Your Excellency Dr. Michael Pulch, Ambassador and Head of Delegation of the European Union to Singapore
Mr. Jan Djerf, President of EuroCham
Distinguished guests
Good morning.
Introduction
1. I would like to thank the European Chamber of Commerce (EuroCham) in Singapore for inviting me to this Europe Day luncheon to celebrate the 66th anniversary of the European Union (EU).
2. On 9 May 1950, then French Foreign Minister, Robert Schuman, unveiled the founding text of European integration, a visionary idea which led to the emergence of a united Europe. From its humble beginnings with just 6 signatory members, the European Union has evolved to be the largest trading bloc in the world, comprising 28 Member States.
Singapore and Europe share longstanding and robust bilateral relations
3. Singapore and Europe have always shared warm and robust bilateral ties. The basis for EU-Singapore relations can be traced back to the 1980 European Economic Community-ASEAN Cooperation Agreement that sparked greater involvement of the EU in South East Asia. With the establishment of the EU Delegation to Singapore in December 2002, our bilateral relations have continued to grow from strength to strength.
4. Today, the EU is Singapore’s third largest trading partner and accounts for 10 percent of Singapore’s total trade. Singapore, in turn, is the EU’s largest trading partner in ASEAN accounting for one third of the EU’s trade with the region. On the investment front, the EU continues to be Singapore’s largest investor, accounting for nearly a quarter of the total stock of FDI in Singapore.
5. Singapore is also home to the most number of European companies in ASEAN. These companies hail from a broad spectrum of sectors with wide-ranging activities.
6. For example, Siemens, Europe’s largest engineering company, has chosen Singapore as its lead country for ASEAN, excluding Indonesia, and houses the ASEAN and Asia Pacific headquarters for its various business divisions, from Power Generation Services, Building Technologies, to Digital Factory and Process Industries and Drives, in Singapore. It employs over 1300 people in Singapore.
7. Shell is another example of a company that plays a significant role in Singapore’s economy, having pioneered Singapore’s first oil storage installation back in 1891. From the establishment of Singapore’s first oil refinery in 1961 to creating Shell’s largest fully-integrated refinery and petrochemicals complex, and forming one of the largest corporate headquarters in Singapore today, Shell has continued to demonstrate its commitment to Singapore, enhancing our position as a leading energy & chemicals hub.
8. Another European company that has found Singapore to be a good base is Sodexo, a French quality of life services firm which provides a range of services such as maintenance and cleaning, facility and equipment management and in-home assistance. Sodexo opened its new regional headquarters at Fusionopolis in May 2015. This facility will not only support Sodexo’s operations in the region, but will also develop new services with key clients headquartered in Singapore such as GlaxoSmithKline and Unilever.
Singapore and European companies can collaborate to seize opportunities in emerging sectors
9. Like Siemens, Shell and Sodexo, we hope to see more European companies base themselves in Singapore and form deep partnerships with their Singaporean counterparts. It is opportune and timely for our companies to tap on each other’s complementary strengths to better address the demands and challenges of the regional and global economy. Against the backdrop of a global economy that is being reshaped by forces that are disrupting industry structures, value chains and business models, there is much scope for Singaporean and European companies to collaborate in order to seize opportunities in emerging sectors and markets.
10. One such emerging sector where Singapore and Europe have formed a good partnership is in FinTech, or financial technology. FinTech adopts technology to improve the efficiency of financial services, in some cases potentially redefining the value proposition. In November 2014, Singapore welcomed Startupbootcamp FinTech, Europe's leading accelerator focused on financial innovation. Startupbootcamp FinTech provides funding, mentorship, office space and access to a network of industry partners, investors and venture capital firms for FinTech start-ups. This year, 10 start-ups from across the Asia Pacific have been selected to join the programme in Singapore. These start-ups focus on areas which are relevant for consumers and businesses in South East Asia, and also reflect important trends in FinTech, such as insurance technology, data analytics, and SME financial solutions, adding to the vibrancy and promise of the regional FinTech scene.
