MFA Press Statement: Visit of Senior Minister of State for Foreign Affairs and Home Affairs Masagos Zulkifli to Kenya and Tanzania, 3 to 9 June 2014

Senior Minister of State for Foreign Affairs and Home Affairs Masagos Zulkifli presenting a souvenir from Singapore, after the courtesy call on Tanzania President Jakaya Kikwete.
 

        Senior Minister of State (SMS) for Foreign Affairs and Home Affairs Masagos Zulkifli is currently visiting Dar Es Salaam, Tanzania.  He visited Kenya from 3 to 4 June 2014, prior to arriving in Tanzania.  SMS' visit is part of Singapore's efforts to engage the two largest economies within the East African Community, where our economic interests have been growing.

        In Kenya, SMS Masagos met the Kenyan Cabinet Secretary for Foreign Affairs and International Trade Amina Mohamed and Cabinet Secretary for Industrialisation and Enterprise Development Adan Mohamed.  Both sides exchanged views on ways to strengthen relations and increase cooperation between Singapore and Kenya, particularly in areas such as air connectivity, tourism, businesses as well as people-to-people linkages.

        In Tanzania , SMS Masagos called on Tanzanian President Jakaya Kikwete and met several political leaders, including the Deputy Minister for Foreign Affairs and International Cooperation Dr Mahadhi J. Maalim, Minister for Transport Dr Harrison Mwakyembe, Minister for Water Professor Jumanne Maghembe, and other senior officials.  SMS Masagos reaffirmed the warm relations between Tanzania and Singapore and welcomed the expanding economic ties between both countries, in particular the US$1.28 billion investment by Temasek subsidiary, Pavilion Energy, in Tanzania's gas sector.  SMS Masagos also offered to share Singapore’s experience with the Tanzanian government in areas such as vocational training, water management, urban planning, port management, education and aviation.

        In both countries, SMS Masagos delivered the keynote address at two separate business seminars organised by the Singapore Business Federation, where he encouraged Singapore companies to look beyond Asia and consider Africa as an alternate investment destination.

        SMS Masagos is accompanied by representatives from International Enterprise Singapore, PSA International, Singapore Cooperation Enterprise, Pavilion Energy as well as a 17-member business delegation led by the Singapore Business Federation.

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MINISTRY OF FOREIGN AFFAIRS

SINGAPORE

7 JUNE 2014

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KEYNOTE ADDRESS BY

SENIOR MINISTER OF STATE FOR FOREIGN AFFAIRS AND HOME AFFAIRS MASAGOS ZULKIFLI

AT THE KENYA-SINGAPORE BUSINESS SEMINAR ON WEDNESDAY, 4 JUNE 2014

AT THE Villa Rosa Kempinski, Nairobi

Engineer Julius Riungu, Energy Sector Board Chairman for the Kenya Private Sector Alliance;

Mr Yatiman Yusof, High Commissioner of Singapore to Kenya and Rwanda;

Mr Teo Siong Seng, Mission Leader and Vice Chairman of Singapore Business Federation;

Distinguished Guests;

Members of the Singapore and Kenya business communities;

Ladies and Gentlemen;

        As they say here in Kenyan, “Habari za asubuhi” or “good morning” to one and all.

2      I am delighted to be here with you for the Third Kenya Singapore Business Seminar and glad to see a good turnout today. I would like to thank the Singapore Business Federation (SBF) and the Kenya Private Sector Alliance (KEPSA) for their hard work in putting together this event.  

3      I also wish to acknowledge at the outset my fellow Singaporeans who have travelled a long distance from home to Nairobi.  They are part of a business mission organised by SBF.  Besides Kenya, they will also be travelling to Dar es Salaam tomorrow, where they will participate in the Tanzania Singapore Business Forum.

4      Last year, I had the opportunity to travel to South Africa and Nigeria in West Africa.  I am glad that this year, I am able to visit East Africa for the first time, specifically Kenya and Tanzania, the two largest economies in the East African Community (EAC).

