Singapore - Joint Statement by the United States of America and the Republic of Singapore

1.      At the invitation of the President of the United States of America Barack Obama, Prime Minister of the Republic of Singapore Lee Hsien Loong made an official visit to the United States to celebrate 50 years of diplomatic relations and to enhance the bilateral strategic partnership.  For half a century, the two countries have built a strong relationship anchored by robust economic cooperation, security and defense cooperation, and enduring people-to-people ties.  Beyond bilateral cooperation, the two countries have worked as close partners to build a rules-based economic and security order for the Asia-Pacific and to address challenges on the global stage, including economic prosperity, climate change, terrorism, transnational crime, and the proliferation of weapons of mass destruction.   On the occasion of the visit and the August 2, 2016 meeting between the two leaders, the United States and Singapore adopted this Joint Statement, affirming a continued commitment to advancing their strategic partnership in the areas below.

Supporting Robust Economic Cooperation and Commercial Connectivity and Driving Innovation

2.      The U.S.-Singapore economic and commercial relationship provides a model to the world for how open markets and fair trade practices increase prosperity and drive innovation.  Our shared economic priorities embrace trade liberalization, market reform, trade security, capacity building, innovation, entrepreneurship, climate change mitigation, clean energy, intellectual property protection, fair labor practices, and cyber security.  Today, over 3,700 U.S. companies are located in Singapore, making Singapore a premier destination for U.S. businesses. A growing number of Singapore companies have also established a presence in the United States.

3.      The two sides noted that the U.S.-Singapore Free Trade Agreement, the first such U.S. agreement in Asia and now in its 12th year, is a gold-standard agreement that has shaped other bilateral and multilateral FTAs in the region.  The largest of these, the Trans-Pacific Partnership (TPP), reflects the commercial dimension of the U.S. rebalance to Asia and Singapore’s commitment to high trade standards.  Both countries emphasized the strategic and economic importance of all participating countries to ratify the TPP agreement expeditiously, and both committed to strengthen trade capacity building among TPP members.

4.      The two leaders affirmed efforts to support expanding economic ties through closer cooperation on bilateral tax issues, and noted ongoing discussions between the two sides on  a tax information exchange agreement (TIEA), which will permit our two countries to exchange relevant tax information to enforce our respective tax laws, and an intergovernmental agreement (IGA) that provides for reciprocal automatic exchange of information with respect to certain financial accounts under the Foreign Account Tax Compliance Act (FATCA).  Both sides are committed to complete negotiations and sign the TIEA and the reciprocal FATCA IGA as soon as possible with the aim of doing so by the end of 2017. The leaders noted the two countries would ‎maintain discussions on whether to negotiate an Avoidance of Double Taxation Agreement in the future, taking into account double taxation with respect to both U.S. investments in Singapore and Singaporean investments in the United States and our mutual interest in avoiding base erosion and profit shifting by multinationals.

5.      The two leaders forged new cooperation on Smart City development and digital innovation.  This includes (a) identifying opportunities for research collaboration between the National Science Foundation and the Singaporean National Research Foundation, (b) sharing of best practices and information exchange between both Governments on topics such as smart city policies, digital government, urban innovation and digital citizen engagement, through, among other things, the Digital Government Exchange forum to be held in Singapore and the Discover Global Markets: Building Smart Cities forum to be held in Chicago, and exchanges between the White House Office of Science and Technology Policy and the Smart Nation Program Office in the Prime Minister’s Office; and (c) facilitating exchanges for start-ups, as reflected in the MoU between the city of Austin and Singapore.

6.      The two nations look forward to deepening their economic cooperation including under the U.S.-ASEAN Connect (“Connect”) initiative, announced in February 2016 by President Obama during the U.S.-ASEAN Leaders Summit at Sunnylands.  As the strategic framework for U.S. economic engagement with ASEAN, Connect will build upon U.S. government economic initiatives within ASEAN to support regional integration efforts and cooperation with the private sector. Singapore offered support for a new Connect program focused on the digital economy, which could include innovation policy workshops under the Third Country Training Program.  The two leaders confirmed collaboration on the third US-ASEAN Connect event to be held in Singapore in 2016, which will focus on themes such as digital economy and financial technology (FinTech). The inaugural Singapore FinTech Festival will be supported by the Connect Center in Singapore and the United States Department of Commerce.  The two leaders welcomed the signing of an MOU between the US Department of Commerce and Singapore's Ministry of Trade and Industry to promote collaboration in the infrastructure sector between US and Singapore companies in Southeast Asia and third-party markets.

Enhancing Security and Defense Cooperation

7.      The two leaders reaffirmed the strong bilateral defense partnership, underpinned by the 1990 Memorandum of Understanding and 2005 Strategic Framework Agreement, and most recently elevated by the 2015 Enhanced Defense Cooperation Agreement.  Singapore trains or stations approximately 1000 personnel each year in the United States.  The United States deploys aircraft and ships to Singapore on a rotational basis to conduct a variety of regional maritime patrol activities covering counterpiracy, counterterrorism, humanitarian assistance, and disaster response. President Obama welcomed Singapore’s continued interest in the F-35 aircraft.  The two leaders expressed support to explore new training opportunities for the Singapore Armed Forces in Guam, with an eye toward a potential long-term training detachment for the Republic of Singapore Air Force. 

