Transcript of Minister for Foreign Affairs Dr Vivian Balakrishnan's Keynote Address at the European Chamber of Commerce Singapore's Annual General Meeting, 30 May 2023

Thank you, Iwona and Federico. Friends, ladies and gentlemen, it is a pleasure to join you for this General Meeting. I am going to make three quick points.

2 The first point is that we, in Europe, and in Singapore and Southeast Asia, need to double down on multilateralism, economic integration and open, free trade.

3 The second point is the digital economy. We are now at an inflection point, and it is going to transform and disrupt jobs, and the very means of production. The last time that happened, it happened in Europe. It also led politically to the development of the welfare state, communism and the battle and contest with capitalism. It has profound political and economic impacts.

4 The third point is that we need to work together to create a sustainable future. The green economy is no longer just a nice-to-have or an ideologically convenient position. It is critical if we are to survive as a world. The biggest challenge is that whilst Europe and Singapore believe in it, we will not be able to solve the challenge of the green economy unless we can get global cooperation on this. So, just three things – multilateralism, digital economy, green economy. 

Multilateralism

5 On multilateralism, I believe that Europe and Singapore are natural partners. For the last seven or eight decades, there has been a broad consensus globally in favour of globalisation, economic liberalisation, the growth of multinational companies, which many of you here represent, the development of global supply chains organised on the principle of comparative advantage, and on supply chains based on efficiency. This concept was based on the free flow of ideas, investments, products, services, and people, all operating on essentially a shared technological platform, using common research methods, applications, and generating world standards which allow interoperability cross-recognition of goods and services. This has been critical to both peace and prosperity since the end of the Second World War. This virtuous cycle of progress and government has benefited many of us in Asia. In Asia Pacific, this system of globalisation created the conditions for the rise of what were sometimes called the “Asian Tigers” – Hong Kong, Singapore, South Korea, and Taiwan – which underwent rapid economic transformation and moved from third world to first in one generation. 

6 Even in Western Europe, if we look over the past five or six decades, the share of GDP that was allocated for defence fell from 6.34% in 1960 to 2.24% in 2021. However, the bad news is that the global multilateral rules-based trading system – that formula for peace and prosperity – is now under severe stress. Severe stress both in terms of domestic politics and in terms of global and superpower contestation. We used to believe that war in Europe was unthinkable – it was something people only read about history books, and not in newspaper headlines. Yet here we are, one year into Russia's unjustified act of aggression against Ukraine, a sovereign independent neighbouring state. In Singapore’s view, this is a flagrant violation of international law and the principles of the UN Charter. 

7 But this is not all. We are also witnessing two worrying trends. First, the declining support for free trade domestically. Amongst countries all over the world, politicians are under pressure. Also, a restructuring of global supply chains. Perhaps we first saw this very starkly during the COVID-19 pandemic, when suddenly people were scrambling, and they suddenly realised that just organising supply chains in terms of “just-in-time” was not good enough. Now, you need to base your supply chains on “just-in-case”. This in turn has led to the popularisation of onshoring, friendshoring, and a variety of arrangements, which, by definition, means it is going to be less efficient, it is going to be inflationary, and everything will cost more. It is fine to pay more if it is a justified premium for resilience. But if everybody backs away and starts chopping, changing, and disrupting global supply chains, it will be inflationary in its own right. 

8 Second, we are watching with concern the intense and sharpening strategic competition between the US and China, which leads not only to the reinstatement of trade barriers and tariffs, but also the deepening technological bifurcation. The International Monetary Fund (IMF) has estimated that the fragmentation of the global economy could reduce global GDP in the long run by about 7%. In fact, we think this number may be an underestimate. The true cost of bifurcation from the lost opportunities, the dramatic reduction in the velocity of flow of ideas, innovation and technology, the reduction in cross border capital flows and financing – all these are likely to compound that number to a higher figure.

9 But despite these storm clouds, I think it is still not too late to pull back from the edge and to still look for that rainbow. That is why I have said that the EU and Singapore are natural partners. The EU’s commitment to multilateralism, to economic integration, and to rules and regulations that promote integration and fair trade – the commitment by the EU is undamaged despite all these storm clouds. I believe that in the case of the European Chamber of Commerce (EuroCham), you as corporate citizens both of Singapore as well as the countries of origin of the companies you represent, have a key role to play in keeping this flag up for globalisation, free trade, standards, openness, inclusiveness, fairness, and sustainability. We expect the EuroCham to continue to ask the right questions, to push, to educate, to encourage, to cajole politicians, not just in Singapore, but all over the world.  Make us make the right decisions that will make sense for the world as a whole.

10 It is worth recalling that 73 years ago, then-French Foreign Minister Robert Schumann proposed the creation of the European Coal and Steel Community. I think this was back in May 1950. The historic Schumann Declaration paved the way for greater European cooperation and integration, which in the following decades served as the foundation for the creation of the EU. In my view, the EU still remains the most eminently successful regional organisation in the world.

11 Closer to home, in the case of Singapore, we remain a tiny city-state with a population of 5.6 million people: multi-racial, multi-lingual, multi-religious, situated in the heart of Southeast Asia. Trade is three times our GDP. No other country that I know of has that ratio. And that means, in the case of Singapore, we have no choice but to continue to engage, to cooperate, and to trade with the rest of the world if we want to survive. Therefore, Singapore, by definition, is a firm and fervent supporter of an open, inclusive global and regional architecture, and a global order governed by international norms and the rule of international law.

