President S R Nathan's Keynote Address at the Asia 21 Young Leaders' Summit

Towards Inclusive and Sustainable Growth in Asia

Dr Vishakha N Desai, President of the Asia Society,
Mr Ho Kwon Ping, Chairman of Singapore Management University Board of Trustees,
Distinguished Guests,
Ladies and Gentlemen,

1      I thank the Asia Society for inviting me to deliver the keynote address for the Asia 21 Young Leaders’ Summit.  I applaud the effort of the Asia Society in bringing together young leaders from Asia and the United States to exchange their experience and discuss issues of common concern and interest.

2      The last 40 years, since the end of the Vietnam War, has witnessed a new era in the United States' engagement of Asia.  The Asia Society has played an important role in reviving US interest in South East Asia and in deepening ties between Asia and America by promoting dialogue and exchange, and encouraging the generation of new ideas across many fields.

The Asian Architecture

3      Asia is made up of old civilisations with thousands of years of history, as well as newer nations - former colonies which gained their independence in the mid 20th century.  While the region is hardly homogeneous, Asia is coalescing.  On the political front, we are engaged through a multitude of regional forums such as the ASEAN Plus Three, the ASEAN Regional Forum (ARF) and the East Asia Summit (EAS).  And economically, our links are evident from our trade figures, and also the interest in forging a network of bilateral and regional free trade agreements.  The ASEAN FTA is one of the earlier initiatives we had embarked on.  ASEAN is also at various stages of negotiating FTAs with other regional countries, including China, Japan, South Korea and India.

The Challenge for Asia

4      Asia today is rapidly growing, lifted by the twin engines of China and India.  The flow of talent, capital, and ideas in the global marketplace has led to unprecedented opportunities for our region.  The IMF estimates that Asia as a whole will grow at least 7% in 2007.  If we look at the individual countries, China will lead the pack at 10%; while India will follow closely at 8.4%.  The original ASEAN-5 is projected to achieve almost 6% growth.   But Asia's development is not insulated from vulnerabilities.  As we live in an inter-connected and inter-dependent world, events that occur far away can deeply impact on our lives.  The 1997 Asian Financial Crisis is a case in point.  The contagion effect extended from Thailand to across Southeast Asia, and also to other economies further north such as Korea.  Businesses collapsed, people lost their jobs, and on a macro-level, non-performing loans ballooned and threatened the integrity of the financial systems.  The Asian Financial Crisis even became a political crisis in some Southeast Asian countries. Ten years later, Asian countries have emerged from this setback, some with stronger economic fundamentals; others with a new found appreciation of globalisation.  Despite the uncertainties that continue to exist in today's financial markets, there is a sense that Asian economies are now better positioned to weather the storm.  There is a shared sense that “our time has come”.

5      Nonetheless, from experience we know that the costs and benefits of globalisation are not always evenly spread.  As our economies become more inter-connected and inter-dependent, competition will also intensify.  Outsourcing, for example, brings down prices for the consumer, but also has an adverse effect on lower-skilled workers by pushing down wages or worse, through the loss of jobs.  In the 1960s and 1970s, the problem of unemployment could be successfully addressed with the help of investments by foreign MNCs.  This was the case for Singapore.  When most of the developing world then was deeply suspicious of exploitation by western MNCs and had preferred the import substitution model of development, Singapore invited them in.  Their investments created jobs, brought along technology and know-how, and raised productivity levels.  Today, this model is no longer sufficient to tackle the divisive effects of globalisation.  Certain segments of the community, especially those who held jobs in the low-skilled industries, are unable to meet the demands of modern technology.  This is not peculiar to Singapore.  Even the United States and Europe face these challenges.  And like everyone else, we will have to respond by adapting and restructuring and retraining.

6      What can be done to address these issues?

Globalisation – Giving Everyone a Stake

7      One of the loudest dissenting voice against globalisation comes from those who assert that it makes the rich richer, and the poor poorer.  This will be true if we do nothing about it.  To bring about inclusive and sustainable growth, it is therefore crucial that all sectors of society feel that they have a stake in their country’s economic prosperity.  While the growing economic pie might not be equally divided, each person must feel that he has a stake in it and can aspire to bigger and better things.  Let me share with you Singapore's experience in this area and how we have tried to create a Singapore that belongs to all Singaporeans.  I will briefly mention our policies in three areas, namely, public housing, healthcare and job retraining.