8.      The United States and Singapore are committed to broadening and deepening our cooperation to promote an open, interoperable, reliable, and secure global Internet that supports innovation, economic growth and social development.  We are committed to ensuring that the digital economy remains a force for robust economic growth and prosperity.  Both sides expressed strong support for the new U.S.-Singapore MOU on Cooperation in the Area of Cybersecurity, which lays a foundation for expanding our cooperation on cyber issues.  The United States and Singapore affirmed their support for the multi-stakeholder approach to Internet governance.  We reaffirm, moreover, that the same rights that people have offline must also be protected online. Both sides pledged to deepen their information exchange and sharing, to conduct new bilateral initiatives on critical infrastructure cybersecurity, and to continue to cooperate on cybercrime, cyber defense, and on regional capacity building activities, including through joint exercises, regular exchanges and visits, joint R&D and capability development, regional cyber capacity building programs or initiatives.

9.      The two leaders endorsed a common approach to international cyber stability, affirming that international law applies to State conduct in cyberspace, and committing to promote voluntary norms of responsible state behavior in cyberspace.  The United States and Singapore affirm that no country should conduct or knowingly support online activity that intentionally damages critical infrastructure or otherwise impairs the use of critical infrastructure to provide services to the public; that no country should conduct or knowingly support activity intended to prevent national computer security incident response teams (CSIRTs) from responding to cyber incidents, or use CSIRTs to enable online activity that is intended to do harm; that every country should cooperate, consistent with its domestic law and international obligations, with requests for assistance from other states in mitigating malicious cyber activity emanating from its territory; and that no country should conduct or knowingly support cyber-enabled theft of intellectual property, including trade secrets or other confidential business information, with the intent of providing competitive advantages to its companies or commercial sectors.

10.  First discussed by both Leaders when they met in 2013, both leaders welcomed a new joint statement to extend the Law Enforcement and Homeland Security, and Safety Cooperation Dialogue for another 3 years, which reinforces the strong cooperation in law enforcement matters, including counter-terrorism and anti-corruption, between the two countries.  The two leaders also welcomed the MOU, which will be signed in September, between Singapore’s Home Team Academy (HTA) and the U.S. Federal Law Enforcement Training Centers (FLETC) to collaborate and share expertise and best practices in law enforcement training, leadership development, and capacity building.  Both countries sought to increase bilateral and regional cooperation to combat internet and computer crime.

11.  The United States has partnered with Singapore on a number of issues related to transportation security. Both sides welcomed the 2016 signing of a Memorandum of Understanding between the Transportation Security Administration and Ministry of Transport on capability development in the Asia-Pacific Region through joint training and capacity building to enhance the level of aviation security standards. The first joint training outreach event will take place in Singapore in 2017 where Asia-Pacific States will be invited to participate.

Addressing Regional and Global Challenges

12.  Both countries reaffirmed their commitment to ASEAN Centrality and to strengthening the regional architecture in the Asia-Pacific, including existing ASEAN-led mechanisms such as the East Asia Summit (EAS) and the ASEAN Regional Forum (ARF) to better address common transnational challenges such as maritime security, climate change and trafficking-in-persons.  The two leaders highlighted the importance of the U.S.-ASEAN strategic partnership, and the principles underpinning this relationship as outlined in the Sunnylands Declaration, for the peace, prosperity, and security of the Asia-Pacific.

13.  The two leaders highlighted the success of the U.S.-Singapore Third Country Training Program (TCTP), which has received more than 700 officials from across ASEAN since its establishment in 2012. They expressed support for its continued growth, including in the areas of trade policy, environment protection, and addressing   non-traditional security threats.

14.  The two leaders resolved to enforce UN Security Council Resolution (UNSCR) 2270, adopted in response to the DPRK’s January nuclear test, which imposes unprecedented sanctions on the DPRK.  The United States welcomed and offered full support for Singapore’s commitment to prevent the proliferation of weapons of mass destruction, including the full and effective implementation of UNSCR 2270.  Both leaders welcomed the commitment to expand bilateral cooperation to ensure the enforcement of this resolution, including on cargo inspections, shipping, and finance. The United States welcomed and offered full support of Singapore's commitment to strengthen advanced cargo screening procedures, which is essential to securing the global supply chain, including through Singapore’s decision to conduct a three-year trial of the World Customs Organization’s Cargo Targeting System. Such measures play an essential role in securing global commerce, not only against proliferation from all sources, but against terrorism and other criminal activity.

15.  The two leaders acknowledged the continued global threat posed by terrorism and the need to enhance information sharing on counterterrorism related issues. The two countries have also co-invested $30 million to date under the 2006 Combating Terrorism Research and Development agreement to improve capabilities to combat terrorism.  Both leaders welcomed the extension of the agreement for another 10 years for investments up to $100 million.  The two leaders reaffirmed their commitment as Counter-ISIL coalition members to degrade and defeat ISIL.  President Obama welcomed Singapore’s commitment to continue existing contributions to coalition efforts, including the deployment of refueling tanker aircraft and an Imagery Analysis Team, as well as Singapore’s new commitment to deploy medical support to Iraq.

