Transcript of Deputy Prime Minister and Minister for Trade and Industry Gan Kim Yong's Fireside Chat at the Semafor World Economy Conference

Clay Chandler: Deputy Prime Minister, thank you so much for being here with us. Delighted to see you here. Maybe I can just open with a simple question, and ask you how what's going on in the Gulf right now is affecting Singapore's economy? Singapore is, of course, one of the most globalised and interdependent countries in the world, but it is sort of removed from the actual regional crisis. How is it being affected?

DPM Gan: Clay, you know Singapore well, and you have visited Singapore several times. You know Singapore is a really small, open economy, and trade is three times our GDP. And therefore, to ensure supply chain continuity, [the] free flow of trade is very critical for our economy. With the disruption in the Middle East, I think the entire supply chain is being disrupted, not just for Singapore but for the rest of the world. And Singapore being dependent on the rest of the world, our supply chain is also severely affected.

First and foremost, [the] flow of oil and energy is being disrupted. Second, after that, you see that [the] products that are derived from oil and gas, such as fertilisers and so on, are also being disrupted. And what this means is that prices are being driven up. It happens not just in Singapore; the US is also seeing gasoline prices going up. In Singapore, too, the prices are rising, [and] the cost of transport has also gone up. And as a result, [for] many of the daily necessities, prices are also on the rise, so this is what we are seeing.

In the longer term, the rising prices will also depress demand for products and services. In Singapore, we are a very small economy. We depend on the world economy's growth in order to drive our own economic development. When [in] the global economy, demand slows down, economic growth slows down, and that will indirectly affect Singapore's overall economic performance. So this year, we think that in the first quarter, based on our preliminary estimates, we are able to achieve 4.6% growth, but that is below our original projection. For the rest of the year, we can see continued drag on the economy because of these uncertainties going forward.

So I think it affects us. That is also a reason why we have to address these short term issues. But at the same time, keep our eyes on the longer-term horizon to plan forward. What happens after this crisis, how do we recover from the crisis, and how do we ensure that the economy will continue to be resilient in the long term.

Clay Chandler: For those of you who have been to Singapore or get a chance to go, I would really recommend going to see the container port. It is one of the great wonders of the world. This is the busiest container port in the world, and they still do not have enough berthing space for all the ships to go through it. And so the lines to get into this - ships go, extend miles out into the ocean, and they have to sort of manage that. I remember visiting when there was all this trouble with the Houthis, and people were rerouting their ships to different ports to deal with that - that actually benefitted the port of Singapore, but this time it is not that way.

DPM Gan: Well, I must say that nobody benefits from war, even if it is a short term surge. During the disruption earlier on - the previous disruption - we had more ships calling on us, but many of them were unscheduled calls, because of the disruption. And the port became very busy, and we had to manage the traffic to ensure that we were able to deliver and serve our customers well.

But you are right that our ports are very, very heavily used, even today, it is still very heavily used. And that is why we are actually in the process of relocating the entire port to the western side [of Singapore], so that we have more capacity [and] we are able to deal with the demand in the future, not just immediately. This is something that we plan in the long term, so we hope to be able to serve our customers better.

In the meantime, the rise in transport costs is going to hurt. So I think at the end, there will be no winners. We are glad that we are able to play a role in supporting some of these supply chains to ensure that they are able to deliver to their customers in time. And if our port is able to play that role and help transshipments that may come through, that may be re-routed through Singapore, we are happy to provide that service.

Clay Chandler: I mean, it also causes problems for your airport, which is, again, one of the busiest in the world. But if oil prices, fuel prices keep going up, that slows traffic.

DPM Gan: Yes, I think all of us know, air fares are on the rise because air fuel is now more expensive, [and] energy is more costly. But on the same note, we are also developing the airport - we are building our fifth terminal. The fifth terminal will double the capacity of the current terminals 1, 2, 3, and 4 together.1 So I think we are expanding capacity to meet longer term demand. The key is really, [that] we need to cast our eye on the longer term, not just on the immediate future. We have to address the immediate problem, but we must not lose sight of the longer term strategies.

Clay Chandler: So, the news in the last couple of days has been that the Trump Administration has decided to deal with the conflict in the Gulf by putting up its own blockade to keep ships from going in and out and shutting down all traffic, and it seems to be working by and large. I saw a video clip last week of your foreign minister saying, we cannot condone any closure of shipments and ports like this. You know, we do not, we would not support this proposal of allowing Iran to collect tolls on ships that come back and forth. And the rationale he gave for that was, we live right next door to one of the world's most important chokepoints, which is the Strait of Malacca. So what is the Singapore position on the US blockade?

DPM Gan: Let me put it this way - I think my Foreign Minister Dr Vivian Balakrishnan made it very clear - the Strait of Hormuz is what we call a Strait that is Used for International Navigation. And for straits that are used for international navigation under UNCLOS - the UN Convention on the Law of the Sea - ships and aircraft must be given unimpeded transit passage through the straits, and the Strait of Hormuz is one example.

