DPM Tharman Shanmugaratnam’s interview with the 21st Century Business Herald

21st Century Business Herald: Among Belt and Road Initiative countries, Singapore is one of the key economic partners of China. How would Singapore and China increase cooperation on the “Belt and Road” initiative?

DPM Tharman Shanmugaratnam: Cooperation between Singapore and China on the Belt and Road (B&R) Initiative is substantial and has much potential for further deepening. We can join each other’s strengths, to promote the integration of the Asian region and facilitate a new phase in regional growth. According to the PRC Ministry of Commerce statistics, Singapore’s investments in China accounted for 85% of total inbound investments from B&R countries, and Chinese investments in Singapore accounted for close to a third of China’s total investments to B&R countries.

Our third Government-to-Government project, the China-Singapore (Chongqing) Demonstration Initiative on Strategic Connectivity (CCI), with Chongqing as the operating centre, was designated as a priority demonstration project for the B&R initiative in November 2015. We are currently working on the development of the “Southern Transport Corridor” linking Western China to Southeast Asia through Chongqing and Singapore which will link the Silk Road Economic Belt and the 21st Century Maritime Silk Road.

More recently, the two governments signed an MOU on B&R cooperation at the inaugural B&R Forum in May 2017. Cooperation on the B&R initiative was also inserted into the Joint Council for Bilateral Cooperation agenda for the first time in February 2017. During Singapore Foreign Minister Dr Vivian Balakrishnan’s visit to Beijing just two weeks ago, Minister Balakrishnan and Minister Wang Yi agreed that Singapore and China would build three platforms together under the B&R initiative, namely: connectivity cooperation; financial cooperation; and third-party collaboration.

In the area of financial cooperation, our governments can work together with the private sector to foster deeper cooperation by (a) unlocking greater private sector financing for infrastructure projects; (b) expanding the role of Asia’s bond markets and facilitating the participation of institutional investors to complement traditional bank financing sources; and (c) developing appropriate risk management solutions for B&R projects, such as insurance pooling to allow expertise sharing and capacity pooling to offer customised risk protection for large and complex infrastructure projects.

In short, the potential outcomes from Singapore and China’s B&R cooperation will be to multiply investments and growth opportunities across the region.

21st Century Business Herald: Recently, Hong Kong’s rail operator MTR Corporation said it is planning to collaborate with China Railway Corp (CRC) to bid for the 350km-long KL-Singapore High Speed Rail project. Earlier, companies from Japan, South Korea, France and the US expressed their interest too.

How do you see China’s advantages and disadvantages in building high-speed rail lines? Which form will the HSR project take, EPC or BOT/PPP?  If the latter, how many years of operation will be given? When will its tender be?

DPM Tharman: Singapore and Malaysia have agreed to conduct an international competitive tender for the High Speed Rail (HSR) link between Singapore and Kuala Lumpur. Many Singapore leaders, including Prime Minister Lee Hsien Loong, have taken the Chinese HSR and found it comfortable, punctual, and reliable. Given China’s extensive HSR experience, we welcome the participation of Chinese companies in the tenders, and I am sure that they will put in high quality, competitive bids.

We expect to call the systems tender for the rail assets and rolling stock in late 2017. It will be a Public-Private Partnership tender jointly called by Singapore and Malaysia. Singapore and Malaysia will give all bids serious consideration in a fair, open and transparent manner.

21st Century Business Herald: The China-Singapore (Chongqing) Demonstration Initiative on Strategic Connectivity (CCI), the third Government-to-Government level project between Singapore and China, is considered as a model for the B&R initiative as well as China's Western development strategy and Yangtze River Economic Zone strategy.

Please elaborate on the progress of the CCI in the four priority areas of collaboration in finance, aviation, transport and logistics, and info-communication technology. How would the two sides further deepen their cooperation in this project?

DPM Tharman: Singapore and China have made good progress since the launch of the China-Singapore (Chongqing) Demonstration Initiative on Strategic Connectivity (CCI) in November 2015, especially in the area of financial services and aviation.

