Professor Jean-Hervé Lorenzi, Chairman of Le Cercle des Économistes
Professor Francisco Veloso, Dean of INSEAD
Her Excellency Minh-di Tang, Ambassador of France to Singapore
Excellencies
Distinguished Speakers
Ladies and Gentlemen
It is a pleasure to join you today at the 2024 Indo-Pacific Economic Forum. I am delighted to see the Les Rencontres Économiques Forum return to Singapore for the first time since the COVID-19 pandemic. I want to thank Professor Lorenzi and Professor Veloso for their invitation and I hope that Professor Lorenzi recovers very quickly.
The theme of this year’s Forum is “Indo-Pacific: Shaping the World Order”. The term “Indo-Pacific” refers broadly to the region spanning the Indian Ocean and the Pacific Ocean. The Indo-Pacific has been affected, like many other regions, by major developments in the world. These include heightened geopolitical tensions, great power competition, economic protectionism, and, of course, the lingering effects on economies and societies caused by the COVID-19 pandemic.
Singapore watches these developments with great concern, not just because of where we are situated, but also because of who we are. We are a tiny city-state ensconced within a region where the Indian and Pacific Oceans meet. A peaceful world matters to all states, but small states are more sensitised to changes in the broader security environment. Moreover, Singapore was an entrepot port long before we were a country. So, quite apart from the fact that we are highly vulnerable to global shocks as a trade-dependent economy, we believe on a fundamental level that free and open trade makes societies and peoples better off.
Let me outline our concerns.
First, the open, rules-based, multilateral trading system that has underpinned global economic growth since the end of the Second World War is under threat. The COVID-19 pandemic was not just a serious public health setback that had raised questions about global pandemic preparedness. It also led to a fundamental rethink about supply chain resilience of critical goods in times of crisis. This rethink took place against growing strategic competition between the US and China, disruptions caused by the outbreak of war in Europe, and more recently, conflict in the Middle East. Rising inflation, stagnating growth, and increased costs of living have placed enormous strains on economies, leading some governments to turn towards protectionism and a renewed focus on industrial policy. Every retreat from free and open trade, however expedient or popular at the time, will exact a cost on consumers, investors and societies. This is not what we wish to see.
Second, ongoing conflicts across the world have undermined global and regional peace and stability. The Russia-Ukraine war is close to entering its third year with no imminent resolution in sight. The heinous terrorist attack by Hamas against Israel on 7 October last year drew a heavy response from Israel in Gaza. This has in turn led to the massive human suffering and loss of civilian life in Gaza. An immediate humanitarian ceasefire, which Singapore supports, is necessary to facilitate the urgent delivery of aid to Gaza.
Most recently, attacks by the Houthis on international merchant shipping in the Red Sea have disrupted a major sea line of communication (SLOC) linking Europe to the Indo-Pacific, a region that facilitated approximately 12% of global trade and 30% of global container traffic. Singapore shares a key interest with our European partners and the international community to ensure that key SLOCs around the world – such as the Red Sea or the Straits of Malacca and Singapore – remain open and safe for the free flow of trade. Singapore is thus participating in Operation Prosperity Guardian, to support the international community in upholding the freedom and safety of navigation in international waters.
Third, intensifying great power competition and mistrust between the US and China have accelerated existing trends towards what some have called ‘slowbalisation’ or even ‘deglobalisation’. More countries are seeking to rearrange and protect their supply chains by ‘friendshoring’ or ‘reshoring’ key production facilities. In Europe, this phenomenon is referred to as ‘de-risking’.
Such efforts have placed tremendous strain on globalisation and the principles of free and open trade that have underwritten postwar economic development over the last 80 years. Analysts have estimated the cost of a fully decoupled US and China at between US$22 to US$37 trillion, or between 15% to 26% of global GDP. Beyond the losses in economic value, technological bifurcation between the US and China would also be a major setback to innovation and research, which thrives when all parties work off the same technology stack, and where there is a free exchange of ideas, access to capital markets, and cross-border financing. It makes the world poorer in every sense.
Singapore watches these developments with great concern. As a small island state with no hinterland nor natural resources, trade, which is three times our GDP, is literally our lifeblood. Since our founding as an entrepot hub, our story has been one of how globalisation can be managed and harnessed to transform and uplift our people. Singapore believes that greater, not less, global interconnectedness can bring about the same benefits for others. We therefore continue to find ways to strengthen, renew, and expand engagement and cooperation with like-minded partners such as France and in the EU.
Against this backdrop of complex challenges, the Indo-Pacific region can be a bright spot. It includes four of the world’s largest economies: the US, China, Japan, and India. It accounts for almost 60% of global GDP and over 60% of the world’s population. Today, two-thirds of global growth is generated in the Indo-Pacific region. Numerous Indo-Pacific regional countries are members of multilateral initiatives such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Regional Comprehensive Economic Partnership (RCEP), and the Indo-Pacific Economic Framework for Prosperity.
