Ravi Velloor
Associate Editor The Straits
Times 22 February 2019
Finance Minister Heng Swee Keat's Budget statement offers
useful pointers for others in the region on meeting the challenges posed by the
forces of change
A decade ago as the Global Financial Crisis raged and Mr
Heng Swee Keat was managing director of the Monetary Authority of Singapore,
the country's central bank, I wrote in these columns that Mr Heng performed a
dual role: watchdog and watch tower for the local economy. The watchdog kept a weather eye on what happened inside the
nation's banks and businesses; the watch tower had its attention on the near
and far horizons.
These days, as finance minister, he has a third role to play
of course - as the gardener who nourishes the economy, particularly its
greenest shoots - which explains the considerable time he spent on issues such
as Singapore's expanding ecosystem of start-up companies in the Budget he
presented on Monday.
Other nations, particularly those that are still hesitant
about making the necessary adjustments, or are in outright denial about their
portents, should pause and take note because what the sentinel that's Singapore
is picking up applies to the broader region as well. And as the Chinese saying
goes, the best time to plant a tree was 20 years ago; the next best time is
now.
AI, AUTOMATION AND JOBS
Tsunami 1 is the gale force changes happening in the
economic landscape brought on by the swift march of automation, robotics,
artificial intelligence and digitisation. Six years ago this week, when a lot of these developments
were specks on the landscape, I had drawn attention in these columns to the
gathering trends and wondered aloud whether the world would need the equivalent
of a Non-Proliferation Treaty to calibrate their advance until statesmen and
diplomats work out solutions to share the fruits of science rather than live in
their dread. Since then, the various tendrils of this phenomenon have gathered
into a perfect storm cloud, one that continues to gather force.
The major Asian population centres, starting with China and
India, are poised to be the most affected. In the national election looming in
India, slow employment generation in the formal sector is rising as a major
headache for Prime Minister Narendra Modi as he seeks re-election. That
phenomenon will only deepen. The import lists of big nations with young
populations - take Indonesia and India as prime examples - reveal robotic
equipment and automation to be among the fastest-growing items.
Last year, a McKinsey study estimated that a quarter of work
activities in Singapore could be displaced by 2030. Still, the island will
probably cope. Last year, almost one in two Singaporeans made some effort to
skill up, according to the figures Mr Heng cited.
Its SkillsFuture programme is being studied around the world
even if it comes with its own quirks and probably needs fine-tuning. It would, for instance, be interesting to see how much of
those credits were used up for Korean language studies. That said, to the
extent that every new language opens up a fresh universe of ideas and thoughts
for the learner it is probably a positive thing, even if the initial benefit
flows towards the propagation of Korean hallyu.
Later this year, we will have a better sense of direction
after the Tripartite Workgroup gives its recommendations on retirement and
re-employment, and pension payments of older workers.
AGEING POPULATION
Tsunami 2 is the silver tsunami - rapidly ageing populations
in parts of Asia, including at home, that bear close watching.
Singapore's population is ageing faster than even Japan's
and this comes with profound implications.
Meanwhile, life expectancy today is almost 85 years. The
happy news is that quite unlike the Japanese minister who urged the old in his
country to "hurry up and die", Singapore has been moving to turn the
aged into an asset, including extending retirement ages. Some years ago I moderated a World Economic Forum panel on
healthcare where Health Minister Gan Kim Yong spoke strongly and convincingly
about how Singapore was planning for active ageing. This week, a top executive
of Mercer suggested to me that the island should consider a retirement age of
70.
Contemporary research indicates that in the world of
robotics and Artificial Intelligence, experience, emotional quotient and other
skills that reside in the older generation will find increasing salience in
business.
But if Singapore has started the journey to tackle this
surge that cannot be said for the rest of Asia.
According to the United Nations Economic and Social
Commission for Asia and the Pacific (Unescap), all Asia-Pacific countries are
ageing at an unprecedented pace, although the timing and pace of this
transition varies across the region. Whereas in 2016, approximately 12.4 per cent of the
population in the region was 60 years or older, this is projected to increase
to more than a quarter - or 1.3 billion - people by 2050. In countries with
significant ageing populations, such as Japan and South Korea, over a third of
the population is expected to be 60 years or older by 2050. France and Sweden took 115 years and 85 years respectively
to move from an ageing to an aged society, whereas China is expected to make
the transition in 25 years, Singapore and Thailand in 22 years, and Vietnam in
only 19 years, according to Unescap projections.
Naturally, all of this has profound implications for
healthcare and long-term care.
CLIMATE CHANGE
The third tsunami is natural disasters, including actual
tsunamis. These have been occurring around Asia with increasing
frequency and intensity, some without doubt the result of climate change whose
manifestations include warming temperatures and rising sea levels. The people of South-east Asia are highly vulnerable given
their exposure to climate change risks, according to the Asian Development
Bank. Vietnam, Myanmar, the Philippines and Thailand were among 10 countries in
the world most affected by climate change in the past 20 years.
This vulnerability will only rise as populations increase.
Between 2007 and 2016, disasters triggered by natural hazards in the
Asia-Pacific region were estimated to have cost damage worth US$76 billion
(S$103 billion) a year, twice the cost in the decade before. Thirty years from
now, the region is projected to be home to 760 million people, mostly living in
low-level, coastal areas. The largest South-east Asian nation, Indonesia, has the
world's second longest coastline and six in 10 people there are at risk of being
exposed to floods and sea level surges. Fishing, agriculture and tourism - to
name just three industries - will all be hit. Asian megapolises such as
Shanghai and Mumbai are located in low-lying areas and will not escape the
effects of rising sea levels.
Singapore is adopting a multi-pronged approach in meeting
the challenges posed by climate change. To meet the threat of rising sea
levels, it is experimenting with the use of polders and dikes on Pulau Tekong.
Low-lying roads near coastal areas have been raised and Changi Airport's
Terminal 5 will be built at 5.5m above sea level. That is about a half-metre
higher than the terminals built before. From 2011, the Government has required all new reclaimed
land to be at least 4m higher than the mean sea level, up from 3m previously.
Much of Singapore's coastline is protected with hard structures such as
seawalls and rock slopes.
Indeed, rather than be seen as some oracular Merlion rising
triumphantly in Asian waters, Mr Heng's instinct, if you were to read the text
closely, is to tell Singaporeans to emulate the sharp-witted and swift Sang
Kancil mousedeer, and I would add, rather than to be stags with prickly
antlers. Combined with his call to build cross cultural literacy among our
youth, his approach should hopefully help carry his message of the Three
Tsunamis beyond this island. After all, when it comes to climate issues and even megatrends,
we are all affected. There is no "over there". And no piece of land,
even if surrounded by water, can truly be considered an island.
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