OPENING ADDRESS BY MR LIM HNG KIANG, MINISTER FOR TRADE AND INDUSTRY (TRADE) AT THE 6th ASEAN-EU BUSINESS SUMMIT ON 2 MAR 2018, 9.15AM, AT GRAND HYATTYour Excellencies,
Mr Don Kanak, Chairman of the European Union-ASEAN Business Council,
Mr Stefano Poli, President of the European Chamber of Commerce in Singapore,
Dr Robert Yap, Chairman of the ASEAN Business Advisory Council,
Mr Ho Meng Kit, CEO of the Singapore Business Federation,
Ladies and gentlemen,
1. Good morning. It is my pleasure to join you today for the 6th ASEAN-European Union (EU) Business Summit. Let me extend a warm welcome to all of you, especially our overseas guests. We are pleased to host you in Singapore.
Global Operating Context
2. The global economy is recovering, reflecting a rebound in investment, manufacturing activities, and trade. Following a strong performance in 2017, the growth of ASEAN economies is expected to remain firm in 2018. This is supported by robust domestic demand led by private consumption expenditure and investments, resilient export demand on the back of sustained global growth, and also higher commodity prices.
3. Yet, anti-trade sentiments remain, and governments are faced with increasing pressure over globalisation and free trade. Increased scepticism in the value of international platforms – such as ASEAN and the EU – will test our relevance and significance.
ASEAN and the EU
4. History is evidence of our success. ASEAN and the EU are still celebrating our 50th and 60th jubilees. While we have pursued economic integration in our own ways, ASEAN and the EU have experienced similar benefits in growth.
5. In the span of 50 years, ASEAN's GDP grew from US$23 billion in 1967 to US$2.55 trillion in 2016, doubling our share in world GDP from 3.3% to 6.2%. ASEAN’s GDP per capita also rose in the same period from US$122 in 1967 to US$4,021 in 2016. Trade also soared over the same 50-year period, from US$10 billion to US$2.22 trillion.
6. For the EU, GDP has grown from €2 trillion in 1967 to €15 trillion in 2016, making the EU the second-largest economic entity in the world (after the US) and representing about one-fifth of global GDP. The EU Single Market now represents one of the most significant symbols of European integration, spanning a wide range of policy areas. The EU has also become, by far, the world’s largest host of FDI stock, accounting for more than €9 trillion in 2014.
7. The benefits of economic integration namely, development, prosperity, and stability in Southeast Asia and Europe, are clearly evident. However, we need to maintain our credibility and trajectories, especially when more eyes are on us to sustain our wider economic objectives.
8. As a rapidly developing region, ASEAN has remained an economic bright spot. It is the 6th largest economy in the world with a collective market of more than 600 million consumers. Some experts see ASEAN potentially becoming the fourth largest single market in the world by 2030, after the EU, US and China. With its young population, coupled with a growing middle class and increasing urbanisation, ASEAN’s potential has yet to be fully realised. Furthermore, some estimates indicate that the ASEAN digital economy has the potential to grow to US$200 billion by 2025, with e-Commerce accounting for US$88 billion.
9. Technology is becoming a driver of competitive advantage. Devices, equipment, vehicles, factories, warehouses and headquarters will be connected digitally through the Internet-of-Things (IOT), and will be able to send data across platforms to help businesses optimise their operations. New business opportunities will arise for companies to analyse the growing pool of data, and assure consumers and businesses that their data and digital transactions are secure. With e-Commerce, sellers of goods and services are able to access overseas markets without the cost of establishing overseas commercial outfits, and to test out new markets without heavy investments. SMEs that are online are more accessible to a larger base of consumers, as information can be easily obtained with a simple internet search.
10. If ASEAN governments support digital connectivity and keep pace with the shift toward digitalisation and harness the opportunities they bring as new growth sectors and business enablers, the pay-offs are expected to be significant. The challenge for ASEAN thus lies not only in navigating the technological change and digital disruption, but also in ensuring that trade and investment remains free, open and facilitated so that there are no hindrances to cross-border business.
