He's been talked up by Prime Minister Lawrence Wong, who called him a key member of his Cabinet, and Senior Minister Lee Hsien Loong, who called him a "very valuable minister."
Deputy Prime Minister Gan Kim Yong, who helms the Ministry of Trade & Industry, recently came under the spotlight after two big events — the imposition of worldwide tariffs by U.S. President Donald Trump, upending 80 years of globalisation, and being moved out of Chua Chu Kang GRC to compete in the newly-created Punggol GRC against a Workers' Party team.
The spotlight on Gan is perhaps the brightest in his entire career, and yet the DPM was focused on matters of economy, trade and industry during our discussion with him.
Mothership had the opportunity to ask him a few questions about the global trade war and Singapore's own position. For clarity, his replies have been published in full.
Even if the U.S. reverses course on tariffs, the damage has already been done. Does Singapore need to re-think its fundamental relationship with the U.S. going forward?
Does it make sense for us to start looking for friendlier trade partners, in terms of our FDI, in terms of our trade relationship?
It's a very important question and a very intelligent question, and let me explain why. People say that well, so long as [the] U.S. decides to roll back the tariffs, actually it doesn't matter and we'll be back to normal. Like, you know Covid-19, when the virus recedes, life is back to normal when we have vaccination, and then the virus no longer can cause much damage, and we are back to normal. But the tariffs [do not] work like that. Let me give you an illustration.
U.S. has made it clear that they are going to impose reciprocal tariffs for various reasons, and one of the reasons is to attract companies to invest in the U.S., bring back the manufacturing, re-shoring some of the supply chain. The idea is to bring investment into the U.S. by erecting tariffs against imports. That the purpose is really to protect the industries that are brought into the U.S. And you can imagine that if you have a tariff, and investors have invested in the U.S., once the investment is there, you can't remove the tariff.
Because if you remove that tariff, it will be unfair to the investors who have put in billions of dollars. Because they put in this capital with the expectation that there will be a tariff to protect the investment. So once you remove the tariff, the investments will be open, will be vulnerable. So I think this doesn't work. So once tariffs [are] introduced and investments are made, the tariffs will be there to stay for the long term. So it's not likely [they will] be rolled back anytime soon.
So I think that is something that people have to understand. The second problem is that if countries are able to raise tariffs and reduce tariffs at will, with no regard to rules or principles. I think it spells trouble for everyone. You can imagine tomorrow our major export countries may decide, well, Singapore, you don't behave, I'm going to put 20 per cent tariffs on you, or worse, 50 per cent tariffs on you.
Either you pay, or out you go. Then what do we do? So I think it is important for us to realise that once countries decide to adjust their tariffs and will without regard to rules and principles, we are in trouble.
And on top of that, there is what we call the MFN rule, Most Favoured Nation rule, where there is a requirement that whatever tariffs or concessions you give to one country must be applied to the same across all countries.
That's the rules of the World Trade Organization. And if countries are willing to give concessions to [other] countries because of this reciprocal tariff, let's say, for example, if U.S. introduces a tariff on Vietnam, and Vietnam decides to give a concession to the U.S. in order to remove that tariff, then that means that Vietnam must offer the same [concession] to the rest of the world.
And obviously Vietnam can't do that because it has domestic industries that they need to protect to allow them to grow, and therefore it becomes a distortion in the whole global trading system.
And what will the other countries do? The other countries will complain and says that if you give a concession to the U.S., you must give [the same] concession to me. If you don't, I'm going to impose a tariff on you. So therefore it's going to be a tit-for-tat tariff war all over. I think that is what we are concerned about.
It will destroy the basis of a multilateral trading system. It will destroy the rules and order that we have been used to for so many decades. And it's this system that gives Singapore the opportunity to trade globally. Once the system breaks down, our trading business will be greatly affected, something that we need to be mindful of.
But we are also not without recourse, because we do have ways and means to talk to countries to make sure that we are able to negotiate and to discuss and to consult one another. Hopefully we can come to some kind of arrangement that [is] acceptable to both parties and to all parties.
