Singapore prime minister warns of turbulence ahead in 'post-American' order | FT Interview

Well, Prime Minister, Singapore is

perhaps the most globalized country in

the world. And you like rules, you like

precision, you like mathematics.

>> We like stability.

>> You like predictability. Of course, you

like visibility.

>> You must be having to adapt to to a new

world order. Tell me a little bit

whether this requires fundamental change

in the way that Singapore operates.

>> We are certainly in the midst of a great

transition to a multipolar world, a

postamerican order and a multipolar

world. Uh no one can tell how the

transition will unfold. But there is no

doubt it will be messy and unpredictable

because America is stepping back from

its role as global insurer. But there is

no other country that's able to or

willing to fill the vacuum. So we are in

an uncomfortable position where the old

rules do not apply anymore but the new

ones have not been written and we must

brace ourselves for more turbulence

ahead. So what are we to do in this

environment? I think we cannot afford to

just wait for things to happen or hope

somehow that things magically will fall

in place. We have to take actions now,

plan now and start taking actions to

invest together in tackling the problems

of the glo global commons or in building

new trade connections and keeping up the

momentum of trade liberalization. So

that's something that Singapore is keen

to do. We can't do it alone, but we will

do it with other like-minded countries.

>> Can you envision a world without the US?

The US may not be able or willing to

join these plans now, but we have to

press ahead and hopefully in time to

come they will come along as well. But

given the uncertainties and the

unpredictabilities, we cannot just leave

things to chance. We have to start

taking actions now to lay the

foundations of the new multilateral

architecture. But there are two views

that the next few years are more of a

passing phenomenon

>> or that there are deep structural

changes in the world order that are that

that we are now living. You are in the

second camp.

>> Yes, we are. We are because we believe

what has happened in America is not just

a temporary phenomenon. It reflects

broader change in political culture and

also in American society itself a

feeling that America has not benefited

from the current global order that it

had put in place and it is not prepared

to do as much of the heavy lifting uh to

keep the order going and I think that

goes beyond this administration.

>> Is some of this sentiment justified?

Does Donald Trump have a point when he

says that the US has been taken for

granted that it's been taken advantage

of?

>> Some of it may well be justified in the

sense that there may well have been free

riders so to speak and countries do need

to do more to invest in their own

economic security and also stability. We

do that in Singapore. We have never

taken it for granted. We have

consistently invested year by year in

our own security and our defense and

also facilitated America's presence in

the region. Certainly what the Trump

administration has done is to motivate

and catalyze many countries to do this

self-reflection and you see that

happening now more countries are indeed

investing

>> there's certainly self self reflection

you see it you see it in Europe and

people are taking matters into

>> alternative but so while there may be

truth in some of this of what uh Mr.

Trump has said and the positive result

of this is countries taking more

responsibility and spending more on

their own security.

We worry that the consequence of these

actions will also mean as I just said a

weakening of the global order today and

we think there's no going back. There

will be a new multipolar world.

Multipolarity itself does not provide a

stable framework for countries to work

together to cooperate and to ensure

shared prosperity and security. So we

have to think about what we can do

together to engender that. Does this

multi-polarity

mean spheres of influence? Because you

often look at the way the US

administration operates and it looks

like what the president prefers are sort

of three strong countries. That wouldn't

work very well for Singapore, would it?

We hope it will not end up like that

because if the world ends up in

exclusionary blocks and fears of

influence, I think it will be more

dangerous and unstable. So from our

point of view, multipolarity

should still have a way to bring about

global connections. We would prefer a

world where ASEAN in Southeast Asia we

are platform that allows for open and

inclusive engagements with all the major

powers. Do you think Azan could become a

more credible block politically but also

economically?

>> Certainly we have ambitions to do so.

>> I know that this is what Singapore hopes

for but are there concrete moves to make

it such

>> I wouldn't first of all belittle the

achievements of ASEAN? Southeast Asia is

a very diverse region, highly complex um

made up of so many different

ethnicities, languages, religions. It

used to be called the Balkans of Asia

because of the geographical

fragmentation and the potential for

instability. And yet all these decades

since the end of the Vietnam War,

Southeast Asia has been able to maintain

relative peace and avoided major

conflicts. And a lot of it is credit to

ASEAN. ASEAN is certainly not perfect,

but it is indispensable.

And we are continuing to build on the

foundations that have been laid. There

are plans to accelerate ASEAN

integration to make ourselves a more

attractive and competitive single

market. and in some ways the tariffs

imposed by America have indeed catalyzed

and motivated ASEAN leaders to come

together with more urgency on this

endeavor.

>> So you you got off pretty lightly but of

course the US does not have a trade

deficit in goods or in services with

Singapore. So you got 10%.

>> It's not the same for your neighbors.

