‘It’s not just about spending more money.’
Heng Swee Keat

Since its independence in 1965, Singapore has been a global model in investing capital for purpose: By investing massively in attracting talents from the globe and high-tech research and development, its longtime leader, Lee Kuan Yew, transformed the new city-state into a global player with one of the highest GDPs per capita in the world. But do changing times require a new recipe – and is the Singapore model still a blueprint for success? We spoke with the country’s Deputy Prime Minister, Heng Swee Keat, to find out.

Heng Swee Keat, 57, is a Singaporean politician. He studied economics at Cambridge University and then earned a degree in public administration at Harvard University.  Before entering politics, between 2005 and 2011, Mr. Heng served as the managing director of the Monetary Authority of Singapore – Singapore's central bank . From 2015, Mr. Heng has been the Minister of Finance of Singapore, and this year, he was appointed as Singapore’s Deputy Prime Minister. He was the Principal Private Secretary to then-Senior Minister Lee Kuan Yew from 1997 to 2000.

Mr Heng, you said in your panel that today’s world is now facing three major changes: A retreat from globalisation, rising social inequality, and the power shift from the West to the East. Faced with these three major trends, will Singapore change its strategies?

In the future, investment will not just be about resources in dollars and cents terms. Because of the trends I mentioned, you’ll need to invest in infrastructure, in research and development.

That sounds expensive.

Of course, all of these things cost money, but what is important for us is to focus on outcomes, and on changing the mindsets of our people. For instance, it is very  important for entrepreneurs to be able to take a broader view of what opportunities are out there in the Asian region and around the world, and to be able to form good partnerships with people from all over the world. It is not just about spending more money to solve a problem, but also about solving the problem more creatively, and learning how to build these partnerships so that we can work together with people who are like-minded. That way, we can create better results.

So Singapore’s strategy is to focus more on partnerships with other nations and other people.

We’ve always had a strong focus on these partnerships, but I think in the coming years, we must continue to do even more and to find ways in which people, corporations, organisations and governments can work together. Together, I believe, we can achieve more than if we were to do it alone.

As you mentioned, Singapore has long been focused on partnerships with other countries. After all, Singapore is a small country, the 20th smallest in the world. It relies heavily on relationships with its neighboring countries. Coming back to the topic of this year’s symposium, “Capital for Purpose,” does Singapore plan to use capital from other countries to ensure its development, for example, China’s Belt and Road Initiatives? If yes, how?

What I find very interesting is that in China, Chinese government officials have started talking about quality growth. It is the same in Singapore: Our focus has always been on sustainable development. Will foreign capital remain very important? Yes, it will. We’ll continue to welcome foreign investments in Singapore – not just monetary resources, but also the expertise and technology that come with them, and the interactions with different parts of the world. [Sustainable development] is about welcoming new ideas, welcoming innovation, and welcoming people who may have different perspectives.

For example?

A very good example is that I just met a group of exchange students from St. Gallen who went to study at Singapore Management University for a semester, and also students from Singapore who are spending some time here in St. Gallen. I asked them what they have learned and what they think could be even better. On both sides, they have very interesting points of view. No one is perfect, but we can all learn to do things better by exchanging knowledge. It goes to show development is not only about financial resources but the exchange of know-how, of expertise, and of different ways of tackling problems. Exchanges like these can also help Singapore to grow.
Beyond helping Singapore to continue to grow and develop, I think this openness will hopefully be helpful to all our friends in Southeast Asia, and also our other friends in the region. I think if we can create good win-win partnerships from around the world, the pace and quality of development can improve.

So, it is not just about Singapore attracting foreign capital for its own development, it is also about other nations using Singapore’s capital to develop themselves.

Every country in ASEAN is attracting foreign investments and people from around the world. There have been very significant contributions by foreign capital to China’s growth and development too, for example. And in turn, now that China has grown so much, it is also contributing to growth and development around the world.