And therefore, it is the principle that we are not able to support any negotiations, because this right is not negotiable. And because it also has a direct impact on our Straits of Malacca and Singapore, which are also straits that are used for international navigation. Therefore, we have to ensure that the strait continues to be free, to allow transit passage for all ships and aircraft. It is a matter of principle. As we know, Singapore always works on principles, based on the interests of Singapore, and therefore we are consistent in our position.

Clay Chandler: There has been a lot of discussion here this week about artificial intelligence. That is usually the second big topic after what is going on in the Gulf, and there is both excitement and trepidation about it. One of the things that, as I look at Singapore, you know, I am always thinking about is that, we talk about Big Data, we talk about this notion of "AI superpowers", and that to be world-dominating in AI you have got to have access to lots of data. You have got to have place to build data centres. You have got to have access to lots of energy to be able to build this kind of compute infrastructure. Singapore is a very small island, [and] does not have a giant population. Tell us how Singapore is trying to compete in an age of Big Data and "AI superpowers".

DPM Gan: Well, I think you had a session just now on AI. I heard it from backstage. AI is very important, I think not only for Singapore, for the rest of the world too. AI is going to be a game changer, and it is here to stay, and it will change the way we work. It will change the nature of jobs, and it will change the way we learn, we play, and we live. So I think it is something that we have to be prepared for.

In Singapore, we take it quite seriously. We have set up a National AI Council that is chaired by the Prime Minister himself. The reason he chairs it is because it requires efforts across multiple ministries and agencies to be able to manage this together. And as you rightly put it, we need to carefully balance the need for AI governance, [and] at the same time, create room for AI innovation. And for us, we want to have [the] best of both worlds - to have a strong governance system to give confidence for people to be able to develop and deploy AI solutions. At the same time, we also want to have space for researchers, for solution providers to develop their solutions, so that they are able to experiment.

So I think this balance is very critical, and that is why we also have a new National AI Strategy, which we just refreshed. And under this strategy, we have three key thrusts. The first, is to develop leaders to be champions in AI, to work with companies to integrate AI into their business models, end-to-end. It is not just adopting AI applications here and there, but [it is] the entire review of the business model to become AI-native. This is something that we hope to embark on.

The second thrust is really to look at AI missions. We have four sectors of key AI missions in advanced manufacturing, connectivity, finance and healthcare. There are many challenges in these four sectors when we are confronted with AI. We do want to use these missions to attract AI solution providers to come to Singapore, work with us to solve these problems, these challenges. And if you have solutions for these challenges, many of these solutions are applicable to the rest of the world. So we hope to be able to become a magnet for AI experts and professionals to be here.

In order for us to bring them together, we have a third thrust, that is to develop [an] AI park where all these professionals and leaders in AI can come together, create an ecosystem and generate synergies so that they work with each other very efficiently, [and] they talk to each other - when one has a solution [it] can apply to the rest; and when one has a problem, the rest can come to help solve the problem. And this way, I think, would speed up the development of AI.

AI also requires us to collaborate and work with other countries, [and] other players. The US is one key player, and we would very happy to look for opportunities to work with the US companies and leaders in AI to develop AI solutions in Singapore.

Clay Chandler: And you are also working with Chinese companies, which makes Singapore quite unique. I mean, it is one of the few cities that I have ever been [to] where you can go into the CBD and look at a big office building, and there is the giant logo for Microsoft on one side, and then Bytedance. They are in the same office building, on top of each other. You would not see that in the US. Talk to us about that data centre problem though. Singapore has very limited space, [and] high cost energy. A few years back, you imposed a data centre moratorium. You were afraid you would pick up too many of them. You have relaxed that a little bit, but still pretty strict environmental standards. Where are you going to put all the data centres necessary to fuel this revolution?

DPM Gan: I think data centres are very critical for our AI strategy, but we have a very selective strategy towards the development of data centres because of the energy issue. Singapore has very limited alternative energy sources. We depend mainly on natural gas. We have solar, but because solar requires land, and Singapore is a very small island, as you put it, we have very limited solar power. So the only way that we can deal with it is to work with our neighbours. We now have a collaboration with Johor, Malaysia, which is to the north, and Batam, Indonesia to our south. We have data centres that are put in these two places that are close to Singapore, so they are connected to Singapore, [and] we operate as one system. But at the same time, because they have supply of green energy, so it is easier for us to put the data centres there, and we work together, and it is a win-win outcome for all three of us.

