SPEECH BY MR S ISWARAN, MINISTER OF STATE FOR TRADE AND INDUSTRY, AT AUSTRALIAN CHAMBER OF COMMERCE (AUSTCHAM) BUSINESS AWARDS, SILVER JUBILEE DINNER, 24 NOVEMBER 2006, 7.00 PM AT MARINA MANDARIN HOTEL

Your Excellency, Miles Kupa, Australian High Commissioner,

Mr John Dick, President of AustCham

Distinguished Guests,

Ladies and Gentlemen,

Good evening.

My wife, Kay, and I take great pleasure in joining you this evening to celebrate the silver jubilee of the Australian Chamber of Commerce. For the past 25 years, the Chamber has played an essential role as a platform for commercial, and economic exchange between Australia and Singapore.This has been a key factor in developing strong business-to-business links and people-to-people ties between our two countries.Singapore and Australia have always worked well together – bilaterally and multilaterally.And with the rise of Asia, our economies are well-positioned to leverage off our our close relationship to jointly reap the benefits of a growing region.

Capitalising on Asia’s Growth

These are certainly exciting times for Asia as the world’s economic centre of gravity shifts to our part of the world.The economic awakening of China and India has had a profound impact on global trading patterns and the flow of investments and trade.In recognition of this trend, the Australian Chamber of Commerce has aptly themed this year’s regional business conference “Capitalising on Asian Growth”.

Asia’s transformation has been underpinned by an openness to globalisation and competition, the promotion of exports and the courting of foreign investments – despite the major economic setback of the Asian Financial Crisis in 1997.The IMF’s latest World and Economic Survey indicates that Asia’s economy is now the fastest growing in the world, contributing close to 50% of the world’s growth in 2005.The region is expected to grow by 7.1% this year.China and India are key contributors to this economic buoyancy (with GDP growth forecasts of 10% and 8% respectively for 2006) as is Japan with its continued expansion after more than a decade of economic drift.

Positioning ASEAN

ASEAN is similarly gearing up for the opportunities and challenges that arise from this wave of growth.The regional grouping is working towards the accelerated formation of the ASEAN Economic Community by 2015.The formation of an integrated and cohesive regional market will allow ASEAN to respond strategically to the rise of China and India, in particular, and position itself as an integral part of the Asian economic network.ASEAN has also embraced the policy of building economic bridges with the rest of the world through the continued engagement of key trading partners, including Australia, through the ASEAN-Australia-New Zealand Free Trade Agreement.

These policies have paved the way for ASEAN to sustain a positive trend in the performance of both its trade and investment flows.ASEAN’s total trade in 2005 increased by 14% over the previous year and reached US$1 trillion.ASEAN’s Foreign Direct Investments reached US$38 billion in 2005, an increase of 48% over the previous year.These figures are a testimony to the region’s economic vibrancy and potential.

Australia’s Engagement of the Region

Australia’s economic and strategic relations with Asia have deepened significantly over the years.Today, seven of Australia’s top ten trading partners are in Asia.Australian companies are exporting more to China, especially raw materials and agricultural products, and the two countries are negotiating an FTA with China to facilitate a closer economic partnership.Australia-India relations are also warming with Prime Minister John Howard’s fruitful visit to India in March this year.

However, there is considerable potential that remains untapped.Let me to illustrate with some data from Australia’s Department of Foreign Affairs and Trade.ASEAN accounts for about 15% of Australia’s total merchandise trade with the world; yet it has received only 2.6% of cumulative outward investments from Australia. Similarly, China and India account for about 13% and 3% respectively of Australia’s total merchandise trade; yet together they have received less than 0.5% of Australian outward investments.In contrast, the corresponding numbers for the UK are 4% and 14%.

There are many factors that can explain this dichotomy not least of which are history and culture.Also, given the risk profile of the emerging markets of Asia, one would expect trade flows to precede investment commitments which are less mobile and entail greater risk.Nevertheless, it is clear that Australian companies and investors have considerable opportunity to seize in the region, especially given the increased interest from the US and to a lesser extent Europe.

Leveraging on the Australia – Singapore Network

This is where the Australia-Singapore network can be leveraged for significant mutual benefit.Australia and Singapore enjoy strong and productive bilateral ties based on longstanding educational, trade and tourism links; compatible corporate culture; as well as a shared strategic outlook.Australia’s free trade agreement with Singapore, concluded in 2003, was your first with any country apart from New Zealand, and it sent a clear signal of Australia’s long-term commitment to Asia.

The Singapore Australia FTA (SAFTA) has enhanced business opportunities, by enabling Singapore companies to gain access to the vibrant Australian economy. In turn, the number of Australian companies registered in Singapore has also grown by almost 70% in the last 5 years to reach 1,500 this year. The single largest Australian manufacturing investment to date in Singapore is Natural Fuel’s construction of a bio-diesel plant in JurongIsland, which was announced earlier this month. While our economic ties have never been stronger, we should continue to strengthen the building blocks of our bilateral relations and work towards greater engagement of Asia.There are several ways to do this.

Firstly, we should strengthen SAFTA to our mutual benefit and to serve as a benchmark for other countries.Since SAFTA was concluded three years ago, new norms have been established, and we should, at the very least, bring the agreement up to these new levels of ambition and aspiration.

The feedback from business is that a review of the current SAFTA Rules of Origin (ROO) is especially important. This will allow the agreement to harness the full potential in tariff savings for Australian and Singaporean importers, retailers and consumers alike. Our business and people links will also be further increased with the liberalisation of the Trans-Pacific air route.

Secondly, I would encourage Australian companies to use Singapore as your springboard to ASEAN and the rest of Asia, by plugging into our current network of FTAs.With this lattice of agreements and more in the pipeline, Australian companies in Singapore can benefit from preferential access to global markets.

In addition, Australian companies can tap on Singapore’s ongoingbilateral projects to gain a bigger foothold in the Asian market.We are currently working on a number of such initiatives including the Vietnam-Singapore Connectivity Framework Agreement; economic cooperation between Singapore and Indonesia in the islands of Batam, Bintan and Karimun; and a Special Economic Zone (SEZ) between India and Singapore.

Some Australian and Singaporean companies are also undertaking various corporate initiatives in each other’s markets to achieve the critical mass and connectivity necessary to enter the Asian market. For example, Toll Holdings aims to expedite its entry into Asia with its acquisition of Sembcorp Logistics, a Singaporean company with a significant logistics network in Asia.Singaporean companies are also making forays into Australia, with Singapore Power’s purchase of TXU and Comfort Cab’s joint venture with Cabcharge Australia providing transportation in Western Sydney.

Thirdly, we should work together towards the timely conclusion of the multilateral FTA initiative, like the ASEAN-Australia-New Zealand, which will go a long way in enhancing market access for all our companies.I am glad that the Ministers from ASEAN, Australia and New Zealand have committed to conclude negotiations by the end of 2007 when they met at the ASEAN Economic Ministers Meeting in August.

Conclusion

Allow me to conclude by saying that I am sanguine that Australia-Singapore ties will grow from strength to strength in tandem with our continued bilateral engagement, joint regional initiatives and multilateral efforts.It is a partnership that is underpinned by strong links between our people, our enterprises and our governments. Asia’s economic renaissance gives us yet another opportunity to renew this partnership.

Tonight’s celebration of the Silver Jubilee of the Australian Chamber of Commerce, and your presence, attest to the depth and breadth of those ties.And, in particular, I would like to congratulate this evening’s award winners and thank them for injecting further dynamism in the Australia-Singapore business relationship.I wish you all much success.

Thank you.