SPEECH BY MINISTER FOR TRADE AND INDUSTRY (TRADE) LIM HNG KIANG,
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1 SPEECH BY MINISTER FOR TRADE AND INDUSTRY (TRADE) LIM HNG KIANG, AT THE SINGAPORE BUSINESS FEDERATION S ASEAN CONFERENCE 2016, ON TUESDAY, 31 MAY 2016, 8.35AM AT SUNTEC SINGAPORE CONVENTION & EXHIBITION CENTRE His Excellency Bapak Darmin Nasution, Coordinating Minister for Economic Affairs, Indonesia His Excellency Dr U Than Myint, Minister for Commerce, Myanmar His Excellency, Mr Hoang Quoc Vuong, Vice Minister for Industry and Trade, Vietnam Mr Teo Siong Seng, Chairman of Singapore Business Federation Distinguished guests, ladies and gentlemen Introduction 1 Good morning. I am pleased to join you today at the Singapore Business Federation s (SBF) ASEAN Conference. It is timely that we are gathered here to discuss the progress and potential of the ASEAN Economic Community (AEC). With the realisation of the AEC in 2015, even more attention is being focused on Southeast Asia. 2 The ASEAN region is a growing market, and will play an increasingly important role in the global economy in the years ahead. ASEAN, as a region, recorded yearly GDP growth of between 4.6% and 7.6% from 2010 to A positive growth outlook is also expected for the region in the next five years, with annual growth projected to average 5.2 per cent from 2016 to Investments into Southeast Asia are also at an all-time high. FDI flows into ASEAN totaled US$136 billion in This reflects ASEAN s strong longterm growth fundamentals. 3 By 2020, the region will have a US$3 trillion economy and a population of more than 600 million due to growing foreign direct investment (FDI), a young and rising middle class, an abundance of natural resources, and growing urbanisation. Some experts see ASEAN potentially becoming the fourth largest single market in the world by 2030 (after the EU, US, and China) 4. 4 For Singapore, ASEAN remains the cornerstone of our foreign economic policy. ASEAN has consistently been Singapore s most important 1 Source: ASEAN Integration Report Source: OECD: Economic Outlook for Southeast Asia, China and India 2016: Enhancing Regional Ties 3 Source: ASEAN FDI Statistics Database, as of 26 May Source: ASEAN-US Business Council.
2 market and largest trading partner. In 2015, ASEAN accounted for 26% of Singapore s trade with the world. 5 Our companies have a robust footprint and continue to show keen interest in the ASEAN region as it offers immediate market access and growth opportunities. ASEAN continues to be Singapore s top investment destination, accounting for 19% of Singapore s investment overseas in It is thus in our interest to see ASEAN become more integrated and prosper as a region, so that our companies can benefit from the opportunities. Opportunities Arising from the ASEAN Economic Community (AEC) 6 The realization of the AEC opens up new business and investment opportunities. 7 Let me elaborate on some of the AEC s key achievements. 8 First, The ASEAN-6 economies, namely Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore and Thailand, have eliminated import duties on more than 99 per cent of their tariff lines for goods from other ASEAN countries. The remaining countries are expected to follow suit over the next three years. 9 Second, on services, ASEAN has completed the 9th package of commitments under the ASEAN Framework Agreement on Services (AFAS), and aims to complete the 10th package by Under each package, ASEAN countries commit to opening up more services sectors for other Member States. Under the 9th package, for example, restrictions to crossborder services trade have eased in between 90 to 108 services subsectors across ASEAN Member States. What this means is that businesses can expect a progressive reduction of services barriers, such as foreign equity limits, in the ASEAN countries. 10 Third, on the investment front, stronger and pro-business investment rules via the ASEAN Comprehensive Investment Agreement (ACIA) help to enhance protection for investors in ASEAN, generate greater opportunities for investment through the liberalisation of sectors, provide greater transparency in investment rules, and offer recourse to investors in times of difficulties. 11 Fourth, ASEAN s economic integration efforts are also supported by the ASEAN Open Skies Agreement. This allows airlines from all 10 Member countries to fly freely within the region. Greater connectivity between the aviation markets will help to increase trade by improving the flow of goods and services, and encourage higher traffic and boost travel around the region. 12 As of 31 Dec 2015, ASEAN collectively completed about 93 per cent of high priority measures in the AEC 2015 Blueprint, and about 80 per cent of all 5 Source: DOS 2014 Investment statistics 2
