MAS announced the renewal of the Bilateral Local Currency Swap Arrangement with the Bank of Japan for another three years.
Opening Address by Mr Ong Ye Kung, Minister for Education and MAS' Board Member at the 2nd China (Chongqing)-Singapore Connectivity Initiative Financial Summit on 4 November 2019
Mr Tang Liangzhi, Chongqing Mayor,
Distinguished guests, ladies and gentlemen, good afternoon.
1 I am happy to join you today for the China (Chongqing)-Singapore Connectivity Initiative (CCI) Financial Summit. I am glad to see so many of our friends from ASEAN and provincial governments of Western China present here today.
2 I was just here in Chongqing two weeks ago for the 15th Joint Council for Bilateral Cooperation, or JCBC, between China and Singapore. At the JCBC, we discussed several important areas of bilateral cooperation, one of which is strengthening financial connectivity between China and ASEAN. And let me start by giving an overview of the status of multilateral economic cooperation today.
3 We are aware of protectionist headwinds against global free trade and multilateral collaboration. Freer trade is driven by technological advancements – planes that fly further, digital connections that bring different regions closer – also, the desire of human beings in a free market place to work with each other for win-win outcomes. This trend, I feel, is inexorable. The world will become smaller, and people will become closer.
4 But this will always solicit a pushback, because free trade reshuffles the economic deck, and we will have winners and we will have losers. Consumers will benefit immediately from competitive prices, and winners often gain in terms of greater opportunities and promises of a better future, which are yet to be realised. You need to seize the opportunities brought about by free trade. But the impact on those who lose out is often real and immediate. If their grievances and concerns, which are legitimate, cannot be adequately addressed, the free trade agenda will stall, and protectionism will rise.
5 The race between free trade and protectionism is therefore asymmetrical, like the proverbial hare versus tortoise. Protectionism can be fuelled by populism and able to surge ahead. But on the other hand, those who believe in free trade need to work hard at a steady pace, forge collaboration, negotiate deals fair to all sides, address the concerns of those who are affected, and keep harnessing technology, keep pushing the agenda. Only then can it overcome protectionism.
ASEAN and China
6 And that is why it is so important for like-minded countries to come together and strengthen our collaboration and work hard at it all the time. Mayor Tang Liangzhi had talked about China’s approach. Singapore welcomes the reform and opening up of China’s economy, and for it to achieve its centurion visions in 2020 and 2049.
7 And in that context, the development of the Western region of China is critical, and Chongqing can play a pivotal role. It can be the hub, and the most open, forward looking and pro-business of all cities in the region. It can strengthen its connection with other regions and cities outside of China, in transport, communications, logistics, trade and investments and financial services.
8 As for ASEAN, the region continues to register positive economic performance. Its combined GDP grew by 5.2% in real terms in 2018, reaching US$ 3.0 trillion, compared to the global GDP growth of about 3.6%. Trade in goods, trade in services, and foreign direct investment inflows likewise grew by 9.3%, 7.7%, and 5.3% year-on-year, respectively.
9 This positive outlook is a result of strong underlying factors in ASEAN. ASEAN is home to a growing educated and young workforce, and an emerging middle class expected to double in size, from 135 million to 334 million, by 2030. Young people under 35, is 60% of its population, at 380 million people – the size of the US population.
10 By 2030, ASEAN is expected to become the fourth-largest economy in the world, after the US, China and the European Union, and with the world’s third largest labour force, after China and India. ASEAN member states are also committed to integrate our economies further. The ASEAN Economic Community, or AEC, was established in 2015 and the AEC Blueprint 2025 is on track.
11 Because of our common outlook, our aspirations and our potential, ASEAN and China have become like-minded partners in strengthening economic co-operation and free trade. China has been ASEAN’s largest trading partner for a decade, and since the first half of 2019, ASEAN has also risen to become China’s second largest trading partner this year.
12 On 22 October 2019, the upgrading protocol of the ASEAN-China Free Trade Agreement was fully implemented, bringing about more trade and investment opportunities to free trade members with simplified rules of origin, customs procedures, trade facilitation and investment regulation.
13 We are working closely together to realise the Regional Comprehensive Economic Partnership, or RCEP – the largest free trade area of the world representing one-third of the world’s GDP. Several ASEAN members are also founding signatories of the CPTPP – or Comprehensive and Progressive Agreement for Trans-Pacific Partnership. It has an open architecture for other countries in the region to join when they are ready.
ASEAN-China Financial Connectivity
14 This is the broader backdrop, so that our efforts to strengthen connectivity between ASEAN and the Western Region of China, can be seen in the right strategic context, and be given the right strategic impetus.
15 And indeed we delivered a major impetus through the establishment of the new International Land-Sea Trade Corridor, or ILSTC. This new corridor can substantially reduce the duration of transporting products from China’s Western Region to ASEAN by one-third the time compared to the conventional route, and it can unlock further potential for collaboration. In fact, we have already seen rail volumes along the ILSTC increase by 20 times in the last two years, demonstrating the strong interest by businesses to take advantage of enhanced connectivity afforded by the ILSTC. And it is encouraging that all 12 Western China provinces have come onboard the ILSTC.
16 Today’s Summit focuses on another key aspect of connectivity, which is financial connectivity. It is key to supporting real economic activity and it is the lifeblood of economic integration. High quality financial services can sustain cross-border trade and investment flows between our regions. It ensures that Chinese and Southeast Asian enterprises have access to capital that enables them to expand into each other’s markets.
17 As to what could be areas where we can make near term progress and register quick wins, two key areas which are important are infrastructure development and sustainable finance.
18 The Asian Development Bank estimated ASEAN’s infrastructure requirements to be US$2.8 trillion between 2016 and 2030, or US$184 billion per year. There can be much greater private sector participation in infrastructure financing, and ASEAN members are committed to narrow the gap between the demand for infrastructure financing and the supply.
19 In addition, there are great opportunities to promote green financing and the funding of environmentally-friendly projects in the region. An ASEAN Task Force under the ASEAN Senior Level Committee on Financial Integration is currently conducting a study on the role of central banks in advancing sustainability in the region.
20 Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, will further elaborate on the opportunities for collaboration, including in the areas of infrastructure and green financing. And Singapore, as the financial centre of the region, can play a facilitative and catalytic role to bring about closer cooperation between ASEAN and Western China in the area of financial connectivity.
21 In conclusion, this Summit, now in its second year, is timely in bringing together the central banks, financial regulators as well as key industry players from China and ASEAN to explore how to build greater financial linkages between our regions. I hope this collaboration will lead to concrete efforts, and decisions, to deepen capital markets and raise the quality of financial services. It is an important building block to support the further development and growth of the real economy which will benefit our people, our companies, and sustain growth and prosperity for all of us.
22 And I wish you a fruitful Summit.