SPEECH BY MR LIM HNG KIANG, MINISTER FOR TRADE & INDUSTRY, AT UNILEVER’S PARTNER TO WIN SUPPLIER SUMMIT 2013, MARINA BAY SANDS CONVENTION CENTRE, ON 27 JUNE 2013, 1450 HRS
Ladies and gentlemen
Good afternoon to all of you
1. It gives me great pleasure to join you here today, at Unilever’s Partner to Win Supplier Summit 2013. First, I would like to extend a very warm welcome to everyone, especially those of you who are visiting Singapore for the first time.
2. This is the first time that Partner to Win is held outside London. Singapore is indeed honoured to play host to this year’s event, “Winning in Developing and Emerging Markets”. In fact, having this year’s event here in Singapore is a reflection of the shifting economic centre of gravity to Asia, which brings me to what I will be sharing more with you later on.
OPPORTUNITIES ABOUND IN ASIA AND ASEAN
3. Asia forms a significant part of developing and emerging markets. By 2030, the global middle class is set to grow almost three-fold, with 85 per cent of this growth coming from Asia[1]. In addition, over the next two decades, Asian middle class spending is also projected to increase to account for more than 60 per cent of global middle class consumption[2].
4. Opportunities in Asia are not limited to just the two economic powerhouses, China and India. ASEAN, with a combined population of 600 million and total GDP that falls behind only China and Japan within Asia, can be both an attractive end-market as well as a prime investment location for companies. In a recent Deloitte study, it is predicted that five of the top 15 manufacturing locations in the world will be in ASEAN by 2018[3]. And companies here are beginning to recognise the potential of ASEAN. In 2012, the region attracted seven times more Foreign Direct Investment per capita than India, and almost the same amount as China[4].
5. Nonetheless, ASEAN still has a lot of work to do in order to realise its full potential. We will need to tackle structural challenges and pursue regulatory reforms, so as to deepen our economic linkages and ensure that growth is sustainable across the region.
6. In this regard, ASEAN countries are looking into regional integration seriously, through our ASEAN Economic Community, or AEC, 2015 roadmap. A key principle underpinning the AEC is the free-flow of goods, services and investments within the region, which will open up more opportunities for companies. We have already achieved significant progress. For example, virtually all goods in ASEAN today move throughout the region tariff-free. The ASEAN Comprehensive Investment Agreement also entered into force in August last year. This Agreement has established stronger, pro-business rules, and provides enhanced investment protection for both ASEAN as well as foreign-owned investments based in ASEAN.
7. Beyond regional integration, ASEAN is also committed to strengthening its ties with external partners. We are negotiating the Regional Comprehensive Economic Partnership, or the RCEP, which will include all of ASEAN’s current Free Trade Agreement partners, all 6 of them – China, Japan, Korea, India, Australia, and New Zealand - representing almost half of the world’s population and one third of the world’s GDP. We believe that such efforts will strengthen ASEAN’s value proposition and make the region an even more attractive location for businesses.
COMPANIES NEED A STRATEGIC BASE IN ASIA
8. Even as doing business becomes easier in Asia and ASEAN, unlocking the market potential is not without its challenges. With growing imports and intra-trade flows, manufacturers today need to deal with an increasingly complex supply chain and regulatory landscape. The unique needs and preferences of Asian consumers also mean that companies cannot just simply repackage products developed for Western markets. They will need to develop customised solutions to cater to consumers in this region.
9. In short, to succeed, companies need to be in Asia for Asia. This will enable them to respond promptly to developments in these unique and fast-growing markets. Some companies are taking it a step further, by transforming their activities and capabilities in Asia into strategic business and innovation control towers that drive top-line growth.
10. Early movers that have established such strategic presence in Asia are seeing the fruits of their labour. Unilever’s success in Singapore and the region is an excellent example. Starting as a small trading office in 1954, Unilever Singapore has grown to become one of the company’s global operations hubs, led by Chief Operating Officer Mr. Harish Manwani and his management team. Today, there are over 800 Unilever employees in Singapore, with global and regional responsibilities in activities such as brand management, consumer insights, supply chain, procurement and engineering services. In terms of its markets, Asia, along with Africa and Eastern Europe, is Unilever’s largest and fastest growing region that accounts for more than 40 per cent of its annual revenue.
