Mr S Iswaran at the Competition Comission of Singapore’s 10th Anniversary Dinner

OPENING ADDRESS BY MR S ISWARAN , MINISTER (PRIME MINISTER’S OFFICE), SECOND MINISTER FOR HOME AFFAIRS AND TRADE & INDUSTRY AT THE COMPETITION COMISSION OF SINGAPORE’S 10th ANNIVERSARY DINNER, THURSDAY, 23 JULY 2015, 7.00 PM, REGENT HOTEL 

Chairman and Members of the CCS Board  

Colleagues from the CCS

Distinguished guests

Ladies and gentlemen

Introduction

Good evening. I am pleased to join you this evening to celebrate the Competition Commission of Singapore’s (CCS) 10th Anniversary.  In its short history, CCS has made significant strides in fulfilling its important mission, and contributing to the growth and development of Singapore’s economy.  

Competition as an enabler of economic growth

Competition is a key enabler in our economic ecosystem.  We seek to preserve and promote competition in our markets because of the benefits it derives.  Competition ensures choice and value for consumers.  It motivates businesses to differentiate themselves through innovation and capabilities.  And, with the usual caveats, competition makes for a more efficient and productive economy.

CCS’ role as a champion of competition enables Singapore’s markets to function efficiently, facilitates innovation and sustains our economic competitiveness.  Our collective efforts have had a discernible impact.  The competitiveness of Singapore’s economy has been widely acknowledged in global rankings.  For example, in the 2014–2015 World Economic Forum Global Competitiveness Report, Singapore was ranked 2nd behind Switzerland for the fourth consecutive year.  

The Global Competitiveness Report found that the effectiveness of anti-monopoly policy in Singapore has been on the rise.  Our ranking improved from 26th in 2006–2007 to 8th in 2014–2015.  The International Institute for Management Development (IMD), in its annual World Competitiveness Yearbook ranked Singapore’s competition regime as the 4th most efficient in preventing unfair competition, up from 8th position in 2014.

A competitive market does not just curb the market power of participants or potential participants; it is also a market where no potential participant, big or small, faces non-market obstacles to entry. This is crucial for it allows for the entry of disruptive innovation by start-ups, or upstarts as the case may be, which can change and challenge incumbents by leveraging technology and adopting new business models.     

One example in the Singapore context is the online company RedMart.  This 4-year old start-up has successfully entered the supermarket sector, which is well-known for its large incumbents with long established business models.  RedMart uses technology to offer consumers a more convenient way to shop for groceries online.  Since its inception, RedMart has seen its revenue grow about 15 per cent month-on-month and now employs 530 people.  It has moved its operations to a larger premises, more automated, and temperature controlled fulfillment centre.  RedMart’s early success has also drawn the attention of several world-class investors.  In 2014, RedMart raised $23 million in Series B funding from current and new investors.  RedMart’s entry has pressed the incumbent supermarket chains to move ahead with online shopping services.  Meanwhile, RedMart continues to innovate and earlier this year launched a new product range of “meal kits”.  Its customers can now enjoy home-cooked meals that are easy to prepare thanks to pre-portioned ingredients and simple recipes.

CCS’ role in balancing competition with benefits to larger economy

In administering and enforcing the Competition Act, CCS must accord, and has accorded, due consideration to the balance between the impact on competition per se of a particular transaction or market development and its net benefit to Singapore’s economy.  In other words, we need a balance between doctrine and pragmatism.  For example, since 2007, CCS has considered 11 airline joint ventures, of which a number were cleared by CCS after weighing their anti-competitive effects against the economic benefits of such ventures.  A market study commissioned by CCS on the quantifiable benefits of two specific joint ventures, between Japan Airlines and American Airlines, and All Nippon Airways, Continental Airlines and United Airlines, found that that the joint ventures had resulted in an increase in passenger numbers, both at the market level and for the carriers in the joint venture.  Specifically, there were increases of up to 14 per cent passenger numbers in the overall market as a result of the joint ventures. The economic benefits included increase in tourism spending, trade and business travel, and the strengthening of Singapore’s positioning as an aviation hub.

The advent of new technology-enabled business models is another example.  As a market regulator, it is essential that CCS has a nuanced and sophisticated understanding of the impact of new business modalities and strategies, such as e-commerce and what is broadly termed the sharing economy, on market structures and dynamics.  Earlier this year, CCS commissioned a study to examine various aspects of e-commerce, including shifts in the structure of value-chains, the roles of domestic and overseas players, and the impact of e-commerce business models on market efficiencies.  The findings will help CCS better understand the market practices in key e-commerce sectors, detect anti-competitive behavior, and propose policies to maintain level playing fields.  As a thought leader and to benefit a larger audience, CCS will be sharing the findings of the study with stakeholders, including sectoral regulators and competition authorities in other jurisdictions such as those in ASEAN. 

Such a collaborative approach is essential, given the nature and scope of CCS’ mission.  In that vein, CCS partners with, and provides advice to, other agencies that regulate specific sectors.  CCS has also reached out to the business community through trade associations and chambers.  For example, CCS has worked with the Singapore Chinese Chamber of Commerce and Industry to educate its members on the Competition Act.  CCS’ outreach efforts have borne fruit and resulted in greater awareness within the business community.  In a stakeholder perception survey, 59 per cent of businesses indicated that they are aware of the CCS and the Competition Act in 2014, up from 41 per cent in 2012.  CCS and the Singapore Academy of Law have also collaborated in organising conferences with experts and legal practitioners to exchange views, ideas and advance thought leadership on competition policy and law.

Within ASEAN, CCS has contributed to the creation and adoption of competition policies to enable level playing fields for businesses in the ASEAN Economic Community (AEC).  In 2008, CCS became the inaugural chair of the ASEAN Experts Group on Competition (AEGC), a regional platform responsible for coordinating competition policies and law among the 10 ASEAN Member States.  The AEGC has published the “Regional Guidelines on Competition Policy”, which serves as a guide for ASEAN Member States to develop their competition regimes in a manner that fosters stronger economic integration in the region.  Supportive competitive regimes will be an important factor in enabling our companies to tap new opportunities arising from the realisation of the ASEAN Economic Community (AEC) as a single market and production base.  In particular, there are now more opportunities for Singapore companies to participate in the services and investment sectors, which were previously closed off to foreign investors.  Investors can also enter the rapidly growing ASEAN market knowing that their investments will be guaranteed fair and equitable treatment in a transparent, consistent and predictable investment environment.

Looking ahead

To stay relevant as an enabler of Singapore’s next phase of development, CCS has refreshed its vision and mission.  It is apt that the new vision and mission emphasise the importance of supporting innovation in a vibrant economy with competition as an enabling factor, and the benefits of well-functioning markets for both businesses and Singaporeans.

Conclusion

Competition is at the heart of Singapore’s efficient and open markets, enabling businesses to thrive through productivity and innovation.  This ultimately benefits our consumers who enjoy greater choice and value in products and services.

Today, we celebrate CCS’s 10 years as a champion of competition.  We also look forward to its continued efforts as regulator and thought leader to stay at the forefront of trends that affect competition, and sustain the efficacy and currency of Singapore’s competition regime.

I wish CCS continued success in this important endeavour, and once again congratulate you on attaining this milestone 10th anniversary.  I wish everyone a pleasant evening.