Thank you, Sachin, for that very generous introduction. Good afternoon everyone and thank you all for being here. This is not a standard audience, and you would not therefore tolerate a standard political speech. But every time I meet a group of Americans who are trying to figure out Singapore, the way I usually describe it is imagine downtown Manhattan being ejected by upstate New York and having to be an independent, sovereign country. I know some New Yorkers actually want this. This means having your own water supply, electrical supply, air force, navy, port, trade policy and having to negotiate a whole web of economic connections in order to keep downtown Manhattan afloat. That is, has been and will continue to be, the fundamental challenge for Singapore. So just keep that imagery in mind.
2 Now Singapore only became independent in 1965. The other odd thing about Singapore is that we did not actually fight for independence. We did not fight for it because we did not believe a city state was viable. Nevertheless, we had independence thrust upon us because of a fundamental difference in political and social ideology. The point I am trying to make is that Singapore only became independent, not as an act of economic strategy, but because of a belief in a set of ideals - political and social. Having got ourselves into that position, we then had to embark on a desperate act of imagination, in order to make this unlikely city state viable.
3 There is an old adage about “necessity being the mother of invention”. In a similar way in Singapore, back in 1965, having lost our hinterland, we were confronted with the need to be relevant to the world. In fact, we embarked on globalization precociously, before the word even became fashionable. In particular, what that meant was for a newly independent country, a post-colonial society, was to reject the conventional political wisdom of that time and instead, open our doors, welcome multi-national companies and welcome Western technology, management models, access to markets, in order that we would become a relevant and vital node of the global supply chains.
4 Today, it seems so obvious, and is not rocket science. But again if we rewind time, and think about the political wisdom of the day. In India it was import substitution. In many parts of Africa, it was about self-sufficiency. Fortunately, we did not embark on that course. And because we opened our doors more than five decades ago, if you now look at the history of American multi-national companies in Singapore, you see a sterling record. Over the years, American companies have played a significant role in electronic development, infrastructure development, and creating thousands of jobs for Singaporeans. And also in the transfer of technology. Here I want to emphasise that these are not forced transfers of technology, but mutually beneficial arrangements which have enhanced the capability of the people and enhanced the competitiveness of American companies.
5 Let’s take a look at a few examples. Texas Instruments was one of the first multinationals in Singapore, establishing a factory which marked the birth of the electronics industry in Singapore. Seagate, at one time, made more than half of all the world’s hard disk drives in Singapore. Hewlett-Packard opened its first facility in Singapore almost 50 years ago. Beyond the fact that Hewlett-Packard brought to the consumer market things we take for granted, e.g. the inkjet printer and the hand-held programmable calculator. Singapore was not only a manufacturing site, but where development of these products occurred. As a result, Hewlett-Packard trained generations of engineers and managers and in turn when they left, went on to become significant entrepreneurs in their own right, and created companies and enjoyed significant successes in the years since then.
6 So, it should not be a surprise that our economic cooperation is growing from strength to strength. You will recall that the US-Singapore Free Trade Agreement (USSFTA) was signed and ratified in the US Congress in 2003, and came into force in 2004. This was the US’ first Free Trade Agreement with an Asian country. It should also be no surprise that trade has blossomed, and Singapore is the US’ largest trading partner in Southeast Asia today. Every time I see President Trump, I remind him that the US has a trade surplus of US$20 billion trade deficit against Singapore but we are not complaining about it. We are not complaining because we are not focused purely on the bilateral deficit number, but on the fact that we are part of the global value chain. The liberal economic arrangements and economic integration have generated jobs, enhanced competitiveness, and retained relevance for us, as well as generated jobs within the American continent itself.
7 Today, Singapore is the US’ largest trading partner in Southeast Asia. The US is the second largest foreign direct investor in Singapore, with a stock of USD$242 billion dollars. The largest foreign direct investor in theory is the European Union, but if you look at it in terms of sovereign states, then the US is the largest investor in Singapore. But that’s not all. The other way of looking at this statistic, and I recall Vice President’s Mike Pence’s speech in Jakarta in 2017, that the US stock of investments in ASEAN is US$274 billion dollars. The more interesting factoid is that the US has more invested in Southeast Asia than in India, China and Japan combined.
8 Now of that big chunk of foreign direct investment the US has in Southeast Asia, the proportion of that in Singapore is somewhere around 80 percent. These are significant investment and trade flows. On the flipside of it, Singapore, surprisingly, is the second largest Asian investor in the US. I am glad that after all these years, American businesses have been voting with your chequebooks and investments, and indicating confidence in Southeast Asia, particularly Singapore. We are glad to have been able to function for many decades as a trusted gateway for your companies in the region. Again, I probably do not need to convince members of AmCham that you are not here just for the Singaporean market, which is very small, but you are here because Singapore is a portal to Southeast Asia.
9 There are more than 4,500 American companies currently in Singapore. I just wanted to highlight a few more factoids. Honeywell inaugurated Asia’s first Industrial Cyber Security Center of Excellence in Singapore last year. Becton Dickinson opened the company’s first Advanced Molding Centre in Asia in January 2019, which I believe will be one of the largest and most sophisticated plastic molding plants in the world for the company. Citi Singapore has consistently used Singapore as an important test-bed for many digital initiatives such as Citi Bot, Voice Biometrics and City Pay with Points. Lucasfilm’s “Sandcrawler” studio in Singapore has also contributed to the Star Wars and Avenger series of movies.
