SPEECH BY MR S ISWARAN SENIOR MINISTER OF STATE FOR TRADE AND INDUSTRY at the Cocktail reception OF MITSUBISHI CHEMICAL CORPORATION for the Asia-Pacific PEtrochemical Industry Conference on TUESDAY, 27 MAY 2008, 6.30pm at THE OliviaRoom, Swissotel the stamford

Your Excellency Mr Makoto Yamanaka, the Ambassador of Japan to Singapore

Dr Yoshimitsu Kobayashi, President and CEO, Mitsubishi Chemical Corporation

Distinguished guests, Ladies and gentlemen

Good evening

I am pleased to join you this evening at Mitsubishi Chemical Corporation’s cocktail reception for the Asia Pacific Petrochemical Industry Conference.

Significant role of Japanese chemical companies

Japanese companies have played a pioneering role in the economic development of Singapore, especially in the development of JurongIsland.Much of our success today is due to the support vested in us by these companies, some of whom have been with us right from the beginning – who worked with us to dream, design and deliver JurongIsland.

Indeed, the presence of Japanese companies has been critical to the continuing success of JurongIsland, a cornerstone of the chemicals industry in Singapore. Today, Japanese companies number close to half [1] of the 50 or so chemical companies on the island. Over the years, their investments have contributed significantly to the S$40 billion invested by Japanese companies in Singapore to date.More importantly, we have forged strong and lasting partnerships with our Japanese friends.Hence, there is mutual trust and confidence.

The past few years have seen the chemicals industry chalking up healthy growth. In 2007, the chemicals sector accounted for 22,600 jobs with manufacturing output totaling S$81.7 billion.This was an 11% increase over the previous year and one-third of Singapore’s total manufacturing output.We certainly want our Japanese investors to be an integral part of this strong growth of our chemicals industry.

Differentiating ourselves through technology and innovation

Let me share with you some of our plans for the industry. While our chemicals industry is poised to remain the largest contributor to Singapore’s manufacturing growth, we are faced today with increasing competitive pressures. The Middle East oil industry is gradually moving downstream and economic giants like India and China are also adding to the competition.In the midst of these global trends, there is a need for Singapore to differentiate itself. We intend to do so by focusing on technology and innovation.

Through cutting edge technology, we want to move higher up the chemistry value chain.This means going into areas such as engineering polymers, performance chemicals and advanced materials. Japanese companies have traditionally been very strong in these fields.Over the years, your companies have been working hard to develop advanced and unique products in which you hold positions of market leadership. Our industry will need to tap on your expertise to move into these new areas quickly to keep abreast of the competition.

Today, the market in Asia for advanced chemical products is growing in tandem with the needs of our societies which are becoming more sophisticated. This presents a tremendous opportunity for Japanese companies to capitalise on the growth in Asia.What Singapore offers, is to be your total solutions hub for Asia. We understand that many specialty products are closely tailored to serve consumers’ needs. Therefore, companies will need to be close to the market in all aspects of the value chain. In this regard, Singapore can serve as your location not only for manufacturing, but also for research and development.Our extensive physical linkages and FTA networks also make us an ideal location to manage regional supply chain activities.By being in Singapore, Japanese companies will be able to provide a product that is both cost-efficient and adaptable to the needs of your customers.

Our other key focus is innovation.By 2010, we aim to invest up to 3% of our GDP in R&D.We want Singapore to be a place where technology is not only implemented, but created. We want to add value to the innovation efforts of your companies.

In the creation of new technology, we recognise the importance of having a ready pool of R&D talent for companies to tap.Hence we have made significant investments to strengthen our capabilities in R&D. Today, we have over 22,600 research scientists and engineers in 18 research institutes under A*STAR and the two national universities.We can help Japanese companies gain access to the global research talent in these institutes.

On this front, we have already made good progress. Mitsui Chemicals has set up a centre for basic catalysis research within the Institute of Chemical and Engineering Sciences (ICES). Sumitomo Chemical now has an R&D centre for MMA applications in its complex on JurongIsland.These are their first R&D centres in Asia.We are also working actively with other companies to explore new possibilities. The interest shown so far bodes well for the future of our corporate R&D landscape.

Conclusion

I am happy to note that many Japanese companies are aligned with our focus on technology and innovation, in particular Mitsubishi Chemical.

I had the opportunity to meet with Dr Kobayashi shortly before this event.I understand that he has coined the motto “A.P.T.S.I.S” to capture the spirit of Mitsubishi Chemical.Some of the keywords in this abbreviation include Agility, Principles, Transparency, Sense of Survival and Internationalisation. I am pleased to note that these are also words that resonate strongly with what Singapore has strived to be for our investors.

From my conversation with Dr Kobayashi, I am also happy to learn that Singapore will be a key strategic location for his company’s future plans in Asia. I see many opportunities for Singapore to work closely with Mitsubishi Chemical to develop a strong and fulfilling partnership. Singapore looks forward to collaborating and building a long-term strategic relationship with Mitsubishi Chemical, as well as all other Japanese companies, to further our common economic objectives.

On this note, let me conclude by wishing all of you an enjoyable evening. Thank you