16.  The leaders reaffirmed the importance of maintaining regional peace and stability and upholding freedom of navigation in and overflight above the South China Sea.  They emphasized the importance of resolving disputes peacefully, including full respect for legal and diplomatic processes, without resorting to the threat or use of force, in accordance with international law, including as reflected in the 1982 United Nations Convention on the Law of the Sea.  They urged all parties to avoid actions that would escalate tensions, including the further militarization of outposts in the South China Sea.  They reaffirmed their support for the full and effective implementation of the Declaration on the Conduct of Parties in the South China Sea and the expeditious conclusion of a Code of Conduct in the South China Sea. 

17.  Both countries affirmed the importance of addressing climate change and transitioning towards a low greenhouse gas emissions and climate-resilient development pathway, and committed to pursue a range of initiatives to advance these goals. They resolved to work together to implement the historic Paris Agreement.  The United States reaffirms its commitment to join the Agreement this year, and Singapore commits to taking the domestic steps necessary to join as soon as possible, with a view to joining in 2016.  They also called on all nations to support the Agreement’s early entry into force in 2016.  Both nations affirmed the importance of supporting the development and implementation of the transparency framework established under the Paris Agreement, with common modalities, procedures and guidelines. Both nations look forward to the early operationalization of the Capacity-building Initiative for Transparency.  They resolve to explore opportunities to collaborate on institutional and technical capacity-building activities to help other Parties meet the requirements of the transparency framework.  Both countries affirmed their commitment to work to adopt an ambitious and comprehensive hydrofluorocarbons (HFCs) phase-down amendment in 2016 within the Montreal Protocol pursuant to the Dubai Pathway. They supported the adoption of a global market-based measure (MBM) at the upcoming Assembly of the International Civil Aviation Organization for implementation from 2020, as part of a collective effort to address climate change through a comprehensive basket of measures. The leaders emphasized the importance of a global MBM in supporting the aviation industry's desire to grow sustainably and prevent a patchwork of national or regional MBM schemes given the cross-border nature of international flights.

18.  The two leaders commended the adoption of the fifth Plan of Action in August 2015 under the U.S.-Singapore Free Trade Agreement’s environmental cooperation Memorandum of Intent (MOI).  To protect our shared environment, the United States and Singapore commit to strengthen cooperation to conserve biodiversity and ecosystems by combating the illegal trade in CITES species, improving the capacity of institutions, and strengthening policies to ensure effective implementation and enforcement of environmental laws.  Singapore also stated its intention to positively consider implementing a ban on the domestic trade in ivory.  Both countries also look forward to deepening the exchange of information on environmental policies, best practices and the use of innovative environmental technology and pollution management techniques, and to work closely together and with other WTO Members to conclude an ambitious Environmental Goods Agreement (EGA) that eliminates tariffs on a wide range of environmental goods by the end of the year.  We also resolve to cooperate to conserve our oceans and to combat illegal, unreported, and unregulated (IUU) fishing, including by implementing port State measures in recognition of the importance of concerted international action to address IUU fishing as reflected in regional and international instruments, including the Port State Measures Agreement.

19.  The United States and Singapore affirmed their commitment to advance the Global Health Security Agenda (GHSA) to assist other countries to implement the International Health Regulations (IHR) and prevent, detect, and respond to biological threats, whether naturally occurring, deliberate or accidental.  In 2016, the United States underwent a Joint External Evaluation (JEE) of its national capabilities to achieve the GHSA and other IHR-related targets and will publish the results.  In 2017, Singapore will initiate a JEE.  The United States has made a commitment to assist at least 31 countries to achieve the GHSA targets, and Singapore will join two GHSA Action Packages to share best practices to assist others.  Singapore will also provide experts, where available, to support the assessments of other countries, including within ASEAN.

Strengthening People-to-People Ties

20.  Both the United States and Singapore affirmed their commitment to further strengthen the already deep bonds of friendship, cooperation, and mutual understanding between the peoples of the two countries.  The United States welcomed the launch of an exchange scholarship program to mark 50 years of diplomatic relations and deepen people-to-people ties.  The scholarship will fund summer exchange programs for 50 Singaporean and 50 U.S. students over the course of the next 5 years.  In support of the U.S. Young Southeast Asian Leaders Initiative (YSEALI), which has grown into a network of more than 80,000 youth across the region, the U.S. will convene an Urban Planning Workshop in 2017 in Singapore.  Both sides recognized the success of the YSEALI program and the contributions made by its Singaporean participants in promoting innovation, inspiring cross-ASEAN connectivity, and advancing bilateral ties.

21.  The United States was pleased to open Global Entry eligibility to include citizens of Singapore from June 2016.  Singapore in turn allowed Americans to apply for its enhanced-Immigration Automated Clearance System (eIACS) under the Trusted Traveller Program (TTP).  Following the Joint Statement issued by the United States and Singapore on Dec. 1 2014, both countries had worked together to officially launch the TTP on June 27, 2016. The TTP reaffirmed the strong trust and ties that the United States and Singapore enjoy given that Singapore is the 1st ASEAN country to be in the program. These trusted traveler programs will make travel between our two nations more convenient and secure for travelers.

Enhancing our Enduring Partnership

22.  Through a half-century of diplomatic relations, the United States and Singapore have forged an expansive and enduring relationship by cooperating on issues of mutual interest and shared principles.  Both leaders committed to further enhance the U.S.-Singapore strategic partnership, making it deeper, more substantive, and more effective to better support peace, stability, and cooperation across the region and around the world.

