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World faces 3 critical risks, says Singapore PM

Publication Date : 22-09-2012

 

Singaporean Prime Minister Lee Hsien Loong yesterday identified economic woes in Europe and the US, rising nationalism, and the shift in the strategic balance from the West to the East as the three "critical risks" facing the world today.

That meant Singapore had to prepare itself for the future, one in which constant change and the rise of Asia will play a big part.

"Global and Asian forces are constantly at play here," he said. "Our survival depends on our living the Global-Asia story - connecting Asia to the world, and vice versa."

Lee was speaking at a dinner for the inaugural Singapore Summit, gathering over 300 advisers and friends of the Monetary Authority of Singapore, the Economic Development Board, the Government of Singapore Investment Corporation and Temasek.

Held at the Shangri-La Hotel, the three-day conference is themed "Global-Asia Confluence" and is chaired by former Cabinet minister George Yeo. Speakers lined up include former Australian prime minister John Howard and World Trade Organisation (WTO) director-general Pascal Lamy.

In his speech, PM Lee took a broad look at the state of global affairs and what it means for Singapore. While the past two decades have seen change, excitement and opportunities, the road ahead might not be as smooth, he said.

"It is tempting to assume that all this will just continue, and the future will be a linear extrapolation of the past. But history is never so predictable. The world and Asia are now at a crossroads."

Lee then highlighted three risks in particular, with the first stemming from the economic troubles dogging Europe and the United States. These may drag down global prosperity and threaten openness in the long term. "Governments are under increasing political pressure to become protectionist. If the advanced economies close up, it is going to have a big impact on the rest of the world, and particularly on Asia," he said.

The WTO's Lamy made a similar point in an interview with The Straits Times. The trade body was monitoring creeping protectionism among some of its members, he said, as he warned of slower global growth resulting from Europe's economic woes.

The WTO has forecast the global economy to grow only 2.5 per cent this year, down sharply from its April forecast of 3.7 per cent, which Lamy described as "a pretty severe downgrading".

The other two risks Lee pinpointed come from Asia itself.

One is rising nationalism, which could lead to tensions and conflict. Lee noted that pride in economic success has sharpened old territorial disputes, including those between Japan and Korea, China and some Asean countries, and China and Japan.

The other is the change in strategic balance stemming from a strengthening China, which is affecting US-China relations.

If all these risks materialise, said the prime minister, the world will be in for a rough ride.

Meanwhile, Singapore needs to do its best to adapt, he noted, listing four things it needs to do: Become a springboard for companies venturing into and out of Asia, embrace globalisation while strengthening itself to cope with risks, master technology to raise productivity and adapt to rapid social changes brought about by the growth of social media.

On the last, he said there was "no magic formula" for dealing with it, and the style of governance and politics needs to evolve.

"We need to make it work functionally, which the examples of other countries show is not so easy. And we can keep Singapore a special place to live, work and play at the crossroads of Asia and the world," he said.

 

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