POWER PLAY: The New Dynamic of Business and Investment
Opening Remarks
by Associate Professor Simon Tay, Chairman, Singapore Institute of International Affairs
Your Excellencies, SIIA members, ladies and gentlemen: Good morning and welcome to the ASEAN and Asia Forum 2014. Thank you for taking time to be with us. On behalf of the Singapore Institute of International Affairs, I would like to acknowledge and thank our keynote speakers: HE Mr John Tsang, Financial Secretary of the Hong Kong SAR, and especially our Guest of Honour and Opening Keynote Speaker, His Excellency U Soe Thane, the Coordinating Minister for Economic Development in the President’s Office of Myanmar. The SIIA is happy to convene the ASEAN and Asia Forum today and is grateful to our sponsors for their support.
Now in our seventh year, the Forum is our flagship event to look out at key events in our region. This is part of the SIIA’s broader mission to provide insight and perspectives on the politics and economic policies that matter to regional businesses. We are well poised to do this.
As Singapore’s oldest think tank, we are partners in the long established network of ASEAN think tanks, one from each country. We look not only at politics and economic policy. We also look more broadly at issues such as sustainability and resources, with the global challenges of climate change, as well as the recurring haze that hits our region. A global survey has ranked us as the best think tank in the region. And for this year, we are very honoured, when Myanmar is chairing ASEAN, that the SIIA has been working with their ministries and think tank to advise on issues relating to ASEAN.
In addition to our links to governments and policies, the SIIA is grateful to have you as our corporate members, some of the leading companies that do regional business from Singapore – both Singapore and foreign MNCs. Also many eminent Singaporean experts and global citizens are among our individual members. I am especially happy to see, spending his morning with us, is Mr. JY Pillay, the Chairman of the Council of Presidential Advisors. And if I may tell the audience, Mr. Pillay, we are very grateful to you for accepting our honourary membership at the end of this year. Thank you, Mr. Pillay. As a membership-based organization, we try to understand the corporate perspectives about what impacts businesses, as well as the human concerns about what is happening in the world.
In this sense, we hope to bring these elements together in this Forum: the content and experts on policy, together with participants from corporations and advisory firms who experience what is happening for businesses on the ground. The SIIA stands at the conjunction of politics, economic policy and business. And with this in mind, the theme we have selected this year is “Power Play: The New Dynamics of Business and Investment”. Allow me to briefly mention some issues the Forum will explore.
Our region is experiencing significant political and security tensions. Asians are now awake to the fear of armed conflict. A recent survey of 11 Asian countries reports that more than half those surveyed expressed concerns that tensions over rocks and islets could spill over. This Forum will not discuss the merits of these claims in themselves, but what we hope to consider are the implications for businesses and stability for investment.
There are impacts on ASEAN and plans to form our integrated economic community by 2015. The estimates are that are by last year August, only about 80 per cent of the planned steps have been achieved. That’s not too bad, but what is unsaid is that the remaining tasks are probably the most difficult to accomplish. One of our panels today will therefore discuss what ASEAN means for business. But my own view is that it is already clear that the integration will neither be complete nor on time. The year 2015 will be more of a milestone rather than a deadline, and it makes a big difference therefore, that the politics keeps ASEAN united, and continues to integrate. Many small things will happen. Like, today, Singapore, with our closest neighbour, we see the causeway jammed over some reaction to policy changes. And if you see the bigger picture of the whole of ASEAN integration, this will be a challenge many times over.
But this is where the maritime issues, which seem so far away, get tricky and complicate ASEAN integration. Only four ASEAN members are claimants to the disputed rocks and islets in the South China Sea. So the danger, the real danger, is that some members will experience friction and even conflict, whereas others continue to court and secure favourable aid, trade and investment from Beijing.
The Sino-Japanese tensions are another factor. These are not limited to their bilateral relations, these after all are the two largest Asian economies and hugely influential on our region. For investment, our region has already seen a clear resurgence in Japanese investment, buoyed by Abenomics. From 2012 to 2013, Japanese corporate investments in Southeast Asia doubled to reach US$22.8 billion. This amount is three times what they send into China. We hope that Panel 1 will therefore explore China-Japanese interests and their tensions, and how they will impact us.
But what about China? From China, both the mainland and especially perhaps, Hong Kong SAR, investor interest in ASEAN has also been increasing. We therefore look forward to hear from HE John Tsang about Hong Kong’s positioning as Asia and ASEAN come together.
One of the key areas is infrastructure. The region currently requires US$8 trillion to fund its infrastructure, and this is necessary to maintain growth. Both China and Japan can be key players. ASEAN’s own fund has targeted a modest US$13 billion, and started with only US$500 million. That sounds a lot to me, a poor professor, of a poor institute, but in terms of infrastructure, it is not enough. Japan will supply some of this. It has a long track record in helping build infrastructure in the region, whether working through the private sector, the ADB, or government to government. But now, China shows considerable ambition with a pledge of US$100 billion to kick-start an Asian Infrastructure Investment Bank (AIIB), this might rival the World Bank and the Asian Development Bank. Singapore, our country, has expressed the intention to accept China’s invitation to become a founding member of this infrastructure bank, and this could stir Singapore’s ambitions to become a hub to finance infrastructure.
These are some of the impulses and trends that Singapore and all ASEAN countries are experiencing, both the opportunities and risks – what could become a “Power Play”. But none of the ASEAN countries experiences more, perhaps, than Myanmar. It is the current chairman of ASEAN, and the upcoming ASEAN Ministerial meetings to be hosted in Naypyitaw will be closely watched. This is Myanmar’s first time as chair and, in my view, it has discharged its duties admirably thus far. We are therefore very honoured to have His Excellency U Soe Thane share his perspectives on ASEAN and Myanmar in the opening keynote.
But the power play is also relevant to Myanmar’s own political and economic opening. Since the country opened its doors in 2011, interest has come from many including Japan and the USA, and Hong Kong, I hear, whereas for many years, the most prominent investor was mainland China. Now its opening is into its third year, there is, I think, more recognition not only of the potential opportunities in that great country, but also on the real and continuing challenges. Recently, Washington DC has decided to continue its sanctions, rather than rolling them back. Questions are rising about the elections slated for 2015 as well as the improving relations with ethnic minorities. The current administration of President Thein Sein has done very well, but it must focus on getting more things done in the remaining time it has in office. So we look forward to revamps to laws and agencies that will continue to try to make investment easier and to help projects get up and running, and the final panel of the day will look at Myanmar specifically.
Allow me to close. I wish to close by thanking not only our keynote speakers, His Excellency Tsang and Minister U Soe Thane, panelists and sponsors, but also all of you for being here today. The ASEAN and Asia Forum aims to be the leading one-day forum to share insights with businesses about regional politics and economics, so that these really matter to what is happening for companies. The SIIA’s goal is to be a think tank for thinking people. It is therefore only possible with your time and active participation. Thank you.
