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MOU signings & the CSIS Singapore Conference, February 2012

Foreign Minister Shanmugam Urges US to Tap ASEAN’s Potential

 

Singapore’s contributions are an example of what the region can offer.

 

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Minister Shanmugam and Secretary Clinton sign two MOUs — on the Establishment of an Institutionalised Strategic Dialogue and on the Singapore-US Third Country Training Programme.

The United States should do more to mine ASEAN’s economic potential, Singapore Foreign Minister K. Shanmugam has said, citing Singapore as a prime example of a regional partner that has generated outsized returns for the American economy.

Delivering the keynote address at the Singapore Conference in Washington DC on February 8, he pointed out that Singapore investments in the US have created jobs and generated a trade surplus for America.

The US$16.72 billion (S$20.8 billion) in profits that US firms generated from their investments in Singapore also represented the biggest such returns for American companies in the Asia-Pacific region.

“If Singapore, the smallest country in ASEAN and the one with the fewest resources, can provide such economic benefits to the US, consider the immense economic potential of greater engagement of larger and more resource-rich countries in ASEAN such as Malaysia, Thailand and Indonesia,” Mr Shanmugam said.

The Singapore Conference brought together top diplomats and foreign policy thinkers from Singapore and the United States to Washington. It was organised by the Centre for Strategic and International Studies (CSIS).

During Mr Shanmugam’s visit, he met key players in the US foreign policy establishment, including Secretary of State Hillary Clinton, and signed three new documents to deepen bilateral ties and cooperation.

Education Minister Heng Swee Keat, who arrived in Washington on February 6, also signed a new memorandum of understanding with his counterpart, Education Secretary Arne Duncan, to significantly expand bilateral cooperation in the education field.

To round off their visit, the two ministers, together with Mr S. Iswaran, the Minister in the Prime Minister’s Office, and several top Singapore bureaucrats, addressed the Singapore Conference

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Secretary Arne Duncan (left) and Minister Heng Swee Keat (right) signing the MOU documents at the Department of Education on February 7, 2012.

They gave their take on a range of foreign policy, economic and educational issues, and exchanged views with their US counterparts, including Assistant Secretary of State for East Asian & Pacific Affairs Dr Kurt Campbell, and Dennis Blair, the former director of national intelligence and commander-in-chief of the US Pacific Command.

In his speech on “New directions: Singapore politics and foreign policy”, Mr Shanmugam spoke about Singapore’s role as a consistent strategic and economic partner for the US in South-east Asia.

He also gave an expansive view of Singapore’s perspective on global developments, particularly the US ‘pivot’ to Asia and the recent dramatic changes in South-east Asia.

ASEAN countries are feeling optimistic, he said, on the back of good economic growth and positive political developments, such as the election of Thailand’s first female prime minister, and the bold reforms in Myanmar which resulted in the release of hundreds of political prisoners and a ceasefire among warring ethnic groups.

Expanding US Trade in Asia-Pacific

The weakness in the US economy remains a major source of anxiety for the region, but that could in turn be the impetus for the US to do more to tap ASEAN’s economic potential and broaden its engagement beyond the security and diplomatic realms.

“ASEAN, which is deepening its regional integration efforts, has tremendous untapped economic potential.

 

This presents economic opportunities for companies from around the world, including the US,” said Mr Shanmugam. Mr Iswaran echoed the call in his speech.

The robust return from US investments in Singapore is a good case in point, he added.

For instance, US trade with Singapore is not only ahead of much larger Group of 20 countries like Saudi Arabia and Russia, but also significantly tilted in America’s favour. Singapore is the US’ 10th largest export market, and the US’ trade surplus with Singapore in 2010 was its fourth largest in the world after Hong Kong, Australia and the Netherlands.

Singapore firms are also investing in America. In 2010, Singapore’s investments in the US totalled US$20.6 billion, making it the 14th largest investor in the US and the third largest from the Asia-Pacific, after Japan and Australia.

Singapore companies have helped create jobs for Americans through their US operations.

ST Engineering, for instance, employs some 4,000 people across six states as a result of its US$473 million investment in its US subsidiaries.

Keppel AmFELS, one of the biggest offshore and marine groups in the world, hires 1,400 people in Brownsville, Texas, and bought more than US$1 billion worth of goods and services from American companies such as Caterpillar last year.

“The bottom line is this: Singapore investments have created American jobs, generated a trade surplus for the US, and represented one of the biggest returns for US firms in the Asia-Pacific region,” said Mr Shanmugam. “Looking ahead,
Singapore is committed to continue to build a holistic relationship and explore new areas of cooperation with the US.”

To better tap the region’s potential, he suggested that Washington should seriously consider the recent recommendations by the US-ASEAN Strategy Commission, which was convened in late 2010 to look into a long-term US strategy for South-east Asia.

Top on its list of recommendations was for Washington to look into a potential USASEAN free trade agreement (FTA). This was important not only for underlining US strategic commitment to the region, but also in arresting the relative slide in America’s economic presence in South-east Asia.


The US share of foreign trade in Asia, for instance, has dropped by almost 10 per cent over the past 20 years. In 2004, the US was ASEAN’s largest trading partner; now it is ranked fourth behind China, the European Union and Japan.

And the US is also noticeably absent from the growing network of FTAs that
ASEAN countries have concluded with key trading partners.

“The US has long played a major role in the region’s stability and prosperity,” said Mr Shanmugam. “Singapore has consistently encouraged the US to engage the region. We have done so for over 40 years, long before it was fashionable to say so.”

Comments on Singapore’s Contribution to the US

In his remarks at the Conference, Dr Campbell paid tribute to the solid foundation that both countries had built over the years. “Before we look forward in any critical relationship, it is always important to look back.

With Singapore, we get the kind of strategic advice and honesty that’s rare in politics”.

In recent years, Dr Campbell recalled, Singapore had provided crucial advice to the US on a range of major regional concerns, from the engagement of Indonesia after the collapse of the Suharto regime to the entry of the new government in Japan, and the US rapprochement with Myanmar.

US-Singapore ties are also anchored by a deep relationship in trade that is sometimes obscured by Singapore’s physical size, said Ms Barbara Weisel, the assistant US trade representative for South-east Asia.

For instance, Singapore accounts for 41 per cent of overall US trade with the 10 ASEAN countries. The US also exports more goods to Singapore than India. In 2010, American direct investments flowing into Singapore outweighed those for China and India combined.

“Those figures really capture the significance of this relationship and the importance of Singapore to the US,” added Ms Weisel.

 
 
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