Mr Lim Hng Kiang at the European Chamber of Commerce Europe Day Lunch

SPEECH BY MR LIM HNG KIANG,MINISTER FOR TRADE AND INDUSTRY, AT THE EUROPEAN CHAMBER OF COMMERCE EUROPE DAY LUNCH, 9 MAY 2008, 2.00 PM AT HILTON HOTEL

Your Excellency Holger Standertskjöld, Ambassador and Head of the Delegation of the European Commission to Singapore

Mr Joachim Ihrcke, President of EuroCham

Distinguished Guests

Ladies and Gentlemen

INTRODUCTION

It is an honour for me to join you here this afternoon to celebrate Europe Day.

European integration has changed the face of Europe. What started with freedom from quotas and customs duties has now progressed into a common currency. We know that today, the euro is not just a tangible symbol of European integration; it plays an increasingly important role in supporting the stability of the global financial system.

WHY EUROPE MATTERS TO SINGAPORE

In this era of globalisation, the future direction that Europe chooses will have a profound impact on Singapore and on the rest of the world. Singapore and the countries of Europe are closely inter-connected.The EU is Singapore’s second largest trading partner, after Malaysia. Last year, our bilateraltradestoodatanall-timehighof $97.5 billion, an increase of 6.3 per cent from 2006. Europe is also our largest source of foreign direct investment.

More than 7,000 European companies have established a presence in Singapore. These companies committed $8.4 billion or more than half of the total manufacturing investment we attracted last year. We are glad that increasingly, European companies have recognised the relevance of Singapore in their Asian strategies. Alongside these strong commercial links, there is also a rich network of connections throughout many sectors including in science and technology, innovation, education and the arts.

This afternoon, I would like to speak on how we can create more opportunities for economic collaboration between Europe and Singapore.

CREATING OPPORTUNITIES FOR ECONOMIC COLLABORATION BETWEEN EUROPE AND SINGAPORE

Although the US financial turmoil is casting a shadow on the global economy, we are optimistic about Asia’s economic prospects. Asian economies continue to remain vibrant. China and India – the region’s growth locomotives – are expected to maintain their growth momentum.ASEAN integration has taken a significant step forward with the signing of the ASEAN Charter and the ASEAN Economic Community Blueprint in November 2007.To keep our economy competitive, Singapore has adopted a four-pronged strategy.First, we grow our market share in our areas of strength; second, explore new growth opportunities; third, entrench the spirit of innovation throughout the economy, and fourth, build more economic bridges. Let me expand on these strategies and, more importantly, illustrate how they provide opportunities for economic collaboration between Europe and Singapore.

(A) Strengthening our engine of growth – Manufacturing

First, we are strengthening the manufacturing sector, a key pillar of Singapore’s economy and our engine of growth. Manufacturing contributes about a quarter of Singapore’s GDP, and our goal is to double manufacturing output to $300 billion by 2018. We are growing our existing capabilities in the electronics, chemicals, biomedical sciences, and precision engineering sectors. Let me illustrate by going through two key clusters that I see potential for collaboration between Singapore and Europe.

i. Transport Engineering – Aerospace

The first cluster is transport engineering. Singapore’s transport engineering sector comprises the aerospace, land transport industries, as well as marine and offshore engineering. Among these sub-sectors, we have set our targets on growing the air transport sector, because we are located in the fastest growing air travel market in the world. In 2007, Singapore’s aerospace industry achieved a record output of $6.9 billion. Today, our aerospace industry has grown to encompass a broad spectrum of activities, spanning air hub, maintenance, repair and overhaul (MRO), design, manufacturing and aviation services. We have now set our sights on moving up the industry’s value chain, beyond MRO to engineering, assembly, as well as Research and Design.

The investments in services and facilities brought into Singapore as a result of the recent Singapore Airshow represent an important step in this direction. Major global aerospace players such as EADS, Rolls-Royce, Thales and Safran have already chosen Singapore to base their manufacturing, R&D and engineering activities. Our well-educated workforce, coupled with the strong links among our defence research agencies, universities, research institutes and industries, makes us a natural choice for aerospace companies to hub their activities. In February this year, Rolls-Royce set up its Aero-Engine Assembly and Test Facility in Singapore – a first for Asia. As the regional aviation hub, Singapore’s aerospace cluster is a vibrant and dynamic one. Therefore, I strongly encourage more European aerospace and transport engineering companies to consider Singapore as the location to base their activities.

ii. Biomedical Sciences (BMS)

The second cluster is biomedical sciences, or BMS for short. In the seven years since we embarked on developing the BMS sector, manufacturing output has almost quadrupled in size. Today, BMS manufacturing accounts for 5.5 per cent of Singapore’s GDP. As one of the key strategic manufacturing sites of the BMS industry, Singapore currently hosts six of the top ten pharmaceutical conglomerates’ manufacturing facilities and a growing base of medical technology companies within the TuasBiomedicalPark.