5      Though it has only been a few hours since I arrived in Nairobi yesterday, I have been very impressed by the level of development that is taking place across this city.  It is not surprising to see why Kenya is developing into the next major hub in Sub-Saharan Africa.  The dynamism is palpable, and I believe this is underpinned by the commitment, conscientiousness and tenacity of the Kenyan people from all walks of life.

6      Indeed, ask any savvy business person or expert today, and he or she will tell you quite unequivocally that Africa is currently on a strong growth trajectory.  In recent years, Asia’s trade with Africa has increased by leaps and bounds.  By 2020, trade volume between Africa and Asia is expected to increase to US$1.5 trillion.  Against this backdrop, trade between Singapore and Sub-Saharan Africa has also grown.   Since 2009, two-way business flows have grown at a compound annual rate of 19.5%. In 2012, the volume of trade reached close to S$14 billion. 

7      Last year was a hive of activity for Singapore on the Africa front.  We launched two International Enterprise Singapore (or IE Singapore) Overseas Centres– the first in Johannesburg, South Africa; followed by a second one in Accra, Ghana.  Singapore also established the NTU-SBF Centre for African Studies, the first of its kind, I believe, in South East Asia.

8      Another significant development was the launch of direct flights by Ethiopian Airlines between Addis Ababa, the capital city of Ethiopia, and Singapore last December. This was followed by Singapore Airlines, our national carrier, entering into a codeshare agreement with Ethiopian Airlines. The agreement was our first airline partnership (under the Star Alliance network) in the African continent and I hope that it will be the first of many to come.

Kenya: Gateway to Africa

9      As the continent continues to prosper and develop, I am confident that the linkages between Singapore and Sub-Saharan Africa, and specifically with, emerging economies like Kenya, will grow from strength to strength. I mentioned earlier how impressed I was with the development that is clearly evident in Nairobi.  This is not mere flattery; it is reality.

10    Kenya is on the brink of entering a new era of unprecedented socio-economic development.  Investor confidence in the country is growing. A recent report by audit and business consultancy firm, Ernst & Young, showed that Kenya’s Foreign Direct Investment (FDI) grew at a rate of 40 per cent, making Kenya the third fastest growing destination in Africa, behind Ghana and Ethiopia.  Kenya’s financial and information and communications technology (ICT) sectors are also ranked the third biggest in Sub-Saharan Africa.  Kenyans today are now eight times richer than they were 50 years before.  It is no surprise then that the World Bank has labelled Kenya as “the leading economy in East Africa”.

11    Kenya, like Singapore, is strategically located and its business infrastructure is well-developed. Kenya’s population is sizeable, about 45 million people strong. Kenya also enjoys the added advantage of having almost direct access to the 150 million-strong East African Community. 

12    Because of its strategic location, the port of Mombasa serves as a distribution hub for the East African market by providing transportation and logistical connections to several landlocked countries neighbouring Kenya.  In addition, Mombasa port is linked to major ports around the world like Rotterdam, Shanghai, Singapore, etc., with over 200 sailings per week.  Kenya and its neighbouring countries have also established the Northern Corridor Transport Agreement which facilitates the transportation of goods to and from the port of Mombasa.

Kenya’s Linkages with Asia

13    I cite the various facts and statistics to underscore Kenya’s immense potential and attractiveness as an investment destination. It is therefore not surprising that many businessmen, including those in Asia, are increasingly interested in doing business in Kenya. 

14    Historically, Kenya has been connected to Asia. Since the establishment of trade and commercial ties between India and Kenya by Gujarati merchants several centuries ago, Kenya has significantly expanded its economic engagements over the years with Asia, especially with India and China.  

15    Kenya’s trade with India in the past two years (2012-13) stood at close to US$4 billion, an astounding 60 per cent increase from 2011.  Kenya recently signed several agreements with China, including a US$3.6 billion Standard Gauge Railway project connecting Mombasa and Nairobi.  Going by business trends in recent years, I am optimistic that we will witness an increase in investments and trade in the years to come.

Singapore’s Relations with Kenya

16    Singapore is miniscule compared to countries like India and China.  Nonetheless, we have sought to do our best to build up strong and enduring ties with many African countries, especially through the private sector.  Singapore’s economic ties with Kenya are among one of the strongest in Sub-Saharan Africa.

