Transcript of Business Times’s “Lens on Singapore” Podcast With Mr K Shanmugam, Minister for Home Affairs and Minister for Law

Claressa Monteiro/The Business Times (BT): The Singapore Story is well known - from a natural deepwater port and part of Malaysia to a successful island Republic in less than 60 years. But Singapore is at an inflection point, politically and economically.

To talk about issues of regional security, counterterrorism, and how these could impact on Singapore's continued stability and prosperity, I'm joined in the studio by K Shanmugam, Minister for Home Affairs and Minister for Law. Minister, thank you for joining us.

Minister K Shanmugam (Minister): Thank you, Claressa.

BT: Now, let us get right into it and look at Singapore's economic success. Do you think that as a country we have started to take our success for granted? Maybe we are getting a bit complacent? Because really what is the basis of our success and you know, what are we going to do to drive future success?

Minister: That is a very incisive question. I don’t know that I would say we have started to take our success for granted. I think a lot of people are aware that the success is built on very narrow foundations. What I would say is, perhaps we are not as paranoid as we ought to be. The leadership has to be paranoid; the people also have to be paranoid. And I deal with the younger generation, I deal with others – they are on the leading edge, cutting edge of competition - both within Singapore and outside, and they're very hardworking, and they’re very intense and focused. So I wouldn’t say they are complacent. But they may not be aware of some of the things that policymakers like me are aware of - the regional situation, issues relating to terrorism, some aspects of economic competition, and that makes us paranoid. You can’t blame them - they are not aware of all the facts. But I wouldn't say they're complacent.

And if you look at what I alluded to, in terms of paranoia, my concerns are this. If you look at Singapore - 720 square kilometres - you can drive from Jurong to Changi, under an hour. And from Woodlands to Robinson Road, also under an hour, on the expressways. That’s our country. Countries make money in one of three ways; I am just putting it very broadly. You dig something from the ground and you sell - oil, minerals, and so on - We can't do that. You grow something on the ground and you sell - We can’t do that. The third is you provide services, legal accounting, medical, or other kinds of services, financial, and you make money. That's how we are making our living. But we are providing these services to countries in the region and internationally. But if you look at it, Indonesia, Malaysia, other countries, Thailand and so on, they really want to be doing these services themselves. They would ask themselves and they asked themselves - why can't they export their own goods? Why can't they do their own legal and accounting services? Why can't they do their own and provide adequate medical facilities for their own people? And if we can do it, they all can do it right? And that's a natural aspiration and we must respect it. So, then the question is: what's our future?

BT: That’s right.

Minister: Bearing in mind, it's not just the region, but you have hundreds of millions of Chinese and Indians coming onstream in their countries. And what is it that we do in Singapore that they cannot do faster, cheaper, and as well, if not better? And what's our value proposition? Say accounting services, book-keeping services, writing accounts. Why is it not possible today to have the accounts written up overseas, whether in the Philippines or somewhere else, and have them sent by email and have a small team in Singapore double-check it, rather than having a large team of professionals actually doing a lot of the work? So, many of these services can be broken up into pieces and some of the pieces can be done overseas and some pieces can be done in Singapore. And this is without speaking about Artificial Intelligence.

BT: That's right.

Minister: So we face very significant issues from a purely economic perspective, without talking about the security issues, and that adds a further dimension.

BT: It’s interesting what you just said, because it leads very nicely to my next question, which is about Singaporeans in the service sector. A lot of Singaporeans now work in the service sector. Banking, retail, tourism, and there is some concern that they are going to start to face stiff competition regionally for those jobs, particularly as you said; you don't have to be here, you can work anywhere. Why not Indonesia? Why not the Philippines? So, is that a worry that we have to address and how do we (do it)?

Minister: I think this is, again, a very serious, near existential question. Let us take -financial services - employs about 200,000 professionals, people, and it is about 14% of our GDP. If you take the tourism-related, including aviation - aviation and tourism - I think it might employ 150,000 people, 10% or 11% of our GDP. So we are talking about big numbers. Take shipping - very substantial number of people employed - also a significant part of our GDP. And then you ask yourself: which of these can be done overseas? Or, as I said earlier, sliced up and parts done overseas? So far, because of our very strong regulatory and legal framework, plus a business-friendly approach, plus the ease of doing business and lack of corruption, high education, and the fact that our people are not just highly educated, but highly motivated and work very hard; and with a government that thinks 20 years, 30 years, 40 years and puts in place both the legal and regulatory framework; but also is pro-business, pro-business because we are pro-people, because businesses employ people. Investments then create more jobs. And investors know that you don’t have U-turns that affect them badly. Investors know that this is not an irrational government that suddenly changes its rules, and they will find that they are in trouble.

