Mr Andrew Kwan, Vice-Chairman of the Singapore Business Federation (SBF),

 

Mr John Denton, Secretary General of the International Chamber of Commerce,

 

Ms Johanna Hill, Deputy Director-General of the World Trade Organisation,

 

Excellencies,

 

Distinguished speakers, guests,

 

Ladies and gentlemen,

 

Introduction

 

1. Good morning. It is indeed a great pleasure to welcome everyone to the inaugural Future of Trade Forum.

 

a. A big thank you to SBF for gathering all our partners to engage on how businesses can better leverage trade agreements to compete effectively in global markets.

 

The future of trade

 

2. Trade has been an important and existential part of Singapore’s DNA – despite our small size, we have enjoyed growth from trade, thanks to global consensus around open and free trade in the past few decades. This consensus, is now at odds and risks being stymied by nationalism, us versus them mentalities, and insularism.

 

3. Today, we are seeing significant disruptions and worrisome developments that will shake up the traditional model of globalisation that we have benefitted from so much in the past few decades. As we look ahead, we find ourselves navigating a very different and possibly very tumultuous global trade landscape. Now, let me highlight four key trends:

 

a. First, the impact of US-China contestation on trade opportunities in the region;

 

b. Second, the reorienting of global trade along geopolitical lines;

 

c. Third, how sustainability considerations have impacted businesses; and

 

d. Finally, how technology has reshaped the global trade landscape.

 

Opportunities amidst disruption

 

4. Now, even though each of these trends might risk disruption to the global trade landscape, not everything is gloomy, because with every challenge, there will also come new opportunities, so I want to encourage all of us to be optimistic.

 

US-China relations

 

5. Firstly, intensifying economic and technological contestation, especially between the United States (US) and China, poses great uncertainties on the future of the global trading order, including the US’ relations with other key economies, such as India and all of us here in Southeast Asia.

 

a. As the most consequential bilateral relationship in the world, it is important for the US and China to continue to engage in dialogue that can build mutual understanding and trust. And, we hope that they will continue to engage each other substantively, through economic cooperation.

 

b. At the same time, how China and India respond, be it via trade or industrial policies, will also significantly impact the flow of goods across borders – especially within ASEAN – and how companies can organise their supply chains in response.

 

c.     Any upside benefits will likely also be tampered and affected by downside risks. So for Singapore, for all of us to successfully navigate these headwinds, we will need a closer nexus between businesses and policy makers. Businesses must continue to champion economic cooperation by helping to build and to facilitate common space between the private and public sector.

 

Global trade as geopolitics

 

6. Secondly, geo-economic competition has led countries to enact measures to protect their domestic economies.

 

a. Countries have raised tariffs in strategic sectors, such as in semiconductors and electric vehicles. ‘Friend-shoring’ or ‘near-shoring’ of supply chains has become more commonplace, underpinned by regulations, sanctions and investment restrictions that have emerged in the name of economic security.

 

b. We are seeing this in the data too, with the World Trade Organisation (WTO) estimating that trade between allied blocs has grown four to six per cent more slowly than trade within such blocs[1]. This is a worrying trend.

 

c. Yet the reorientation of trade flows has also led to the formation of new trade corridors within Southeast Asia, which has thus far benefitted from an increase in imports of intermediate goods from China and exports of finished goods to the United States[2].

 

d. For our businesses, especially our SMEs, this presents an opportunity not only to build your presence in new markets, grow your customer base, but also enable you to diversify and build resilient supply chains.

 

e. Notwithstanding the opportunities that this has presented, we have to constantly be mindful, watchful and maintain the nimbleness in the next few years, because we expect headwinds to come our way.

 

Sustainability

 

7. Thirdly, the global transition to net-zero will continue to reshape the way businesses operate.

 

a. Part of this shift has been driven by the introduction of more ambitious climate policies all around the world – including Singapore. We have raised our headline carbon tax level this year, from $5 to $25 per tonne of greenhouse gas emissions.

 

b. In tandem, we expect demand for sustainable goods and services to continue to rise, as customers recognise the importance of going green.

 

c. To remain competitive, businesses will need to work hard to transform their operations. And this is not going to be an easy feat. Nonetheless, I am happy to see many businesses already beginning to pivot towards more sustainable operating models.

 

i. Low-carbon fuels and polymers are one key segment, with players in Singapore’s Energy & Chemicals sector – such as Arkema and Neste – already making use of bio-based feedstock in their manufacturing plants here, instead of traditional hydrocarbon feedstock.

 

Technology

 

8. On my final point, not that it is least important, I cannot afford to underemphasise the role of technology. Technology is a key enabler, and this is particularly true for international trade, where technology demonstrates clear potential to make trade more efficient, more inclusive, and more equitable.

 

a. By facilitating the sharing of digital trade documents, platforms such as the Singapore Trade Data Exchange (“SGTraDex”) have enabled Singapore to complete digital trade transactions with countries like Bahrain, India, and China, and there are more in the pipeline.

