Once the global economic, technological and capital market systems start getting fragmented, the world will be in for lower growth, said Minister for Trade and Industry Chan Chun Sing yesterday.
He was answering a question about the impact of potential United States restrictions on fund flows to China, following reports last Friday that Washington is considering measures such as delisting Chinese companies from US stock exchanges.
This comes more than a week or so before China and the US, which make up about 40 per cent of the global gross domestic product, enter another round of high-level trade talks.
But Mr Chan added that whether capital markets or technological standards can be easily decoupled is not a straightforward issue.
"The interdependencies between different economies, between different companies and countries are much deeper than what many of us will give it credit for," he told a day-long conference on the impact of digitalisation trends on businesses.
The situation today could lead to two scenarios, and companies must be able to operate in either, he said.
One scenario involves greater global integration, with people realising how much more interdependent parties are, and the other sees the world fragmenting. The question is how firms can learn to operate across different economic blocs.
Whether the US and China come to any agreement, the world has woken up to the realisation that things will not go back to what they were before, said Mr Chan at the Digitise Asean conference organised by the Singapore Business Federation and Asean Business Advisory Council (Asean-BAC).
"Everybody is taking the need to de-risk their operations very seriously," he said.
But he maintains that the world is at a crossroads. Governments and businesses have to decide if it will go on a higher growth trajectory with greater integration, or become fragmented digitally, financially and as a global economy.
Governments are responsible for fostering global digital integration, said Mr Chan.
In a speech, Asean-BAC Singapore chairman Robert Yap added that governments also play a key role in providing conducive environments for the adoption of advanced technologies.
Mr Chan added that Singapore is working with like-minded countries and companies on new international approaches to support the digital economy - in facilitating data flows, setting standards and helping businesses seize opportunities.
Businesses can also champion an integrated market to their respective governments and this can help to remove many of the non-tariff barriers that are in place, he said.
"Even if the rest of the world runs the risk of being fragmented by different standards, Asean has every opportunity and responsibility to make sure that our... market remains integrated," said Mr Chan.
But on a local level, countries need to muster the resources and political will to help firms and workers adjust to tech and globalisation, or there will be backlash, he added.
Dr Yap noted that some issues remain, such as smaller businesses' difficulties in obtaining financing.
Asean-BAC 2019 chairman Arin Jira added that "human capital empowerment" is a precondition to compete in the digital era. This involves boosting workers' skills.
For a start, the event launched an Asean Applied Research Centre to develop solutions for challenges that businesses in Asean face.
Asked by Mr Jira if Asean could be louder in calling for economic peace, Mr Chan said small countries should "speak effectively" and make a case that it is in larger countries' interests to uphold and update international rules.
"The outcome of (the US-China) tussle will not be determined by whether the US beats China or China beats the US... I don't think that is the outcome that will determine the future trajectory of the global trading and economic system," he said. "It's whether the US wins over the world or China wins over the world."