11. Digital innovation is another sector where Singapore enterprises can collaborate with European companies. We see digitalisation gaining momentum in many economies, including China. Just last month, Dutch-based business consultancy, KPMG Singapore launched Digital Village – an initiative which allows corporate businesses to tap on the creative skills of start-ups to gain access to innovative solutions. This will help Singapore companies become more competitive internationally by facilitating the adoption of innovation and technology. Digitalisation is also an important plank in our endeavours as part of the Committee of Future Economy where we look at how to harness this to advance the potential of our SMEs.
12. Indeed, there is great potential to foster more of such partnerships between Singaporean and European companies, especially among our SMEs. Just two weeks ago, I had the honour of launching the Enterprise Europe Network (EEN) Singapore. The EEN is the world’s largest business and innovation support platform, with a network spanning 54 countries, and 600 partnering organisations in Europe and around the world. It is an important platform for European companies to discover business opportunities in ASEAN and can help profile Singapore companies as potential partners for European companies seeking to expand in this growing region.
ASEAN is a growth region that is increasingly integrated with the global supply chain
13. Regionally, I believe the growth prospects in ASEAN present compelling business opportunities for European companies who can use Singapore as a regional base.
14. The annual GDP growth rate of ASEAN registered an average of six per cent, outperforming the global average of four per cent in the last decade (2002-2012). According to the latest OECD report, ASEAN’s annual growth is projected to average 5.2 per cent from 2016 to 2020, and ASEAN’s combined GDP could rise more than fivefold to US$10 trillion by 2030.
15. With a rising middle class and a growing young working-age population with increasing literacy rates and higher skills, companies will look towards ASEAN as both a source of demand and as a base for production.
16. ASEAN has benefited from the EU’s experience in economic integration as it presents us with a useful model that ASEAN can study and adapt to suit our own regional and historical context, as we progress on our integration journey.
17. The establishment of the ASEAN Economic Community (AEC) on 31 Dec 2015 was a major milestone in the regional economic integration journey in ASEAN. Although less ambitious than the EU’s common market, the AEC is a significant step in the right direction and a work in progress. As the region moves towards a single market and production base, ASEAN will become increasingly competitive and attractive as an investment destination.
18. ASEAN’s extensive network of trade agreements with key trading partners such as China, Australia, New Zealand, Korea, India and Japan integrates it well with the global supply chain. Given today’s business realities, where production processes are often distributed across geographical boundaries, many businesses have located their production processes across ASEAN to tap on the range of comparative advantages the region has to offer such as lower cost of labour, both skilled and unskilled, and availability of supporting services including logistics management.
19. The ongoing negotiations on the Regional Comprehensive Economic Partnership (RCEP), which seeks to consolidate the existing ASEAN+1 FTAs, and the recently concluded Trans Pacific Partnership (TPP) will inject significant momentum in the regional integration efforts. Both the RCEP and the TPP are potential pathways towards the vision for a Free Trade Area of the Asia-Pacific (FTAAP) that will connect ASEAN to key markets like China, Japan and the US.
The EUSFTA is a strategic building block for the EU’s effective engagement of ASEAN and the Asia Pacific region
20. As we step closer to the vision of establishing the FTAAP, it becomes increasingly important and urgent for the EU to broaden and deepen its engagement of the region. Singapore is a natural partner in the EU’s engagement of this region. It was not by chance that Singapore was the first ASEAN Member State with whom the EU chose to pursue a bilateral FTA in 2009. Concluded in 2012, the EU-Singapore Free Trade Agreement (EUSFTA) is currently pending ratification.
21. It remains our hope that the EUSFTA will be ratified soon. The agreement will give our bilateral relations a further boost and create new opportunities for our businesses.
22. More significantly, the expeditious ratification of the agreement will send an important signal of the EU’s intent to engage this fast-growing region and act as a building block towards an eventual EU-ASEAN FTA. Timely and effective engagement with an increasingly integrated ASEAN and the Asia-Pacific is critical to ensure that European companies sustain their competitive interests in the region.
Conclusion
23. The EU can count on Singapore as a like-minded and trusted partner in ASEAN. I would like to thank EuroCham and the EU Delegation in Singapore for their strong support and continued efforts to ensure strong relations between the EU and Singapore. We look forward to nurturing broader and deeper bilateral partnerships for the mutual benefit of our two regions. Thank you.