By the end of 2016, USD 3.22 billion worth of cross-border financing deals had already been realised. These cross-border RMB channels have effectively lowered the financing costs of Chongqing corporates by 0.7% in interest rates, which led to savings of RMB 152 million (SGD 30.9 million) in total.

Air connectivity between Singapore and Western China has also been enhanced. The frequency of flights between Chongqing and Singapore has increased from 5-weekly to 14-weekly services, and there are now flights extending to Urumqi. Changi Airports International and Chongqing Airport Group Co. Ltd are also collaborating on a Commercial Management Joint Venture to manage Chongqing Jiangbei International Airport’s (CJIA) non-aeronautical businesses. This is a first step to transforming CJIA into a world-class airport.

The CCI provides a platform for Singapore and China to learn from one another. It presents opportunities for Singapore companies to share their expertise and expand their presence into Western China through Chongqing just as how Chinese companies can tap on Singapore as a gateway into Southeast Asia. This creates the “mutual hub effect” for the benefit of businesses on both sides.

21st Century Business Herald: Since 2013, Singapore has always been China’s largest foreign investor. Have you found any changes in Singapore’s investments in China in terms of asset class, sector and geography?

DPM Tharman: Singapore’s investments in China reached USD 6.2 billion in 2016, making Singapore the largest foreign investor in China for the fourth consecutive year. Most of these investments are in China’s manufacturing, real estate, wholesale and retail sectors. While Singapore companies have traditionally invested in China’s coastal cities, they have also started to venture into the Central and Western regions in recent years.

With China’s huge remaining potential for urbanisation, and the growth of its middle class, there will be more opportunities for Singapore companies to contribute, e.g. by providing quality urban solutions, transport & logistics, lifestyle, education and healthcare.

21st Century Business Herald: Since 2016, China and Singapore have conducted three rounds of negotiations to upgrade the China-Singapore Free Trade Agreement (CSFTA). What progress has been made?  When to conclude the deal? What changes will the upgrade bring?

DPM Tharman: Our officials have made good progress in the CSFTA upgrade over three rounds of negotiations, since its launch during President Xi Jinping’s State Visit to Singapore in November 2015. The scope of the upgrade is comprehensive, and has potential to include enhancements in investment provisions, trade facilitation, and trade remedial measures; as well as improved market access for businesses in trade in goods and services.

To keep abreast of global developments, the upgraded CSFTA will also include new areas such as Competition, E-Commerce, and Environment. Singapore looks forward to working with China towards a substantive, comprehensive and mutually-beneficial CSFTA upgrade, which will enhance support for ongoing and future collaborations between our two countries.

21st Century Business Herald: The Monetary Authority of Singapore (MAS) started to include its RMB financial investments as part of its official foreign reserves (OFR) from June 2016 onwards. What is the current level of RMB deposits in Singapore? How do you see the change in the ASEAN's demand for RMB? As the most important financial hub in Southeast Asia, has Singapore sensed any business opportunities from it, particularly in relation to B&R initiative?

DPM Tharman: As of March 2017, Singapore’s RMB deposits stood at RMB 127 billion (S$25.8 billion).

ASEAN’s demand for RMB will likely accelerate, driven by China’s growing connectivity with the region and strong cross-border trade and investments. Further, Singapore-based financial institutions are well-positioned to partner Chinese companies in their regional journey, and to deepen China’s linkages to Asia through trade, finance and investment. More than 6,500 Chinese companies have already established presence in Singapore. Many of them have set up regional finance and treasury centres to tap on Singapore’s banking and capital markets to finance their regional expansion. The eight Chinese banks in Singapore are also expanding their presence so as to provide funding support for the activities of Chinese and regional corporates.