Minister: So you have a lot of people employed in the service sector (in Singapore). The service sector can be spliced and some parts can be taken away, and more than some parts can be taken away and done by others. And investors find that when you come here, they can find good people in Singapore that they can employ. They can invest, their money is safe, they are safe – so all the factors come together to make us an attractive place and there aren't many places around which offer the same. But bear in mind, there are many places which are far less expensive. Land is cheaper and the wages are much lower. For example, to employ a software engineer in Singapore is multiple times what it costs to employ a software engineer in Jakarta or Vietnam. And there are places - you do not need the entire country to be like Singapore - but in the urban centres that have something like Singapore - it is possible for work to move, and we need to be aware of that.

Competition - I will put it two ways – it is external competition, others getting their act together, or others just taking parts which can be done remotely, away from us; it still means a loss for us. And (the) second part is internal competition - because if an investor comes and he says I want to invest $5 billion, but I need 3,000 engineers, and I need 2,000 of these skilled personnel. We don't have 3,000 engineers and we don't have 2,000. We have maybe 200 skilled people, and maybe 500 or 600 engineers, possibly. Just to give you some numbers. If you look at it, China produces about 5 million STEM graduates a year. India produces 2.5 million STEM graduates a year. Indonesia produces 200,000 STEM graduates a year.

BT: But that's the scale we cannot match.

Minister: How many do we produce? But we want the investment; you are going to need those STEM graduates but you want to make sure that your own people are employed. And then they come in and supplement, rather than supplant. And you can understand the anxiety of someone in Singapore, Singaporeans. Say he is in his forties; he is in a good job. If he feels like his job is going to go, he is not going to be happy. And so the challenge is to make sure that we remain attractive for investment, that we remain attractive for investors, because they can get the talent in Singapore and they can supplement that talent from overseas, but without that taking away Singaporean jobs. It is a difficult balance. And inevitably there will be cases where mid-level employees in companies, for one reason or another favour foreign workers over Singaporean workers at that kind of level. Singapore is a small place; and people's unhappiness is easily transmitted to each other; and there would be a general sense of nervousness - all entirely understandable - and which is why we have moved to try and target sectors, industries, individual companies even, and their hiring practices to the extent that we can.

BT: The Government has signalled that as a country, we need to have a serious conversation on how to sustain population growth, whether through raising the total fertility rate or TFR, or immigration. But Singaporeans in turn have strongly voiced that we are uncomfortable with the arrival of foreign talent, in what feels like unacceptably large numbers - uncomfortable with the many newly minted citizens. Here's a divide between policy and public opinion. So let us have that conversation. There is a fear we’ll lose our jobs to foreign talent, we’re concerned about the competition our children face for places in good schools. Help us understand why we need the foreign talent? The new citizens?

Minister: I think the concerns are entirely understandable. We have to have a very serious conversation in Singapore on these issues. And I will break the issues up into this. First, the data. Our TFR today is very low, it is about 1.2 and we are not unique in that. You look across East Asia; you look at the West, it is all low. In fact, ours is slightly better than many of the other East Asian places. And if you look at South Korea, Japan, you look at Hong Kong, look at even China, of course China had a one-child policy. You look at the West, other than the very Catholic countries, if you look at Germany and so on, the TFR is very low.

And if you look at our ageing profile in the year 2000, 23 years ago, we had 8.5 working persons for every one person who was a senior. By 2030, we will only have 2.1, basically two working adults for every one person who is senior. So just imagine the impact on our next generation; the taxes they will have to pay to support the elderly because health care costs are going to shoot up. In fact, in 2007, we spent 6.7% of our GDP on healthcare - $2.2 billion.