Southeast Asia sits at the heart of the Indo-Pacific region. As much as 25% of international maritime trade passes through the Straits of Malacca and Singapore alone. Collectively, ASEAN has a population of more than 650 million, of which 60% are below the age of 30. As one of the world’s youngest and fastest-growing regions, ASEAN is on track to become the world’s fourth-largest economy by 2030. The economic potential of the Indo-Pacific region, with ASEAN at its centre, is tremendous.
This potential is acknowledged by many like-minded partners, including Europe. The EU, as well as EU Member States like France and Germany and several others, have released individual Indo-Pacific policies, essentially affirming the importance of the Indo-Pacific region remaining open and inclusive, operating based on multilateralism and respect for international law.
Developments in the Indo-Pacific region can have a demonstrative effect on other parts of the world. It is important that countries in the Indo-Pacific region make common cause and advance a development agenda based on an open and inclusive, multilateral and rules-based global system. We should double down on efforts in the CPTPP and RCEP to bring about greater connectivity across all sectors in the Indo-Pacific region.
At the same time, Singapore supports greater connectivity between the Indo-Pacific region and other regions, including Europe. We see closer cooperation between France and Singapore, between the EU and Singapore, between France and ASEAN, as well as between the EU and ASEAN, as ways of creating overlapping circles of friends, and forging omni-directional cooperation.
Singapore enjoys an excellent and longstanding relationship with France. We are France’s top trade and investment partner within ASEAN. France is also Singapore’s only Strategic Partner within the EU. In 2022, we traded nearly S$23 billion worth of goods. We are now working to seize growth opportunities in emerging sectors such as digital innovation and the green economy. Singapore and France signed a Digital and Green Partnership in 2022, which will allow our companies to work on the fields of smart transport, smart cities, financial innovation, MedTech, and EduTech.
At the Singapore-EU level, we are natural partners who share common interests in promoting multilateralism as well as free and open trade, upholding a rules-based international order and tackling climate change. We are proud to be the first ASEAN Member State to conclude a Free Trade Agreement (FTA) with the EU. The EU-Singapore FTA (EUSFTA), which entered into force in 2019, reduced technical barriers to trade and offers greater access to services and procurement markets. The EUSFTA also enshrines our shared principles for sustainable economic development by setting out rules for the protection of labour rights and the environment, and serves as a pathway towards an eventual FTA between ASEAN and the EU.
The EU-Singapore Investment Protection Agreement and EU-Singapore Partnership and Cooperation Agreement are key instruments that will strengthen economic linkages and cooperation between Singapore and Europe. We are currently negotiating a legally binding Digital Trade Agreement that, when concluded, will create even more opportunities in the digital space for our companies and our workforce. We envisage that Singapore’s agreements with the EU will eventually serve as pathfinders for broader cooperation between ASEAN and the EU.
We have already made progress at the region-to-region level with the signing of the ASEAN-EU Comprehensive Air Transport Agreement (CATA) in 2022. The ASEAN-EU CATA gave a significant boost to air connectivity between our two regions and complements Singapore’s position as an air hub and gateway for France and other EU Member States to engage the rest of ASEAN. Many French and European companies have set up their regional operations in Singapore, and we welcome more European companies to leverage Singapore and our network of FTAs as a springboard into the wider Indo-Pacific region.
Excellencies
Ladies and Gentlemen
The world is in troubled times. Hot wars have broken out and show no signs of immediate resolution. The global rules-based trading system continues to be under siege. Great power rivalry between the US and China will continue to persist. We must not stand idly by while these developments unfold.
For small countries like Singapore, we believe that we can have agency and influence if we make common cause with other like-minded partners to strengthen our collective voice, be it at ASEAN, within the Indo-Pacific region, or at the UN.
Our partner France is a member of the P5 at the UN Security Council and a leader within the EU, with whom Singapore and ASEAN share many interests. In this context, Singapore welcomes the continued engagement of the region by France and Europe, including through the resumption of today’s Forum after the pandemic-induced hiatus. By working together to defend the multilateral, rules-based trading order, harnessing opportunities in fast-growing sectors, and ensuring the stability, security, and sustainable growth of our respective regions, I am confident that we will not only be able to contribute towards “Shaping the World”, but also capture new opportunities in areas such as artificial intelligence, renewable energy, biotechnology, and the green economy.
Thank you, ladies and gentlemen, and let me wish you a very fruitful and productive series of discussions ahead.
. . . . .
Photo Caption: Senior Minister of State, Ministry of Foreign Affairs and Ministry of National Development, Sim Ann at the Opening Session of the third Les Rencontres Économiques de Singapour – Singapore Economic Forum at INSEAD Asia Campus on 25 January 2024.
Photo Credit: Ministry of Foreign Affairs, Singapore
Photo Caption: Senior Minister of State, Ministry of Foreign Affairs and Ministry of National Development, Sim Ann with INSEAD Dean Francisco Veloso and Le Cercle des économistes member Professor Philippe Trainar on 25 January 2024.
Photo Credit: Ministry of Foreign Affairs, Singapore
