Transcript of Minister for Foreign Affairs Dr Vivian Balakrishnan's Remarks at the 2018 Southeast Asian Young Leaders Programme Working Breakfast, 3 June 2018

Ladies and Gentlemen

1 A very good morning to everyone. 

 2 We are living in an age of great uncertainty - uncertainty characterised by profound and accelerated change. I think that’s a statement that I hope everyone can accept. That’s what is happening in the world now. In such a time, difficult choices will need to be made.  Difficult choices on the part of politicians, on the part of electors, on the part of companies. What I am hoping to do today is just try to sketch out very briefly some of driving forces behind these changes and the larger strategic context behind what we are confronting.

3 First, for 70 years, there has been the global consensus that more free trade is good, closer economic integration is good, industrialisation is good, globalised value chains and the more interconnected – is good. It’s almost been a trite presumption.  But I think you all know as well as I do - you talk - if you get down at the street level, the guise has changed, the consensus for that has frayed.

4 The benefits of globalisation are being questioned all over the world. Washington, New York, London, Tokyo, Singapore, Jakarta, everywhere - whether it is developed or developing, this consensus is frayed. If you look at what is in the headlines – trade frictions, unilateral sanctions – even those are actually just symptoms of an underlying problem.  We also see that we are witnessing a once in a lifetime shift in geostrategic balance of power.  Some of you here are too young to have been born in 1989 when the Berlin Wall fell but I can tell you that history did not end with the fall of the Berlin Wall and the apparent break-up of the Soviet Union and the communist bloc.  The world is moving into a multipolar world. Not with just one single pole of power but multiple poles of power and rising; and the configuration of that tent is changing as the different tent poles reach different heights.

5 The second big thing is the digital revolution and it goes beyond Twitter, the media, Facebook, and the rest of it. Actually if you think about it, now that computing has become pervasive, now that everyone in theory - regardless whether you are in a developed or developing country - is connected and always “on”, all the time. The world has been fundamentally altered if you think about the changes which occurred in say Europe, with the invention of the Gutenberg press, and the democratisation of information. Now the difference is that everyone is a publisher.  Again, there will be tectonic changes in the distribution of information and therefore, power.  On top of that, machines have recently acquired the ability to see, to hear, to understand, to speak and to do. The revolution, simultaneous revolutions in robotics, in A.I., big data analytics, machine innovation, are profound changes. It will disrupt economies, jobs, and society. Therefore, traditional business models, traditional political arrangements, the way societies are organised, are also fundamentally disrupted.

6 Now, if you think about previous revolutions – the agricultural Revolution, Industrial Revolution, every time you have a revolution – in the early phases of the revolution, you get increasing inequality. Why? That’s because the few entrepreneurs, the few regions, and the few countries that “get it” that are able to exploit the advantages, get an outsized advantage, and therefore in the initial phase, inequality increases. It takes times for the new means of production to be democratised, to be commoditised, and then a new middle class arises.  So the point here is that I know there is a lot of anxiety about inequality but it is not because it is a widespread political conspiracy.  It’s because there is a technological revolution going on and people need to get their hands on these new tools.

7 The third fundamental change is that we are witnessing the emergence of non-state actors and transboundary threats, for instance, terrorism, cybercrime and climate change. These are all challenges and threats to the global commons, which do not obey the boundaries of the Westphalian nation-state.  Anything that happens in any part of the world quickly has an impact on the rest of the world.  The only way to deal with these transboundary challenges is a collective exercise of political will coordinated – not dictated – amongst all nations of the world who are all stakeholders in these fundamental challenges.

8 So that’s why, ASEAN and as chairman of ASEAN this year, we chose the two themes of “Resilience” and “Innovation” because these are attributes that we believe encapsulates what ASEAN needs to do if we want to remain relevant, reliable, and to make a difference to the lives of citizens in the 10 countries that constitute ASEAN.  Now, what are we going to do about it?

9 First, one of our key priorities is to double down on free trade, on economic integration, on reaffirming the role of a multilateral institutions; resolving disputes through multilateral processes instead of relying on unilateral sanctions, threats of force, and doing things on the basis that “I am bigger than you” or “I am stronger than you therefore my will prevails”.  I know that there are doubts about the value of globalisation, the value of free trade but we believe in ASEAN that we need to double down on free trade.

