KEYNOTE ADDRESS BY MR LEE YI SHYAN, MINISTER OF STATE FOR TRADE AND INDUSTRY AT THE “BRIDGING PARTNERSHIPS BETWEEN KOREA AND SINGAPORE” CONFERENCE ON Friday, 30 march 2007, 10.30am
Your Excellencies,
Distinguished Guests
Ladies and Gentlemen,
Good morning.
The Rapid Growth of Korea
It gives me great pleasure to speak to you at this conference, which marks the first anniversary of the Korea-Singapore Free Trade Agreement (KSFTA).Your presence not only reflects your interest in the Korean and Singaporean markets, but also indicates the growing and strong economic ties between the two countries.
Four decades ago, Korea was a rural and undeveloped country with GDP per capita comparable to the poorer countries of Africa and Asia. Today, Korea is a member of the trillion dollar club as the world’s ninth largest economy. Korea has benefited from a liberalized world trade system.
Like Korea, Singapore four decades ago was undeveloped. We were just a small trading port. However, with a coherent policy of industrialization, investment in science and technology and open trade, Singapore’s GDP per capita today has reached the level of western Europe. Singapore too, has benefited from a liberalized world trade system.
Bilateral Trade and Investment
Turning to our bilateral economic relations, I have good news to report. In 2006, bilateral trade totaled S$31 billion, an increase of 10% over 2005. Korea was Singapore’s tenth largest trading partner, while Singapore was Korea’s seventh largest export market, after China, the United States, Japan, Hong Kong, Taiwan and Germany.
The key components of Singapore and Korea trade are essentially in the trading of electronics equipment and petroleum products. In the area of electronics, both Singapore and Korea are strong bases for the manufacturing of electronic parts, with each supplying components to different parts of the manufacturing value chain. There are definitely opportunities for Singapore and Korea to work together in this area by tapping on each other’s key strengths to supply components to major Korean electronics manufacturers. Similarly, in the area of petroleum trading, we have complementary interests. I will elaborate on these a little later.
Korea and Singapore have also seen significant increases in cross investments. In 2005, Korean investments in Singapore totaled about S$185 million, while Singapore investments in Korea amounted to approximately S$590 million. In 2006, Singapore investments in Korea increased about 34% to around S$790 million.
Singapore companies have invested heavily in Korea’s financial sector, including Temasek Holdings’ stake in Korea’s Hana Bank. Other prominent Singapore companies in Korea include PSA International, Ascendas, City Developments Limited and even local favorite Ya Kun Kaya Toast, reflecting the broad-ranging interests of Singapore companies in Korea.
I believe Korea is attractive to Singapore businesses in a few ways. First of all, Korea has a market of around 48 million. Its relatively high affluence level, particularly in Seoul, for instance, makes up an interesting and sizeable market for products and services. Secondly, Korea is located within a 2-hour flight of Japan and China – two of the world’s largest economies. In sectors such as logistics and manufacturing, Korea can be a good spring board for serving Japan and northeast China.
Similarly, Singapore is attractive to many Korean companies as a gateway to Southeast Asia, South Asia and the Middle East. There are currently 489 registered companies from Korea in Singapore, engaging in activities such as international trading, logistics & transport, and construction & engineering. All the major Korean chaebols are represented here. For example, Samsung Asia operates its Asia Pacific hub for procurement, logistics and administrative functions here. Korean Airlines has also recently designated Singapore as a regional headquarters for Asia. In addition, companies such as SK Corporation, Hyosung and Hanjin use Singapore for international trading, shipping and procurement operations.
Singapore – Your Gateway to ASEAN and Beyond
With Asia growing steadily and taking up an even larger pie of the world trade and GDP, companies in our region will find previously undiscovered opportunities to expand and grow. It is in this context that I see potential for more Singapore investments in Korea, and more Korean investments into Singapore, to introduce products and services to Northeast Asia and Southeast Asia respectively.