17    Since the establishment of diplomatic relations between Singapore and Kenya in 1991, “B-to-B” (or business-to-business) relations have expanded steadily.  This is due in no small part to the efforts of individuals such as Kenya’s Honorary Consul to Singapore, Mr Neal Chandaria of the Comcraft Group, and the strong support we have received from the Singapore companies and Singaporeans based here, especially in Nairobi.

18    On the trade front, Kenya was Singapore’s sixth largest trading partner in Sub-Saharan Africa last year.  Bilateral trade has more than doubled since 2012 to S$357.5 million.  With South-South trade on the rise coupled with the rising ease of market access, I expect our two countries to play an increasingly important role as key regional hubs in Asia and Africa.

19    To achieve this, we need to raise our collaboration and trade links.  One way is to strengthen Singapore’s air connectivity with Kenya. I mentioned earlier that Ethiopia Airlines commenced flight services to Singapore last year. Similarly, there is scope for Singapore Airlines or Kenyan Airlines to ply routes between our two countries. International connectivity is a critical enabler for economic growth since accessibility is an important consideration for businesses, investors and even tourists who need to travel in and out of the country on a frequent basis.  In this regard, Singapore looks forward to liberalising the existing aviation agreement it has with Kenya to further promote people, trade and investment flows, and in the process enhance Nairobi’s status as a major air hub in East Africa and the rest of the continent.

Singapore as Gateway to Asia

20    Just as Kenya serves as a gateway to Africa, Singapore is a springboard to the Asia-Pacific region. Singapore is a small island nation with no natural resources. Fortunately, we are strategically located near the Straits of Malacca, one of the world’s major shipping lanes.  This has given us an opportunity to leverage on our geographical advantage and carve a niche for ourselves in the global trade system.  Today, Singapore is the world’s busiest transhipment hub, handling one-seventh of the world’s total container transhipments.  We are also one of the world’s major aviation hubs, an international financial centre as well as a key regional oil refining hub.

21    What does Singapore offer that makes us such an attractive business destination?  Let me offer three key reasons.

a.   Proximity and Access to the Regional Market.

22    Singapore is located in Southeast Asia and is part of the Association of Southeast Asian Nations (ASEAN), which has a combined GDP of US$2 trillion and a combined population size of 600 million. ASEAN has consistently registered strong growth rates, its key manufacturing costs are relatively low and its purchasing power is increasing with the rise of the middle class. 

23    The formation of the ASEAN Economic Community (AEC), which will take place by end-2015, will only serve to enhance the promising trends which I just mentioned, through the removal of trade barriers and the effective creation of one of the largest single markets in the world.  Singapore is well-positioned to capitalise on opportunities which will eventually arise from this development which leads me to my next point.    

b.   Business-friendly Singapore

24    While seeking to capitalise on growth in the region, businesses are mindful of the need to establish a strong base from which they can operate from. Singapore has consciously sought to develop and improve itself and enhance its status as an investment-friendly destination through pro-business government policies, establishing an excellent financial infrastructure and strong corporate governance as well as good and reliable business practices.  In doing so, we have been rated by the World Bank as one of the easiest places in the world to do business and have successfully attracted many multinational and foreign companies who have decided to set up their global or regional business headquarters in Singapore.  These companies choose Singapore because we are an excellent springboard to launch out into the region and tap the lucrative markets in Northeast and Southeast Asia.  

25    In addition, Singapore boasts a highly-educated and productive workforce, as well as world class research and development facilities and expertise.  The availability of quality human capital is one of the main considerations for many companies choosing to locate their critical company operations or to set up their headquarters in Singapore.  

c.   Good Governance

26    Singapore has developed a credible reputation for its rule of law, reliability, integrity and the protection of intellectual property rights.  The government plays an important role in this through the enactment and enforcement of laws and regulations using a rational and pro-business approach.  This stability brought about by sturdy political governance and political structures enables businesses to focus on their core value generating functions and provides investors with a peace of mind. Undoubtedly, this assurance is something investors seek, and has helped to create the conducive business environment that Singapore is known for.

