SINGAPORE MUST “STAY OPEN”
Nonetheless, Singapore’s strategy must be “to stay open, and make our economy stronger and more resilient”, said the prime minister.
Singapore must “keep seizing opportunities for growth, developing new capabilities and becoming a more competitive economy”, he added.
“Then despite the uncertain climate, despite the pressures against globalisation, investors will still find it worthwhile to put their projects in Singapore, our exports will still find foreign markets, and we can still earn a living for ourselves in the world.”
Economic success alone is not enough, noted Mr Lee.
He said: “Our growth must be matched by social and political cohesion. There is war in Europe, there are major troubles in the world, and great power rivalry in the region. Facing all these external troubles, if Singaporeans are not strong and united, if we allow ourselves to become split and divided, we will be done for.”
But Mr Lee acknowledged that there are “limits to what Singapore can do to influence broader international trends”.
“We will push back against deglobalisation. We will speak up to encourage the US and China to constructively engage each other. But ultimately all these matters depend on the major powers themselves, and the relations between them, and how the war in Ukraine unfolds,” he said.
While larger countries can turn inwards, rely more heavily on their domestic markets and produce more things onshore, this was “not a choice open to Singapore”.
Singapore “has to take the world as it is, and develop a strategy that works for us in this troubled environment”, said Mr Lee.
He added that while Government support schemes can help to “share the burden fairly and ease the hardship on households” in the short term, this will not solve the problem in the long term.
“We must address the fundamental issue which is that higher energy and food prices have made us collectively worse off. And the fundamental solution to this is to make ourselves more productive, transform our businesses, to grow our economy, to uplift everyone,” he said.
“Then our incomes can go up, and more than make up for the higher prices of energy and food. Then we can all become better off, in real terms.”
“NO ESCAPE” FROM RISING COST OF LIVING, GOVERNMENT WILL CUSHION THE IMPACT
Singaporeans are already “feeling the impact of the war on the cost of living”, noted Mr Lee, and added that this is a worldwide problem.
For instance, with Russia being a major exporter of oil and gas, “supply is being disrupted”, he said, explaining the rising electricity and petrol prices.
“European countries are trying to stop buying energy from Russia, and Russia is also cutting off supplies to punish European countries for supporting Ukraine. That is causing a worldwide energy crunch. That is why our electricity and petrol prices have gone up sharply,” he said.
Food prices have risen too, added Mr Lee.
Due to the war, Ukrainian farmers have been running short on seeds, fertilisers and even fuel for their tractors. But as Ukraine is among the world’s largest exporters of cereal crops and vegetable oils, this has disrupted global food supplies.
Except for solar energy, Singapore imports nearly all supplies of energy, said Mr Lee.
“When oil prices were around US$50 per barrel … our annual imports of crude oil and natural gas cost us about S$30 billion … And when oil prices double (to US$100 per barrel), we have to pay double too,” he said.
The Ministry of Trade and Industry estimates our hit at around S$8 billion per year, he added.
“That means we in Singapore have become collectively S$8 billion poorer off per year. And there is no escape from this.”