Speech by Minister Grace Fu at the European Chamber of Commerce (Singapore)'s Annual General Meeting

Mr Jens Rübbert, President of the European Chamber of Commerce,

Her excellency Ambassador Iwona Piórko,

Distinguished guests,

Ladies and gentlemen,

Introduction

A very good evening.

1. It is a pleasure to join you for today’s Annual General Meeting.

2. We have seen major shifts in the operating environment in the world due to geopolitical tensions, reconfiguration of supply chains, inflation, climate change, and new technologies such as generative AI.

a. The Russia-Ukraine war and the Israel-Hamas conflict have not only brought devastating effects on the lives of people, but also surfaced economic challenges – such as disruptions to supply chains, and driving up prices of energy, food, and other goods.

b. These political tensions and geopolitical contestations have placed greater pressure on the multilateral trading system and are increasingly shaping countries’ approaches to re-shore or “friend-shore” operations and productions.

c. Climate change and the much-needed transition to a low-carbon future is also a deep and broad transformation that will significantly impact the economy.

d. New technologies such as generative AI are also disrupting business models and industries, forcing businesses to rethink and change the way we do business.

3. Fortunately, Europe and Singapore are well-placed to weather these global shifts and seize new growth opportunities together. As like-minded partners, we have been consistently advocating for an open and rules-based global order. For example, the EU-Singapore Free Trade Agreement (EUSFTA) has removed barriers to trade and supply chains between the EU and Singapore. This has given EU businesses greater confidence to extend their operations from Europe into Singapore seamlessly and use Singapore as a regional launchpad to seize opportunities in Southeast Asia. The foundations of our economic partnership would be further strengthened when the EU-Singapore Investment Protection Agreement also enters into force. This will complement our strong trade and supply chain connectivity by presenting greater assurance to EU and Singapore investors when investing across both sides.

4. Allow me to outline a few areas where Singapore and Europe’s longstanding relations can continue to blossom as we navigate these challenges and seek to leverage opportunities in emerging trade domains:

a. First, to strengthen our digital connectivity and help our businesses to capture emerging digital trade for their next bound of growth.

b. Second, to collaborate and partner businesses to seize green growth opportunities in the ongoing global transition to a low-carbon economy.

c. Third, to provide a stable business environment where businesses can continue thrive and make sizeable investments into Singapore, amidst the external challenges.

Strengthening digital connectivity

5. To maximise the benefits of digitalisation for our businesses and people, Singapore and the EU are pursuing several initiatives to enhance digital connectivity between our markets.

6. Signed in February 2023, the EU-Singapore Digital Partnership (EUSDP) serves as a comprehensive and flexible framework for all bilateral digital cooperation. This includes areas such as digital trade, digital skills for workers, and frontier areas such as 6G and AI (artificial intelligence). As the first deliverable under the EUSDP, Singapore and the EU agreed on a set of Digital Trade Principles that were signed on 31 January 2023. The Principles marked the first step towards a legally binding bilateral Digital Trade Agreement (EUSDTA).

7. Negotiations on the legally binding EU-Singapore Digital Trade Agreement (EUSDTA) were launched in July 2023. The EUSDTA will promote high ambition digital rules, standards and policy frameworks. All of these will work to provide certainty and clarity for our citizens and businesses to engage in cross-border transactions. By facilitating end-to-end digital trading, enabling free flow of data across borders, and enhancing trust in the digital economy, our companies and people can more easily access and benefit from new growth opportunities in the fast-growing digital economy. We can also harness the efficiency gains of digital transactions to reduce business costs, especially for SMEs. At a strategic level, the digital trade agreement can serve as a pathfinder for region-to-region digital connectivity between the EU and the Asia-Pacific Region, including Southeast Asia.

8. Businesses play an important role in supporting the success of such EU and Singapore G-to-G initiatives. Thus, I urge businesses to continue stepping forward to propose new areas where government support could help enhance the digital cooperation initiatives between the EU and Singapore.

Seizing green growth opportunities

9. Let me move on into another area where there are tremendous opportunities for collaboration: the green economy.

10. Singapore is committed to our net zero emissions by 2050 target. The Singapore Green Plan, launched in 2021, aims to catalyse a Whole-of-Nation movement to advance Singapore’s sustainability agenda to reach our net zero emissions goal by 2050. We are the first Southeast Asian nation to implement a carbon tax, covering up to 80% of our total emissions, to nudge our businesses towards greening their practices.

11. International cooperation is necessary to realise our climate ambitions. To this end, we have pioneered the Green Economy Agreement to address green growth sectors not sufficiently addressed in traditional FTAs. These include (i) facilitating green trade and investment flows such as clean energy trade, carbon trading, cross-border carbon storage, and green air and sea connectivity, (ii) develop interoperable rules, standards and policy frameworks to support new growth sectors and (iii) catalyse technology development and pilot projects in green growth sectors.

12. We also look forward to working with the EU on areas of common interest in the emerging green economy.

Government’s efforts to support businesses in Singapore

13. In the face of external challenges, the Singapore government recognises the need for a stable business environment and the importance of continuous engagements with businesses to fairly represent business perspectives and concerns when formulating our policies.

14. Besides ensuring our policies are clear, transparent, and consistent, we have also been proactively rolling out schemes that aim to add value to businesses, especially in the post-BEPS 2.0 world. One such scheme is the Refundable Investment Credit Scheme (RIC), which was announced during Budget 2024:

a. As a tax credit with a refundable cash feature, the RIC will support qualified firms to develop high-value and substantive economic activities in Singapore in key sectors and new growth areas. This includes setting up or expanding manufacturing facilities, commodity trading, R&D and innovation, and decarbonisation activities. We hope that businesses will be able to benefit from this new scheme when we announce more details in third quarter this year.

Conclusion

15. In closing, Singapore hopes to remain a reliable partner for businesses. We extend our appreciation for the enduring support of EuroCham. EuroCham has actively participated in our inter-governmental efforts such as by launching the Whitebook on the digital economy to provide concrete projects for digital collaboration, and proactively engaging the Singapore government and local businesses in sustainability initiatives.

16. We hope to continue collaborating with EuroCham and the many European businesses in Singapore to foster innovation and growth across both sides. We also warmly welcome ideas on how Singapore and our European partners can work together to build a conducive business environment and partner you to seize growth areas in the digital and green economy.

17. Let us partner on this journey together – a journey that transcends geographical borders, embraces digital frontiers, and nurtures our planet. Thank you!