Mr Lim Hng Kiang at the Singapore Business Federation “Brazil: The Next Leap” Seminar and Networking Session

ADDRESS BY MR LIM HNG KIANG, MINISTER FOR TRADE & INDUSTRY AT THE SINGAPORE BUSINESS FEDERATION “BRAZIL: THE NEXT LEAP” SEMINAR AND NETWORKING SESSION ON FRIDAY, 29 FEBRUARY 2008, 9.00AM AT BALLROOM 2, THE FULLERTON HOTEL

Your Excellency Celso Amorim, Minister of External Relations, Federative Republic of Brazil

Distinguished speakers and guests

Ladies and Gentlemen

Good Morning.

I am delighted to join all of you today and would like to extend a warm welcome to our speakers and delegates, as well as our overseas guests and friends.

Two Dynamic Regions

Latin America and Asia, including Brazil and Singapore, are enjoying healthy economic growth - growth in Latin America and Asia is expected to reach 5.6%[1] and 7.4%[2] respectively for last year. Trade and investment flows between both regions are also expanding. Asia’s rising demand for energy and resources, driven largely by China and India, presents natural synergies for resource-rich Latin American economies such as Brazil.

Brazil: Positive Growth Prospects

Brazilis a key economy in Latin America. It posted a strong economic growth rate of 5.3% last year largely driven bylower annual inflation rates, expansion in exports producing a trade surplus of almost US$ 39 billion, and international reserves which swelled by almost US$ 80 billion.[3]Brazil has been active in welcoming foreign participation in its economic development. It is thus not surprising that Foreign Direct Investment (FDI) into Brazil reached an unprecedented US$ 35 billion last year.[4] The outlook for Brazil continues to remain positive – with a healthy growth rate of 5%[5] expected this year. Brazilian firms have also embarked on investing more aggressively abroad - Brazil’s total outward FDI reached US$28.2 billion in 2006[6] - a clear indication of the growing investment appetite of Brazilian companies.

Bilateral Trade and Investment Growing

Economic ties between our countries are increasing.Bilateral trade continues to experience strong growth..It has expanded by an average of 29% since 2004 to reach S$3.2 billion last year. Total trade with Brazil, our second largest trading partner in Latin America, nevertheless constituted only 0.4% of Singapore’s total trade. There is thus tremendous potential for further expansion. Investments have also been growing with Singapore now the 2nd largest Asian investor in Brazil after Japan – FDI from Singapore totalled US$ 171.1 million between 2001 to 2005.[7]

Physical distance, language and cultural differences have not impeded greater economic linkages between both countries. Some of you may be surprised that although Brazil is far away from Singapore, it is the largest exporter of frozen chicken to Singapore! Brazil’s abundance of livestock as well as economies of scale in processing, packaging and distribution make the country a competitive source of frozen meats. At the retail end, the much longer shelf-life also means that retailers need not charge a higher premium than for chilled meat. Singapore’s AVA has been looking into the diversification of our food sources, and Brazil has proven to be a highly competitive market which we have been tapping on in recent years.

Deepening Our Engagement

Forays by Singapore companies into Brazil have increased over the years. Some of these companies have been in Brazil for some time now. Both Keppel FELs and SembCorp Marine through its subsidiary, Jurong Shipyard, for example have chosen to deepen their commitment and investment in Brazil’s oil and gas industry. Their expertise in ship repair, shipbuilding and offshore platform construction dovetail well with Brazil’s own vibrant shipbuilding and offshore industry. Not only have they invested substantively, these companies have also created job opportunities in partnership with their Brazilian counterparts.

Singapore-based companies’ presence in Brazil has also widened over the years, and spans a number of sectors - agribusiness, food, energy, contract manufacturing. Olam International, for example, has invested in a cashew and cocoa processing plant in Brazil while the Noble Group owns a sugar and ethanol production facility in the state of Sao Paulo and various storage facilities across the country. I am confident that Singapore’s presence in Brazil looks set to grow even further.

