Ladies and gentlemen, I am very happy to join you this morning for the Singapore Regional Business Forum. 

 

We just marked 20 years since the Asian Financial Crisis in 1997. I’m sure many business leaders here would have first-hand experiences of what happened at that time. I still remember I had just joined MTI as an economist back then in 1997. My first assignment was to look at the financial crisis in Thailand, study what could happen to other regional countries and what the impact on Singapore would be. 

 

The crisis brought about major structural changes in the region. Countries reduced foreign borrowing, moved to more flexible exchange rates and undertook macro-economic reforms. They stepped up regional cooperation and built mechanisms for liquidity support and crisis management. So Asia became stronger, and when the global economic crisis struck in 2008, the region was not so badly affected.

 

Today, Asia has a much stronger economic outlook. Developing Asia’s economies grew at nearly 7% per annum over the past two decades. Asia is by far the fastest growing region in the world. Asian growth is also more resilient and sustainable than before.

 

One major contributing factor to this new phase in Asia’s growth over the last 20 years is China’s transformation. In 1997, China had not joined the World Trade Organisation (WTO), and its trade and investment linkages with the regional economies were not as significant as they are today. Now, China is the top trading partner for all key Asia-Pacific economies – Australia, Japan, Republic of Korea (ROK), India and ASEAN. For ASEAN, excluding intra-ASEAN trade, China is now ASEAN’s largest trading partner.

 

In 20 years, a lot has changed. This transformation has been a major plus for the region. It has significantly boosted intra-regional trade and investments and brought about a more integrated regional production network. The old paradigm for development in Asia was something called the “flying geese formation”, which is the theory that when Japan advanced in its economic development and moved up the value chain, it helped to bring the next tier of developing economies with it – the newly industrialising economies, and step by step, other ASEAN economies. That was the former paradigm of Asian development. The new paradigm of development is a much more multi-layered model of production, a much more integrated production network with regional countries sharing different parts of the production process. China has played a major role in this integration and a prosperous and stable China benefits Asia and the world.

 

China has now initiated the Belt and Road Initiative (BRI). It is potentially the largest platform for regional cooperation. It will significantly enhance regional connectivity and accelerate infrastructure development across the whole of Asia. This is a major game changer that will shape our next phase of Asian development. 

 

Singapore’s position on the Belt and Road is very clear. We are fully supportive of the Belt and Road Initiative and we stand ready to partner China to build the Belt and Road.

 

I attended the Belt and Road Forum in Beijing in May and at that Forum, I signed an MOU for cooperation on the Belt and Road with Chairman of the National Development and Reform Commission (NDRC), Mr He Lifeng. Building on that MOU, our two Foreign Ministers recently agreed on three areas of cooperation between Singapore and China on the Belt and Road. I will elaborate briefly on these three different areas of co-operation.   

 

The first area of cooperation is on infrastructure connectivity, and we seek to operationalise this through the China-Singapore (Chongqing) Connectivity Initiative, or the CCI. Both sides are now working to jointly develop the CCI Southern Transport Corridor which will link Western China to Southeast Asia through Chongqing and Singapore respectively. 

 

With this Southern Transport Corridor, we will connect the overland Silk Road Economic Belt with the 21st Century Maritime Silk Road. This will offer a shorter and more direct trade route between Western China and Southeast Asia. Potentially, it can lower logistics costs, enhance cross-border trade flows, and help to catalyse the economic development of both regions, in particular the provinces along the Corridor.

 

Chongqing is an important node to catalyse the development of Western China. It has access to different transport modes and is strategically located at an intersection point along the Belt and Road and the Yangtze River Economic Belt. At the same time, Singapore is already a major hub for Southeast Asia. So we have Chongqing in mainland China and Singapore in the centre of Southeast Asia. Both Chongqing and Singapore can be the two hubs in Asia, mutually supporting one another, linking up the Belt and Road, and enlarging the possibilities for connectivity across both regions.

 

That’s our first area of cooperation which is already being worked on and progress has been made.

