OPENING ADDRESS BY MR LIM HNG KIANG, MINISTER FOR TRADE
AND INDUSTRY, AT GES BUSINESS LEADERS SUMMIT 2011, TUESDAY, 18
OCTOBER 2011, 9.15AM, RESORTS WORLD SENTOSA
Mr Tony Chew, Chairman of Singapore Business
Foundation,Distinguished Guests,
Ladies and Gentlemen,
Good morning. It is my pleasure to join you at the opening of this year’s GES Business Leaders Summit. Let me also welcome our overseas guests to Singapore.
Introduction
This time last year, the world was emerging from the global financial crisis. Today, things have taken a turn and we are faced with great uncertainties. A double-dip recession could occur in the US. Growth in Europe has stalled. The developed economies have rolled out measures to tackle these issues, but the long term implications remain unclear.
More than ever it is crucial for companies to be ready to adapt to the new situation – an external environment of greater volatility. In such an environment, business models will be tested and challenged. Companies keen to capitalise on emerging opportunities must therefore stay updated if they are to remain relevant.
Emerging Asia – tapping on growth opportunities
An emerging Asia will provide growth opportunities in an increasingly volatile environment. The outlook for the advanced industrial economies is tepid and will affect Asian growth, but the growth story of an emerging Asia remains strong. Based on the Asian Development Bank’s forecast, Asia is set to continue its steady 7.5% expansion through 2012[1]. The International Monetary Fund’s global economic outlook has also pointed to China and India as two key global growth engines, with their 2012 GDP growth forecasts at 9% and 7.5% respectively[2]. Robust growth could also be seen in Southeast Asian economies such as Vietnam and Indonesia.
So, how can businesses tap on this growing market? Allow me to share some of my thoughts on three key trends occurring in Asia that companies can leverage on.
Rapid Urbanisation
First, a rapid wave of urbanisation is sweeping across Asia. Over the next two decades, the total global infrastructure spending is set to reach US$40 trillion, with Asia Pacific accounting for 40% of this spending. China and India – the two key Asian global growth engines – are tipped to spend a total of US$1 trillion each in construction of projects and the manufacturing sector over the next five years. ASEAN economies like Vietnam and Indonesia are also facing robust growth and demand for infrastructure investments. In addition, many countries in ASEAN are also in need of the „soft‟ infrastructure such as information and communication technology, which are important requisites for the next stage of development.
With ambitious plans in the pipeline, governments will not be able to provide all the capital to develop their infrastructure. Public-Private Partnerships (PPPs) will therefore become an increasingly important approach. Such partnerships recognise that the public and private sectors each have certain advantages. They also optimise the allocation of tasks, obligations and risks to play to these particular strengths.
In this regard, Singapore can play a role in providing infrastructure solutions for the region. We have a strong value proposition as the gateway to raise global capital. Besides traditional credit facilities, we also offer a conducive legal and regulatory framework for companies to finance projects via local-based financial institutions and capital markets. Our local law firms have deep expertise in practice areas such as project financing. A good example is Rajah & Tann, which has worked on projects throughout the Asia Pacific region and is also set to widen their Asia presence. We also have Allen & Gledhill who has recently been voted as Singapore National Law Firm of the Year in the Chambers Asia Pacific Awards 2011. It is also the only local law firm ranked Tier 1 for the Banking, Finance and Capital Markets practice area in the 2010/2011 edition of The Legal 500 Asia Pacific.
Asia’s rapid urbanisation is also generating a huge need for urban solutions. By 2030, China’s urban population is expected to reach 1 billion. In India, over 40 percent of the population is expected to be living in urban areas by 2030, compared to about 30 percent today. Rapid urbanisation will spur demand for urban services solutions such as water and waste treatment, transport management, clean technologies, urban planning and real estate services. There will be a greater demand for a wider range and higher quality of consumer goods, and education, healthcare and financial services.
Many leading global companies are expanding their presence in Asia in a bid to ride this coming wave. Here, Singapore can partner international investors keen to seize these growth opportunities. Our deep industry base, skilled workforce and excellent connectivity to key markets have made us an ideal base for companies to navigate Asia’s complexities and further drive their business expansion in the region. As a highly urbanised city state with constraints in natural resources, we have acquired a great deal of expertise and experiences in providing the supporting infrastructural and urban solutions.
Increased Connectivity
Increased global and regional connectivity is the second trend that is now seen in various parts of Asia. Globalisation and technology have resulted in unprecedented flows of goods, capital and people across borders in the real world. Economies and markets alike are increasingly intertwined.
In ASEAN, steps are already being taken to foster greater connectivity. The ASEAN Roadmap for the Integration of the Air Travel Sector, or RIATS, seeks to have Member States establish a fully liberalised air services regime as part of the ASEAN-wide Single Aviation Market by 2015. The ASEAN Energy Ministers have also recently agreed on the need to expedite regional connectivity projects such as the ASEAN Power Grid and Trans-ASEAN Gas Pipeline. Undoubtedly, these will open up new market opportunities in the energy sector while helping to boost overall energy security.
