SPEECH BY MR S ISWARAN, SENIOR MINISTER OF STATE FOR TRADE AND INDUSTRY AND EDUCATION AT THE ITALY-SINGAPORE BUSINESS FORUM, 15 JUNE 2009, AT GRAND BALLROOM, LEVEL 1, RITZ CARLTON
His Excellency Adolfo Urso, Deputy Minister for Economic Development
Distinguished Guests
Ladies and Gentlemen
Good Morning
It gives me great pleasure to join you today at the Italy-Singapore Business Forum. I also wish to warmly welcome His Excellency Adolfo Urso and his delegation to Singapore.
Robust Bilateral Economic Ties
Singapore and Italy have long shared a warm and strong relationship. Our economic ties span the spectrum of activities from trade and investment to tourism, education and science and technology. Italy is our fifth largest European trading partner, while we are Italy’s largest trading partner in South East Asia. Our bilateral trade reached $5.77 billion last year.
The Italy-Singapore relationship gained significant momentum in 2006, when Senior Minister Goh Chok Tong made an official visit to Italy. In April this year, Senior Minister Goh visited Italy again and I was a member of the Senior Minister’s delegation.We were warmly received by Prime Minister Silvio Berlusconi, government leaders and the business community. Such high level government-to-government exchanges, and the efforts of our officials and business associations, have culminated in the business forum today.
This is the largest Italian business delegation that Singapore has hosted, which is all the more remarkable in light of the current global economic downturn. It is especially important at this time, that governments and businesses look ahead to beyond the downturn to find new opportunities and keep international trade and investment flowing.
Your strong presence here today demonstrates foresight, as you position yourselves to take full advantage of Asia’s recovery.
Furthering Bilateral Economic Collaboration
I believe that there is significant potential for companies from Italy and Singapore to collaborate more closely. In particular, I would like to highlight three specific aspects which underpin the value proposition that Asia and Singapore offer Italian companies. First, Singapore companies are strong regional players who can be good partners for Italian companies. Second, Asian trends and growth provide a lucrative long term market for Italian companies. Third, Singapore can catalyse Italy’s entry into Asian markets. Let me elaborate.
Singapore companies are strong regional players
SMEs are the backbone of Singapore’s economy. Many are mid-sized, family-owned operations. Italian SMEs are generally larger than ours and many are world leaders in their own niche areas. Though relatively smaller in scale, Singapore SMEs have grown into strong regional players with a diversified geographic footprint and significant market presence within Asia. Their positioning as leading regional players can be attributed to their core business capabilities and global outlook.
Our SMEs have developed solid capabilities in sectors such as precision engineering, chemicals, engineering services and clean technology. In the automotive sector, Singapore companies have become the preferred vendor of high-precision components for global players such as Ford, Bosch, Delphi and Texas Instruments.
Our companies strive to continually enhance their capabilities by moving into higher value-add activities such as design and R&D. Our furniture companies, for example, have distinguished themselves from their regional competitors by moving beyond manufacturing towards an emphasis on industry-led design. This year, for the second time, the Singapore Furniture Industries Council led our furniture companies in an exhibition at the prestigious Salone Internazionale del Mobile [Sah-low-nay In-ter-nah-zeeoh-narh-lay dell Moe-bee-lay], or Milan Furniture Fair. At the Salone, Singapore designers forged several potentially long term business partnerships with the Italian furniture industry.
Given our small domestic market, we adopt a global perspective and constantly seek opportunities beyond our geographical boundaries. To ensure their competitiveness, Singapore SMEs rely on solid business fundamentals, good industry practices and sound corporate governance.
Indeed, European and American companies often remark how easy it is to do business with their Singapore counterparts, primarily because of mutually compatible corporate culture and values.
Italian companies should cater to future trends in Asia
Let me now turn to the second point on Asian trends and lucrative market opportunities for Italian companies.
The World Bank has forecast that the global middle class will grow from 430 million in 2000 to 1.2 billion in 2030.Two-thirds of that number will come from India and China.The burgeoning middle-class in China, India and ASEAN will have growing aspirations and rising purchasing power.
This translates into changing tastes and increasing demand for lifestyle and healthcare services and products.The consumers of China and India will not just follow global trends – they will also become trendsetters. And this means business opportunities which farsighted companies should seize.
For instance, China has recently been encouraging more of its citizens to buy their own homes. Unlike their parents, who are averse to buying on credit, young Chinese consumers are increasingly willing to spend more on expensive goods like imported furniture. In addition, rather than buying one or two pieces at a time, the trend in China is to furnish a whole room at once with a complete set of furniture.
While Italy is already China’s favourite European source of furniture, Chinese producers still account for 90% of the furniture in the market. There is, therefore, considerable room for international players to grow their presence. To fully tap on this market potential, Italian companies should gear their product lines towards anticipated domestic trends in China and other Asian markets.
Singapore companies can be good partners to Italian companies wanting to venture into Asia
The third and final point that I would like to make is that partnership with Singapore companies can catalyse the entry and growth of Italian companies in Asia. For example, Italy’s world-class strength in design can complement Singapore’s knowledge of and links in the region.
Our companies have broad experience and established networks in Asian countries such as China, India and Vietnam. These countries, in turn, value the expertise that our companies have in several niche industries.
Take China as an example. Leveraging on our capabilities in clean technology, water and environmental management, we are now jointly developing a landmark bilateral project with China – the Sino-Singapore Eco-City in Tianjin. When completed, the eco-city is expected to be a model for other cities in China. A Singapore company, Sembawang Engineers & Constructors, has become the Eco-City’s first business partner.
Singapore also has a strong presence in India, where we were the third largest investor in 2005. Some established Singapore companies in India include Nestronics, Hyflux, First Engineering Plastics, PSA and Singapore Airlines. They are involved in a variety of industries, including logistics, automotive component production and construction services.
Given our deep and broad links with key regional players, Italian companies can capitalise on Singapore’s strategic location in Asia and use it as a launch-pad into the region. We are well-regarded for our good connectivity, excellent infrastructure, English-speaking population, rule of law and a pro-business environment. In fact, over the last three years, Singapore has been consistently ranked as the most business-friendly economy in the world by the World Bank.
Many European companies already recognise this and use Singapore as a base to venture into the region. German, French and Nordic SMEs who have established operations here have leveraged Singapore to network not only with one another but also with the 3,000 Chinese and 3,700 Indian companies who are also present in Singapore. We are privileged to have over 230 Italian companies firmly established in Singapore. They include prominent names such as Coim, Permasteelisa, Faci, Tecnnoprobe, Saipem and Rainbow. I urge you to join them.
Conclusion
In conclusion, I would like to thank the Italian government and business community for your continued interest in Singapore. This business mission is a tangible result of our engagement and commitment to deepen bilateral economic relations. I commend the Italian Embassy, the Italian Trade Commission, the Association of Italian Banks and Confindustria, as well as their Singapore counterparts, the Singapore Business Federation and Singapore Manufacturers’ Association, for their hard work in putting together this business forum. I hope that the insights gained and partnerships formed at this forum will spur many more Italian companies to conduct their business in Singapore to capture the next phase of growth in Asia. I wish you every success. Thank you.
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