SINGAPORE: Singapore can no longer rely on a "working" global trading system to fit into, unlike in previous crises, and a recession, though unlikely, remains a possibility, Senior Minister Lee Hsien Loong said on Monday (Apr 14).
Addressing the impact of the United States' sweeping tariffs, Mr Lee said that uncertainty is high and over the next five to 10 years, Singapore faces "a less friendly world".
"I hope that Singaporeans understand what is happening, what is at stake, and what we must do together to secure our future," he said in a speech to union leaders at the National Trades Union Congress (NTUC) Centre before a closed-door dialogue.
Mr Lee noted such dialogues with union leaders were held “regularly”, particularly after Budget announcements.
Earlier on Monday, Singapore downgraded its growth forecast for 2025 from 1 per cent to 3 per cent, to 0 per cent to 2 per cent, citing the impact of the tariffs.
Assessing the impact on Singapore, Mr Lee said he did not think there would be a recession, but it "could happen".
"We must expect lower growth this year and recession somewhere down the road, maybe not this year, but quite possibly at some point," he said.
"We must expect more US-China tensions, and therefore a less tranquil, a less stable region, and more demands on us to work very hard to be friends with both, and to find our own way forward without getting into trouble more."
These are "very serious implications" for Singapore, said Mr Lee.
"So what do we do about it? Some people say don't get excited, don't overblow the issue. We've weathered bigger storms before. We haven't failed. So we should take ... these events in our own stride.
"And it's true, we shouldn't get excited, we should take it in our own stride. But we do need to be concerned and to understand what is happening and what this means for us. Because this time, something important is different."
Mr Lee said Singapore had gone through many crises, from the 1997 Asian financial crisis to the 2008 global financial crisis, from the severe acute respiratory syndrome (SARS) outbreak to the COVID-19 pandemic.
"But one important thing which you must understand is that every time that happened, we had two big things going in our favour," he said.
"One, within Singapore, we were doing the right thing. We could get united, we could get our act together, we could respond with the right policies, even painful ones. And we could get the system, get ourselves, sorted out.
"But two, every time we got into trouble last time, Singapore was part of a working global economic system, trading system. And that trading system promoted free flow of trade, free flow of investments, encouraged (multinational corporations) to look for places to do business.
"So every time you run into trouble, you come out, you plug in, you grow again," he said. "The system is still there. It's a global financial system, the (World Trade Organization) system, and that was what helped us."
This system "gave countries big and small a level playing field" because of the most-favoured-nation (MFN) rule, where tariffs and concessions on one trading partner apply for every other country.
"What it means is that for small countries who have very little bargaining power, because the rules are like that, so we enjoy the same market access which big countries enjoy, and we benefit from the bargaining power of bigger countries."
NTUC secretary-general Ng Chee Meng and Senior Minister Lee Hsien Loong pose for a photograph with union leaders before a dialogue session on Apr 14, 2025. (Photo: CNA/Wallace Woon)
Mr Lee said the MFN rule was "critical" to Singapore, giving the country access to investments and jobs.
"What is different this time is that the US doesn't want MFN. They want to dismantle the system. They want to replace MFN with 'reciprocal tariffs'."
This involved the US negotiating one-on-one with trading partners, allowing it to "exploit America's bargaining power", and taking a win-lose instead of win-win approach.
"So it's a fundamentally different kind of world which the US is looking for, pushing for," said Mr Lee.
Singapore's response will involve addressing "the political issue, which is we unite as one Singapore team, working closely with the government", said Mr Lee.
The senior minister said a strong, effective government was needed to take care of Singapore, and for the country to be strong internationally.
"When you say on foreign policy, Singapore must speak with one voice, I think everybody will agree. Even the opposition agrees," he said.
"But the opposition go one further. They say well, overseas, we stand together. Domestically, let's challenge. Now that is a problem."
Mr Lee said that countries assess whether they can "make a deal" with other countries: "Will you still be here in five years time? Will your policy still be here in five years time? Can I do business with you?"
Other countries can come to the view that "this (prime minister) makes very good speeches, but actually, there's a lot of political problems at home".
"When you meet them, you'll be received with the courtesies, but I think you're not carrying the same weight, and you will not be able to defend and advance Singapore's interest in the state," he said.
