SINGAPORE - As countries work to strengthen their supply chains by moving production lines onshore, they should take care not to "swing to the extreme" and overlook the benefits of globalisation, Prime Minister Lee Hsien Loong said on Friday (Nov 12).
He observed that governments will have an active role intervening to make supply chains more resilient, given that the Covid-19 pandemic has led to a protracted supply chain crunch all over the world.
"But in many cases, free markets and globalisation actually produce reliable, diversified and efficient supply networks, more responsively and economically than dirigiste state intervention," PM Lee said at a virtual meeting of Asia-Pacific Economic Cooperation (Apec) leaders hosted by New Zealand Prime Minister Jacinda Ardern.
He called on Apec members to make a collective commitment on safeguarding supply chain resilience and openness, suggesting that this can be done by developing strong connectivity links to ensure seamless trade flows.
Countries should also maintain the unimpeded flow of goods and services across borders - even in a crisis - which will build trust, PM Lee said.
Beyond the crisis, Apec's support for multilateral institutions such as the World Trade Organisation and trade liberalisation should complement the overt emphasis on supply chain resilience, he added.
Apec is a regional forum that comprises 21 economies, including seven of the 10 Asean nations, as well as Australia, Canada, Chile, China, Hong Kong, Japan, South Korea, Mexico, New Zealand, Papua New Guinea, Peru, Russia, Chinese Taipei and the United States. Together, they account for nearly half of global trade and more than 60 per cent of the world's gross domestic product.
In his speech, which focused on regional collaboration, PM Lee also called on Apec members to cooperate more deeply on the digital economy - a new growth area with huge potential - and work towards a regional digital economy agreement.
Singapore currently has a Digital Economy Partnership Agreement (Depa) with Chile and New Zealand, and a separate digital economy agreement with Australia.
By 2025, the annual Asia-Pacific spending on information and communications technology will exceed US$1 trillion (S$1.35 trillion), with the Internet economy in South-east Asia alone projected to be over US$300 billion a year.
One path to a regional accord on this topic could be to expand the Depa, just like how the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) trade pact had its roots in the P4 agreement between Brunei, Chile, New Zealand and Singapore, PM Lee suggested.
He noted that several more Apec members have recently expressed interest in acceding to the Depa.
Alternatively, a new agreement with a wider membership could be developed. "These two approaches are not mutually exclusive, and can be building blocks towards a larger regional or global digital architecture."
Governments must also support businesses and people in the digital transition, invest in upskilling their workforces, build public digital infrastructure, and align digital rules and standards, he added.
PM Lee also spoke of the need for progressive reopening of borders, deepening regional economic integration and the green economy. Singapore, he said, has introduced travel lanes for vaccinated passengers with several Apec economies, including an upcoming one with Malaysia that its Prime Minister Ismail Sabri Yaakob also spoke about.
But when it comes to opening up between countries that have taken the contrasting strategies of "zero Covid" and "living with Covid", strict border measures will be unavoidable for some time to come, PM Lee said. He called on members to recognise the importance of reopening borders to rebuild economies, support businesses and reconnect families.
Apec is a good platform to share ideas and best practices on how to reopen safely, including getting economies to accelerate the mutual recognition of digital health certificates, he added.
He also noted that Apec members have been taking "encouraging steps" towards the vision of a Free Trade Area of the Asia-Pacific, through building blocks such as the CPTPP and Regional Comprehensive Economic Partnership, which will enter into force on Jan 1, 2022.
Countries should build on these to make further progress, he said.
There are also opportunities for cooperation in the area of climate change, PM Lee added. These include building low-carbon solutions and capabilities in green finance and carbon trading services.
"Apec can be an incubator of new ideas, to pioneer innovative solutions and establish common rules and standards in the green economy," he said.