Growing Brazilian Presence In Singapore

Brazilian companies have also made steady inroads into Singapore. Embraer, for example, has chosen Singapore as its hub for customer support, simulator training and distribution activities in the Asia-Pacific. Starting as a representative office in 2000, Embraer has since incorporated a fully-owned subsidiary now responsible for serving the Asia-Pacific region in terms of spare parts distribution, logistics and full training of pilots and crew. Vale Brazil’s premier mining company with operations in Australia, China, Japan, South Korea and Indonesia, also established a representative office in Singapore last year to coordinate marketing activities in the region and develop strategies for its business in the Asia-Pacific region.

I look forward to seeing even more of such ventures in time to come.Our FTA network, connectivity and knowledge of the region reflect Singapore’s value proposition as a regional node in fostering investments between Latin America and Asia. With Singapore's strategic location at the cross-roads between India and China, Singapore businesses, with their extensive networks in Asian markets, are uniquely placed to assist Brazilian companies venture into Asia.

Growing Trade & investment links

We have also been proactive in enhancing our economic engagement at the G-to-G level.Late last year, Singapore concluded a Memorandum of Understanding (MOU) on trade and investment cooperation with Mercosur, a customs union comprising Brazil, Argentina, Paraguay and Uruguay[8].SPRING Singapore also concluded an MOU with the Movement for Brazilian Competitiveness (MBC) aimed at promoting best practices as well as encouraging interaction and collaboration between enterprises on both sides. This re-affirms both countries’ commitment to expand and develop economic linkages.

Links between our private sectors are also growing. I am pleased to see that the Singapore Business Federation and the Federation of Industries of the State of Sao Paulo (FIESP) have today entered into a Memorandum of Understanding. This is SBF’s second MOU with a business chamber in Brazil[9]. This MOU will involve identifying and pursuing business cooperation as well as sharing of information and experiences to further drive business collaborations. Since 2004, SBF has organised a total of three business missions to Latin America, including Brazil. It has also partnered International Enterprise Singapore (or IE Singapore for short), over the past four years, in organising the annual Latin Asia Business Forum. The Forum has been successful in bringing together the business community from both Asia and Latin America to identify emerging business trends and potential opportunities. I hope to see all of you at this year’s Forum which will be held from 22 to 23 September 2008.

IE Singapore, the government agency under the Ministry of Trade and Industry spearheading the development of Singapore's external economic wing, has established an office in Sao Paulo since 2005, its second in Latin America after Mexico City. The office has played an active role in forging partnerships and increasing business flows between both countries.

Businesses can thus make use of multiple platforms to further explore opportunities in Brazil and Singapore. These platforms bear testimony to Singapore's commitment to expanding its economic links with Brazil. The governments of both Singapore and Brazil will continue to facilitate this trend of growing engagement.

Conclusion

The prospects for further expanding economic relations between Brazil and Singapore are bright. Governments, business leaders and companies from both regions should seize this opportunity to expand trade links and invest strategically. I applaud SBF for this excellent initiative and for all that it is doing to strengthen economic relations between our two countries.I urge all of you present here today to leverage on this platform to identify opportunities and avenues for working together as well as building rewarding partnerships.

Thank you.

[1]United Nations Economic Commission for Latin America and the Caribbean’s (UNECLAC)Preliminary Overview of the Economies of Latin America and the Caribbean in 2007.

[2]United Nations Economic and Social Commission for Asia and the Pacific’s (UNESCAP) Economic and Social Survey of Asia and the Pacific 2007.

[3]UNECLAC Preliminary Overview of the Economies of Latin America and the Caribbean in 2007.

[4]UNECLAC Preliminary Overview of the Economies of Latin America and the Caribbean in 2007. In 2006, Brazil recorded negative net FDIas a result of direct investment operations abroad, principally the purchase of Inco (Canada) by Vale (formerly known as CVRD) for some USD 17 billion.

[5]Brazil’s National Confederation of Industries (CNI).

[6]UNECLAC. Data as at the first 9 months of 2007.

[7]Brazil Central Bank.

[8]Venezuela’s full Mercosur membership has yet to be ratified by the Paraguayan and Brazilian parliaments.

[9] In 2005, SBF signed an MOU with the Sao Paulo Chambers of Commerce during their business mission to Brazil.