Greater global leadership needed to rejuvenate globalisation, fight climate crisis: Heng Swee Keat

SINGAPORE – A global leadership deficit led to a lack of international coordination in tackling the Covid-19 pandemic, for instance in ensuring vaccine access for the least developed countries.

To navigate an uncertain and complex post-pandemic recovery amid stresses to the world order and rising geopolitical tensions, the need to close this gap is now more urgent than ever, said Deputy Prime Minister Heng Swee Keat on Friday (Nov 12).

He added that greater leadership would be required to mend fraying consensus around globalisation, improve economic partnership and combat the climate crisis – even as a recent surprise team-up between superpowers China and the United States, pledging to cut emissions and phase out coal, provides cause for optimism.

Mr Heng, who is also Coordinating Minister for Economic Policies, was delivering a keynote speech in person at the Caixin summit in Marina Bay Sands, with about 50 people in attendance.

The two-day event, organised by the Chinese media group, is taking place in both Singapore and Beijing and also streamed virtually.

Mr Heng noted that support for globalisation has waned in recent years, with the same disruptive forces that brought about improvements in innovation and output also displacing many jobs and livelihoods.

“Some workers have found it harder to keep pace with skills upgrading and take on new roles. Median wages in many developed economies have stagnated,” he said. “Inequality has widened as a result.”

Countries are now seeking ways to redistribute the benefits of globalisation, with the new agreement on a global minimum tax an example of how taxes can be channelled towards needs like social programmes.

Leaders at last month’s Group of 20 Summit in Rome backed the proposal to establish a 15 per cent global minimum tax by 2023 – a move aimed at getting large multinational firms to pay their fair share of taxes.

Mr Heng cautioned, however, that pure redistribution was a zero-sum game and suggested that a better approach would be for countries to transform companies and invest in people in a “win-win paradigm”.

“Years of investment are needed before rewards can be seen,” he added. “But if countries are unable to make these investments, we will not be able to rejuvenate globalisation, and the world will be the worse for it.”

In a later dialogue with Caixin Media vice-president Li Xin, Mr Heng was asked how governments could better help people enjoy the fruits of globalisation.

He outlined how Singapore constantly reviews its education system, which includes lifelong learning, and encourages companies to train and retrain their workers.

For older staff who wish to stay employed, Singapore will progressively extend its retirement and reemployment ages to 65 and 70, and has partnered firms to restructure jobs to be more suited for seniors.

Mr Heng’s earlier address also highlighted climate change as an area requiring even longer-term investment, while balancing the sharp trade-offs involved in a necessary but difficult green transition.

Strong and sustained global leadership is thus needed on this front. “We have made some progress,” said Mr Heng. “The ongoing COP26 in Glasgow has injected fresh urgency and ambition into global efforts.”

At the United Nations climate conference from Oct 31 to Nov 12, world leaders have stressed the need to limit global temperatures from rising beyond a 1.5 deg C threshold, by cutting carbon dioxide emissions to net zero by 2050.

Mr Heng added that the climate change pact announced on Wednesday between China and the US was “a strong signal” that the two largest economies in the world are prepared to set aside differences to exercise leadership on the issue.

Still, more needs to be done to limit worldwide warming, he said, citing sustainable tech as a sector ripe for global collaboration.

He also called on countries to find new “building blocks” for economic partnerships, through free trade agreements like the Regional Comprehensive Economic Partnership (RCEP) and agreements to establish digital trade rules.

Singapore was the first among participating countries to ratify the RCEP, the world’s largest trade pact; and has inked a digital economy agreement with Australia along with a digital partnership agreement with Chile and New Zealand.

The Republic has started talks on similar pacts with South Korea and Britain.

“Instead of keeping out competition, these building blocks are meant to be open and inclusive, with the view of welcoming more like-minded partners over time,” said Mr Heng.

This will create more opportunities for countries to make a strong economic recovery from the pandemic – though this will not happen naturally either, he warned.

“Stronger leadership will be needed for countries to hold the course. If we succeed in doing so, we can put the world on a firmer and more stable footing for the future.”