The issue is discussed openly here and studied by academics, he noted, pointing to a study released last week by the Institute of Policy Studies (IPS) and racial harmony group OnePeople.sg on racial and religious harmony.
YouTuber Preeti Nair and her brother Subhas, like everyone else, had every right to discuss racism, he said, but the manner in which they did so was wrong.
Mr Shanmugam spoke to reporters at an event at Sri Siva Krishna Temple in Marsiling yesterday, a day after the siblings issued a second apology over a controversial rap video made in response to a "brownface" advertisement featuring Chinese actor Dennis Chew.
"There is racism in every multiracial society that we know of. And there is, in Singapore," Mr Shanmugam said, adding that the issue is a key concern for the Government.
"We want to build a cohesive society, but racism corrodes and deepens the fault lines in society. We do a lot to counter it, and we have set out what we do," he added.
While Mr Shanmugam agreed that Ms Nair - who is also known as Preetipls - and her brother had the right to raise the issue of racism, he questioned the way it was done.
"If everyone starts discussing race and religion in the way they did, then you will in fact get more racism, not less.
"That is our key concern. They have used the language of resistance in America, but we thankfully are in a very different situation."
WAY ISSUE IS RAISED MATTERS
We want to build a cohesive society, but racism corrodes and deepens the fault lines in society. We do a lot to counter it, and we have set out what we do. The Nair siblings, like everyone else, had every right to raise the issue of racism, but the way they did it was not right. So, I agree with their right to raise it, but question the way it was done. If everyone starts discussing race and religion in the way they did, then you will in fact get more racism, not less. That is our key concern. They have used the language of resistance in America, but we thankfully are in a very different situation.
HOME AFFAIRS AND LAW MINISTER K. SHANMUGAM, speaking at an event at Sri Siva Krishna Temple.
The Nair siblings had made a rap video called K. Muthusamy, who is one of the characters Mr Chew portrayed in the ad, a man with visibly darker skin. Mr Chew had also portrayed a woman wearing a tudung.
Both the ad and rap video raised concerns about racial sensitivity in Singapore and were criticised by politicians as being offensive and unacceptable. Police reports have been made against both.
In their second apology on Saturday, the Nairs said they "unconditionally apologise for the tone, aggression, vulgarities and gestures used" in their video.
They had first issued an apology last Friday "for any hurt that was unintentionally caused" by the video.
That initial apology was criticised by the Ministry of Home Affairs, which said it was a "mock, insincere" apology and that it closely followed the wording of a statement issued by the creative agency and management company involved in producing the "brownface" ad for e-payments website epaysg.com.
Mr Shanmugam went on to add that in any multiracial society, there is always a need to frankly discuss issues like how to deal with casual racism.
There are regular conferences, symposiums and dialogues held by government agencies, non-governmental organisations and other groups on such matters, he added.
Singapore, he said, has made progress from when it gained independence on Aug 9, 1965, when founding prime minister Lee Kuan Yew said: "We are not a Malay nation, we are not a Chinese nation, we are not an Indian nation. This is a country for all Singaporeans."
The country has progressed by having clear government policies, and with Singaporeans generally accepting multiracial values, Mr Shanmugam said.
"We are not in the American situation. And we must see how we can progress further, because as many of us recognise, there continue to be racial fault lines and religious fault lines. It is always a work in progress," he added.
Turning to the ad, he said it was in poor taste. "Many disapprove of it, and the people behind the ad and others need to learn from that - be much more sensitive," he added.
As the country approaches its 54th birthday, he said there is much that Singaporeans can be positive about.
Pointing to headlines that made the news from around the world, he cited the ongoing clashes between police and protesters in Hong Kong, the mass shooting in Texas and militant attacks in Kashmir.
"I am not saying the governments were right or wrong in those countries. They face different issues. But we in Singapore can be thankful that we have avoided headlines like these. And we must focus on getting things better, discuss issues openly and work on them."
Commentators contacted by The Straits Times said the recent episode, and the controversy it sparked, had helped by raising a "sensitive issue" for discussion.
Senior lecturer Nazry Bahrawi from the Singapore University of Technology and Design agreed that race relations have developed differently in Singapore and in the US, and that Singaporeans will need to "develop their own vocabulary to outline our experiences of race relations here".
Said IPS senior research fellow Mathew Mathews: "Sizeable portions of the public prefer that such concerns be discussed behind closed doors and not brought out to the public.
"Because we don't talk about race much, many people don't have the vocabulary or the sensitivity to deal with these issues."
But he added that Singapore does not have a history of severe oppression or ongoing discrimination like police brutality similar to the US, to warrant the "in your face", confrontational methods used in some societies like America.
Such methods might be acceptable in those contexts, but often are seen even there as a last resort.
"Race and religious relations in Singapore won't do well with such antagonistic approaches," he said.