Thank you to the Chambers for inviting me to your lunch. I also want to thank the Chambers for supporting National Service. But having the employers' support for our National Service, for Singapore National Serviceman and conscripts, is important because we recognise that there are disruptions especially, as companies are very efficient with their manpower use, allowing your middle management and even sometimes top management to be away two weeks a year, is a significant adjustment.
Let me acknowledge the German Ambassador to Singapore His Excellency Dr Ulrich Sante,
President of the SGC Dr Claus Trenner,
Executive Director of the SGC Dr Tim Philippi and
The last time I spoke at your lunch was four years ago. And I said then that Asia's biggest security challenge was being complacent and taking peace in our region for granted. And I also added that to prevent that occurring, countries needed to come together and agree about the rules and norms that they want to observe.
Unfortunately, four years have passed and, geopolitics has taken a turn for the worse. Even though the title of the talks is about technological innovation, I thought I should start with the geopolitics, the continents, because any talk on technological innovations for defence and security even for your business plans, is meaningless and irrelevant if we cannot get the strategic context right. As Albert Einstein puts it starkly, if we get that wrong – "I know not with what weapons World War III will be fought, but World War IV will be fought with sticks and stones."
A fundamental shift in ground rules, foreign policy and strategic intent of major powers has occurred, and with it, new norms will evolve, even to break from previous ones. So the world as we knew of it a decade ago or even now, will change - That we are certain. The reasons for this, how they will change and the reasons for these potentially disruptive changes provide us insights to the future trajectories, timelines and potential outcomes. And I think this is an area of interest that you as business leaders would also want to talk about, so I intend to focus on that.
The US No Longer Accommodates China's Rise
Firstly, the US will no longer accommodate China's rise, based on its past practices. In 1978, Deng Xiaoping undertook economic reforms to shift China away from autarky. These reforms were hailed by US and other Western liberal powers alike, who indeed facilitated China's accession into the World Trade Organisation (WTO) and this was in 2001. As victors of the free-market capitalist system over the Communists, the Western powers could afford to be magnanimous. The hope and expectation then was that China with access to markets, technology and capital, would over time also become a market economy and democratise – and others become another successful nation amidst a globalised world order. The four Asian Tigers – Singapore, Taiwan, South Korea and Hong Kong – between 1960s and 1990s, had followed this path and added vigour and depth to the globalised economy without being a security threat to any nation or altering the global order.
However, there was one major problem with this narrative. China's rise has been too successful – both in scale and speed – but not on the terms and expectations envisaged. The accusation is that China has not been playing by the rules. Notwithstanding this accusation, the dragon, as Napoleon cautioned, has awoken and is indeed shaking the World. The speed of China's growth is a phenomenon. Since China joined the WTO in 2001, its total trade increased from then US$509 billion, about 4% of global trade, to US$4.62 trillion last year, 13% of global trade. China's nominal GDP grew 10 times, from US$1.3 trillion to US$13.6 trillion last year, only after the US presently. If you adjust it for Purchasing Power Parity (PPP), China's GDP grew about 6 times and has actually surpassed the US since 2013. Pari passu, China's military spending has quadrupled, from US$50 billion in 2001, to US$239 billion last year – second again only to the US.
The US' recent 2018 National Defence Strategy Paper and this year's Indo-Pacific Strategy Report concluded that China is a "revisionist power" and a "strategic competitor". "China seeks Indo-Pacific regional hegemony in the near-term, and displacement of the US to achieve global pre-eminence in the future", and "seeks to reorder the region to its advantage by leveraging military modernisation, influence operations and predatory economics to coerce other nations". The roots of the US-China strategic competition go beyond just trade deficits or currency fluctuations. They stem from fundamental differences in operating systems which pit the two largest economies and militaries against each other – this is a long game. The potential to consume all countries is there in our inter-connected World.
The US' Withdrawal from Globalisation
Secondly, since 2015, the US itself has changed and this too will alter global trajectory. As espoused by the Trump administration, the America First policy underscores all aspects of the White House's dealings. The US is seeking to redress perceived imbalances accumulated over the past two decades where the US' magnanimity had been taken advantage of on the global stage. As such, the US under Trump, the erstwhile champion of globalisation has taken a holdfast. It has moved away from free trade, environmental protection and multilateralism. Accordingly, the US withdrew from the Trans-Pacific Partnership (TPP) because the terms were unfair to the US' domestic interests, even if the larger world benefitted. On the same grounds, the US withdrew from the Paris Agreement in 2017 as it would undermine the US' economy, at least in the short and medium term.
We are talking about the world's two largest economies and militaries changing. There will be great uncertainty and turbulence moving forward. The question for both you and I - that is uppermost in all our minds then, whether in government or in businesses - is what does this mean and how do we prepare for the future – our businesses, our country and our World?
Promoting an Open and Inclusive Architecture
Singapore, has as an open economy with trade three times that of our GDP, thrives on a connected World, much like Germany. We want a world unfettered by artificial constraints, not only for goods and services, but for ideas and innovations too. Singapore will maintain this course in our policies and beliefs, but we cannot chose to ignore the realpolitik and the path that major powers take. We will maintain the strength of our ties with both the US and China, as well as with the European Union (EU). We will continue pursuing multilateralism, as it has brought growth and prosperity to the region, and contributed to peace and security over the decades. While multilateralism may not be perfect, the alternatives are much worse, as history teaches us. A bifurcated world based on the US or China, as it was during the Cold War between the US and the USSR, is a severe impediment of today's global economy and security and is in no one country's interest or benefit.
