Mr Lim Hng Kiang at the Latin Asia Business Forum 2010, 22 Sep 2010

OPENING ADDRESS BY MR LIM HNG KIANG, MINISTER FOR TRADE AND INDUSTRY, AT LATIN ASIA BUSINESS FORUM 2010, HELD ON 22 SEPTEMBER 2010 (WEDNESDAY) AT 10.00 AM, AT THE FULLERTON HOTEL, SINGAPORE

Your Excellencies;

Distinguished guests;

Ladies and Gentlemen.

Latin America and Asia’s Strong Recovery from the Global Financial Crisis

A very good morning to all of you. It gives me great pleasure to be here at the opening of the Latin Asia Business Forum.I would like to extend a warm welcome to our friends from Latin America and hope you will have an enjoyable stay in Singapore.

The recent financial crisis affected nearly every region of the world and many regions are still in the process of recovering. There is however, cause for optimism in Asia and Latin America. We have weathered the storm surprisingly well, due in part to effective macroeconomic policies which our governments adopted. Asia and Latin America are regions that are now leading the global recovery.

Economists are forecasting healthy growth in both regions for this year. Latin America as a whole is expected to grow 4.9%

[1]

, while Asia is expected to grow 6.3%

[2]

, led by China and India. In South East Asia, growth is expected to reach 6.7%

[3]

, a stark contrast to the economic contractions which many countries faced just last year.

Nonetheless, challenges in the global economy remain. The United States, the world’s largest economy, continues to wrestle with high unemployment. In Europe, downside risks remain as countries struggle to bring sovereign debt levels under control.

This uncertain environment in traditional markets, coupled with the strong growth of the emerging markets will see a rebalancing of trade relations.For example, Singapore’s trade with Latin America had been less affected than its trade with other regions throughout 2009. It has in fact rebounded by more than a third in the first half of 2010.

Latin America and Asia are set for Significant Growth and Transformation

The growth potential for our two regions therefore looks very promising. We are riding a wave of growth, broughtabout primarily by the emergence of a thriving middle class. By 2030, the Asian Development Bank forecasts that the middle class in India and China will number more than 2 billion. In Brazil, the middle class already accounts for almost half of the population, and national income.

[4]

The middle class constitutes much of the consumer demand in our regions. They require healthcare services, education for children, urban housing, and consumer goods like household appliances and cars. And as they become more affluent, many are increasingly venturing overseas on holidays.

In tandem, demand for infrastructure in areas such as transport, urban planning, utilities and sanitation will also rise. For instance, Indonesia will need more than US$140 billion of investments in infrastructure over the next 5 years

[5]

, while the demand for energy in Vietnam is growing at more than 15% per annum

[6]

. In Latin America, Brazil’s hosting of the upcoming World Cup and Olympics in 2014 and 2016 respectively will see large investments in infrastructure. Similarly, Panama aims to spend US$20 billionin the next four years on building ports and upgrading its existing airports

[7]

.

This emerging middle class will change the way we know Asia and Latin America. And therein lie valuable business opportunities for both regions.

Strengthening Economic Engagements between Asia and Latin America

Recognising the potential of a strong relationship, governments in both regions have steadily built a framework of economic engagement. In the last year, we have seen bilateral FTAs between Costa Rica

[8]

and China, Peru and Thailand

[9]

, and between Chile and Malaysia

[10]

. In April this year, Singapore signed an FTA with Costa Rica, our fourth with a Latin American country after Panama, Peru and Chile. Negotiations for a Trans Pacific Partnership are also underway, a free trade agreement comprising Singapore, Chile, New Zealand, Brunei, Australia, Peru, the US, and Vietnam. This agreement is a key step toward achieving an eventual Free Trade Area of the Asia Pacific, and will fuel greater economic exchanges between our regions.

Businesses are also creating frameworks for cooperation. This morning, the Mexican Business Council for Foreign Trade Investment and Technology (COMCE) and the Singapore Business Federation signed a Memorandum of Understanding (MOU). Through greater cooperation and sharing of opportunities, we hope this MOU will facilitate greater trade and investments between our two countries.

Companies from Singapore have continued to expand their presence in Latin America. In the first 8 months of the year,

a.Keppel Offshore & Marine has secured projects in the oil and gas industry worth S$170

[11]

million,

b.SembCorp Marine has invested S$150 million in a new shipyard in Espirito Santo, Brazil’s second largest oil producing state,

c.SembCorp Industries also acquired US-listed Cascal, and now has a portfolio of water and wastewater assets in Latin America and the Caribbean, and

d.Temasek Holdings has stepped up its investments across Latin America.

Latin American companies can also enjoy long term growth by investing in the Asia-Pacific region. I encourage Latin American investors to tap on the frameworks which your governments have put in place. Base yourselves close to Asia and start forging key business links today.

Singapore - Platform for Latin America to Expand into Asia

Singapore, on its part, stands ready to welcome and help our Latin American friends access the Asian markets. We can provide you with a highly conducive business environment, including a robust financial market, strategic location and a well trained workforce. Latin American investors can also leverage on our wide network of international treaties and intimate knowledge of the ASEAN region. Last year, trade and investment with ASEAN countries made up about a quarter of Singapore’s total trade, and outgoing investments.

Indeed, an increasing number of Latin American companies are already setting up in Singapore. Today I am delighted to announce that more Latin American companies will join companies like Vale, Petrobras and Embraer, who have established successful Asian operations out of Singapore.

One of these companies is PMI, the oil trading arm of Mexico’s national oil company PEMEX. Another is Braskem, South America’s largest petrochemical company. Both companies have chosen to set up their first Asian office in Singapore. Earlier this year, Chile’s largest wine producer and exporter, Concha y Toro, also set up a subsidiary in Singapore to manage and develop its growing Asian sales and distribution.

To service the growing number of Latin American and European companies doing business in our region, Spanish bank Banco Santander, one of the world’s leading banks, has also set up a Representative Office in Singapore.

Conclusion

These are indeed exciting times for both our regions. Today’s forum plays a key role in helping to further mutual business interests and promote awareness of both regions. I encourage Latin American and Singapore businesses to leverage on this forum, and others like it, to further grow our bilateral investment and trade ties.

I wish you all a rewarding and fruitful time at today’s forum. Thank you.

[1] Source: Consensus Forecasts estimates.

[2] Source: Consensus Forecasts estimates.

[3] Source: Asian Development Bank July 2010 Economic Forecast.

[4] Source: 2009 Report by the Getulio Vargas Foundation

[5] Statement by Paskah Suzetta, Indonesian Minister of National Development Planning

[6] Source: Statement by Vietnam Electricity in 2008, Vietnam’s largest power company.

[7] Quoted from a speech by President Martinelli in May 2010.

[8] Signed in April 2010

[9] Signed in November 2009

[10] Signed in May 2010

[11] Source: Keppel press release, 21 July