[SINGAPORE] Rather than turn away from trade and partnerships, Singapore must double down and stay open by supporting international cooperation, strengthening itself as a regional and global hub and building up its maritime industry, said Senior Minister Lee Hsien Loong on Monday (Mar 24).
Speaking at the Singapore Maritime Lecture on the opening day of Singapore Maritime Week 2025, he warned that choppy waters lie ahead for the global maritime sector as geopolitical tensions and climate change are straining the world’s trade system.
The sector faces an “increasingly turbulent environment” and must prepare to navigate a world marked by heightened protectionism, economic bifurcation and climate change threats, said SM Lee.
“Over the past decade plus, tensions between major powers have intensified. (Countries) are prioritising security, resilience and self-reliance over interdependence and cooperation… Supply chains, once optimised for economic efficiency, are being reconfigured.
“A new administration in the US believes that under the previous system, ‘the US has been treated unfairly by its trading partners’… It treats tariffs not only as a preferred economic instrument, but also as bargaining leverage in non-economic domains, to protect its overall national interests.”
Climate change is also impacting global trade. Extreme weather patterns affecting established trade routes and the maritime industry’s push for decarbonisation will result in the reorienting of existing supply chains and trade pathways, he added.
But despite headwinds, globalisation is unlikely to completely reverse itself. “The world still needs to trade, and countries still need to do business with one another,” he said.
He pointed out that trade is “existential” for Singapore, as the maritime sector is a major part of the nation’s economy, contributing to over 6 per cent of its gross domestic product and about 140,000 jobs.
“Being so small, we have no choice. But we are not alone. Even with globalisation in retreat, many countries still believe that trade can be a win-win proposition, and want to preserve as much of the benefits of the multilateral trading system as possible.”
Following the lecture, SM Lee took part in a fireside chat with Professor Chan Heng Chee, ambassador-at-large at Singapore’s Ministry of Foreign Affairs. He noted that there is room for intra-Asean trade to increase, adding that such trade accounts for under a quarter of Asean’s global trade currently. He contrasted this with the European Union, where intra-member trade made up around 80 to 90 per cent of members’ global trade.
He also suggested that members of the Asean bloc enter into more free-trade agreements (FTAs) with external parties, among other initiatives, to insulate themselves from the impact of the trade war between the United States and China.
Global trade could lag GDP growth; turning point could be near
A decline in global trade could bring the world into an era not seen since World War II, SM Lee warned in his lecture.
For decades until the 2008 global financial crisis (GFC), international trade growth outpaced world GDP growth.
“In the 1950s, international trade was around 15 per cent of world GDP. By the time of the GFC, this had more than tripled to 55 per cent,” he said.
This sustained growth improved lives globally, but the present moment could be a turning point, he added. “Given the heightened strategic tensions and policy uncertainty, we cannot assume that global trade will continue to keep pace with GDP.”
If the trade-to-GDP ratio starts to fall, there will be serious economic and strategic consequences. Minimally, economic growth will be dampened in many countries. The slowdown could cause further social and political fallouts domestically and internationally.
“In that event, the world would truly enter a new epoch, which it has not seen since the Second World War,” SM Lee warned.
“Naturally, our hope is that whatever the uncertainties and turbulence ahead, world trade will continue to grow.”
Singapore must stay open
Meanwhile, to continue supporting trade, Singapore will uphold international collaboration and interdependence through agreements and partnerships, he said in his lecture.
Singapore has built an extensive network of 27 FTAs that cover around 90 per cent of its trade, which have strengthened its trading hub and contributed to economic growth.
The Republic will continue to expand this network.
Recently, Singapore signed the Pacific Alliance-Singapore FTA with members of the regional integration initiative – Chile, Colombia, Mexico and Peru. Singapore also signed the Mercosur-Singapore FTA with members of the South American Mercosur bloc – Argentina, Brazil, Paraguay and Uruguay.
“We are also working on green and digital shipping corridors with many countries and ports… to expedite port clearances, promote the supply and deployment of new fuels, and define common standards,” SM Lee said.
Strengthening the maritime sector
The Republic will also strengthen its maritime sector through investing in infrastructure, technology and innovation.
Tuas Port, set to be completed in the 2040s, will have a handling capacity of 65 million twenty-foot equivalent units annually, and will consolidate all of Singapore’s container terminals in one location.
Singapore is also developing an artificial intelligence (AI)-enabled next-generation vessel traffic-management system to improve the safety and efficiency of port operations.
The Republic on Monday also debuted its first digital twin, a virtual model of Singapore’s port and maritime ecosystem. Named the Maritime Digital Twin, it uses real-time data alongside AI to improve decision-making, management of port operations and energy efficiency, as well as to cut emissions.
The country’s maritime industry is also investing in green technology to do its part in the sector’s decarbonisation transition.
As Singapore is a centre for bunkering and petroleum refining, its sea lines and infrastructure will likely be key conduits for the transport and distribution of alternative fuels as they are developed and come into use, SM Lee said.
“We are conducting trials on the bunkering of alternative fuels, which will support the setting of national and international standards,” he added.
While turbulent times lie ahead, Singapore can thrive by planning ahead and taking the right steps, SM Lee said. “Collectively, we can turn adversity into opportunity.”
He reiterated this point during the fireside chat. Singapore should still be able to make a living out of maritime, he said in response to Prof Chan’s question about the future of Singapore in the next two to three decades.
He pointed out that Singapore has done it in the past by being a step ahead and by being efficient, tapping technology and human resources to build a first-class port.
“I think we can continue to make a living for ourselves,” SM Lee said.
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