Distinguished guests
Ladies and gentlemen
1. I thank Nikkei for convening this important gathering and am pleased to join you for the 31st Nikkei International Forum.
2. The prosperity of Asia depends greatly on global conditions. And one of the conditions is the state of globalisation. So today I would like to talk about the future and the state of globalisation. When this Forum first began in 1995, the Cold War had ended, tariff barriers were coming down, China was reforming and opening up, and Eastern European countries and former Soviet republics pivoted to Europe.
3. As a result, hundreds of millions of workers entered the global economy and we had many years of robust growth with low inflation. It was the golden era of globalisation. Against this backdrop, Asia entered a new phase of growth and development.
4. Three decades later, we are in a very different environment. The World Trade Organization (WTO) has not concluded a new round of broad-based trade liberalisation after 25 years; countries are grappling with the uncertainty of tariffs imposed by the US; big powers are talking about export controls and decoupling; and around the world, nationalist and anti-immigration political parties are gaining ground.
5. It is reasonable to ask if globalisation has run its course, reached its limits, and in fact, unravelling. My answer is that globalisation continues to rise, but we have entered a new era of interdependence, and societies need to manage it differently. I will lay out my arguments in four points.
The March of Globalisation
6. First point, more than ever, the world is connected and globalisation continues to be on the march. It is a historical phenomenon that has occurred over several phases – and never in a way that is universally good.
7. The first phase of globalisation was driven by empire, resources and power. It accelerated during the industrial revolution, when the steamship and the railroads made international trade possible.
8. Workers in industrialised countries were oppressed. Regions that were colonised and had their physical and human resources extracted, they lost out and they suffered. It was an age of extraction.
9. A cup of tea, essential to the quality of life in the industrialised world at that time, embodied this cruel reality of globalisation. It was brewed with tea leaves grown in the Far East, sweetened with sugar made in the Caribbean and Americas, with opium sent eastward to balance trade flows, and enslaved and indentured labourers sent westward to plough the sugar cane fields.
10. It was an unjust system and could not possibly be sustained. Indeed, it unravelled after the World Wars. But it does not mean that people in the developed world gave up their lifestyles, and gave up sipping tea. They continued to do so.
11. The world then transitioned to an age of integration – globalisation rebuilt after World War II through international rules and institutions. It was a correction of the old model – to become fairer, more humane, more respectful of the rights of various nations and therefore a lot more stable. This was the post-World War II global order of the United Nations, free trade between nations, global finance and currency exchange.
12. A major impetus for globalisation was the opening up of China, which had a monumental effect as it involved absorbing an enormous market, economy and population into the global system. China quickly became the factory of the world, and an indispensable part of the global production chains – from Apple iPhones and Tesla cars to industrial machinery and goods for European luxury brands.
13. In 2001, just before China joined the WTO, annual global merchandise trade was just over USD 6 trillion, of which China accounted for only 4%. Today, global trade volume is about USD 26 trillion. From USD 6 trillion to USD 26 trillion. China accounts for about 14% and has become the top trading partner for many countries in Asia, including Japan.
14. Globalisation was further turbo-charged by innovation and technology – containerisation, jet aircraft, computers and the internet, all of which integrated economies and societies at a scale never seen before.
15. That cup of tea has now come a long way. Today it is probably a bubble tea, enjoyed all over the world. The tea leaves may come from India or Sri Lanka, cassava, which is used to make the tapioca pearls, from farms in Thailand or Vietnam. We pay by waving our phones, devices powered by chips, software and global supply chains, and the digital payment zips through global financial systems.
16. There is no bubble tea agreement to make that happen, nor is there any extraction of labour or resources to deliver that cup of bubble tea. It is a product of friendly international co-operation and division of labour governed by the rules after World War II.
17. This is just one example. Now, billions of people, all of us, we wake up every morning and connect ourselves to a global system. We enjoy overseas holidays, online purchases, endless streaming entertainment, and connect with friends across the world. This is the life we have grown accustomed to, and we will not give up.
18. Globalisation is no longer an economic choice or pursuit. It is a basic reality of life. We witnessed that when all of us fought hard to emerge from the isolation of the COVID-19 pandemic in order to restore our interconnected world.
19. More recently, when the Strait of Hormuz was closed, it caused supply disruptions and triggered price increases, which is ongoing. The clear desire of the world is to restore free passage of ships through the Strait. With greater interdependence, a conflict between countries may not result in mutually assured destruction, but certainly mutually assured disruption. There is no turning back from globalisation.
A New Era of Globalisation
20. This leads to my second message, which is that we have entered a new era of globalisation – an age of hyperconnection. In this phase, the importance and discontent of globalisation are concurrently growing.