To the Korean companies present today, I would like to make three suggestions: My first suggestion is to encourage more Korean companies to forge partnerships with Singapore based businesses to develop the markets of Southeast Asia and South Asia. They could tap our strong network of business linkages and free trade agreements to explore opportunities in various sectors.
My second suggestion is for Korean companies to consider investing in the electronics and petrochemicals sectors. Like Korea, Singapore has a comprehensive range of electronics and precision-engineering companies that can support high-end manufacturing wafer fabrication and IC design operations.
One example is Nepes Corporation. The company, through a joint venture with Singapore company UTAC and EDB Investments, has established Nepes Pte Ltd, which is the first 3rd party wafer bumping company to enter volume production of 300mm wafer bumping in Singapore.
The petrochemicals industry is another key sector where we have infrastructure and technology. We promote a total-solutions approach integrating innovation, manufacturing, regional distribution, marketing and other services. This offers a cost-competitive and synergistic environment for some of the world's leading petroleum, petrochemicals and specialty chemicals giants, including ExxonMobil, Shell and Sumitomo. Korean petrochemicals companies can similarly leverage on this platform to penetrate third-country markets in the region.
For instance, Korean company SK Energy Asia is one of the largest traders in Singapore with a turnover of US$12 billion. In January 2005, SK Corporation announced its plans to invest in a US$10 million (5.3 million barrel) petroleum storage facility on Jurong Island. This marks the first time that a major Asian refiner has a direct stake in an independent storage in Singapore. We hope SK Energy Asia would consider downstream manufacturing in Singapore in the near future.
My third suggestion is for Korean companies to tap the resources of the Korea Trade and Investment Promotion Agency (KOTRA), Korea International Trade Agency (KITA) and the Korea Small Business Corporation (SBC) which are all present in Singapore. Together with our agencies, they form a comprehensive range of supporting business infrastructure to facilitate information flow and deal flow.
Leveraging on KSFTA
Benefits for Korean companies
Let me now say a few words on the Korea-Singapore FTA. Under KSFTA, Korean investors would derive benefits in a number of ways. For example, Korean companies keen to invest or provide services in Singapore are assured of fair and non-discriminatory treatment, in fact on the same terms as Singapore investors or service suppliers.
Korean companies would also enjoy greater access to Singapore’s market for professional services in architecture, engineering and real estate. In particular, Korean construction companies would gain greater access to Singapore’s construction market, which was estimated to be worth more than S$16 billion in 2006.
Benefits for Singapore companies
As for Singapore companies, our goods exporters would stand to gain from tariff concessions on 92% of Korea’s total national tariff lines. In 2006, these concessions covered 74% of our domestic exports to Korea. Goods exporters should explore using these tariff concessions to make their product prices more competitive in the Korean market.
For service exporters, the KSFTA has increased your access to Korea’s services markets like education, environmental and courier services.
Under the FTA, Singapore companies can also benefit from increased opportunities to bid for tender projects of Korean Central Government entities as the threshold amount (except for construction services) has been reduced from around US$192,000 under the Government Procurement Agreement, to US$148,000 under the KSFTA.
KSFTA and a closer partnership for the future
The KSFTA we have concluded represents a major step forward in strengthening our mutual economic relations. To keep pace with the world trade system and the needs of our businesses, we ought to continue to improve KSFTA for mutual benefits. In fact, FTA reviews are important in this process. For example, the KSFTA currently covers 74% of our exports to Korea, we should work towards raising it to 90% level in subsequent review as we have done in other reviews. With a strong and comprehensive FTA in place, I am confident that bilateral trade and investments would increase further.
Beyond trade and investment relations, people and cultural flows are also important in forging stronger bilateral relations and helping us gain a firmer understanding of each other. Last year, Singapore welcomed 454,666 Korean visitors. Korea too has become popular tourist destinations for Singapore tourists for shopping, skiing and visits to the 大长今 (Dae Jang Geum) filming site. Over 70,000 Singaporeans visited Korea in 2006.
