Era of stable prices is already over says PM Lee

PM Lee said international economic conditions have fundamentally changed

The era of stable and low prices has already ended, said Prime Minister Lee Hsien Loong.

In his National Rally Day speech, Lee said the cost of products was stable in the recent decades because globalisation was in full swing, international trade grew rapidly, and China’s economy was growing exponentially; however, this period is “now over.”

“The basic reality is that international economic conditions have fundamentally changed. It is not just the pandemic or the war in Ukraine,” the Prime Minister said.

“China’s growth and exports are slowing. Their costs are going up. Some countries have raised tariffs against each other, particularly between the US and China,” he added.

These factors, according to Lee, have raised costs and pushed up inflation everywhere, including in Singapore.

Whilst Singapore does not have much influence on the global inflation picture, Lee said it is within the country’s power to make it more “productive and competitive.

“Then our workers can earn more, and more than make up for the higher prices of food, fuel and other imports. That way we can all become better off, in real terms,” he said.

Lee also underscored that Singapore

The basic reality is that international economic conditions have fundamentally changed

is also “not helpless” despite it being a small and open economy which is heavily dependent on imports.

The prime minister said this in response to disruptions of physical supplies to Singapore, like Malaysia’s export ban on chickens.

“For quite a while now, we have been actively diversifying our import sources – building up adequate stockpiles of food and medical essentials; investing in agri-tech to make local farms more efficient and productive; pushing ahead with our “30 by 30 Goal”, to be able to produce 30% of our nutritional needs locally by 2030,” he said.

“It costs money to make our supplies more resilient. Buying from diversified sources means we do not just buy from the cheapest or the most convenient producer. Maintaining stockpiles requires space, and incurs costs - we have to air-condition your stocks – but we must think of it as paying for insurance,” he added.

Looking ahead, Lee said the government will continue to “plan forward” to have options and solutions when crises arise.

THREE BUSINESS MODELS THAT WILL SUCCEED IN THE METAVERSE

By 2030, the metaverse could be worth around US$3t to US$10tn and would make up 10%-40% of the digital economy, which is why it is expected that more players will enter this new realm.

For those planning to enter the metaverse and succeed in the space, DBS Head of Telecom, Media and Technology Research Sachin Mittal said there are three business models which they think can help them achieve such a goal.

First, Mittal said businesses should start to incorporate the metaverse into their existing business models to drive competitive differentiation. One way to do this is by virtualising a production line or a sale demonstration.

The second business model is creating or orchestrating new experiences in the metaverse. Examples of this are gaming, high-risk exploration, and social engagement.

These two business models focus on “contentdriven experiences.”

“The premise of the metaverse is an experiential offering engaging a wide band of human senses. Yet those senses need to be engaged in a way that sparks the imagination. Successful metaverses will be those with superior, immersive, and engaging content,” Mittal said.

In order for these two types of business models to remain sustainable, Mittal said companies must continuously create content that is engaging to customers.

“It also follows that just focusing on enabling a virtualised experience is insufficient. It must also drive a deeper underlying job to be done,” the DBS analyst said.

“An example would be a manufacturing process that is made better because of virtualisation or a virtualised hands-on test of a new car’s limits without the risk of a high-speed crash,” he added.

The last business model which DBS suggested is for players to provide underlying infrastructure and components of the metaverse.