One Asean market, more opportunities for businesses

Foreign Minister K. Shanmugam said the AEC will create easier trading conditions and freer movement of goods and services.
Foreign Minister K. Shanmugam said the AEC will create easier trading conditions and freer movement of goods and services.PHOTO: LIANHE ZAOBAO

Businesses can look forward to more opportunities and easier trading conditions once the Asean Economic Community (AEC) comes in by the end of this year, said the Minister for Foreign Affairs and Law yesterday.

Mr K. Shanmugam told the Singaporean-German Chamber of Industry and Commerce lunch at the Shangri-La Hotel: "Economically, there is a lot of sense in looking at it as one centre of production.

"Capital can be raised in Singapore, production can take place somewhere else, ease of movement of goods, services - that makes a lot of logic and sense."

The AEC aims to create a single market and production base across the region, with minimal barriers to trade and investment.

Mr Shanmugam, who noted that the free movement of labour in Asean was not on the agenda for now, also discussed Singapore and the European Union.

"Employment prospects and wages in Singapore are such that, obviously, it will be attractive to many people in Asean," he said.

"There's a limit to what kind of immigration we can take. We've been very clear that immigration has to benefit our national interest."

He noted that "a certain commonality of living standards and value-based systems" needs to be present for free movement of labour to work.

"You could argue in Europe that there are differences in the Eastern Europe countries and the more developed countries," he said.

"When the concept was started, the living standards were not as different as they are here."

It would be difficult for various Asean countries to accept that kind of freedom now, said Mr Shanmugam, so they are focused on factors of production instead.

These include setting up a factory in one country, getting professional expertise from another, and tapping banking, financial, insurance and legal services elsewhere.

"You can look at a single factor of production across different countries, that is what we are looking at. And freer movement of goods and services," he said

He also addressed concerns of firms facing obstacles coming into the region, owing to diverse business environments.

"In Singapore, things work; they don't work in the same way as other places. We don't think they are going to change overnight.

"But is there an opportunity in the region now to do business either directly or from Singapore? The answer is yes."

Mr Shanmugam noted that Japan has a US$110 billion (S$148 billion) plan to fund Asian infrastructure, while China is prepared to commit US$40 billion and more.

He assured firms: "The economic imperative of the countries' need to move (forward) and the huge amounts of investments going into all the other countries, will force some of them to move and that's where the opportunities come."

A version of this article appeared in the print edition of The Straits Times on July 08, 2015, with the headline 'One Asean market, more opportunities for businesses'. Print Edition | Subscribe