As a small and open economy, Singapore has invested heavily in developing our physical connectivity, thus enhancing our access to markets. Today, our Changi Airport serves more than 100 airlines which connect to nearly 200 cities in about 60 countries and territories worldwide[3]. We have the second busiest container port in the world, with a total container throughput of 28.4 million TEUs[4]. With such extensive connectivity, we are able to serve as a good springboard for Asian enterprises to internationalise their operations. Yingli Green Energy, a leading solar energy company and one of the world’s largest vertically integrated photovoltaic (PV) manufacturers, is one such enterprise. It has established its regional headquarters in Singapore. It has also set up a wholly-owned subsidiary in Singapore to drive sales and further business development opportunities as part of its strategy to strengthen business practices in Southeast Asia. There are also plans to set up a R&D centre in Singapore to test-bed its PV products.
Beyond physical connectivity, Singapore also seeks greater economic links to other markets. We have a network of 18 regional and bilateral Free Trade Agreements with 24 trading partners. These agreements allow companies from both sides to enjoy tariff concessions, preferential access to certain sectors, as well as faster entry into markets and Intellectual Property (IP) protection. What this means for companies is that they will find it easier to do business and for their goods, services and capital to flow across borders.
Economic Integration
The third trend I will talk about is the integration of economies. With integration comes increase in market size, efficiency and liquidity. This in turn provides for more competitive costs of capital and helps spur further growth. Companies can therefore benefit from the cross-border flow of trade and investments. ASEAN Member States are aiming to achieve an ASEAN Economic Community (AEC) by 2015. The AEC will help accelerate ASEAN‟s journey towards a single market and a synergistic production base with enhanced transport and business connectivity.
As individual economies, ASEAN may not feature highly in the minds of potential investors. But collectively, the region represents a market of over 550 million people with a GDP of US$1.1 trillion and total trade of about US$1.6 trillion. Companies looking to expand their footprints should take advantage of this development. ASEAN has FTAs with six of its Dialogue Partners – China, Japan, South Korea, Australia, New Zealand and India. Our next task is to integrate these FTAs into a greater regional framework. This will take time but it will be a catalyst for closer economic integration in the Asia region.
Conclusion
Ladies and gentlemen, I hope I have offered all of you some food for thought as you spend today and the next exchanging ideas, building networks and deepening your understanding of the Asian markets and beyond. On this note, I wish you a fruitful discussion.
Thank you.
Ladies and Gentlemen,
Good morning. It is my pleasure to join you at the opening of this year’s GES Business Leaders Summit. Let me also welcome our overseas guests to Singapore.
Introduction
This time last year, the world was emerging from the global financial crisis. Today, things have taken a turn and we are faced with great uncertainties. A double-dip recession could occur in the US. Growth in Europe has stalled. The developed economies have rolled out measures to tackle these issues, but the long term implications remain unclear.
More than ever it is crucial for companies to be ready to adapt to the new situation – an external environment of greater volatility. In such an environment, business models will be tested and challenged. Companies keen to capitalise on emerging opportunities must therefore stay updated if they are to remain relevant.
Emerging Asia – tapping on growth opportunities
An emerging Asia will provide growth opportunities in an increasingly volatile environment. The outlook for the advanced industrial economies is tepid and will affect Asian growth, but the growth story of an emerging Asia remains strong. Based on the Asian Development Bank’s forecast, Asia is set to continue its steady 7.5% expansion through 2012[1]. The International Monetary Fund’s global economic outlook has also pointed to China and India as two key global growth engines, with their 2012 GDP growth forecasts at 9% and 7.5% respectively[2]. Robust growth could also be seen in Southeast Asian economies such as Vietnam and Indonesia.
So, how can businesses tap on this growing market? Allow me to share some of my thoughts on three key trends occurring in Asia that companies can leverage on.
Rapid Urbanisation
First, a rapid wave of urbanisation is sweeping across Asia. Over the next two decades, the total global infrastructure spending is set to reach US$40 trillion, with Asia Pacific accounting for 40% of this spending. China and India – the two key Asian global growth engines – are tipped to spend a total of US$1 trillion each in construction of projects and the manufacturing sector over the next five years. ASEAN economies like Vietnam and Indonesia are also facing robust growth and demand for infrastructure investments. In addition, many countries in ASEAN are also in need of the „soft‟ infrastructure such as information and communication technology, which are important requisites for the next stage of development.
With ambitious plans in the pipeline, governments will not be able to provide all the capital to develop their infrastructure. Public-Private Partnerships (PPPs) will therefore become an increasingly important approach. Such partnerships recognise that the public and private sectors each have certain advantages. They also optimise the allocation of tasks, obligations and risks to play to these particular strengths.
