Opening Statement By Head Of Delegation, Mrs Ow Foong Pheng, Permanent Secretary, Ministry of Trade and Industry, Singapore
Singapore Trade Policy Review, 24 July 2012, Geneva
SINGAPORE’S ECONOMY SINCE 2008: CHALLENGES AND RECOVERY
Thank you Chairperson for your kind introduction.
I would also like to thank Ambassador John Adank, for leading the discussions for our TPR. We are very happy to have the privilege of working with Ambassador Adank not only in our regular work in Geneva, but also in this TPR. We would also like to express our appreciation to the WTO Secretariat for the hard work they have put in, to prepare for this TPR. The Secretariat’s report, together with our government report, provides a comprehensive review of Singapore’s trade policies and practices, since our last TPR in 2008.
The period since Singapore’s last TPR four years ago has been challenging. The global financial crisis was far reaching and its consequences are still unfolding. Let me first give a brief overview of what we did in response to the crisis, before turning to the fundamental principles of Singapore’s trade and economic policies, which have remained unchanged.
RESPONDING TO THE CRISIS (2008-2009)
Singapore’s economy is highly dependent on trade. External demand supports an estimated 60% of our gross domestic product (GDP) in value-added terms, and 50% of total employment1. It was therefore no surprise that Singapore was hit hard by the effects of the global economic crisis. We were one of the first Asian economies to slip into recession in the third quarter of 2008. In the first quarter of 2009, our economy contracted by nearly 9%. Singapore’s total trade fell by nearly 28% in the first quarter of 2009, and continued to fall by an average of 24% in the following 2 quarters, as our externally-oriented sectors of manufacturing, wholesale trade, and transportation, experienced the full impact of the global slowdown.
We responded swiftly with counter-cyclical measures.
- First, Singapore introduced fiscal measures to help Singapore-based companies gain access to credit, retain workers, and upgrade their skills to prepare for the economic upturn when it comes. We were fortunate to have the resources to respond to the immediate needs of our households and businesses during the downturn, without having to compromise our focus on long-term initiatives, because we had built up a nest egg of reserves over the years.
- Second, Singapore’s monetary policy responses were deliberately graduated, underpinned by the objective of promoting price stability over the medium term. This ensured that the Singapore dollar remained an anchor of stability during the period of heightened uncertainty.
Throughout all this, Singapore maintained our open trade regime. We were acutely aware that in this day and age, no individual economy possesses all the factors of production to be able to competitively manufacture a complete product. Trade restrictions would have adversely affected our position within the global value chain and reduced our export competitiveness by raising the cost of intermediate goods for our manufacturers.
We are grateful for the important role played by the WTO during this period. Singapore was able to work with other WTO Members to advocate that Members keep markets open and respect their WTO obligations. The WTO’s role in monitoring trade policies introduced by governments during the global economic crisis helped to guard against tit-for-tat protectionism that could have led to a downward spiral of the global economy, and deepened the downturn.
RECOVERY FROM THE CRISIS (2010-2011)
Trade-led growth supported our recovery. By the first quarter of 2010, Singapore’s economy had recovered output lost during the crisis. Our economy grew by almost 15%2 in 2010 and nearly 5%3 in 2011. Total trade rebounded sharply and expanded by nearly 21% and 8% in 2010 and 2011 respectively. As a result of the strong economic recovery, Singapore’s unemployment rate, which had averaged around 2.9% in the past decade, declined to a 14-year low of 2% in 2011.
Today, Singapore is in the fortunate position of having topped the World Bank’s Ease of Doing Business rankings for the past six years. In the World Economic Forum’s Global Enabling Trade Report 2012, we were ranked first in terms of having the most open economy for international trade and investment.
