Mr Lim Hng Kiang at the Seminar on Business Opportunities in Malaysia, 6 Aug 09

OPENING ADDRESS BY MR LIM HNG KIANG MINISTER FOR TRADE AND INDUSTRY AT THE SEMINAR ON BUSINESS OPPORTUNITIES IN MALAYSIA 10.40AM THURSDAY, 6 AUGUST 2009 

"Singapore And Malaysia: Seizing Opportunities Amid The Challanges”

Your Excellency Dato’ Mustapa Mohamed, Minister of International Trade and Industry

Distinguished Guests,

Ladies and Gentlemen,

Introduction

It is my pleasure to be able to join Minister Mustapa and all of you at this seminar on “Business Opportunities in Malaysia”. Let me begin by extending a very warm welcome to Minister Mustapa to Singapore for his inaugural seminar. This seminar has been a long-standing fixture in both our countries’ annual calendar of bilateral economic events. I would like to thank Minister Mustapa for continuing the tradition of hosting the annual seminar in Singapore.

Singapore-Malaysia Economic Relations

Malaysia and Singapore share a very close bilateral economic relationship. We are consistently among each other’s top trading and investment partners, and our business communities have established strong linkages over the years. Business communities from both sides of the Causeway enjoy a familiarity and closeness which I believe could not be matched with another country.

The strong turnout at this annual seminar year-after-year reflects these close ties. Without saying, I am sure that those present today appreciate the usefulness of this seminar as a platform to renew friendships, network and explore business opportunities in our countries and beyond.

When we last had this seminar, the world and regional economies were slowing down but we did not anticipate the financial tsunami that followed the collapse of Lehman brothers. Today, while we are probably past the worst of the economic crisis, we are still not out of the woods. We do not expect recovery from this severe downturn to be quick, and many countries will continue to face challenges in the years ahead. In short, the entire economic context and our operating environment have changed dramatically. It is timely for our companies to re-examine their strategies to see how best to seize new opportunities in each others’ countries and to collaborate to do so beyond our shores.

Outlook of Singapore’s Economy

For an open economy like Singapore, the collapse in external demand led to Singapore’s exports being affected badly. Singapore was the first Asian economy to slip into recession in the third quarter of last year. There were contractions in the manufacturing and services sector and weakened conditions in our labour market. The government has responded swiftly by introducing various measures since late last year, to mitigate the impact and to help Singaporeans and our businesses prepare for the upturn.

In recent weeks, some key economic indicators have pointed to signs of stabilisation globally. Hopefully, the sharp declines that we saw for trade in the fourth quarter of last year and the first quarter of this year would be a thing of the past. Specifically for Singapore, manufacturing output appears to have picked up, with positive readings in June for leading indicators such as the Purchasing Managers’ Index and Index of Industrial Production[1]. Business expectations in the second quarter of 2009 for companies in both the manufacturing and services sector have also become less negative, compared to the previous quarter. Advance GDP estimates for the second quarter of 2009 indicate that the economy expanded by 20.4% on a quarter-on-quarter seasonally adjusted annualised basis, the first expansion after 4 consecutive quarters of contraction 

However, it is still too early to conclude that a strong, sustained recovery is at hand. Several of our local economic indicators continue to be weak. For instance, the volatility in our exports[2] suggests that it is premature to assume that Singapore’s exports have stabilised, and the labour market outlook has yet to improve. Although we have revised our GDP forecast for this year to be between -6.0 and -4.0% from between -9.0 and -6.0%, let me remind Singaporeans that this is still a serious contraction and we continue to maintain a cautious outlook for the remainder of the year.

Opportunities in Malaysia

I am sure Minister Mustapa will be able to elaborate on the business opportunities in Malaysia later on, so my job here is to tee-up for his presentation here later on.

For Singapore-based businesses, I encourage you to seek out these opportunities in Malaysia. You will be able to enjoy first-mover advantage by means of our historical, cultural and geographical proximity. Your understanding of the Malaysian market and rapport with business partners in Malaysia built up over the years are plus points. On the Singapore Government’s part, we will step up our efforts to facilitate collaboration amongst businesses. In fact, even as we speak here today, International Enterprise (IE) Singapore is currently conducting a healthcare study mission[3] to Malaysia to explore possible opportunities arising from the recent liberalisation of the healthcare services sub-sector. 

Malaysian or Singapore businesses venturing overseas would naturally consider Singapore or Malaysia to be your launch pad before moving on to the region and the world. The reason is simple. Our people share a unique understanding of each other, forged by both countries’ close and long-standing historical and cultural ties. With a better understanding of our markets, there is a higher chance of success. This is a distinct and unique advantage that Malaysia and Singapore offer to any Malaysian and Singaporean SME looking for its first foray overseas.

Opportunities in ASEAN

Apart from Malaysia and Singapore, I would like to strongly encourage our business community to take a serious look at the opportunities in ASEAN. In the past few years, ASEAN Member States have been working very hard towards the integration of the ten economies into an ASEAN Economic Community (AEC) by 2015. Under the AEC, we aim to transform the region into a single market and production base with free flow of goods, services, investments and skilled labour, and a freer flow of capital. An integrated ASEAN presents significant business and investment potential which companies should take advantage of.

ASEAN has also made significant progress to provide a pro-business and pro-trade environment over the past decade. ASEAN has taken region-wide initiatives to eliminate tariffs, improve market access and facilitate investments. Under the AEC, ASEAN will look at newer areas such as competition policy, infrastructure development, e-commerce, and intellectual property rights.

For ASEAN’s efforts to be in line with your business needs, we have continually engaged the private sector. We have received some feedback from the business community on the various initiatives. We had considered the feedback and where appropriate and possible, incorporated them to improve these initiatives. This consultative process has contributed to the successful conclusion of the ASEAN Trade in Goods Agreement (ATIGA), ASEAN Comprehensive Investment Agreement (ACIA) and the 7th Protocol for the ASEAN Framework Agreement on Services, which were signed by all the ten ASEAN Member States in February this year.

We will continue to open and improve the liberalisation of ASEAN and I continuously urge you to give us your feedback on the sectors where we can do so.

Conclusion

Malaysia and Singapore are continuously refining policies to enhance each other’s investment climates. We want to ensure that our measures are relevant and facilitative to businesses in accordance with the prevailing global economic situation. We remain very attractive destinations. Businesses should continue to seek and seize opportunities on both sides.

With new challenges come new opportunities. Despite the current challenging economic conditions, I urge companies to continue to seek out and capitalise on new opportunities in Malaysia and Singapore, and beyond. The current economic conditions offer the potential for a lower business cost environment from which to start your operations. This will in turn provide you with a first-mover advantage from which you can leverage and capitalise on for the upturn.

On this note, I wish all participants a very engaging and fruitful Seminar. Thank you. 

[1] The Singapore’s Institute of Purchasing & Materials Management Purchasing Managers’ Index (PMI) was 51.1 in June 2009, the second consecutive month the reading was above 50 since September 2008 , while Singapore’s May 2009 Index of Industrial Production (IIP) grew by 2.0% – the first positive growth in seven months.

[2] Non-Oil Domestic Exports (NODX) and Non-Oil Re-Exports (NORX) increased on a month-on-month seasonally adjusted basis by 10.4% and 3.4% respectively in March 2009, contracted by 1.4% and 3.3% respectively in April 2009, before increasing again by 5.6% and 0.3% respectively in May 2009.

[3] The study mission is taking place from 5-7 August 2009.