As a regional financial centre and one of the largest offshore RMB centres in the world, Singapore can play a key role in financing and advancing B&R initiative projects, particularly in Southeast Asia. Singapore banks are actively helping Chinese companies tap on the B&R initiative and expand into Southeast Asia, e.g. UOB’s MOU with the China Chamber of International Commerce announced earlier this month. Similarly, Chinese banks in Singapore have also committed more than S$100 billion in financing Singaporean companies involved in B&R initiative projects, including issuance of project bonds to support B&R initiative financing needs. Bank of China (BOC) Singapore branch issued US$600 million of B&R Initiative bonds last month and China Construction Bank (CCB) Singapore branch issued RMB 1 billion (US$146 million ) of B&R initiative bonds in August 2016.

21st Century Business Herald: Singapore’s economy expanded by only 2.0 per cent in 2016, slower than the compounded annual growth rate of 4.1 per cent from 2010 to 2015. How do you forecast Singapore’s economic growth for 2017? What are the reasons behind Singapore’s struggles with slowing growth over the past few years?

DPM Tharman: The recent slower growth of the Singapore economy partly reflects the slower growth of external demand. For example, Singapore’s manufacturing, wholesale trade and marine & offshore engineering sectors have seen slower growth in the past few years owing to weaker global demand.

For 2017, Singapore’s economic growth is likely to come in higher than the 2 per cent in 2016, in line with the projected improvement in global growth.

However, the fundamental reasons for slower growth are structural, not cyclical. Our labour force is growing much more slowly than before - just like it is in Hong Kong or Korea. Further, productivity growth in the domestically-oriented sectors of the economy has been weak, and lagged behind productivity growth in the outward-oriented sectors, which is strong. Our strategies for the future are therefore aimed at revitalising productivity growth, especially in the domestic sectors of the economy. These efforts are beginning to show results, with more innovation being seen in these sectors.

Over the medium term, Singapore’s potential GDP growth would average 2 to 3 per cent per annum, led primarily by productivity growth. This economic growth rate will be better than the performance of most economies at a similar stage of advancement and similarly low labour force growth. It will not be unlike the situation in other advanced East Asian economies. Growth will primarily be led by productivity growth, as local workforce growth continues to slow.

21st Century Business Herald: In mid-May, China and the US announced the initial results of the 100-day action plan of China-US Comprehensive Economic Dialogue. And the US decided to send a high-level delegation to the Silk Road Forum. This is seen as an indication that US President Donald Trump is adopting a less confrontational approach with Beijing. How does Singapore view the state of China-US relations?

DPM Tharman: The most important relationship in the region and globally is between China and the US. It defines the peace, security and prosperity of the region and the world. By virtue of their economic ties and geopolitical weight, both countries have made important contributions to the stability and development of the region.

Economic competition between China and the US is both inevitable and desirable in a dynamic world economy. But there are also deep interdependencies and many opportunities for win-win cooperation. This is true in bilateral trade and investment flows between the two economies. It is also true that China and the US both benefit by upholding an open world order.

We therefore hope that the China-US relationship continues to be strong, stable and mutually beneficial. We want to deepen our ties with both countries and keep both constructively engaged in the region. In short, Singapore wants to be friends with both China and the US.

We welcome the recent positive developments in the China-US relationship under the leadership of President Xi and President Trump. If both countries continue their constructive engagement and win-win cooperation, this will only benefit the region and the world.

21st Century Business Herald: About its trade strategy, has Singapore decided to give higher priority to RCEP? What expectations do you have for it? When to conclude the deal?

DPM Tharman: The Regional Comprehensive Economic Partnership (RCEP) is a key priority for Singapore. It will establish an integrated regional market amongst some of the fastest growing economies in the world, such as China, India, Indonesia and Vietnam. Apart from its economic benefits for the region, the RCEP is also a strategic deal, which should strengthen linkages and mutual interdependence between ASEAN and ASEAN’s Free Trade Agreement (FTA) partners.

