March 25, 2025
SINGAPORE – Amid a strained geopolitical outlook, Singapore and the rest of Asean can “cooperate more intensively” on trade to help stabilise the regional order in the Asia-Pacific, Senior Minister Lee Hsien Loong said on March 24.
“After all these years of cooperation, our share of intra-Asean trade, as a share of our global trade among Asean members, is still quite low,” SM Lee said. “It is less than one-quarter, and it has been about that level for a very long time.”
He compared this with the European Union, where trade within the bloc is 80 per cent or 90 per cent of the members’ global trade.
The former prime minister made these comments in response to a question from Professor Chan Heng Chee, ambassador-at-large at the Ministry of Foreign Affairs, who was moderating a discussion with SM Lee at the opening of the Singapore Maritime Week.
Prof Chan had asked SM Lee how Asean might stabilise the regional order in the Asia-Pacific, and whether Singapore can shield itself from the turbulence and changes happening elsewhere.
In response, SM Lee said Singapore “can insulate ourselves, but we can’t prevent some impact upon us”.
Countries in the region want to cooperate and trade more with one another, he noted. China, India, Japan, South Korea and smaller countries such as the Asean members are some examples.
Countries with close links to the West, like Australia and New Zealand, also want to do this.
“All believe that they have to do business and trade together,” SM Lee said.
He noted that the Asean economic community is not like the EU, but it “gives a broad basis for us to enhance our economic cooperation, and we can do better”.
Asean can also work harder with its external partners to conclude more free-trade agreements (FTAs), he added.
Such agreements with like-minded partners can “give you some life rafts to hang on to and to have collective safety in this uncertain world”.
The 10 members of the Association of South-east Asian Nations are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
Prof Chan, Singapore’s ambassador to the US from 1996 to 2012, also asked SM Lee whether a “grand bargain” is possible between the US and China, as US President Donald Trump is “not a man of war” and instead seeks to strike deals.
A grand bargain between states is based on the idea that coexistence is premised on reciprocal commitments, or fundamental political compromises, that allow the development of some form of strategic exchange and interdependence.
To this, SM Lee said a grand bargain would be difficult, as the two countries have deep issues. He said the US’ assessment is that China is a “pacing challenge”.
“That means it’s something which they have to treat, not just as a partner, as a friendly country, but something which could pose a challenge, maybe even a threat, to them.”
The US sees China growing and “possibly becoming bigger than them, maybe stronger than them”, SM Lee said.
This is not acceptable to the US, which sees differences between itself and China in terms of ideology, global influence and their place in the world.
China, on the other hand, sees itself growing. “They want to do business with the world, but at the same time, they see America as trying to block their growth,” SM Lee said.
He added: “They want to take (what they see as) their rightful place in the world.”
Feeding this rivalry is “a series of very difficult questions”, including of sovereignty, security, values, imbalances in global trade, and political systems. These are “not easily traded off or packaged together into a grand bargain”, SM Lee said.
Yet, unless they work together, both countries, and the world, will be in trouble. “If they clash with one another, they will do a lot of harm to themselves and to the rest of the world,” SM Lee said.
Prof Chan then asked SM Lee for his thoughts on the tariff war between the US and China, as well as the retaliatory tariffs.
Mr Trump has so far imposed a 20 per cent tariff rate on China, as well as a 25 per cent levy on steel and aluminium. China then announced it would impose 15 per cent tariffs on imports of US liquefied natural gas and coal, and 10 per cent levies on oil, farm equipment and some cars.
SM Lee said the world has not seen a similar situation since World War II, and “maybe does not remember what it is like”.
In the 1930s, during the economic depression, high tariffs in the US triggered similar high barriers from other developed countries.
“World trade plummeted. It deepened the recession. It caused great hardship in many countries, and it contributed to the political pressures and the tensions between countries, which eventually led to the Second World War,” SM Lee said.
In the Pacific, the war started with Japan’s attack on Pearl Harbour.
“What immediately preceded the attack on Pearl Harbour? It was a US embargo on Japan of petroleum and rubber − vital raw materials. And the Japanese started the Pacific War to secure those raw materials from South-east Asia,” SM Lee added.
Now, he said, the mood and the times have changed.
“You are not talking about the US versus Japan. You are talking about two nuclear powers. You may or may not go all the way to the end of the road,” SM Lee said.
“And hopefully, somewhere before the end of the road, you will find an off-ramp and a way out, which will enable us to stop short of doing maximum damage to one another. But it will take time, and it will take changes in mindsets, and I think, meanwhile, we just have to fasten our seat belts.”
On March 24, SM Lee also took questions from the audience after his discussion with Prof Chan.
Captain Hari Subramaniam, chair of The Nautical Institute (Singapore), asked SM Lee about improving the image of shipping, as the industry grapples with a labour crunch.
In response, SM Lee said that as countries become more affluent, their populations become less willing to go for a seafarer’s life. In countries where being on shore is tough, people are prepared to go to sea. “And in Singapore, being on shore is not tough.”
Singapore has the institutions, facilities and training simulators, but the number of people taking up seafaring is not enough.
“You need a certain passion, a certain fascination with the ocean,” SM Lee said.
He told Capt Hari that the industry has to “catch them young and get them fascinated with the oceans”. “There is something magical about it, but you have to have that personality – that obsession, almost.”
Another question, from Mr Teo Teng Seng of the Singapore Shipping Association, touched on the high cost of living in Singapore for foreigners, which has been an issue for talent here.
Replying, SM Lee said: “We are not as low-cost as many other Asian cities, but it cannot be helped.”
While there has been tightness in the rental market for some time, it is easing, he added.
SM Lee said he finds it hard to believe that Singapore is more expensive than New York or London, as some surveys have reported.
“If you look and see what they are shopping for, and where they are dining at, to make those calculations, it may be − if you want that sort of a lifestyle − you will have an issue.”
But the data shows that people are still coming in. “As long as that is the case, we should be able to continue to grow.”
- Vanessa Paige Chelvan is a correspondent at The Straits Times. She writes about all things transport and pens the occasional commentary.