Everything about DPM Lawrence Wong’s May Day Rally Speech Summarised for You

Last Updated on 2023-05-15 , 3:36 pm

Deputy Prime Minister Lawrence Wong (DPM) addressed 1,400 labour movement leaders, workers, and tripartite partners at the NTUC May Day Rally on 29 April 2023, delivering a 40-minute speech on Singapore’s economic challenges and difficulties regarding job creation in an increasingly competitive world.

This marks Mr Wong’s first keynote speech at the annual May Day Rally without Prime Minister Lee Hsien Loong (PM Lee), who delivered the speech alongside him in 2022. 

It is unsurprising, as Mr Wong is expected to assume the position after PM Lee’s rumoured retirement from politics.

Mr Wong cited shifting geopolitical tensions and increasingly competitive trade rules, which have led advanced economies to roll out massive subsidies to boost their strategic industries. 

He noted that Singapore already feels the impact of this, as it cannot outbid more prominent players, such as the United States, for foreign investment opportunities.

However, he also highlighted that Singapore can still thrive under these harsh economic conditions by having “guts and gumption” and remaining committed to its values of ingenuity and innovation.

No More Win-Win Situations in Trade

Mr Wong observed that many countries no longer pursue win-win trade cooperation due to shifting geopolitics. Some are wary of becoming overly dependent on others, while others view trade as a battleground.

With foreign trade accounting for more than three times Singapore’s Gross Domestic Product (GDP), any increase in protectionism or violation of trade rules would hurt the country. 

Furthermore, investment flows continually change as geopolitical tensions redirect global foreign direct investment (FDI) flows.

Geopolitics refers to how countries, businesses, and terrorist groups attempt to achieve their political goals by controlling the world’s geographical features. 

FDI transactions, which typically include equity transactions, reinvestment of earnings, and intercompany debt transactions, record the value of cross-border transactions related to direct investment.

Singapore has traditionally built its economy around the flow of FDIs. However, this may change as more countries adopt “near-shoring” or “friend-shoring” practices. 

This is especially true for the world’s top four geopolitical players: the United States, China, Russia, and Europe. 

Amid increasing geopolitical tensions, these countries increasingly seek to protect their global connections and are relocating factories and critical supplies closer to home or trusted allies.

Mr Wong warns that this trend will likely slow global FDI flows and concentrate FDI opportunities among geopolitically aligned countries.

Stiffer Competition Due to Tax Incentives Provided by Foreign Countries

According to Mr Wong, advanced economies now offer significant tax incentives to encourage investment in domestic production capabilities, particularly in strategic industries such as semiconductors and clean energy. 

This is ironic, as these countries previously complained about harmful tax competition.

Singapore and other countries have pushed for the global agreement on base erosion profit shifting (BEPS) to address this issue. 

Unfortunately, before the BEPS agreement could be implemented, significant economic players such as the United States, European Union and China had already rolled out massive subsidies for critical projects and investments.

Mr Wong cited Germany’s negotiations with Intel to establish a semiconductor plant in Eastern Germany as an example, which comes amid the predicted growth of clean energy industries in 2023.

This was also fueled by the record-breaking clean energy incentives in the Inflation Reduction Act (IRA). 

The United States established the IRA law in 2022 to curb inflation by lowering prescription drug prices and investing in domestic energy production while promoting clean energy.

As a result, Germany has pledged $10 billion in support for this project, almost double the amount the Ministry of Trade and Industry plans to spend to grow Singapore’s economy in 2023.

Unlike major economic players like Germany, Singapore has limited renewable energy options, with solar energy being the most viable. 

As such, Singapore cannot jump on the bandwagon of investing in clean energy just yet.

Moreover, our effective corporate tax rate of 15%, which contrasts with large subsidies provided by other countries, has made Singapore a less desirable investment hub. 

Mr Wong cited conversations with various multinational corporations (MNCs), who referenced these subsidies as the primary factor dissuading them from investing in foreign countries like Singapore. 

As a result, despite having abundant revenue and financial reserves, he noted that Singapore could not outbid these foreign players.