21. Globalisation is rising in importance because of technology. The advent of AI means economies have become dependent on each other for minerals, raw materials, lithography equipment, semiconductor chips, data centres, AI models and applications. Even a technological superpower will find it extremely challenging to be self-sufficient.
22. My small constituency of 50,000 residents in the northernmost part of Singapore is part of a global system. Micron is building its High-Bandwidth Memory (HBM) advanced packaging facility there, expected to be operational by 2027. Once the new facility is completed, my constituency will be part of Micron’s global delivery system that, according to industry estimates, contributes about 20% of global HBM supply, which will power the world’s AI infrastructure, not bad for a small constituency.
24. More than ever, countries also need to work together to address challenges that no country can solve alone. Take climate change for example. If economies do not collectively deliver on their carbon reduction commitments, rising sea levels will spare no one.
25. Pandemic preparedness tells the same story. The next pandemic is an evolutionary certainty, and scientists around the world are coming together to develop a vaccine within 100 days of the emergence of the next major outbreak.
26. While the world becomes far more connected, discontent against globalisation is rising too, even as it has lifted prosperity overall, because some workers and communities feel left behind. And if their concerns are not addressed, support for openness will weaken. In the United Kingdom, enough Britons were convinced that they lost out, voted for Brexit, and changed the course of their nation.
27. Globalisation can also undermine our sense of resilience and security. Because the more we feel dependent on something or someone else, the more we are wary that it is our vulnerability.
28. Hence, countries now seek to insource or work with trusted partners – friendshoring, they call it – or reconfigure trade flows and investments to strengthen resilience. Take energy, for example, there will likely be a more decisive shift away from fossil fuels, towards renewables and, for some countries, towards nuclear energy.
29. But make no mistake. In this hyperconnected world, no economy can be self-sufficient, and decoupling is unrealistic. On the contrary, greater resilience is often achieved by having more supply sources and trading partners, to achieve supply stability through diversity. So ironically, to address the insecurity of globalisation, we need more globalisation.
30. But the most worrying objection to globalisation is anti-immigrant sentiment. When national borders become more porous, an initial sentiment of inclusivity and acceptance can morph into a sense of displacement, rejection and even resentment. That is why nationalist, anti-immigration political parties are rising in so many countries.
31. Albeit not to the same extent as the era of colonisation and extraction, globalisation once again seems unjust, unfair, even threatening.
32. Globalisation is therefore due for another significant correction, to address the contradiction of rising importance and discontent towards it. This is the heart of the challenge today.
The Policy Agenda
33. Hence, my third message is that in the era of hyperconnection, we require active, deliberate and coordinated governance from within. And three areas are particularly salient in my view.
34. The first is fiscal soundness. Ageing is a global phenomenon that is as much of a fiscal challenge as it is a social one. In many countries, healthcare and pension spending are already rising rapidly.
35. To illustrate, government health expenditure as a share of GDP has risen across developed economies from about 6% in year 2000 to more than 10% today in countries such as Japan, Germany and the UK . National debt as a share of GDP compounds the picture. If left unaddressed, it raises systemic risks and crowds out the very investment societies need for the future.
36. Singapore has been deliberate and pragmatic in building a fiscal system that is sustainable over the long run. Retirement expenditure is largely funded through a defined contribution system, supplemented by Government top-ups. Due to deliberate systemic discipline, our healthcare expenditure is about 5% of GDP, one of the lowest in the world amongst developed economies, yet with relatively good health outcomes.
37. With a sound fiscal system, we can invest in the future, such as in education, housing and infrastructure. Each society is different, but governments need to balance social support, fiscal sustainability and building a hopeful future.
38. The second area is to develop an economic model that generates growth, opportunities and instils hope. New technologies like electric vehicles and AI have put this challenge into sharp focus. Economies and industries are at a crossroads, whether they should embrace the new technology and transform, or persist with the tried and tested. The automobile industries of Japan and Europe have been grappling with this dilemma.
39. In Singapore, we have decided that we need to embrace the change and make the best of it. We are undertaking a deep review of how we educate the young, reconcile the potential benefits and harms of digital technology, attract new investments, grow industries, and prepare workers ahead to make the necessary adjustments. We put in place policy guardrails to ensure that technology does good rather than harm. Or at least we manage the harm. Government, employers and unions need to work in concert.
40. The third key agenda is engendering social cohesion, especially amidst growing sensitivity around immigration. Every open economy faces a version of this challenge. Singapore faces this acutely as a small, open city-state.
41. Our approach is therefore one of calibrated openness and deliberate integration. We watch the numbers carefully – where people come from, which sectors they work in, and how well they can integrate. New citizens and permanent residents go through an integration journey to ensure better understanding of Singapore’s history, values, and social norms, as well as to build connections with fellow residents.
42. We work to prevent enclaves, whether residential, social or professional. We invest in common spaces where everyone can interact. The objective is not just to bring people in, but to help everyone live together, understand one another and preserve a shared sense of society.
