Speech by Minister Lim Hng Kiang at the Singapore Business Federation's ASEAN Conference 2017

​SPEECH BY MR LIM HNG KIANG, MINISTER FOR TRADE AND INDUSTRY (TRADE) AT THE SINGAPORE BUSINESS FEDERATION’S ASEAN CONFERENCE 2017, ON THURSDAY, 4 MAY 2017, 9.10 AM, MARINA BAY SANDS SINGAPORE

His Excellency Mr. Ramon M. Lopez, Secretary of Trade and Industry, the Philippines

Mr Teo Siong Seng, Chairman of Singapore Business Federation

Distinguished guests, ladies and gentlemen

Introduction

Good morning. I am pleased to join you today at the Singapore Business Federation’s (SBF) ASEAN Conference. This year we celebrate the 50th Anniversary of ASEAN. It is timely that we gather here and set the tone for the next historic milestone in promoting growth and prosperity for a competitive ASEAN Economic Community (AEC).

2          ASEAN has come a long way since its inception in 1967 – it has achieved commendable growth and holds considerable economic potential. ASEAN has recorded yearly GDP growth of between 4.5% and 6.1% from 2012 to 2016 and is expected to grow at a yearly average of 5.2% in the coming years (i.e. from 2017 to 2020).

3          By 2030, the region is forecasted to have a US$6 trillion economy and a population of more than 700 million. This is attributed to the growing foreign direct investment (FDI), a young and rising middle class, and an abundance of natural resources. ASEAN is also envisaged to be the fourth largest single market in the world by 2030 (after the EU, US, and China).

Next Phase of Regional Economic Integration – ASEAN Economic Community (AEC) 2025

4          ASEAN Member States’ consistent efforts in deepening economic integration under the AEC have contributed to its strong growth over the years. Nevertheless, ASEAN’s continued vitality and success will hinge on Member States’ commitment to embrace change and progress further on the AEC agenda.

5          The next milestone for ASEAN is AEC 2025. The AEC Blueprint 2025 builds on existing work from the AEC 2015 roadmap, while strengthening and deepening its focus on issues relevant to modern businesses. This will ensure ASEAN remains relevant in the evolving global environment.

6          The AEC 2025 Consolidated Strategic Action Plan (CSAP) was adopted earlier this year. This Plan seeks to inform the public and stakeholders of the key action lines that will be implemented under the ASEAN economic integration agenda from 2016 to 2025. This is to ensure that ASEAN’s effort continues at a steady pace and are credible and transparent. Thus, I would like to encourage business feedback on the AEC 2025 action plans as they will be reviewed periodically over the 10-year period. 

7          The AEC remains the cornerstone of Singapore foreign economic policy. ASEAN has consistently been Singapore’s most important market and largest trading partner. In 2016, 25.7% (S$217.1 billion) of Singapore’s world trade was with ASEAN. Singapore accounts for the majority of intra-ASEAN trade (31%) and is a key intermediary for external trade flows into ASEAN.

8          A more economically integrated and prosperous ASEAN will generate greater opportunities for all ASEAN citizens, including for Singaporeans. Already, our businesses are benefitting from improved market access and opportunities under the AEC.

9          Singapore exports to ASEAN Member States remain cost-competitive from the elimination of tariffs under the ASEAN Trade in Goods Agreement (ATIGA). Singapore’s exports also enter ASEAN markets more easily with liberal rules of origin and ASEAN cumulation. One example is a local Small and Medium Enterprises (SME), Trends Home Electrical Pte Ltd, who manufactures air conditioners under the ‘Trentios’ brand name in Singapore and exports the finished product to Malaysia. Using the ATIGA, the company has been able to enjoy up to 30% tariff savings for their products in Malaysia since 2015.

10        The AEC has helped to expand the global footprints of our businesses, by plugging them into regional and global markets to reap the benefits of closer economic integration and globalisation. In the long term, the AEC will also continue to be a vehicle to further the ambitions of our local businesses.

Challenges towards AEC 2025

11        ASEAN has clocked steady progress in its transition towards the AEC 2025. Nonetheless, it is critical that ASEAN do not rest on its laurels as challenges facing ASEAN have grown – both internally and globally. Uncertainties and anti-trade sentiments are on the rise in today’s global trade environment. ASEAN will need to be mindful of such developments as it continues to focus on long-term, sustainable growth.

12        The solution to sluggish global growth lies not in closing off markets, but keeping markets open for unimpeded trade and investment flows. To ensure ASEAN’s value proposition, ASEAN has to continue building stronger economic connections within ASEAN and with the outside world. This will help ASEAN expand our global economic space and benefit our people and our economies.