10 In a multilateral system, we have a system of rules which everyone, big or small, every state, big or small, has to comply with and to compete on a level-playing field. This is a system and a formula, that encourages win-win collaboration, discourages the formation of rival blocs engaged in zero sum games and issuing threats. That is how Southeast Asia has profited, has benefitted, and has developed so profoundly over the last five to seven decades.  Hence one of our preoccupations in the remaining six months is to settle the Regional Comprehensive Economic Partnership (RCEP). This is a huge free trade agreement that includes the 10 ASEAN countries and the six partners who are India, China, Japan, South Korea, Australia and New Zealand.  If we succeed, this includes 45% of the world’s population and one-third of global GDP, and it will make ASEAN an even more attractive single market, single destination zone for investments, and we will remain at the centre of the geo-economic sphere.

11 The digital revolution – I mentioned earlier, is another area where we need to double down on.  It has caused anxiety, and people are worried about job losses as machines potentially replace many hitherto human activities. But we believe we need to get ahead of the curve. In the same way, in many other parts of the world, where standard telephone lines were not laid quickly enough, the mobile phone has allowed the population to leapfrog past that hurdle. In the same way, we need to equip our people with the skills, we need to fundamentally alter our policies and prepare our markets for the digital revolution.

12 That is why, in a sense, we came up with a concept of starting the ASEAN Smart Cities Network.  It is a response and an opportunity to share experience, share problems, avoid mistakes, raise digital literacy, enhance digital inclusiveness, and give our people those digital tools and platforms. One concept here which I want to emphasise is that we don’t want to see a world where just the few oligarchs, or few systems, or few platforms, dominate.  The operating concept for ASEAN in the digital revolution is interoperability, which means you may have your financial systems, your trade systems, your national operating systems.  But we want to ensure that we can interoperate and that is why for instance, just two days ago when PM Modi made a payment through his RuPay system that is interconnected with Singapore’s NETS system. It is a way to say that we will still be able to maintain sovereignty and distinctiveness and security but we will interoperate and thereby facilitate a larger marker with lower hurdles.

13 Now moving on to geopolitics, fundamentally, the question is how do we relate to the super powers, the regional powers, and the rising powers? This is where ASEAN needs to navigate carefully. When I meet big powers or rising powers, the usual line I convey to them – sometimes more diplomatically, sometimes more directly – is that it is in everyone’s long term interest for ASEAN to remain united.  ASEAN with 630 million people, and 60 % below the age of 35, with a demographic dividend not yet fully harvested, with a great need for infrastructure, investment, with great trade potential – when I meet these big powers, I tell them that in fact, we have the potential to be your biggest trading partner, and the greatest opportunity for investment.  So here again, two things are in mind:  It is in your own, it is in the big power’s interest for ASEAN to be united, and the way in which we want to operate is this concept of interdependence – that we gain more by working together, by collaborating together, by becoming more invested and intertwined, and by trading with one another.

14 We want to avoid the opposite scenario – one where the world is divided by bamboo curtains or iron curtains into rival blocs, engaged in zero-sum competition, and trying therefore, to break up ASEAN into proxy arenas for these rival blocs.  That’s why we continue as ASEAN to engage both explicitly, and sometimes – a lot of the time – below the surface, paddling furiously.  Think of a swan gliding graceful in a pond actually.  There is a lot of furious paddling going on underneath but we are focused on interdependence, on greater integration, win-win collaboration, and to give even the big powers a stake in our collective success.

15 We are currently, apart from the chairing of ASEAN, we are also the coordinator for ASEAN-China relations in the last three years, and you can imagine that has also kept us quite busy. In August, we will also become the coordinator of ASEAN-EU relations, that is another big set of challenges, but with the EU, I can say that there is a shared commitment to globalisation, to free and fair trade, and to an open, rules-based trading system.  If fact the EU, and this is something most people don’t seem to realise - the EU remains the top investor in ASEAN it accounts for US$30.5 billion in foreign direct investment in 2016 and total trade between ASEAN and the EU amounted to US$233.6 billion in 2016, which makes it our second biggest trading partner after China.

16 As ASEAN-China coordinator, we have a number of projects in the pipeline, as well as new deliverables.  For instance, this year is the supposed to be the ASEAN-China Year of Innovation.  It dovetails quite nicely with this agenda of innovation and staying ahead of the digital revolution.  We also commemorate the 15^th anniversary of the ASEAN-China Strategic Partnership, and we are negotiating a Strategic Partnership Vision 2030, which will chart the future directions for this crucial relationship.  And of course you know, we are negotiating the Code of Conduct (COC) in the South China Sea.  Because if we can maintain peace, stability, freedom of navigation and openness throughout the South China Sea, which is a vital artery for global trade then we would have made a signification contribution.

