Singapore Government Media Release
Media Division, Ministry of Information and The Arts,
140 Hill Street #02-02 MITA Building, Singapore 179369.
Tel: 837 9666
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Good evening,

Mr Dirk Paulsen, Chairman, SICC

Ladies and gentlemen,

The Singapore International Chamber of Commerce has had a long history. Formed in 1837 by British merchants to watch over their commercial interest, the Singapore Chamber of Commerce, as it was then called, was the first such commercial organisation in Singapore. In the years before WW1, the SICC was active in speaking out against issues such as protectionism in Java and high duties in Britain. Until some time after independence the dominant members were British. The governor of the day usually appointed one of its leading lights to his executive council, at least by the time I was in school in the 1930s. This practice only ended in 1955 with the first elected Chief Minister.

After independence in 1965, the SICC gradually opened up to take in businesses of all countries in order to remain relevant and effective, and to make the Singapore economy vibrant and competitive.

Foreign companies have played a crucial role in Singapore’s industrialisation drive. While many developing countries in the 1960s pursued a closed-door policy, we brought in the multinationals.

The MNC investments and technology have helped build Singapore up to what it is today. They were our engine of growth – they provided employment, transferred skills to workers, linked up with local companies, and provided contacts with overseas markets for Singapore products.

In 1998, foreign companies (with at least 50% foreign equity) contributed about $22 billion in manufacturing value-added, 73% of total manufacturing value-added, and employed over 177,000 workers, half of the total number employed in manufacturing.

MNCs are major players in many of our key industries, such as the electronics sector, which helped pull Singapore out of the recent economic crisis. We are confident that foreign companies will continue to be our economic partners, and MNCs will continue to bring in sophisticated expertise, advanced technology, markets, international networks and contacts. Local enterprises are growing and some will grow into regional and global players.

The global landscape for investments is changing. First, advances in technology and globalisation have reduced the cost of outsourcing, made distance less of a barrier, and changed the economics of how businesses can best structure their operations across countries. This increases the importance for host countries to have good international linkages otherwise investors would not be able to take advantage of the benefits of globalisation.

Second, technology and innovation have become more important factors for economic success. The 2000 WEF World Competitiveness ranking placed increased emphasis on economic creativity. The report distinguished between innovative countries, and countries that are merely good recipients of technology transfer, reflecting the weight investors give on technological sophistication, and not simply low wage costs.

Third, competition for investment has intensified. Many countries are attracting FDI aggressively, by liberalising foreign ownership restrictions and becoming friendlier to foreign investors. Northeast Asia has liberalised more rapidly in the last few years. They have been drawing in more FDI because of their substantial populations, indigenous technological capabilities, and their proximity to the huge Chinese market. And China itself will draw in more FDI now that it is to join WTO.

Singapore has continued to do well in attracting investments. During the Asian financial crisis, our total investments did not fall below pre-crisis levels of 1996. Rapid technology and market changes, however, require us to make constant adjustments to retain our competitive edge as a choice location for global businesses.

To increase our international linkages and promote trade and investment flows, Singapore has to be among the most open economies in the world. Our total trade is about three times our GDP. It is in our interest to work with other countries to bring down international barriers that impede businesses.

Singapore is one of the strongest proponents of the multilateral trading system. We hosted the first Ministerial meeting of the WTO. To complement the multilateral process that has lost momentum since the WTO meeting in Seattle, we are pressing ahead with regional and bilateral agreements.

We are supporting greater economic integration of ASEAN through the ASEAN Free Trade Agreement (AFTA), the ASEAN Investment Agreement (AIA), and e-ASEAN. We are linking up with other countries through FTA, starting with New Zealand. We should conclude one with Japan by the end of next year. More will follow. These agreements allow us to liberalise trade with these countries at a faster pace than under a multilateral approach. Regional agreements will also help restart multilateral trade talks.

We have to strengthen our technological and innovative capabilities. We are building up capabilities for R&D in our research institutes, our universities as well as companies. Our latest Science & Technology Plan 2005, has a budget of $7 billion for 5 years, to identify and build world-class research capabilities in life sciences, infocomms, chemicals and microelectronics.

The key to innovation and technology is people. We must develop and nurture our talent so that innovation and creativity will be integral to education and training. Our education system is being revamped to nurture innovation and creativity, from kindergarten to university, and on to lifelong learning. Equally important, we will tap foreign talent, by making Singapore a more attractive place to live in.

Singapore Business Federation

The Government is a facilitator of business, creating an environment where businesses can operate with profit. The business sector will have to take the lead in innovation, and generate new value and business activities. Each company must create within itself a culture and environment that draws out creativity and innovation.

Businesses acting alone as individual companies may not be as effective as those acting in concert. For example, the Keidanren, an apex organisation of business organisations in Japan, engages the Japanese government on policy issues that impact on business. It helps members network, organising bilateral exchanges with other countries, and cultivating business communities overseas. It even represents Japanese businesses in multilateral fora such as APEC. As their apex organisation, the Keidanren is able to promote and protect the interests of the Japanese business community.

It is necessary to have a similarly strong organisation of businesses in Singapore working as one body to improve the lobbying power of the present loose confederation of our various ethnic and international chambers. The move by the Singapore Federation of Chambers of Commerce & Industry (SFCCI) to reorganise into the Singapore Business Federation (SBF) will bring businesses together. MTI is working with the various chambers to help the SBF come about. It will focus on collectively representing the interests of Singapore-based companies overseas and help develop stronger business linkages for members.

With the support of the SICC, I am sure the SBF will bring about greater benefit to all companies in Singapore.

Finally, I congratulate the SICC on the launch of your book to commemorate your long history. The book by Mr Roderick MacLean, "A Pattern of Change - The SICC from 1837", records the rich history of the SICC, and the important role it and its members have played in Singapore’s economic development. SICC has had a proud history. I wish the Chamber success for the future.

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