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Singapore's openness places it in good stead amid supply chain reshuffling: Chan Chun Sing
SINGAPORE'S long-term policy posture of openness will stand it in good stead amid the global reshuffling of supply chains, said Minister for Trade and Industry Chan Chun Sing on Wednesday.
Even as trade tensions threaten to lead to a "bifurcation" of trade, Singapore can continue to be an integrator, and a base which welcomes everyone to come and do business, he said during a webinar on the economic outlook for trade, part of The Economist's Asia Trade Insight Hour series.
Mr Chan began the discussion by setting out three points. First, that global growth will slow with less trade. Global trade has enabled economic growth that has uplifted millions from poverty, but pushback has grown due to uneven distribution of trade's benefits. Yet it remains in the interests of like-minded countries and companies to work together to uphold the rules-based trading system, he said.
Second, and relatedly, "trade necessitates domestic adjustments". While trade is a net positive for a country, its benefits may not be felt evenly, which is why adjustments must be made to ensure industries and workers are not left behind.
Third, when it comes to supply chains, many countries and companies are "aware of the need to balance efficiency with resilience" but must not arrive at the wrong conclusions, he said. "Resilience doesn't mean autarky, doing everything ourselves. Resilience comes from diversity of supply chains and markets."
Christopher Clague, managing editor for The Economist Intelligence Unit's thought leadership division in Asia, asked Mr Chan about Singapore's near to medium-term trade outlook, in light of the bleak second-quarter gross domestic product growth figures released on Tuesday.
In reply, Mr Chan did not make any predictions of the trade outlook, but focused instead on two sets of factors behind the Q2 figures. One were the "circuit-breaker" measures adopted to tackle Covid-19, which meant a sharp fall in economic activity - though this is set to recover in the short to medium term, as consumption picks up.
The other factors are structural forces such as geopolitical tensions and reshuffling of global supply chains. In facing these challenges, however, Singapore's continued openness to trade will give it an edge, said Mr Chan.
Barriers to trade between countries will lead to increased costs on both sides, he added. "But if you can find a country... where both can trade, that's useful." With its high free trade agreement (FTA) coverage - with more than 90 per cent of its trade covered by FTAs - Singapore is especially well-placed to play that role.
Apart from working to uphold the rules-based trading system represented and enforced by the World Trade Organization (WTO), Singapore is also working with partners to keep borders open to the free flow of data.
Here, the interests of global multinational corporations - "especially digital giants" - coincide with those of Singapore, said Mr Chan. "We are all richer if we are able to share data."
Asked if Singapore has confidence in the future of the WTO, which has come under fire in recent years, Mr Chan replied: "The answer is not whether Singapore has confidence or not. We all have to make it work. Without rules, we are all the poorer for it."