8      In the 1960s, the Government embarked on a public home ownership scheme to build low-cost apartments.  The idea was to give all Singaporeans an opportunity to own their own homes.  Today, we have seen the success of the scheme - a remarkable 86% of Singaporeans own their own flats, and many have upgraded to larger apartments as their incomes grew.  In the area of healthcare, we put in place a basic healthcare scheme for all, with more targeted assistance for the needy.  And finally, to help workers cope with structural changes in the employment market, the Government offers re-training programmes to help workers take advantage of emerging job opportunities from the changing economic and technological landscape.

Education

9      The second key area is education.  The strong emphasis on education, as we have seen in Asia over the last few decades, has had a strong positive correlation with social and economic development.  Education enhances the quality of our human capital, and is a crucial determinant of success, especially in resource-scarce countries like Singapore.

10      During the colonial days, Singapore was the regional centre for education in British East India, and had good schools and training for teachers.  The decision by Singapore's political leaders to continue adopting English as our language of education and administration at the onset of "Internal Self Government" in the 1950s gave Singapore a head start. We would not have attracted so many MNCs without our proficiency in English.  India's current success as a provider of IT services can also be partly attributed to its proficiency in English.   Today, not only are the Chinese and Russians learning English with great enthusiasm, English is also the most learnt, and most commonly used language in the EU.

11      In this day and age where lifetime employment is no longer guaranteed, education also equips us to better deal with change in the new economic world.  In Singapore, we are moving towards a holistic and broad based education system.  This will help to prepare the next generation for continuous learning and change.

Leadership

12      The last area I want to touch on is governance and leadership.  Good government is an essential prerequisite for Asia’s success.  To cope with globalisation, countries need competent and honest leaders who can run the government machinery properly, anticipate problems, prepare for the future, and deliver stability and progress for their peoples.  How each one does that will depend on its culture and history, the structure of its society and the institutions it has evolved.  Good government delivers economic growth and progress, and builds a resilient and inclusive society.

13      Good leaders and a robust system of governance will be instrumental to Asia's continued development.  In a fast changing environment, the forces affecting a country's economic outlook shift rapidly.  Good leaders must be conscious of the complexity of the modern world and how seemingly distant and isolated events, such as the recent sub-prime mortgage loan crisis, can affect us.  They must also embrace good leadership values that deliver the best outcomes for their peoples - values like honesty, integrity, incorruptibility, transparency, and empathy.  Finally, if leaders do not have the political will or courage to carry through the right decisions, the opportunities for growth can be squandered.

14      Being a good leader does not always mean being a popular leader.  Men and women elected to public office cannot take an opinion poll every time they make a decision.  Sometimes politicians have to get out in front of public opinion, in the conviction that they are making the right decision and that eventually public opinion will catch up with them.  If Margaret Thatcher had not gone against the tide to introduce economic reforms and privatise nationalised industries in the 1980s, the United Kingdom would not have reversed its economic decline then.  Our participants from the US would also be familiar that had President Thomas Jefferson listened to public opinion, he would never have purchased the Louisiana Territory from France in 1803 which doubled the size of the United States, and resulted in a quantum shift in the destiny of the United States today.

Conclusion

15      The growth and development of 21st century Asia will not be homogeneous - it will be colourful and diverse.  No one particular group can claim to have a monopoly on good ideas or best practices.  And no country can claim to have the perfect formula for development.  Each country must tailor its strategies according to its circumstances, cultures and realities.  Achieving inclusive and sustainable growth is also a complex challenge which calls for a nuanced understanding of multi-dimensional issues. Regional leaders will need to cooperate, and engage in exchanging ideas and experiences so that we can move forward together.  In attending this Summit, you have already taken the first step in such exchanges.  Make the most of this two-day programme to learn more about each other and forge friendships that hopefully, will form the basis for an international network to facilitate future consultations in the political, economic and social arena.  As young leaders, you have inherited the responsibility for shaping the future well-being of Asia and its people.  In this age of scientific and technological changes, I encourage you to think ahead of the concerns that future leaders in Asia must address and thereby play a major role in contributing to Asia’s future growth, stability and prosperity.