Speeches

Trade Development Alliance of Greater Seattle
Remarks by Ambassador Herbold
Rainier Club, Seattle
March 27, 2007

Thank you, Bill.  It’s great to be back in Seattle and to see so many familiar faces in the audience today.  Thank you all for coming downtown this morning to hear about Singapore.  I hope by the end of this morning's meeting, you will agree that it is the easiest place to do business in Asia and an enticing gateway to the region.

I’d like to begin with a plug for the business mission that the Trade Development Alliance will be leading to Singapore and Southeast Asia in September.  This mission will meet with potential business partners, key government officials, and business associations.  It will give participants a view of Singapore’s exceptionally good infrastructure, including the airport and seaport.  And mission members will be able to experience Singapore's diverse culture and sample the local cuisine, including the chili and pepper crabs.  It's no secret that eating is a national past time in Singaporean, and you'll see why when you get there.  The other popular past time is shopping and there are many places in Singapore to indulge in that.

What Makes Singapore Unique?

Let me tell you a little about Singapore before I discuss some of the economic and commercial reasons for looking seriously at Singapore as a business partner.

Singapore is an island city-state of 270 square miles – the size of greater Chicago -- with a population of 4.5 million.  It’s located on the southern tip of the Malay Peninsula in Southeast Asia, with a predominantly ethnic Chinese population; ethnic Malays and Indians account for most of the rest of the population.  Malay is the national language, but English, Chinese, and Tamil are also official languages.  English is the language of administration and educational instruction, and is widely used in business.

Singapore’s remarkable history helps explain why it’s a thriving metropolis today.  In 1819, Sir Stamford Raffles landed on the island, which was then a sultanate.  Five years later, the East India Trading Company bought the island, and Singapore developed into a busy trading port.  After a long period under British control (interrupted by the Japanese occupation during World War II), Singapore was admitted into the Federation of Malaysia in 1963.  But Singapore and Malaysia parted ways two years later and, in 1965, Singapore became an independent country.

At independence, Singapore had a small and not particularly well educated population, no natural resources, high unemployment, a severe housing shortage, widespread corruption, and a tense ethnic situation.  Just over four decades later, it still has no natural resources, but it has become one of the world's wealthiest nations, with per capita income on par with Spain and New Zealand.  Its population is well educated, it hosts world-class universities, it is one of the world's most wired societies, it has no homeless people (most of the population own their apartments in government-built housing estates), corruption has been stamped out for a long time, and relations among the various ethnic communities are peaceful.

The secret of success was exceptionally strong leadership.  Everyone has heard of Lee Kuan Yew, who served as prime minister from 1959 to 1990, and who is still in the cabinet in a more advisory capacity as "Minister Mentor."  He and his fellow leaders made decisions that shaped Singapore into what it is today.

• Social policy:  Singapore's leaders sought to build a multiracial and multilingual society that would be unified by a sense of a unique “Singaporean identity.”  Singapore continues to pay constant attention to ethnic relations in that hope that good will and mutual understanding will enable the various communities to overcome any future challenges to national unity.

• Rule of law:  Singapore's leaders decided to pay government employees well so they wouldn't have an excuse to be corrupt and so the best and the brightest would be attracted to government service.  They also throw the book at anyone caught with his hand in the till.  Singaporean cabinet ministers’ salaries are pegged to those of multinational CEOs, and Lee Kuan Yew once remarked of his own salary, “I’m one of the best paid and probably one of the poorest of the Third World Prime Ministers.”

• Quality of life:  And Lee Kuan Yew and other leaders wanted Singapore to be a livable city, and so emphasized parks, trees, and green space in urban planning.  Today, Singapore is known as “The Garden City,” and any Seattle resident would feel right at home (except for the temperature!).

Why is Singapore a Great Place to Do Business?

Let's turn to why Singapore is a great place to do business. 

• It continues to exploit its single natural advantage -- its strategic location on the Strait of Malacca, through which flows some 30 percent of the world's trade and 40 percent of its oil.  With this geographic advantage and Singapore's history as an entrepot, it may not surprise you that the value of Singapore's trade is nearly four times its GDP.

• Singapore offers tax incentives and a highly skilled, disciplined, and relatively low- paid work force to attract foreign investment.

• It is constantly upgrading its infrastructure and has created a world-class airport and seaport, an extensive road network and subway system, state-of-the-art telecommunications facilities, and reliable public utilities.

• Singapore tries to stay far ahead of the curve.  As low-cost manufacturing operations have migrated to lower-cost locations, Singapore has invested heavily in industries where it can compete -- these include petroleum refining and chemicals, transportation, financial services, biotechnology and biomedicine, communications, and educational services.  As a result, Singapore is one of the most highly developed and sophisticated industrial, commercial, financial, and consumer economies in the world.

• Singapore offers investors and traders legal certainty.  Businesses can have confidence that their contracts will be honored, that government contracts will be awarded on merit, and that they won't be shaken down.

• Ease of entry in the Singapore market is unparalleled in neighboring countries.  The British commercial code, strong legal system, and predominance of the English language make Singapore one of the most attractive locations for American business in the Asia Pacific region. 

The World Bank ranks Singapore as the easiest place to do business in the world, and the Global Competitive Index ranks the city-state as the most competitive Asian economy.  Singapore has also been recognized as having the best labor force (BERI 2005), the most attractive investment incentives in Asia according to IMD World Competitiveness Yearbook 2005, and first in the world for the quality of air transportation (World Competitiveness Yearbook 2006).  In addition, Singapore earns plaudits for one of the most efficient, least bureaucratic, and corruption-free governments in the world.