CHALLENGES
Although Singapore has recovered from the financial crisis, we are not yet out of the woods. The global economic environment remains uncertain. We also face a number of domestic challenges. For example, we are not immune to the increasing income inequality faced by countries around the world. We are working hard to counter this trend. To this end, we are investing in worker training to upgrade their skills so as to enhance their employability and enable them to seize job opportunities that emerge in the market. We also need to improve our labour productivity. To achieve this, we have established work groups comprising representatives from Government agencies, unions and the private sector to study and develop strategies to raise productivity in 16 sectors, which together account for about 55% of Singapore’s Gross Domestic Product (GDP) and 60% of employment.
However, even in the face of these challenges, we have found no reason to change the fundamental principles of Singapore’s trade and economic policies. These are:
- Firstly, to keep markets open and to promote competition and innovation;
- Secondly, to continue to deepen our integration with the rest of the world; and
- Thirdly, to ensure a stable macro-economic environment that supports trade and investment.
LOOKING AHEAD
We continue to strengthen our Intellectual Property Rights (IPR) framework, to encourage innovative investments and activities, while balancing the interests of consumers and other stakeholders with that of IP rights owners. Since our last TPR in 2008, patent and trademark filings by Singapore-based entities, which is an indicator for innovation, have increased by 30% and 7% respectively. We also continue to take seriously the need to ensure the effective enforcement of our 2004 Competition Act. Since the establishment of the Competition Commission of Singapore (CCS) in 2005, the agency has looked into more than 140 competition cases and has issued six infringement decisions.
We also remain firmly committed to integration with the rest of the world through deeper links.
- Our foremost trade priority remains the WTO’s multilateral trade system. Our pursuit of FTAs, RTAs, and other economic cooperation activities with trading partners is based on our firm belief that these complement the objectives of the multilateral trading system and are all building blocks for one another. Singapore is active in regional fora such as ASEAN and APEC, where we work with other Members to achieve greater economic integration in the region, to spur the same at the multilateral level. Our participation in the Trans-Pacific Partnership (TPP) Agreement with 8 (and soon to be 10) other Asia Pacific economies, and in building a wider regional trade agreement under the ASEAN Framework on Regional Comprehensive Economic Partnership, are envisioned to be potential pathways towards a Free Trade Area of the Asia Pacific (FTAAP).
- We balance our priorities of market openness with high standards for consumer safety. The safety of our people is vital and our standards and regulations are geared towards their protection. At the same time, we remain committed to our international obligations, including those embodied in the WTO agreements. Our formulation and implementation of regulations, including TBT and SPS standards and measures, are in keeping with achieving that balance.
Last but not least, our trade and investment regime will continue to be underpinned by sound macro-economic policies. Our commitment to fiscal sustainability has boosted business confidence in our long-term stability, and gives businesses a strong reason to continue operating and investing in Singapore. Our monetary policy is aimed at keeping inflation low and stable over the medium term. Singapore has adopted the policy of a modest and gradual appreciation of the Trade-weighted Singapore Dollar since April 2010, while making sure that the currency value is aligned with underlying fundamentals. This moderates domestic inflationary pressures by lowering imported inflation and dampening business costs.
Singapore’s trade policies and practices are guided by the premise that the market place plays a central role in the economy. The objective of any government involvement is not to suppress or supplant markets; but rather to support and sustain them. Government policies are developed with the free market in mind, to achieve growth, development and social objectives. We do not believe in shielding our companies, as they need to be truly competitive, both regionally, and globally, in order to survive.
CONCLUSION
To conclude, Mr. Chair, we thank Members for all their questions. We are pleased with the engagement from Members as this shows their interest in us and the growth in our economic relationships. We appreciate the value of the TPR, and welcome the improvements Members seek to make to the process itself. We found, for instance, that the revised question and answer timelines allowed for more thorough preparations. We are grateful for Members’ support shown through this process and the candid and helpful views expressed. We acknowledge that there are always areas in which we can improve and will give due consideration to the feedback Members give. Singapore will continue to work with all Members here, in the common goal of upholding, strengthening, and contributing to the multilateral trading system.
Thank you.
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1 These figures are for the year 2005, based on the latest study available.
2 14.8%
3 4.9%