They have some of the highest uh

tariffs. So there is a growing sense in

the region that that the US under Trump

has turned its back on Southeast Asia.

Do you agree?

>> The actions of the tariffs have

certainly impacted America's standing in

Southeast Asia. There is no doubt. But I

would say all Southeast Asian countries

still recognize that America is remains

the largest investor in the region. Not

China. China is the largest trading

partner. But as far as FDI flows are

concerned, America remains the largest

investor. America still has significant

stakes in Asia and all of us in

Southeast Asia want to maintain good

links with America and that's why many

countries have had extensive

negotiations with the US and eventually

they have landed on slightly lower

tariffs

>> more around 19 19%. It's it's

interesting how now we think of 10 or

20% as as as rel practically as relief.

>> I I agree fully with you that

>> but we started with nothing

>> exactly. So from our point of view the

correct figure is 0%. Yeah.

>> But 10% has become the new normal. What

to do?

>> You could though still suffer from um

semiconductor tariffs on and

pharmaceuticals. Are you in discussion

with the US and and do you think that

you will get exemptions?

>> We remains to be seen. We are in

discussions with the American officials

on this. But from what we understand

from some of the large American firms

like the pharmaceutical companies, some

of them on their own have already

negotiated their own exemptions because

they are investing back in America.

>> So these are the pharmaceutical

companies in Singapore, right? They're

American companies. They're investing in

America. So they get their own

exemptions. That's right. So, so we are,

you know, looking at this in greater

detail also to understand fully what's

the impact on our economy.

>> You're a logistics uh hub. There are a

lot of reexports from Singapore and

supply chains have been disrupted

because there is pressure also from the

US to remove Chinese elements from these

uh supply chains. Have you felt this

pressure and what impact has it had? not

so much on the overall flows because if

you look at global figures, trade flows

continue. They are just being

reconfigured into new patterns of trade

and so long as they are continuing

especially in Asia, Singapore can remain

a relevant node and we see that

continuing to be the case and we are

determined to remain at the center of

these uh global patterns.

>> I know that you are under pressure to

stop US advanced chips from getting to

China, right? advanced trips that you

get in in Singapore. What are you doing

to stop these flows?

>> Well, opposition is very clear. We've

we've established a business hub on the

basis of our reputation for rule of law

and trust. And so, we are determined and

fully committed to maintain the

integrity of our business environment.

Uh we will not tolerate businesses

violating our laws. We'll take, you

know, strict actions. And when it comes

to export controls, we will also not

condone businesses or individuals taking

advantage of their association with

Singapore to circumvent the export

controls of other countries. So where

America is concerned, what we have done

is put in place robust arrangements so

that the US government can take actions,

investigate companies of interest in

Singapore if they so wish. And we will

also extend similar arrangements for

other countries if they would like also

to have the same treatment where it

comes to their export controls because

nowadays export controls is not limited

to America only.

>> Are you surprised that economic growth

hasn't really suffered? tariffs were

supposed to do a lot of damage and yet

whether you look at the global economy

the recent IMF report or indeed in in

Singapore economic growth has not yet

been affected. Did we get it wrong?

>> No, I don't think we got it wrong. I

think there are several reasons for it.

One, the actual roll out of the tariffs

have not been as high as what they

initially were indicated to be. Uh

second there has been a lot of

frontloading of activities which has

dampened the impact and third generally

speaking because of AI because of new

technologies the rest of the economy has

been quite resilient so far but there

will be an impact. I think we already

start to feel it in our own economy. In

many ways, we always say the Singapore

economy is like the canary in the coal

mine because we are so open and so

exposed to the external environment. We

are the first to feel it when the

external environment starts to weaken.

We didn't feel it in the first half of

this year.

>> So, how are you feeling?

>> We are starting to feel some slowdown

now in this as we approach the second

half of this year because of

uncertainty. businesses are holding back

on new investments and new hiring and we

are starting to see a general slowdown

in uh business activities.

>> I'm just wondering how you and your

neighbors navigate the tensions between

the US and China. There may be a trade

deal, there may not be a trade deal. One

day it's on, one day one day it's off. H

how difficult is it for you? I suppose

we have to take a step back and look at

first of all the US and China

relationship itself. Uh it's the most

consequential relationship in the world

and it's also the most dangerous fault

line in international relations. Uh for

now you can see both countries wanting

to insulate themselves from each other.

There are also many interdependencies

between them. Their economies are deeply

intertwined and they are looking at

potential choke points to use as

leverage.

But when one economy squeezes, the other

squeezes back right away. So you end up

in a path in a dynamic of mutually

assured destruction. We see this

happening already as you know even now.

