Businesses will have to adapt to a changing international environment: SM Lee

SINGAPORE - Singapore’s businesses will have to adapt amid a changing international environment marked by technological advancements and geopolitical tensions, said Senior Minister Lee Hsien Loong.

“Technology is advancing faster than ever, nations are competing to secure an edge in emerging areas like biotechnology and artificial intelligence (AI).

“And there is intense geopolitical contestation especially between the US and China, and between the US and Russia, there is outright hostility,” he said at the Shangri-La Singapore on Sept 30.

Still, economic growth and transformation remain essential to improving Singaporeans’ lives, and the Republic is capable of finding its way forward, SM Lee said.

He was speaking at a dinner hosted by the Singapore Business Federation (SBF) to thank him for his contributions to Singapore’s economy and its businesses.

More than 800 business, political and community leaders attended the event.

SM Lee noted in his speech that when he became prime minister 20 years ago, the “dominant paradigm” was about fostering multilateralism and encouraging interdependence. 

“As a small country heavily reliant on international trade, Singapore thrived in this environment,” he said.

But the environment has since changed, with national security and resilience taking precedence over economic efficiency and mutual prosperity, while measures such as state intervention and protectionism have become more prevalent.

“Singapore will continue to pursue trade and investment liberalisation wherever possible,” said SM Lee, adding that the Republic continues to stand out as a regional and global node, and should make the most of its international reputation as a trustworthy and reliable partner.

SM Lee said that Singapore is well placed to take advantage of advances in information technology and AI.

On this front, the Government has already concluded a Digital Economy Partnership Agreement with Chile and New Zealand, as well as similar bilateral agreements with the UK, Australia and South Korea.

Meanwhile, tackling climate change and decarbonising Singapore’s economy will create new industries and opportunities, for example in green finance and carbon trading, even though the transition will not come cheap, he noted.

Initiatives like the

Singapore-Australia Green Economy Agreement

and the Indo-Pacific Economic Framework for Prosperity Clean Economy Agreement will support Singapore’s green transition, while promoting economic growth and job creation, he added. 

“Hence, despite the headwinds, I am confident Singapore will find a way forward, and we will take care of ourselves,” SM Lee said.

This can be done through a competitive corporate sector, with companies that are growing and those doing less well being able to pivot to more productive sectors, or exiting the business completely, he said.

“This is how free markets generate growth, and this is how our economy has to work.”

SM Lee said that a vibrant business sector is vital to the Republic’s economic development and success, as it is the businesses that create wealth and generate prosperity for Singapore through the creation of good jobs and wages.

SM Lee also noted that as companies transform themselves, they can depend not only on a pro-enterprise government, but also a supportive labour movement.

The National Trades Union Congress (NTUC) has launched Company Training Committees (CTCs) with government support to translate Industry Transformation Maps (ITMs) into training programmes tailored to the needs of individual companies. 

The ITMs were launched in 2016 as road maps to drive transformation for 23 industries across manufacturing, built environment, trade and connectivity, essential domestic services, modern services and lifestyle.

“Many companies have set up CTCs, utilised CTC grants to digitalise and streamline your workflows, and upskilled your workers with the help of NTUC’s LearningHub,” SM Lee said. 

“In these ways, companies can improve their productivity, while their workers can benefit from transformation and technical progress.

“Our Tripartite Partnership has served us well for half a century, and continues to give Singapore an enduring competitive advantage,” he added. 

SM Lee also noted that trade associations and chambers (TACs) are important players in industry transformation.

TACs have partnered the Government to set up an islandwide network of small and medium-sized enterprises (SME) centres, to offer business advisory services, capability-building workshops and a range of facilitation services.

“In the past year, more than 25,000 SMEs have benefited from these services,” SM Lee said.

SBF chairman Lim Ming Yan said in his welcome speech at the event that SM Lee has consistently championed pro-business policies that have helped Singapore weather economic storms, including the global financial crisis and the challenges brought on by the Covid-19 pandemic. 

“Under his leadership, gross domestic product per capita has grown about three times, with a sixfold increase in the number of enterprises,” he said.

“Singaporeans have benefited from good jobs and higher wages, with median income doubling in the last two decades.”

Mr Lim also noted that TACs have grown from strength to strength during SM Lee’s tenure as Singapore’s prime minister.

Established in 2002, SBF helps businesses in Singapore address concerns related to trade and investment, labour management and wages. 

All companies with paid-up capital of $500,000 or more are statutory members of the SBF. Smaller companies with paid-up capital of less than $500,000 are able to join as associate members.

SBF marked the Sept 30 appreciation dinner by raising $500,000 for the Chinese Development Assistance Council, Mendaki, Singapore Indian Development Association, the Eurasian Association and the SBF Foundation’s Employability Fund, which supports employment programmes aimed at helping vulnerable groups.