Speech by Minister Lim Hng Kiang at the Singaporean-German Chamber of Industry and Commerce (SGC) Business Luncheon

SPEECH BY MINISTER FOR TRADE AND INDUSTRY (TRADE), LIM HNG KIANG FOR THE SINGAPOREAN-GERMAN CHAMBER OF INDUSTRY AND COMMERCE (SGC) BUSINESS LUNCHEON, 29 APRIL 2016 AT 2.15 PM

Your Excellency, Mr Stanislaw Tillich, Minister-President of the state of Saxony and President of the German Federal Council, 

Your Excellency, Dr Michael Witter, Ambassador of the Federal Republic of Germany to Singapore,

Distinguished guests, 

Ladies and gentlemen, 

Good afternoon.

Introduction 

            I am pleased to join you at this business luncheon today. Let me first extend a warm welcome to Minister-President Stanislaw Tillich and his distinguished delegation from Saxony to Singapore. 

The ASEAN growth story 

2          Despite the headwind from the global economy, the outlook for Southeast Asia remains relatively optimistic for companies looking for growth. ASEAN has continued to perform well, and growth is projected at 5.2 per cent over the next five years. This resilient economic picture is due to the region’s strong fundamentals. 

3          ASEAN represents a significant market in Asia with a population of more than 600 million. With growing foreign direct investment, a young and rising middle class, an abundance of natural resources, and growing urbanisation, the regional economy is expected to reach US$3 trillion (€2.66 trillion) by 2020.

4          The ASEAN Economic Community (AEC), established in December 2015, will make ASEAN a more compelling market and a competitive production base. The AEC aims to create a single market where products and services flow freely, investments are uninhibited, and skilled labour moves to wherever it is in demand.  While the AEC is a work-in-progress, ASEAN is making good headway towards this vision. 

5          A Deloitte study predicts that 5 of the top 15 manufacturing locations in the world will be in ASEAN (Singapore, Vietnam, Indonesia, Malaysia and Thailand) by 2018. Many European global MNCs, including the German Mittelstand companies, are already leveraging on the availability of talent and raw materials, and conducive business conditions in ASEAN. Companies are rethinking their supply chain and production strategies to take advantage of the region’s strength as a manufacturing base.

Transforming Singapore’s manufacturing sector 

6          With the progress of the AEC, Singapore seeks to hone our comparative advantage to ride the growth of ASEAN and be future-ready. This is imperative given the many forces that are reshaping our global economic environment, disrupting industry structures, and changing the nature of jobs. 

7          Singapore has to adapt to world trade trends, market integration, new technologies, and business models. This is the focus of the Committee on the Future Economy that has been created to develop economic strategies which will position Singapore well for the future. We will build on our strengths to move up the value chain into advanced technology and high-value industries, and seek productivity improvements in existing sectors. This will ensure that Singapore continues to compete on value creation and not on cost.

8          A key area of focus is the transformation of our manufacturing sector. Manufacturing is an important pillar of Singapore’s economy, accounting for nearly 20 per cent of nominal GDP last year. It also generates spillover benefits for the rest of the economy through its wide range of inter-industry linkages. Increasingly, companies are incorporating manufacturing-related services in their operations in Singapore, such as R&D, engineering, logistics, maintenance, and post-sales services. 

9          However, the nature of manufacturing is evolving, and Singapore has to understand the challenges and seize new opportunities in order to remain competitive. Firstly, new technologies are blurring traditional industry boundaries, creating hybrid sectors, and transforming existing industries. 3D printing and advanced robotics, for example, can revolutionise manufacturing by enabling rapid prototyping, and vastly improving operational efficiency. Secondly, digital technologies, such as Big Data, the Internet-of-Things, and the Cloud, enable innovation and facilitate the development of new business models. These advancements empower manufacturers to better access markets and adapt to fast-changing consumer preferences. 

10        For all these reasons, Singapore has to undertake several measures to ensure that the manufacturing sector remains relevant and well-positioned for the future. One, we will continue to invest in advanced manufacturing technologies such as additive manufacturing and robotics, and promote their adoption by the industry. Two, we will work to capture the opportunities arising from new business models that are emerging in the manufacturing scene. For example, in Aerospace, many original equipment manufacturers are moving beyond manufacturing to provide total support packages. This is where the sale of aircraft or aircraft systems is bundled with a full range of support services such as engine maintenance and field support services. Three, we will continue to invest in talent development to ensure that we have skilled labour for the manufacturing jobs of the future. And last but not least, we will foster stronger partnerships to derive greater synergies and make our manufacturing ecosystem more robust.

Collaboration with German companies to tap on the opportunities in ASEAN

11        This is where German companies can play a key role to help Singapore develop robust and self-sustaining innovation systems to meet the challenges of global demands and new competition. Singapore and Germany’s robust bilateral relationship is underscored by strong partnerships and regular interactions at all levels. Economic co-operation between our countries is solid, and Singapore is one of Germany’s most important economic partners in Southeast Asia. Singapore provides a reliable, trusted, and connected location from which German companies can manage their regional operations. We welcome more German companies to strengthen their strategic base in Singapore to tap on the prospects in the region.

12        In particular, Saxony’s strong engineering capabilities present compelling opportunities for Singapore firms to partner Saxony ones in the areas of advanced manufacturing, composite materials and flexible electronics. Prime Minister Lee Hsien Loong’s visit to Dresden in February 2015 and Minister-President Stanislaw Tillich’s visit to Singapore have created a positive momentum, and we should continue to build on it to foster greater partnerships between our companies. 

13        An example of such fruitful collaborations between Saxony and Singapore is Dresden-based solar film company Heliatek’s partnership with Singapore’s vTrium Energy to create a test-bed platform for new sustainable, urban-fit technologies in the development of solar films for buildings. The first phase of their pilot project to install Asia’s largest Building Integrated Organic Photovoltaic was completed in September 2015. 

14        There are also deep opportunities in the science and technology fields. I am pleased to note that Fraunhofer, Europe’s largest institution for applied research, is expanding their presence in Singapore, and an MoU will be signed tomorrow between the Nanyang Technological University and  Fraunhofer’s Institute for Ceramic Technologies and Systems. A*STAR’s Singapore Institute of Manufacturing Technology and the Fraunhofer Interactive Digital Media Centre are also exploring collaboration in areas such as diamond coating and additive manufacturing research. 

15        Germany can look towards Singapore as a like-minded and trusted partner in ASEAN. We look forward to deepening the economic collaboration, and partnering more German companies to develop industries for the future. 

Thank you.