Conclusion

27    Kenya and Singapore share striking similarities, especially in the role we play as gateways into our respective regions.  The prospect for us is a promising and exciting one but it is up to us to take advantage of this window of opportunity.  We need to take that all important first step to strengthen existing links between our business communities by promoting greater trade and investment, and increasing connectivity between our two countries.

28    Today, we have the opportunity to take our relationship one step further.  Two Memorandums-of-Understanding (MOUs) will be signed - one between the Kenya Private Sector Alliance (KEPSA) and SBF, and another between KEPSA and Vector Scorecard Asia Pacific. Beyond formalising our engagements, these MOUs reaffirm our shared commitment to promote knowledge-sharing and serve as a milestone for greater and more deliberate collaboration opportunities. 

29    On this note, I commend the organisers for your efforts in organising this timely seminar and wish everyone a productive day and fruitful discussions ahead.  Thank you.  

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KEYNOTE ADDRESS BY

SENIOR MINISTER OF STATE

FOR FOREIGN AFFAIRS AND HOME AFFAIRS

 MASAGOS ZULKIFLI

AT THE THIRD TANZANIA-SINGAPORE BUSINESS SEMINAR

ON THURSDAY, 5 JUNE 2014

AT THE HYATT REGENCY DAR ES SALAAM

Mr Godfrey Simbeye, Executive Director of the Tanzania Private Sector Foundation;

Mr Yatiman Yusof, High Commissioner of Singapore to Kenya and Rwanda;

Mr Teo Siong Seng, Mission Leader and Vice Chairman of Singapore Business Federation;

Mr Seah Moon Ming, Group Chief Executive Officer of Pavilion Energy and Pavilion Gas, Chairman of Singapore Cooperation Enterprise and Chairman of International Enterprise Singapore;

Members of the Singapore and Tanzania business communities;

Ladies and gentlemen

1             It is my pleasure to be here with you this afternoon at the Third Tanzania-Singapore Business Seminar.

2             It is good to be in Dar Es Salaam as I have always wanted to visit Tanzania. It has only been a few hours since I arrived, but I already feel very welcomed.  I am sure many of my fellow Singaporeans present here today share similar sentiments. 

Ladies and Gentlemen

3             Although this is my first trip to Tanzania, it is not the first time I am in Africa.  I visited South Africa and Nigeria last year, and remember being blown away by the rate of progress in two of Africa’s largest economies. I wondered if the Africa growth story was only limited to a few countries or continent wide, and wanted to find out by visiting another part of Africa.

4             I must say that Africa’s outlook has never been brighter, and my opinion has been reinforced by what I had seen and heard in Kenya over the last three days and now here in Tanzania. Allow me then to say a few words at the outset about Tanzania and offer a few of my impressions of this beautiful place.

5             Tanzania as, many of us know, is renowned for its seemingly limitless range of breath-taking landscape, exotic wildlife and affable people. It is home to the famous Serengeti National Park, one of the most well-known natural wonders in the world. I believe some of you would have seen on National Geographic or Animal Planet, herds of wildebeest, zebra and gazelle and other plains animals that gallop across hundreds of kilometres of grassland plains and sweeping savannah. That, in short, is the Serengeti, which literally means “endless plains” in the local Maasai language.

6             Tanzania’s Indian Ocean coastline is, I am told, equally magical, with its tranquil islands and coastal villages marked with Swahili culture.

7             The cities of Tanzania are bustling with life.  Take Dar Es Salaam for example.  Dar Es Salaam means “haven of peace” in English. It is the largest city in Tanzania and home to almost 3 million people.  Dar Es Salaam is a cosmopolitan city; government offices, diplomatic missions, as well as non-governmental organisations can be found here.

8             One can easily see that the business districts are abuzz with activity throughout the day. Dar Es Salaam Port, the main harbour in Tanzania, is also the country’s busiest. The industrial area around Dar Es Salaam produces products for export and for use throughout the country.

9             Tanzania has come a long way since its independence in 1961. Under the leadership of President Jakaya Kikwete, whom I had the pleasure of meeting when he visited Singapore exactly a year ago this week, the government is committed to develop Tanzania into a strong and competitive economy under its National Vision 2025.

