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Section: Media Centre
Level 2: SBF Focus on Growth Opportunities in ASEAN Economic Community 2015
Speech By Mr Lee Yi Shyan, Senior Minister Of State, Ministry Of Trade And Industry & Ministry Of
National Development, At ASEAN Economic Community 2015 SME Forum: Leveraging New
Opportunities In ASEAN, 28 May 2014, 9:10 AM At Grand Copthorne Waterfront Hotel
Distinguished guests
Ladies and Gentlemen
1.
Good morning. I would first like to thank the Singapore Business Federation for inviting me to participate
in this forum. I am particularly heartened that today’s forum focuses on Small and Medium Enterprises (SMEs)
and their opportunities in ASEAN.
2.
The fact that SMEs account for more than 96 per cent of all enterprises in ASEAN is well known.
Amongst them are start-ups and enterprises with innovative ideas. Our job is to help them to tap on ASEAN’s
market to grow.
The Growth Story of ASEAN Remains Strong
3.
The reason for exporting to and investing in ASEAN is clear; ASEAN has about 600 million people, and
make up the third largest GDP in Asia – at nearly US$1.8 trillion in 2012. During the last decade (2002-2012),
ASEAN’s annual GDP growth rate was 6 per cent, higher than the global average of 4 per cent.[1] Looking
ahead, ASEAN is expected to surpass Japan to become the fourth largest single market in the world by 2030
(after the EU, US and China).[2] According to the Asian Development Bank, the size of the middle class in
Southeast Asia will rise from 24 per cent of the population in 2010, to 65 per cent in 2030. As early as by end2017, the number of middle class households in ASEAN will reach 85 million, up from 40 million in 2010.[3]
4.
No doubt, the current political turmoil in some ASEAN countries, as Mr Lawrence Leow has pointed out,
may have taken its toll on business and consumer sentiments. For the medium to long term, however, I remain
positive about the key drivers of growth in ASEAN. One such driver is demographic. ASEAN also provides
access to consumer markets that are predominantly young, dynamic and increasingly affluent. By 2020, the
region’s under-30 population will account for nearly half of the total population. [4]
5.
As purchasing power grows, consumer demand for education opportunities, household goods and
services, communications and dining options will also increase. What this means is that more companies will look
to ASEAN as both a consumption and production base. As it is, ASEAN is attracting record levels of foreign direct
investment (FDI). On a per capita basis, ASEAN is pulling in seven times more FDI than India, and almost the
same amount as China. A recent Deloitte study further predicted that five of the top 15 manufacturing locations in
the world will be in ASEAN by 2018.[5]
Moving Towards AEC 2015
6.
Given such economic potential, the question then is whether ASEAN can fully realise its potential and
maintain its proportionate share of global growth. This is largely dependent on its efforts in regional integration –
formation of the ASEAN Economic Community (AEC) by 2015.
7.
The report card for the AEC 2015 so far has been reasonably good. Let me elaborate.
a.
On goods, virtually all goods in ASEAN already move throughout the region tariff-free.[6]The focus now
is on eliminating non-tariff barriers, improving trade facilitation and harmonising standards and conformance to
ensure that businesses will operate in a stable and predictable environment.
b.
On services, an increasingly important sector in all the members’ economies, the target is to complete
the 9th package of commitments under the ASEAN Framework Agreement on Services (AFAS) by end of this
year. With these commitments, businesses can expect a progressive reduction of barriers to services trade, such
as foreign equity limits in the ASEAN countries.
c.
On investments, the ASEAN Comprehensive Investment Agreement (ACIA) provides for stronger and
pro-business investment rules to enhance protection for investors in ASEAN. ACIA will generate more
opportunities for investment and jobs through the liberalisation of sectors.
8.
Businesses can also look forward to simplified customs procedures in the region. With 2015 fastapproaching, governments in the region are working hard to put in place ASEAN-wide trade facilitation initiatives.
These include Self-Certification, which will allow selected exporters to certify export documents on their own, as
well as the ASEAN Single Window (ASW). The ASW is a unique regional initiative aimed at linking the National
Single Windows (NSWs) of Member States. ASEAN countries have made significant strides in establishing their
SBF Website
Section: Media Centre
Level 2: SBF Focus on Growth Opportunities in ASEAN Economic Community 2015
NSWs. Once the various NSWs are fully linked to the regional platform, businesses can enjoy simpler and faster
cargo clearance of goods.
9.
While I have said that progress has been good, realising the AEC 2015 is not without its challenges. Let
me highlight a few areas which I believe many of you, as businesses, would be aware of.
10.
Top on the list is non-tariff barriers (NTBs), which can range from complex import licensing procedures
to ineffective implementation of existing commitments. With tariffs already close to zero, ASEAN needs to
prioritise work on tackling NTBs, which have as much potential as tariffs in restricting trade flows. Work is already
underway in ASEAN on this, but addressing these behind-the-border difficulties would entail a multi-year effort.
11.
