Speech by Second Minister S Iswaran at the 174th Annual General Meeting and SG50 Luncheon of the Singapore International Chamber of Commerce (SICC) at Grand Copthorne Waterfront Hotel

Chairman of the Singapore International Chamber of Commerce

Excellencies

Distinguished Guests

Ladies and Gentlemen

Introduction: Sustaining Singapore’s Success

Allow me first to extend my congratulations to the newly-formed Board of your Chamber.  It is my pleasure to be with you at this special SG50 luncheon. 

2.            As a nation, we celebrate a key milestone in our history this year.  The Singapore International Chamber of Commerce, or SICC, has always been a key partner of the Government, as we navigated the various economic challenges over the last 50 years.  Your work has been instrumental in sustaining Singapore’s economic success by advocating the needs of your members, and supporting government’s policies to make our economy more competitive.  Today, as we celebrate 50 years of independence, it is befitting to consider if we have, as a country, what it takes to sustain this success for the years ahead.

Challenges and Opportunities Ahead

3.            Singapore will see a slower pace of growth as our economy matures.  Today, we are facing increasing economic challenges.  Our labour market will continue to be tight, and global competition will intensify.  However, amidst these challenges there are reasons to remain optimistic about our future.

4.            The world’s economic centre of gravity continues to shift towards Asia.  The OECD expects Asia to account for more than 80% of the growth in global middle class spending in the next two decades. By 2030, two-thirds of the global middle class, or 3.2 billion of them, will reside in Asia.

[1]

While China and India are the traditional sources of Asia’s dynamism, ASEAN, with a youthful population larger than the EU’s and a combined GDP larger than India’s, is playing an increasingly important role. At the crossroads of Asia and the world, Singapore is well positioned to leverage the region’s rapid growth in consumerism and urbanisation, which will create strong demand for consumer goods and services, and infrastructure projects. 

5.            There are opportunities at our doorstep. But it is not always easy for businesses to internationalise and tap markets outside Singapore. The government will help companies gain access to these opportunities and participate fully in Asia’s growth story.

Enhancing Links with the Region

6.            We will continue to enhance our links with the region and beyond to keep our economy vibrant.  The ASEAN Economic Community, or AEC, is expected to be established by the end of the year.  Through the creation of a single market, the AEC will increase ASEAN’s overall competitiveness and appeal as an investment destination.   ASEAN has also concluded free trade agreements (FTAs) with key trading partners in the region. 

7.            In all, Singapore has more than 20 FTAs, which account for more than 70% of our trade in goods.  We are currently working on the Regional Comprehensive Economic Partnership (RCEP) and the Trans-Pacific Partnership (TPP). The RCEP and TPP are key building blocks for greater regional economic integration and an eventual Free Trade Area of the Asia Pacific (FTAAP).    

8.            With stronger regional integration, Singapore companies will benefit from lower tariffs, better market access, and the ability to tap on the best suppliers and talents across the region. This will facilitate the internationalisation of companies to cater to the demand of increasingly affluent markets.

Helping Companies Internationalise

9.            By enhancing links with the region, the Government has helped open doors for our businesses.  However, companies must take the first step out to make full use of these links.  We will continue to support companies in this endeavour and have recently enhanced our incentives schemes to do so.

10.         For example, IE Singapore’s new International Growth Scheme will provide greater and more targeted support for Singapore companies in their internationalisation efforts through a concessionary tax rate of 10% on incremental income from qualifying activities for up to five years.  From July 2015, companies can also enjoy double taxation deductions on qualifying manpower expenses when they post employees overseas to push forward with their international expansion plans.

11.         We will also continue to support our SMEs.  IE’s enhanced Market Readiness Assistance (MRA) programme provides financial support for overseas set-ups, identification of business partners and overseas market promotion.  In addition, IE’s Global Company Partnership (GCP) scheme was enhanced last year to groom companies by providing assistance in building the necessary capabilities, manpower development and gaining access to market and financing.

Building our Business Ecosystem

12.         To take advantage of regional opportunities, we need to build a strong base of competitive companies at home.

13.         As announced in this year’s Budget speech, we are positioning ourselves to be among the leaders in future growth clusters such as Advance Manufacturing, Applied Health Sciences, Smart Urban Solutions, Logistics and Aerospace, and Asian and Global Financial Services.  These are areas where we have a competitive advantage in.

14.         To support the development of these clusters, Singapore will continue to invest in the education, training and development of our workforce to ensure that they have the relevant skills.  Chief Executive Victor Mills has called for companies to view HR as a strategic function, and not merely an administrative process.  This means valuing people for their competencies, experience, and not just their academic qualifications.  This is very much in line with what SkillsFuture has set out to accomplish.  Through SkillsFuture initiatives, we are working towards a culture of mastery of skills in every job.  This entails enhancing industry-relevant skills, and cultivating lifelong learning and continuous upgrading.  We will also partner our industry players with Institutes of Higher Learning and relevant training providers to offer structured on-the-job training opportunities for fresh graduates.

Sustaining Growth through Productivity

15.         Finally, we need to increase labour productivity to sustain our growth.  While productivity has improved in some sectors, more needs to be done.  The Partnerships for Capability Transformation initiative, or PACT for short, was launched in 2010 to foster knowledge transfer and capability building through collaborations between large organisations and local SMEs. 

16.         I would like to take this opportunity to thank SICC for supporting PACT.  The inaugural SICC Awards: Innovations in Productivity will be launched in December, and will recognise SICC members who are partners of PACT.  Your Chamber can play the important role of encouraging your members, many of which are large successful enterprises, to collaborate with our SMEs and support our drive to increase productivity.

Conclusion

17.         On this occasion of this SG50 Luncheon, I stay optimistic that we can sustain Singapore’s success in the years ahead.  Singapore is a natural springboard for companies venturing into Asia and beyond. By enhancing our links with the region, helping our companies internationalise, and boosting our productivity, we will make full use of Singapore’s advantages to tap on the opportunities that this dynamic region offers.

18.         SICC has been an integral part of the Singapore business ecosystem since 1837.  Your Chamber has helped the Government to be attuned and responsive to the needs of businesses.  Together, we can open new doors of opportunity for our companies, and support them on their path to success for many more years to come.

[1]

Source: OECD – The Emerging Middle Class in Developing Countries (2010)