"On the other hand, if they know you are on top of your situation at home; if they know you have strong support, good support, they know you are in touch with your population and you have got your domestic issues well under control – then they take you seriously."
Mr Lee said "stable politics, good politics" was a big factor in Singapore being seen as a "safe haven".
"So I know that many Singaporeans want more opposition (Members of Parliament). If you ask why, they'll say well, we'd like a stronger check and balance on the (People's Action Party).
"And I would say the opposition has a role to play in our democratic system. It's here to stay. Opposition MPs are never going to disappear from parliament. I accept this. That's the way democracies work.
"We started in a very unusual position with almost overwhelming PAP presence in parliament, almost zero opposition. And now there's significant opposition, and I don't think that's ever going to change. And we will work with this," he said.
"But Singapore also needs an effective system of government which is led by a good and capable ruling party, and that depends on elections producing outcomes which work for Singapore.
Such outcomes are when an election generates "a leadership which is capable, which is committed, which is honest, which can run a competent and efficient, effective government, defend our place in the world, and lead Singapore safely through crisis".
"But if voters keep on electing more opposition MPs even when the government is doing a good job, then beyond a point, it must weaken the government's ability to govern, to form the best possible team for Singapore, and to run this country the way Singaporeans have come to expect," said Mr Lee.
Looking back to the 2020 General Election during the COVID-19 pandemic, Mr Lee said he called the elections "as soon as practical", and the PAP secured a good mandate.
"Thereafter, we were focused on fighting COVID-19 as one nation, and I'm relieved to say, not unsuccessfully. And it was because we were able to unite and put our team together and be able to focus on solving problems," he said.
Mr Lee described his speech on Monday as "sober", but said it was his duty to "share things as they are".
"I think that we can go into battle with confidence. We have the resources, we have the experience – we are ready. We've done it before, and we'll show the world that we can do it again.
"The upcoming elections will be crucial. It's a changed world, we have a fresh team in charge, and we will have a new resolve to tackle the challenges and to emerge stronger.
"PM Lawrence Wong is leading the PAP into elections for the first time, seeking his own mandate to take Singapore forward – forward through this crisis, forward with their plans, forward for our future."
Mr Lee said Singapore's domestic response would also be practical, by helping households and businesses.
Help for households included cost-of-living support, which would give typical households around S$4,000; support for displaced workers such as through the new Jobseeker Support Scheme; and reskilling for new jobs.
Mr Lee said the 2025 Budget was "enough for now" but "if the situation gets a lot worse, we will do more, and I can assure you we are able to do more".
A new national task force chaired by Deputy Prime Minister Gan Kim Yong would also help businesses to navigate uncertainties and transform themselves.
Singapore's response would also be psychological, by preparing for a more troubled world.
"We can take comfort knowing that other countries are also facing similar challenges, and Singapore is readier than most of them to deal with these challenges," he said.
An important part of this will be to look at "faultlines and stresses and strains" that will build up in society, making sure that people having greater difficulties do not feel left out, he added.
Internationally, Singapore will continue to support free trade, multilateralism and the WTO, and "try to keep the system going and not collapse even though the US is abandoning the rules", said Mr Lee.
This would be done through the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and by promoting trade agreements with like-minded partners, including doing more with the Association of Southeast Asian Nations (ASEAN).
Taking a wider view, Mr Lee said that the damage to US-China relations was the biggest problem caused by the tariffs.
While US President Donald Trump has paused the reciprocal tariffs for 90 days, there was no such postponement for the higher tariffs on China.
US tariffs on China are now at 145 per cent, while China tariffs on the US are at 125 per cent. China has also restricted rare earth exports to the US.
Bilateral trade was "going to get killed" by the high tariffs and entire businesses and trade flows will stop, with far-reaching consequences for US-China relations, said Mr Lee.
Attitudes towards China in the US changed during President Barack Obama's administration and hardened over time, achieving strong bipartisan consensus in the US, he said.
"They are trying very hard to stay ahead of China and to ... prevent China from overtaking them. At the same time, the Chinese say I'm growing, I'm developing, I want to take my rightful place in the world. Who's going to stop me?
"There's a fundamental contradiction and it's not going to be easily resolved," said Mr Lee.
"So the latest trade war has worsened it and it's going to be a serious problem for the two countries, and also for the world."
