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March 02, 2006

Transcript of Remarks By Minister for Foreign Affairs George Yeo in Parliament on 2 March 2006

In response to questions by Members of Parliament:

• Mr R. Ravindran on the Regional Outlook
• Dr Warren Lee on Relations With India
• Dr Warren Lee on Relations with Australia
• Mr R Ravindran on ASEAN
• Mr Teo Ho Pin on ASEAN
• Mr Hawazi Daipi on ASEAN
• Mr R Ravindran on East Asia Summit
• Mr Leong Horn Kee on Bilateral Relations with Malaysia
• Dr Ong Chit Chung on Singapore - Malaysia relations
• Dr Ong Chit Chung on Thailand
• Mr Tan Soo Koon on Myanmar
• Mr Leong Horn Kee on the Middle East
• Mr Hawazi Daipi on the Middle East

REPLY

Mr Speaker Sir,

1. Allow me first to thank Members for their questions and comments on Singapore's foreign policy.

2. To answer Mr Ravindran and Mr Hawazi, compared to a year ago, the regional outlook for Singapore has become more favourable although there are some problems.

3. The prospect for continuing peace in East Asia in the short to medium term is good.

Sino-US Relations

4. The most important relationship, the Sino-US relationship, is stable. Although there are contentious economic issues like China's huge trade surplus, the value of the RMB and the lack of intelletual property protection in China, both sides understand the need to keep the overall picture in view. China needs the US market; China values US investments; China also holds hundreds of billions of dollars in US financial instruments. Without China's cooperation, it is more difficult for the US to prevent the proliferation of weapons of mass destruction and to fight the war against terrorism.

5. The US and China are now engaged in a strategic dialogue. They are cooperating on the problem of proliferation in North Korea and Iran. From a strategic competitor, the US now describes China as a "responsible stakeholder" in the global system. When US Deputy Secretary of State Robert Zoellick hugged pandas in Chengdu recently, he was sending a signal of the way the US is seeing China.

6. The key issue in Sino-US relations is Taiwan as pointed out by Mr Hawazi. Because President Bush has taken a clear position on One China, it is difficult for pro-independence forces in Taiwan to win support. It is important for the Taiwan issue to be handled properly because of the importance of good US-China relations to regional and indeed global stability. The recent move to cease the function of the National Unification Council and the application of its Guidelines is worrying. It goes against earlier undertakings and will cause cross-strait tensions to rise unnecessarily. In the interest of regional stability, we hope that this issue will be handled with wisdom and restraint by Taiwan, China and the US.

East Asia Summit

7. So long as US-China relations are managed well, the prospects for continuing peace and development in East Asia are good. In Kuala Lumpur last December, the first East Asia Summit was convened. In addition to the 10 countries of ASEAN and the 3 countries of Northeast Asia, India, Australia and New Zealand were also included. As Mr Ravindran pointed out, the East Asian Summit is driven by ASEAN. We included India, Australia and New Zealand to make sure that ASEAN is at the centre and the group is clearly outward-oriented and inclusive. The first meeting went well. The Leaders of the 16 member countries have agreed to meet annually. It will take time for us to develop an agenda and we must now work hard to shape it and to do this in a way which doesn't cause the Americans nor Europeans to think that we want to exclude them. And there will be many issues to discuss which will involve all of us because the whole continent is in ferment. Some of these issues will be maritime security, war against terror, energy supplies, and of course, economic connectivity.

8. The countries in the EAS make up half the world's population. Mr Hawazi was right to point to the economic potential of this region to the global economy which will have a combined GDP greater than that of the US or the EU in twenty years' time. China and India are emerging as two new poles in the global economy. As they engage more with each other politically and economically, we must make sure that ASEAN's interests are taken into account. Mr Ravindran referred to an article written by Mr Malik. I read that article and I think it is not quite objective in the way it has portrayed China's role in the EAS. Yes, he was right in that China had a different view of it initially, but once China realised ASEAN had its own consensus, they were quite prepared to go along, and I believe China will play a positive role in the EAS.

