SINGAPORE – Singapore and Germany should work together to sustain globalisation, drive innovation, and find new partners that believe in the value of free trade and investment, said Deputy Prime Minister Heng Swee Keat.

Speaking at the WELT Economic Summit in Berlin on Jan 27, DPM Heng said there is an urgent need for a consensus, both globally and within societies, to tackle the profound challenges of our time, namely, deglobalisation, digitalisation, demographics and decarbonisation.

DPM Heng is the first Asia-Pacific leader to speak at the summit, which is an annual gathering of government and business leaders of Germany, the largest economy within the European Union.

He noted that at present, the global consensus is not there to tackle the challenges, which he referred to as 4Ds.

“There is a big trust deficit and strategic competition between the two largest economies, the US and China. So instead of providing global leadership to tackle the 4Ds, we face the prospects of bifurcated and decoupled supply chains and technological networks,” he said.

He expressed hope that the two major powers can find a modus vivendi (Latin for “a way of life”) to accommodate each other’s concerns and to build strategic trust.

“But in the meantime, the rest of the world must come together to drive growth, improve the lives of our peoples and protect our planet,” he said.

DPM Heng proposed a two-pronged approach that advanced economies like Germany and small open economies like Singapore can pursue together.

First, the two nations can deploy their existing strengths – that has been reinforced since 2019 when the EU-Singapore Free Trade Agreement (EUSFTA) became effective – to new emerging markets such those in the Asean bloc.

Second, Germany and Singapore must double down on investment in research and development (R&D), translate the R&D into new capabilities, products and services, build a regulatory system that facilitates innovation, and invest in education for the young, with lifelong learning for all workers.

Hence, besides the bilateral EUSFTA, the EU should consider a region-wide free trade agreement, an EU-Asean FTA, to harness the region’s growth potential, he said.

“Asean is a market of 677 million people with a rising middle class, and a combined gross domestic product of around €3.6 trillion (S$5.07 trillion),” DPM Heng said.

He said Singapore can serve German companies as a gateway to expand into Asean and other emerging Asian economies such as India and China.

More than 2,300 German companies are already present in Singapore, with many of them using Singapore as a regional headquarters.

German firms can use Singapore as an Asian innovation node, DPM Heng said.

“Singapore can also serve as a city-scale laboratory of new ideas,” he said, giving the example of South Korea’s Hyundai Motor Group’s Innovation Centre in Singapore that tests new production technologies for the company’s factories globally.

Singapore’s financial hub can help German companies raise capital for mergers and acquisitions, and innovation in digital and sustainable finance, he said.

DPM Heng’s visit to Germany comes at the 60th anniversary of the establishment of diplomatic relations between the two countries.

It also takes place after the launching of the Germany-Singapore Strategic Partnership in November 2024, which will pave the way for both sides to deepen cooperation, especially in emerging areas like artificial intelligence and sustainability.

Concluding his speech, DPM Heng said: “To continue growing, Singapore and Germany must continue to tap on global opportunities, while pursuing structural reforms.” He also wished the gathering a happy Lunar New Year.

• Ovais Subhani is senior business correspondent at The Straits Times. He writes stories that demystify the latest economics, trade and finance news. He also covers key Singapore industries such as semiconductors and energy.

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