We are actively creating an optimal environment where companies can connect to a myriad of research and commercial opportunities. Our location in the heart of Asia, good research infrastructure and strong focus on the industrial application of research provide the ideal platform for European companies looking for a site to serve Asian markets. We are already home to some of the world’s leading biomedical sciences giants such as Novartis. I look forward to seeing more partnerships between European and Singaporean companies in this promising cluster. 

(B) Exploring New Growth Areas – Clean Energy

Our second strategy is to explore new growth areas. A key thrust is to grow the clean energy sector. Apart from providing a key resource, the energy sector also presents significant economic opportunities. Europe is a world leader in clean energy, and has developed cutting edge technology in this cluster. We are therefore keen to partner European companies to further develop a comprehensive clean energy cluster in Singapore.

To date, we have already successfully attracted several major investments in clean energy from Europe.In October last year, Norway’s Renewable Energy Corporation (REC) announced a $6.3 billion investment to establish what is envisaged to be the world’s largest solar manufacturing complex in Singapore. In January this year, Neste Oil decided to invest $1.2 billion in building a plant here to produce the world’s cleanest renewable diesel NExBTL, a premium-quality fuel which outperforms conventional fossil diesel fuel.With our strong R&D capabilities and skilled talent, we offer European companies in the clean energy business an attractive investment location for them to hub their activities.I am confident we will be able to find new collaborative projects in this sector.

(C) Entrenching the Spirit of Innovation

Going forward, we also want Singapore to be the place where great ideas bloom and breakthroughs happen, where new technologies are first implemented and new knowledge created. Therefore, our third strategy is to entrench the spirit of innovation and R&D. The Singapore government will increase our overall research spending to $7.5 billion per annum by 2010, or 3 per cent of our GDP. Our R&D funds will be directed at areas such as environmental and water technologies, interactive and digital media, and life sciences. By doing so, we hope to be an attractive location for companies to base their R&D centres.

I understand that the EU has also set itself the target of being the most competitive and dynamic knowledge-based economy in the world by 2010. European companies invest heavily in R&D, and this commitment to constant research and innovation has enabled European companies to produce premium goods with a reputation for quality. Singapore shares the EU’s belief in the value of research and innovation. We have been involved in projects organised by the European Commission under the Framework Programme for Research and Technological Development.

Increasingly, European companies are basing their R&D centres in Singapore. Earlier this year, Oerlikon Solar, a world-leading supplier of equipment for making solar cells, based in Switzerland, chose Singapore as the location for its Asian hub for manufacturing and R&D. This project is Oerlikon’s first facility in Asia that will develop, assemble and test its advanced solar cell equipment. EADS also signed a partnership agreement with A*STAR to investigate and develop research projects in aerospace technologies. The strong pipeline of investments by European companies into our R&D sector clearly indicates that R&D is another area in which Singapore and the EU can explore collaboration opportunities. 

(D) Building Economic Bridges and Growing Our External Wing

Beyond developing our strategic clusters, we are also expanding our economic space through deepening our presence in existing markets, and building economic bridges with key trading partners like the EU, US, China and India. With our extensive network of FTAs, businesses in Singapore will find it easy to trade with and invest around the world.

Singapore is also committed to building links between ASEAN and the EU.The ASEAN-EU FTA, launched last year, will further enhance the strong cooperation and close economic ties between our two regions. Since then, progress has been made in setting out the framework of this FTA. Nevertheless, as the EU is our second largest trading partner, we see scope within the framework of the regional ASEAN-EU FTA for Singapore and the EU to pursue deeper bilateral trade liberalisation. We expect an EU-Singapore FTA to bring about benefits such as tariff concessions, preferential access, IP protection and faster market entry for EU companies. I know that we have some very influential businessmen in the room today, and I look to you to bring the business case for an EU-Singapore FTA to your governments and the European Commission.

CONCLUSION

In summary, I have shared with you my thoughts on how, amidst the global financial uncertainty, Singapore and Europe can further our relationship in a mutually beneficial way. We share many interest areas in manufacturing and R&D, and these offer a wealth of opportunities for further collaboration.

9 May is a festive day for the EU. Thanks to the good work of EuroCham and the EC Delegation in Singapore, our bilateral relations with the EU have grown from strength to strength. I look forward to seeing further opportunities for collaboration emerge. On this note, I would like to wish everyone here a Happy Europe Day.

Thank you.