10           Tanzania’s economy has become more open over the years. Tanzania’s trade-to-GDP ratio rose from 15.5 percent in 2000 to more than 30 percent in 2011, the highest rate in the East African Community. Tanzania’s economy is projected to grow by around 7 percent in 2014 and 2015, also one of the highest in Sub–Saharan Africa. The transport, communications, manufacturing and agriculture sectors are performing well.

11           What we are witnessing in Tanzania, to a large extent, mirrors the unprecedented growth, development and progress that are taking place throughout Africa.  The African market is booming and one indicator of this can be seen in how trade between Singapore and Sub-Saharan Africa has been growing.

12           Since 2009, two-way business flows have grown at a compound annual rate of 19.5 percent. In 2012, the volume of trade reached S$13.8 billion.  Africa is currently on a high growth path, and as the continent continues to prosper and develop, I am confident that the linkages between Singapore and Sub-Saharan Africa, more specifically, emerging economies like Tanzania, will continue to intensify.

The “Big Boys” in Tanzania

13           Against this promising backdrop, it is not surprising that the private sector is paying more attention to Sub-Saharan Africa. In that regard, I would like to acknowledge the 17 Singapore companies taking part in the Business Mission organised by the Singapore Business Federation (SBF). We were in Kenya yesterday for a similar seminar as the one that we are having this morning, and I am happy to see that they look refreshed and enthusiastic.

14           I commend them for taking the initiative to explore new and emerging markets that are thousands of kilometres from home, for their spirit of entrepreneurship but most of all, for stepping out of their comfort zone, and I wish to spend a few minutes to talk about this particular aspect.

15           Since our independence in 1965, and after our economy started to modernise, Singapore companies have traditionally focused on foreign markets which provided a sense of familiarity, such as those in Southeast Asia and Northeast Asian countries like China and Japan. These markets are developed, within a 7-hour flight radius from Singapore, as well as offer a large consumer base. China, for instance, has a population of 1.3 billion, and India is close to overtaking China’s population.

16           The number of Singapore companies, particularly the small and medium enterprises (SMEs), that dare to venture to so-called “exotic” or far-flung markets, such as Africa, Central Asia or even Latin America, are therefore understandably small.

17           We must keep in mind that the reasons for Singapore’s economic success as an island nation state lie in our intrinsic ability to adapt, to identify potential markets, to take bold decisions and to be nimble. I strongly believe the same goes for doing business overseas.

18           It is never easy to move out of one’s comfort zone.  This is especially so if one is heading to a totally unfamiliar environment or location. I can say this based on my personal experience. When I was in SingTel before I joined politics, I was posted overseas to places such as Sulawesi in Indonesia, and had also made many business trips to many developing countries across Asia. The business environment was not always the friendliest, and the living conditions were quite harsh.

19           So I can understand why many Singapore companies are hesitant or hold back when they are advised to consider Africa as an alternate investment destination. Unfamiliarity with Africa is one of the reasons.  But Africa is transforming itself, and there is a need to update our traditional mindsets about this huge and complex continent.

20           In fact, there are already several Singapore companies that have ventured into Africa and have managed to gain a foothold in their host countries. Some have been here for decades. They have managed to establish a name for themselves as well as introduced the Singapore brand to Africa. Let me list a few examples, and since we are in Tanzania, I will cite a few Singapore companies that have operations in Tanzania.

21          Olam, a company with operations throughout Africa, marked its entry into the East African market through the incorporation of Olam Tanzania. Since 1994, the company has been in Tanzania’s agribusiness with a strong presence here in Dar Es Salaam, as well as in other locations like Mtwara, Mwanza, Mtibwa and Kyela.

22           Pavilion Energy, a subsidiary of Temasek Holdings, made the headlines last November when it announced an investment worth US$1.3 billion in Tanzania’s gas sector. I was told that Pavilion is in the midst of setting up an office in Dar Es Salaam, which bears testament to their long term confidence in Tanzania.

