Singapore must stay open, ‘remake’ its economy repeatedly as US role shifts: SM Lee
“Trade dependencies are being weaponised. Multilateralism is breaking down,” said Senior Minister Lee Hsien Loong of the global trade environment.
Senior Minister Lee Hsien Loong called on Kazakh President Kassym-Jomart Tokayev on Aug 26, 2026. (Photo: MDDI/Betty Chua)
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SINGAPORE: Singapore must remain open, outward-looking and committed to multilateralism as the United States redefines its role in global security and trade, Senior Minister Lee Hsien Loong said in Kazakhstan on Thursday (Aug 27).
Mr Lee was delivering a lecture at Nazarbayev University during a visit to Kazakhstan and Uzbekistan, his first to Central Asia. He was also conferred an honorary professorship by the university on Thursday.
Mr Lee said the US had been the dominant power in the Asia-Pacific region for decades, while from the 1980s, China’s re-entry into the global economy created favourable conditions for Asian economies such as Singapore to integrate with regional and global markets and grow steadily.
However, the US is now reassessing its approach to the world, with national security and resilience taking precedence over economic well-being.
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Mr Lee said: “It is no longer willing to play the same global role as before, whether in security or trade.
“Trade dependencies are being weaponised. Multilateralism is breaking down.
“This is a much less conducive environment for countries to grow and develop in.”
MOVING FORWARD
Mr Lee touched on several ways Singapore can adapt in such an environment.
Singapore must continue to be open and outward-looking. Unlike larger economies, it cannot turn inwards or pursue self-sufficiency, Mr Lee said.
“We will always have to do business with the world, even as we diversify and secure our own supply chains.”
Mr Lee highlighted Singapore’s emphasis on deepening ties with non-traditional partners such as Kazakhstan and other Central Asian countries.
Even larger countries cannot avoid trading with others, he said. This creates opportunities for Singapore to carve out a niche for itself, provided the country remains competitive, trusted and remains useful to the rest of the world.
Singapore must also continue to support multilateralism.
Mr Lee said: “Multilateralism remains important, and there still needs to be rules that apply to everybody, big and small.”
Singapore will continue working with countries that support the World Trade Organization (WTO) framework while pursuing practical ways to strengthen it.
“The first best solution – reaching a consensus among all WTO members – has too often become a mechanism for obstruction and paralysis,” he said.
Second-best solutions, like coalitions advancing shared interests within the WTO framework, are workable and important, said Mr Lee.
He cited the WTO Agreement on Electronic Commerce, which Singapore co-convened with Japan and Australia. Interim implementation pathways were adopted by 66 WTO members, including Singapore and Kazakhstan, in March.
“Such partnerships supplement the multilateral framework, and are especially valuable to small and middle-sized economies.”
On the domestic front, Singapore will maintain its approach of combining strict market discipline with an activist state, said Mr Lee.
Singapore has long relied on market forces to make its firms and economy efficient and competitive, he said.
“Wherever possible, we have achieved social and political objectives not by imposing administrative requirements, but by harnessing market forces and aligning economic incentives,” he added.
“The free-market economy incentivises our people to work hard and to do well. It is the impetus for wealth creation and progress.”
Mr Lee said the government plays an active role in creating the conditions for businesses to thrive. It has invested in infrastructure and skills, promoted new economic activities, developed capabilities, opened up new markets overseas, and overcome market failures and coordination problems.
While industrial policy has come in and out of fashion in other developed economies, Singapore has consistently practised this approach for decades, he said.
Mr Lee also said Singapore would have to “remake” its economy repeatedly, including helping businesses adopt artificial intelligence and supporting workers through continuing education and training as jobs evolve.
Singapore must also continue investing in and deepening capabilities in areas where it is strong, like its air hub, container port and financial sector, said Mr Lee.
“We will also foster a dynamic enterprise ecosystem, and help Singapore-based companies succeed globally.
“MNCs remain important to us, but they need to be complemented by successful companies with Singaporean roots,” said Mr Lee.
In these areas, the government “can and will play an enabling role”.
Most critically, Singaporeans must stay united, he said.
“Our society must not be split by racial or religious differences, frictions between old and new citizens, or divides between rich and poor.”
Singapore is a multi-racial society that also depends heavily on immigrants and foreign workers to top up and complement its population, Mr Lee said.
“As our society matures, social mobility will tend to diminish. Hence, we must be especially watchful of these fault lines.”
He said that for Singapore to stay united, growth needs to be inclusive and benefit everyone.
“The fruits of growth must be shared broadly and equitably. No one should be left behind.”
This underscores the importance of strong and effective social policies, like public housing, public healthcare and public education, said Mr Lee.
He added that Singapore’s economic success has always been underpinned by social and political cohesion.
“The government has been able to pursue sound policies and make tough trade-offs in the country’s long-term interest because Singapore’s politics has worked,” he said.
“We are thankful to have kept this up now for over six decades, and the present generation is doing its best to sustain this virtuous cycle of good politics and good policies into the future.”
Source: CNA/nh(bg)
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