SM Goh Chok Tong at the Singapore-China Business Association 40th Anniversary Gala Dinner

It gives me great pleasure to join you today to celebrate the 40th anniversary of the Singapore-China Business Association (SCBA). Since we established diplomatic relations with China 20 years ago, we have developed strong ties at the government-to-government, business-to-business and people-to-people levels. Vice President Xi Jinping’s recent visit has further broadened and deepened our bilateral cooperation.

Singapore-China Economic Relations

Economic cooperation remains the cornerstone of our bilateral relationship with China. Our trade with China has grown immensely and China is now Singapore’s 3rd largest trading partner. China has also become our top investment destination. The investment flow is two way. More Chinese enterprises are using Singapore as a springboard to expand their businesses into the region. To date, more than 3,000 Chinese companies are operating in Singapore and close to 160 are listed on the Singapore Exchange.

Our bilateral cooperation has borne fruits in two government-to-government flagship projects: the Suzhou Industrial Park and Tianjin Eco-City. Another project, the Guangzhou Knowledge City, is a private sector project which will receive support from both the Singapore and Chinese governments. The signing of the China-Singapore Free Trade Agreement in 2008 marked another milestone. In addition, to further our companies’ interest in China’s provinces, we have set up 7 provincial business councils in Guangdong, Jiangsu, Shandong, Sichuan, Liaoning, Tianjin and Zhejiang.

SCBA’s Contributions to Bilateral Economic Relations

As the oldest Singapore trade association involved in promoting trade with China, SCBA and its former entity “Singapore Chinese Merchandise Import-Export Association” have helped to bring businesses and people from both countries together. It has provided a platform for businesses from both sides to interact, explore market opportunities and find valuable partners. This was particularly important in the days before the government played an active role in facilitating business interest in China. The SCBA has continued to stay relevant through the years. It has kept its members plugged into new opportunities arising from China’s development by organising frequent business missions to emerging regions and through its active participation in China trade fairs.Over the past 40 years, SCBA has strengthened its membership base. It has a core of some 400 Small Medium Enterprises (SMEs). At the same time, I am happy to see that more Chinese companies here in Singapore, such as the Agricultural Bank of China, Baosteel and COSCO, have become SCBA members. These companies can become valuable partners of Singapore companies with operations in China.

Leveraging on China’s Growth and Opportunities

Singapore companies are well-positioned to ride on China’s growth. We have built a strong supportive economic framework with China. Our companies are familiar with the operating environment. Our cultural affinity also gives us an edge in establishing mutual understanding and business partnerships. Our bilingual ability in English and Mandarin is certainly a great advantage.

Let me share two observations on China’s growth and potential areas which our companies can tap on. First, China will undergo an unprecedented rate of urbanisation. In the next 20 years, 350 million more people will live in Chinese cities. By 2030, Chinese cities will house two-thirds of China’s population and generate more than 90% of its GDP. The city clusters around mega cities like Beijing and Shanghai will need increasing investments in infrastructure and transportation linkages.

These developments bring opportunities for companies with strengths in serving an urban population. As China will encourage more domestic consumption to support its growth, our companies can offer services like education and healthcare. They could sell products and services tested in Singapore to a growing and more affluent Chinese middle class.

Second, inland second and third tier cities, particularly those in Central and Western China, will emerge as new growth areas. With rising labour costs in coastal provinces and better transportation links to the inland areas, these second and third tier cities will continue to attract more investments. Recently, Chengdu and Chongqing, both in Western China, were identified by Forbes Magazine as two of the world’s fastest growing cities in the next decade.

At the same time, coastal provinces are upgrading their economic structures and attractiveness. Second and third tier cities along the coast are likely to tie their development to first tier cities like Beijing and Shanghai. For example, the growth potential of small and medium-sized cities such as Jiaxing in Zhejiang province along the Shanghai-Hangzhou high speed rail has increased with better connectivity to Shanghai.

Encouraging SMEs to Ride on China’s Growth

As more Singapore SMEs make inroads into the Chinese market, they can tap business opportunities in China in a number of ways.

First, make full use of the China-Singapore FTA to lower business operating costs. I encourage Singapore companies to deepen their understanding of the FTA so as to gain maximum benefits from it. We also encourage companies to provide feedback to the government through associations like SCBA, to help us improve the FTA to better meet the needs of the business community when we next review it.

Second, leverage on Singapore’s seven provincial business councils to further your business interests in China. These councils have been established for provinces which are amongst Singapore’s top 10 trade and investment destinations in China. We already have a degree of familiarity with the local governments and markets in these regions. These councils can help reduce your start-up risks as you enter the Chinese market.

Third, leverage on business associations to venture into the Chinese market. The Economic Strategies Committee had recommended that trade associations and chambers do more to facilitate market access for Singapore businesses. With its strong China network, I am confident that the SCBA will continue to play a useful role in finding more business opportunities and valuable partners for its members.

Conclusion

As China’s development continues, new opportunities will emerge. More than ever, trade associations such as SCBA will have an important role to play. I encourage SCBA to continue to grow its membership. With SCBA’s strong network and experience in engaging China, I am confident SCBA will continue to play a significant role in promoting trade and investment between Singapore and China.

I wish you a pleasant evening.