23           Apart from the companies that I have mentioned, other companies, such as Wilmar International and Pacific International Lines have also managed to establish themselves in Tanzania’s agribusiness and container liner services. PIL, incidentally, is run by Mr Teo Siong Seng, who is also Tanzania’s Honorary Consul General in Singapore and the leader of the SBF business mission.

What about SMEs?

24           As you might have noticed by now, those companies that I have just mentioned are what most of us term as “big” companies. They have the human resource, business know-how, deep pockets and are high profile multinational corporations. What about the SMEs, you might ask? Would they be able to establish themselves in a place like Tanzania and succeed like the “big boys”?

25           Well, I am happy to say that some Singapore SMEs have made their presence in Tanzania and have done very well. One good example is GreenA Consultants, a French-Singaporean consulting company that provides green building certification and green advisory, such as sustainable building practices and renewable technology.  GreenA Consultants has acted as a lead consultant in the Kigambuni Housing Estate in Tanzania, the first sustainable building project to achieve a Green Mark award from Singapore.

26           Another example is Zoe International, a Singapore company set-up by a Tanzanian, Mr Muze, who is now a Singapore permanent resident and is here with us today. His company is providing services and consultancy in energy efficient systems.

27           But apart from the above-mentioned companies, I must honestly say that I am struggling to think of other SMEs that are operating in Tanzania. As I mentioned earlier, Singapore companies are less inclined to venture into markets which they are not familiar with. But I hope the examples of the companies that have managed to gain a foothold in Tanzania would inspire, and motivate other Singapore companies to re-look Greenfield markets.  

28           This is where seminars such as the one here today can, I believe, play a role. The Tanzania-Singapore Business Seminar is an excellent platform to provide Singapore companies with first-hand market information from the ground.  But I also hope that today’s seminar would provoke discussion on business strategies that will enable companies, be it multinational giants or SMEs, to set up profitable and sustainable commercial ventures in various parts of Africa, including Tanzania. 

29           Let me also briefly mention the coming 3^rd Africa-Singapore Business Forum (ASBF), organised by International Enterprise Singapore, which would be held from the 27 to 28 August 2014. The ASBF brings together top government and business leaders from all over Africa to Singapore to market their countries and companies to a wider audience in Singapore, and the rest of Asia.

Ladies and gentlemen

30           Unfamiliarity with Africa is only one of many challenges we need to address, both at the Singapore end as well as here in Africa, if it is our desire to build up closer economic and business ties between our two regions. As the saying goes, it takes two hands to clap. The lack of awareness of many Singaporeans about Africa, and vice versa, is compounded by the geographical distance that separates our two regions. 

31           The good news is that we can bridge the physical divide that separates us through air connectivity.

32           Last December, Ethiopia Airlines started direct flights from Addis Ababa to Singapore. Singapore Airlines also embarked on a codeshare agreement with Ethiopia Airlines, its first airline partner from the Africa continent under the Star Alliance. Singapore Airlines is already flying daily to Johannesburg and Cape Town, and from Johannesburg, one can easily catch a flight to Dar Es Salaam under five hours.

33           Speaking of Johannesburg, IE Singapore opened two overseas centres last year in Johannesburg and Accra. So now you know who to look for if you are uncertain about investing in Africa! 

34           But on a more serious note, with forums such as the Singapore Tanzania Business Forum and the Africa Singapore Business Forum, increasing air connectivity between Singapore and Africa, and even our commercial offices in Africa, the building blocks for a strong and lasting relationship, both at the government to government levels and between the private sectors of Singapore and Africa, are slowly but surely being laid.  And I fully expect the linkages between our two regions to be more robust in the years to come.

Conclusion

35            As the saying goes: “a journey of a thousand mile starts with a single step”. It takes foresight, courage and fortitude to do business in Africa.  The seminar today may well be the first step for many of you, and hopefully it heralds the beginning of more business interactions between Singaporeans and Tanzanians, and out of it, the start of a meaningful relationship between companies from both countries.

36           Fortune favours the bold. I hope Singapore companies will grab the opportunities offered by a fast-growing Tanzania by the horns. On that note, I wish this seminar every success, and wish all of you all a productive day ahead.

37           Thank you.

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