Singapore is supportive of a high quality RCEP agreement. However, we need to be mindful of the sensitivities and challenges faced by all RCEP Parties, which are at diverse stages of economic development. While we are keen to conclude the RCEP as soon as possible, we are also aware that a quick conclusion of the RCEP cannot come at the expense of a good quality agreement. For the RCEP to work, it has to be substantially meaningful for businesses, and provide a balanced package of benefits for all RCEP Parties. Otherwise, an RCEP agreement in form will not be a useful agreement for businesses around the region, and that would be a lost opportunity for ASEAN and our partners to advance the regional integration agenda.

We have been working closely with all RCEP Parties to maintain good momentum in the RCEP negotiations, and hope to make significant progress this year.

21世纪: 在“一带一路”沿线国家中，新加坡是中国重要的经济伙伴之一。中新两国将如何在这个倡议中加强合作？

副总理尚达曼: 新中两国在“一带一路”倡议下有着广泛的合作，并有很大潜力进一步加深合作。我们可以联合两国优势，促进亚洲地区一体化，推动区域增长进入新阶段。来自中国商务部的统计数据显示，新加坡对中国的投资占“一带一路”国家对华投资总额的85%，中国对新加坡的投资占中国对“一带一路”国家投资总额的近三分之一。

我们的第三个政府间合作项目，以重庆为运作中心的中新（重庆）战略性互联互通示范项目在2015年11月被指定为“一带一路”示范性重点项目。我们现在正致力于开发通过重庆和新加坡连接中国西部和东南亚的“南方交通走廊”。该走廊将连通“丝绸之路经济带”和“21世纪海上丝绸之路”。

今年2月，中新双边合作联合委员会首次将“一带一路”合作纳入日程。在今年5月举办的首届“一带一路”国际合作高峰论坛上，两国政府签署了“一带一路”合作备忘录。两周前，在新加坡外长维文·巴拉科瑞斯南访问北京期间，维文部长和王毅部长同意两国将在“一带一路”倡议下打造互联互通、金融合作及第三方合作三个平台。

在金融合作领域，我们政府可以与私营部门共同努力，从以下方面着手深化合作。首先，吸引更多私营部门为基础设施项目提供融资；其次，拓展亚洲债券市场的作用，促进机构投资者的参与，与传统的银行融资渠道实现优势互补；再次，为“一带一路”项目制定适当的风险管理解决方案，如通过联合投保来促进专业知识共享，通过能力聚焦为复杂的大型基础设施项目定制风险保障方案。

简而言之，新中两国“一带一路”合作的潜在成果将为整个地区带来投资和增长机会。

21世纪: 近日，港铁表示要和中铁联合竞标350公里的新马高铁。日韩法美等国的公司也表示有意参与项目。你如何评价中国在高铁建设方面的优势和劣势？这是EPC项目，还是BOT/PPP项目？若是后者，投资企业可获得多少年的运营权？这个项目何时开始招标？

副总理尚达曼: 新加坡和马来西亚已同意联合为新加坡-吉隆坡高铁进行国际招标。包括李显龙总理在内的多位新加坡领导人都曾搭乘中国高铁，并觉得中国高铁舒适、准时、可靠。鉴于中国广泛的高铁经验，我们欢迎中方企业参与投标，我相信他们定会提出有竞争力的高质量竞标计划。

我们预计在2017年末启动铁路资产与车辆各系统招标工作。这是新加坡和马来西亚联合启动的公私合作（PPP）招标项目。新加坡和马来西亚将会以公平、公开、透明的方式给予所有的竞标者慎重的考虑。

21世纪: 中新第三个政府间合作项目——重庆互联互通项目——得到了两国政府的高度重视，双方都希望将它打造成“一带一路”倡议、“西部大开发”和“长江经济带”的重点示范项目。请介绍一下该项目在金融、航空、交通物流和信息通信技术四个重点领域的进展。

副总理尚达曼: 自2015年11月启动“中新 （重庆） 战略性互联互通示范项目”（CCI）以来，两国已取得良好进展，特别是在金融服务和航空领域。

截至2016年底，跨境融资交易额已经达到32.2亿美元。这些跨境人民币融资渠道有效地为重庆企业降低了0.7个百分点的融资成本，共节省1.52亿元人民币（3090万元新币）。

