Mr Lim Hng Kiang at the Latin Asia Business Forum 2011, 5 Oct 2011

OPENING ADRESS BY MR LIM HNG KIANG, MINISTER FOR TRADE AND INDUSTRY, AT LATIN ASIA BUSINESS FORUM 2011, ON WEDNESDAY, 5 OCTOBER 2011, 10.05AM, GRAND HYATT SINGAPORE

Your Excellencies,

Distinguished Guests,

Ladies and Gentlemen

Welcome & Introduction

Good morning to all of you. I am glad to be here today at the eighth Latin Asia Business Forum.

I am pleased to note that this Forum has gathered close to 300 business leaders and government officials from Latin America and Asia. Your presence reflects the importance you have attached to the Forum, and the urgency of dealing with the challenges and harnessing new growth opportunities in Asia and Latin America.

Prospects for Asia and Latin America remain bright

Today, the global economy continues to be plagued by uncertainty. The sovereign debt crisis in Europe, sluggish US economic recovery, and the ongoing socio-political unrest in the Middle East are all precursors of slowing global growth.

Nevertheless, Asia and Latin America continue to be the bright spots, with higher growth than other major economies. In Asia, China and India are expected to become key global growth engines, with their 2011 GDP growth forecast at 9.5% and 7.8% respectively[1]. Opportunities are also abound in the fast growing Asian economies. For instance, Indonesia recently announced plans to invest over US$400 billion over the next decade or so to accelerate the nation’s economic growth. Vietnam has also committed US$12 billion worth of investments on 60 urban infrastructure projects, ranging from water and sanitation systems to roads, highways and traffic systems between 2009 and 2016[2]. These, coupled with China’s and India’s rapid development, will sustain continued growth in Asia.

Likewise for Latin America, it has had robust economic performance in the last decade. Brazil – the region’s largest economy - grew at about 4% per annum from 2001 to 2011[3]. Mexico, another major Latin American economy, also grew at a compound annual growth rate (CAGR) of 5.98% from 2000 to 2010.[4] With political stability in its larger economies, positive demographics, and strong external and domestic demand, the Latin America and Caribbean region is projected to expand by 4.5% in 2011[5].

Strengthening of Trade & Economic Ties between Asia and Latin America

On the bilateral front, we are seeing stronger trade and economic ties between both regions. Last year, bilateral trade between Asia and Latin America increased by 50% to US$172 billion. In fact, trade between both regions have been growing at a compound annual growth rate (CAGR) of 25% since 2000[6]. This upward trend is likely to continue as we see strong demand for commodities in Asia, as well as Latin America’s increasing appetite for Asian consumer goods.

Similarly, Asia’s investments into Latin America have also been growing. In 2010, Chinese companies accounted for 9% of the foreign investments into Latin America at US$10.17billion[7]. As the fastest growing and largest Asian investor in the region, China had earlier this year announced that it would invest US$22 billion into Latin America and the Caribbean[8].

Singapore’s trade with Latin America has more than more than quadrupled in the last ten years, totalling US$20.3 billion (S$27.7 billion) in 2010. We continue to be a key Asian investor in Latin America, especially in Brazil where Singapore’s stock of investment grew at a compound annual growth rate (CAGR) of 11.3% between 2004 and 2009[9]. Increasing business links have also prompted Singapore Airlines, our national carrier, to make its first foray into Latin America with its direct flight service to Sao Paulo, Brazil in March this year.

Singapore - a natural partner for Latin American companies looking to expand into Asia

Singapore is a natural partner for Latin American companies looking to expand into Asia. Apart from our central location between the East and West, Singapore is valued for our cultural affinity and strong economic links to Asia. In addition, Singapore has strong economic fundamentals and offers a business-friendly environment.

All these qualities, as I have just mentioned, have enabled Singapore to become an important hub in Asia. Our container port is now amongst the busiest in the world. We have also built up significant industry clusters such as energy and chemicals, oil and gas, natural resources and consumer businesses.

Increasingly, we see many emerging global companies from China, India and Southeast Asia here. They have seen the strategic and economic value of Singapore as a base to expand beyond their home markets. Many of them undertake substantive activities such as manufacturing and regional headquarter functions. A good example is Shagang International, a Chinese Private-Owned Enterprise (POE) steel mill. It has set up a trade office in Singapore to purchase iron ore for its steel production in China, and to sell Chinese steel products into Southeast Asia. Aditya Birla Group, an Indian multi-national conglomerate corporation, has also set up a subsidiary in Singapore – Swiss Singapore Overseas Enterprises – to expand into markets such as China, Indonesia and Vietnam for its commodities trading business.

Many of the Latin American companies – in varied sectors such as chemicals, food and beverage, industrial products, retail and lifestyle services – have embarked on Asian strategies to tap on Asia’s strong growth and rapidly-growing consumer base. On this note, I am glad to learn that some have chosen to base in Singapore. One of them is Brasil Foods, a global leading poultry exporter and ready meal manufacturer. Leveraging Singapore’s strengths as a logistics hub, the company’s Singapore subsidiary provides marketing and logistics services for its business in Southeast Asia.

Today, I am pleased to share that Argentina’s federal trade and investment agency, CFI has appointed representation in Singapore to advise on their interests in Singapore and Southeast Asia. Ecuador also recently established an Embassy in Singapore, with a focus on driving Ecuador’s economic agenda in the region.

Singapore and Latin America to deepen bilateral economic relationship

Indeed, there is no better time for Latin American companies to come to Asia, and Singapore, than now. We should build on the current momentum and take our economic engagement to the next level. For Singapore, we will ensure that we remain fully plugged into Asia and continue to add value to Latin America’s engagement of Asia.

As another sign of our commitment, I am pleased to announce that the International Enterprise Singapore (IE Singapore) and the Development Bank of Latin America (CAF). will sign a Memorandum of Understanding (MOU) at this Forum today. This MOU represents IE Singapore’s continuing efforts to develop institutional relationships with strong partners in Latin America. The MOU will establish the platform for greater collaboration and exchange between Singapore and CAF’s member countries in several areas including infrastructure development, urban planning, energy, trade facilitation, electronic government services and financing.

Singapore will also step up its resources in the region to further assist the growing bilateral business links. The Singapore’s Ministry of Foreign Affairs (MFA) recently appointed a Non-Resident Ambassador (NRA) to the CARICOM and will also set up an Embassy in Brazil, Singapore’s first resident diplomatic representation in Latin America. This is a clear testament of our commitment to deepening the Singapore-Brazil – and Latin America – connection.

Conclusion

In closing, let me say that Latin America and Asia will continue to fare well in a global economy beset with uncertainty. As Latin America deepens its connections with Asia, Singapore will continue to bridge these interests and strengthen our role as Latin America’s valued partner in this region.

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

[1]Source: “Slowing Growth, Rising Risks”, World Economic Outlook (WEO), International Monetary Fund, Sep 2011

[2]Source: “Vietnam Infrastructure Report Q3 2011”, Business Monitor International

[3]Source: The Economist, 24 Sep 2011

[4]Source: World Bank & CIA World Factbook

[5]Source: “Slowing Growth, Rising Risks”, World Economic Outlook (WEO), International Monetary Fund, Sep 2011

[6]Source: “Growing M&A activity between Asia and Latin America?”, Alternative Latin Investor, Aug 2011

[7]Source: “Foreign investment in Latin America up 40% in 2010 – UN”, The Costa Rica News, May 2011

[8]Source: “Commentary: China will increase investments in Latin America”, Mcclatchy, May 2011

[9]Source: Singapore Department of Statistics