Singapore, India and Southeast Asia are well positioned to create a new era of opportunity, equity and sustainability, despite the resurgence of industrial policies among major economies, Singapore President Tharman Shanmugaratnam said on Thursday.
By working with other responsible middle powers, both regions have the ability to strengthen multilateralism, which, despite its imperfections, has been an arrangement that has served both rich and poor nations for decades, he said at a dinner celebration of the 20th anniversary of the Institute of South Asian Studies (ISAS), a think tank at the National University of Singapore.
Tharman also expressed optimism that relations between Singapore and India will continue on an upward trajectory. Industrial policies such as tax breaks and subsidies to promote specific industries domestically are returning at a pace not seen since the 1960s and 1970s, despite having largely failed then, Tharman noted.
For example, the International Monetary Fund tabulated 2,500 industrial policy interventions in 2023, two-thirds of which were aimed at discriminating against foreign interests.
These interventions by governments are not due to any powerful new evidence or compelling reassessment of what drives prosperity, but "through drift and tit-for-tat actions", he told about 180 guests discussing Singapore's diplomatic trade. relations with South Asia, focusing on India as a great investment destination and a consumer-driven market. The result is a world where competition is unstable and the business and investment environment is changeable and unpredictable, he said.
"In other words, it is both a reaction to intense geopolitical contestation and a further source of weakening of the global economic order," Tharman said.
But India and this region have the agency to respond and shape global reality in a way that ensures both national interests and global good, he said. The event was attended by Deputy Prime Minister Heng Swee Keat, patron of ISAS, and Minister Emeritus Goh Chok Tong, who helped establish the autonomous institute at the National University of Singapore and promoted ties with India and South Asia during his tenure as Prime Minister of the city state.
For one thing, no region is caught in the biggest geopolitical conflicts of the time, nor involved in the major current tensions, Tharman said.
Both regions also have societies where the majority of ordinary people have hope that they can achieve a major improvement in their lives, something rare today, he said. India and Southeast Asia also account for more than a quarter of the world population and 15 percent of its gross domestic product, and are the fastest growing regions in the world, said the President of Singapore.
"We have to make the most of this positioning of the two regions in the next decade," he said.
Tharman made three suggestions for how they can respond to this global trend of increasing industrial policy. First, focus on policies that build their own capabilities, rather than seeking to displace other countries.
"We have to remind ourselves that innovation remains the fundamental driver of long-term growth in all countries," Tharman said.
"Either we stimulate innovation through skills competition or we stifle innovation by eliminating competition." Second, recognize that developing each individual and continually improving their skills is a complex task, and deepen collaboration between government, business, unions, community groups and training institutes.
Even while doing this, investments must be made to maintain the inclusive society, so that the political consensus for open economic policies is maintained, Tharman stressed.
Third, India and Southeast Asia should strive to work with other responsible partners to form coalitions that can address complex global issues, such as energy transition to mitigate climate change. Singapore and India should be able to deepen and expand their bilateral relations in the next few years, he said.
Prime Minister Narendra Modi won a third term in India's general election in June, which is a remarkable feat in a massive and robust democracy, Tharman said.
The result also speaks to how millions of Indians have seen their lives improved under Modi's leadership, especially by gaining basic amenities and services that had eluded them for decades, he said. "We can expect broad continuity in India's domestic and foreign policies." "Tharman added. "Certainly, we should expect our bilateral relations, which are deep and long-standing, to continue on an upward trajectory."
He noted that the new industrial interventionism has found favor not only among politicians but also among many economists.
Tharman cited economist John Maynard Keynes, who observed that politicians who believed themselves exempt from intellectual influences were “usually slaves of some deceased economist.” “The same danger we face today is that economists and commentators, especially those in advanced economies, , despite the protests for independence, are at the service of the political temperament of the time," he said.
"I am confident that ISAS will continue to bring in outstanding minds from India, Southeast Asia and other East Asian countries to help promote honest thinking about our long-term interests and help build strong partnerships in a troubled world."
Over the past 20 years, ISAS has become a respected and reputable institute studying contemporary South Asia, providing in-depth research and analysis to foster a deeper understanding of the complexities and dynamics of the region and its implications for Singapore and Southeast Asia, said the president of ISAS. Professor Tan Tai Yong in his welcome speech to the guests.