3 measures. Work to implement the remaining AEC 2015 measures will continue this year. 13 Work in other areas is ongoing as part of ASEAN s integration efforts. These will provide significant benefits for businesses and people. For example, ASEAN is working on reducing Non-Tariff Barriers (NTBs), the realisation of the customs single window, as well as further liberalisation in services and investment. More attention will also be paid to behind-theborder issues such as improving trade facilitation and harmonising standards and conformance. Furthering the AEC s progress 14 While the establishment of the AEC last year was a significant milestone, 2015 did not mark the end of ASEAN s integration journey. ASEAN s continued vitality and success hinges on Member States willingness to embrace change and deepen regional economic integration beyond The next milestone that ASEAN has set for itself is The AEC Blueprint 2025, announced at the 27th ASEAN Summit in November last year, will focus on existing work and deepening its focus on cross-border issues. Over the next decade, ASEAN will continue to work on the implementation of outstanding measures in the AEC 2015 Blueprint and take forward the AEC Blueprint Let me share with you some of the work that is being done in key areas under the AEC 2025 agenda. 17 First, there will be greater focus on improving trade facilitation and delivering the benefits of ASEAN integration for Small and Medium Enterprises (SMEs). Businesses can look forward to the ASEAN Single Window and the ASEAN self-certification scheme this year. 18 The ASEAN Single Window will expedite customs clearance, reduce transaction time and costs, and make trade seamless through the crossborder electronic exchange of information among ASEAN Member States. 19 The ASEAN self-certification scheme will allow authorised companies to self-certify that their goods meet the ATIGA requirements for preferential treatment. 20 Companies will be able to enjoy smoother and faster clearance of goods within ASEAN, which will translate into lower business costs and definitely help our SMEs. 21 Second, since tariffs on most products have already been eliminated, ASEAN will place a greater emphasis on tackling non-tariff barriers. Businesses have provided feedback on a range of non-tariff barriers that currently impede their business, ranging from cumbersome import licensing 3
4 procedures and other import and export requirements, to the ineffective implementation of existing commitments in some countries. 22 Reducing such barriers will improve trade facilitation, and ensure that businesses can operate in a transparent, stable, and predictable environment. 23 Three, the AEC 2025 Blueprint will also address new areas relevant to the needs of modern businesses. 24 ASEAN is working on how we can facilitate e-commerce and other emerging trends in manufacturing to enhance trade and investments. E- Commerce, in particular, can significantly lower barriers to entry and reduce operating costs for businesses especially our SMEs. 25 ASEAN Member States are also committed to promoting principles of good governance, transparency, and responsive regulatory regimes through more active engagement with the private sector. 26 Other areas which are being worked on include incorporating a sustainable growth agenda that promotes the use of, and support for, green technology and energy; we also try to foster productivity growth through innovation, technology and human resource development; and intensify cooperation in research and development that is designed for commercial application. Working with the Singapore Business Federation (SBF) 27 Work on the initiatives under the AEC 2025 Blueprint is ongoing. 28 Businesses ideas and feedback will be crucial during this process. We look forward to fostering a more inclusive and consultative process involving the private sector. 29 Singapore has benefited from the work of organisations such as the Singapore Business Federation as we charted the course of regional integration within ASEAN over the last decade. The views obtained from businesses were invaluable in ensuring that ASEAN s integration efforts were instrumental to creating more opportunities for businesses operating in the region. 30 As we head into the new decade, continued feedback from SBF is very important to ensure that ASEAN remains relevant to the needs of modern business realities. Conclusion 31 ASEAN s efforts at economic integration have helped anchor ASEAN s relevance to the world and been instrumental in creating more opportunities for businesses operating in the region. 4
5 32 Singapore remains committed to the ASEAN vision of deepening regional integration. I am confident that ASEAN will continue to be a region of promise for companies looking to internationalise and grow. 33 We look forward to working closely with business stakeholders and the SBF, and welcome your constructive feedback as we work on the next lap of ASEAN s integration efforts. 34 On this note, I wish you a fruitful and productive conference. Thank you. 5
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