Continue reading...
Addressing the impact of the United States' sweeping tariffs, Mr Lee said that uncertainty is high and over the next five to 10 years, Singapore faces "a less friendly world".
"I hope that Singaporeans understand what is happening, what is at stake, and what we must do together to secure our future," he said in a speech to union leaders at the National Trades Union Congress (NTUC) Centre before a closed-door dialogue.
Mr Lee noted such dialogues with union leaders were held “regularly”, particularly after Budget announcements.
Earlier on Monday, Singapore downgraded its growth forecast for 2025 from 1 per cent to 3 per cent, to 0 per cent to 2 per cent, citing the impact of the tariffs.
Assessing the impact on Singapore, Mr Lee said he did not think there would be a recession, but it "could happen".
"We must expect lower growth this year and recession somewhere down the road, maybe not this year, but quite possibly at some point," he said.
"We must expect more US-China tensions, and therefore a less tranquil, a less stable region, and more demands on us to work very hard to be friends with both, and to find our own way forward without getting into trouble more."
These are "very serious implications" for Singapore, said Mr Lee.
"So what do we do about it? Some people say don't get excited, don't overblow the issue. We've weathered bigger storms before. We haven't failed. So we should take ... these events in our own stride.
"And it's true, we shouldn't get excited, we should take it in our own stride. But we do need to be concerned and to understand what is happening and what this means for us. Because this time, something important is different."
Mr Lee said Singapore had gone through many crises, from the 1997 Asian financial crisis to the 2008 global financial crisis, from the severe acute respiratory syndrome (SARS) outbreak to the COVID-19 pandemic.
"But one important thing which you must understand is that every time that happened, we had two big things going in our favour," he said.
"One, within Singapore, we were doing the right thing. We could get united, we could get our act together, we could respond with the right policies, even painful ones. And we could get the system, get ourselves, sorted out.
"But two, every time we got into trouble last time, Singapore was part of a working global economic system, trading system. And that trading system promoted free flow of trade, free flow of investments, encouraged (multinational corporations) to look for places to do business.
"So every time you run into trouble, you come out, you plug in, you grow again," he said. "The system is still there. It's a global financial system, the (World Trade Organization) system, and that was what helped us."
This system "gave countries big and small a level playing field" because of the most-favoured-nation (MFN) rule, where tariffs and concessions on one trading partner apply for every other country.
"What it means is that for small countries who have very little bargaining power, because the rules are like that, so we enjoy the same market access which big countries enjoy, and we benefit from the bargaining power of bigger countries."
NTUC secretary-general Ng Chee Meng and Senior Minister Lee Hsien Loong pose for a photograph with union leaders before a dialogue session on Apr 14, 2025. (Photo: CNA/Wallace Woon)
Mr Lee said the MFN rule was "critical" to Singapore, giving the country access to investments and jobs.
"What is different this time is that the US doesn't want MFN. They want to dismantle the system. They want to replace MFN with 'reciprocal tariffs'."
This involved the US negotiating one-on-one with trading partners, allowing it to "exploit America's bargaining power", and taking a win-lose instead of win-win approach.
"So it's a fundamentally different kind of world which the US is looking for, pushing for," said Mr Lee.
Related:
NEED FOR UNITY AND "STABLE POLITICS"
Singapore's response will involve addressing "the political issue, which is we unite as one Singapore team, working closely with the government", said Mr Lee.
The senior minister said a strong, effective government was needed to take care of Singapore, and for the country to be strong internationally.
"When you say on foreign policy, Singapore must speak with one voice, I think everybody will agree. Even the opposition agrees," he said.
"But the opposition go one further. They say well, overseas, we stand together. Domestically, let's challenge. Now that is a problem."
Mr Lee said that countries assess whether they can "make a deal" with other countries: "Will you still be here in five years time? Will your policy still be here in five years time? Can I do business with you?"
Other countries can come to the view that "this (prime minister) makes very good speeches, but actually, there's a lot of political problems at home".
"When you meet them, you'll be received with the courtesies, but I think you're not carrying the same weight, and you will not be able to defend and advance Singapore's interest in the state," he said.
"On the other hand, if they know you are on top of your situation at home; if they know you have strong support, good support, they know you are in touch with your population and you have got your domestic issues well under control – then they take you seriously."