ASEAN Integration

9. However, ASEAN can only play an active role in this entire process if we ourselves are united. I appreciate the points made by Mr Ravindran, Dr Teo Ho Pin and Mr Hawazi that ASEAN must get its act together. At the ASEAN Summit in KL, the Leaders appointed an Eminent Persons Group (EPG) to recommend what steps we should take to integrate ASEAN economically, politically and socially beyond what we are already doing. The Chair is Musa Hitam, former DPM of Malaysia, and our own representative is Prof Jayakumar. We need political will to achieve the ASEAN 2020 Vision mentioned by Dr Teo and Mr Ravindran. It is not enough just to have meetings which there are already too many of in ASEAN. This year's Summit in Manila will be critical because the EPG will be presenting its recommendations to the Leaders. Once the Leaders agree on the main points, ministers and officials will draw up an ASEAN Charter which will become the constitutional basis of our future development. Some hard decisions have to be made as to how we achieve consensus, whether we are always dragged back by the slowest among us, whether we are prepared to subject these views to third party panels for resolution. Some progress should be made by the time Singapore hosts the ASEAN Summit in 2007, which is the 40th Anniversary of ASEAN.

10. Myanmar might be a problem. As Mr Tan Soo Khoon lamented, the developments in that country are a cause for concern. To insulate ASEAN, the Myanmar Government had agreed to give up the ASEAN Chair this year. That has been helpful. Because internal developments in Myanmar are sometimes a mystery to us like the sudden bizarre decision to shift the seat of government from Yangon to Pyinmana, it has become more and more difficult for ASEAN to defend Myanmar at the UN and other international forums. Despite calls by ASEAN, and as Mr Tan Soo Khoon recounted, Aung San Suu Kyi remains for a long time under house arrest. In KL last December, the Myanmar PM agreed to receive Malaysia's FM Syed Hamid as an ASEAN envoy on a fact-finding visit. Unfortunately till today no date has been set for his visit. When ASEAN FMs meet in Bali in April, I expect some hard decisions to be made on ASEAN's approach towards Myanmar. If Myanmar needs time out to attend to its own domestic preoccupations, I think we should respect it but, at the same time, the rest of ASEAN should not be held back. But should we, as Mr Tan suggested, expel Myanmar from ASEAN? Of course Mr Tan put it politely in the form of options. But let us look at the strategic picture. A long time ago, when Burma received its independence from Britain, it decided not to join the Indian Union. In fact, it was clear from the beginning it was part of Southeast Asia. It remains a buffer state between India and China. China has decided that whatever happens in Yangon, the backgate to China will be wide open. And because of that, India, in its own strategic calculation, has decided that it would keep its sidegate to Myanmar open. So this month, President Abdul Kalam will visit Myanmar. Because these two gates are wide open, the Western embargo against Myanmar is not going to work. The country has fertile soil, rice is plentiful, the sea teems with fish. It is in our interests we stay engaged with Myanmar, that our own gate to Myanmar is open, that what happens in that country is a source of concern. So I think, let's just take a realistic approach. We are in no position to affect the course of internal developments. What happens there, good or bad, it is for the Myanmar people to bear the consequences. But I think we will have to distance ourselves a bit if it is not possible for them to engage us in a way which we find necessary to defend them internationally.

11. As for the impact of recent political developments in the Philippines and Thailand on ASEAN, a point alluded to by Mr Tan Soo Khoon, and mentioned by Dr Ong Chit Chung, we have to wait and see. Although some Filipinos including former President Fidel Ramos have objected to the declaration of a State of Emergency in the Philippines, it is not for us to second guess President Arroyo's decision when she faces a rebellion by a segment of the Philippine Army. However, I don't expect any change to the Philippines hosting the ASEAN Summit and the EAS at the end of this year. As for the protests against PM Thaksin in Bangkok, a concern raised by Dr Ong Chit Chung, we hope that fresh elections will bring some finality to the debate of the last few weeks. Have Singapore companies been affected? Not so far, from the reports I have read. And when leader of the Democratic Party, Mr Abhisit, was in Singapore three weeks ago, he said that the actions against PM Thaksin are not directed against Singapore. On the whole, I would say Singapore-Thai relations have not been adversely affected by the recent developments. I also share Dr Ong's concern about the situation in Southern Thailand. The Muslim problem in the southern provinces has deep roots in the past and has to be managed with that history in mind. It has affected Thailand's relationship with Malaysia and this is not good for ASEAN.

12. However, on the whole, while keeping our fingers crossed, we can be optimistic about the future of ASEAN. I don't quite share Dr Teo Ho Pin's pessimism. As a group, we are doing well economically. Investor confidence in Indonesia is gradually returning. President Susilo Bambang Yudhoyono is determined to improve the business environment and we see progress in various parts of the archipelago. In Aceh, the tsunami disaster has brought some good in the form of a peace agreement with GAM. And to look elsewhere, Vietnam is now the fastest growing economy in ASEAN. ASEAN countries have no choice but to draw closer together in the face of China's and India's emergence as regional superpowers.