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Singapore - Brexit and the false analogies with Asean

Asean is no European Union, and its go-slow approach to integration works well in the region

Governments, political-economic analysts and newspaper editorials all over the world reacted with alarm at the June 23 British referendum result for the United Kingdom to withdraw from the European Union.

In Asia, the vote to exit from the most integrated regional organisation in the world sparked comparisons with Asean, often touted as the most successful regional organisation in Asia and the developing world. Many warned that regional integration had gone too far in Europe. They noted that Asean should be careful with projects like the Asean Economic Community (which might aggravate economic inequalities) and the free movement of eight professions (which might raise fears of job losses).

I would suggest that most of these comparisons are misplaced. Apart from sensitising Asean against taking any ambitious leaps forward on enhanced regional cooperation (that is, more substantive integration), the impact on Asean will be minimal.

First, the EU and Asean are very different animals. The EU's founding fathers envisioned a post-Westphalian regional order based on (French political economist and diplomat) Jean Monnet's vision of a supranational Europe when they formed the European Coal and Steel Community in 1951. This was based on shared political and social values; a sense of a shared "European" identity based on history; a desire not to repeat the nationalist mistakes that led to two world wars; alignment with the US; and opposition to communism. They pledged to transcend the nation-state based on shared sovereign control over sensitive resources linked to heavy industry, weapons manufacturing and atomic energy.

Asean, on the other hand, was founded by five states which sought to consolidate post-colonial regimes, most of which had recently become independent. Unlike their European counterparts, Asean states used their organisation to guarantee and build each nation-state's sovereignty. Non-interference in the domestic affairs of each state and weak centralised coordination (a secretariat did not even come into existence until 1976) were sacrosanct principles.

Even the post-Cold War decision to move towards a low-level Asean free trade area was considered sensitive. There is no single currency, no Asean passport. The "four freedoms" of the EU's single market - free movement of goods, capital, services and especially persons (citizens' right to move and live in any state within the organisation) - are simply absent or restricted in Asean.

Second, the series of concurrent crises in Europe since 2009 has simply put the EU, as it has been conceived, under multiple and severe strain.

The euro crisis, the breakdown of states in the EU's neighbourhood (especially Libya, Ukraine and Syria), the ensuing influx of refugees and the rise of ISIS and terrorism in Europe - these ongoing crises and the difficulty of reaching consensus among 28 member states have simply overwhelmed the capacity of national governments and the EU institutions (Commission, Parliament, European Central Bank) to arrive at common solutions that can placate the heightened anxieties of European publics.

In comparison, the Asean region has been fortunate in having populations and economies that continue growing, with no failed states in the neighbourhood, and it does not face the same scale of displaced persons or a tide of immigrants seeking a better life within its members' borders.

Third, the depth of integration demanded of member states in Asean has been low. Asean's leaders have found the EU integration process very useful as a reference or even a model for its own institutionalisation. But they have been careful to avoid politically sensitive, long-term commitments from which disentanglement could be protracted and costly.

For instance, Asean study teams visited Brussels and Berlin in the aftermath of the 2004 "no" referendum votes in France and the Netherlands to a European Constitution, in order to avoid making similar mistakes in the framing of the Asean Charter .

On transnational crises such as the haze or international ones such as the disputes over the ownership of islands in the South China Sea, Asean has often been criticised for not finding a regional solution or for not speaking with one voice to external powers such as China.

But this avoidance of locking in Asean states' positions into categorical legal commitments has also allowed Asean a measure of flexibility in shifting gears as fast-evolving situations demand. Asean states can and do respond to globalisation pressures without disenfranchising whole socio-economic segments of the population within states, or whole states from the pressures of an "ever closer union".

If there is one lesson of Brexit for Asean, it is that Asean should not take the benefits of regional projects for granted.

Citizens, the media and governments need to know and be reminded that there are tangible benefits to belonging to a regional organisation. The benefits of projects like the Asean Economic Community may not be immediately apparent or evenly distributed to everyone in society (in fact, there might even be some "losers"). But to win public support over the long term, governments, Asean agencies and scholars need to engage in public diplomacy and debates to educate their populations and highlight both the attendant costs and benefits inherent in any regional initiative.

Reuben Wong

Associate Professor Reuben Wong is Director of Studies, College of Alice and Peter Tan, at the National University of Singapore.

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Singapore - The Straits Times' interview with US President Barack Obama

WASHINGTON - In an e-mail interview with The Straits Times ahead of an official visit by Prime Minister Lee Hsien Loong - the first by a Singapore prime minister since 1985 - US President Barack Obama stressed the importance of the US-Singapore relationship in his administration’s rebalance to Asia.

Mr Obama, who will step down in January 2017 after eight years at the helm, also expressed confidence that Washington's emphasis on the region will outlive his presidency.

Here is the full interview:

Q:  You've had a relatively small number of state dinners during your presidency and none for any country in South-east Asia. Can you elaborate on your approach to state dinners and your decision to hold one in honour of PM Lee and Singapore?

A:  State visits are often an opportunity for the United States to reaffirm our ties and friendship with our closest partners around the world. This visit is an occasion to mark the 50th anniversary our bilateral relationship with Singapore, which is one of our strongest and most reliable partners in South-east Asia. 

