Professor Simon Tay, Chairman of the Singapore Institute of International Affairs
Ladies and gentlemen
1. A very good morning to all of you.
2. I would first like to thank Singapore Institute of International Affairs (SIIA) for the kind invitation to speak today. The Forum is a valuable platform for industry experts, academics, and practitioners to exchange views and keep up to date on the emerging trends in the region.
Amidst recent challenges, ASEAN and Asia presents immense growth potential
3. The past few years have been challenging for countries around the world, including Singapore. These challenges include dealing with the pandemic, supply chain disruptions as well as strong inflationary pressures arising from recent geopolitical tensions. I am sure all of us here have felt the squeeze in some way or another.
4. Notwithstanding these economic headwinds, I remain optimistic in Asia’s potential to grow and prosper. Currently, the region makes up more than half of the world’s middle-class population which will continue to increase over the next decade. This means that the bulk of the world’s consumer demand will soon pivot towards Asia, turning the region into an engine of growth for the global economy.
5. Over the past twenty years, we have also witnessed Asia-headquartered companies quadrupling the Global Fortune 500 rankings and now making up over a third of the list. Recent disruptions in global supply chain have also accentuated the importance of this region with many international companies looking to Asia as an alternative source of input.
6. There is a good chance that ASEAN companies can capture new parts of the global value chain and entrench ourselves as a critical supply chain node. Allow me to share three things which I think ASEAN and Asia must get right to seize the opportunities afforded by the current world order and realise the region’s potential.
Singapore and ASEAN must maintain our longstanding commitment to open and free trade to keep our doors open to investors, ideas, and talent
7. First, at the most fundamental level, Singapore and ASEAN must remain committed to stay open and connected, to keep our doors open to investors, ideas, and talent from all over the world. We must continue to support and strengthen multilateral institutions such as the World Trade Organisation (WTO). As the world experiences a retreat of globalisation, ASEAN must resist the temptation to turn inwards and continue to uphold the core principles of the rules-based trading system. Quick fixes such as export restrictions and trade tariffs may accrue short term political benefits but is often at the expense of long-term solutions which requires close cooperation among countries. To this end, Singapore will continue to work with like-minded partners to support WTO reform, and leverage plurilateral initiatives to push new boundaries and open new avenues for trade and investment.
Singapore and ASEAN must deepen regional integration to better tap on each other strengths to capture opportunities in the new global economy
8. Second, within ASEAN, we need to double our efforts at regional integration and deepen the region’s connectivity with the rest of the world. Over the past few decades, ASEAN has made good progress in this regard through the signing of several free trade agreements (FTAs) in the areas of goods, services, and investment. More recently, ASEAN is pursuing FTAs with new partners such as Canada and upgrading existing plus-one FTAs, such as the ASEAN-Australia-New Zealand FTA (AANZFTA), to ensure that these agreements remain relevant and fit for purpose in the post-pandemic economic climate. The entry into force of the Regional Comprehensive Economic Partnership (RCEP) for most Parties to the agreement will also deepen ASEAN’s connectivity with major economies in Asia.
9. Beyond trade agreements, governments, businesses, and people in the region must also work hand in hand and tap on each other’s strengths to capture the opportunities in the global economy. To this end, Singapore has been working with our immediate neighbours in Iskandar Malaysia, as well as Batam, Bintan and Karimun to anchor high-value manufacturing investments in our region. We have also collaborated with Vietnam in the signature Vietnam-Singapore Industrial Parks (VSIPs) that combine the strength of Vietnam’s geographical location with the experience of Singapore companies in managing industrial parks.
10. These partnerships, be it trade agreements or industrial parks, will increase ASEAN’s value proposition as a vital node in the global economy.
ASEAN need to leverage emerging trends such as the digitalisation and sustainability to grow our economy.
11. Lastly, Singapore and ASEAN must capitalise on emerging trends such as digitalisation and sustainability to grow the region’s economy.
12. The digital economy has enabled companies to gain access to new markets and opened multiple possibilities to trade by facilitating the seamless flow of goods, services, and data across borders. Digital technologies such as electronic payments, electronic invoicing and digital identities have also increased the efficiency of trade processes and lowered costs for businesses. We must continue to leverage digitalisation to integrate our economies and grow our businesses.
13. ASEAN has done considerable work in this regard. For instance, the ASEAN Single Window which connects and integrates the National Single Window of all ASEAN Members States has been operational since 2019. In a significant step towards establishing the region as a leading digital community, ASEAN has also agreed to accelerate the process to commence negotiations on an ASEAN Digital Economy Framework Agreement. This is a resounding signal of ASEAN’s commitment to an open, inclusive and rules-based digital economy.
14. For Singapore, we have also worked with like-minded partners to forge Digital Economy Agreements (DEAs) to enable the open flows of data and build confidence in digital systems. So far, we have concluded four DEAs with five countries – Australia, Chile, South Korea, New Zealand, and the UK.
15. Sustainability is another area that presents new economic opportunities for Singapore and ASEAN. With increasing global momentum on climate action, businesses need to pivot and transform their products and services to be more sustainable, in order to meet investors and consumers’ demands. This presents opportunities in the area of green financing, as more companies look to various financial instruments to support their sustainability efforts.
16. Another promising area is carbon markets. Carbon credits is one of the pathways for companies and countries to meet their climate targets, especially for hard-to-abate operations and sectors. There will be increasing demands for high-quality carbon credits. ASEAN, with its abundance of natural capital, is well-placed to meet this demand. The growth of a thriving regional carbon market would contribute to economic growth, as well as job creation in services such as credit project development, carbon accounting, reporting and verification, and carbon trading.
17. To establish Singapore’s competitive edge early in a low-carbon future, Singapore is currently working with Australia on a first-of-its-kind Green Economy Agreement (GEA). The GEA aims to foster rules and standards that promote cross-border green economic activities and facilitate trade and investment in environmental goods and services. Once concluded, the Singapore-Australia GEA will serve as a strategic pathfinder to update trade rules and standards for the global green economy. This will create new growth opportunities in sustainability while contributing to global capacity in addressing climate change.
18. I hope that my sharing has provided some food for thought and would be useful for your discussion later. Thank you very much and I wish everyone a fruitful session ahead.