Conclusion
Today, speakers with extensive knowledge on doing business in Korea have been lined up to share information and experiences with you. I hope you will find this conference a fruitful and insightful one. I wish you a pleasant day ahead.
Thank you.
It gives me great pleasure to speak to you at this conference, which marks the first anniversary of the Korea-Singapore Free Trade Agreement (KSFTA).Your presence not only reflects your interest in the Korean and Singaporean markets, but also indicates the growing and strong economic ties between the two countries.
Four decades ago, Korea was a rural and undeveloped country with GDP per capita comparable to the poorer countries of Africa and Asia. Today, Korea is a member of the trillion dollar club as the world’s ninth largest economy. Korea has benefited from a liberalized world trade system.
Like Korea, Singapore four decades ago was undeveloped. We were just a small trading port. However, with a coherent policy of industrialization, investment in science and technology and open trade, Singapore’s GDP per capita today has reached the level of western Europe. Singapore too, has benefited from a liberalized world trade system.
Bilateral Trade and Investment
Turning to our bilateral economic relations, I have good news to report. In 2006, bilateral trade totaled S$31 billion, an increase of 10% over 2005. Korea was Singapore’s tenth largest trading partner, while Singapore was Korea’s seventh largest export market, after China, the United States, Japan, Hong Kong, Taiwan and Germany.
The key components of Singapore and Korea trade are essentially in the trading of electronics equipment and petroleum products. In the area of electronics, both Singapore and Korea are strong bases for the manufacturing of electronic parts, with each supplying components to different parts of the manufacturing value chain. There are definitely opportunities for Singapore and Korea to work together in this area by tapping on each other’s key strengths to supply components to major Korean electronics manufacturers. Similarly, in the area of petroleum trading, we have complementary interests. I will elaborate on these a little later.
Korea and Singapore have also seen significant increases in cross investments. In 2005, Korean investments in Singapore totaled about S$185 million, while Singapore investments in Korea amounted to approximately S$590 million. In 2006, Singapore investments in Korea increased about 34% to around S$790 million.
Singapore companies have invested heavily in Korea’s financial sector, including Temasek Holdings’ stake in Korea’s Hana Bank. Other prominent Singapore companies in Korea include PSA International, Ascendas, City Developments Limited and even local favorite Ya Kun Kaya Toast, reflecting the broad-ranging interests of Singapore companies in Korea.
I believe Korea is attractive to Singapore businesses in a few ways. First of all, Korea has a market of around 48 million. Its relatively high affluence level, particularly in Seoul, for instance, makes up an interesting and sizeable market for products and services. Secondly, Korea is located within a 2-hour flight of Japan and China – two of the world’s largest economies. In sectors such as logistics and manufacturing, Korea can be a good spring board for serving Japan and northeast China.
Similarly, Singapore is attractive to many Korean companies as a gateway to Southeast Asia, South Asia and the Middle East. There are currently 489 registered companies from Korea in Singapore, engaging in activities such as international trading, logistics & transport, and construction & engineering. All the major Korean chaebols are represented here. For example, Samsung Asia operates its Asia Pacific hub for procurement, logistics and administrative functions here. Korean Airlines has also recently designated Singapore as a regional headquarters for Asia. In addition, companies such as SK Corporation, Hyosung and Hanjin use Singapore for international trading, shipping and procurement operations.
Singapore – Your Gateway to ASEAN and Beyond
With Asia growing steadily and taking up an even larger pie of the world trade and GDP, companies in our region will find previously undiscovered opportunities to expand and grow. It is in this context that I see potential for more Singapore investments in Korea, and more Korean investments into Singapore, to introduce products and services to Northeast Asia and Southeast Asia respectively.
To the Korean companies present today, I would like to make three suggestions: My first suggestion is to encourage more Korean companies to forge partnerships with Singapore based businesses to develop the markets of Southeast Asia and South Asia. They could tap our strong network of business linkages and free trade agreements to explore opportunities in various sectors.