I look forward to hosting Prime Minister Lee, whose friendship and partnership I appreciate very much and with whom I’ve worked throughout my administration. This will also be an opportunity for me to reciprocate the hospitality that the Prime Minister and the people of Singapore showed to me during my visit to Singapore for the APEC summit in 2009.

This visit also reflects the important role that Singapore plays in the rebalance of American foreign policy to the Asia Pacific. With Singapore’s partnership, the United States in engaging more deeply across South-east Asia and Asean, which is central to the region’s peace and prosperity. Singapore is an anchor for the US presence in the region, which is a foundation of stability and peace. Both our nations are committed to building a regional order where all nations play by the same rules and disputes are resolved peacefully and this visit will be an opportunity to continue deepening our cooperation on behalf of regional stability and prosperity.

More broadly, Prime Minister Lee and I will work to advance the US-Singapore partnership across the board. We’re committed to sustaining the dynamism of our economies with the Trans-Pacific Partnership—the highest-standard trade agreement ever—which will support trade and innovation in both our countries. 

Singapore was the very first South-east Asian nation to join the global coalition against ISIL (ISIS) coalition, and we’ll work to sustain our momentum in destroying that terrorist organisation.

We’ll discuss how we can implement the Paris climate change agreement in order to protect coastal cities like Singapore.

And building on our Young South-east Asian Leaders Initiative, I’m hopeful that we can continue expand the ties and cooperation between our young people and students.

US' REBALANCE TO ASIA TO ENDURE

Q:  You've expressed some confidence that the US commitment to Asia will not fade away after your presidency, primarily because a majority of Americans understand the importance of the region. However, the election campaign thus far seems to show that Americans are not convinced about globalisation, even Donald Trump notwithstanding, Americans of all political stripes seem to be turning inwards. Are you still as confident that the Asia rebalance will persist? What will happen if your successor doesn't attend the annual Asian summits and never hosts another Asean meeting like the one in Sunnylands?

A:  There’s no question that a lot of Americans on both the right and the left are expressing some fears and frustrations about the dislocations brought on by globalisation. Many of those frustrations are legitimate and they need to be addressed. 

But in an interconnected world, I remain convinced that the best way to manage these dislocations and to ensure our security and prosperity is to engage more deeply with countries around the world, not less—especially in the Asia Pacific.

That’s why, over the past eight years, the United States has worked hard to deepen partnerships across the region and across South-east Asia in particular.  We’re now a part of the East Asia Summit and we have a strategic partnership with Asean.  At the US-Asean Leaders Summit I hosted earlier this year in Sunnylands, California, we agreed to a set of principles that will shape the future peace and prosperity of the region, from promoting innovation and furthering economic integration to addressing transnational challenges like global health security and climate change.

I’m confident that America’s foreign policy rebalance to the region will endure beyond my presidency because it’s in the national interest of the United States. The United States has been a Pacific nation for over two centuries. That’s not going to change. That reality transcends election cycles. And just as our past has been integrally linked to the region, so, too, is our future. The Asia Pacific is home to nearly half the world’s population, a growing middle class and holds so much opportunity for us all. It’s no wonder that America’s engagement in the region has strong, sustained, bipartisan support. So I’ll be handing my successor a strong foundation—including closer ties with Singapore—on which to continue building, and I’m optimistic that will happen.

TPP 'WILL GET CONGRESS SUPPORT'

Q:  On the TPP, many observers, including Singapore's PM Lee, have said that if it doesn't happen this year, the chances of it happening at all drop significantly. And that would be a big hit to US credibility in the region.  Do you agree with that assessment and how optimistic are you that it will pass Congress this year?

A:  I remain committed to TPP because it’s a good deal—for America, for the region and for the world. TPP advances America’s economic and our strategic interests.  It would eliminate 18,000 tariffs – basically taxes -- on American products and help us sell more American exports to the Asia Pacific. It levels the playing field for our workers and helps to ensure countries abide by strong labour and environmental rules. It will help strengthen our relationships with partners like Singapore and lay the foundation for even greater cooperation in other areas. It will make sure that we’re writing the rules for trade in the 21st century.

That said, I know that the politics around trade can be very difficult—especially in an election year. There are legitimate concerns and anxieties that the forces of globalisation are leaving too many people behind—and we have to take those concerns seriously and address them. But the answer isn’t to turn inward and embrace protectionism. We can’t just walk away from trade. In a global economy where our economies and supply chains are deeply integrated, it’s not even possible.

The answer is to make sure that trade is working for our people by supporting good jobs, reducing inequality and creating more opportunity. That’s what TPP does. I’ll continue making the case for TPP, and I’m optimistic that the United States Congress will ultimately support this landmark agreement.

SOUTH CHINA SEA RULING 'LEGALLY BINDING'

Q:  The permanent court of arbitration issued its ruling on the Philippines South China Sea case on July 12. What is your administration's approach to the ruling and how will it engage on it with a Chinese government that has already indicated it does not recognise the ruling?

A:  The United States is committed to a regional order rooted in international rules and norms, including freedom of navigation, and the peaceful resolution of disputes. That’s the only way to ensure our common security. We believe that big nations should not bully smaller nations, and that the sovereignty of nations must be respected. And we have long urged that disputes be resolved peacefully, including through mechanisms like international arbitration.