So I mentioned earlier that we are in discussion with the U.S., for example, on our bilateral training system, to see how we can have facilitate preferential treatment for Singapore's physical exports to the U.S.
[That is] something that we are in discussion, and we hope to be able to conclude that negotiation quickly, and because this will benefit some of our exporters, learning is something that we have continued to negotiate and to discuss with.
So we do have the ability to negotiate and to see how we can get the best outcome for Singapore, and for Singapore companies and for Singaporeans.
What do the tariffs mean for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), of which Singapore is a signatory?
Is it dead, or should we wait for a different Administration in the U.S.?
This actually relates to your second question. So are we looking for other trading partners, more amiable trading partners? We already have many of these trading organisation and trade agreements. There are bilateral agreements, as well as multilateral agreements. CPTPP is one example, that we have entered into this agreement with many countries.
And this is one of a [number of] very important agreements because it is the most advanced, taking into account the latest development in the global trading system, and therefore they have incorporated many of the new features, modern features that were not there in the older versions of trade agreements. So I think it's a very high standard, high quality trade agreement. And this is important.
It continues to be important, because such agreements [involve] a collection of countries which are like minded, so they think the same way, they believe in the same principles of trade. And it's important for members of organisations like CPTPP to make commitments to each other that you will continue to uphold your undertaking in the agreement.
One example is Asean. Asean [has] a similar free trade agreement. Among Asean, we have a trade in goods agreement, which we are negotiating and upgrading. Despite many countries talking about protectionism and so on, we are talking about an upgrade in our free trade agreement to encourage more trade. So I think we are going against the tide.
We have made a commitment among the Asean economic ministers recently that we will not only commit to our undertaking in the Asean agreement, but we will at the same time continue to explore opportunities for collaboration among ourselves, as well as with other trading partners.
One of the trading partners we are thinking about is the GCC (a regional political and economic union of six Middle Eastern countries, Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the UAE).
So whether we can be able to cooperate with GCC, between ASEAN and GCC, we also looking at whether we can cooperate between the CPTPP and the EU (European Union), because EU is another economic bloc, and CPTPP is among these member countries who are like-minded.
So if the two blocs can come together, and it may not be a merger of the two, but you can have agreements between the two to facilitate trade. And it may not be sort of global trade, maybe specific sectors of collaboration.
So there are many areas that we can work together, continue to explore space for collaboration and partnership. And if we are able to do that, I think it will create more opportunities for Singapore's economy and our businesses and workers.
This means that Singapore is not going to give up on its principles of promoting free and open multilateral trade, despite the current nativist [and] protectionist sentiments. You know, even though [it's an] uphill climb, Singapore can succeed in continuing this mission.
I think we do have a large number of countries who continue to believe that trade will be beneficial to our economies, will uplift our people's lives and help to reduce poverty. So I think these are important objectives of trade, and it is important therefore for countries of a similar thinking to come together.
One example that I have is this collaboration among WTO, World Trade Organization members on E-commerce. We want to make sure that E-commerce will continue to grow and flourish, because it's still in the initial stage of development for many countries. We want to make sure that the E-commerce is open platform to allow countries to trade with one another in terms of E-commerce. And therefore this particular arrangement already has 70 countries signed up.
And so we are optimistic that they will still be [a] significant number of economies [who] are prepared to come together to cooperate on specific areas. It may not be overall global trade, but it may be specific sectors. I think there will still be this opportunity.
And I think Singapore and some [other] countries with similar ideas can come together and spearhead this initiative of continuing to promote trade, to help countries to develop and to improve the quality of lives of people.
How can Singapore persuade another country, perhaps one of our Southeast Asian neighbours which has tariffs in place, that free trade is in their best interest?
I think most countries in this region believe that free trade is in their interest. Some countries may need some tariffs to protect their infant domestic industry, give them time to grow, to mature and to compete. Certainly, most countries take that as a given, as a principle. So I think there is [a] basis for some tariffs.
