Minister for Foreign Affairs Dr Vivian Balakrishnan's Oral Reply to Supplementary Question on Singapore's Role as an International Trading Hub

QUESTION

Assoc Prof Jamus Jerome Lim: Notwithstanding Second Minister (Trade and Industry) Dr Tan See Leng’s assertions about the physical sales of NVIDIA products being only around 1%, NVIDIA’s latest filings with the US Securities and Exchange Commission states that for the nine months that ended October 2024, the company booked US$91 billion in total revenue, of which a little less than half is domestic. The next highest source is actually Singapore, with around US$7 billion, and it is more than that for China, which includes Hong Kong, at US$12 billion. This means that Singapore accounts for around 20% of NVIDIA’s global revenue. It is not unusual for entrepreneurial hubs like us to book such inflated revenue figures, even if our value-added component is small or negligible. Nor is this really about fraud, which Minister Tan seems to allude to, but actually legitimate accounting practices and rules of origin machinations. Regardless, the headline “imbalance” invites commercial action, like what we have seen. So, if I may inquire, if MFA was aware of these imbalances and if so, its assessment on whether facilitating transhipment trade is positive or negative for Singapore’s national interest, from a foreign policy angle. Relatedly is there a formal mechanism for MFA to review and provide input to MTI’s trade decisions that have inevitable foreign policy implications?

REPLY

1        Mr Speaker, Singapore is a transhipment hub, a vital regional and global headquarters for thousands of international companies. Our trade volume is three times our GDP. The range of activities that our companies are engaged in, and not just companies owned by Singapore and Singaporeans, but by global owners of these companies, have a regional and international footprint. So, I am not sure what Mr Lim is referring to when he says “imbalances”. These unique characteristics are par for the course for the unique role that Singapore plays in the global economy. For instance, when as you correctly say, NVIDIA states in its returns that 22% of sales of chips were booked to entities with operations in Singapore – my colleague (Second Minister for Trade and Industry Tan See Leng) has already explained to you, only 1% physically came to Singapore and was deployed in data centres here serving the government and other major enterprises, including I should add, hyper-scalers. So, there is nothing unusual or unbalanced about that.

2        The nub of the question is whether Singapore is being used by these enterprises and companies to evade unilateral export controls. My colleague has very carefully explained to this house that Singapore, by law, through the Strategic Goods (Control) Act gives effect to multilateral export control regimes. He referred to the Wassenaar Arrangement, Australia Group and Missile Technology Control Regime. These are focused especially on weapons, weapons of mass destruction, chemical and biological threats, and other potentially significant dual-use equipment. These have force of law, and we take our reference from the United Nations Security Council.

3        There are 200 countries in the world. It is possible for 200 countries to promulgate unilateral export measures. We have explained that we are not legally obliged to enforce the unilateral export measures of 200 countries. But we will enforce the multilateral – agreed upon – export control regimes. Having said that, it is not in our national interests to be made use of, and for companies who for whatever reasons are trying perhaps to evade unilateral export control measures that apply to them, to use their association with Singapore – because people know Singapore is a clean, hygienic, transparent, reputable place – to engage in deceptive or evasive measures to avoid unilateral export measures that apply to them.

4        The point is that the onus is on the company, and we will not countenance evasion, deception, false declarations, or even miscounting – and we will act on that. As and when a trading partner comes to us and says, “we have concerns”, at that point, we would certainly facilitate investigations, or at least take a deeper look at the data to see whether there is any cause for concern. We do that in order to protect our own national interests, specifically for advanced semiconductor chips. We too have a need for semiconductors. It is true that we are also part of the global chain that manufactures and exports semiconductors, but those that are currently manufactured in Singapore are not the H100s – the high-end chips which are used for artificial intelligence. But we need them for our own purposes and we therefore have to monitor the export regimes of the manufacturers of these chips.

5        You refer to our tier 2 classification on the AI Diffusion Rule. It was first published near the tail end of the Biden administration. In fact, right now, the rules are up for comments and the situation is still evolving. We are not in tier 1. We are in tier 2, and in good company with about 150 other countries. I do not want to get into details about the exact number of chips and whether that currently poses a constraint for us. Needless to say, we will continue to engage the major exporting source of these advanced chips to ensure that we have adequate. I am sure Members of this House will also be aware that when dealing with sensitive topics like this, it is not in our national interest to compromise our negotiating positions when it deals with strategic items.

6        So, I hope you understand that the situation that has arisen is one because of our unique role, and indeed, our successful performance of this unique global role, as well the fact that we are a trusted, reliable, and honest player. If you zoom out beyond chips and export controls, the point is this – Singapore as a tiny island city state and a trading hub, we do need to stand in favour of free trade. We do need to play a critical role in global supply chains. Second point, because we are small, we have to subscribe to international law, and multilateral rules and processes, and institutions to give effect to multilateral rules. Third point, we always have to seek to be relevant to the world, to be useful to big and middle powers, but we will not be made use of, either by other powers or even by companies pursuing pecuniary interests.

7        My final point, in a world which is bifurcating or fracturing or polarising and divided, it is all the more important for us to play it straight, for me to say the same thing in Beijing and Washington, to be fair. That is why everything that Minister Tan has said applies to all our trading partners. I hope I have reassured you and Members of this House.

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MINISTRY OF FOREIGN AFFAIRS

SINGAPORE

18 FEBRUARY 2025