By 2023, this year, we are spending about $17 billion. That’s 16% of our GDP. A very substantial amount. And it's only going to increase - you have seen PM’s National Day Rally speech - it’s going to increase. Now where is this money going to come from? As it is today, we are, every year, if you look at our budget, we are spending more than the income we are getting from taxes and other collections. The main reason why our budget is not in a deficit is because one-fifth of the income is actually from our reserves. The money that we get - 50% of the income every year - we take it for current budget, and that helps keep our taxes low and fund all these policies. So it is like a family living on money that is in the bank for 20% of its budget - money, not the capital, but the interest. And that, plus the fact that there is intense regional competition and that jobs can go away from Singapore. Because jobs now can be – many of the jobs…

BT: They can be anywhere!

Minister: Many of the jobs can be done outside of Singapore, they can be done on the virtual space, and there is competition from AI. So, we have got to have a conversation about all of this and what investors need if they're coming to Singapore, and how do we make sure that we can give investors what they need to make Singapore an investor-friendly place; at the same time, protect Singapore jobs.

Now, we've got to protect Singapore jobs not by saying, “don't worry, regardless of how you perform, you will have your job”. I think Singaporeans are reasonable people – that’s not what they are asking. What they are saying is: when we are performing properly, we do not want our jobs taken away because some foreigner is favoured over us, not because he is better but because he is a foreigner, and that is entirely understandable.

And so, rules have to come round to making sure that it's not unfair towards Singaporeans, while giving enough flexibility to investors to bring in talent while Singaporeans have their jobs. And if you look at our unemployment rate, it’s very low. And I think most people understand that where they are directly affected, of course, there will be unhappiness, and we’ll have to try and see that if they've been unfairly treated – we need to try and deal with that.

We have to have serious conversations surrounding our ageing population. Our TFR which is low and continues to be low. And when your population is ageing and there are less working people, there's a certain loss of vibrancy in the economy. And how do you continue remaining attractive to investors? And how do you fund your increasing expenses? So, these are serious questions. And today we are okay; but in 10 years, 20 years, how do you square these different trade-offs? These are serious questions.

BT: Help me understand. As a Singaporean looking at it, I understand the policy and what you just said that, but if we have more immigrants, wouldn't that also mean that we need more infrastructure and more medical care for them? And that would raise the cost even more?

Minister: By the way, I'm not arguing for more immigrants. My earlier point is that we have some serious issues in Singapore. The first of which is ageing population and the resultant impact on the economy and the resultant impact on costs, including health care costs and the need for more doctors, more nurses, and spending far more - how are we going to find that money? And also, how are we going to continue to remain attractive to investors, both local and international, to create businesses in Singapore and employ Singaporeans? When they find that it's an ageing population, and there are less and less people they can find. Of course, our people will remain active for longer if they remain healthier, and that means that we'll get more working years and people will want to work anyway if they're healthy, it keeps their mind active. But, nevertheless, if there aren't enough young people coming in stream into the workforce, that does impact on you. So, those are serious conversations we need to have, spanning over the next 10,15, 20 years.

Now, immigration is, I'm not suggesting immigration is the only solution. It cannot be the only solution. It cannot even be a partial solution. You need some immigration. I think most Singaporeans will agree that you need some immigration as long as it helps us and it helps supplement our existing workforce. If you look at today's Singaporean residency profile: 3.2 million citizens, about 560,000 Permanent Residents. So, that makes it like 3.75 – 3.76 million of residents who are either citizens or PR. The rest is what I would call ‘floating population’ - people on Work Permits, your construction workers, workers, cleaners, F&B workers, and so on. A large number doing jobs that Singaporeans do not really want to do. And then, there are those on EPs, doing jobs that Singaporeans would like to do. And that’s whereas I said earlier, we have got to make sure that those who come in, don’t supplant Singaporeans; they supplement the Singapore workforce. And that way, we can have a win-win situation. And you have to have a balance between the number of people who become citizens, and we have carefully and tightly controlled on that, and the number of people who can come here to work on short-term passes and then leave after a period of time. They contribute to the Singapore economy; they contribute to taxes. It's beneficial for them too for the years that they work here. And then you know, they leave.

