Singapore Government Press Release

Media Division, Ministry of Information and The Arts

36th Storey, PSA Building, 460 Alexandra Road, Singapore 119963.

Tel: 3757794/5

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Ladies and Gentlemen

May I first thank our hosts for inviting me to this Business Linkages Seminar organised by the Singapore-Australia Business Alliance Forum (SABAF). I am happy to have this opportunity to meet with members and friends of SABAF and to exchange views and suggestions on how we can further enhance cooperation between our two countries especially in the area of business.

SINGAPORE-AUSTRALIA ECONOMIC RELATIONS

2 Singapore-Australian relations have been excellent. We share a common outlook on many political, security and economic issues. Our bilateral relations were given a boost when our Prime Ministers launched the Singapore-Australia New Partnership in January 1996. Following this, the inaugural meeting of the Singapore-Australia Joint Ministerial Committee was held in Canberra in October that year, with discussions focusing on economic, defence and people-to-people ties. The second meeting will be held later this year in Singapore.

3 Singapore and Australia have enjoyed a strong economic partnership. Over the years, we have seen a steady increase in bilateral trade. It grew to A$6.3 billion in 1997, a 75% increase from A$3.6 billion in 1990. In terms of direct overseas investment, Australia was the 9^th largest destination for Singapore, and Singapore was the 8^th largest destination for Australia. Available statistics for 1996 show such direct investments to be A$1.3 billion either way, a perfect balance.

4 The launch of SABAF in August 1995, jointly endorsed by our Prime Ministers, was a significant step towards strengthening our bilateral economic relations. I am pleased to note that SABAF has been very active in promoting bilateral cooperation through activities such as investment workshops, networking and joint missions to third countries.

SYNERGY BETWEEN SINGAPORE AND AUSTRALIA

5 Let me offer a Singaporean perspective of the synergies between our two countries as a basis for business collaboration. First, we are closer to one another geographically than to Europe and the US. Parts of Western and Northern Australia are nearer to Southeast Asia than to population centres in South East Australia. In fact it takes longer to fly from Sydney to Perth, than from Singapore to Perth. This proximity is a significant factor for those Singaporean parents who prefer not to send their children too far away for their tertiary education. Cost and the friendly, English-speaking environment are other important factors.

6 Second, our countries share a similar economic outlook, one that recognises the vital importance of a fair and open trading system for sustainable growth and employment. This is especially important for countries such as ours which are heavily dependent on world trade. As partners in free trade, we will continue to work closely to promote trade liberalisation at multilateral fora such as APEC and WTO.

7 Third, we have complementary strengths which can form the basis for successful joint ventures into our region. Australia has abundant natural resources and technological expertise. However, Australian companies may not be so familiar with market conditions and business practices in Asia. A study has shown that two thirds of Australia’s top 200 companies do not conduct significant business with Asia.

8 On the other hand, Singapore companies have, through years of trading experience, built up their knowledge of the regional regulatory and market conditions, and established a good network of business contacts. The regional know-how of Singapore companies could be combined with the resources and technology of Australian companies to create a winning partnership in the region. In recent years, Singapore has also set up industrial parks in the PRC, the Philippines, Thailand, Indonesia, Vietnam, Myanmar and Bombay to facilitate investments into these countries.

9 Such collaboration is particularly helpful to our small and medium-sized enterprises or SMEs. They may not have the resources on their own to build up their existing operations or venture overseas in search of new opportunities. By combining resources with other SMEs they are better able to weather the regional economic crisis and position themselves for future growth. In this connection, the Singapore Productivity and Standards Board has been trying to matchmake SMEs from Singapore and Australia. Last November, it concluded an agreement with the Queensland government to support such activities. It is currently exploring similar agreements with other Australian states.

10 May I suggest a few areas where Singapore and Australian companies can consider joint investment at the appropriate time. One of these is infrastructure development. A growing Asia will continue to be desperately short of infrastructure such as power, water, roads, ports and telecommunications. They will require billions of dollars’ worth of foreign investments. Regional economies have been looking to the private sector for financing and development of such infrastructure projects.

11 Other potential areas are in the food, information technology and multimedia industries. The regional demand for food products is enormous and growing rapidly. Australian know-how and capital in its agrobusiness can add value to the less developed agricultural sectors of the region to serve domestic and export markets.

12 IT and multimedia are also extremely promising high growth areas that our companies can jointly develop. Our economies are relatively sophisticated, high income markets with good access to computers for various networked applications such as electronic commerce, entertainment and education. Our populations are literate in English and adaptable to modern technology. By working together on IT we can derive synergy, diversity and economies of scale to service global markets.

13 In manufacturing, Australian companies have niche technologies which Singapore companies can help to commercialise and adapt to Asian consumer needs. Such projects can benefit from established regional distribution networks.

SABAF AS A PLATFORM FOR COLLABORATION

14 SABAF is a good platform to explore these potential areas of collaboration. There are already existing SABAF mechanisms that our companies can make use of. The A$2 million Joint Feasibility Study Fund was established to assist Singapore and Australian companies working in tandem to capitalise on projects in third countries. Under this initiative, both governments committed A$1 million each to provide successful applicants with grants to cover up to half of the costs of conducting feasibility studies for joint projects in third countries. Five Singapore-Australia joint ventures have benefited from the Fund so far.

15 SABAF has organised several joint missions to the region, including the Philippines, Indonesia and China. These trips not only provided opportunities for investment, but also served to broaden and deepen the networks of participants.

16 Over the years, Singapore and Australia have been good partners in economic, political and other areas. As like-minded countries we have collaborated well and complemented one another for mutual advantage. Our region is going through a severe economic crisis which has altered the political and economic landscape. This makes it all the more important that we enhance our cooperation to weather the storm, to push the frontiers of free trade and to seek out growth opportunities.

17 SABAF has an important role to play to realise such collaboration at the working level among business leaders of our two countries. May I wish SABAF and all its members and associates every success in the years ahead.