 

The second area of cooperation is in the financing of Belt and Road projects. Large infrastructure gaps exist today in Asia. It is estimated at over $1.7 trillion a year through 2030. While Asia has developed and grown over the last 20 years, the gaps are very real. Over 400 million people still lack electricity and about 300 million have no access to safe drinking water. There are huge development gaps that need to be plugged.  

 

Good infrastructure is critical for developing Asia to advance and avoid the middle-income trap. That’s why we believe that the Belt and Road can be a way to resolve and address these infrastructure gaps. 

 

The challenge for all of us is to make infrastructure projects bankable, so that they can be financed and implemented commercially. If all these projects have to be financed through government subsidies or funding, it is not sustainable. We know that around the world, there is a large pool of funds that are enjoying very low or even zero interest rate. That’s the reality today. There is a lot of liquidity in the world. How can we make projects in Asia more bankable so that they can match commercial funds and apply them on these projects? 

 

That’s the challenge that needs to be addressed. It’s not easy because of the scale, complexity and inherent risks of infrastructure projects. They are large scale, some of them may even be cross-border, so the risks are there. A lot of work needs to be done with regard to project selection, preparation and structuring.

 

This is where we believe Singapore can play a useful role. We are already a major centre for the financing of infrastructure projects in Southeast Asia. 60% of projects in Southeast Asia obtain their finance and advisory services from Singapore-based banks. Chinese banks in Singapore are also ramping up and doing more in this area. They are expanding their presence here and doing more to finance Belt and Road projects too. For example, the Bank of China (BOC) Singapore branch issued US$600 million of Belt and Road Initiative bonds in May this year, and the China Construction Bank (CCB) Singapore branch recently issued RMB 1 billion worth of BRI bonds.

 

Beyond financing, we are home to a full suite of high quality professional services that are necessary to bring infrastructure projects into being. This includes project advisory, design, engineering, dispute resolution and legal services. These are all part of the suite of professional services that can enable an infrastructure project to be implemented well. Many of these services are anchored and based here in Singapore. We are working with Chinese insurers and reinsurers, for example, to develop better risk management solutions, such as risk pooling, especially for larger and more complex infrastructure projects. We are also discussing with multilateral development banks (MDBs) in project financing and to develop new mechanisms that will enable the financing of infrastructure projects. The World Bank Group’s Global Infrastructure and Urban Hub is based here in Singapore, and we have close links with other MDBs, including the Asian Infrastructure Investment Bank (AIIB) and Asian Development Bank (ADB).

 

This is one area where Singapore may not be a direct beneficiary in the sense of having an infrastructure project based here, but we believe we have a useful role to play in the Belt and Road, and we can partner with China to strengthen our financial connectivity and be the infrastructure and financial exchange for Belt and Road projects in the region.

 

Finally, we also want to encourage companies on both sides to forge partnerships and do projects together in third countries, as well as work together on human resource development in the Belt and Road countries.

 

More Chinese companies are internationalising and expanding their global operations. To date, over 6,500 Chinese companies have established a presence in Singapore and are tapping on our strong regional linkages to venture into ASEAN and beyond. We welcome more Chinese companies to do so.

 

At the same time, Singapore companies are going out. This is something that has started many years ago when we talked about developing our second wing, our external wing, and that effort continues today. 

 

We believe Singapore companies are natural partners for Chinese firms expanding to the region, especially to Southeast Asia. Our companies have experience working within China itself. We have worked together on the Suzhou Industrial Park (SIP) for 20 years; we have close to 10 years of experience with Tianjin Eco-city. Our companies have good market knowledge of Southeast Asia. We understand what it takes to implement projects, we understand better the local conditions, culture and requirements. These are complementary strengths that are right for win-win partnerships. You see some of that already happening. For example, our companies may not be able to build a railway or a large-scale infrastructure project but we can do engineering, design, master planning, project management, financing, logistics, servicing and a whole range of other services. This is what we mean by comparative advantage and bringing both sides together.

 

Surbana Jurong has set up a joint venture with China Highway Engineering Consulting Corporation. Surbana Jurong is one of the leading firms in design, engineering and consultancy services. China Highway is very strong in the building of transportation infrastructure. Together, the joint venture will pursue highway and infrastructure-related projects in the Belt and Road countries. It is a good example of how we can combine the best in class capabilities from China and Singapore, and achieve even better results by cooperation and partnership. 