Singapore is very rich, relatively speaking: According to the World Bank, in terms of GDP per capita, it is ranked 15th in the world. You mentioned earlier that Singapore focuses on partnerships with other countries, such as ASEAN countries. As a wealthy country, will Singapore be willing to help other countries? How is Singapore going to use its capital for this purpose?

First, let me say that the statement that Singapore is very rich is not fully accurate. You cannot only look at GDP numbers. We have been welcoming foreign investments all these years, and a very big share of the capital in Singapore has been contributed by many of our foreign investors. We continue to welcome them. But, is this all Singapore’s capital? Not necessarily. We have to be careful about GDP numbers. GDP is gross domestic product. It is what is produced in Singapore, but it does not mean that it is owned by Singapore. We need to make this distinction.
Second, in terms of the role Singapore as a country has developed over the years, the amount of capital that Singapore can mobilise is a small fraction of what the world needs. So what we can do is really help catalyze capital from all sources to be used for productive investments in the region. If you look at the global pool of savings, it is a huge pool. If you just look at savings in the Asian region, you will find Japan and China have far more savings than Singapore. Some of the savings are owned by the governments and some of them are owned by the citizens of these countries. And in both places, the population is ageing. So it is very important for these savings to be deployed for the best possible uses so they can help catalyze development in the region. Such investments can also help to earn a good return for pension needs of the  citizens back home. This is the sort of win-win partnerships that we must continue to promote.

What’s Singapore’s role in all this?

We are working together with the World Bank, the Asian Development Bank, and the Asian Infrastructure Investment Bank to look at how we can help to mobilise capital from these multilateral development banks, which in turn can then help to bring in more private capital.
Second, the development of human resources is key. We are partnering, for example, with the IMF and the World Bank to work together on how we can develop the knowledge of policy makers, so that we can structure projects well.
Finally, the experience of ASEAN has been that free trade allows for better specialization and removes non-tariff barriers, helping economies grow. We hope that the region as a whole will continue to promote free trade for more development. That way, we can draw in the best ideas from around the world to help the region develop better. And in the process, we can create better jobs for people.

Besides partnerships, what lessons can Singapore’s experience teach other poor countries in Asia?

We do a lot of sharing when it comes to development policies. For example, how do we treat foreign investments, and what are the rules we have to abide by in order to attract foreign investments? Also, we have worked together on international agreements. For example, the ASEAN agreements on investment: in many of our free trade agreements, we also have an important chapter on investment protection. Second, we hope that we can eventually broaden some of our agreements into ASEAN-wide agreement. A very good example is that we signed a free trade agreement with New Zealand, and following that we had a free trade agreement with Australia. Now we have an ASEAN-Australia-New Zealand Free Trade Agreement. In the same way, we signed a China-Singapore Free Trade Agreement. And today, we have ASEAN-China Free Trade Agreements.
In this way, we can help think about how we can work together to enlarge the pie so that everyone can benefit. I will say Singapore’s not alone here. Many of our friends in ASEAN are also thinking along similar lines.

Singapore is a small country with an outsize role in promoting partnerships in Asia and around the world.


Professor Mariana Mazzucato, Director of the Institute for Innovation and Public Purpose at University College London, argues that a ‘mission-oriented’ approach to state investment can be an effective way to identify and tackle social and global issues with targeted and patient investment strategies.
To do this, she says, we must change the idea that the private sector is an innovator and the state is little more than an enabling body, occasionally called in to the address private sector failings. “It really doesn’t make much sense to talk about purpose just in the private sector, unless you think that value is only created in the private sector,” she says. The system she envisages would see the state’s role reimagined as “an investor of first resort, not just lender of last resort.”
Such an approach can help tackle pressing social and environmental issues. “Instead of just giving handouts, you formulate very concrete missions, like getting plastic out of the ocean,” she says. “The role of using government to fuel bottom-up experimentation is what got us to the moon.”
She’s implementing her approach in real life: Mazzucato helped lay the foundations for a Scottish National Investment Bank, which aims to address major societal challenges in order to achieve transformative and inclusive change. — Martin MacDonald