SINGAPORE: ASEAN must continue to charge ahead with regional trade agreements and offer strong economic opportunities despite the Trans-Pacific Partnership (TPP) withering in the hands of US President Donald Trump.
Minister for Trade and Industry (Trade) Lim Hng Kiang highlighted this to the American Chamber of Commerce in Singapore (AmCham Singapore) and other US business leaders on Tuesday (Sep 12).
He said the “strong political will to move on and preserve the good set of regulatory outcomes” will be crucial in helping to work towards an alternative arrangement among the remaining 11 countries in the trade pact, following the departure of the US.
The countries are looking to conclude talks on a “TPP 11” version of the trade pact by November when it meets at the APEC Economic Leaders' Meeting in mid-November in Vietnam.
“Ideally of course, we would love to see the TPP 12 being ratified but we are all adults and we have to move on," said Mr Lim.
"For the TPP 11, it’s still an ongoing challenge because in all trade negotiations, the structure of the deal depends on the balance of cost and benefits. And with the departure of the US, which is the biggest market and the strongest trading partner in the TPP 12 configuration, that departure changes the balance for all countries and especially for some TPP-participating countries. So to have a new landing zone for the remaining countries is still a continuing challenge."
ASEAN AND THE US
Mr Lim added that ASEAN and the US need to continue to deepen their ties and enhance their linkages.
“Particularly in this increasingly digitalised global environment, we will need to work together to leverage our strengths, learn from each other’s best practices and streamline our regulatory regimes to enhance the opportunities for businesses,” he said.
He added that US foreign direct investment in ASEAN came in at S$411.9 billion (US$306 billion) last year, with Singapore logging S$347 billion (US$258 billion) of that figure.
Citing results from the ASEAN Business Outlook Survey (ABOS) 2018, Mr Lim said US business sentiments on ASEAN's prospects "remain optimistic" with 80 per cent of US business representatives surveyed expecting their level of trade and investment to increase in the region over the next five years.
He added that nearly 60 per cent of those surveyed said ASEAN's share of worldwide revenue will increase over the next two years.
The minister also invited US businesses to leverage Singapore's role and prime location to tap on ASEAN's growth and connect with the rest of the region. He noted that there are more than 4,200 US companies in Singapore involved in many sectors.
Many of these companies based their headquarters in Singapore to gain business opportunities in the region, he added.
"For example, Coca-Cola recently opened a new highly automated distribution centre in Singapore to support their growing business in the Asia-Pacific. Other US firms such as Estée Lauder and P&G have also chosen Singapore as a base to manage their regional supply chains and develop consumer products specially catered to the region. Amazon launched its Prime Now service in Singapore based on a new operating model."
SINGAPORE TAKES ON ASEAN CHAIRMANSHIP IN 2018
Singapore will pursue tangible goals to improve connectivity when it assumes chairmanship of ASEAN next year, Mr Lim added.
This will be done through working towards a single customs window to facilitate the smooth movement of goods within the region and help companies enjoy “lower compliance and time-to-market costs”.
"We will work closely with the rest of ASEAN to realise an ASEAN-wide self-certification regime and the ASEAN Single Window, to facilitate the smooth movement of goods within ASEAN," he said.
Companies will also be able to better access new overseas markets when the ASEAN chair kickstarts efforts to streamline regional trade rules on e-commerce.
Mr Lim said: “We need to get ourselves back on track to respond to the challenges and the needs of the digital economy. The potential is huge and it’s a very important way to level up the playing field for the micro- and small- and medium- sized enterprises because the digital economy gives them more advantages.
However, the trade and industry minister said challenges in Singapore’s labour force remain and that more work needs to be done to ramp up the quality of productivity of the workforce.
“Essentially the labour force is not going to grow very much because of the retirement of the older workers and smaller entry of new entrants so the local labour force is peaking and to some extent will start to decrease so we need to complement this with foreign workers. At the same time we have more than 1.5 million foreign workers in Singapore and there is of course a limit to how many more we can increase or add to our workforce so that is a challenge in terms of numbers.”
Meanwhile, sectors such as retail, manufacturing and infocomm technology will see the need for job openings as more US companies expand their business operations in Singapore and leverage on the city state’s role as a gateway to the ASEAN region.
Jeffrey Hardee, vice chair of the AmCham Singapore Board of Governors said: “With the educated workforce in Singapore, There’s a lot of data centres here and a lot of data to analyse. There is every reason to believe that there’s going to be a lot more demand for people who can do analytics. Singapore places a great deal of importance of that, and analytics is not just for the IT industry – it’s really across the board. And that looks like a very good opportunity for American companies to locate here in Singapore plus it’s a regional hub for businesses.”