And and furthermore, when one side

starts to weaponize a particular

dependency, it just motivates the other

to look for alternatives. So when

America puts controls on chips, China

will start looking for workarounds

because you can use lower-end chips as

workarounds and China will start looking

for to become more technologically

self-reliant. And when China puts

controls on rare earths, I think all of

us will start to realize these are not

so rare after all. and America and its

allies, I'm sure, will look for

alternatives. These things will happen.

It will take time. But the economist in

me says that uh we should never

underestimate the elasticity of supply.

So when you look at these sorts of

dynamic and and the consequences of

actions, I think America and China may

well come to a new modus vivendi. think

about how they can coexist with one

another even while they compete

intensively. It's not easy to see how

this may arise.

>> Yes, I'm trying to I'm trying to imagine

what you what you are describing if it's

unstable in in some areas. It will be

unstable in in other areas. You often

hear um the Chinese saying that it's

they look at the relationship as a whole

and they cannot compartmentamentalize

it. whereas the US prefers to

compartmentamentalize.

So

>> do you think they'll get a trade deal in

the next few weeks?

>> We hope so. It may not be a strategic

agreement that resolves everything, but

even some form of a guard rail to manage

the economic relationship in trade is

better than nothing.

And if the US and China continue to

coexist and not end up with a full

decoupling

which is going to be highly damaging to

both economies and also highly

destabilizing for the entire global

economy. So if they can find ways to

coexist going back to your earlier

question Singapore and all of ASEAN

countries will be able to navigate this

new environment we will be able to

therefore continue to have relations

with both America and China. Do you

think that a lot of the US sort of

economic nationalism, the America first

strategy is is leading more to a China

first strategy and in some ways giving

them this impetus to produce the chips

themselves to make themselves even more

independent and paradoxically stronger.

You can see growing confidence in China

throughout its entire society at its own

developmental model. China's rise gives

rise to a lot of unease in many parts of

the world. Not just because of its a

rising power of tremendous scale, but

because it's a power with a different

economic model and political system. But

I think the world must realize that

China will not converge with western

norms and it will find its own path to

modernity. And while there's still

tremendous catch-up growth because its

per capita GDP is just 1/5if of

America's

uh in some areas it's gone beyond

catchup. It's a technological leader in

many areas in advanced manufacturing in

renewable energy. So we have to contend

with and and and accept the reality that

China is not just a rising power. It is

a risen power and the moves that it has

made in recent years. I think just

demonstrate that China itself recognizes

its growing weight and is thinking about

what responsibilities it might exercise

as a leader in the global system. For

example, it recently decided to forgo

its special and differential treatment

provisions in the WTO. In just this past

year or so, it has doubled down on its

support for global institutions. And I

think these are examples of how we have

to embrace the reality that China will

be a key player and potentially a key

leader in this new global system. But

doesn't a country like Singapore then

have to make a choice because you have

navigated a strong political defense

relationship with the US and a very

strong trade relationship with China. Do

you not feel that you are reaching a

point where this balancing act doesn't

work anymore? Having said all that I

just described of China,

we are talking about China today still

not being able to or willing to replace

America's role in the global system

because it's not quite at the same level

as America. It's still a middle inome

country with a lot of domestic

challenges.

So there is no new global leader yet

emerging and we are in this very messy

period of transition.

>> Yes.

>> And this will be a long

>> what does Singapore do then?

>> Therefore in this very unpredictable

messy period of transition which can

continue for years maybe more than a

decade. I think we will have to work

with like-minded countries as I said

just now find ways to preserve and

reinforce the multilateral frameworks

that matter.

>> So describe to me a little bit this sort

of multilateral system that that you

see. I know that there's a new grouping

that you are promoting with other

smaller countries.

>> Um

how do you see that system working and

and surviving? The efforts are

multiprong. One, we have to reinforce

and reinvigorate existing institutions

like the WTO. For example, in the WTO,

the consensus decision-m process, which

is a treasured principle, has become a

recipe for paralysis. We have to change

that. We have to find ways for

plurilaterals to take off in the WTO.

>> You need the US for that though.

>> You do. So, we're not discounting the

role of America. They're saying some of

us should start moving, keep keep you

know keep the momentum going and in time

to come even if the America is not

willing to or able to make a decision

today maybe down the road it might and

so we have to do that in terms of uh

refreshing global institutions which we

are doing. The second front is to look

at pathfinding initiatives new

initiatives which we are working on too

with like-minded countries. So the

future of investment and trade

partnership which you

>> that's the one with the with the UAE and

that's right we bring together small and

medium trade dependent economies because

we are all alike in um wanting to uphold

a rules-based trading system and we can

come together to push the frontiers for

new initiatives amongst these 15 or so

economies we already have virtually

tariff-free so the point is not to come

together to do an FTA PA, but to think

about what new ideas we can put on the

table, including facilitating

investments, making it easier for

businesses to interoperate across our

economies by standardizing rules,

regulations customs documentation and

enabling using technology as an enabler

with electronic invoicing,

documentation,

data flows, these sorts of things. And

if we can have new initiatives like that

in time to come, we might be able to

multilateralize them as part of WTO

precepts.

