Mr S Iswaran at the inaugural Ascendas Investors Day, 16 Aug 2011

KEYNOTE SPEECH BY MR S ISWARAN,MINISTER, PRIME MINISTER’S OFFICE AND SECOND MINISTER FOR HOME AFFAIRS AND TRADE & INDUSTRYAT THE INAUGURAL ASCENDAS INVESTORS DAY ON TUESDAY, 16 AUGUST 2011, 0910 HRS AT THE RAFFLES CITY CONVENTION CENTRE, STAMFORD BALLROOM

Ms Chong Siak Ching, President and CEO of Ascendas,

Distinguished Guests,

Ladies and Gentlemen,

Introduction

Good morning. I am very pleased to join you this morning for the inaugural Ascendas Investors Day, and would like to thank Siak Ching and Ascendas for the kind invitation.

Global Economic Uncertainty

As we meet at this conference, a climate of uncertainty pervades the global economy. The sovereign debt crisis in Europe has cast a pall over the region. Meanwhile, the US continues to be plagued by its fiscal deficit and structural issues such as unemployment.Given the inter-dependencies of the global economy, the rest of the world cannot be insulated from the troubles of these major developed economies. Overall, it will dampen global growth and cause greater volatility.

Positive Prospects for Asia

As a counterpoint to these challenges, the economic prospects for Asia remain positive. Asia has continued to show good growth, despite the global financial crisis of 2008/2009, and looks set to outpace the rest of the world for some time to come. China and India are becoming, if not already, key global growth engines. The IMF has forecasted 2011 GDP growth for China and India at 9.6 per cent and 8.2 per cent respectively, and they are on a trajectory to become the world’s largest and third largest economy, respectively.

ASEAN economies are expected to gain greater prominence as well. Relatively healthy fiscal balance sheets and strong domestic demand in ASEAN suggest that the region now has a greater capacity to weather external economic uncertainties. As of 2010, ASEAN represented a sizeable market of about 600 million people with a gross regional output of US$1.8 trillion. The grouping’s economic heft will increase as it reaps the gains of greater regional market integration and cross-border trade.

Asia’s Needs: Urban Solutions and Infrastructure

Asia’s growth will generate two key needs. The first is for urban solutions.Asia will experience an unprecedented level of urbanisation in the coming decades.Population projections indicate that in 2025, 16 out of 27 megacities in the world will be in Asia.China’s urban population is expected to reach 1 billion by 2030, virtually doubling from 572 million in 2005. In that same year, 40.7 percent of India’s population is expected to be living in urban areas, compared to about 30 percent today. The numbers are compelling, and this rapid urbanisation will spur demand for urban services solutions such as water and waste treatment, transport management, clean technologies, urban planning and real estate services.

The second is infrastructure. Asia’s economies will need a quantum leap in the quantity and quality of their infrastructure if they are to attain the full developmental potential. This is reflected in the strong demand for infrastructure investment in Asia. The Asian Development Bank Institute estimates that the total investment needs for national infrastructure development in Asia will average close to US$750 billion per year in this decade.

Moreover, Asian economies will require more sophisticated forms of infrastructure as they grow. Asia’s rising middle class seeks a higher quality and wider range of consumer goods, as well as education, healthcare and financial services. Companies responding to this demand seek a relatively quick entry into these markets and an early ramp up of operations, whilst minimising the frictions associated with emerging economies.Hence, there is an increasing demand in Asia for “turnkey” solutions that optimise resources by integrating discrete infrastructure components into a seamless whole. In particular, there is a growing need for industrial, business and science parks - zoned areas where essential services like power supply, telecommunication connections and transport networks are well-developed and reliable. Such developments are in high demand and call for expertise in fields such as land-use master planning, development of industrial and commercial facilities, and systems integration.

India is projected to spend US$1 trillion on industrial parks over the next 5 years. While official statistics are unavailable, the Economist Intelligence Unit also estimates that China’s investment in industrial park development totalled US$600 to 700 billion in 2009 alone.

Traditionally, governments have taken the lead in such infrastructure development, given the sizeable capital outlays and long payback periods they entail.In this regard, Asian governments have committed significant resources.To cite a few examples, about 40 percent of China’s US$580 billion fiscal stimulus package in 2008 was earmarked for infrastructure development. Under its Master Plan for the Acceleration and Expansion of Indonesia’s Economic Development, Indonesia has allocated about US$63 billion for infrastructure projects through 2014.