Singapore Is No Stranger to Economic Challenges

While Mr Wong acknowledged the severity of Singapore’s economic challenges in the upcoming future, he also highlighted some positive aspects in his speech. 

He noted that the COVID-19 pandemic has strengthened Singapore’s reputation as a dependable business hub.

Moreover, Singapore has a history of overcoming economic challenges, and its economy has consistently recovered from previous crises. 

According to PM Lee, since 2021’s COVID-19 crisis, Singapore’s GDP has grown by 3.6%, and even hard-hit sectors like tourism and hospitality have rebounded quickly.

Mr Wong also mentioned that Singapore had tackled more significant challenges in the past, such as developing Newater to overcome water scarcity and transforming into an energy hub despite the lack of natural resources. 

As such, he emphasised that instead of being discouraged by the current situation, Singapore should take advantage of this opportunity to increase its competitiveness and relevance on the global stage.

Remaining Competitive 

According to Mr Wong, Singapore is determined to remain competitive by investing in its connectivity infrastructure. 

This is evident in the ongoing construction of Changi Airport Terminal 5 and Tuas Port, which are being accelerated to enhance the country’s capacity as a business and logistics hub.

These developments have attracted MNCs like VF Corporation and UPS to increase their investments and presence in Singapore. 

Another approach he cited is to deepen the country’s capabilities for innovation, particularly in areas of expertise.

To achieve this, Singapore collaborates with global industry leaders such as Procter & Gamble and the United Microelectronics Company to establish research facilities and fabrication plants here. 

He stated the Government is also heavily investing in research and development across all sectors in Singapore to create innovative opportunities with top global companies.

Investments in Up-skilling Essential 

In June 2022, Mr Wong led Forward Singapore, a year-long initiative with the fourth generational leadership team in PAP to review and refresh the country’s social compact. 

The movement aimed to provide more significant opportunities for Singaporeans and offer better assurance and care.

Looking ahead to 2023, Mr Wong stated that the program would be reviewed, and the government plans to invest more in every worker, including improving the SkillsFuture initiative. 

Vocational and technical roles, especially among ITE and polytechnic graduates, will be given special attention to help them deepen their skills and secure better salaries and career paths.

He noted that rapid technological advancements in artificial intelligence (AI) programmes, such as ChatGPT, could take over most autonomous human tasks.

According to the AI programme, its functions could replace over 4.8 million workers. 

As such, professionals, managers, and executives must continually re-skill and up-skill to provide talents that machines cannot replicate.

Furthermore, the Forward Singapore initiative plans to work with NTUC to uplift lower-wage workers, professionalise skilled trades, provide more support for job loss and help all workers meet their retirement needs.

Addressing the concerns around increased living costs, Mr Wong stated that the government has been implementing support measures, such as CDC vouchers and utility and cash rebates, to help lower and middle-income households cover the inflation-induced increase in spending.

Singapore’s Unique Competitive Edge Due To Tripartism

According to Mr Wong, while Singapore can only provide small subsidies to attract investments, our tripartite structure more than compensates for it. 

Tripartism refers to the collaboration among unions, employers and the Government and has long been a critical competitive advantage for Singapore. 

Singapore’s Tripartism has helped to promote harmonious labour-management relations, overcome manpower challenges, boost economic competitiveness, and contribute to overall progress.

Values that underpin Singapore’s Tripartism include upgrading the capabilities of employers and workers, uplifting and strengthening support for vulnerable and mature workers, fostering inclusive and progressive employment practices, and upholding workplace fairness.

Mr Wong highlighted that breakdowns of industrial relations had been observed in other developed nations that have yet to practise this.

For example, in China and Vietnam where the national trade union centre holds a monopoly over their workers’ representation, businesses and governments have been observed to push back against labour action, further fuelling societal divisions.

In contrast, Singapore’s tripartite approach ensures the country can consistently overcome challenges and seize new opportunities.

While acknowledging the country’s strengths and capabilities, he emphasised that Singapore must not get complacent and continue working harder and more intelligent than others to maintain a competitive edge.

He emphasised that Singapore must always find ways to provide value to the world so that the country can prosper, thrive, and always be seen as a reliable partner.