S'pore to build up its foreign reserves shield

Section: Front Page
By: TEH SHI NING
Publication: The Business Times 22/09/2012
Page: 1,6
No. of words: 965

As global risks grow, PM says reserves will make safety nets stronger; S'poreans will be given skills to face competition

tshining@sph.com.sg

Singapore

SINGAPORE has to build up its foreign reserves to strengthen social safety nets, as part of its response to the risks and challenges of the future, Prime Minister Lee Hsien Loong said last night.

In his keynote address to 350 senior guests of the Economic Development Board, Monetary Authority of Singapore, Government of Singapore Investment Corporation and Temasek Holdings at the first Singapore Summit's welcome dinner, Mr Lee laid out how he sees Singapore responding to threats and possibilities facing Asia and the world.

"We have to build up our foreign reserves to strengthen our social safety nets, and to cope with volatility and uncertainty. People sometimes ask us, 'Why do you need to have a sovereign wealth fund? The world is safe and you can float your currency.' But we tell them, there are things which you cannot calculate and your models may not predict all the events which can go wrong," he said.

Apart from building its reserves, Singapore is also strengthening itself against globalisation's risks in other ways, such as equipping people with the skills and mindset to face inevitable competition.

"We have to know that it's impossible for us to shield ourselves completely from the competition. There is no place to hide.

However high your seawall, however strong your barrier, the pressure is there. And it will seep through, and we must be ready to meet it," Mr Lee said.

As a small country, Singapore will have to adapt and "take the world as it is".

"We cannot imagine ourselves changing the world," he said.

But it does have the advantage of being closely linked to key Asian markets – China, India and Asean – and enjoying the presence of many multinational companies already in Singapore.

"Our survival depends on our living the Global-Asia story – connecting Asia to the world and vice versa," Mr Lee said, explaining how Singapore must harness the "Global-Asia Confluence" – the summit's theme – to be a springboard for companies venturing into and out of Asia.

Singapore will also need to continue promoting economic integration and free trade "through many ways, because there is no single path forward, and because doing it on a multilateral basis through the World Trade Organization and the Doha Round has become too difficult", Mr Lee said.

As technology transforms the world, with IT and robotics revolutionising entire industries, Singapore must also master technology. "Whether it's broadband on fibre, whether it's intelligently managing our city traffic, whether it's being more efficient with a smart grid in our energy utilisation – if technology is applicable, we should be able to use it to the max," he said.

But the impact of technology on societies must be managed carefully. Already, technology has hit income distributions, with a huge premium on talent and huge pressure on unskilled and routine jobs. So Singapore needs to educate its people to use technology to thrive in the new economy and not be sidelined, he said.

Societies worldwide will undergo major change as social media continues to alter the way people interact with one another and with their governments.

"The Internet helps societies organise more effectively, for example through e-government, but it also makes it harder for societies to take a longer view, because governing becomes a 24-7 referendum," Mr Lee said.

This will be a challenge for all societies – "whether it's America, with its free and open roots, whether it's China, trying its best to keep social order and a lid on discontent, or whether it's Singapore, finding its way forward as a very small player in a very uncertain world".

Singapore is especially affected, being small, open, and fully wired up. So while there is a need to exploit fully the Internet and social media, Singapore will also need to institute safeguards against misuse and strengthen the community's cohesion and identity. This is necessary for Singapore to be able to "hold its own in a very porous and rapidly changing world", Mr Lee said.

While preparing to ride these global waves of change, Singapore also needs to prepare for critical risks: the long and painful resolution of the United States and Europe's deep-seated economic troubles, rising nationalism due to the euro's woes in Europe and in Asia because pride in economic success has rekindled old territorial disputes, as well as the shifting strategic balance of power as China becomes stronger.

"We need an economy which is resilient, able to cope with a protracted global downturn. We need a strong armed forces and a Home Team of security and police to protect ourselves against security threats and dangers. We need to build social cohesion to strengthen our sense of togetherness," Mr Lee said.

On balance, he believes it is likely that these risks will be contained and that Singapore faces a "challenging, but bright future".

The three-day summit, chaired by former foreign minister George Yeo, is organised by the Global-Asia Programme Office. Participants include World Trade Organization director-general Pascal Lamy, Standard Chartered group chief executive Peter Sands, former World Bank president Robert Zoellick and other business leaders and thinkers serving as international advisers to the EDB, MAS, GIC and Temasek.


The Global-Asia Programme Office, an inter-agency initiative led by the EDB and MAS in collaboration with the Ministry of Trade and Industry, Ministry of Finance, GIC and Temasek, intends to host the Singapore Summit annually.