Mr Lim Hng Kiang at the Opening Ceremony of the 1st APEC Business Advisory Council (ABAC) Meeting of 2006

SPEECH BY MR LIM HNG KIANG, MINISTER FOR TRADE AND INDUSTRY, AT THE OPENING CEREMONY OF THE 1STAPEC BUSINESS ADVISORY COUNCIL (ABAC) MEETING OF 2006, ON MONDAY 23 JANUARY 2006 AT 12.15 PM AT SHANGRI-LA HOTEL, SINGAPORE

Good afternoon, ladies and gentlemen.

Welcome to Singapore. We are happy to have you here, especially during this festive season. Let me take the opportunity to wish you a happy Lunar New Year.

This is the second time that Singapore is hosting an ABAC Meeting and we are honored to do so.

Some of you may recall coming to Singapore in 2001 when we last hosted an ABAC meeting. Our cityscape has changed with the introduction of architectural landmarks like the Esplanade and improvements to the Singapore River waterfront. It will continue to be updated with plans for integrated resorts in Marina Bay and Sentosa. What have not changed are the foundations that underpin our economic policy.

Our land area is limited and our population relatively small. We make a living by plugging ourselves into the global economy and adapting to international trends and developments. The introduction of Chinese and Indian factors of production represents a tremendous change to the way the global economy is organised. The expansion of the EU and the integration of Southeast Asian economies will throw up new business opportunities. How do we respond to these forces of globalization?

We believe the answer lies in free trade. Trade remains a cornerstone of the Singapore economy, dating back to our days as the British Empire’s trading hub for the region. Singapore’s total trade value amounts to more than 3 times that of our GDP.

Like ABAC, Singapore believes in free trade. We are pro-market, pro-competition, and pro-business. We pursue trade liberalization using a three-pronged approach. First, we actively engage in WTO negotiations. Second we participate in regional economic liberalization efforts such as those under the APEC forum. And lastly, we supplement these efforts through the pursuit of bilateral trade agreements.

WTO: Follow-up to Hong Kong Ministerial Conference

The WTO is the multilateral forum that drives global trade liberalisation. Singapore believes that the WTO creates a more secure and predictable trading environment. We work to actively contribute to a global framework of rules, governing market access commitments and trade.

Just a month ago, Ministers from 149 countries met in Hong Kong to make further progress on the Doha Round of negotiations. Because of a collective resolve to move forward, and leadership from key players like the EU, US, Brazil and India, we managed to bridge some of the differences, putting the Doha Round back on track.

However, many key issues remain unresolved, chief of which is market access for agricultural goods. Time is running short. The next 3 months are especially crucial as parties have to decide on full modalities in the liberalization of agricultural and industrial goods trade by 30 April 2006.Whether we can meet this deadline would depend largely on whether the long-standing impasse in agricultural market access can be resolved.

Movement in agricultural market access is key to unlocking progress on other fronts like industrial goods and services. Significant resolve and political will were exhibited by all parties in order to avoid failure at Hong Kong. The same resolve and will have to be ramped up by a couple of notches, in order to complete the round by the end of this year, as set out within the mandate.

Singapore firmly believes that the successful completion of the Doha Agenda would result in new development opportunities, and bring immense benefits to all. The ongoing multilateral negotiations are therefore our key priority and we will continue to devote our full resources, especially in negotiating areas of key interest to us, like that for industrial goods, services and trade facilitation.

On the plurilateral front, we work to promote trade in regional platforms, such as ASEAN, and of course, APEC.

Singapore is ASEAN 101

ASEAN economies have progressively increased their level of economic integration. Under the ASEAN Free Trade Area (AFTA), average tariffs in the ASEAN-6 have been reduced from more than 12% to under 2%.

But we are not stopping there. ASEAN is preparing a roadmap for an ASEAN Economic Community by 2020, an ambitious vision to create a single enlarged market of 550 million people.

The potential economies of scale will present businesses with immense opportunities, ranging from improvements in supply chain efficiency, to integrated consumer markets.

Ahead of the 2020 target, ASEAN countries have already agreed to accelerate integration in 11 priority sectors, in order to provide for faster integration for member countries that are eager, in sectors that are ready. The region is bustling with activities, driven by a vision of a common destiny, and a common wish for the ASEAN family to prosper.

What is Singapore’s role in all these exciting developments in Southeast Asia? I have heard that first time visitors to Singapore and Asia sometimes say that Singapore is Asia 101, an introductory course to Asian culture. To a businessman from outside Southeast Asia, Singapore can play the role of ASEAN 101, by acting as a gateway to ASEAN.

As the logistics, communication, IT, financial services and management hub to the region, Singapore provides a friendly and open door to the rest of the Southeast Asian market and beyond. More than 7,000 multinational companies are here in Singapore. According to the U.S. Commercial Service in Singapore, of the 1,500 American companies currently operating in Singapore, 90 per cent have regional or sub-regional responsibilities.