 

b. But technology does not stop at digitalisation. Today, artificial intelligence (AI) can do everything from forecasting demand, to optimising inventory levels, elevating customer service levels, and even forecasting supply chain disruptions. In the years ahead, I expect AI and big data analytics to be game changing for supply chain management, which is a core capability of every business.

 

From opportunity to action

 

9. As these megatrends will continue to shape the future of trade, we will expand and refresh our trade architecture to enable our businesses to internationalise, innovate, and also, to stay informed.

 

Internationalise by leveraging Singapore’s trade agreements

 

10. Over the years, we have built up an extensive network of 27 Free Trade Agreements (FTAs) in force.

 

a. For example, we are commemorating the 20th anniversary of the United States-Singapore FTA (USSFTA) this year.

 

i. The USSFTA was the US’ first FTA with an Asia-Pacific country and remains its only FTA with an ASEAN country.

 

ii. Since the USSFTA came into effect in 2004, bilateral trade in goods and services has tripled, with a trade surplus in favour of the US.

 

iii. Singapore is also the top recipient of US investment in the Indo-Pacific and the seventh largest worldwide, with almost 6,000 American companies based here.

 

b. Fast forward to today, I am heartened to see that our FTAs continue to provide a clear value proposition to our businesses.

 

i. According to SBF’s FTA Utilisation Survey released one week ago, the percentage of Singapore businesses that benefitted from FTAs stands at over 70 per cent in 2023, and this is more than double the figure in 2020.

 

ii. Homegrown manufacturing company Singapore Asahi is one good example. To enhance its price competitiveness overseas, it worked with Enterprise Singapore (EnterpriseSG) to leverage the ASEAN-China Free Trade Agreement (ACFTA) to export its products and benefitted from a measurable reduction in import tariffs.

 

11. Still, we cannot afford to be complacent. As the reorientation of trade flows takes place, we have also developed new mechanisms to promote regional economic integration and cooperation.

 

a. Thus far, the Regional Comprehensive Economic Partnership (RCEP), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the Indo-Pacific Economic Framework (IPEF) have helped to cement Singapore’s position as a springboard to the rest of Asia.

 

b. As part of ASEAN, we are negotiating, we are upgrading, and we are reviewing a number of Agreements, including ASEAN’s internal Agreements on Goods and Digital Economy, as well as ASEAN’s FTAs with Australia and New Zealand; Canada; China; and India.

 

c. We have been growing the number of regional landing zones for local manufacturing and logistics businesses.

 

i. Of note is the Johor-Singapore Special Economic Zone (JS-SEZ). Both Malaysia and Singapore are working expeditiously towards a full-fledged agreement this year, and I hope to see many of our businesses consider expanding there when it is up and running.

 

Innovate in new growth areas

 

12. Additionally, we have been opening up pathfinders that make it easier to do business in sustainability and digital domains.

 

a. These efforts started some time back, with Singapore signing the first-of-its-kind Green Economy Agreement (GEA) with Australia in 2022. Under the GEA, we set up the Go-Green Co-Innovation Program (GGCIP) and saw promising results from the first batch of grant recipients.

 

i. Two of the grant recipients – Stemly, a Singapore company, and its Australian partner Givvable – are working on digital technologies that improve insights and decision-making among businesses looking to reduce carbon emissions along the supply chain.

 

b. Today, we are negotiating an ASEAN Digital Economy Framework Agreement (DEFA), which is estimated to double the value contribution of Southeast Asia's digital economy from US$1 trillion to US$2 trillion by 2030[3].

 

Stay informed and build capabilities

 

13. So above all, to effectively internationalise and to innovate, businesses must have a good understanding of how to tap on Singapore’s suite of trade agreements.

 

a. Today, SBF and EnterpriseSG offer a range of education and outreach programmes to help businesses level up on their respective trade competencies. They also offer grants to defray the costs faced by businesses in overseas market promotion and business development.

 

b. To complement these, I am heartened to hear SBF’s plan to launch the Centre for the Future of Trade and Investment, or CFOTI, as a new Public-Private Partnership initiative. CFOTI represents a strong desire by the business community to significantly expand its existing trade competencies and capabilities, in response to the increasingly complex global trade environment.

 

Conclusion

 

14. Indeed, the next era of trade and globalisation will be marked by significant discontinuities and disruptions. We, above all, recognise that the road ahead is not going to be smooth. This is why we will do whatever we can to ensure that our country’s trade policy toolkit remains relevant to all of you, so that our businesses continue to have a stake in the new global trading order.

 

15. Of course, we hope that for businesses, you can also play your part by staying nimble, agile, and responsive. I encourage you to adopt strategies that help you take advantage of these promising opportunities and welcome you to share with the Ministry of Trade and Industry, EnterpriseSG, SBF or even the Ministry of Manpower on how we can help to create a more facilitative trading environment.

 

16. Attending today’s Future of Trade Forum is a step in the right direction, and I want to commend all of you for taking the time to join us today, particularly at this inaugural forum. I am confident that you will gain many new insights and forge new connections. I wish everyone a fruitful Forum ahead. Thank you very much.