STRUCTURAL IMPACT OF CRISIS
Global energy supply chains have been disrupted by Iran’s blockade in the Strait of Hormuz, after the United States and Israel began the war against Iran on Feb 28.
Member of Parliament Liang Eng Hwa (PAP-Bukit Panjang) asked the minister about structural changes to the economy wrought by the conflict, especially the damage dealt to oil and gas infrastructure.
To this, Dr Tan said it was “premature” to make conclusions about the long-term impact, but that the crisis was likely to accelerate structural shifts that are already under way in the global economy.
This refers to supply chain diversification, digitalisation, the adoption of artificial intelligence and the energy transition, he told parliament.
While the crisis will test the resilience of economies, it also creates new opportunities for firms to transform, diversify and deepen their capabilities, he said.
Energy has become an “existential” issue because of the need to power data centres for the compute required for AI.
At the same time, there is an abundance of new discoveries in oil and gas, and developments in green energy sources are accelerating, he said.
He pointed to Prime Minister Lawrence Wong’s recent commitment that Singapore will not restrict fuel exports amid the energy crisis.
Mr Wong said this on Apr 10, during a press conference with his Australian counterpart Anthony Albanese who was visiting Singapore.
“Our sense is that many countries are not just thinking about diversification, but they are also moving into a just-in-case mode, rather than just-in-time,” said Dr Tan.
“This crisis will test us, and if we are able to prevail, I think it would cement, it would reinforce and consolidate our position as a trusted hub.”