>> You are a massive investor in in the US.

Um and and around and around the when

you hear of the attacks on uh on the

Federal Reserve, when you see the

unpredictability of of economic policy,

does that make you less likely to

invest? Are you reducing investments?

Are you shifting more towards Europe or

is it there is no choice? Your largest

investments have to be in the US.

>> We are not scaling back right now

because when we look at investments, we

look at macro risk environments, but we

also look at the individual company

dynamism and you know prospects for

growth. And for now while the risk

premiums at the macro level may have

increased

uh in America we still see a lot of

leading edge technologies

tremendous dynamism in American

enterprises. So we remain invested in

these companies but it's not America

alone. We continue to look out for

opportunities around the world in Europe

and in Asia and other parts of the world

as well.

>> What about Europe? there is an

opportunity for Singapore politically,

economically on the investment front to

have a closer relationship with the EU.

>> We think Europe will be also a key

player in this multipolar environment.

Europe is a major power in its own right

and Europe will be a key player in this

new global environment. So we are keen

to forge closer links with Europe.

We already have very close links with

Europe, between Singapore and the EU,

but we are looking at how we can bring

different groupings together and there

are opportunities to do so. Between the

CPTP and the EU, for example, we have

been having discussions on a more formal

partnership that accounts for something

like 40% of global trade between EU and

ASEAN. Incidentally, EU has already

signed or moved on FDAs not just with

Singapore but with several ASEAN member

countries. So if we can get EU and ASEAN

together on an FDA discussion, that will

be another one-third of global trade. So

these we see as new opportunities to

reinvigorate trade. I mean we are in a

world where the global system is

starting to see more and more becoming

more and more clocked up but we would

like to keep the arteries of trade open

and maybe create new arteries and that's

why we see these uh strategic

opportunities with Europe. Does this new

world order that is yet uh to to emerge,

does it require any domestic changes in

in Singapore towards more political

liberalization?

I ask also because you would have seen

that there's a new youth movement that's

emerging in different parts of the of of

the world in Asia and also in um in

Africa, the Gen Z movement. Tell me how

you are thinking about the future on

domestic, social and and and political

liberalization.

>> The two are connected. It's a it's a

relevant question. The changes in the

global order as well as the sort of

youth movement that you see around the

world. And we see growing anxiety

amongst young people everywhere in the

world. In China, they talk about lying

flat. In Japan there's a term hiko hiko

komori uh staying in the home not going

out and uh I think in America Europe you

talk about the great resignation and all

sorts of other terms. So you see that

level of growing anxiety amongst young

people because we are in a different

environment less stable more chaotic

more disorderly. So naturally young

people are more concerned about their

future. We feel that in Singapore too.

So from do from a political point of

view uh from a domestic point of view

our focus must be to find ways to give

assurance to our young to give them that

confidence that they can chart a better

future for themselves and that's what we

are determined to do in Singapore.

>> What's been the hardest thing that

you've had to do since you became prime

minister?

Uh many hard things. I don't know that I

can hardest.

>> Hardest.

>> Uh

>> have you been to see Trump?

>> Not yet.

>> Okay. So you haven't done the hardest.

>> We are. We might have a chance to meet

when he comes if he comes for the ASEAN

summits which he has said he would.

>> Yes. Yes. Because he has to sign the

peace agreement.

>> Yeah. Well, I'm not sure whether it's

just for that, but if he comes to the

ASEAN summits, there may be a chance to

meet him. I I've had a phone call with

him

>> late last year.

>> Uh it went well, but I'm sure there'll

be opportunities to meet.

>> Okay. So, we take that out. That's that

that's not the hardest. What is the

hardest has been really in managing

people? You don't realize the extent of

it until you get into this job, right?

Which is that I'm not just prime

minister. I'm leading a party.

I'm leading a party. I go into elections

and you have to then think about which

are the me members of my team who I have

to drop because I want renewal and one

of the keys to the PAP success has been

a

full focus on renewing our team every

election.

And this is not easy to do at all.

it it's very easy to say let's just

continue with the status quo I don't

want to offend anyone you know it's okay

we all move along but then if I do less

of the renewal I will pay the price for

it 5 10 20 years from now so having to

look hard at the members of the team

speak to each one of them individually

and say I'm sorry I'm not able to help

allow you to continue I have to drop

you. That was very painful.

>> So, party management.

>> Yes, that was very painful. Um, not easy

to do and you I had to steal myself to

do it and and manage it and I'm glad we

had a good election outcome at the end

of the day.

>> Thank you for uh your time and hope to

see you again soon.

>> Thank you. Good talking to you.

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