Dean's Message丨Singapore Thriving In A Divided World

Singapore Thriving In A Divided World

新加坡的闪耀

Dear ZIBSer,

Two years ago, I started Dean's Message and my original plan was to do this for 18 months with the view that I would "retire" after a "transition period" of up to 18 months.

This is my 25th Dean's Monthly Message! The fact that I am still writing this is not a fair reflection of the tremendous progress ZIBS Leadership Team has made, nor is it an indication that I have not been stepping back from the daily operations of ZIBS.

As you may have noticed, the content of recent Dean's Messages has become less "hands-on" and more "macro". This Message follows a similar pattern and is based on my Keynote Speech at ZIBS Singapore Forum, the theme of which is "Singapore In A Divided World – The Future of Finance, Supply Chain and Beyond".

Thanks for taking your time to read.

Warm regards,

Your colleague

Ben Shenglin

Singapore In A Divided World

-From Surviving To Thriving

Today we live in a very complex and challenging environment for most, if not all, people and nations in the world.

China At New Stage

For China, we are facing enormous external and internal challenges. Externally, we are facing one of the least friendly international environments since 1978, when China started the open door policy and embarked on the journey of reform.

The views of general public in the West, from America to Europe, from Japan to Australia, on China have been more negative than most of the times. Similarly, many Western media have turned more hostile towards or have focused more on China. The Economist, the British weekly journal, has been featuring cover stories such as "America vs. China, It Is Worse Than You Think" (April 1) and "The World According To Xi" (March 25).

The trade sanctions by America on China started in 2018 when Trump was President and have since been expanded into other areas amongst calls for de-coupling and de-globalization. The Ukraine crisis has accentuated the trend. There appear to have been significant waves of words and deeds in the West that are contributing to the "de-coupling" between the West and the Rest (mainly China), though the more moderate wing of the West is championing the "de-risking", with reducing the dependence on China as a key objective.

Domestically, China is facing an unprecedented set of challenges as well. This year, China will lose the title of the world's most populous country to India thanks to demographic trends. Business confidence is yet to be fully restored after a prolonged period of supply chain disruptions caused by COVID-19 restriction policies and other seemingly less-than-friendly policies and postures.

The rising costs in China and geopolitical considerations are also motivating more Chinese outbound investments. ASEAN has been and remains the main beneficiary of such movements. During my recent trip to Thailand, I visited the Thailand-China Rayong Industrial Park. Over 200 Chinese companies have set up their manufacturing bases there to serve markets in Thailand, ASEAN, and beyond. In the meantime, Singapore is the favorite destination to host the international headquarters of many Chinese multinationals.

The local government's financial situation is also serious as a result of lower tax receipts from slower business activities and the loss of a major chunk of its revenue source: land sales to property developers. The financial sector, while still making significant profits for the time being, is facing a severe test of its very survival. The impact of fintech is slowly but surely feeding through the entire financial sector, and more robust regulations are making financial institutions' traditional business models less sustainable. This is most evident in their capital market valuations: many of their stocks are trading at a deeper discount to their book value.

Needless to say, the challenges are not limited to the above. In short, it is not easy for China. How about America? It is not easy for America either.

America As No. 1

America faces a very different and equally severe, if not more, set of challenges than China.

Domestically, American politics is more polarized than ever, inching the political system ever closer to the dysfunctional brink. The endless political debates about gun rights (and violence) and abortion rights seem just perplexing to people outside America. Don't the world have more urgent matters to worry about? Aren't there obvious answers for such debates?

Social inequality is another depressing and divisive subject. I was in Santa Monica, a suburban city of Los Angeles, last summer. There were two homeless people just on the street where I rented the Airbnb house. According to one estimate, there are 580,000 homeless Americans. Assuming each homeless person takes USD 50,000 to (re)settle down, it will translate into USD 29 billion, which is not a lot for the world's richest country, about 0.1% of its annual GDP. Many people, including myself, cannot understand why this problem cannot be solved.

America's two iconic industries are not having an easy time either. The Wall Street is facing soul-searching again: what is wrong with Wall Street? Why again the recent banking crisis at Silicon Valley Bank and Signature Bank after barely 14 years since the last crisis in 2008? The Silicon Valley is shedding jobs in the range of the thousands and Big Techs are being questioned for their public roles and social responsibilities as technological advancements like Chat-GPT reshape and revolutionize the way we work, learn, and live.

Internationally, it is not easy for the No. 1 country in the world.

We must accept that it is never easy to be No. 1, as it means a lot of responsibilities. America's decisions to walk away from TPP and Paris Climate Pact have left the world, including their closest allies, to wonder about America's commitment to free trade and global partnership and undermined the credibility of future American commitments.

Last month, the world was commemorating 20th anniversary of Iraqi War, which America would rather forget. Iraqis today are not better off than 20 years ago, the size of Iraqi economy today is no bigger than that of Hangzhou, a city of 10 million people that Zhejiang University calls home.