APEC and ABAC’s role in APEC

Similar to our participation in ASEAN, Singapore has been actively committed to the APEC process since its founding years.

APEC leaders from 21 Asia Pacific economies meet every year, to build, renew and sustain a commitment to economic integration and openness in the region. Representing 60% of the world’s GDP, this commitment has immense impact not only on the region, but also on the world.

With APEC economies acting on a common target of reaching the Bogor Goals by either 2010 for developed countries, or 2020 for developing countries, average tariffs in APEC have declined from 12 per cent to 8 per cent in the last five years. Today, over two-thirds of APEC economy imports attract tariffs of 5 per cent or less. As a leader in the global economy, APEC has set a very good example.

Beyond tariff reductions, APEC has also been the birthplace of many pathfinders and sectoral initiatives that have improved business conditions and facilitated trade in the region. In order to do that well, the business perspective is crucial.

ABAC has a unique standing in APEC, as it keeps the forum grounded in understanding the real concerns of real businesses. Through this process of regular engagement with APEC officials, ABAC is shaping how trade policies are formulated. ABAC gives credence to what we do, and keeps us honest so that we remain true to APEC’s aims and values.

Trans-Pacific Strategic Economic Partnership (TPSEP or P4)

One of ABAC’s contributions to APEC in recent years is the study and recommendation of an APEC-wide FTA. We appreciate the benefits of such an FTA. But any trade official who has been part of an FTA negotiation process will know how difficult negotiations can be. It is not hard to imagine that negotiations among 21 countries can only be extraordinarily strenuous.

This is why I would like to highlight briefly what we consider a proud moment in Singapore trade policy work in the past year – the conclusion of the Trans-Pacific Strategic Economic Partnership, or what we fondly also call the P4 agreement, referring to the four parties to the agreement, Brunei, Chile, New Zealand and Singapore.

The P4 agreement has an open accession clause, which makes an APEC-wide FTA no longer an impossible dream. By having new members join the P4 agreement on a P4 + X basis, we do not have to be engaging all 21 economies negotiations all at the same time. Instead, it offers a step-by-step path to building a larger free trade area, as other members can join when they are ready.

Singapore’s FTA network

Including the P4 agreement, Singapore has concluded 10 FTAs, many of which are with APEC members, such as with the US, New Zealand, Japan, Australia and Korea. We are also in active negotiations with Pakistan, Qatar and Kuwait, in addition to the FTAs that ASEAN is negotiating with its dialogue partners.

Through FTAs, trade barriers are lowered or removed, and there can therefore be a freer movement of talent, goods, services and investment. This helps ensure that resources are used in the most efficient way possible, and businesses are given more room to expand and grow globally. FTAs allow for faster trade liberalization, and are complementary to our WTO and other regional commitments.

Through our years of efforts in engaging other likeminded partners, Singapore is now an FTA hub with linkages to more than 20 countries. Reaching far and deep into economies ranging from the traditional powers like the US and Japan to the emerging powers like China and India, our network of FTAs allows companies with global aspirations to enjoy enhanced market access into these markets.

Whether through the WTO, regional integration or bilateral trade deals, I believe we are heading in the right direction, in creating a freer global market.

Pro-business environment in Singapore

Concurrent to our efforts to liberalize trade, we also work to nurture our domestic capabilities and talents to meet the challenges of a globalized economy. One way we do that is to cultivate a pro-market and pro-competition environment in Singapore.

Singapore has an open economic system. Businesses benefit from policies that are predictable, transparent and market-friendly. With the enactment of our Competition Law since 2004, companies also enjoy a level playing field, as the new Law provides for fair and healthy competition in Singapore.

Private sector consultation is a key component of our policy development process. We are constantly reviewing our policies and looking out for new ways to enhance our pro-business environment.

The outcome of our policies is that Singapore has been consistently ranked near the top for being the most competitive economy, the freest economy, and for having the best investment climate in the world.

With Singapore’s proven track record, many companies have chosen to augment their presence in Singapore, with increased investments and expanded operations.

Take for example Siemens, one of Singapore’s most dynamic foreign companies in the last 30 years. In addition to its current spectrum of semiconductor manufacturing activities, Siemens has further strengthened its ties with Singapore with a new facility to manufacture cutting-edge surface mounting machines.

The American IT company, Dell, has also set its sights on increasing its presence in Singapore, following the establishment of its design center here. The positive factors that have helped convinced Dell include Singapore’s well-connected infrastructure, well-regulated but flexible financial infrastructure and sound intellectual property management and protection policies.

Conclusion

Now, let me return to the question I asked earlier. Given Singapore’s inherent limitations, how have we responded to the challenges of globalization?

The simple answer is that we open our doors to the best businesses in the world, and provide our local companies the opportunity to hone their skills in the global

Thank you.