13. Because of Japan's complicated relationship with China, there is a strong desire on the part of Japanese businesses to adopt a China plus One strategy in Asia and what we want is to make sure that the "plus One" is ASEAN. ASEAN can provide an alternative manufacturing base for Japanese companies.

14. Singapore signed an economic agreement with Vietnam last year which will help Vietnam tap on Singapore's international connectivity until such time as Vietnam is able to establish its own. Keidanren is interested to make use of this agreement to help Japanese companies invest in Vietnam using Singapore as a complementary hub. I was cheered this morning to read that Intel has decided to invest in a US$300 million facility outside Ho Chi Minh City.

Bilateral Relations with Malaysia and Indonesia

15. Let me now turn to bilateral relations with our immediate neighbours, Malaysia and Indonesia, and answer the questions raised by Mr Leong Horn Kee and Dr Ong Chit Chung.

16. Our relations with Malaysia are good. They rest on a bedrock of common history and common interests. You only have to see the way that the two police forces have cooperated on the Tan Chor Jin case recently. Within a few hours, they were on his trail and now he is being extradited back to Singapore. So, there are many things going on, which can only go on because there are very good relations between counterpart departments on both sides. In January this year, the Agong made a state visit to Singapore - the first such visit after 18 years. Bilateral trade and investments also picked up considerably on both sides of the Causeway. Yes, negotiations on the full bridge are still ongoing. The fourth round of negotiation has just ended on Monday. A fifth round of talks is tentatively scheduled for this month. These negotiations have made progress towards an appropriate balance of benefits for both sides. However, as negotiations are now in a delicate stage, it would not be useful for me to publicise the details. As for the low-hanging fruits mentioned by Dr Ong Chit Chung, some are on our tree and some are on their's. We have to decide what is the correct balance of fruits to be plucked, otherwise no fruit can be plucked at all. As to earlier reports about moves to build a half-bridge on the Malaysia side, Wisma Putra has clarified to us in a TPN that Malaysia remains committed to negotiations for a full bridge and only soil studies are being conducted. We have explained to Malaysia the serious implications of a unilateral move by Malaysia to demolish its side of the causeway and replace it by a crooked bridge, however scenic.

17. On Pedra Branca, a question asked by Mr Leong Horn Kee, the case before the ICJ is expected to be heard in 2007. Both sides have already put in their written submissions. As for security in Johore, a question raised by Mr Leong Horn Kee, I should just say that Johore leaders themselves are aware of this problem and have said publicly that they are giving it their full attention.

18. Like Malaysia, our overall relationship with Indonesia has improved significantly since a year ago. In the coming year, we can expect our economic cooperation with Indonesia to gather momentum. As members are aware, Singapore is also working with Indonesia on combating avian flu through a pilot project in Tanggerang, which is a kabupaten next to Jakarta. A multilateral meeting is right now being held in Singapore (2-3 March 2006) involving officials from Singapore, Indonesia, the US and international agencies. We are also going to open a consulate in the new province of Kepulauan Riau, Kepri, which consists of the islands of Riaus all the way up to Natunas. Negotiations for an extradition treaty, defence cooperation and counter-terrorism are being carried out in parallel, and making good progress.

Relations With India and China

19. Dr Warren Lee asked about our relations with India and China and what impact their rise will have on our relationship with the US and Japan. This was also touched on by Mr Ravindran.

20. Since a year ago, our relationship with both India and China has improved appreciably. It is our national strategy to engage both of them deeply and comprehensively and position ourselves for the growing trade between them.

21. Last June, PM Lee and PM Manmohan Singh signed the Comprehensive Economic Cooperation Agreement in Delhi which raised our relationship with India to a new level. In a nutshell, what CECA does is to restore in some respects the old position of the British Raj when trade between India and Singapore flowed freely, when standards were common, and professionals like doctors, accountants and engineers were able to move back and forth freely, operating within the same legal and regulatory framework. Our bilateral trade with India has been growing rapidly. Last year, it jumped 41%. For much of the 19th century, the largest trading partner of British India was in fact, Qing dynasty China, and Singapore was established by the East India Company for the China trade and grew on it. Well, in this century, there will be a new China trade which will benefit us immensely. The flow we are now seeing will become a flood. Already, within a few years, China will again be India's largest trading partner.