 

There are many more possibilities to explore. When I was in China for the Belt and Road Forum, I also visited Suzhou and I met the Party Secretary Mr Zhou Naixiang. He was very keen to see how the SIP can be exported overseas. As it has been more than 20 years since the SIP was established and it has gained a good track record and reputation, there are many countries looking to Suzhou to have an SIP built in their country. That’s another possibility where China and Singapore can collaborate and work together on a project in a third market. These are existing ideas and opportunities that companies from both sides should be actively discussing and exploring.

 

I hope today’s Forum will help to catalyse more partnerships. I am very glad that SBF has initiated the Belt and Road English portal, which we are launching today. We are seeing several MOUs being signed and I encourage business leaders here to make full use of the time to network and find new opportunities for collaboration.

 

I started by talking about how much Asia has changed since the Financial Crisis. Asia is in a much stronger position than 20 years ago. In fact, after the 1997 Crisis, there were critics who said that the Asian growth miracle was a myth and was unsustainable. We have proven them wrong because over the past 20 years, Asia has become stronger. Looking ahead, we can be confident about our growth prospects. Initiatives like the Belt and Road will give Asian growth and cooperation a further boost. 

 

The prospects are good but we must not be complacent and must stay vigilant. There are still many uncertainties and downside risks that lie ahead. There are geo-political risks around us – the developments in the Korean peninsula that we are reading about every day; rising protectionist and anti-globalisation sentiments in the world; and rapid technological change which continues to disrupt industries and workers everywhere. The risks and challenges are real. 

 

Within Singapore, our own economy is going through restructuring and transformation. We are in the process of implementing recommendations that have been put forward by the Committee on the Future Economy. We are implementing Industry Transformation Maps (ITMs) across 23 sectors of the economy and looking at the different areas which we can leverage on technology. We are upgrading our workers through SkillsFuture and we are putting in a major programme for investment in new infrastructure over the coming decade. It is a very significant programme for new investments. 

 

Singapore may be a little red dot. Some of you will have the impression that we are already very built up, but we are not done building Singapore yet. We have not reached our physical limits. The infrastructure that we are putting in will include several major pieces. For example, we will be building a new Terminal 5 that will double everything you see at Changi Airport today. We are building a new Tuas mega port in the Western part of Singapore which will also double the capacity of what we have today. So on both the air and the sea front, we are building capacity that will double what we have today and it will enhance our connectivity to the region. We are building rail linkages as well, with the High Speed Rail connecting Singapore and Kuala Lumpur and the Rail Transit System connecting Woodlands in the northern part of Singapore and Johor in the southern part of Malaysia. We are developing new districts across the whole of our island, not just focusing on the Central Business District (CBD) but spreading our developments to other parts of Singapore – in Jurong, which will be our second CBD; in the north, in Woodlands; and in Punggol, which will be a creative cluster. 

 

I’ve just described very briefly some of our infrastructure plans. If you pull it all together, it’s a major infrastructure programme over the coming decade that will make Singapore more competitive and put our economy on a stronger footing. There is a lot of work for us to do but we must have confidence that we can make it happen. 

 

If you look at our history in Singapore, we have never failed in restructuring our economy before. In the 60s, when we became independent and people said that Singapore was likely to fail, we proved them wrong. We found new growth engines to create jobs despite huge obstacles and very real odds. In the 80s, when we faced a severe recession, we found ways to restructure the economy to stay competitive. In the late 90s, we had the Asian Financial Crisis and that went on to the dot.com bust and SARS in 2004. It was a period of slow growth, unemployment had crept up, but again, we found ways to get out of that and to restructure the economy. So we have been through restructuring processes before. Every time there is a challenge, we come together, restructure and emerge stronger. In looking ahead at future challenges, let’s have confidence in ourselves, in our companies, and in the partnerships we’ve forged. 

 

We are living in the heart of Asia that is booming, that is the fastest growing region in the world and has tremendous potential for future prospects. And here in Singapore, we are well placed to seize the opportunities around us. Let us work together to build a stronger economy and a better Singapore.

 

Thank you very much and have a very enjoyable Forum ahead.