11. Similarly, suppliers are also deepening their investments in Asia, to grow with their customers. For instance, Givaudan broke ground yesterday for a new fragrance creative centre, manufacturing facility and perfumery school in Singapore. This investment will further allow Givaudan to use Singapore as its control tower in Asia, for activities such as headquarters, innovation as well as manufacturing. Overall, this will strengthen the company’s ability to support its clients, through developing scents and flavours that cater to Asian preferences.
12. Another good example is specialty surfactant manufacturer Solvay Novecare. To better serve its regional clients in the household and personal care, agrochemicals and coating industries, Solvay will be building an alkoxylation facility in Singapore. This investment reinforces the company’s regional headquarters and research facility in Singapore, and allows the company to use Singapore as a hub to penetrate further into other key ASEAN markets such as Indonesia, Malaysia and Thailand.
SINGAPORE AS THE GLOBAL-ASIA HUB
13. Ladies and gentlemen, as a Global-Asia Hub, Singapore is well-positioned for companies and their suppliers to house their strategic business and innovation functions. Our world-renowned business infrastructure, our excellent business connectivity, as well as strong business and cultural links with many Asian markets have enabled us to build up a diversified economy with manufacturing and services sectors serving as our twin engines of growth. Our success can also be attributed to our commitment to build long-term relationships with companies, and to facilitate partnerships within and across industries.
14. Going forward, Singapore will continue to invest in capabilities to help companies seize new growth opportunities. Let me just highlight two such examples.
15. The first is in the area of sustainability, which many of you will agree is a growing imperative for all businesses. Singapore is an early adopter of sustainable growth initiatives, largely because we face resource constraints. Today, our national focus on sustainable development is embodied in what we call the Sustainable Singapore Blueprint. This blueprint encompasses strategies, initiatives and goals for us to achieve economic growth as well as a good living environment for our people over the next two decades.
16. This in turn has translated into investments to build a comprehensive base of public and private sector capabilities. For instance, under the Energy Innovation Programme Office, we have set aside S$140 million for research into clean energy technologies. We have also created a strong cluster of research institutions and programmes on sustainable development.
17. An example of this is the Institute of Chemical & Engineering Sciences’ Biomass to Chemicals Programme, where companies can access multi-disciplinary expertise, such as bioinformatics and synthetic biology, to develop products with renewable feedstock. Chairman of the Singapore Economic Development Board, Mr Leo Yip, will share more on this with you tomorrow, particularly how companies can leverage these capabilities that we have built up, to develop green solutions across the entire value chain, in areas such as manufacturing, supply chain and product development.
18. The second area is in manufacturing, where the Singapore Economic Development Board has set aside S$500 million over the next five years to support a Future of Manufacturing Plan. This plan entails strengthening our supplier base, building stronger linkages to our immediate region, and investing in new technologies and capabilities. Specifically, S$250 million will be set aside, under the Partnership for Capability Transformation or the PACT programme. This is to support win-win partnerships between the larger enterprises and their Singapore-based suppliers, especially the small and medium enterprises. The objective here is to facilitate knowledge transfer, as well as to foster innovation and adoption of new manufacturing technologies, so that companies can acquire the latest technical expertise and enter new demanding markets.
CONCLUSION
19. Ladies and gentlemen, Asia’s growth provides ample opportunities for companies, including all of you who are here today. ASEAN will become an even more dynamic and attractive base for companies as it grows together as a single market and production location. There is therefore no doubt that companies will need to be in Asia for Asia, to capitalise on these opportunities. As a Global-Asia hub, Singapore looks forward to partnering you to transform your activities and to drive growth in Asia.
20. Let me once again express my appreciation to Unilever for holding the Partner to Win Supplier Summit 2013 in Singapore, and for bringing together your partners to look at co-investing in Asia. On this note, I wish you all a very fruitful time ahead. Thank you.
[1] Source: OECD
[2] Source: The emerging middle class in developing countries, November 2010, OECD
[3] Source: Deloitte Global Competitiveness Index 2013. The 5 ASEAN countries are Singapore, Vietnam, Indonesia, Malaysia and Thailand
[4] Source: The Economist: Riding the ASEAN elephant. Economist Intelligence Unit
