Mr Lim Hng Kiang at The Global Entrepolis @ Singapore Business Leaders Summit 2012

​OPENING ADDRESS BY MR LIM HNG KIANG, MINISTER FOR TRADE AND INDUSTRY AT THE GLOBAL ENTREPOLIS @ SINGAPORE BUSINESS LEADERS SUMMIT 2012, 23 OCTOBER 2012, 9.15AM, RESORTS WORLD SENTOSA

Datuk Sri Mohamad, Minister for International Trade and Industry of Malaysia

His Excellency Hasunul Haq Inu, Minister for Information of Bangladesh

Dr Han Duck-soo, Chairman of the Korea International Trade Association

Mr Tony Chew, Chairman of Singapore Business Federation

Distinguished Guests

Ladies and Gentlemen

Introduction

A very good morning to all of you. It is my pleasure to join you at the opening of this year’s GES Leaders Summit. Let me also welcome our overseas guests to Singapore.

A prolonged period of low growth

The world that we live in today continues to surprise us, some positive, most less so. On the positive side, the urbanisation of the emerging economies, particularly China, India and increasingly Africa too, as well as the rapid growth of their middle class presents new opportunities and sources of growth. On the downside, we still have to address the consequences of deleveraging.

Around the world, many countries face profound economic challenges that have stubbornly resisted multiple rounds of fiscal stimulus and quantitative easing. The US and the EU, the world’s biggest economies, also face political constraints. Many solutions and ideas have been proposed to tackle their economic problems, but their leaders have found it very difficult to address the underlying structural problems in the face of increasing popular dissent.

As the EU and the US account for almost half of the global economy, the rest of the world will not return to stable growth unless they recover their lost ground. In fact, the IMF chief economist Olivier Blanchard has estimated that the world economy would take at least a decade to recover from the 2008 financial crisis. The close trade and financial inter-linkages between Europe, the US and Asia has resulted in Asia taking a hit too. The years of double-digit economic growth may be over for Asia’s major economies. 

However, there is some room for cautious optimism. The US has a very deep capacity to innovate and find new sources of growth, and its people are resilient and resourceful. The EU will find it harder, but its leaders have taken important steps towards deeper integration, including plans for a banking union.

Growth in Asia depends on closer regional ties

In Asia, relatively healthier fiscal positions, strong investment and buoyant domestic demand in many Asian countries will cushion the impact of a major slowdown in the developed economies. While the developed economies still represent the largest export markets for many Asian economies, intra-Asian trade has grown very strongly, increasing three-fold between 2000 and 2011. Intra-Asian investment flows from one Asian economy to another Asian economy have also increased strongly.

Asia continues to present opportunities, not just in traditional sectors like manufacturing but also in services. The development of the services sector in Asia has lagged other sectors, so there is that potential for growth. Today, services accounts for just half of the region’s GDP. There is room for high-value services to grow further in Asia, to meet the needs of upwardly mobile urban dwellers whose tastes have become more sophisticated. This segment – the rising Asian middle class – will become the world’s biggest consumers in due course, seeking not just day-to-day consumer goods but also good quality education, healthcare, media, recreational and travel services.

Asian companies are also rapidly coming to the fore, becoming globally competitive in many areas. These growing companies will need a wide range of financial, legal, business and management services as they expand and venture out of their traditional home markets to reach out to the world.

This new tide of Asian consumers and corporates will demand top-quality products, services and experiences.  Businesses that can respond flexibly and innovatively to this new wave of Asian demand will have a good chance of becoming the next generation of globally competitive companies, anchored here in Asia.   

But Asian countries have a lot of work to do in order to realise their full economic potential. We will need to think hard about raising labour productivity and investing in the equipment, infrastructure and training needed to maximise the potential of our people. We will also need to tackle structural challenges and pursue regulatory reforms, in order to deepen our economic linkages and sustain good growth across the region.

The importance of regional economic integration

Countries will need to do this together. ASEAN’s vision for economic integration by 2015 through the ASEAN Economic Community (AEC) will facilitate the flow of goods, services and investment in the region and grow our total economic output, which currently stands at around US$2 trillion. The gains on the upside are tremendous. ASEAN economies must continue to invest the political will and economic resources needed to achieve the vision of AEC 2015. Beyond this, ASEAN’s commitment to begin negotiations for the Regional Comprehensive Economic Partnership (RCEP) with six other partner countries is another important step.

ASEAN needs to keep up with such efforts because modern business needs are constantly evolving. Modern supply chain management, for example, illustrates this. Today, the supply chains of our businesses span across many suppliers and partners from different countries. This means that supply chain disruptions or increased trade barriers in one country will hurt others along the entire supply chain. Conversely, efforts to identify and reduce trade barriers and strengthen connectivity will serve to benefit everyone.

We have already made good progress in improving connectivity in the region. APEC economies have made serious efforts at tackling the barriers to trade across our borders, and as a result, it now costs an APEC economy 44 per cent less to export a container, and 49 per cent less to import a container, compared to the rest of the world¹. Within ASEAN, trade barriers have also come down, and many efforts to deepen our connectivity are underway.

It is indeed in everyone’s interests to reduce trade barriers and to ensure that markets remain open in these challenging economic times. In fact, the World Trade Organisation has observed an increase in protectionistic measures in the last two years. This is a worrying trend. This is why Singapore and our key trading partners such as the EU and the countries of the Trans-Pacific Partnership are actively engaged in free trade negotiations. We want our businesses to venture overseas with confidence and certainty, with minimal trade barriers.

Businesses too can play a part to maintain an open business environment. The active participation of Singapore companies in the events organised by ASEAN Business Advisory Council, or the APEC Business Advisory Council, goes a long way in strengthening business ties across the region. At the same time, such structures allow companies with opportunities to give feedback to governments on trade barriers, new business practices and needs, and gaps in the regulatory environment. We need your feedback, to keep us on our toes.

If markets are fast-changing, companies will need to be fast-changing too

As companies, you have your work cut out for you. You will need to adapt to a prolonged period of low growth in the developed economies. To “capitalise on fast-changing markets” in Asia, you will need to anticipate the needs of a diverse group of consumers across different countries. You will need flexible, nimble supply chains, drawing on inputs from across the region. And you will need to anticipate changes to markets, so that you can deal with disruptions and turn risks into opportunities.

Let me end by saying that GES Business Leaders Summit provides a platform for businesses to share the latest insights, exchange innovative ideas -- and to make friends. Over these two days, as you learn to “capitalise on fast-changing markets”, I hope you will also capitalise on the wealth of knowledge that is present here. I wish you all a fruitful time ahead.

Thank you.

¹ APEC Economic Policy Report 2012, September 2012.