The Philippines made a lawful and peaceful effort to resolve their maritime claims with China using the tribunal established under the Law of the Sea Convention (Unclos). The tribunal’s ruling delivered a clear and legally binding decision on maritime claims in the South China Sea as they relate to China and the Philippines—and that ruling should be respected. We believe this decision can and should serve as an opportunity to renew efforts to address maritime claims peacefully. And we continue to urge China and other claimants to work constructively to resolve these disagreements, so that the South China Sea – which is so vital to the global economy -- can be defined by commerce and cooperation.

RULES-BASED ORDER

Q:  There is a belief in China that the US is practising double standards and double talk and that this belief is impending deeper progress in Sino-US ties. It is not a signatory to Unclos but is pushing China to respect the international law. It is beefing up military alliances with China's neighbours and conducting military operations in China's backyard but issuing alerts over Beijing's military activities or modernisation. What is your response to such views and what can future US governments in response?

A:  The United States believes that every nation should respect international law, including in the South China Sea. This is not an area where we can pick and choose. It is in the interests of all of us—the United States, China and the rest of the world—to make sure that the rules of the road are upheld. These rules and norms are part of the foundation of regional stability, and they have allowed nations across the region, including China, to grow and prosper.

The United States, therefore, works to ensure that any actions we take are consistent with international laws and norms—including those reflected in the Law of the Sea Convention. It’s worth remembering that our presence in the region is nothing new. For more than 60 years, the United States has stood by our allies and partners in the Asia Pacific. That includes our defence partnership with Singapore, which stretches back more than two decades.

Moreover, our alliances and partnerships are not directed against any nation. Rather, they are focused on protecting and defending our common security and upholding a rules-based order that undergirds the peace and prosperity of the region and the world.  In this work, we are grateful for our continued partnership with Singapore.

Jeremy Au Yong

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Singapore - Japan-Singapore ties: More scope for cooperation

Business, political leaders at forum discuss new opportunities, especially for SMEs

Singapore-Japan ties are already on a solid footing, but the relationship looks set to become even stronger as business and political leaders explore exciting new areas of bilateral collaboration.

At a Singapore-Japan business forum yesterday to mark 50 years of diplomatic relations, speakers highlighted opportunities to collaborate in developing innovative solutions, particularly for small and medium-sized enterprises (SMEs).

Mr Lim Hng Kiang, Minister for Trade and Industry (Trade) urged Japanese firms to join their Singapore counterparts to take advantage of Asean's vibrant growth.

One way is to use Singapore as a base to develop new technologies, he said, citing the example of Japanese flavours and fragrance firm Takasago, which develops and tests halal food products here.

Said Mr Lim: "Singapore is a microcosm of a highly diversified Asia... This makes it an ideal location for the Japanese to undertake innovation-intensive activities and develop solutions for the region."

Japanese firms can also work on innovative solutions with Singapore firms, which can then be used to access third countries, he said, citing Japanese information technology giant NEC's collaboration with ST Electronics to commercialise its cloud services in the region.

The Straits Times was a media partner for the forum, and Mr Ignatius Low, managing editor of Singapore Press Holdings' English, Malay and Tamil media division, moderated a panel discussion at the event.

He asked panel members why there would be benefits in collaboration for Japan and Singapore, as both have track records of "going at it on their own".

International Enterprise Singapore chief executive Lee Ark Boon said while large firms tend to have their own supply chain of services, he saw opportunities for SMEs.

"Two smaller firms together can offer a potentially much stronger and cheaper product than what a bigger, single company can offer," he said.

Collaboration can be fruitful even for large firms as they move farther afield to markets with which they are less familiar, he added.

Mr Robert Yap, chairman of the Asean Business Advisory Council and executive chairman of YCH Group, said Japanese firms that came to the region tended to be large conglomerates with their own supply chains, but more Japanese SMEs are heading here now. "That could be an area which Singaporean firms can leverage on. IE can try to connect these companies," he added.

Citing his experience of learning to sing in Japanese and working with Japanese clients much older than him, Mr Yap said Singaporeans need to develop the cultural know-how to work closely with Japanese firms.

Singapore Business Federation (SBF) chairman Teo Siong Seng, speaking on the sidelines of the forum, said SBF was working with the Japanese Chamber of Commerce and Industry to get more Japanese firms to join SBF's business trips.

"For instance, Japanese firms would like to visit Myanmar with Singapore firms... During these visits, perhaps Japanese and Singapore firms can come together to explore opportunities."

The Singapore-Japan love affair also extends to the love of food. While Singaporeans have long loved Japanese food, with Japanese restaurants making up 15 per cent of the food and beverage sector here, Japanese consumers are developing a taste for Singaporean food.

Mr Teo said the trend had been for Japanese firms to invest here, but there were opportunities in Japan for local firms. In fact, iconic Singapore food businesses like Jumbo and Bee Cheng Hiang have set up shop in Japan, he added.

Lee Xin En

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Singapore - Asean - the new growth frontier

Singapore once decoupled from the region and saw its economy take off. Now, it's time to do the reverse, and focus on its neighbourhood

The modest two-storey facade of Fassler Gourmet's food factory in Woodlands Terrace belies the home-grown seafood and soup manufacturer's reputation as one of the largest suppliers of smoked seafood in Singapore.