17 With the US, ASEAN-US relations are positive.  The US is ASEAN’s third largest trading partner and source of foreign direct investment inflow to ASEAN.  In fact, when Vice-President Pence visited Jakarta two years ago, he made a speech which - a point, which even I had not appreciated – that the US is more invested in ASEAN than it has in India, China and Japan combined.  Most people are not aware of that, so when I meet President Trump, I’ve repeatedly told him that you have real skin in the game in Southeast Asia.

18 Recently, you have heard much talk about Free and Open Indo-Pacific (FOIP).  You have heard Prime Minister Modi address this yesterday- I hope you heard Secretary Mattis also address that point.  Some of you may also be aware that in the past, I’ve expressed a certain healthy skepticism about the Indo-Pacific concept because we need to be very clear when we throw alphabet soup at each other that we define and understand what exactly you mean, what are the values and principles are behind it, and what we actually want to achieve.  Well, I want to tell you I’m very encouraged by what I heard over the past two days.

19 Prime Minister Modi’s keynote speech is worth reading and re-reading carefully.  Basically, my take is that both US and India have reaffirmed ASEAN Centrality and unity.  In fact, they are recognising a geographical fact.  Southeast Asia is right in the middle of the Indian and Pacific Oceans.  We are the junction, the nodal point, the focal point.  So I’m glad that both of them have reaffirmed the necessity and the primacy of ASEAN Centrality and unity. I’m also glad that both of them reaffirmed that inclusiveness – they are not looking for exclusive clubs- and openness, as well as a commitment to the rules-based world order, anchored on international law, should be key attributes of this emerging concept.  And it allows me to continue to reaffirm, therefore, that a united ASEAN in the heart of the Indo-Pacific, is a route to continued peace and prosperity in our part of the world.  I’m glad again, that they have emphasised that it is not meant to be an exclusive club, because ASEAN does not want to be forced to make invidious choices or to confront forced dilemmas. We want to open bridges, not build walls, we want to open bridges with as many players and stakeholders as possible, to give everyone a win-win stake in the emerging success story of Southeast Asia. So anyway, these are  early days yet but I am saying based on what has been said so far, these are concepts are ideas that we can subscribe to, although the details will need to be worked out and negotiated in greater detail in the months and years to come.  So, watch this space.

20 This brings me to my final point that we need to maintain ASEAN unity in this multipolar and rapidly changing world.  We want a rules-based multilateral system because we can’t afford a system where “might is right”. By definition, Singapore and many of the smaller ASEAN countries would certainly be worse off in a world where “might is right”.

21 Secondly, we also recognise the reality.  We are a highly diverse regional group.  In fact, you’ll be hard-pressed to find any other grouping in any part of the world where ten members are so vastly different and that is why we will continue to operate on the basis of consensus, to give everyone an assurance that – in a sense – everyone has a veto right but not to be exercised lightly, and certainly not to be exercised on behalf of some other powers.  But every single member of ASEAN has a veto right in order to have the assurance that your core interests will not be overridden.  It ensures that that every member has an equal voice regardless of size or wealth.  It also forces us to take an enlightened long-term approach of our national interest. And again, you know we live in the world where commitments don’t seem to mean the same thing that they did in the past, that when you get a change in government, people decide, “oh well, I am going to upend all past agreements”.  We need to remind ourselves that commitments, agreements, solemnly entered into in good faith and with due diligence must mean something for the long-term. The consensus-based decision-making also allows us to mount therefore a coherent, consistent, long-term programme that when ASEAN says something, we mean it. It has taken us time to germinate and get to that point but when we say something, and agree to it and sign on to it, we will fulfil it.

22 So, it is worth getting back to first principles and the circumstances of ASEAN’s founding in 1967.  You must bear in mind in 1967, the initial five founding members of ASEAN were far less developed than we are today.  In fact, we had far more fundamental differences and conflicts even amongst the original five.  Nevertheless, the original founders, the Leaders of ASEAN, 51 years ago decided we better hang together, or we will hang separately.   In that sense, the success and the progress which you witnessed across Southeast Asia over the last five decades reflect that they made the right decision.  So we overcame our internal differences, we overcame our external challenges by banding together; we have secured peace; we have enhanced prosperity; and now our objective is to harvest the opportunities that come our way in a world that is undergoing multiple, simultaneous revolutions.

23      So I will stop there and invite frank, direct questions.  And if you fundamentally disagree with me, please put up your hand up first and challenge me on this.

24      Thank you all very much for your attention.

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