22. We must therefore encourage more Singaporeans to visit and understand India. India is not homogeneous. Conditions vary from state to state and from city to city. But the country on the whole is growing. I just read Finance Minister Chidambaram's budget speech. They are expecting 8 percent growth this year and they said double digit growth for India is now within reach. He is an old friend and when he was Finance Minister some years ago, I remember him making his budget speech at that time and he said "at a stretch, 7 percent." Now he is talking about double digits. To be an effective partner of India, we need deep knowledge and this requires effort on our part. We will be upgrading our representation in Mumbai and Chennai and will be helping India to develop its Special Economic Zone. And we must make full use of the Indian expatriate community in Singapore, which is growing. President Abdul Kalam's visit to Singapore in January this year symbolised the growing links between our two countries.

23. Our China account is also growing nicely. Bilateral relations are back on track and picking up speed. We will increase our consular presence in China, opening new consulates in Guangzhou and in Chengdu. We have also upgraded our representation in Shanghai. Last year, the Chairman of China's National People's Congress Wu Bangguo and Vice Premier Wu Yi visited Singapore. In October, PM Lee had a very good introductory visit to China as PM. As for the Singapore-China FTA, both PMs agreed that it would benefit both countries in the long term and facilitate regional cooperation and integration. A Joint Expert group will be formed soon to look into this.

24. It is in Singapore's interest to have both India and China engage all of ASEAN and not just Singapore alone. For this reason, we have pushed hard for the conclusion of ASEAN's FTAs with them and to bring everyone together under the umbrella of the EAS.

Relations With US, Japan, Europe and Russia

25. However, for both Singapore and ASEAN, it is important that we also strengthen our links to the US, Japan and Europe at the same time. The continued strategic presence of the US in Asia helps us to maintain peace in the region even as it goes through rapid transformation. Singapore's links with the US are excellent. Last year, we signed a Strategic Framework Agreement which strengthens security cooperation. The USSFTA has stengthened our competitive position particularly our attractiveness as a hub for Intellectual Property.

26. ASEAN's relationship with the US has also improved. As Mr Ravidran pointed out, an Enhanced Partnership Agreement was mooted last year setting the stage for a summit meeting between President Bush and the Leaders of APEC's ASEAN members in Busan. At the coming APEC meeting in Hanoi, it is likely that another such summit will be held. US officials are already talking about this becoming an annual Summit.

27. To answer Mr Hawazi's question about Japan, Japan is indeed another important player in the region and a strong partner of Singapore. With renewed growth of the Japanese economy, which we should remember, is still more than twice the size of China; it behooves us to engage Japan more deeply. Singapore's links with Japan have never been better. This June, the Japanese Emperor and Empress will make a state visit to Singapore. This is the first ever State visit by a Japanese Emperor.

28. To answer Mr Ravindran and Dr Warren Lee, our relationship with Europe is good. PM Lee had interesting meetings with both President Chirac and Chancellor Merkel during his official visits to France and Germany at the end of last year. President Chirac, PM Tony Blair, PM Jose Zapatero of Spain, Russian PM Fradkov were all in Singapore for the International Olympic Committee's meeting last July. Next month, we look forward to welcoming Queen Elizabeth for whom many older Singaporeans have a special affection. In the last few months, we have also played host to the Hungarian PM and the Lithuanian President. All the Central and Eastern European countries are keen to engage us and they welcome our businessmen to go there.

29. However, while Singapore's relations with Europe are good, ASEAN's relationship with Europe can be improved. There is a tendency among Europeans to concentrate on China, Japan and India when they look at Asia. Southeast Asia catches their attention only where there are particular issues of domestic political importance to them like Myanmar, or when there are natural disasters like the Boxing Day tsunami when Europeans responded with the greatest generosity. The Europeans have also played a helpful role in the Aceh peace process. But the strategic understanding of Southeast Asia is lacking. It is in Singapore's and ASEAN's interest to capture a greater European mindshare for our region. For indeed, we are important to them. Something like 40%, if not half, of their total international trade passes through our waters.

30. To answer Mr Ravindran and Dr Warren Lee, Russia's economy is of growing importance to Singapore. Last year, MM Lee Kuan Yew visited Russia twice and had good discussions on ways to strengthen bilateral cooperation. With high commodity prices, Russia as a resource-rich country is playing a significant role in the global economy. We will be helping Russia to develop an SEZ. We also support a deepening of Russia's political and economic engagement with ASEAN in the coming years.

