[SINGAPORE] Communications and information sharing will be a key focus of a new government task force aimed at dealing with the fallout of escalating trade tensions, Deputy Prime Minister Gan Kim Yong said in Parliament on Tuesday (Apr 8).
“The idea is to gather information from the ground, understand the challenges faced by the enterprises on the ground and to also discuss with them how we can lean forward to support them, to help them navigate through these uncharted waters,” said DPM Gan, who is also trade and industry minister.
He was responding in clarifications to Prime Minister Lawrence Wong’s ministerial statement on US tariffs and their implications.
DPM Gan told the House that the government’s main guiding principle is to be “as transparent as possible”.
“When we know something, we’ll share with the population, with the businesses, with the workers, with the unions and with members,” he said. “And when we don’t know yet, we’ll tell you honestly we do not have the information yet.”
He added that the government is also reaching out to Singapore’s trading partners to share information and explore different ways of working together.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Meanwhile, Singapore is also working with Asean members as well as other trade groupings such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership to discuss their collective strategy towards the US.
In seeking clarifications to PM Wong’s statement, Member of Parliament (MP) for Bukit Panjang Liang Eng Hwa asked what other markets and groupings Singapore companies can explore if the Republic trades less with the US.
PM Wong replied that the government will help companies identify new markets while strengthening links, including areas in the Middle East and Latin America where it may not have such close links yet.
But he warned that if economic activities are going to be reconfigured to be based less on efficiency but on security, geopolitical and political considerations, then the world ends up operating on a higher cost base.
This is the case even if slower global demand reduces inflationary pressures, he said.
Relative advantage?
Progress Singapore Party’s Non-Constituency MP Leong Mun Wai asked if Singapore being charged the lowest tariff rate in Asia would put it in a “stronger competitive position” to continue exporting to the US.
PM Wong replied: “If you want to see silver linings in dark clouds, you can say so. But certainly for us, as a country so reliant on trade for our growth, on external markets for a living, this new environment will be detrimental to Singapore’s longer-term prospects.”
He added that he takes “no comfort at all” in Singapore being in the lowest tier, saying: “We have to brace ourselves for a much bumpier ride ahead.”
Noting that PM Wong had acknowledged this is a “silver lining”, Workers’ Party (WP) MP for Aljunied GRC Gerald Giam asked if Singapore’s economic agencies are stepping up efforts to help businesses secure US demand in areas such as semiconductors, telecoms equipment and electronics, before global buyers reorganise their supply chains and lock in new sourcing arrangements.
DPM Gan said this is part of the task force’s strategy, adding that it is looking at both the shorter and longer term. He added that supply chain reorganisation takes time, while logistics and capacity needs to be beefed up in order to open up new markets and new sources.
“But always also bear in mind, as we have more investments into Singapore and taking advantage of a lower tariff, as you mentioned, to export to the US, our trade balance will start to shift,” he pointed out.
“At some point in time, you’ll find that we are also going to face challenges as well,” he said, adding that there is a need to “exercise some care” in organising this.
Additionally, some components will become more expensive to buy from overseas since they are subject to duties. At the same time, Singapore may face lower demand when selling to economies that have been slapped with higher tariffs from the US.
“This is an entire global chain effect, so we should not look at it just simply from any particular single segment of the trade because it’s going change the entire playing field,” he said.
Rebalancing demand
WP MP for Sengkang GRC Jamus Lim asked if the government is considering policies to shore up consumer demand and to help “rebalance the economy towards domestically driven demand, at least in the short run”.
DPM Gan replied that overstimulating demand could create inflationary pressures, adding that a careful balance must be struck.
“We have a very small economy, it will not be able to move the needle,” he said.
Prof Lim and Nominated MP Neil Parekh Nimil Rajnikant also asked if the government may consider enacting anti-dumping duties in case countries with surpluses export at low prices to Singapore.
DPM Gan said anti-dumping duties are a possibility provided under the World Trade Organization, but pointed out that such duties would ultimately be paid for by Singapore consumers.
“Anti-dumping duties are introduced in order to protect local domestic industries that are facing an onslaught of imported products at very low prices,” he said.
Singapore needs to be careful about introducing such duties, since its industries are competitive and mostly export-oriented, he added.
