Thriving amid a disrupted global order 

THE year 2024 was heralded as the Ultimate Election Year, where voters in more than 60 countries, accounting for half the world’s population, went to the polls. The world has since voted and it is “politics not as usual”.

With rising costs and an increased sense of insecurity over their livelihood and identity, it was in many cases a challenging election for the incumbents who had to deal with frustrated voters desiring for a change in the status quo.

Donald Trump’s victory in the US election epitomises the increasing appeal of right-wing populism. We are entering a period with America-first as the dominant theme. If “Trump 1.0” serves as a guide, further hikes in tariffs and a tightening in immigration will be inevitable.

The world trading system will shift from a rules-based to a power-based system where stronger economies will dictate trade terms and influence based on their relative might with less regard for established rules. It will shift from a commitment to multilateralism for common prosperity and collective action to deal with global challenges, to one where bilateralism will dominate based more narrowly on individual state interests.

This has direct implications on businesses.

In the past, geopolitical conditions tend to take a back seat to macroeconomic and operational concerns in businesses’ decision-making. Now, it is becoming the biggest risk to not just economic growth but business survival.

In our recent National Business Survey (NBS), geopolitical tensions emerged as the second-most cited challenge, behind uncertainty of demand, for companies looking to scale their business internationally.

For a country like Singapore, with trade accounting for three times our gross domestic product, where 70 per cent of our businesses have an overseas presence that accounts for over 40 per cent of their revenue, this presents a clear and present challenge that our businesses need to overcome.

Geopolitics as a business priority

First, businesses must adapt through risk mitigation. They need to assess whether their products or operations are geopolitically sensitive and how this sensitivity differs by region. They will need to consider supplier diversification, or localising supply chains.

The good news is that our businesses are now more adept at dealing with supply chain disruptions due to the Covid pandemic, as well as regional conflicts and trade wars initiated under “Trump 1.0”. From our NBS findings, the impact of supply chain disruption to our businesses has continued to trend down from the peak of 46 per cent in June 2022 to 22 per cent in November 2024. About 55 per cent of businesses have taken steps to diversify suppliers and markets arising from such disruptions.

Second, even as they improve their resilience to shocks, businesses should focus on opportunities to seize. They should consider tailoring their growth strategies, core business operations and organisational capabilities with an eye towards thriving and not just surviving.

For example, businesses must think strategically about how changing tariffs and taxes affect their competitiveness. They should proactively leverage industrial policy incentives that might present growth potential for their business.

The trade war between US and China, which started in 2018, and the subsequent series of industrial policies by US, India and the European Union have created many such opportunities.

The good news is that the shifting trade flows are favourable within Asia as protectionism drives greater regional integration. Increased China-West differences with higher tariffs will catalyse further shifting of global supply chains, fuelling the substantial growth of Asean-China trade.

Trade growth in the Association of Southeast Asian Nations will increase, arising from gains in such supply chain shifts and good trade connectivity with corridors such as Asean-Japan and Korea. India is also set to play a much larger role in global trade, leveraging on its role as a “China+1” destination for manufacturing.

Agreements such as Asean and the Regional Comprehensive Economic Partnership) offer a blueprint for investment and trade expansion, with a focus on investing in the “neighbourhood”. Singapore-based businesses can align their businesses with trade flows into these new corridors by leveraging the multitude of free trade agreements (FTAs) that Singapore has with over 65 trading partners.

Building capabilities in international trade and investment

To adapt and thrive, businesses need to invest in building up or have access to geopolitical and international trade capabilities that can help them navigate industrial policies, tariff exemptions and product classifications that can make the difference between market access and market denial.

They need to understand the impact of import/export controls and how domestic environmental, labour and even immigration policies affect their operations while finding opportunities in domestic industrial policies.

It is one thing for a business executive to be informed about the potential upsides and downsides of geopolitics, which makes for interesting dinner conversations. It’s another thing entirely for businesses to have the capabilities required to respond to them – including corporate strategies that take geopolitics into account and operational capabilities that are attuned to geopolitical realities.

US companies are reported to be stepping up engaging lawyers and accountants to prepare for tariffs, export controls and trade wars under “Trump 2.0”. International trade policy, once a dry topic involving just government officials operating in legalese, is now sexy again as implications to businesses become more real.

The proposed Centre for the Future of Trade and Investment (CFOTI), announced by the Singapore Business Federation in July as a public-private initiative, is an attempt to fill this gap for Singapore businesses.

With a qualified pool of in-house and industry trade and investment specialists, CFOTI will provide advisories and conduct workshops to help businesses navigate complex trade and investment-related regulations and policies including FTAs, and recommend measures to gain market access and identify opportunities for growth overseas.

Several key advisories were given this year, helping companies such as SGProtein, a plant-based meat manufacturer, gain access to the Korean market through the Asean-Korea FTA and Korea-Singapore FTA.

CFOTI will also be developing a competency framework to support the professional development of a cadre of trade and investment practitioners skilled not just in the functional areas of customs and trade facilitation, but in trade digitalisation, sustainability in trade and trade financing whom businesses can hire in-house or have access to within our ecosystem.

It will also be a platform for businesses to be plugged into multilateral/plurilateral organisations – such as the World Trade Organization, Asia-Pacific Economic Cooperation, Asean and B20 – to stay informed of geopolitical developments, influence the path where possible, and ultimately find a path and place for themselves amid the changing operating landscape.

We can’t direct the wind, but we can adjust the sails

In a fragmented world, collaboration and adaptability are the keys to resilience. By leveraging FTAs and preparing for the evolving trade landscape, businesses can position themselves not just to survive, but to lead in the markets of tomorrow.

While businesses cannot direct the winds of trade and investment flows, with the right capabilities they can adjust their sails.

Organisations need the right capabilities, but above all, the fortitude to seize opportunities amid volatility, complexity and uncertainty. A proactive approach to geopolitics and its impact on trade and investment flows is a major undertaking for any businesses, but it is essential, and those that succeed in this volatile, uncertain and complex environment will emerge as the market leaders of tomorrow.

The writer is CEO of the Singapore Business Federation