Relationship With Australia

31. Dr Warren Lee asked about the state of our relationship with Australia, in particular, the implications of our hanging of a convicted drug trafficker and the decision by the Australian Government to keep SIA out of the trans-Pacific route. Mr Tan Soo Khoon also commented on this during the Budget debate. In actual fact, overall, our relationship with Australia is excellent and remains excellent. We have extensive interest in each other's economy; we share common views on many strategic issues; there is a high degree of comfort in our interactions; our defence links are broad and deep. Although there were strident reactions to the hanging case, some quite racist, the majority of Australians supported us. Throughout, the Australian Government was entirely proper in the way it handled the case. As regards the trans-Pacific route, while we were naturally disappointed, and we just heard Minister Yeo Cheow Tong recount the history, in the end, we respect the decision of the Australian Cabinet to protect Qantas. That is their decision. But it is clear that our hopes for Open Skies with Australia are perhaps not realistic in the short term despite Australia's commitment to Open Skies in our FTA. But we will continue to work for Australia's deeper engagement with ASEAN. We fought hard for Australia's inclusion in the EAS and supported strongly Australia's FTA with ASEAN.

Relationship With The Middle East

32. Mr Ravi, Mr Leong and Mr Hawazi asked about our links with the Middle East. This is an important new region for us particularly in the economic field. With abundant energy resources and high prices, which will stay high because of the growing economies of China and India, many Middle Eastern countries have the resources to build up their physical and social infrastructure and to invest overseas. According to OPEC's estimate, over the next 25 years, some US$500b will be spent on oil infrastructure. Another US$100 to 150 billion will be spent annually on social and economic infrastructure in the Gulf region, according to the Gulf Times. Qatar alone has US$130b worth of projects on the table. Growing tensions between Islam and the West after September 11 have led many Middle Eastern countries to look increasingly to Asia, not only as a partner for trade and investment, but also as a model for development. There is a certain frustration with the West, and we can only imagine their disappointment at the recent strong reaction in the US Congress against Dubai's acquisition of P&O's ports in the US. China and India have become new factors in the politics and economics of the Middle East. They are already among the largest consumers of Middle Eastern oil exports. The decision of Saudi Arabia's King Abdullah to make Asia the first region of his overseas visits, including both China and India in his itinerary, was deliberate.

33. Singapore enjoys a good reputation in the Middle East, much more than most Singaporeans realize. We are often held up, sometimes to our embarrassment, as a model for development and of good government especially by the smaller Gulf states, who share with us many similarities. When we embarked on our new policy two years ago to engage the Middle East, we found friends everywhere who were happy to work with us. We discovered to our pleasant surprise that they knew far more about Singapore than we did about them.

34. The Middle East therefore presents a huge new opportunity for us. Our companies are welcome there. For example, SATS (Singapore Airport Terminal Services) made its first entry into the Middle East last month when it was awarded a contract to handle ground operations at the Doha International Airport, quite a valuable contract. Against stiff international competition, Sembcorp Utilities won the Fujairah Independent Water and Power Project in Abu Dhabi. It was the first time that Abu Dhabi has chosen a Singapore company since it embarked on its privatisation drive several years ago. And some of our SMEs like BreadTalk and Charles & Keith are also gaining footholds in that region.

35. And all this is just the beginning. A new frontier has opened up for us. Mr Leong Horn Kee painted a picture of what's happening there. Mr Hawazi asked, how we can prepare Singaporeans for this new adventure. Well, we have to do many things. And the first thing is to recognise that there are many things that we do not know. To begin with, we need good political relations. This explains the flurry of high-level visits on both sides. Last year, Singapore helped to organise the first meeting of Asian and Middle Eastern countries called AMED. 38 countries and the Palestinian National Authority participated. It was a good inaugural meeting. Without the cooperation of many of our Arab friends, that meeting could not have been held. The ice broke easily and quickly. Many of the participants from the Middle East were pleasantly surprised to find a reflection of their own region in Singapore. One Egyptian journalist wrote warmly about our Arab district near Kampong Glam though he also lamented that our command of the Arabic language is poor.

36. This Arab said that we should learn Arabic, and indeed we should. Now, every time I meet Foreign Service Officers of Arab origin, I say, "Look, you better brush up your Arabic". We are encouraging our officers to study Arabic. And it should not just be Foreign Service Officers. We need more Singaporeans to learn the language. I was happy to learn that an enterprising graduate of Al Azhar University has recently opened a school to teach Arabic in Kembangan. URA is thinking of doing up our Arab district to give it a richer Middle Eastern character. And we are attracting more and more tourists from the Middle East here. At Tan Tock Seng, the Johns Hopkins wing, some have already described it as an Arab hospital. We will also be establishing a Middle East Institute to enhance our knowledge and understanding of the region's culture, economics and politics. As we build up Islamic banking in Singapore, more of the funds from the Middle East - and it's a lot of funds - will flow here. To facilitate the growth of our economic links, we will be expanding our diplomatic coverage in the Middle East concentrating on the countries which provide us with more opportunities.

. . . . .