Opening Remarks by Minister Lim Hng Kiang, Minister for Trade and Industry, at the UAE Asia Investment Forum/ Middle East-Asia Business Exchange, 30 October 2006, 9.30 AM at Suntec Convention & Exhibition Center, Rm 303-305 (Level 3)
Your Excellency, Minister of Labor Dr Ali Abdullah Al Kaabi, UAE
Eng. Salah Al Shamsi, President UAE Federation of Chambers of Commerce, UAE
Your Excellencies
Distinguished guests
Ladies and Gentlemen
It gives me great pleasure to address you this morning. To our overseas guests, a warm welcome to Singapore. It is heartening to see so many here today supporting the event, as we strive to build up the business linkages between the Middle East and Asia.
The Middle East and Asia on the Ascent
Many of you are aware that countries in the Middle East are undergoing economic transformation. We are also fully conscious that Asia is growing strongly. Over the next decade, the economic landscape in the Middle East looks set to change dramatically, while Asia will continue to surge, led by the re-emergence of China and India, and a revitalized ASEAN.
In recent years, both China and India have witnessed remarkable growth. Since its “Open Door Policy” in 1978, China’s economy has grown by almost 10% a year on average. China has become one of the most globalized economies; it is the world’s third largest trading nation with total trade of US$1.4 trillion in 2005 and a leading destination for foreign direct investment. It has definitely moved beyond cheap toys and low-tech products to produce innovative companies. It has grown by an average annual rate of 8% over the last three years, and has established itself as a world leader in services. In fact, in 2005, China and India account for 16% of the global economy based on purchasing power parity and about 40% of the global population of working age. These are vast opportunities for the rest of the world.
The Middle East is also experiencing an exciting transformation. In recent years, the Middle Eastern economies have experienced good growth, on the whole averaging 5% over the last three years. The growth in some parts of the Middle East, in particular the Gulf States, is much higher. Many of these countries have benefited from high energy prices and are diversifying into non-oil sectors to reduce their dependence on oil revenue. Huge investments in infrastructure are also being made in ports, airports, telecommunications, industrial parks, education, tourism, healthcare and utilities. To date, the total value of planned and active infrastructure projects in the Middle East exceeds a trillion US dollars. A trillion US dollars. In Saudi Arabia alone, an estimated US$624 billion worth of projects is being planned over the next 15 years.
The task that lies before us therefore is to link our two very dynamic regions, not only at the government-to-government level, but more importantly, at the business-to-business level.
Linking Asia and the Middle East
In Singapore, we believe that governments can facilitate by providing a framework so that businesses can engage. To this end, we have concluded several Free Trade Agreements with both Middle East and Asian countries. In Asia, our first FTA was with Japan. Since then, we have concluded a Comprehensive Economic Cooperation Agreement with India and have recently launched bilateral FTA negotiations with China soon. Within ASEAN, we have been lowering tariffs since 1992 and have embarked on ASEAN FTAs with the key countries in the region. The Singapore-Jordan FTA is our first FTA with a Middle Eastern country and also Jordan’s first with an Asian country. We have also registered our interest for an FTA with the Gulf Cooperation Council. These economic agreements will serve not only to enhance trade and investment flows but also serve as strategic bridges between Asia and the Middle East.
We have also stepped up exchanges through bilateral visits and the hosting of the inaugural Asia-Middle East Dialogue last year. Many Singapore leaders have visited the Middle East over the last few years. In the coming months there will be more visits to the Middle East by our political and business leaders.
The growing interaction and awareness between the two regions has started to pay off. In 2005[1], the Middle East was Singapore’s 7th largest trading partner and trade volume has more than doubled from a decade ago to US$30 billion. Singapore businesses are increasingly involved in the Middle East. Singapore-based Ascott group for example, a leading international serviced residence company has partnered with Addax, an investment bank based in Bahrain to launch a cluster of serviced apartments across the Middle East and North Africa. Boustead has secured several upstream oil and gas contracts with Saudi Aramco, the world’s largest oil and gas producer. More recently, Keppel secured a solid waste management project in Qatar worth US$1.3 billion.
Middle Eastern companies are also increasing their presence in Singapore. For instance, the Emirates National Oil Company is currently working with Horizon Terminals on the third phase expansion to increase the oil storage capacity in their tank farm on Jurong Island. In May, I had the pleasure of officiating at the opening ceremony for Proclad, a Kuwaiti oil and gas equipment manufacturing company that has set up a US$25 million facility in Singapore to service its regional customers. Last month, the Doha National Bank opened a representative office in Singapore to facilitate trade transactions between the Middle East and the Far East. We welcome more enterprises, from the Gulf region to partner Singapore as they internationalize their businesses. As a key financial, trade and transportation hub in Asia, Singapore is well-positioned as a gateway for Middle Eastern companies to explore and expand into the region.
UAE is one of the front runners leading the wave of change sweeping rapidly across the Middle East. Having moved away from a public sector dominant economy model towards an outward-oriented approach based on international trade and the development of the private sector, the UAE today has one of the highest GDP per capital in the Middle East. Many iconic mega-projects such as the Dubai Waterfront and the Saadiyat Island, are in the pipeline. According to the Middle East Economic Digest, one quarter of the world’s total supply of construction cranes is in Dubai. Abu Dhabi is also rapidly industrializing. The Abu Dhabi Chamber of Commerce estimates that US$136 billion will be invested in Abu Dhabi over the next five years. These illustrations bear testimony to the magnitude of the projects in the UAE. Opportunities are abound. Recently, a Singapore company, SembCorp invested in an Integrated Water and Power Plant project in Fujairah. In terms of trade, the UAE is also Singapore’s 2nd largest trading partner in the Middle East with total trade having increased by almost 60% from last year.
Conclusion
So ladies and gentlemen, these are exciting times. For companies seeking high growth and rewards, the Middle East and Asian markets hold great potential. The inaugural Middle East-Asia Business Exchange is a manifestation of Singapore’s commitment and interest in enhancing linkages with the Middle East particularly at the business-to-business level. I understand that in addition to the UAE Asia Investment Forum today, participants in the Business Exchange will also have the opportunity to learn about the exciting opportunities also present in Egypt and Saudi Arabia tomorrow. Together all these events promote a mutual exchanges and understanding amongst the respective business communities and our people.
I encourage everyone to make full use of these forums to explore and to understand the business opportunities in the two regions. I am sure you will have a fruitful discussion. Thank you very much.
[1] After Malaysia, US, EU, China, Indonesia and Japan.