But at the same time, we are also beginning to allow more data centres to be set up [here], and we are very careful and selective in doing so. We want to make sure that the data centres that we give out [licenses] to are used for very critical operations and functions. We do not really want them to store all your birthday photos and so on, I think that can be stored somewhere else, that is not so critical. But for banking data, transaction data, business data, they are very critical for us. We do want to allow them to have capacity to have these data centres in Singapore, and you need to develop AI systems, you need to have access to the data centre capacity, and that is what we are focusing on. But if you want to store your birthday photo, that is fine - you can store somewhere else and if you need to retrieve them, it [may] take an hour to retrieve them, I think that is okay.

Clay Chandler: But it is very interesting for Singapore because obviously, [the] financial services industry is a pillar of the Singaporean economy, and other types of services need to be able to have rapid access to high quality data and the very best AI tools that there are. How much does it help you that you are so connected with undersea cables?

DPM Gan: Well, that is very critical, and it is not just cables, it is also physical above sea connectivity, in terms of air, land and sea. So I think it is important for Singapore to be a transport hub, so experts and businessmen from all over the world will come to Singapore and do business with the region. In data, similarly, we have the same concept. We have cables connected to everywhere, so that we are able to use Singapore as a centre to manage headquarter operations and key data are held in Singapore; at the same time, you are able to operate with data centres distributed around the Asia-Pacific. This is our model of operation.

Clay Chandler: I want to ask you about regulation, because obviously different economies have different views about how AI should be supervised. In the US, our policy seems to be that it should not be supervised at all, and there are no regulations, really, whatsoever, and the Trump Administration has opposed even to states trying to impose restrictions. Of course, the Europeans are much more restrictive and cautious in thinking about privacy and human rights and all these kinds of things, and the Chinese have a very industrial policy kind of focus, and how they regulate it. But where is Singapore's governance policy?

DPM Gan: It is interesting you should ask this, because one lesson that we learned from the past crises, whether it is COVID-19, [the] Ukraine war, or the Iranian conflict, I think one lesson that we learnt is that trust is very important, and data is also fundamentally built on trust.

So I think it is important to understand that Singapore is a trusted partner in many of these, and that is our key strength. And in order for us to preserve that trust with our key partners, it is important for us to put in place sufficient governance and guidelines. So we develop a framework for AI models and how we can make sure that the development of AI is properly guided, like you said, with governance. And it is also important for us to develop this governance framework not in isolation, but with like-minded partners.

So we work with many partners, like-minded partners, to develop these guidelines so that they are effective and practical.

At the same time, we have also the concept of sandboxes that allow development to take place. We do not have tight regulation, but we watch them and monitor, so we make sure that they do not run wild. And once some of these practices are well-established, then we begin to develop regulations and rules so that we are able to govern the future development and application of these solutions.

So I think we take a calibrated approach - on one hand, ensuring that there is sufficient governance and guidelines to preserve the trust that we have with our partners; at the same time, enough space for innovation to happen, for experimentation to take place, so that new solutions can emerge. If you are too tight, I think you just cannot move. If you are too loose, then they will run wild. So I think it is a very careful, calibrated balance.

And I must say this balance is also very dynamic - it depends on the evolution, [and] depends on the development of technology. You need to be prepared to be nimble to adjust these regulations and rules as you move along and you have to keep your eye on the ball to make sure that the development is according to the guidelines and governance that you [have] put in place.

Clay Chandler: Big tech companies still kind of spend hundreds and hundreds of billions of dollars to develop these frontier, cutting-edge closed models. China, embracing open source, has its own different kind of paradigm for how to embrace AI. But Singapore is kind of going its own way in some respects. It is working to develop its own LLM, that is, you know, for Southeast Asia, where, of course, there are 10 different countries, and there are, I do not know, hundreds of different languages and dialects and that sort of thing. I often hear people in Singapore complain that the Silicon Valley AI [companies] are really not set up to deal with all the different cultural variations that you get in a place as rich and diverse as Southeast Asia. But does it really make sense for Singapore to invest in building its own platforms like that?

DPM Gan: Frankly, we are not focusing too much on developing frontier models, because they take a lot of resources and a lot of commitment and a lot of investments. But for Singapore, I think there are companies developing some of these frontier models. We do not prohibit them, but our focus really is on solutions, focusing on deployment of these solutions, development and deployment of these solutions. And that is why I mentioned about [the] Champions of AI, AI Missions and so on, just focusing on application cases, working with companies to see what would be suitable for them, how do we bring them along the journey of this transition.

And it is not just about applying AI solutions, it is also about managing the workforce. You need to train the people so that they are ready for the new applications that are AI-driven, so they need to be AI literate, be able to be confident in using AI applications. I think this transition is non-trivial. It is not just about the solution, it is about the transition journey. We need to manage the process carefully so that we do not end up with unemployment, with displaced workers, [and] destroying jobs; but at the same time, use AI to create more opportunities and more jobs for people.

Clay Chandler: DPM, I am afraid that is all the time that we have, but thank you very much - it was a fascinating course on Singapore's policy.