Real benefit of free trade lies in learning, says Tharman at leadership conference

Deputy Prime Minister Tharman Shanmugaratnam stressed that Asia should not take the ongoing trade friction between the United States and China as a sign to start turning inwards.
Deputy Prime Minister Tharman Shanmugaratnam stressed that Asia should not take the ongoing trade friction between the United States and China as a sign to start turning inwards.PHOTO: MINISTRY OF COMMUNICATIONS AND INFORMATION

SINGAPORE - Asia has to keep opening up economically, said Deputy Prime Minister Tharman Shanmugaratnam on Friday (April 13) at a conference.

He stressed that Asia should not take the ongoing trade friction between the United States and China - which he described as "a very public game of chicken" - as a sign to start turning inwards.

"We've got to keep opening up and recognise that the benefit of opening up comes in the learning and the developing of competitive strengths," said Mr Tharman in an opening address.

"The source of economic dynamism has always been competition and learning. And it is through trade, through investment across borders, that we learn the fastest," he said.

The real merit of opening up lies in interacting with buyers who have more sophisticated specifications, for instance, or with foreign investors with different technology, said Mr Tharman.

Asia's record shows that countries that were the most export-oriented had the highest growth in productivity over the decades, he said, citing economies such as South Korea, Singapore and Taiwan.

These increases in productivity caused living standards to rise and improved people's lives, he said at the inaugural HT- Mint Asia Leadership Summit organised by India's Hindustan Times.

About 300 businessmen and policymakers attended the conference, centred on the theme "The road ahead for Asia". The one-day event was held at the Four Seasons Hotel.

Speakers included politicians past and present, such as former British prime minister Tony Blair and Andhra Pradesh Chief Minister N. Chandrababu Naidu.

India needs to make a more decisive change to create the 10 million to 12 million jobs a year it needs to counter unemployment, said Mr Tharman.

He urged India to shift away from protecting firms in its domestic market towards developing niches in the international market, saying: "You need the spur of competition to develop competitive strengths."

"'Make in India' has to be 'Make in India for the world and India'," he added, referring to Indian Prime Minister Narendra Modi's drive to encourage companies to manufacture in India.

India also needs to improve its air connections with nearby countries, particularly East Asia and South-east Asia, said Mr Tharman.

"It's not just about the number of people you carry. It's the fact that they're coming with business, with investments," he said.

Digital innovation across borders is another opportunity Asia can seize, said Mr Tharman, who suggested Asia connect its economies digitally and link its smart cities.

Asean, which Singapore is chairing this year, is developing a network of smart cities. India, too, has its mission to build 100 smart cities.

But free trade must be accompanied by the right social investments, warned Mr Tharman, who is Coordinating Minister for Economic and Social Policies. These include the regeneration of towns and skills training for people throughout their working lives.

He said: "It is the failure to have invested in people that is at the heart of many of the problems we see today."