Singapore Government Media Release
TRANSCRIPT OF CHANNELNEWSASIA INTERVIEW WITH BG (NS) GEORGE YEO, MINISTER FOR TRADE AND INDUSTRY, 4 NOV 2000, 9.40 AM
Q : The Singapore economy has made a remarkable recovery, with growth rates of about 9% so far. Do you think that kind of growth is sustainable?
A : It's been much stronger than we expected. In fact, each time we had the numbers, we had to increase the forecast. So I don't think it's sustainable for very long. The US economy is beginning to slow down, the electronics cycle is beginning to turn down, and we must expect slower growth next year. Take say the U.S. economy -- will it be able to achieve a soft landing? If it's able to achieve a soft landing, and interest rates stay low, that's a comfortable position for us and next year's forecast of 5-7% can be met. But if the U.S. economy, partly because of oil prices, has a hard landing, then the position will be completely different.
Q : What sort of levels of investment are we looking at for next year?
A : I remember a year and a half ago, when I was in England with Philip Yeo, he gave me a briefing and he said that he was worried that, while incoming investments were still strong, the longer term pipeline in 3 to 5 years was not filling up. So that bothered him. Just last week, I had another meeting with EDB, and they told me the position is much better. And even Japanese investments are beginning to show an upward trend. I would say on the whole, our position is good, we continue to enjoy a very high reputation among foreign investors. We are likely to meet or even exceed our 8.5 billion dollar target for total investment in Singapore. We've not yet set a target for next year. We'll be setting it soon, not yet ready for me to announce it now. But it will not be less than this year.
Q : A lot of the recovery has been driven mainly by the growth in the electronics sector. Does that run the risk of trade growth becoming lop-sided ?
A : You're right. Electronics make up more than half of manufacturing in Singapore, it accounts for about half of our overall exports. So it's a large component of our economy and to some extent, it drives the other sectors. So there's no doubt in my mind that if the electronics cycle turns down sharply, we'll be affected. That cannot be helped. It'll affect, I would say all countries in East Asia -- Malaysia, Thailand, Philippines, Taiwan, China, Korea and Japan. But are we that undiversified? We are not. In fact, if you look at our export markets, say between North America, Europe, Northeast Asia, Southeast Asia, we're pretty well diversified in terms of our trade position, in terms of our economic dependence. And that's one reason why in the last economic crisis, we didn't fare as badly as some of our neighbours.
So our various FTAs are really a way by which we can transcend the region and achieve a bigger, more diversified base for ourselves. And this is good for the region too. Because in many regards, we are a first mover. We make the mistakes, but we also achieve the early successes and our neighbours will study our experiences and decide which bits to pick and choose and they'll move along. So in that respect, Singapore is in some ways a front runner. And if we are able to achieve a better position in the world, in the end the region will come along. And that's one reason why the Japanese are keen to have an FTA with us.
Q : The talks in Mexico appear to have stalled. What are the chances of completing a deal sometime in the future with Mexico?
A : With Mexico, because the present Mexican administration, the time we had was short, we could not complete in time. So we already agreed many months go that we would collect together what we've agreed so far, sign some document, pass it on to the next administration and express a common wish to get it concluded quickly. But in May this year, when I was in Mexico City, I took the precaution of meeting the president elect, Fox, with whom I had dinner in fact, and I briefed him on what we're trying to do and he gave it his whole-hearted support and assured me that if we could not conclude in time, he'll certainly see it through. So yes there are problems as there would always be problems when we negotiate FTAs but I'm optimistic about the progress of our talks with Mexico.
Q : What about FTAs with Singapore's other major trade partners, like the EU or Malaysia ?
A : Well the EU is still reviewing its policies on FTAs, I've discussed it with their trade commissioner, Pascal Lamy, some months ago. He asked me why we're doing all these things and I explained to him our political objective and the importance of keeping the Pacific as one large community.
Q : You talked about the role of FTAs in lifting the multilateral process. Has that happened yet?
