Mrs Ow Foong Pheng at the Special Commemorative Forum on ASEAN-China Free Trade Area, 7 Jan 2010

SPEECH BY MTI 2ND PERMANENT SECRETARY, OW FOONG PHENG AT THE SPECIAL COMMEMORATIVE FORUM ON ASEAN-CHINA FREE TRADE AREA, 7 JANUARY 2010, 1500 Hrs, NANNING, CHINA

Your Excellencies,

Distinguished Delegates and Esteemed Colleagues, 

I am delighted to have this opportunity to address you in this beautiful city of Nanning. As an important gateway to Southeast Asia, Nanning is a fitting location to celebrate the establishment of one of the world’s top trading blocs: the ASEAN-China Free Trade Area.

The vision of an ASEAN-China FTA, or the ACFTA, has been a key driving force in our relations over the years. Former Premier Zhu Rongji’s foresight in proposing the ACFTA in year 2000 was instrumental in setting a strong, long-term direction for economic engagement between China and ASEAN. Indeed, it is a testament to China’s vision that it was the first among regional partners in proposing an FTA with ASEAN.

Today, thanks to the hard work and perseverance of our officials, the vision mooted a decade ago has become a reality. We have completed the world’s largest FTA, covering close to two billion people with a combined GDP of almost US$6 trillion. Over the years, we took a pragmatic and incremental approach to lay the building blocks for the ACFTA. The result today is a comprehensive, high quality FTA which comprises three agreements. They include trade in goods, signed in 2004; trade in services, signed in 2007; and investment, the final piece of the puzzle, which was just signed in August 2009.

Due to our step-by-step approach, the agreement has already started to bear fruit. The progressive liberalisation of goods trade meant that ASEAN and China-made products have been able to enjoy growing access into one another’s markets. The full establishment of the ACFTA this year will see the elimination of tariffs on 90% of products between China and ASEAN-6. This means even more potential tariff savings for our businesses and cheaper goods for our consumers.

Going beyond goods, companies will also benefit from the First Package of Services Commitments which provides greater market access in areas such as construction, environmental protection, transportation, telecommunication, education, tourism, construction and medical treatment.

The newly minted Investment Agreement will also help create a more transparent and facilitative investment environment. This will encourage more businesses from China to “go regional” in Southeast Asian markets, and give a competitive edge to companies from Southeast Asia to tap the thriving opportunities in China.

Singapore-China Relations

Singapore is pleased to be part of this landmark agreement. Bilateral economic relations between Singapore and China are already at an all-time high. The array of opportunities brought by the ACFTA will inject further dynamism into our economic engagement.

China is currently Singapore’s 3rd largest trading partner and the top overseas investment destination for Singaporean companies.Collectively, ASEAN has invested a total of US$52 billion in China over the past 30 years. Of this, US$39 billion, or about 75%, came from Singapore. Our investments are also geographically distributed across provinces from Beijing, Shanghai, Suzhou and Tianjin to inland cities like Guangxi, Chengdu, Shandong, Xi-an and Liaoning.Prominent examples include our flagship SuzhouIndustrial Park project and fresh ventures like the Sino-Singapore Tianjin Eco-city.

Meanwhile, China’s investments in Singapore have also been fast growing. Over the past 10 years, the number of Chinese companies in Singapore has risen from 500 in 1999 to over 3,000, as of September 2009.

With the establishment of the ACFTA, Singapore expects bilateral trade and investment to grow further. In fact, we have already received positive feedback from Singapore exporters who have benefited from the Trade in Goods Agreement, since its implementation in 2005.These are promising developments, and we should encourage them by promoting greater awareness about the FTA.

Moving Beyond the ASEAN-China Free Trade Area

The journey for ACFTA to reach its fruition here in Nanning has taken us many years. But we must not stop here.

There is a Chinese saying that goes: “欲穷千里目, 更上一层楼”.(yù qióng qiān lǐ mù, gèng shàng yī céng lóu) This means: In order for us to be able to see one thousand miles away, we should move one level higher.So, while today’s ceremony marks the important beginning of a new level of economic cooperation between ASEAN and China, we must not end here.

An FTA is not a static instrument. We must continually improve upon it and expand on it to other areas of cooperation.Market trends and business processes change rapidly. Similarly, ASEAN and China must also keep reviewing the FTA to ensure its relevance.

This is indeed what we have been doing. It is encouraging to know that both sides are close to finalising the Second Package of Services Commitments.Negotiators have also started discussing the review of Sensitive Track products under the Trade in Goods Agreement.I encourage negotiators from both sides to keep enhancing the original FTA by further reducing barriers to trade and investment – be it lowering customs duties, removing more non-tariff barriers, opening up more services sectors or strengthening investment rules.

Conclusion

The ASEAN-China FTA is an important tool to promote economic dynamism in East Asia, but it must evolve with new economic opportunities and challenges to make it arelevant framework for the new decade ahead of us.Let us build on the positive momentum generated and scale greater heights in 2010 and beyond.

Thank you.