新加坡与中国西部地区之间的空中互联互通也得以提升。新渝往返航班服务从每周5次增至14次。航线已延伸至乌鲁木齐。目前，新加坡樟宜国际机场正在与重庆机场集团有限公司合作组建商业管理合资公司，负责重庆江北国际机场的非航空业务。这是将重庆江北国际机场打造为世界一流机场的第一步。

中新 （重庆） 战略性互联互通示范项目为新中两国互学互鉴提供了平台。借此机会，新加坡企业可以通过重庆在中国西部地区分享专业知识并拓展业务，而中国企业则可以利用新加坡的东南亚门户地位进驻东南亚市场。这样就形成一个“互为枢纽效应”，使新中企业都从中受益。

21世纪: 自2013年起，新加坡一直是中国最大投资来源国。近年来，新加坡在华投资的形式、行业、区域有哪些变化？

副总理尚达曼: 2016年，新加坡在中国的投资达到了62亿美元，使得新加坡连续第四年成为中国最大的投资来源国。这些投资的大部分都流入了中国的制造业、房地产、批发以及零售业领域。新加坡企业习惯于在中国的沿海城市进行投资，然而近年来也开始进军中国的中西部地区。

中国的城市化发展潜力巨大、中产阶层不断发展，新加坡企业将有越来越多的机会，提供高质量的城市解决方案、物流交通、生活方式、教育、医疗等产品服务，从而贡献自己的力量。

21世纪: 中新两国自2016年起已为双边自贸协定（CSFTA）升级进行了三轮谈判，目前取得了哪些进展？预计什么时候达成？升级后的CSFTA将有哪些变化？

副总理尚达曼: 2015年11月，习近平主席对新加坡进行国事访问，其间中新两国启动自由贸易协定升级谈判。之后的三轮谈判取得了良好进展。协定升级的范围是广泛的，有希望在投资条款、贸易便利化以及贸易救济措施方面做出改善；同时改善对于商品和服务贸易企业的市场准入。

为紧跟全球发展，升级的中新自贸协定还将涵盖譬如竞争政策、电子商务以及环境等新领域。新加坡期待与中国共同努力，打造一个实质性的、全面的、互利共赢的升级版中新自贸协定，这将为我们两国当前以及日后的合作提供更强有力的支持。

21世纪: 新加坡金融管理局（MAS）于2016年6月宣布将人民币纳入新加坡官方外汇储备。新加坡目前所持人民币资产的规模如何？如何看待东盟对人民币需求的变化？作为东南亚最重要的金融中心，新加坡是否从中看到商机，特别是在“一带一路”倡议的推动下？

副总理尚达曼: 截至2017年3月，新加坡人民币存款总额达到1270亿元人民币（258亿元新币）。

随着中国与东南亚地区互联互通的不断提升以及跨境交易和投资的强劲发展，东盟对人民币的需求应该会快速增长。位于新加坡的金融机构有能力与该地区的中国企业合作，并通过贸易、金融和投资来加强中国与亚洲的联系。

已经有6500多家中国企业在新加坡设立了分部。其中有很多企业已经设立了区域金融和资金管理中心，利用新加坡的银行和资本市场来助力其在该区域拓展业务。新加坡的八家中资银行也不断扩展业务，以便为中国和地区企业的活动提供资金支持。

作为一个区域金融中心以及世界上最大的人民币离岸中心之一，新加坡在资助和推动“一带一路”项目方面可以发挥关键作用，尤其是在东南亚地区。新加坡的银行正积极帮助中国企业把握“一带一路”倡议的契机，开拓东南亚市场，其中一个例子就是大华银行和中国国际商会在本月早些时候宣布签署的谅解备忘录。同样，中国在新加坡的银行也调拨了超过1000亿新元资助新加坡企业参与“一带一路”项目，包括发行项目债券以满足“一带一路”的融资需求。中国银行新加坡分行在上月发行了6亿美元的“一带一路”倡议相关债券。2016年8月，中国建设银行新加坡分行也发行了10亿人民币（1.46亿美元）的“一带一路”倡议相关债券。