As a member of ASEAN, we will continue pushing for an open and inclusive architecture that respects international law and the peaceful settlement of disputes. This is the basis of established democracies, and ASEAN has made some good progress in establishing norms for international behaviour so that we can protect the global commons. The first reading of the Single Draft Negotiating Text for the Code of Conduct in the South China Sea between China and ASEAN took place earlier this year, and end-2021 has been set as the date for conclusion.
For defence, we successfully conducted the inaugural ASEAN-China Maritime Exercise in 2018, and there, they employed Code of Unplanned Encounters at Sea (CUES). CUES is the Code of Unplanned Encounters at Sea. CUES is a practical confidence-building measure that builds trust, in other words, you meet another ship unexpectedly, both sides know what to do to de-escalate. It allows de-escalations and avoidance of miscalculations among militaries at sea. The inaugural ASEAN-US Maritime Exercise is underway, and this is another good opportunity for navies to build rapport and exercise CUES.
ASEAN also adopted the world's first multilateral Guidelines for Air Military Encounters (GAME). CUES is for the sea, GAME is for the air and this set of guidelines can minimise the risk of mishaps in the air, as CUES does for the seas. The ADMM-Plus countries, 8 countries, have given their in-principle support for GAME and we look forward to them adopting it together with us.
EU, Singapore-Germany Bilateral Relations
For the 21st century, Asia will likely take increasing prominence in global affairs. The European Union – Germany included – must be present in this part of the World, not only to protect your interests but to shape the course of events. The economies of Asia and EU are closely intertwined. China and the EU are each other's second largest trading partner, with trade last year amounting to €605 billion (S$923 billion), about 15% of EU's trade. The EU is ASEAN's second largest trading partner at €237 billion (S$361 billion) and accounts for 14% of ASEAN's trade. The EU is also the largest investor in ASEAN, with Foreign Direct Investment amounting to €337 billion (S$514 billion).
On defence technology, Singapore works with many European defence agencies on specific projects. Let me give you some examples. With MBDA, a joint venture among three leading European defence companies – the French, the UK and the Italians, we recently acquired our Aster-30 Surface-to-Air missiles and will enhance our overall air defence capabilities. Airbus was also recently awarded the contract to supply us with the H225M Medium Lift Helicopter, which will replace our Super Pumas. These new helicopters will have 20% longer range and require less manpower support.
Germany is Singapore's largest trading partner in the EU. Bilateral trade last year amounted to €14.5 billion (S$22.3 billion), and will grow further to conclusion of the EU-Singapore Free Trade Agreement earlier this year. There are over 1,800 German companies in Singapore including chemicals, electronics, engineering and finance. Both governments jointly established the German Entrepreneurship Asia (GEA) last year to facilitate German start-ups to navigate the region. They're planning for similar reciprocal offices in Berlin and Munich, so that Singapore start-ups can access the EU market through Germany. These close business links serve the larger purpose of promoting integration between ASEAN and the EU.
Our bilateral defence relations are strong with cooperation at various levels. Every year, I meet my counterpart in Munich and attend the Munich Security Conference, and the German Federal Minister of Defence also regularly attends the Shangri-La Dialogue in Singapore. I was fortunate to have a good and close working relationship with your former Federal Defence Minister Dr Von der Leyen, and we concluded the enhanced Defence Cooperation Agreement (eDCA) to expand collaboration into non-conventional security domains such as cyber and information.
Recognising the threats of these non-conventional domains, Germany has made significant efforts in these areas. In 2017, the Bundeswehr established the Cyber and Information Domain Service (CIDS), comprising more than 13,000 personnel, tasked with defending critical networks and information systems. That same year, the Bundeswehr also invested €1.6 billion (S$2.4 billion) on digitalisation and information technologies; it was a sizeable investment. Germany is one of the few countries that have made such decisive actions and is an excellent example for Singapore. I met with the Chief of the CIDS LG Ludwig Leinhos when he visited Singapore last year, and there is much that Singapore can learn from the Bundeswehr.
We also cooperate in defence technology. During my visit to Germany earlier this year, I made a trip north to Kiel. There, at the shipyard of ThyssenKrupp Marine Systems, we launched the first of RSN's Type 218SG submarines. It was an extremely proud moment, because this was a submarine that was custom-built to cater to Singapore's needs, and represented a significant milestone for the SAF. The new submarines are the fruits of our collaboration with Germany, tapping into deep German engineering expertise, and matching it with Singapore's design requirements. Besides the submarines, the SAF also operates other German military platforms, including the Leopard 2 Main Battle Tanks, the Armoured Engineer Vehicles and the Wheeled Recovery Vehicles.
Our militaries also interact to reinforce professional ties and build friendships. Our armies participate in an annual bilateral armour live-firing exercise at the Oberlausitz Military Training Area (OMTA). This very precious training ground is about a quarter the size of Singapore. If I did that here, you won't be able to see this hotel, there won't be space for hotels. We are deeply appreciative of the German Military for their support for our armour training in Germany since 2009. My Ministry welcomes the Bundeswehr to our part of the world too, especially to Changi Naval Base. I look forward to meeting with the newly appointed Federal Minister of Defence, to further our partnerships in the years to come.
Let me conclude, welcome questions and we can talk about diverse areas beyond defence capabilities. An open and inclusive multilateral global order governed by international norms and the rule of law brings benefits to all countries, big or small. Our engagements with and inter-dependence on each other cannot be solely based on the military but need to be holistic and include areas such as trade, culture and economics. We will need cooperation and collaboration, not rivalry, to deal with global challenges such as climate change, cyber threats, nuclear threats, Humanitarian Assistance, Disaster Relief, the protection of migrants and vulnerable communities and many more. The business community must also have a voice in these state-to-state interactions, because you represent the interests of your country and your people. With your networks and connections, the Singapore German Chamber is well-placed to lead such efforts.