However, if Asia’s growth-driven infrastructural needs are to be fully met, governments alone cannot finance and drive such investments. By some estimates in 2009, private participation in infrastructure investments in Asia amounted to just US$15 billion. Clearly, there is significant scope for a greater role for private expertise and capital.And, Governments will have to do more, for example through greater regulatory clarity and information on opportunities, in order to encourage Asia’s substantial savings and foreign capital inflow to be channelled towards productive infrastructure projects that are needed for long-term growth.

Singapore’s Role in Facilitating Investment in Asia

What role can Singapore play in this environment that is burgeoning with opportunities and challenges?I believe that investors seeking to be a part of Asia’s growth story will find Singapore a valuable partner, for three reasons: our domain capabilities; the commercial track record of our companies; and our high level of economic connectivity. Let me elaborate.

First, our capabilities. As a small, highly urbanised city state, we are well-acquainted with the challenges of economic development and urbanisation - and have acquired considerable expertise in providing the supporting infrastructural and urban solutions. With their experience in dealing with significant land constraints, for instance, Singapore-based companies have built up a commendable track record in designing and managing business parks.

Ascendas is one good example.As a developer of high quality business parks, it has leveraged on its experiences in Singapore to be the first to introduce the ready-built facility concept in China (Ascendas-Xinsu in Suzhou industrial Park).Ascendas pioneered the “work-live-play” business environment in the Bangalore International Tech Park by integrating office, retail, residential and recreational facilities in one location. Today, Ascendas is well-known for its high quality projects which attract foreign direct investments that drive the growth of local communities, and its current portfolio includes key projects in China, India, Vietnam and other regional economies.

Our natural constraints have also spurred us to develop solutions for other urban challenges. For instance, Singapore’s efforts to overcome our water constraints led to the development of expertise in water management technologies such as water reclamation and desalination. SembCorp, a Singapore company, has won recognition at the Global Water Awards for its innovative work in water management, and today, has global operations in areas such as water treatment and desalination. Another home-grown water treatment company, Hyflux, has also been internationally recognised for its expertise in managing and operating desalination projects, and today operates the world’s largest desalination plant in Algeria.

This leads me to my second point, the commercial track record of our companies. Singapore companies have been active in pursuing opportunities in Asia. Ascendas, Sembcorp and Hyflux, and many other Singapore companies operate major infrastructure and urban management-related projects in Asia. Other examples include Keppel’s Eco-City in Tianjin, Singbridge’s Knowledge City in Guangzhou, and Changi Airport International’s Airport City project in West Bengal. Their knowledge of the Asian market, their commercial network, and their ability to tap capital markets render them ideal partners for investors seeking opportunities in the region.The government also encourages alliances between Singapore-based companies with complementary capabilities in order to undertake more of such projects overseas.International Enterprise Singapore’s iPartners Programme expansion facilitates such partnerships and provides grants to support their development.

Finally, economic connectivity.Access to markets and transportation links are key to business success.In Singapore, as a small country, we well understand this and invest heavily to develop our connectivity.Changi Airport serves more than 86 international airlines which connect to nearly 200 cities in 60 countries.Among Southeast Asian cities, we are the most connected to China.We are also connected to 11 Indian cities with 352 flights a week.About 200 shipping lines call at Singapore offering connections to more than 600 ports in 120 countries. Today, we have the second busiest port in the world, with an annual container throughput of 28.4 million TEUs.

Beyond physical connectivity, we also seek greater economic links to other markets. Consequently, Singapore has committed to 18 Free Trade Agreements, which link us to major economies around the world, including key Asian economies such as China and India. These agreements reduce tariffs and regulatory hurdles for Singapore-based companies and investors seeking entry into these markets, making it easier to do business and for goods, services and capital to flow across borders.

Conclusion

Let me sum up. The vicissitudes of the current global economic climate are an understandable cause for concern among investors.But the prognosis for Asia is good and the region will grow in prominence in the global economy. Asia’s growth provides significant opportunities amidst this uncertainty. With our capabilities, companies and connectivity, Singapore is well positioned to partner international investors to seize these opportunities.

I commend Ascendas on organising this conference and for putting together a comprehensive programme of presentations and lectures.These will serve to highlight the opportunities for collaboration and mutual growth.I trust that it will spark new ventures and wish you all productive discussions.Thank you.