21世纪: 新加坡2016年经济增长仅有2.0%，低于2010至2015 的4.1%复合年均增长率（CAGR）。你如何预测今年的增长率？新加坡经济近年来增长缓慢的原因是什么？

副总理尚达曼: 新加坡经济近期增长放缓，部分反映了外部需求的增长放缓。例如，在过去几年里，由于全球需求疲软，新加坡制造业、批发贸易、海洋和离岸工程行业的增长也随之放缓。

2017年，新加坡经济可能会高出2016年2个百分点，符合全球增长改善预期。

尽管如此，增长放缓的根本原因是结构性原因，而不是周期性原因。我们的劳动人口增长比以前慢得多，就像中国香港或韩国一样。此外，内向型经济部门生产率增长疲软，落后于依然强劲的外向型部门生产率增长。因此，我们的未来战略旨在提振生产率增长，尤其是在国内部门。这些努力正在开始显现成果，这些部门的创新越来越多。

从中期来看，新加坡的潜在GDP年均增长率可达2%至3%，主要靠生产率增长拉动。这一经济增长率将优于处于类似发展阶段、类似低劳动力增长阶段的大多数发达经济体的表现，与东亚其他发达经济体的情况不会有所不同。随着本地劳动力增长的持续减缓，未来增长将主要依靠生产率增长。

21世纪: 5月中旬，中美发布《中美经济合作百日计划早期收获》十条内容，美方还派代表参加“一带一路”国际合作高峰论坛。这被外界视为是美国总统特朗普对华态度改善的重大信号。新加坡如何看待中美关系的现状？

副总理尚达曼: 中美关系是地区内以及全球最重要的双边关系，对地区和世界的和平、安全和繁荣有着重大影响。两国凭借其经济交往和地缘政治上的分量，为地区的稳定与发展做出了重要贡献。

在一个蓬勃发展的世界经济中，中美之间的经济竞争是必然也是可取的，也是不可避免的，但同时两国也有深厚的相互依存关系和许多双赢合作机会。这体现在两国双边贸易和投资流动之中。两国均通过坚持开放型全球秩序而获益。

因此，我们希望中美继续保持紧密、稳定和互惠的关系。我们希望与两国加深关系，也希望两国在地区事务中继续发挥建设性作用。简而言之，新加坡希望成为中国和美国共同的朋友。

我们欢迎近期中美关系在习近平主席和特朗普总统的带领下所达成的积极进展。如果两国能继续保持建设性参与和双赢合作，将只会有利于地区和世界。

21世纪: 在贸易政策方面，新加坡是否已经决定给予区域全面经济伙伴关系（RCEP）更高的优先级别？对它有什么期待？希望何时谈完？

副总理尚达曼: RCEP是新加坡的一项优先要务。RCEP将建立一个包括中国、印度、印尼、越南等全球增长最快经济体的一体化区域市场。除了谋求区域经济利益以外，RCEP还是一个战略协议，它应当加强东盟与东盟自贸协定伙伴关系国之间的联系和相互依存关系。

新加坡支持高质量的RCEP协议。但是，我们需要注意处于不同经济发展阶段的所有RCEP缔约方面临的敏感问题和挑战。尽管我们希望尽快缔结RCEP，但是我们也意识到，RCEP的快速缔结不能以牺牲协议质量作为代价。为了使RCEP发挥作用，RCEP必须对企业具有实质意义，必须提供一套能够令所有RCEP缔约方获益的平衡利益机制。一个形式化的RCEP协议对区域內的企业来说没有什么用处，而且会浪费东盟和伙伴国共同推进区域一体化进程的良机。

我们一直在与所有RCEP缔约方密切合作，以便在RCEP谈判中维持良好势头，并希望今年取得重大进展。