At a time when the world is witnessing a trade friction between its largest trade economies, the US and China, and Asia looks with bated breath to take cues on the path it has to take, Singapore’s deputy Prime Minister Tharman Shanmugaratnam stressed on the need for the region to shift strategies.
The deputy prime minister during his inaugural address at the HT-Mint Asia Leadership Summit held in Singapore on Friday, said there is currently a need for India and many of the Southeast Asian economies to have a three-pronged trade strategy — creation of jobs, air connectivity, and digital innovation and smart cities.
Tharman has some advice for India but caveated by saying that he was offering this as a friend of the country.
He indicated that India was on the right trajectory but that it needs to do more in terms of pace and direction and to make a decisive shift in its strategies to escalate to the required level of growth.
“India needs ten to twelve million jobs per year and you (India) are currently far short of that and it requires new strategies and India has embarked on those strategies. There has been impressive progress in infrastructure, in roads, rails and now airports. Improving the ease of doing business and some liberalization of foreign direct investment and I have to say quite frankly that the pace and direction of travel is not enough," he added.
The Minister further stressed that there is a need for “a more decisive change".
He exuded optimism that the change can be brought about. Giving examples of Tata Group, Mahindra & Mahindra and the Hero Group, he added that Indian firms can compete internationally. He noted, however, that manufacturing is not going to achieve the ambitions that India has set up for itself.
“Make in India has to be for the world and India. It has to have an external orientation," he noted.
During a conversation at the opening session of the event, Shanmugaratnam pointed out that for countries to move beyond trade wars, there needs to be more winners. However, he said, technological change has rendered the window of opportunity much shorter than what it used to be. The next five years are critical for India and parts of Asean that are still not on the manufacturing escalator, he added.
“We have probably peaked in terms of global trade as a proportion of global economy but even at current levels of global trade, there is still significant scope left to export and import more. The source of economic dynamism has always been competition and learning and it is through trade and investment across borders that we learn the fastest," Shanmugaratnam said.
“If you look at our part of the world (Asia), we are still far away from realizing the potential of manufacturing. Most specially, in India and some parts of the Asean...It can be done but there has to be a sense of urgency because the window of opportunity is much smaller to get on that escalator," he said.