But it is also important for countries to realise, to understand that tariffs in the long term, is going to be counterproductive, because it provides protection for [the] domestic economy, and some of the domestic companies that are protected have less incentive to grow and develop and become competitive.
So it is important for them to understand that and to work out a timeline, a development plan to support these countries, these companies, to develop, to mature and to become competitive. And as the process goes on, the tariff can then be rolled back gradually, so it won't go to zero in one go, it can be rolled back very gradually. Eventually, [it] becomes zero. So I think this way, by that time, your companies, your businesses, will already be competitive.
So tariffs and protectionism must be coupled with developmental programs to help industries develop. So I think this will work well. And therefore when we discuss with countries to collaborate, to look at removal of tariffs or reduction of tariffs, we must also understand that. And therefore we must be prepared to give countries time to adjust and to adapt to the new lower tariff environment.
At the same time, we also look at opportunities for Singapore to play a role in supporting these countries in uplifting their industries. One example is in the digital economy. Asean is negotiating a digital economy framework agreement. But as you know, digitalisation is a very different level of progress among different countries within Asean. So there will be countries who are more ready and there will be countries which are actually not quite ready.
So in order for us to move ahead, we are looking at the agreement that allows countries which are more ready to move ahead first, but it's important for us to not leave behind the other countries that are not yet ready, so the door is always open for these other countries to catch up whenever they can. And at the same time, we also have programmes among these countries to support them so that they are able to catch up as fast as they can.
This support will include training programmes, hardware and software support, so that they are able to develop the digital economy quickly, so that they can catch up with the rest of the [other] countries. And I think if you are able to progress together, it will benefit everyone.
In the 1990s, Singapore was considered one of the Four Asian Tigers (along with South Korea, Taiwan and Hong Kong), known for industrialisation and rapid growth.
But these days, Brand Singapore seems to have taken a hit, with countries like Bangladesh and Vietnam considered the most productive.
Do you agree with this? If so, how can Singapore reclaim its reputation of being one of the most productive and innovative countries in the region?
I must beg to differ, because the Singapore brand is still very much alive. In fact, it is very valued. I think the reason that we are able to discuss with the U.S., in fact, we are among the first to discuss with us on this bilateral arrangement, is because the U.S. trusts us. And why do they trust us?
It's not because we pay them a lot of money or because we are big economy important to them. They trust us because of our brand, our Singapore brand, that we are a trusted partner in many of the things that we do with them, not just this year, but for decades.
So I think that is the value of the Singapore brand. It's not just whether we are the lowest-cost countries [or have] the cheapest labour. I think that we cannot do because we do want our workers to get good income, and therefore we want to go for value in the brand.
We are one of the most connected countries in the world. We have 27 free trade agreements, one of the largest number of free trade agreements in the world. We have the best connected airport. We have the biggest, one of the busiest shipping ports in the whole world. So I think this connectivity is our branding.
And Singaporean workers are the most trusted workers. So many countries want to employ Singapore workers in their country, because they trust Singaporean workers. I think that, again, is Singapore's brand. And the last part, which is equally important and [perhaps] even more important, is that we have a trusted government.
Many of the companies who decide to invest in Singapore, I always ask them, "Why [did] you decide to put your headquarters in Singapore, your main production plant in Singapore?" They explained to me, one of the reasons is that because the government is reliable.
You get what you see when you negotiate with the Singapore government. When we make a decision, we don't turn back, and even if we change our policy, we want to make sure that we honour our commitment.
So that is the brand value of Singapore in terms of our government, in terms of our people in terms of infrastructure and our system. So I think that brand is very valuable. Never, never say that the brand of Singapore is no longer there.
In fact, it is even more valuable today in this uncertain and turbulent world. Singapore's brand that provides stability, clarity and this principled approach is, I think, most valued by many countries.
Top image by Khoo Wen-En and Gan Kim Yong Facebook.