My second suggestion is for Korean companies to consider investing in the electronics and petrochemicals sectors. Like Korea, Singapore has a comprehensive range of electronics and precision-engineering companies that can support high-end manufacturing wafer fabrication and IC design operations.
One example is Nepes Corporation. The company, through a joint venture with Singapore company UTAC and EDB Investments, has established Nepes Pte Ltd, which is the first 3rd party wafer bumping company to enter volume production of 300mm wafer bumping in Singapore.
The petrochemicals industry is another key sector where we have infrastructure and technology. We promote a total-solutions approach integrating innovation, manufacturing, regional distribution, marketing and other services. This offers a cost-competitive and synergistic environment for some of the world's leading petroleum, petrochemicals and specialty chemicals giants, including ExxonMobil, Shell and Sumitomo. Korean petrochemicals companies can similarly leverage on this platform to penetrate third-country markets in the region.
For instance, Korean company SK Energy Asia is one of the largest traders in Singapore with a turnover of US$12 billion. In January 2005, SK Corporation announced its plans to invest in a US$10 million (5.3 million barrel) petroleum storage facility on Jurong Island. This marks the first time that a major Asian refiner has a direct stake in an independent storage in Singapore. We hope SK Energy Asia would consider downstream manufacturing in Singapore in the near future.
My third suggestion is for Korean companies to tap the resources of the Korea Trade and Investment Promotion Agency (KOTRA), Korea International Trade Agency (KITA) and the Korea Small Business Corporation (SBC) which are all present in Singapore. Together with our agencies, they form a comprehensive range of supporting business infrastructure to facilitate information flow and deal flow.
Leveraging on KSFTA
Benefits for Korean companies
Let me now say a few words on the Korea-Singapore FTA. Under KSFTA, Korean investors would derive benefits in a number of ways. For example, Korean companies keen to invest or provide services in Singapore are assured of fair and non-discriminatory treatment, in fact on the same terms as Singapore investors or service suppliers.
Korean companies would also enjoy greater access to Singapore’s market for professional services in architecture, engineering and real estate. In particular, Korean construction companies would gain greater access to Singapore’s construction market, which was estimated to be worth more than S$16 billion in 2006.
Benefits for Singapore companies
As for Singapore companies, our goods exporters would stand to gain from tariff concessions on 92% of Korea’s total national tariff lines. In 2006, these concessions covered 74% of our domestic exports to Korea. Goods exporters should explore using these tariff concessions to make their product prices more competitive in the Korean market.
For service exporters, the KSFTA has increased your access to Korea’s services markets like education, environmental and courier services.
Under the FTA, Singapore companies can also benefit from increased opportunities to bid for tender projects of Korean Central Government entities as the threshold amount (except for construction services) has been reduced from around US$192,000 under the Government Procurement Agreement, to US$148,000 under the KSFTA.
KSFTA and a closer partnership for the future
The KSFTA we have concluded represents a major step forward in strengthening our mutual economic relations. To keep pace with the world trade system and the needs of our businesses, we ought to continue to improve KSFTA for mutual benefits. In fact, FTA reviews are important in this process. For example, the KSFTA currently covers 74% of our exports to Korea, we should work towards raising it to 90% level in subsequent review as we have done in other reviews. With a strong and comprehensive FTA in place, I am confident that bilateral trade and investments would increase further.
Beyond trade and investment relations, people and cultural flows are also important in forging stronger bilateral relations and helping us gain a firmer understanding of each other. Last year, Singapore welcomed 454,666 Korean visitors. Korea too has become popular tourist destinations for Singapore tourists for shopping, skiing and visits to the 大长今 (Dae Jang Geum) filming site. Over 70,000 Singaporeans visited Korea in 2006.
Conclusion
Today, speakers with extensive knowledge on doing business in Korea have been lined up to share information and experiences with you. I hope you will find this conference a fruitful and insightful one. I wish you a pleasant day ahead.
Thank you.