Singapore’s ASEAN Chairmanship in 2018
11. Singapore has thus set out a forward-looking agenda for our chairmanship of ASEAN this year, designed to help our economies harness the opportunities and manage the challenges from these global trends. We envision the deliverables that we pursue through our chairmanship to promote innovation, build up digital connectivity and facilitate e-Commerce flows.
- We will pursue an ASEAN Agreement on e-Commerce that advances trade rules in e-Commerce, lowers businesses’ operating barriers to entry, and builds up greater digital connectivity, in order to facilitate the growth of the digital economy.
- We are also developing an ASEAN Digital Integration Framework to monitor the progress of ASEAN’s digital integration. The digital economy has become an increasingly vital element of the global economy, and this Framework will allow us to better scrutinise and improve our digital ecosystem to identify areas for improvement.
12. While our trade architecture has served us well over the past few decades, it must also be enhanced and updated to ensure that ASEAN and its businesses remain competitive and well-positioned to reap the opportunities of the future economy. During our chairmanship, Singapore will also focus on initiatives with ASEAN that facilitates the seamless movement of goods within the region, and which improve the region’s regulatory regime for trade in services and investment.
- For example, we are working towards the full implementation of the ASEAN-wide Self-Certification regime, which will allow certified exporters to self-declare the country of origin for their exports on permitted commercial documents, without having to apply for a conventional Certificate of Origin Form from government issuing authorities. This makes it easier for small businesses, operating from anywhere in our region, to sell their goods across borders and benefit from ASEAN’s lowered tariffs.
- We are also developing a pathfinder for an ASEAN-wide Authorised Economic Operators Mutual Recognition Agreement (AEO MRA). This pathfinder will allow ready ASEAN Member States to first recognise AEOs from one another, and this is the first step towards an eventual ASEAN-wide AEO MRA. This translates to lesser administrative burden for traders and speedier customs clearances at the border – keeping up with the accelerated demands of consumers in the e-Commerce space.
- Singapore also continues our efforts to realise the ASEAN Trade in Services Agreement (ATISA). The ATISA builds upon the ASEAN Framework Agreement on Services (AFAS), and will broaden and deepen the integration of services sectors within ASEAN and introduce disciplines related to services trade. When completed, the ATISA is expected to create a more liberal, stable and predictable environment for service suppliers in ASEAN.
- We are also working to enhance the ASEAN Comprehensive Investment Agreement (ACIA) by adopting disciplines surrounding performance requirements for investors and their investments, and by enhancing the transparency around our investment liberalisation commitments. Businesses will stand to enjoy less restrictions and greater certainty when making investments in ASEAN.
13. Some of our efforts have already borne fruit.
- The ASEAN Single Window (ASW) entered into the live operations phase for five ASEAN Member States, namely Singapore, Indonesia, Thailand and Vietnam earlier this year. The ASW integrates the National Single Windows (NSW) of all ten AMS to allow the electronic exchange of customs data, which ASEAN-based traders can use to obtain customs clearances, permits, and other trade-related documentation for trade with other AMS. The ASW aims to expedite cargo clearance and cut down paperwork, and traders will benefit from reduced hassle and costs of compliance when exporting and importing within ASEAN.
- We have also issued an ASEAN Declaration on Cruise Tourism, which we envision to help enhance ASEAN’s value proposition as a single cruise tourism destination. Through greater clarity in cruise-related policies and regulations, efficiency in processes, responsible business practices, we hope to create greater capacity for tourism and spark off new business opportunities in our region.
ASEAN-EU Free Trade Agreement
14. However, ASEAN cannot only look inwards. Our businesses have reaped benefits from ASEAN’s strong connections outside the region, and we will need to continue broadening and deepening our economic linkages with our external partners. The EU has remained a key and steadfast economic partner to the region – being ASEAN’s largest source of Foreign Direct Investment (FDI) and third largest trading partner. Solidifying this relationship is an important agenda.