Mr Lee said "stable politics, good politics" was a big factor in Singapore being seen as a "safe haven".
"So I know that many Singaporeans want more opposition (Members of Parliament). If you ask why, they'll say well, we'd like a stronger check and balance on the (People's Action Party).
"And I would say the opposition has a role to play in our democratic system. It's here to stay. Opposition MPs are never going to disappear from parliament. I accept this. That's the way democracies work.
"We started in a very unusual position with almost overwhelming PAP presence in parliament, almost zero opposition. And now there's significant opposition, and I don't think that's ever going to change. And we will work with this," he said.
"But Singapore also needs an effective system of government which is led by a good and capable ruling party, and that depends on elections producing outcomes which work for Singapore.
Such outcomes are when an election generates "a leadership which is capable, which is committed, which is honest, which can run a competent and efficient, effective government, defend our place in the world, and lead Singapore safely through crisis".
"But if voters keep on electing more opposition MPs even when the government is doing a good job, then beyond a point, it must weaken the government's ability to govern, to form the best possible team for Singapore, and to run this country the way Singaporeans have come to expect," said Mr Lee.
Looking back to the 2020 General Election during the COVID-19 pandemic, Mr Lee said he called the elections "as soon as practical", and the PAP secured a good mandate.
"Thereafter, we were focused on fighting COVID-19 as one nation, and I'm relieved to say, not unsuccessfully. And it was because we were able to unite and put our team together and be able to focus on solving problems," he said.
Mr Lee described his speech on Monday as "sober", but said it was his duty to "share things as they are".
"I think that we can go into battle with confidence. We have the resources, we have the experience – we are ready. We've done it before, and we'll show the world that we can do it again.
"The upcoming elections will be crucial. It's a changed world, we have a fresh team in charge, and we will have a new resolve to tackle the challenges and to emerge stronger.
"PM Lawrence Wong is leading the PAP into elections for the first time, seeking his own mandate to take Singapore forward – forward through this crisis, forward with their plans, forward for our future."
PRACTICAL, PSYCHOLOGICAL RESPONSE
Mr Lee said Singapore's domestic response would also be practical, by helping households and businesses.
Help for households included cost-of-living support, which would give typical households around S$4,000; support for displaced workers such as through the new Jobseeker Support Scheme; and reskilling for new jobs.
Mr Lee said the 2025 Budget was "enough for now" but "if the situation gets a lot worse, we will do more, and I can assure you we are able to do more".
A new national task force chaired by Deputy Prime Minister Gan Kim Yong would also help businesses to navigate uncertainties and transform themselves.
Singapore's response would also be psychological, by preparing for a more troubled world.
"We can take comfort knowing that other countries are also facing similar challenges, and Singapore is readier than most of them to deal with these challenges," he said.
An important part of this will be to look at "faultlines and stresses and strains" that will build up in society, making sure that people having greater difficulties do not feel left out, he added.
Internationally, Singapore will continue to support free trade, multilateralism and the WTO, and "try to keep the system going and not collapse even though the US is abandoning the rules", said Mr Lee.
This would be done through the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and by promoting trade agreements with like-minded partners, including doing more with the Association of Southeast Asian Nations (ASEAN).
Related:
DAMAGE TO US-CHINA RELATIONS
Taking a wider view, Mr Lee said that the damage to US-China relations was the biggest problem caused by the tariffs.
While US President Donald Trump has paused the reciprocal tariffs for 90 days, there was no such postponement for the higher tariffs on China.
US tariffs on China are now at 145 per cent, while China tariffs on the US are at 125 per cent. China has also restricted rare earth exports to the US.
Bilateral trade was "going to get killed" by the high tariffs and entire businesses and trade flows will stop, with far-reaching consequences for US-China relations, said Mr Lee.
Attitudes towards China in the US changed during President Barack Obama's administration and hardened over time, achieving strong bipartisan consensus in the US, he said.
"They are trying very hard to stay ahead of China and to ... prevent China from overtaking them. At the same time, the Chinese say I'm growing, I'm developing, I want to take my rightful place in the world. Who's going to stop me?
"There's a fundamental contradiction and it's not going to be easily resolved," said Mr Lee.
"So the latest trade war has worsened it and it's going to be a serious problem for the two countries, and also for the world."
Continue reading...