Another challenge for ASEAN is to stay the course in community building. I mentioned earlier about
political unrest in some ASEAN countries. This is something that we are very concerned about, because it makes
it difficult for these governments to concentrate on gearing up for the AEC’s implementation.
12.
Another challenge affecting timely implementation is the difficulties faced by ASEAN Member States in
transposing both intra-ASEAN and extra-ASEAN commitments into domestic laws and regulations. This requires
political will at the highest level.
Raising Awareness of the AEC 2015
13.
As an initiative to reach out to businesses on the benefits of the AEC 2015, the ASEAN SME Working
Group has launched an ASEAN publication entitled “SME Guidebook towards the AEC 2015”in November last
year, which will help to prepare our SMEs for the implementation of AEC 2015. For SMEs, chambers of
commerce, industry and business community at large, this SME Guidebook provides them with key messages,
implications and benefits of the measures, standards, regulations or agreements being implemented by various
sectoral bodies under the purview of the ASEAN Economic Community pillar.[7]
Internationalisation for SMEs
14.
We know that SMEs venturing abroad are among the most innovative and competitive. To encourage
our companies to expand their overseas’ footprints and grow locally, we have two dedicated agencies, IE
Singapore and SPRING, which work together to build our SMEs’ capabilities and to internationalise.
15.
SMEs looking to build up capacity and strengthen their value proposition can tap on SPRING’s
Capability Development Grant (CDG). The grant supports a wide range of capability upgrading initiatives that
enable SMEs to successfully compete and grow their businesses locally and globally.
16.
Meanwhile, IE Singapore’s global network of 39 Overseas Centres provides Singapore businesses with
in-market support and knowledge. It supports both established companies and companies new to
internationalisation.
Its Global
Company
Partnership (GCP) and Market
Readiness
Assistance
(MRA) programmes cater to companies at different stages of their internationalisation journey.
17.
For example, Mevo Ptd Ltd, an SME providing Distribution Management Solutions to the Fast-Moving
Consumer Goods (FMCG) industry, tapped on IE’s assistance to conduct market assessment and set up a
marketing office in Yangon.
18.
Similarly, another company Netiquette Pte Ltd, made use of IE’s grant assistance to penetrate the
Indonesian market. It has set up an office in Jakarta to reach out to SMEs in Indonesia to offer cloud enterprise
solutions such as accounting management system, inventory management system, and customer relationship
management systems.
19.
Besides SPRING and IE, the Singapore Business Federation (SBF) also plays a significant role in
helping our companies establish networks overseas. Over the last few years, SBF has organised many business
missions to markets such as Myanmar, Indonesia, Vietnam and Philippines in order to establish good relations
with business leaders there and create inroads for Singapore companies to enter ASEAN markets.
Conclusion
20.
As a small economy, we are committed to free trade as this is most conducive for our SMEs to grow by
expanding both regionally and internationally. Besides the AEC, Singapore also has a network of 21 Free Trade
Agreements and Economic Partnership Agreements with 32 trading partners. These agreements help our
businesses reduce costs through the removal or reduction of custom duties, or the simplification of customs or
import procedures. In addition, they open new markets for our businesses, and encourage investments by
providing investors with greater confidence and legal certainty.
SBF Website
Section: Media Centre
Level 2: SBF Focus on Growth Opportunities in ASEAN Economic Community 2015
21.
Let me once again express my appreciation to SBF for hosting the AEC 2015 SME Forum. I wish you all
a fruitful forum. Thank you.
[1] Source: 2013 World Economic Outlook Database.
[2] Source: ASEAN-US Business Council. According to the OECD Development Centre’s Publication on
“Economic Outlook for Southeast Asia, China and India 2014”, ASEAN’s annual growth is projected to average
5.4 per cent for the next five years (2014-2018).
[3] “Riding the ASEAN Elephant: How Business is Responding to an Unusual Animal,” Economist Corporate
Network (2013).
[4] “Catching the ASEAN Wave,” Accenture (March 2013).
[5] Source: Deloitte Global Competitiveness Index 2013. The 5 ASEAN countries are Singapore, Vietnam,
Indonesia, Malaysia and Thailand The other ten countries are China, India, Brazil, US, Canada, Mexico,
Germany, South Korea, Taiwan and Japan.
[6] ASEAN-6 countries have eliminated tariffs on 99.65% of tariff lines effective 1 Jan 2010. The CLMV countries
have reduced tariffs on 98.86% of their tariff lines to the 0-5% tariff range in 2010, and are expected to eliminate
tariffs on these goods by 2015, with flexibility for a few tariff lines until 2018.
[7]SME Guidebook Towards AEC 2015
About Singapore Business Federation (SBF)
As the apex business chamber, the Singapore Business Federation (SBF) champions the interests of the
business community in Singapore, in trade, investment and industrial relations. Nationally, SBF acts as the bridge
between the government and businesses in Singapore to create a conducive business environment.
Internationally, SBF represents the business community in bilateral, regional and multilateral fora for the purpose
of trade expansion and business networking. For more information, please visit our website: www.sbf.org.sg