Mr Lim Hng Kiang at the APEC Supply Chain Connectivity Symposium

KEYNOTE ADDRESS BY MR LIM HNG KIANG, MINISTER FOR TRADE AND INDUSTRY,AT THE APEC SUPPLY CHAIN CONNECTIVITY SYMPOSIUM, SATURDAY 16 MAY 2009, RAFFLES CITY CONVENTION CENTRE, 8.35 AM “Supply Chain Connectivity in the Crisis: APEC’s Role”

Thank you for joining us at the APEC Supply Chain Connectivity Symposium, and for our guests from other economies, a very warm welcome to Singapore. I would also like to take this opportunity to thank Australia, the co-host of this Symposium, for your generous contribution and support towards this event.

Singapore has taken over the chairmanship of APEC at a challenging time. World output is expected to fall by 1.3 per cent this year

[1]

, whilst world trade is expected to decline by 9 per cent

[2]

, the first time this will happen since World War II. Some are already talking about green shoots of recovery, although others might beg to differ. Regardless of when the world economy will start to turn, economies need to look beyond the immediate crisis and start preparing for the future economic landscape, which will likely be a very different one.

The need to sustain our growth momentum within our own economies and within the larger APEC community lies behind Singapore’s choice for the theme for this year. Inherent within the theme, “Sustaining Growth, Connecting the Region”, lies a clarion call to APEC economies to work together to sustain growth, by first, addressing the immediate effects of the crisis and second, resisting any attempts at protectionism, which will only prolong and deepen the crisis. In addition, in 2009, we intend to stress the need for APEC economies to accelerate economic integration to take advantage of new patterns of consumption and production and new trade flows post-crisis.

Accelerating Regional Economic Integration

At the Border

‘At the border’ issues have been the traditional mainstay of APEC’s work. We will look into how we can accelerate APEC’s work in the area of trade and investment liberalization. This year, we will focus on putting in place tangible building blocks for a future Free Trade Area of the Asia-Pacific, and making rules of origin more business friendly.

However, more importantly, we need to go beyond these traditional “at the border” measures to make accelerating economic integration “behind and across borders” new APEC priorities. Businesses have consistently told us that with tariffs now down significantly to single digits, the key barriers they face are no longer high tariffs “at the border”, but red tape, onerous regulations and other bottlenecks “behind and across the border". This year, APEC will focus on ways to make it easier, cheaper and faster for companies to do business “behind the border” and move goods and services “across the border”. In dealing with behind and across the border issues, we need to start seeing things from the perspective of the businesses who use our regulations, so that we are able to ensure that we promulgate rules and regulations which assist them and do not confuse and hinder them.

Behind the Border

First, let us look at ‘behind the border’ issues, where we will focus on easing the regulatory burden on business. The World Bank Doing Business survey shows that some APEC economies are among the best places in the world to do business, whether you are trying to register a company, get a license, enforce a contract, or close a business. But there is always room for improvement. This year, APEC will identify priority areas for regulatory reform, with inputs from businesses. We will set ourselves measurable targets for improvement, and develop a work programme to share best practices and help each other improve over the next few years.

For example, one of the 10 indicators in the World Bank’s Doing Business survey asks how easy or difficult it is to Trade Across Borders, by measuring the time, cost and number of steps it takes to import and export goods. By tracking our targets and deliverables in this area, APEC economies can then benchmark and improve themselves.

Across the Border

Second, with ‘across the border’ issues, we want to improve physical connectivity across our borders to ensure that our economies are plugged into new waves of growth post-crisis. Production and distribution chains today are not limited within one economy, but instead stretch across jurisdictions and borders. The manufacture of a single hard disk drive can involve production in multiple factories across the region, from Bangkok to Guangzhou. The assembled hard drive might then be sold in a store in New York, or Seoul, or Auckland.

Supply chains are the veins and arteries of this global production and trading system. Strengthening transport and logistics connections will help raise efficiency, cut cost, boost trade and speed up recovery. Being plugged into these veins and arteries would allow economies, companies and people to be lifted by the new waves of growth with economic recovery.

In a study prepared for this Symposium by the Centre for International Economics, the authors demonstrate that if we can improve the efficiency of transporting goods between APEC economies by 10 per cent, we stand to gain a total benefit of US$21 billion for the region. In addition, according to the World Bank, economies that have high physical connectivity and strong performance in logistics experience two per cent more trade expansion, one per cent more annual growth, and export 40 per cent more variety of products.

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This evidence points to the need for governments and businesses to do their part to strengthen supply chains. This requires coordinating across multiple agencies that oversee different parts of the supply chain, from air transport to sea transport to land transport, to customs and ports authorities and other regulators. Strengthening supply chains also requires governments to work together. As a region, we need to establish common standards and principles and make it easy for goods and services to move from one jurisdiction to another.

To succeed, governments will need inputs and feedback from businesses. Where are the key impediments? Is there too much paper work when exporting goods? Are goods stuck in the warehouse because trucks are not allowed to operate at peak hours? Is there a lack of flexibility in the routing and scheduling of air cargo flights? Is there a need to strengthen and interface our IT infrastructure? Let us know. In this way, business and government can work together to tackle the chokepoints and strengthen the weak links in the supply chain.

This is what the Supply Chain Connectivity Symposium is about. It brings officials from transport, trade, customs and regulatory agencies together with business and academia. Here, we have all the right people to discuss the chokepoints, and to focus on the best ways to overcome them. You have a full programme lined up for you, covering topics that will be new to many, including customs, domestic regulations, air, land, sea transport and multi-modal connectivity. But it is worth the effort, because the supply chain is only as strong as its weakest link. There is much at stake for us and real benefits to be reaped. I wish you a fruitful symposium and look forward very much to your recommendations.

[1] IMF, World Economic Outlook, April 2009

[2] WTO, Mar 2009

[3]World Bank, Logistic Performance Index, 2007