Mr Lim Hng Kiang at the European Chamber of Commerce Europe Day Lunch

SPEECH BY MR LIM HNG KIANG, MINISTER FOR TRADE AND INDUSTRY, AT THE EUROPEAN CHAMBER OF COMMERCE EUROPE DAY LUNCH ON TUESDAY 9 MAY 2006, 12.40 PM AT FOUR SEASONS HOTEL 

Your Excellency, Vassilis Bontosoglou, Head of the European Union Delegation,

Mr Shanker Iyer, EuroCham President,

Distinguished guests,

Good afternoon.

I am very happy to be here today to join you in celebrating the 56th anniversary of the Schuman Declaration, which marked the genesis of European integration. Europe has come a long way since then, and Asia has much to learn from Europe, especially as ASEAN works to deepen its integration and develop an ASEAN Charter. Besides a shared desire for regional integration, Europe and Asia have much in common. Singapore, in particular, enjoys close ties with Europe in culture, education, research, and of course, business.

Our trade and investment statistics clearly bear this out. The EU is Singapore’s second-largest trading partner after Malaysia. Last year, trade between the EU and Singapore reached $84 billion, up from $81 billion in 2004. Within ASEAN, Singapore is the EU’s largest trading partner, accounting for about a third of all trade between the EU and ASEAN. Singapore is privileged to play host to the over 2,400 European MNCs and SMEs that have established business operations in Singapore. I believe EuroCham certainly deserves some credit for these figures.

Bearing further testament to our robust bilateral relations, we saw in Brussels last October the substantive conclusion of negotiations for the EU-Singapore Partnership and Co-operation Agreement, which aims to enhance co-operation between the EU and Singapore on a wide range of issues spanning trade, science and technology, education and culture. I understand a further round of discussions took place just this morning, and I look forward to seeing the formal conclusion of the agreement in the coming months.

With such healthy economic relations, is it possible to further strengthen them? I believe we can, and today I would like to suggest a few areas that we can work on to deepen our partnership.

Manufacturing

The first area is manufacturing. Manufacturing is vital to the EU economy. It contributes one-fifth of total output and employs some 34 million people. Although some foreign CEOs have called it Singapore’s best-kept secret, manufacturing has been and will continue to be a key pillar of our economy. It currently contributes about a quarter of our GDP and we hope to double manufacturing output to $300 billion by 2018.

To do this, we will strengthen our existing capabilities in electronics, chemicals, biomedical sciences, and engineering. However, we recognise that this will not be enough, and we are therefore expanding into new growth industries such as nanotechnology, aerospace engineering and environmental technology. Many of these industries are also the EU’s areas of manufacturing strength. For example, the EU is home to world leaders in key sectors such as chemicals, biomedical sciences and engineering. This makes Singapore an ideal base for European companies looking for a manufacturing site to serve Asian markets.

One such company which chose Singapore is Ciba Specialty Chemicals. Having considered alternative locations including China, Malaysia and the Gulf, Ciba decided to site its $170 million antioxidant plant here because of our stable political and economic environment, good infrastructure, and easy access to raw materials. We welcome more such companies, particularly in sectors that are key to both Europe and Singapore.

Research and Development

The next area where I believe we can collaborate further is research and development, or R&D. EU companies invest heavily in R&D. In fact, an EU firm, DaimlerChrysler, was the world’s largest industrial R&D investor of 2005. This commitment to R&D enables European companies to produce premium goods with a reputation for quality.

Singapore shares the EU’s belief in the value of research and innovation. This is why we recently set up the National Research Foundation to identify new growth areas and offer grants to finance research projects which will advance science and technology in Singapore. Over the next five years, we will be doubling our R&D budget from $5 to 12 billion to enhance our existing capabilities and grow new areas of strength that can help ensure our continued attractiveness as a regional hub well into the future.

Many of the industries that we are growing, such as biomedical sciences, nanotechnology and infocommunications and technology, are key areas for European businesses as well. We have been very encouraged by investments in these areas by European companies. For example, German chemicals firm BASF recently announced the setup of its global nanotechnology research centre here, while Dutch biotechnology company PharmaCell, and Singapore cell therapy firm CyGenics, unveiled in March a partnership to develop a new anti-cancer technology. We look forward to seeing more such collaborations between European and Singaporean companies in areas such as renewable energy, biomedical sciences and digital media.

EU-Singapore FTA

As we seek to strengthen our relationship, whether in manufacturing, R&D or other areas, what will truly bind us together is a strategic compact that will catalyse the flow of trade, investment, ideas and people.This compact, in my view, takes the form of an EU-Singapore free trade agreement, or FTA.

To provide companies with better access to key markets, Singapore has already put in place a network of FTAs with major trading partners such as the US, Australia, New Zealand, India and Japan. The EU-ASEAN Vision Group has made good progress in putting together a framework agreement for an EU-ASEAN FTA, but since the EU is our second-largest trading partner, it is only logical that we should work bilaterally to further improve ties between us.

Singapore is a pragmatic nation – we do not believe in signing agreements unless there are concrete benefits to be reaped. We see a strong business case for an EU-Singapore FTA. For example, strong and wide-ranging commitments in investment and trade in services under such an agreement would clearly benefit EU companies. I know that we have some very influential businessmen in the room today, and I look to you to bring the business case for an EU-Singapore FTA to your governments and the European Commission.

Conclusion

In summary, I have shared with you my thoughts on how Singapore and Europe can develop our relationship in a mutually beneficial manner. We share many interest areas in manufacturing and R&D, and these offer a wealth of opportunities for closer collaboration. I have also explained why, to maximise the benefits of such enhanced collaboration, the EU and Singapore should work towards a bilateral FTA.

Finally, I would very much like to thank EuroCham for the work it has done in facilitating the relations between Europe and Singapore, and I look forward to seeing further opportunities for business collaboration emerge.

Thank you.