A : ...... the mood in Geneva is less negative than it was say 6 months ago but it's still negative. The ministers are now talking about where to meet next year, we've got to meet because that's a WTO requirement. I discussed this with a few of my colleagues, Hong Kong, and other countries, and now they tell me that they're looking at South Africa...... the ministers are also aware that when we meet, we do not set as an objective the launch of a new round. Because when we set that as an objective, there's a very good chance that we'll fail again. And it'll be an even bigger disaster. So there's a lot of finessing going on right now, to say, alright, let's meet, let's talk about many things and talking about the launch of a new round should only be one item on the agenda list. Now, this shows just how much we've been set back by the failure in Seattle.
Q : In terms of the negative sentiment in Geneva towards the WTO and the launch of a new round, what do you think needs to be done to move that process forward, to improve the sentiment ?
A: A lot of confidence building to be done. To begin with, the process failed because the big boys could not agree. ...... so there must be a basic framework of agreement among them to structure a new round. But we cannot allow the big boys to settle every aspect of our lives. So there must be a certain, there must be a sense of democratic participation so small countries, ....... must also have their say.
Then there are the NGOs which should be brought in. Some NGOs like Amnesty International, Oxfam, Greenpeace, World Wildlife Fund, they do good work, and it is in our interest as Ministers to engage them, and in some ways be educated or enlightened by them. We may not agree, but we should listen to them. I'm in favour of some kind of credentialing process which if you want to engage the ministers at the WTO, you must explain what you do, how your leaders are elected, where you get your money from, and what your purposes are.
Q : In terms of China's entry into the WTO, Northeast Asia is expected to benefit more than Southeast Asia. What can Southeast Asia do then?
A : China's entry also poses a huge competitive challenge to Southeast Asia. In many sectors, we are in head-on competition for investment, in textiles, in simple manufactures, electronics. Not Singapore and China, at least not yet, but Malaysia, Philippines, Thailand, Indonesia and China. And the numbers show a worrying trend. Because of the various institutional and political problems in Southeast Asia and the prospect of China joining the WTO, American and European investors are showing much greater interest in China than in Southeast Asia. Which is why the countries of Southeast Asia should regird themselves and recommit themselves to the ideas of economic integration and present the whole of Southeast Asia, with 500 million people, as a competitive market and competitive manufacturing base to China in the global system.
Can we do it ? I think we can do it. It'll take some time, and there must be sufficient political will. Unfortunately we're going through a bad patch right now in Southeast Asia. So we've got to ride through this rough patch. It may take some months or a few years, but the quicker we can get Asean back on track, the better. This is one reason why the upcoming Asean summit in Singapore will be very important. PM intends to present this issue in a very stark way to his colleagues, that unless we get our act together, we will be no match for a China that's one market, 1.3 billion people, infrastructure is getting better by the day and which will be a huge competitive challenge to us. But on the brigher side, that China will also create all kinds of opportunities for Singapore businessman.
Q : In terms of playing the Northeast Asia game, what's your assessment so far of Singapore companies going regional ?
A : The economic crisis has slowed us down but the long term trend continues. So the second wing which the Senior Minister once talked about is now growing and becoming an integral part of us. It's a new game, we've got to play it in a more sophisticated way because from time to time, there may be a reaction against us, like in the case of Hong Kong Tel deal or the Time's deal in Malaysia. But this is not altogether surprising in telecommunications because of its high prominence and because it's a highly regulated domain but in many other fields, like in hotels and hospitality, we are a major player in the region.
Q : Singapore has been experiencing difficulties in China in terms of its investments in industrial parks. What does that say about the Singapore model of industrial development?
A : It's a huge continental country and we've got to understand its multi-faceted nature. We were probably too ambitious when we embarked on the Suzhou project but now that we've restructured it, it is something that we can be proud of. We did not realize the local leaders did not see the overall picture in the same way. And so there was some local game playing which created conflicts on the ground, but which this restructuring will overcome because instead of one-third ownership, they now have two-thirds ownership and therefore a much greater interest in seeing the park succeed.
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