13        ASEAN continues to maintain strong and longstanding economic ties with other key markets such as China, Japan, Korea, Australia, New Zealand and India. In addition to our existing ASEAN Plus One FTAs, ASEAN has also taken the lead in negotiating the Regional Comprehensive Economic Partnership (RCEP).

14        RCEP is envisaged to be an improvement over our existing ASEAN Plus One FTAs in terms of benefits, and coverage of newer trade issues such as E-Commerce, competition policy and intellectual property. Negotiations are progressing, but we can move faster. ASEAN will continue to drive negotiations to ensure that meaningful outcomes are delivered to our businesses in a timely manner.

15        Businesses have also benefited from the Singapore’s improved trade connectivity through ASEAN. They are able to sharpen their competitiveness by tapping on ASEAN’s extensive list of FTAs to gain preferential access to growing markets in ASEAN and beyond.

Singapore’s 2018 Chairmanship

16        While the progress towards realising the goals of the AEC remains steady, more could be done, especially in new areas relevant to modern businesses under the AEC 2025 agenda. The Philippines, as the ASEAN Chair this year, continues to promote trade and entrepreneurship with a set of priorities focused on inclusive and innovation-led growth. Particular attention is directed to strengthen the Micro, Small and Medium Enterprises. Together with the other ASEAN Member States, Singapore will work closely with the Philippines to advance these priorities. Singapore aims to continue and build on some of these priorities as it takes over the ASEAN Chairmanship in 2018.

17        During our Chairmanship year, Singapore intends to pursue a set of tangible and meaningful economic deliverables. We hope to tap on opportunities from global megatrends, such as the digital economy and trade facilitation, to help businesses expand their economic space more effectively. We have some preliminary thoughts, and would welcome further inputs from stakeholders to ensure that our priorities remain relevant to the business communities.

18        First, we have identified E-Commerce and other initiatives relating to the digital economy as a potential key priority for Singapore’s ASEAN 2018 Chairmanship. This is a new focus area under AEC 2025. There is interest among most ASEAN Member States to develop their e-Commerce capabilities, to tap on emerging opportunities presented by the digital economy.

19        The needs of our companies are evolving in the advent of the digital economy. An example will be Gryphon Tea, which started out as a provider of premium-quality teas under the Lim Lam Thye Umbrella since 1980s. Other than tapping on distributors to expand its presence overseas, Gyphon Tea was convinced that e-commerce was the route to go in establishing its global recognition. Currently, Gyphon Tea has a presence in 10 markets in Asia, and is exporting to about 40 countries worldwide. Online transactions contribute to five per cent of total business revenue. Overseas buyers make up 35 to 40 per cent of internet purchases, with the largest proportion of sales coming from Australia, the UK and the US.  

20        Going forward, we will look into streamlining regional trade rules governing e-commerce that will promote greater digital connectivity in the region, and lower operating barriers to entry. Importantly, we will also ensure that these are incorporated into our current regime and new trade agreements.

21        Second, we also hope to focus on improving trade facilitation measures to support the internationalisation plans, including for SMEs. We intend to work closely with other ASEAN Member States towards the realisation of an ASEAN-wide Self-Certification regime and the ASEAN Single Window (ASW).

22        The ASEAN-wide Self-Certification regime will allow authorised exporters to self-certify that their goods meet ASEAN’s requirements for preferential treatment, while the ASEAN Single Window will expedite customs clearance via the electronic exchange of information across borders. This will facilitate seamless movement of goods within ASEAN, allowing businesses to enjoy lower administrative and time-to-market costs.

Working with the Singapore Business Federation (SBF)

23        As we head into Singapore’s ASEAN Chairmanship next year, valuable inputs from the SBF and the wider business communities will be critical in ensuring our priorities remain relevant to our businesses and the business community.

24        Over the medium and longer term, an inclusive and constructive consultation with the private sector will also be instrumental. This will ensure that ASEAN’s integration efforts continue to benefit and create opportunities for businesses operating in the region.

Conclusion

25        ASEAN’s regional integration efforts have anchored ASEAN’s relevance at the world stage. Amidst rising challenges, free and open regional and global economy is important for companies looking to internationalise and grow. ASEAN should work to sustain the momentum and build on the progress achieved. 

26        Singapore is committed to the ASEAN vision of deepening regional integration. We will work other ASEAN Member State to continue advocating for freer trade and deeper regional economic integration as envisioned under the AEC 2025.

27        We also look forward to continue working closely with business communities and the SBF. Your constructive feedback will be critical as we strive towards the next milestone of AEC 2025, and advance our priorities together during Singapore’s ASEAN Chairmanship.

28        On this note, I wish you a fruitful and productive conference. Thank you.