By working with other responsible middle powers, both regions have the ability to strengthen multilateralism, which, despite its imperfections, has been an arrangement that has served both rich and poor nations for decades, he said at a dinner celebration of the 20th anniversary of the Institute of South Asian Studies (ISAS), a think tank at the National University of Singapore.
Tharman also expressed optimism that relations between Singapore and India will continue on an upward trajectory. Industrial policies such as tax breaks and subsidies to promote specific industries domestically are returning at a pace not seen since the 1960s and 1970s, despite having largely failed then, Tharman noted.
For example, the International Monetary Fund tabulated 2,500 industrial policy interventions in 2023, two-thirds of which were aimed at discriminating against foreign interests.
These interventions by governments are not due to any powerful new evidence or compelling reassessment of what drives prosperity, but "through drift and tit-for-tat actions", he told about 180 guests discussing Singapore's diplomatic trade. relations with South Asia, focusing on India as a great investment destination and a consumer-driven market. The result is a world where competition is unstable and the business and investment environment is changeable and unpredictable, he said.
"In other words, it is both a reaction to intense geopolitical contestation and a further source of weakening of the global economic order," Tharman said.
But India and this region have the agency to respond and shape global reality in a way that ensures both national interests and global good, he said. The event was attended by Deputy Prime Minister Heng Swee Keat, patron of ISAS, and Minister Emeritus Goh Chok Tong, who helped establish the autonomous institute at the National University of Singapore and promoted ties with India and South Asia during his tenure as Prime Minister of the city state.
For one thing, no region is caught in the biggest geopolitical conflicts of the time, nor involved in the major current tensions, Tharman said.
Both regions also have societies where the majority of ordinary people have hope that they can achieve a major improvement in their lives, something rare today, he said. India and Southeast Asia also account for more than a quarter of the world population and 15 percent of its gross domestic product, and are the fastest growing regions in the world, said the President of Singapore.
"We have to make the most of this positioning of the two regions in the next decade," he said.
Tharman made three suggestions for how they can respond to this global trend of increasing industrial policy. First, focus on policies that build their own capabilities, rather than seeking to displace other countries.
"We have to remind ourselves that innovation remains the fundamental driver of long-term growth in all countries," Tharman said.
"Either we stimulate innovation through skills competition or we stifle innovation by eliminating competition." Second, recognize that developing each individual and continually improving their skills is a complex task, and deepen collaboration between government, business, unions, community groups and training institutes.
Even while doing this, investments must be made to maintain the inclusive society, so that the political consensus for open economic policies is maintained, Tharman stressed.
Third, India and Southeast Asia should strive to work with other responsible partners to form coalitions that can address complex global issues, such as energy transition to mitigate climate change. Singapore and India should be able to deepen and expand their bilateral relations in the next few years, he said.
Prime Minister Narendra Modi won a third term in India's general election in June, which is a remarkable feat in a massive and robust democracy, Tharman said.
The result also speaks to how millions of Indians have seen their lives improved under Modi's leadership, especially by gaining basic amenities and services that had eluded them for decades, he said. "We can expect broad continuity in India's domestic and foreign policies." "Tharman added. "Certainly, we should expect our bilateral relations, which are deep and long-standing, to continue on an upward trajectory."
He noted that the new industrial interventionism has found favor not only among politicians but also among many economists.
Tharman cited economist John Maynard Keynes, who observed that politicians who believed themselves exempt from intellectual influences were “usually slaves of some deceased economist.” “The same danger we face today is that economists and commentators, especially those in advanced economies, , despite the protests for independence, are at the service of the political temperament of the time," he said.
"I am confident that ISAS will continue to bring in outstanding minds from India, Southeast Asia and other East Asian countries to help promote honest thinking about our long-term interests and help build strong partnerships in a troubled world."
Over the past 20 years, ISAS has become a respected and reputable institute studying contemporary South Asia, providing in-depth research and analysis to foster a deeper understanding of the complexities and dynamics of the region and its implications for Singapore and Southeast Asia, said the president of ISAS. Professor Tan Tai Yong in his welcome speech to the guests.