In this regard, Singapore can play a role in providing infrastructure solutions for the region. We have a strong value proposition as the gateway to raise global capital. Besides traditional credit facilities, we also offer a conducive legal and regulatory framework for companies to finance projects via local-based financial institutions and capital markets. Our local law firms have deep expertise in practice areas such as project financing. A good example is Rajah & Tann, which has worked on projects throughout the Asia Pacific region and is also set to widen their Asia presence. We also have Allen & Gledhill who has recently been voted as Singapore National Law Firm of the Year in the Chambers Asia Pacific Awards 2011. It is also the only local law firm ranked Tier 1 for the Banking, Finance and Capital Markets practice area in the 2010/2011 edition of The Legal 500 Asia Pacific.
Asia’s rapid urbanisation is also generating a huge need for urban solutions. By 2030, China’s urban population is expected to reach 1 billion. In India, over 40 percent of the population is expected to be living in urban areas by 2030, compared to about 30 percent today. Rapid urbanisation will spur demand for urban services solutions such as water and waste treatment, transport management, clean technologies, urban planning and real estate services. There will be a greater demand for a wider range and higher quality of consumer goods, and education, healthcare and financial services.
Many leading global companies are expanding their presence in Asia in a bid to ride this coming wave. Here, Singapore can partner international investors keen to seize these growth opportunities. Our deep industry base, skilled workforce and excellent connectivity to key markets have made us an ideal base for companies to navigate Asia’s complexities and further drive their business expansion in the region. As a highly urbanised city state with constraints in natural resources, we have acquired a great deal of expertise and experiences in providing the supporting infrastructural and urban solutions.
Increased Connectivity
Increased global and regional connectivity is the second trend that is now seen in various parts of Asia. Globalisation and technology have resulted in unprecedented flows of goods, capital and people across borders in the real world. Economies and markets alike are increasingly intertwined.
In ASEAN, steps are already being taken to foster greater connectivity. The ASEAN Roadmap for the Integration of the Air Travel Sector, or RIATS, seeks to have Member States establish a fully liberalised air services regime as part of the ASEAN-wide Single Aviation Market by 2015. The ASEAN Energy Ministers have also recently agreed on the need to expedite regional connectivity projects such as the ASEAN Power Grid and Trans-ASEAN Gas Pipeline. Undoubtedly, these will open up new market opportunities in the energy sector while helping to boost overall energy security.
As a small and open economy, Singapore has invested heavily in developing our physical connectivity, thus enhancing our access to markets. Today, our Changi Airport serves more than 100 airlines which connect to nearly 200 cities in about 60 countries and territories worldwide[3]. We have the second busiest container port in the world, with a total container throughput of 28.4 million TEUs[4]. With such extensive connectivity, we are able to serve as a good springboard for Asian enterprises to internationalise their operations. Yingli Green Energy, a leading solar energy company and one of the world’s largest vertically integrated photovoltaic (PV) manufacturers, is one such enterprise. It has established its regional headquarters in Singapore. It has also set up a wholly-owned subsidiary in Singapore to drive sales and further business development opportunities as part of its strategy to strengthen business practices in Southeast Asia. There are also plans to set up a R&D centre in Singapore to test-bed its PV products.
Beyond physical connectivity, Singapore also seeks greater economic links to other markets. We have a network of 18 regional and bilateral Free Trade Agreements with 24 trading partners. These agreements allow companies from both sides to enjoy tariff concessions, preferential access to certain sectors, as well as faster entry into markets and Intellectual Property (IP) protection. What this means for companies is that they will find it easier to do business and for their goods, services and capital to flow across borders.
Economic Integration
The third trend I will talk about is the integration of economies. With integration comes increase in market size, efficiency and liquidity. This in turn provides for more competitive costs of capital and helps spur further growth. Companies can therefore benefit from the cross-border flow of trade and investments. ASEAN Member States are aiming to achieve an ASEAN Economic Community (AEC) by 2015. The AEC will help accelerate ASEAN‟s journey towards a single market and a synergistic production base with enhanced transport and business connectivity.
As individual economies, ASEAN may not feature highly in the minds of potential investors. But collectively, the region represents a market of over 550 million people with a GDP of US$1.1 trillion and total trade of about US$1.6 trillion. Companies looking to expand their footprints should take advantage of this development. ASEAN has FTAs with six of its Dialogue Partners – China, Japan, South Korea, Australia, New Zealand and India. Our next task is to integrate these FTAs into a greater regional framework. This will take time but it will be a catalyst for closer economic integration in the Asia region.
Conclusion
Ladies and gentlemen, I hope I have offered all of you some food for thought as you spend today and the next exchanging ideas, building networks and deepening your understanding of the Asian markets and beyond. On this note, I wish you a fruitful discussion.
Thank you.
[1]Source: “Preparing for Transition”, Asian Development Outlook 2011 Update, Asian Development Bank, Sep 2011
[2]Source: “Slowing Growth, Rising Risks”, World Economic Outlook (WEO), International Monetary Fund, Sep 2011
[3]Source: Changi Airport Group
[4]As of 2010 (Source: Maritime & Port Authority of Singapore)