15. In recognition of this, the ASEAN Economic Ministers and the EU Trade Commissioner agreed last year to launch discussions to develop a framework setting out the parameters for a future ASEAN-EU Free Trade Agreement (FTA) – almost eight years since negotiations were adjourned.
16. We have seen many positive developments during this period of time. As a region, ASEAN is better prepared to engage in deeper trade and investment liberalisation, especially after reaching our AEC 2015 milestone. The region has opened up, with intra-ASEAN import tariffs virtually eliminated, gradual removal of services restrictions, and improved investment regimes. Trade costs have also come down, with simplified Rules of Origin and more streamlined technical regulations. ASEAN is also better integrated with the global economy, with six ASEAN+1 FTAs under its belt, and we are now forging ahead with deeper economic integration under the AEC Blueprint 2025. Globally, we have seen collective progress and commitment to increased trade facilitation, particularly with the WTO Trade Facilitation Agreement. The EU has also concluded two FTAs with inpidual ASEAN Member States, namely Singapore and Vietnam, and discussions with several others are ongoing. Our renewal of the pursuit for deeper bi-regional economic integration is therefore timely.
17. This development was warmly welcomed in the business community. The 2017 EU-ASEAN Business Sentiment Survey by the EU-ASEAN Business Council found that 88% of respondents believed that the EU should pursue a region-to-region FTA with ASEAN (up from 66% in 2016), while 76% of respondents said that a region-to-region trade deal should be pursued now (also up from 66% in 2016). It is evident that the private sector shares in our urgency to see positive outcomes from our discussions – and the sooner the better.
18. However, these discussions to lay out the framework for a future ASEAN-EU FTA are not easy. While ASEAN has made progress in its economic integration efforts, our regulatory environment, in many areas, differ in sophistication. Our differing political realities also pose a variety of challenges. What we need to adopt is a pragmatic approach.
19. First, we will need to build confidence and trust in one another. As I had mentioned earlier, there are several bilateral endeavours between the EU and inpidual ASEAN Member States. I would encourage the EU to take serious action toward progressing these engagements – be it in the early ratification of concluded bilateral trade deals, or in accelerating negotiations.
20. Second, we should avoid placing the cart before the horse. We should focus on creating a framework that sets out a meaningful and pragmatic level of ambition that will allow us to discuss issues of interest to either side, without prejudging the outcomes of our eventual negotiations.
21. I believe that such an approach will allow us to advance our discussions. This will pave the way for the eventual resumption of negotiations for an ASEAN-EU FTA as a positive response to the enthusiasm of the business community.
22. I am pleased to witness the ASEAN-EU Business Summit entering its sixth iteration this year. Your discussions here and the active advocacy by the EU-ASEAN Business Council has lent ASEAN a useful lens with which to appraise ourselves and our efforts to facilitate trade and commerce. As a voice for the private sector, you are uniquely positioned to influence and lead positive changes in our region. I look forward to your support of Singapore’s chairmanship of ASEAN and our objectives, and also for an ASEAN-EU FTA. Along with Commissioner Malmström and my ASEAN colleagues, I will also meet with some of you later during the consultations between the Ministers and the EU-ASEAN Business Council to hear your views and recommendations for region-to-region economic integration. On this note, I wish all of you a fruitful Summit today, and a pleasant stay in Singapore.Thank you.
 The IMF has projected that global growth in 2018 will be 3.7%, higher than the 3.6% expected in 2017.
 The World Bank has forecast that energy and non-energy commodity prices will rise by 4.0% and 1.0% in 2018, following the 24% and 0.6% increase in 2017 respectively.
 Source: ASEAN Secretariat Publication,"Celebrating ASEAN: 50 years of evolution and progress", 2017
 Source: McKinsey Global Institute Report,"New priorities for the European Union at 60", 2017
 Source: Eurostat and UNCTAD
 Source: ASEAN-US Business Council
 Source: Joint Study by Google and Temasek, "e-conomy SEA 2016, 2016
 Source: ASEANStats, 2017