SINGAPORE - Back in 1840, two friends from Hamburg arrived in Singapore and began trading spices, silk, cotton and tea across the oceans – between Singapore, Indonesia, China and the Philippines, and back to Germany.

The Behn Meyer company – set up by Theodor August Behn and Valentin Lorenz Meyer – still exists today, but now supplies high-end products from areas such as the agricultural and life science sectors, and has more than 1,000 employees in South-east Asia, noted visiting German Chancellor Olaf Scholz on Monday.

Mr Scholz, who hails from Hamburg and was its First Mayor from 2011 to 2018, said that like his hometown, Singapore owes its economic success to free trade, its global network and openness to the world, and its central location in one of the most dynamic economic regions.

Free trade was able to transform a company like Behn Meyer, which had three ships back in the 1800s, into a global player, he said. It also enabled the transformation of a small port city of 5,000 into a global metropolis like Singapore, he added in a keynote speech at a gathering of German businesses.

“Free and fair trade benefits all parties involved. It is still the basis of our prosperity,” he told the 17th Asia-Pacific Conference for German Business at Raffles City Convention Centre. The conference, hosted by the Singaporean-German Chamber of Industry and Commerce, is the largest and most important German business conference in the Asia-Pacific region and is held every two years.

Mr Scholz noted that on Nov 5, 1890, an article in The Straits Times on Germans in Singapore – marking the golden jubilee of the Behn Meyer company’s establishment on the island – read: “If the Straits have bought goods from Germany it was because those particular goods suited our trade; if the Straits have sold produce to Hamburg it is because Hamburg was willing to pay the market price.”

The article may be out of date, but the concept of free and fair trade is not, said Mr Scholz.

Today, both Europe and Asia have benefited from greater integration within their regions, and it is important to work towards more free trade between both regions, he added.

Deepening cooperation is essential amid a tense geopolitical environment, he said. And while Germany is keen to diversify its trading relationships, this does not mean decoupling, he added, saying this is an important distinction at a time when concepts like nearshoring, deglobalisation and self-sufficiency are on the rise.

Often, these ideas are nothing more than covert protectionism. And protectionism gets countries nowhere, he said. A world with new or re-erected trade barriers and disintegrated economies is not a better place, he added.

Mr Scholz noted that when former German chancellor Helmut Schmidt visited Singapore 10 years ago to visit his old friend, Singapore’s first prime minister Lee Kuan Yew, they spoke about globalisation, and the late Mr Lee said then that globalisation had opened up the entire world to Singapore. Mr Scholz said the statement was also true for larger, more populous countries.

The key to tackling global challenges such as climate change, global health crises and food insecurity, or moving towards carbon-neutral economies lies in innovation, he added. However, more trade barriers would lead to less competition and less innovation, he said, calling for more cooperation and collaboration.

At the same conference, Deputy Prime Minister Lawrence Wong highlighted various German companies that have come to Singapore. There are over 2,100 German companies in Singapore today.

These include Rohde & Schwarz, a Munich-based electronics company, which came in 1997 to make use of Singapore’s hub capabilities and capture market opportunities in China and South Korea. Henkel, an industrial adhesive manufacturer, established a sustainable Singapore-based global supply chain hub, and is working with suppliers and business partners to use recycled materials and plastic resin alternatives.

Mr Wong also spoke of how Singapore and Germany will have to adapt to the evolving geopolitical situation, in particular the tensions between the United States and China as well as the possibility of conflict within Asia. He noted that both Singapore and Germany are export-oriented economies that have long thrived on the principles of free trade and a rules-based international order.

He said: “While the US-China relationship is the most consequential, it does not mean that the rest of us in the world are simply passive bystanders. We too have agency and collectively, we have the ability to shape developments in the region and the world.”

At the same time, he hoped the two superpowers would eventually be able to find a way to co-exist to ensure an environment that is stable and inclusive – where countries big and small can compete and cooperate peacefully.

Mr Wong also noted the potential of growing players in Asia, such as India and Asean. There are many new opportunities for cooperation between the European Union and Asean, he said. 

One important area is sustainability, such as the development of low-carbon industrial solutions, carbon management services involving inspection and certification, as well as the scaling up of blended finance.

As an international trade and financial centre, Singapore will do its part, by helping connect Asean to the world and deepening South-east Asia’s connectivity with other regions, said Mr Wong.

He added: “The close ties between Germany and Singapore can help to anchor and bring our two regions – the EU and Asean – closer together. Ours is a longstanding relationship built on shared strategic perspectives and mutual trust.”

Mr Scholz also called on President Halimah Yacob and Prime Minister Lee Hsien Loong, who hosted him to an official dinner.

President Halimah and Chancellor Scholz reaffirmed the longstanding and multifaceted relations between Singapore and Germany, and took note of the wide-ranging areas of bilateral cooperation, including in emerging areas such as the digital economy, innovation and cybersecurity.

PM Lee and Chancellor Scholz agreed to deepen existing areas of cooperation, and issued a joint declaration titled “Partners for a Resilient and Sustainable Future” that outlines new areas of cooperation between the countries.