Remarks by Prime Minister Lee Hsien Loong at the Korea International Trade Association (KITA) Luncheon

Dr Han Duck-Soo

Chairman & CEO of KITA

Distinguished guests, ladies and gentlemen

 First, may I thank Dr Han and KITA for organising this lunch. I am very happy to be back in Korea and at an exciting time for the world and Asia. If you look at the global economy in the last few years, there have been considerable difficulties in America and Europe and the developed countries in general. Asia has come through relatively unscathed in comparison. One reason has been that our Asian economies have learnt our lessons from the previous Asian Financial Crisis back in the late-1990s, especially Korea. So we have restructured our economies, opened up, liberalised, worked out our banking systems and therefore, are in a stronger position.

Southeast Asia is a bright spot on the map. It has great potential for growth overall, even though each individual country has its own challenges, as do countries elsewhere in the world. We are making progress towards an ASEAN Economic Community by 2015 – a step which will bring our economies closer together, and allow us to integrate our trade, our investments, our services, our communications and air services, and fuel regional growth by creating an integrated production base where goods can flow freely and seamlessly.

In the wider Asian region, countries are pursuing closer economic integration with one another and the world. China, Japan, Korea are negotiating a trilateral FTA. We also have other FTA initiatives underway – the RCEP which Korea is part of, which covers all the major economies on the Western side of the Pacific; and the TPP, which I believe Korea is considering joining, and discussing with the TPP participants which brings together both sides of the Asia-Pacific, the Americas, Asia, Australia, New Zealand, Japan and we hope, Korea too. Both these schemes - the TPP and RCEP – are pathways towards what we hope eventually will be a Free Trade Area of the Asia-Pacific.

So all in all, the outlook for Asia is bright, provided we have peace and stability in Asia. It is a big proviso, it is something that I am sure the Korean business people are very conscious of because of the Korean peninsula, and you have your local problems here to deal with. Nevertheless, next year Asia is expected to outgrow the rest of world again - one and a half times faster than the rest of the world. So there are many exciting possibilities for Korean companies who are well represented in the region.

Singapore admires Korea’s achievements greatly. You recovered quickly from the Global Financial Crisis and there are many strengths. I remember during the GFC, how vigorously your Government and your President then, Mr Lee Myung-bak, went about reinforcing Korea’s position to buttress itself against the waves and storms, e.g. working out swap arrangements, stabilising the country domestically, cooperating with other countries in the region. Hence Korea came through much better and faster than we all expected.

You have many strengths, e.g. world class companies, innovative start-ups, bright young people, and significant soft power thanks to K-Pop and K-Drama which are very popular all over the world, including in Singapore. Now, you are transitioning to a “creative economy” to fulfil President Park’s vision of a new era of hope for the Korean people.

Singapore is also making steady progress. We are constructing a high quality living environment for our people, we are maintaining a pro-business climate for companies, Singaporean as well as foreign, and we are integrating ourselves closely with the region and the global economy, e.g. ASEAN Economic Community, TPP, RCEP.

But Singapore society and economy are in transition. We are adapting to a changing world. We are at a more mature stage - higher GDP, more difficult to make further improvements in productivity and performance. Also, new social needs as our people reach higher levels of education and our society ages. Therefore, we are pursuing quality and inclusive growth – not growing by expansion alone, but by raising our capabilities, upskilling our workers, and restructuring our economy. And also by staying open to global investments and talent, while remaining mindful of our social and physical constraints. I was talking to my host, and he was telling me how his company has been in Singapore for 30 plus years and how satisfied he has been with the projects he has done in Singapore. They have done well, they have met their objectives, and Singapore remains a good place where companies can do business. He asked me to maintain these policies and this consistency over a long period of time so that companies can continue to have the confidence to invest and help us to build our economy. I said yes of course, that is exactly what we are going to do, and that is my message to Korean businessmen too.

There are many areas for Singapore and Korea to work together - our companies as well as our two countries. For bilateral trade, we have a FTA between Singapore and Korea that was concluded in 2006, and in the trade world, seven years ago was quite a long time. I think we need to enhance our bilateral FTA to bring it up to par with our other bilateral FTAs. Singapore can also be a base for companies operating in the region. Singapore is a good regional base for Korean companies to gain access to the ASEAN market and beyond. Korean companies can take advantage of Singapore’s unique position to tailor solutions, products and even business models to cater to the needs of Southeast Asian markets, South Asian markets and even Australian markets, using Singapore to locate your headquarters, to bring your R&D activities and design work, and selectively, your production work as well, so that out of Singapore, you can extend your reach to a further part of the world.

Several have done so, e.g. AmoréPacific, one of Korea’s leading cosmetics company. It set up an innovation centre in Singapore to conduct R&D with our research institutes to tailor products for the Southeast Asian market, because Asian skin is different from Western skin, and hence Asian cosmetics will be different from Western cosmetics, and of course Asian beauty will be better than Western beauty. By doing the research in Singapore, you have the materials, ideas, population, you will be able to get the products. For example, Amoré has produced Laneige Snow BB Soothing Cushion for Southeast Asian skin, and it has set up its Asia-Pacific headquarters and first flagship outlet in South East Asia for its premium brand Sulwhasoo in Singapore. We welcome more Korean companies to do the same. Our Economic Development Board and IE Singapore have set up offices in Seoul to promote such projects. They just gave you a briefing just now and I hope you found it interesting and useful.

Business organisations such as KITA are important bridges between our two economies and business communities. The SBF-KITA Korea-Singapore Business Roundtable (KSBRT) celebrates its 10th anniversary this year – it has helped bring our businesses together to explore opportunities. I think it must have been the matchmaker for quite a number of joint ventures and projects. So I encourage our businesses to utilise this and other platforms, such as the ASEAN-Korea Centre and the MOU on Third Country Collaborations between IE Singapore and the Ministry of Trade, Industry and Energy (MOTIE) to explore collaborations in third countries.

I hope that by taking all these avenues together, in a changing world and a dynamic Asia, Korea and Singapore can do well and enhance our friendship for many years to come.

Thank you.