S'pore and Asia can take steps to emerge stronger from Covid-19, says DPM Heng

Even as the authorities take immediate steps to avoid economic scarring, businesses and workers must gear up for accelerated changes - such as those involving digitalisation and sustainability - brought about by the pandemic, Deputy Prime Minister Heng Swee Keat said yesterday.

Speaking at the 26th International Conference on the Future of Asia, or Nikkei conference, he said that this is why industry transformation maps (ITMs) to drive transformation across 23 industries were launched in 2016 under the Future Economy Council (FEC).

These ITMs cover sectors such as manufacturing, built environment, trade and connectivity, essential domestic services, modern services and lifestyle.

To seize new opportunities in a post-Covid-19 world, the ITMs will be refreshed over the next five years as part of a new plan dubbed ITM 2025, with three new thrusts: Incorporating the recommendations of the Emerging Stronger Taskforce, closer integration with research and innovation, and greater focus on jobs and skills.

Mr Heng, who is also Coordinating Minister for Economic Policies and chairman of the FEC, said: "We are looking at how to help companies adopt technology and innovation, re-engineer processes and redefine jobs."

He added that taking these steps is very important when the population is ageing.

"We will also expand cooperation with other countries so that we can have a bigger market," he said. "Covid-19 has changed the rules of how many economic activities are conducted. The Emerging Stronger Taskforce has just issued a report, and I will be incorporating that work into our plans."

The Government convened the 23-member task force last May to identify systemic shifts arising from Covid-19 and provide recommendations to the FEC on how Singapore could refresh, reimagine or reset its economic strategies.

In a report released on Monday, the task force made recommendations to drive the Republic's transformation as a node for technology, innovation and enterprise.

They are: Creating new virtual frontiers; seizing growth opportunities from sustainability; enabling global champions and growing an agile and strong Singapore core; institutionalising private-public partnerships through Alliances for Action; and strengthening international partnerships, especially in South-east Asia.

At the regional level, Mr Heng outlined three things Asia can do to emerge stronger from the crisis.

First, it can further strengthen regional architecture and partnerships such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Former United States president Donald Trump withdrew the US from the Trans-Pacific Partnership during his first week in office, leaving 11 other countries negotiating the deal - including Singapore - to form the trade agreement.

"I know that the current political conditions make it difficult for the US to rejoin, but things are never static, and the US should not rule it out," Mr Heng said.

While the idea of President Joe Biden's administration joining the CPTPP has been floated, significant barriers remain, including domestic considerations within the US.

Another key pact is the Regional Comprehensive Economic Partnership (RCEP). A number of countries, including Singapore, have already ratified the agreement, and the RCEP remains open to India when it is ready, Mr Heng said.

"The CPTPP and RCEP are important building blocks for the region and for the world. The door remains open for other like-minded partners to join us. Both agreements also serve as pathfinders for a possible FTA (free trade agreement) of the Asia-Pacific, one which should include the US, China and India.

"Such an FTA will shape economic relationships and the region's geostrategic landscape for years to come."

Second, Asia can continue constructive dialogue on difficult issues such as those involving the Korean peninsula, Taiwan Strait, South China Sea and Myanmar.

Many of these are longstanding issues with entrenched positions by the stakeholders, said Mr Heng, and while there are no easy solutions to bridge the divergent interests, major conflict could have catastrophic consequences. "So, the region must do what we can to reduce the risk of miscalculations and prevent situations from boiling over."

Third, countries must invest in emerging opportunities across borders so that they can raise living standards and share in one another's growth.

One area to look at is the region's huge infrastructure needs. Mr Heng noted that the funding gap in developing Asia, estimated at US$1.7 trillion (S$2.3 trillion) a year before Covid-19, would have increased since then.

No government could fund these projects on its own, he said. Greater collaboration between countries, multilateral development banks and the private sector is needed to enhance collective capacity.

Japan, where households are holding on to almost US$10 trillion in cash and deposits, can consider investing some of these monies to earn returns while improving lives, he said.

Countries can also collaborate on environmental sustainability - not just in terms of natural capital, but also in ensuring high standards of quality and verifiability of carbon credits, and developing vibrant exchanges for these credits to be traded, he said.

While much of the world's attention is on the US-China relationship, Singapore's good relations with its partners extends beyond these two countries, he said.

Stressing that constructive competition can help promote innovation and new solutions, he said Singapore will continue to work closely with all of its key partners.

"I hope that we take an open, inclusive approach to our relationships across the world."