10 Putting on my other hat as Minister-in-charge of the Smart Nation Initiative, I would also need to make this pitch that Singapore and the US are natural partners, as open, smart and technologically advanced leaders of the new economy. We were very pleased that the US-Singapore Collaboration Platform Memorandum of Understanding (MoU) was signed during US Vice President Mike Pence’s visit to Singapore in November 2018. The renewed MoU will galvanise cooperation including in fields like energy, advanced manufacturing and technology.
11 Let me now shift focus to politics. On several occasions, I have quoted Dr Henry Kissinger. In July 2018, he said that “we are in a very, very grave period.” I unfortunately have to agree with him. We are watching with great interest, in fact great concern, the ongoing negotiations and discussions between the US and China. The ability of the US and China to work out a new modus vivendi -or not- will shape our era. The recent tensions, which we all witnessed, have naturally engendered concern not just in US and China but across the rest of the world. To date, the US has imposed tariffs on Chinese goods worth more than US$250 billion, and China has, not surprisingly, countered with US$110 billion worth of tariffs on US goods. I am glad that there has a postponement of further tariffs, and that the ongoing talks between the US and China, seem so far to be moving in positive direction.
12 For us, as an open economy, as a city state in which our trade volume is three times of our GDP, we have a lot riding on these negotiations in which we have no say. But any sign of increased trade conflict will have profound implications on all of us. Let me also take a step back, and try to view this evolving Sino-US relationship from a broader perspective. At the end of the second World War, the real winner was the US. In fact, if you move back to 1960, the US share of global GDP was around 40 percent. At that level, of every additional dollar the world GDP grew by, 40 cents went to the US. It was therefore worthwhile for the US to generously, and in its own enlightened self-interest, envision and underwrite the global world order based on economic integration and lowering trade barriers. In fact, this has been a formula for seven decades of peace and prosperity all over the world. Singapore has been a beneficiary of the system for the last 70 years. But in fact, the biggest beneficiary of the liberal world order, post-second World War, has been China. China has used that opportunity to uplift hundreds of millions of people out of poverty. Surely, it is one of the ultimate achievements of humanity in our lifetimes.
13 But, as in all things, even pleasant, calm, balmy seasons come to an end. Today, the US remains still the most vibrant, inventive, creative source of economic potential. But it no longer accounts for 40 percent of global GDP. It is down to around 23 percent. And we all know that proportion will fall, not because the US is weak but because there are multiple centres for growth and development. As that percentage falls, the political question that American voters will legitimately ask is if it is still worthwhile for the US, unilaterally, to be the underwriter, policeman, empire and referee of the world order. A world order that is transiting from a unipolar world, when the US was the only superpower or hyperpower, to one in which there is China, India and Europe. Here is where I want to make a pitch for Southeast Asia.
14 Southeast Asia, the ten ASEAN countries, has a combined GDP of over US$2.7 trillion. That means that ASEAN is the third largest economy in Asia after China and Japan. But let me differentiate the prospects for Southeast Asia from just China and Japan, which we all know are ahead. The key difference is that Southeast Asia is younger and continues to have more babies. The fertility rate is vastly different between Northeast Asia and Southeast Asia. The demographic dividend has not yet been harvested in Southeast Asia. In fact, this is why American companies are here. ASEAN, if we get it right, would hopefully reach US$10 trillion dollars in combined GDP, making us the fourth or fifth largest economy. The point is that there are lots of opportunities in this part of the world.
15 We are heartened that the US has expressed commitment to this region, to engage the region using the banner of the “Free and Open Indo-Pacific”, and acknowledged that Southeast Asia, both geographically and strategically, will be at the centre of the Indo-Pacific. We are glad that the Asia Reassurance Initiative Act signals the importance of our region to the US, and we believe that the US’ active interest in and engagement of Southeast Asia has been, and will continue to be key to the region’s prosperity and development. However, now more than ever before, it is no longer just the State Department or Commerce Department. We believe that the US private sector is an indispensable partner. I am encouraged to have just launched the ASEAN Business Outlook Survey 2019. I have not had the chance to flip through it yet, but the fact that it is compiled is important in its own right. It shows the importance that American companies place on ASEAN as a business and investment destination going forward. And there I want to encourage more US companies to continue to leverage on Singapore, because we are at the heart of Southeast Asia.
16 I would like to highlight two concrete avenues that I believe we can explore. First – the BUILD Act, which consolidates international investment agencies under the US International Development Finance Corporation (USIDFC), and doubles USIDFC’s budget to US$ 60 billion. It is a doubling, but to be frank, a tiny fraction of the needs and opportunities in Southeast Asia. Nevertheless, it will facilitate the participation of private sector capital and skills, and I believe that will make all the difference, as a much needed and welcome source of infrastructure and technology investment throughout Southeast Asia. Second, I would like to highlight Vice President Mike Pence’s announcement of the US-ASEAN Smart Cities Partnership during the 6th ASEAN-US Summit in November 2018, as an opportunity to renew US investment in the region’s digital infrastructure, to provide capacity building, and to cooperate on sensitive issues like cybersecurity where trust and reliability is critical.
17 So let me conclude by reiterating that Singapore is an unusual and unlikely city state. We were forced by necessity to make some unconventional decisions. Fortunately, we made the right choices. AmCham and American companies have been a critical part of our success story. I therefore say with all sincerity that we want the US to continue to be engaged and to play a strong leadership role, even as we transit into a multipolar world. I want to emphasise that the US private sector should continue to take a lead in advocating a sustained US presence throughout Asia. I hope you all will stay the course, and for the newcomers, continue to build on the work of those who have been here for many decades.
18 Thank you.
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