So that deals with your point, about wouldn’t they age, and how many you can take in within Singapore, of course, must be something that our infrastructure and our land size can bear. And our small size means that we have more trade-offs. And our infrastructure has to be worked in such a way that we can manage whatever population that we think can be maintained in Singapore. And you need to be careful about how many citizens you have and how many permanent residents you have. Floating population, working population, I think people understand they're here for anything between two to eight years, 10 years. Then they go back to their home country. That's their wish. I think that can be managed.

BT: Say look at Hong Kong and New York, they are vibrant cities because of that floating foreign talent.

Minister: Yes, but Hong Kong and New York also have the same issues that we have, which is that their local population wants to know that they will not be thrown out of jobs. You’ve got to make sure that when immigration comes in, it's actually not a pro-immigration policy, per se; the policy is that it benefits Singaporeans – it must benefit Singaporeans, it must make sure that Singaporeans get good jobs, and their jobs are safe, and that this helps Singaporeans.

Now, I'm not saying it always works that way, because I said in a complex economy like Singapore's, you will have situations where individual companies behave badly, individual middle-level managers behave badly. But question is, overall, are we quite tight? Do we try and deal with situations which go wrong? And the proof is in the eating of the pudding – Singapore: 3.2 million citizens, 560,000 permanent residents and the floating population - I think all in we are looking at 5.5 million people. What’s the size of our economy? It's US$380 billion, maybe a bit more. That's bigger than the Malaysian economy. Singapore is 720 square kilometres; Malaysia is 330,000 square kilometres. Malaysia has every resource you can think of. Palm oil, oil, rubber. Things are dug up from the ground and things are grown on the ground, and it has a 30 million population. What same reason is there for the Singapore Dollar to be worth three times the Malaysian Ringgit, and for the Singapore economy to be bigger than the Malaysian economy? It’s because the policies have been sensible, Singaporeans have benefited, by and large, most Singaporeans are employed. Unemployment is a very small number. And overall, the economy has been well-managed because Singaporeans are well-educated, productive, they are hardworking, and they are willing to learn new skills. That’s how we have managed. Doesn’t mean that there are no problems. And if you look at the horizon, the problems look even more severe. But so far, they have been managed.

BT: Still to come, rising religiosity in the region is not just a concern for our government here in Singapore. Governments in the region too, have noted a rising trend towards greater religious exclusivism and sympathy towards more extreme ideology. Why? And what does that mean for us? That’s ahead.

BT: I’m Claressa Monteiro, in conversation with K Shanmugam, Minister for Home Affairs and Minister for Law. Let’s talk about religiosity. The COVID years seem to have contributed to an environment for religious exclusivism to thrive. Was it that people were distanced from daily face to face interaction with their colleagues, from their friends and family? Did this contribute to rising sympathies for more extreme ideology? Or were those sympathies simmering below the surface the whole time?

Minister: I wouldn’t ascribe it just to COVID. I think the main reason is that today, the online sphere, you can tune in to whatever appeals to you, and you get a series of micro-communities which are based on interests, on race, or religion, forming.

Over the years, the events in the Middle East, the wars, the Palestinian situation, the rise of ISIS, Al-Qaeda, all of this has contributed to a wave of extremist propaganda. And, you also have a wave of extremist right-wing propaganda, based on killing Muslims and attacking others. For example, it was a right-wing extremist who went into the mosque in New Zealand and killed a large number of Muslims. So, you have extremism on all sides increasing, so there are always some people in society – some of whom are mentally not so well, some of whom can be disposed towards extremism and violence. But in the past, it wasn’t so easy to radicalise them and motivate them.

Today, online, you watch a video that extols violence towards people that you are encouraged to hate, and some people find that motivating. And you have that across different religious groups. And some, quite often encouraged by politicians as well, by political groups, for their own ends. And you get this cross-over in many countries. This region has not been spared, because there is a large Muslim population; there are small minorities within them who have found the extremist videos and propaganda and preaching attractive; and then you go slightly beyond this region, you have non-Muslim populations which have found other kinds of extremist preaching – Christian or Buddhist, and even further afield, even Hindus. You get segments in different societies which have become extremist, and they are prepared to go into something violent in pursuit of that.

BT: So just how serious of a threat to our future economic success is this rise in support for extreme ideology?

