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Disruption is 'defining challenge' to economy, says PM Lee
AMONG all the economic issues that Singapore has to deal with, the "defining challenge" facing the economy in this era is how to deal with disruption, said Prime Minister Lee Hsien Loong on Sunday.
He made the point at the National Day Rally, which was suspended midway when Mr Lee felt ill and had to be ushered backstage to receive medical attention. He returned about 80 minutes later to complete the rest of his speech after doctors assessed that he was fine.
Mr Lee said that Singapore is already dealing with all kinds of economic issues, among them slower growth, helping people to upgrade their skills, and strengthening social safety nets.
The most pressing issue, however, is the "fast and relentless" pace of technological change and globalisation that is affecting many industries here, he told his audience at the Institute of Technical Education College Central campus in Ang Mo Kio.
"Old models are not working, new models are coming thick and fast, and we are having to adjust and to keep up because of technology and globalisation. Disruption will happen over and over again, relentlessly."
He used the example of the taxi business as an industry feeling the impact of disruption, thanks to private car hire services Uber and Grab that compete with taxis for passengers in cities all over the world.
While taxi firms and drivers complain that their business has been affected, Mr Lee noted how the disruption has resulted in commuters benefiting from better, more responsive and faster service as a result.
Singapore has two options to tackle the issue: Either to ban such ride-sharing apps and impose restrictions to protect taxi companies and drivers, or to embrace this change and let the disruption happen.
Mr Lee said that the authorities are helping the incumbents, especially the taxi drivers, to adapt to the changes. The government is updating the rules to foster fair competition while protecting commuters, and requiring all drivers to have the necessary insurance and clean driving records.
"I think we all know that we cannot stop progress. Even Uber and Grab are going to be disrupted," added Mr Lee, citing an upcoming trial of driverless taxis that will begin at one-north in 2017.
The retail sector - with 125,000 workers in 16,000 companies - is another industry feeling the pain of disruption. Physical stores in Orchard Road have been hit by the trend of more shoppers turning to e-commerce.
But Mr Lee noted that it is not all doom and gloom, because new jobs are created whenever there is disruption too.
As a key transport and finance hub in the region, Singapore can be a major player in the new logistics chain, while there are also new opportunities in areas such as data analytics and digital marketing.
Even as agencies such as Spring Singapore and the Economic Development Board work with industries affected by disruption, Mr Lee said that the country also needs an overall strategy to spot where the changes are coming from and respond to successive disruptions.
To this end, he revealed that the Committee on the Future Economy will focus on three main thrusts: building new capabilities, promoting entrepreneurship and developing skills.
On the first area, Mr Lee singled out the digital economy as a promising area due to Singapore's connectivity and a population that is IT-savvy.
"Besides digital, we also need to build capabilities in other sectors, and we have SMEs which can compete with the best in the world, and we should help them to grow, to scale up," he said.
Entrepreneurs, too, have an important role to play to create jobs and prosperity and to send a strong signal to society that anything is possible so long as one does not give up.
Lastly, Mr Lee emphasised the importance of the SkillsFuture movement, a national effort to help working adults upgrade their skills and stay relevant as they advance in their careers.
A strong economy is built on a skilled workforce, and other stakeholders are involved in the effort: Schools are preparing students for the new economy, and the labour movement is helping all workers, from rank-and-file to PMEs.
"These are the ways our economy and our workers can thrive amid disruption. This is how we can progress together, and thrive in a competitive and dangerous world," he said.