S’pore needs ‘ingenuity and gumption’ to prevail in changing world shaped by geopolitics, security imperatives: DPM Wong

SINGAPORE — In a changing world where rules are now shaped not by consistent principles but by geopolitics and security imperatives, Singapore “cannot afford to outbid the big boys” in order to attract investments, said Deputy Prime Minister Lawrence Wong on Monday (May 1).

While Singapore “won’t have enough money” to match the competition, the nation can still prevail if it has enough “ingenuity and innovation, guts and gumption”, he said during his keynote speech at the the National Trades Union Congress (NTUC) May Day Rally.

“That’s the only way we will prevail, even when the odds are stacked against us,” said Mr Wong, noting that this is not the first time Singapore has had to respond to such grave challenges, ranging from oil to financial crises.

Each time Singapore was pushed to the limit, it did not fold and crumble, said Mr Wong.

“Instead, we gritted our teeth, worked even harder to defy the odds, and bounced back stronger,” he said.

While this is the second speech that Mr Wong has delivered at the annual May Day Rally, it is the first time he is delivering the keynote address instead of Prime Minister Lee Hsien Loong who was in attendance on Monday, along with 1,400 labour movement leaders, workers and tripartite partners at the Suntec Convention and Exhibition Centre.

CHALLENGES SINGAPORE FACES

Mr Wong elaborated on how the Singapore is already feeling the impact of these changing rules with major economies mobilising “very large sums of money” to build strategic industries. 

For example, Germany is negotiating with chipmaker Intel to establish a semi-conductor plant in Eastern Germany — a deal with involves $10 billions in financing support. 

“$10 billion for just one project….That’s almost double what the Ministry of Trade and Industry will spend this year to grow our entire economy! Imagine just one project – and the subsidy promised is double what MTI spends in a year!” said Mr Wong, who is also Finance Minister. 

Advanced economies, he said, are also rolling out “massive subsidies” to build up their own domestic production capacities, particularly in strategic industries like semi-conductors and clean energy.

There is considerable irony in this, he pointed out.

“Because not so long ago, these very same countries were complaining about what they called harmful tax competition – that governments around the world were undercutting one another with more and more generous tax incentives,” said Mr Wong. 

These countries pushed for a global agreement to stop tax competition, which is now called Base Erosion Profit Shifting or BEPS, which includes a minimum corporate tax of 15 per cent.

“But before this can be implemented, the major economies – the United States, European Union and China – are already rolling out huge subsidies for key projects and investments,” he said. 

“Tax incentives and subsidies all involve public funds. So it’s highly inconsistent to say tax incentives cannot do, and to subsidies yes.”

Singapore is already feeling the impact of these changing rules, said Mr Wong. 

For instance, when the Government speaks to multinational corporations (MNCs) about raising corporate tax rates to 15 per cent, these firms say they understand the rationale as it is happening worldwide.

However, these corporations also say that if this were to be the case, Singapore will be “less competitive compared to other places” as their home jurisdictions are now offering large subsidies. 

MNCs want to know what Singapore can offer to persuade them to locate their next investment project to the Republic, he said.

PLANNING FOR SINGAPORE’S FUTURE

Looking to the future, he said Covid-19 has “enhanced our international reputation as a reliable and trusted hub for business”.

As such, he said Singapore must seize this window of opportunity, to make the country “more competitive and relevant” to the world.

Other strategies include investing in Singapore’s connectivity and infrastructure, such as Changi Airport’s Terminal 5 and the Tuas Port projects.

“These will significantly enhance our capacity and reinforce our competitive status as a business and logistics hub,” he said.

Deepening Singapore’s capabilities for innovation, especially in our areas of strengths such as research and development will also be another strategy, said. 

Such plans, said Mr Wong, have led to companies wanting to invest and create jobs in Singapore across all sectors in the economy.

“So despite the dark clouds around us, I say: never fear, and never lose heart. Singapore may be small. But this little red dot is shining brighter than ever,” said Mr Wong.