Similar unfortunate events in Afghanistan and other places have prompted people around the world to rethink America's leadership role in the world, and to review the opportunities to improve the global order. As if these were not enough challenges, a more hostile Russia and a more confident and competitive China are calling loudly for America's wisdom.

In short, it is a very challenging time for America as the No. 1 country as well. Is Europe in a better position?

Where Is Europe?

After recovering from the long Brexit saga, the European Union has been facing the Ukraine crisis. Without fiscal union and military capacity on its own, the EU (and its member states) have no real sovereignty and strategic independence. While most European countries are suffering directly from the subsequent inflation pressure, the magnitudes of their pains are not equal, and some are even benefiting from the higher energy prices.

European banks are suffering from the contagion of America's banking failures thanks to the dominant role of US dollars. Credit Suisse had to be merged with and by its Swiss competitor UBS, and jitters about the sustainability of some other largest European banks, such as Deutsche Bank, are not ending. Financial centres like London have been losing their preeminent positions, as the London Stock Exchange and other European bourses have become increasingly less relevant in global finance.

The traditional industries in Europe have not embraced the digital revolution quickly enough. Notwithstanding its leading advocacy for green development and sustainable growth, such as ESG, Europe badly needs more success in embracing new technologies to transform these industries. European carmakers have been slow in adopting electrification and are now lagging far behind America (Tesla) and China (BYD and more) in electric vehicles.

In new industries such as digital giants, there is no real competition from European names in the digital age. Granted that Europe is leading in the regulations of the digital economy, from the smart Regulatory Sandbox for FinTech by Financial Conduct Authority (FCA) in the UK to the General Data Protection Rules (GDPR) by the EU, but where are the European Google, Facebook, Apple, Microsoft, Alibaba, and Tencent?

How is Europe coping with the new and divided world with the Ukraine crisis at its doorstep? It is trying hard to balance between safety and stability and between America and Asia. In an age of geopolitical competition, it is no easy task for Europe or any country. Or is it?

Singapore Thrives In A Divided World

Against the backdrop of a very difficult world situation, Singapore is a rare sparkle in the dark.

Thanks to its first-class infrastructure provided by Singapore Airlines, the Port Authority of Singapore, Singapore Telecom, and Changi Airport… Singapore has increasingly become the unrivalled regional hub for international multinational companies, both Western and Eastern.

Singapore's universities are equally very impressive. The National University of Singapore and Nanyang Technological University are recognized among the top in various rankings. Notwithstanding the size of their domestic talent pool and aging population, Singaporean universities have been successful in attracting students and scholars alike from the region and beyond.

The traditional industries in Singapore have been innovating themselves. For example, the three Singaporean banks, DBS, OCBC, and UOB, are taking advantage of regional economic integration and have done well in transforming their businesses digitally and expanding them regionally, as illustrated by their healthier multiples traded in the stock market.

In the age of the digital economy, Singapore has become an important hub as well. SEA Ltd. and Grab are calling Singapore home, and many global digital giants have chosen Singapore as their regional or international head offices. Singapore as an international financial centre has also been reinventing itself as a fintech hub. Based on the Global FinTech Hub Report 2022, Singapore has climbed the league tables and is now No. 7 in the world's overall ranking. It is probably the No. 1 international fintech hub.

Why Singapore? Why is Singapore such a success as an international economic and financial hub? Other than many of the above-mentioned reasons, Singapore has benefited a lot from the rise of ASEAN, RCEP, and Asia as a whole. Today, ASEAN is one of the fastest-growing regions in the world, partially due to its geopolitical rivalry. The RCEP region has 3 of the top 10 economies in the world (China, Japan, and the ROK), and Asia accounts for 7 of the top 20 economies in the world (China, Japan, India, the ROK, Australia, Indonesia, and Saudi Arabia).

Concluding Remarks: 

Thriving In A Divided World

I want to conclude my talk by summarizing what I shared today.

The world faces enormous challenges. It is not an easy time for China, for America, for Europe, or for any country, as a matter of fact. Asia's importance as a continent has increased significantly and will continue to increase in the future thanks to demographic and digital trends.

Singapore has been successful in navigating through these trends. As a small country with no real resources in a not-so-easy neighbourhood and an unstable world, it has not only survived but thrived in global competitions, political divisions, and regional integrations thanks to its efficient governance system, its hardworking ethics, and its ability to connect the West with the East.

Singapore has the potential to play an even more important role in global affairs. The success of Singapore as a nation in a very challenging environment is just another proof that challenges and dangers are opportunities, but only for those who are able and agile, for those who dare and do, and for those who seek and seize.

At ZIBS, our motto is Connect The World, Shape The Future. It is our mission, dedication, and opportunity to contribute in our own way to a better world while we work hard to build a premier global business school from China.

（photos credit: Pixabay）

Editor｜LI Songjiao

Managing Editor｜CHENQI Lisha

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