For more than 20 years, the company, set up in 1991, had been content to cater solely to the domestic market. It counts among its customers all major hotels here, along with big-name restaurants and supermarkets such as Cold Storage and NTUC FairPrice.

But last year, it made the move to sell its products outside Singapore - to countries such as Brunei, Cambodia, Indonesia and Malaysia - and that has opened up a world of possibilities.

On going regional, chief executive Mellissa Chen says, "In Singapore, there's definitely still more to do. But in terms of growing Fassler and expanding the brand, export is the way to go. That's where the bigger growth is."

The smoked salmon specialist, which runs on a staff strength of about 50, now sells its products overseas in small quantities with the help of partners with a presence or a network of customers across various markets. The aim, says Ms Chen, is to double or even triple its export business over the next five to 10 years, with Malaysia and Indonesia as its key foreign markets.

The bulk of the company's turnover still comes from the Singapore market.

"Asean is exciting for us because the opportunity is here, right at our backyard," Ms Chen says, citing the fast-changing dynamics in the region, such as the emerging middle class and rising levels of disposable income.

"The market is ready, and it's something we can immediately provide," she says, adding that the firm's halal-certified processes already lay the groundwork for it to penetrate the region's sizeable Muslim market.

POISED FOR TAKE-OFF

In a global economy where growth prospects are for the most part dim, Asean is a bright spark.

With a total market size of more than 600 million people, "if the countries work well together and, increasingly, if the markets are more integrated, it represents a tremendous opportunity for companies in Asean, and that includes Singapore", says corporate titan Koh Boon Hwee.

In fact, the potential to scale Fassler's business beyond Singapore and into Asean was one reason Mr Koh's private equity firm Credence paid $23 million to buy out the company from its founder in November 2014.

"No one can really predict how fast or how slowly things will progress, but the direction is correct. Ten or 20 years down the road, I think Asean, as an economic region, will be quite a formidable entity," says Mr Koh. "It will be twice the size of Europe, almost 1.5 times the size of the United States. And if you believe as I do, the standard of living within Asean will continue to grow, which means the purchasing power and the consumption ability of these 600 million people should be far better than it is today," he adds.

"So yes, there is plenty of reason for optimism here."

At a conference this week on Singapore's Future Economy, Mr Caesar Sengupta, Google's vice-president of product management, spoke of South-east Asia as a region enjoying "exponential growth". It is the world's fastest-growing Internet region with an existing Internet user base of 260 million that is set to nearly double to 480 million by 2020. The region's Internet economy is also expected to grow to US$200 billion (S$269 billion) by 2025.

Already, the 10 Asean countries combined - Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam - make up the seventh-largest economy in the world, with a gross domestic product (GDP) of US$2.43 trillion last year.

They marked a milestone in economic integration when the Asean Economic Community (AEC) was established on Dec 31 last year, with an eventual goal of a single market and production base with free flow of goods, services, investments and skilled labour, as well as freer movement of capital across the region.

If growth trends continue, the Asean region could be the world's fourth-largest economy by 2050. And as incomes and purchasing power rise, the region's significance as a centre of demand - not just supply - is set to grow.

"Asean never had it so good. It is poised for the next stage of takeoff - though only if its members know how to play their cards right," says Associate Professor Tan Khee Giap of the Lee Kuan Yew School of Public Policy. "If Asean can stay united as a political entity and become more integrated as an economic entity, it has the potential to be a significant economic community close to the likes of the European Union by 2030."

For Singapore, Asean's growth as an entity will open many more doors, says SIM University senior lecturer Lim Tai Wei. "Asean represents a large market for Singaporean products and services, especially with an expanding middle class of consumers. Singapore is at the centre of this regional trade arrangement, and it enjoys a fast-mover advantage as an energetic advocate of free trade for decades," he notes.

A PIVOTAL MARKET

The Asean growth story comes at a time when companies globally are making the move towards inshoring - also known as reshoring or next-shoring, or the practice of bringing back manufacturing activity to where the demand is.

It is the reverse of offshoring, or the practice of setting up production facilities in low-cost, developing countries like China, which has been the industry norm in the last decade, notes Mr Matteo Mancini, partner at global management consulting firm McKinsey & Company.

But Asean presents a unique proposition - it is able to host the entire spectrum of business activity, from production to consumption.

"If someone wants to invest in Singapore, he will be told by consultants that Singapore is very expensive and that he should put his headquarter functions there, but the manufacturing operations somewhere else, like Malaysia or Vietnam," says Mr Ong Keng Yong, former Asean secretary-general and Singapore's Ambassador-at-Large. "So we have this kind of 'distribution' of the incoming investments, which is conducive for businesses across the board."

He adds: "These days, US and European companies are thinking about moving back to home countries because of issues like rising labour costs, regulatory compliance costs and the protection of IP (intellectual property) rights. Going forward, Asean investors must play a more prominent role in the business and manufacturing sectors of Asean member states."

Many Singapore firms are in fact already stepping in.

Conglomerate Sembcorp Industries, for instance, has singled out emerging countries such as Vietnam, Myanmar and Indonesia as focus markets for its urban development and power businesses. "In these markets, urbanisation and industrialisation continue to drive growth for essential solutions and infrastructure," says Sembcorp group president and chief executive Tang Kin Fei. "These markets are expected to see continued economic growth and, along with this, demand for utilities such as power is expected to rise."

