Singapore can leverage a revived Silk Road

Beijing

OPPORTUNITIES could emerge for Singapore from the proposal to revive the maritime Silk Road, given the Republic's role as a major transportation, logistics and maritime hub, Prime Minister Lee Hsien Loong has said in Beijing, where he is attending the Apec Summit.

In an interview with Beijing Satellite TV on Monday, he said: "If we can deepen our cooperation with neighbouring countries, and in particular, strengthen trade and investment between China and its neighbours through the maritime Silk Road initiative, we hope a part of the services can be provided through Singapore's sea port and airport network."

He was referring to Chinese president Xi Jinping's proposal on Saturday that China and Central Asia join hands to build a Silk Road economic belt to boost trade and maritime cooperation. The idea, which Mr Xi mooted during a visit to Indonesia last year, is aimed at resurrecting the trade route that ran from China through South-east Asia and the Indian Ocean to Europe.

In the interview, Mr Lee pointed out that economic and financial linkages between Singapore and China had strengthened in other areas, such as in the promoting of the international use of renminbi for trade and investment through the first overseas yuan clearing bank in Singapore. Direct currency trading between the Chinese yuan and the Singapore dollar also started last month. Companies and individuals in the bilateral projects Suzhou Industrial Park and Tianjin Eco-city have been allowed to access offshore funding.

Mr Lee said: "We hope to continue to deepen this cooperation and encourage more Chinese companies to set up their operations in Singapore, list on the Singapore Exchange to leverage our capital market and network and be able to expand globally through Singapore."

As a small country, Singapore had no choice but to open up its economy to the world, he added. "This is why we try our best to participate in free-trade talks and to work with other countries to enhance our interactions and win-win partnerships."

Plans to revive the ancient Silk Road, form an Asian Infrastructure Investment Bank and promote the Regional Comprehensive Economic Partnership (RCEP) are among China-backed initiatives seen by observers as Beijing's attempts to counter the influence of the US in the region.

Mr Lee said although the ideal form of cooperation was a multi-lateral and multi-faceted one through the Doha round, it was difficult for the many participating members to reach a consensus.

But there is more than one pathway to achieve a regional free-trade zone, such as through the Trans-Pacific Partnership (TPP) and the RCEP, he said. The US-led TPP and the China-backed RCEP are both seen as prodding the region towards free trade and greater connectivity.

On Monday, the 12-country TPP leaders, meeting on the sidelines of the Apec Summit, issued a statement expressing their commitment to ensuring that the final agreement of the TPP reflected their "common vision of an ambitious, comprehensive, high-standard and balanced agreement". TPP leaders said ministers and negotiators were working on coming up with ambitious, balanced packages to open their markets to one another and had been instructed to "make concluding this agreement a top priority", so businesses, workers, farmers and consumers could reap the benefits as soon as possible.

Mr Lee said that as China's economy made a transition into a slower growth mode, the key concern was not how its Gross Domestic Product (GDP) would pan out this year, but whether China could restructure its economy successfully, reform the hukou system, taxation and state-owned enterprises. These tasks cannot be accomplished within a year, he added.

In the long run, he said, a stance against corruption was a requisite for economic development, he said, flagging Singapore's clean system as a crucial condition for the development of a financial hub.

Noting that some countries had sought to do the same, but had been met with challenges to transform the culture and legal systems, he said this was why he respected what the Chinese president was doing to starve corruption - by targeting high-ranking "tigers" as well as lowly "flies".

Asked how Singapore was coping with slower economic growth after a rebound from the Global Financial Crisis, Mr Lee replied that the 13 to 14 per cent jump in GDP in 2010 was not sustainable; the economy had since stabilised to clock 3 to 4 per cent growth. The economy was mature, with full employment and high female employment, but a cap had been put on foreign labour. The drive now was thus to raise productivity by raising skills and education levels - a "painful" process.

He said Singapore's economic and financial openness had come with a price: to keep in step with or stay ahead of global changes, the country has also opened itself to uncertainties and risks, with the impact on the middle- and low-income groups a long-term challenge.

Mr Lee met Peruvian President Ollanta Humala on the sidelines of the summit on Monday. The leaders affirmed the positive ties between their countries and discussed issues and opportunities for partnership.