Lim Hng Kiang, Singapore Minister for Trade and Industry (Trade): Interview

Interview: Lim Hng Kiang

How can Singapore strengthen its investments in the ASEAN Economic Community (AEC)?

LIM HNG KIANG: Singapore is committed to and is a substantial stakeholder in the AEC. In 2015 Singapore continued to maintain its position as the highest contributor of intra-ASEAN foreign direct investment (FDI) flows, at 67.3% of total intra-ASEAN FDI. Singapore is also the second-highest recipient of intra-ASEAN FDI at 15.4%, all which signal high investment.

Paramount to ensuring positive investment trends between Singapore and ASEAN is maintaining our long-standing reputation as a trusted regional business centre. This allows us to continue playing a key role in facilitating investment flows in the region by encouraging potential financiers and corporations to choose Singapore as their conduit for expanding their footprint into the rest of ASEAN. Singapore continues to maintain investment-friendly public policies to encourage industry development. This includes streamlining processes for the business establishment, as well as ensuring a strong and transparent legal framework. According to the World Bank’s “Doing Business 2016” report, Singapore was ranked as the easiest country worldwide to do business in for the 11th consecutive year.

Furthermore, a sound regional investment regime in ASEAN will complement Singapore’s position as a reliable regional investment centre and help our businesses expand across the region. In this regard, ASEAN’s work in facilitating investments does not stop with the establishment of the AEC. Singapore continues to work with our counterparts to strengthen investment flows in the region and improve the ease of doing business under the AEC Blueprint 2025. Such efforts include initiatives to provide greater transparency in investment-related policies, as well as regulations to create better resources and knowledge to help our business institutions internationalise across the ASEAN region.

In what ways can ASEAN members benefit from Singapore’s strong financial sector?

LIM: Singapore is well positioned to serve the financing, investment and risk management needs of ASEAN companies. Many global institutions are represented in Singapore, offering a wide range of financing and Treasury management services, complemented by our strong asset management capabilities. We also have an expansive insurance ecosystem comprising top global reinsurers, speciality players, modelling firms, innovation labs and a growing arrangement of insurance research institutes, all with the ability to provide large reinsurance programmes and customised risk management solutions. The government is committed to supporting the recently established AEC.

Consolidating regional financial sectors is a key pillar of ASEAN economic integration as it supports the region’s growth, while promoting inclusion. I would like to highlight two areas where ASEAN members can access Singapore’s financial centre and support their economic development.

The first is addressing the protection gap in ASEAN with a strong insurance system. Asia remains underinsured, with a penetration rate of 1-3%. This is less than half the global average. However, in Asian countries, damage from natural catastrophes over the last 30 years has made up almost half of the world’s estimated economic losses. Less than 5% of these losses were insured, compared with a rate of 40% in developed countries.

The second is bridging the infrastructure financing gap in ASEAN. According to estimates by the Asian Development Bank, ASEAN would need about $60bn per year to meet its basic infrastructure needs. While governments and development institutions will continue to be important sources of financing, the role of the private sector is becoming increasingly significant due to the large funding gap.