Even now, the Asean region accounts for a "significant proportion" of Sembcorp's urban development business, notes Mr Tang, adding that the group's land bank in the region grew nearly 30 per cent in the last five years alone, while it also ramped up power capacity in Myanmar and increased investment in Vietnam's power market.

Real estate giant CapitaLand, which has been building up its presence in the Asean region since the late 1980s, is keeping an eye out for more room for expansion in key cities.

The opportunities in Asean are "immense", says CapitaLand president and group chief executive Lim Ming Yan. "As key cities in the region develop, demand for infrastructure and real estate will invariably rise."

The group has to date 26 malls in Singapore and Malaysia, a portfolio of about 7,850 homes across eight residential projects in Vietnam, and over 16,000 units under its serviced residence arm, The Ascott, in nine of the 10 Asean countries.

Smaller outfits like home-grown beverage brand Allswell want in as well. Mr Jate Samathivathanachai, director of strategy and investments, says the company, which sells its products mainly in Singapore and Brunei and exports small quantities to Cambodia and Vietnam, is looking at manufacturing its drinks in Johor Baru, Malaysia.

"Our biggest challenge is that our drinks are 100 per cent made in Taiwan, so they are not duty-free in Asean, under the rules of origin requirement," says Mr Samathivathanachai. "So we're now exploring making our products in Johor Baru. We could buy the essence or extract of the drinks from our partner in Taiwan and bottle them in Malaysia."

By 2030, the continued growth of Asean cities could add US$930 billion to the region's annual GDP, says Mr Mancini. This shift will be supported by the growing consumer class, which could double to 163 million households by then, making South-east Asia "a pivotal market of the future for companies in a range of industries".

Analysts see Singapore playing a key role in supporting the growth of the rapidly-emerging digital economy, says Ms Alison Kennedy, managing director for Asean at Accenture Strategy.

"The question for Singapore is how does it organise its economy to play in this new digital world? For me, the real potential lies in the ability to connect in digital trade," she says, adding that Singapore has the infrastructure, for instance, to facilitate and lead secure trade transactions within Asean.

EY Asia-Pacific partner Tad Carmody adds: "You could see Singapore become an exporter of enabling systems, such as expertise, skill sets, technologies and IP. It's not going to be an exporter of goods. Its true value is in its ability to enable - that is exactly what all of Asean needs."

Indeed, Singapore firms can take advantage of the manpower pool and relatively lower land costs in other Asean markets, says Mr Ivan Tan, group director for South-east Asia at trade agency IE Singapore.

"We also see investment opportunities relating to infrastructure needs, consumer needs, such as food and beverage, healthcare, education, and the growing digital economy, such as e-commerce," he says, citing Indonesia, Myanmar and Vietnam as markets ripe for investments.

STAYING RELEVANT

But Asean's rise also comes with its own set of challenges for Singapore.

For one thing, it could spell more competition for Singapore as other member states play "catch-up" and the playing field evens out.

Jakarta, for instance, has announced plans to become a regional financial hub, a role Singapore has been playing for years.

Mr Koh, former chairman of top corporates such as DBS Bank, Singapore Airlines and Singtel, says Singapore companies will find it easier to succeed in an Asean economy that is open, although it is less likely they will end up as the only, or biggest, winners.

"Countries like Indonesia, Malaysia, the Philippines themselves will be the biggest winners. They have the advantage of having a big domestic market," notes Mr Koh, who also sits on the investment board of GIC, Singapore's sovereign wealth fund. "Today, with certain degrees of protectionism, they are shielded from the competition and there is no need for them to be best in class. But a little more incentive to compete and globalise could see them succeed in an open environment."

But Mr Koh believes that Singapore will remain relevant. "There are certain activities that naturally make a hub. Take the financial services sector in Europe - a lot of it is centred on London not because it's in the centre of Europe, but because it's where people enjoy living, working and so on."

Singapore must make sure its environment, from the rule of law to education to security, is friendly and open, and stays that way, he says, adding: "If the world's most talented people want to live here, somehow, activity will flourish."

More competition, in fact, could even be helpful for Singapore in moving up the value chain, notes SIM's Dr Lim. "Singapore is small and nimble and can identify niches in which it has a comparative advantage," he says, citing areas such as urban planning and development, infrastructure project management, education, biotechnology and financial services.

Accenture's Ms Kennedy says: "Rather than seeing the rise of Asean as competition, this single market can instead serve as a growth multiplier for Singapore. "And Singapore has advantages it can already leverage on - its history in trade, its location at the centre of Asean, and the trust that people have in the Singapore Inc brand."

The region's growth, she adds, will spell opportunities for local small and medium-sized enterprises, in particular, as they leverage on Singapore's strengths to develop their businesses.

Fassler, for its part, is banking on its Singapore brand as it expands into Asean. Right now, import and export regulations pose a big challenge as each market has its own set of rules.

"There is more time and costs involved, the logistics are not that straightforward, and there is no guarantee," says Fassler CEO Ms Chen.

But she believes the "Made in Singapore" tag will help the company navigate its way.

"That's the strength of running a business here - the stringent regulations and processes you have to pass, certifications, things like that. All of this is already a selling point and an advantage because Singapore is seen that way," she says. "So yes, notwithstanding all of those challenges, we're still forging ahead."

Jacqueline Woo

straitstimes

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