43. So, in this age of globalisation, people need to see governments addressing their insecurities, protecting their livelihoods, dignity and way of life. Only then will there be confidence and trust to embrace globalisation again. This in turn provides the political support for governments to co-operate and work together. More than ever, foreign policy is a projection of domestic politics.
44. In that regard, the most consequential bilateral relationship for the future of globalisation is US-China relations. It will be shaped not only by geopolitics, but also by the hopes and anxieties of the people of the US and China.
45. Over the years, the two countries have become economically more closely intertwined. Their comparative strengths have also become more pronounced – the US a leader in technological breakthroughs, while China the master in large scale production. Yet what seems like greater complementarity also heightens the sense of insecurity and economic rivalry between the two superpowers. The US wants to produce and bring more manufacturing jobs home, while China is working hard to invent and innovate to bring about higher quality growth.
46. So, the US and China may neither be enemies nor best friends. But they will compete and rival each other. If both can address the anxieties of their people, they will have political room to work through differences and find areas of co-operation for mutual benefit. Then there will be a sustained constructive strategic stability which would be important for globalisation, and for Asia.
The Contribution of Japan
47. My final point: As the world grapples with the challenges of globalisation, Japan has much to contribute.
48. Japan’s contribution to Asia has been broad and sustained. Through its investments in ASEAN countries, Japan has supported industrialisation, created jobs and built capabilities across the region. It has contributed in many other areas, such as disaster risk reduction and resilience, pandemic preparedness, infrastructural development and people-to-people ties. Japan’s cultural influence – from cuisine to anime – is felt widely.
49. Let me highlight two areas where Japan’s contribution is especially relevant today: one is in trade, and one is in ageing.
50. On international co-operation, Japan can be a stalwart for free trade. Japan and ASEAN share a common vision – for an open and inclusive regional architecture, engaging with economies across oceans to the East and West of our region. This openness has been the basis of ASEAN’s and of Asia’s prosperity.
51. When I was a trade negotiator in the year 2000, Singapore had just started our negotiations with Japan on JSEPA – the Japan-Singapore Economic Partnership Agreement. JSEPA was not just an external trade negotiation exercise, it was also an internal process for Japan at that time to build consensus on the way forward for free trade, especially addressing sensitive areas like agriculture.
52. Two decades later, Japan has emerged as an active international player for free trade. It demonstrated important leadership in shaping various regional free trade frameworks, especially the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
53. At the height of its support for international free trade and investment, the US negotiated a set of rules that it felt would work for its businesses, while addressing its domestic concerns. This was the TPP.
54. Unfortunately, the subsequent administration walked away from the framework that it played a central role in designing. Fortunately, Japan stepped in and revived it from TPP to the CPTPP, ushered UK into the partnership, and is working to expand the membership further.
55. More recently, Singapore, Japan and Australia, worked together to secure the adoption of the interim arrangements for the WTO E-Commerce Agreement. The agreement covers 67 WTO Members, representing about 70% of global trade.
56. This is an example of “flexible multilateralism”, where like-minded partners can move ahead on important issues of common interest, while leaving the door open for others to join.
57. At a time when the free trade agenda was flailing, Japan’s leadership and interventions have been decisive.
58. On the domestic front, I believe the world will remember Japan for its adaptability to its demographic shift. Japan has been experiencing ageing longer than most developed economies. Yet, with one third of its population already aged 65 and above and despite being a very high-income country, it has managed to overcome years of persistent deflation, embrace technology, brought about productivity increase, and register consistent growth.
59. Japan’s disaster response offers a powerful lesson in social resilience. In the aftermath of the Fukushima nuclear incident in 2011, over 100,000 residents were evacuated and many communities were destroyed. The impact was especially devastating for seniors, who lost their familiar spaces, daily routines and agency.
60. What happened next was an inspiring tale of ground-up self-help, of people coming together to re-establish social networks for seniors, enabling them to run community activities and then feel purposeful again.
61. The concept is called Ibasho. The Singapore Ministry of Health concluded that we needed to learn from Japan and study the system. We subsequently launched what we call the Age Well SG national programme. We established Active Ageing Centres throughout the island, where seniors can establish social networks, participate in activities and volunteer work.
62. 2026 marks the 60th anniversary of diplomatic relations between Japan and Singapore. It was a timely milestone, for Japan and Singapore to elevate ties to a Strategic Partnership. This lays out a forward-looking agenda to deepen co-operation in areas such as supply chain resilience, digital technologies, AI governance, cybersecurity, low-carbon solutions and the green economy. It is a reminder that long-standing partnerships remain valuable anchors, especially in uncertain times.
63. I wish everyone a successful and fruitful Forum. Thank you.
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