- POSTED: 02 Oct 2013 23:03
This graph is an experimental feature that tracks number of views over time.
Singapore's Deputy Prime Minister and Minister for Finance Tharman Shanmugaratnam says emerging regions have to strengthen links to compensate for the lack of growth in advanced nations.
SINGAPORE: Singapore's Deputy Prime Minister and Minister for Finance Tharman Shanmugaratnam said deleveraging will take its toll on growth for a long time to come, and advanced economies are not going to grow as they did in the past two to three decades.
Speaking at the Latin Asia Business Forum in Singapore, Mr Tharman added that emerging regions have to strengthen links to compensate for the lack of growth in advanced nations.
Looking beyond the potential volatility arising from the US government shutdown, Mr Tharman said there is a new structural setting where advanced nations will no longer grow as rapidly as before amid the gradual unwinding of debt in some of the economies.
He said: "That is the first point I will make… slow growth outlook for a long time to come, even stagnancy in much of the advanced world, but still an opportunity for us. Opportunity not just in demand terms but opportunity from the supply side perspective, moving up the curve.
“To compensate for the lack of growth in advanced economies, I think we need to strengthen greatly the links between the emerging regions (Latin America, emerging Asia, the Middle East and Africa)."
Mr Tharman said Asia and Latin America for example are still "underweight" in each other in terms of trade and investments. He added that relationship between the two regions currently is too concentrated on commodities and that diversification is needed.
Mr Tharman noted that while the commodities trade is not likely to be growing at the same pace as the last decade, it remains important in the long-term.
"That commodities trade is also very heavily concentrated in North East Asia - China, Japan, Korea. And the underweight relationship that I spoke about earlier is even more accentuated if you look at ASEAN, South East Asia vis-a-vis Latin America,” said Mr Tharman.
“We are not going to grow our complementarity and we are not going to be able to grow our economies if we rely so heavily on commodities business."
Meanwhile, trade agency IE Singapore said Singapore's trade with Latin America has grown over the past 10 years at a compounded annual growth rate of 21.2 per cent from 2003 to 2012 to reach US$29.3 billion last year.
It added that Singapore's stock of investments into Latin America grew by a compound annual growth rate (CAGR) of 7.5 per cent between 2002 and 2011, to US$45.2 billion. As of 2011, Singapore was the fourth largest Asian investor in Brazil and third largest Asian investor in Mexico.
IE Singapore highlighted three areas that offer scope for greater collaborations which includes infrastructure development, the growing consumer market and oil and gas industry.
Meanwhile, Mr Tharman sees "a bubble of opportunity" in the area of urban management, which covers sectors like water and waste management, urban planning, traffic management and sustainable development.
When asked about what are the structural and institutional reforms that can be expected over the next 10 years, Mr Tharman answered that both Latin America and Asia need to look at constant reforms and improvement of institution, such as devoting more resources to focus on improving technical education and rule of law to provide regulatory certainty, especially for long-term investors.
Mr Tharman said: "Part of the uncertainty in the market that we have seen this year reflects not just short term cyclical preoccupation but a sense of uncertainty as to whether that new way of reforms in the emerging world is going to take place.
"And I think it is going to be an opportunity, it is a useful jolt and the emerging market needs a jolt once in a while to refocus on reforms."
Mr Tharman said Singapore has had to learn from best practices from all over the world on how institutions could work well.
"Getting our act together, getting as close as possible to best practices is the challenge for all of us, even for Singapore, even though we have achieved something different in the last five decades, it is a continual race,” said Mr Tharman.
“We are not satisfied with where we are today, we are not satisfied with the operation of our institutions, we are not satisfied with the standard of living of the average Singaporean and the lower-income Singaporeans and we want to go further, we are still looking for the best lessons, still bringing them in, still trying to innovate."