12 The EU and Singapore are therefore quite natural strategic partners – the numbers speak for themselves. The EU is Singapore's fifth largest goods trading partner, second largest services trading partner, and the second largest foreign investor. I keep reciting these statistics because not enough people outside this room are aware of that and are aware of the importance of the EU for our economy. Our annual goods and services trade with the EU now stands at more than $194 billion. Singapore is also the EU’s largest ASEAN trading partner for all goods and services. Even during the COVID-19 pandemic, the EU stock of FDI in Singapore reached $310.4 billion in 2021, which represents a 23.3% year-on-year increase during the depths of the COVID-19 pandemic. As at the end of 2022, there are over 12,000 registered EU companies in Singapore.

13 Our cooperation is underpinned by the EU-Singapore Free Trade Agreement, which entered into force in 2019. It, in my view, is an ambitious, strong and powerful signal of our shared commitment to uphold the open and rules-based trading system. This agreement has brought tangible benefits to both the EU and to Singapore businesses. It has provided that much needed certainty which companies planning investments and new avenues of operations need. I hope many of you are familiar with the benefits of this agreement, which includes tariff savings, improved access to services and government procurement markets, as well as enhanced intellectual property rights protections, including a new term which I had to learn – “geographical indicators” – another frequent item of the EU.

Digitalisation

14 Let me move on to my second point – digitalisation. We believe that this is a new engine for growth. It is another area where the EU and Singapore quite uniquely and naturally aligned to work together. I am glad that we signed the EU-Singapore Digital Partnership (EUSDP) in February this year. This Digital Partnership is an ambitious, comprehensive overarching framework for all areas of digital cooperation between Singapore and the EU. It includes core areas such as digital trade facilitation, trusted data flows, and protection of customers, consumers and businesses, as well as emerging domains in Artificial Intelligence and digital identities. I believe this Digital Partnership will support and enable broader participation in the digital economy through cooperation, as well as opportunities for us to collectively upskill the digital skills of our workers to prepare them for the jobs of the future and for the digital transformation of all our businesses, as well as improvements to public services provided by governments. We envision the development of a portfolio of use cases and pilot projects between Singapore and the EU. I hope that all of you will contribute to these cases under this Digital Partnership and, as I have said just now, treat Singapore as living laboratory for new products and new services. Grow them here, prove that they work, and then along the way, work on both the technical standards as well as the public policies and regulatory frameworks that will enable these products and services to flourish in the brave new world that we are emerging into.  

15 I believe that the Digital Partnership is critical, and one of its first deliverables is a set of Digital Trade Principles that demonstrate the EU and Singapore's alignment on issues like trade facilitation, and business and consumer trust. These principles will serve as a building block towards a legally binding EU-Singapore digital trade agreement in the near future, which I believe will set the stage for Europe's digital engagement, not just with Singapore, but with Southeast Asia. When we can get this bloc-to-bloc agreement, just as we did with air transport, hopefully we can get the rest of the world to come on board as well. 

Sustainability and Green Economy 

16 My third point is on sustainability and green economy. This, for us in Singapore, is a pivotal pillar of the Singapore Green Plan 2030. The key aspect of this is a mindset of sustainability to help our workers and our businesses thrive in this new green economy. I mentioned just now in our small group discussion, that we are not ideologically green. We are pragmatic greenies who believe that the world does need a green transformation in order for us to survive and for the human race to thrive. But we also believe this can be done carefully, deliberately, economically, sensibly, rationally, and predictably. Businesses must be a part of the solution, and there must be a way for us to ensure that we continue to generate revenues and remain profitable whilst doing good and saving the world. It is possible to organise ourselves rationally. We want to work with you, and we will definitely need the recommendations and suggestions of EuroCham.

17 We have more than 70 organisations providing carbon services. This is the highest concentration in Southeast Asia. So, we believe that Singapore is well positioned to become a regional carbon and trading hub. I think you might also be painfully aware that Singapore introduced a carbon tax in 2019, which makes us the first country in Southeast Asia to introduce a carbon pricing scheme, despite the fact that Singapore actually only accounts for 0.11% of global emissions.

18 Singapore has planted the seeds to enhance our domestic green economy, but we really need to work with global partners – and by that, I refer to the EU – to ensure that these seeds are planted on fertile soil and will thrive for the benefit of all. I believe that there is a significant demand in our region for sustainable solutions in areas such as clean energy and urban management. I believe that European businesses are well-placed to capitalise on your expertise in these areas, and will provide many opportunities here in Singapore, and to use Singapore as a launchpad to Southeast Asia. I am confident that by working together, we will be able to harness the full potential of the green economy in a sensible, rational, business-friendly, and predictable way. 

19 Let me conclude by reaffirming our commitment. EuroCham is a corporate citizen of Singapore. You belong here, you are welcome here, just as your families are welcome here. You should feel safe and secure. You should feel that you belong. Even as we go through this digital and green transformation, we want your companies to continue to invest here, to continue to do well here, and to continue to grow your footprint and enlarge your families – both your personal families as well as your corporate families – in Singapore. I hope your conversations during your General Meeting and subsequently will feed back into improving our policies and making sure that Singapore remains the best and most hospitable place for yourselves, your families, and your companies. Thank you very much. I wish you the best in the future – a bright, emerging, and exciting future. Thank you very much.

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