Singapore and the United States

Our bilateral relations with Singapore have never been better.  Looking briefly at our security relationship, I should explain that we are not allies, but we are strong partners.  The United States military leases facilities in Singapore to provide logistical support to our forces transiting and operating in the western Pacific.  Singapore has provided air and naval support in Iraq and Afghanistan and has consistently publicly supported our efforts there.  We regularly hold high-level strategic policy exchanges and our militaries frequently train and exercise together.

Our economic ties are flourishing.  Our bilateral Free Trade Agreement entered into force on January 1, 2004.   The FTA provides a secure, predictable legal framework for conducting business with Singapore, including substantive protections that are similar to those that Singaporean investors in the United States enjoy under U.S. law.  It expanded market access for U.S. firms in many service-related sectors such as telecommunications and financial services.  Except for four tariff lines covering beer and certain alcoholic beverages, Singapore imposes no tariffs on imported goods -- the FTA eliminated those four remaining tariffs for goods originating in the United States.

The U.S.-Singapore FTA enhances the protection of intellectual property rights, giving Singapore one of the top IPR regimes in Asia.  State-of-the-art protection includes a strong dispute resolution mechanism for trademarks and Internet domain names.  The Agreement provides for patent protection for biotech plants and animals; extended terms for copyright protection; strong anti-circumvention provisions to prohibit tampering with technologies that are designed to prevent piracy; criminal penalties for companies that use unlicensed software; protection for encrypted programs-carrying satellite signals; and limited liability for Internet Service Providers.

The advantages to both economies of the FTA are evident in the results.  During the first three years of the U.S.-Singapore FTA, two-way trade increased 34 percent, with U.S. exports rising by an astounding 49 percent.  Singapore is the second largest recipient of U.S. foreign direct investment, or FDI, in Asia after Japan.  The most recent data available (2005) show that  the $48.1 billion in U.S. FDI in Singapore was more than double the stock of U.S. FDI in China.  In terms of exports, imports, and FDI, Southeast Asia is a more important market for the United States than South America and Sub-Saharan Africa combined.  And Singapore accounts for the lion's share in each category.

In 2006, Singapore rose to be the ninth largest export destination for U.S. goods and services, with imports from the United States totaling nearly $25 billion.  Primary U.S. exports to Singapore consist of machinery, electrical machinery, aircraft and aircraft parts, and optical and medical instruments.  In 2006, exports from Washington State to Singapore totaled more than $2.3 billion, which ranked Washington third among our 50 states in terms of dollar value.  Leading products were transportation equipment, computers and electronic products, petroleum and coal products, and machinery.  I was happy to see Washington wines, smoked salmon, and red delicious apples among Washington's exports as well.

In 2006, Singapore was the United States’ fifteenth largest trading partner.  In 2006 alone, two-way trade increased 19.0 percent to $42.5 billion -- this was the second highest rate of growth among major trading partners after China (20.2 percent).

More than 1,500 U.S. firms already operate in Singapore, and many have their Asia Pacific overseas headquarters there.  Almost all of the major U.S. multinationals operate in Singapore, along with a substantial and growing number of small and medium-sized companies.  About 15,600 citizens live in Singapore, mostly drawn by their work and business opportunities.  A further quarter million Americans visit Singapore each year for business and pleasure.

Looking ahead

Opportunities for U.S. business abound in Singapore.  Its economy is growing rapidly.  In 2006, GDP growth hit 7.9 percent, and some economists are forecasting a growth rate of 5-6 percent or higher in 2007.  For U.S. exporters, the "best prospect" sectors include: aircraft and parts, laboratory and scientific instruments, electronics components, computer hardware and software, telecommunication equipment, oil and gas equipment, medical devices, university education services, and franchising.

Not only is Singapore a great place to do business, but it also serves as the gateway to Southeast Asia and the greater Asia Pacific region.  It’s the logistics, communications, IT, financial services, R&D, medical, and management hub among the ten countries in Southeast Asia.  It’s positioning itself to support third-country business interaction with markets farther afield, including China and India.  Many U.S. manufacturers and service providers find that Singapore serves as a force multiplier for them.  Many Singapore companies have established networks in neighboring countries, which they can and do put to use marketing U.S. products.

For companies looking for a place to locate an Asia office, Singapore offers the obvious attractions of a clean and safe living environment, excellent international schools, and easy access to all of Asia within seven hours flying time.

Another advantage is Singapore's vibrant Meetings & Exhibitions industry.  Many of the major regional trade shows are held in Singapore, and American firms find them to be an opportunity to showcase their products to buyers from across the region.  You name the industry, and there is an associated trade exhibition in Singapore.

Finally, Singapore always has several major projects in the works that are of interest to American companies. For example, the government has issued licenses to the Las Vegas Sands and a Malaysian-led consortium for two multi-billion-dollar "integrated resorts" with casinos.  At any given time, the government has any number of major infrastructure projects under consideration, in the bidding stage, or under construction.   The private sector is also investing.  One major upcoming project will be the construction of the country's largest independent oil storage terminal.

Conclusion

As I mentioned earlier, the Singapore economy is booming and there are ample opportunities for U.S. companies.  If you have any specific questions about specific projects or sectors, I’d be happy to put you in touch with my Commercial Section at the Embassy.

For Americans considering doing business in Singapore, the best tip I can give you is to show up.  It’s a long flight across the Pacific, but investing in making face-to-face contact and building personal relationships pays off.  Your presence will go a long way in helping you secure business deals and sales in Singapore.  Similarly, it is important to keep coming back, to reinforce the value you place on the business relationship and to demonstrate your commitment to your products.

Singapore is a prime destination for U.S. business and a market that I encourage all of you to seriously consider.  Some have quipped that, “If you can do business in Canada, you can do business in Singapore.” I think they’re right.  Thank you for your attention this morning, and I look forward to seeing all of you in Singapore.