Minister: I would say very serious, because what is our success built on? As I emphasised earlier, 720 square kilometres, we are seen as an oasis of stability, peace, clear regulations, rational government, hardworking people…

BT: So it threatens our stability?

Minister: It threatens the idea that you can be an oasis of peace if around you there are serious incidents. It is not the situation yet, but it is a serious risk because you have had incidents, you have rising religiosity in the region.

Surveys in one of our neighbouring countries, show that 20% of the people believe in either an Islamic caliphate or that suicide bombing is an acceptable form of jihad. Now 20% of them are not going to do something, but if a very small percentage of that 20% decide to do something, that's still a large number. So you can have threats, counter-threats, but all-in, if the incidents rise, and I also see increasingly in the region, religion and race being used as props for politics. You know, “I'm so and so, vote for me based on my race” or “I'm so and so, vote for me based on my religion”. As parties compete on religious lines, each one has got to prove that they are more religious than the other person. I'm not talking about any particular religion, because you look around the region, you see different religions. So, when you appeal to religious identities, racial identities, as many political parties are doing, it is going to polarise societies; and when you get polarisation, you're going to get violent incidents. That kind of approach in countries in, say, Southeast Asia, inevitably will affect how Singapore is perceived, quite apart from the kinetic effect, right.

I'm not even referring to the kinetic effect. By kinetic effect, what I mean is people from outside Singapore wanting to come into Singapore to attack because Singapore is seen as a high-profile prized target, as ISD has put out in its review. We remain a very highly prized target and an attack in Singapore will get into international headlines. So, leaving that aside, that itself can affect confidence if it becomes frequent. But beyond that, the fact that the region, if it goes this way – it is not certain it will go this way, but if it goes this way – it is a risk. Because I see the politics going that way. Then it has got serious implications for us.

BT: Is this going to be a growing fear for us?

Minister: It is a fear for me, and it is a fear for policymakers. And how it goes, I think, depends on how politics in Southeast Asia goes.

BT: Now, this makes my last question even more important, personally, to me. I became a journalist, because I believe that what I do what my colleagues here at The Business Times do is a public good. So, I feel I have to ask amid the growing diversity of views, the demand to be heard, how do you see the media reflecting all this, while yet playing a role in keeping Singapore and Singaporeans together?

Minister: The media's role is to inform, educate, rationally, reasonably, and it is important for Singapore that we have national newspapers, which focus on national issues and allow people to have conversation on various issues. It's not the only conversation they have, they have many different conversations on different platforms.

But the national media can focus on some of the major issues. The whole idea is to get them thinking on the different issues.

For example, our ageing issues; for example, the issues we face from the rising religiosity in the region; for example, the competition that we face from AI and the fact that others can do the jobs that we do in Singapore. All of these are issues on which we need conversations, and the media is a very important tool. Its role is to bring these issues out, have Singaporeans thinking about them, have Singaporeans debating them, and providing a forum where people then can come to some kind of viewpoint, hopefully coalesce around some central ideas. Because it is important for us that the people are- at least a majority- agree on what are the steps forward. Each of us will have our individual perspectives and individual interests, but on some issues, whether we can get a broader consensus. I think media is not the only medium, but it is a part in trying to flush that consensus, by getting conversations and debates and discussions going.

BT: Conversations like we are having today.

Minister: Conversations like we are having today. We can’t tell what the solutions are going to be, always. It’s the Government’s duty to go and think of solutions, but it cannot be just the Government. People have to understand that there are issues, there are problems, and then start thinking about the solutions and then Government can come up with solutions, which can then be mediated upon, discussed, and decided upon.

BT: So it’s a partnership.

Minister: It’s a partnership, but somebody has got to take the lead and say this is the way to go. And if you get it wrong, then the answer comes at the elections.

BT: Singapore’s first Prime Minister Mr Lee Kuan Yew is noted for telling the first executive chairman of the Straits Times Press that The Straits Times was a "bowl of china" further remarking to him that he if he broke it, it could be pieced back together but that it would never be the same. Advising him to try not to destroy it. I get the sense as a Singaporean, that these words could very easily now apply to our country.

This has been Lens on Singapore. Our guest for this podcast, K Shanmugam. Minister for Home Affairs and Minister for Law.

For the Business Times. I’m Claressa Monteiro.