US can lead the way in global digital integration, decisions should not be guided by politics: Chan Chun Sing

Mr Chan (above, in a file photo) said the Covid-19 pandemic has underlined the importance of digital connectivity, and hastened the rise of the digital economy.
Mr Chan (above, in a file photo) said the Covid-19 pandemic has underlined the importance of digital connectivity, and hastened the rise of the digital economy.PHOTO: LIANHE ZAOBAO

SINGAPORE - The world is at a crossroads between digital integration and fragmentation, and the choice made will determine the fate of the ensuing global economy, said Minister for Trade and Industry Chan Chun Sing on Wednesday (Sept 16).

The decision, he added, should be guided by economics and technology, rather than politics.

Speaking at a virtual dialogue organised by the Peterson Institute for International Economics (PIIE), he also said the United States has a "historical opportunity to play a leading role in building this global digital architecture, governance framework and the rules of the game".

The dialogue was moderated by PIIE non-resident senior fellow Anabel Gonzalez and also involved Google's former head of global policy Caroline Atkinson, who is a PIIE board member.

Mr Chan said the Covid-19 pandemic has underlined the importance of digital connectivity, and hastened the rise of the digital economy.

"Digitalisation has transformed the way we do business and transformed the way we trade. There will be consequences for global trade and how the global system will continue, or not continue, to uplift millions from poverty in the coming decades," he added.

He set out several challenges amid the transformation.

These include countries putting up barriers to digital trade and cross-border data flows, like customs duties, out of fear or a desire for a greater share of the potential fiscal revenues; and some struggling to get their workforce to learn new skills, even as they deal with local firms being displaced by competition from large foreign entrants.

"Our decisions should be guided by economics and technology, and hopefully not by politics," said Mr Chan, adding that the digital economy has the potential for increasing returns to scale to benefit everyone.

He said the US has a "historical opportunity" to lead the world on this digital front.

"It would be fair to say that if physical trade had cemented the US' global pre-eminence in the last century, digital connectivity will determine the US' leadership in the current century," he added.


The growth of the digital economy will be speeded up by the next wave of developments, such as the adoption of 5G, robotics, artificial intelligence and other new technologies.

"However, the US will require like-minded partners to help shape this new terrain and establish the new rules for this new era.

"If the US does this well, it will entrench US global leadership for another generation. The US has a head start and it will be a pity if the US is not able to exercise the power of its example to bring about a more integrated, connected, secured and inclusive digital world."

Mr Chan also said that large technology companies, whose power and influence cannot be understated, have a responsibility to help establish the new digital space.

"The fate of the global economy is not the responsibility of governments alone. Corporate leadership must partner and complement government for enlightened self-interest and humanity's greater good."

He noted that last year, Apple would have been the world's 15th largest economy by gross domestic product if it were a country, and cited a 2019 United Nations Conference on Trade and Development report that showed Google accounts for 90 per cent of the market for Internet searches and Facebook accounts for two-thirds of global social media.

One important way to seize the potential of digital connectivity is through making clear and transparent rules that reduce uncertainties around data privacy and cyber security, and promote a fair playing field, said Mr Chan.

This will also create greater harmonisation among digital markets in the long run, he added.

"It's up to government, in close consultation with our stakeholders, including the digital giants, to define the rules of the game."

He commended the US' efforts like the US-Japan Digital Trade Agreement, and said Singapore has adopted a similar approach, pointing to the Singapore-Australia Digital Economy Agreement.


He noted that Singapore and the US share longstanding economic ties, with Singapore being the first Asian country to conclude a free trade agreement with the US in 2004, which facilitated more than US$131 billion (S$178.3 billion) in trade in goods and services last year. Singapore is also one of the largest Asian investors in the US today.

"Moving forward, we look forward to continuing cooperation with the US to advance our shared agenda in deepening global digital connectivity and writing new rules for the digital economy."

Ms Atkinson, a former deputy national security adviser for international economics to former US president Barack Obama, said the private sector should be involved in formulating rules for the digital space.

Sharing her experience at Google, she said one problem is when engineers do not understand the goals of policymakers.

"What creates a mess is when the policymakers try to come up with the engineering fix. Often, they may not know quite how the technology works, or even some basic things about the technology," she said.

Mr Chan added that Singapore welcomes a diverse number of digital firms to its shores to avoid being held ransom by one dominant giant.

"That is our greatest assurance against any regulatory capture or any untoward thing happening to us, because we have choices, and from the choices we are able to level our knowledge and know what we can do and cannot do."