Good morning Ladies and Gentlemen

Thank you all for joining me on a Monday morning. First and foremost, I would like to thank the Paris Chamber of Commerce for giving me this opportunity to address all of you this morning.

Singapore has a very close relationship with your Chamber of Commerce. In fact, it is one of the oldest that we have with a French institution. As such, on the occasion of your 200th anniversary this year, on behalf of the Singapore government, I would like to congratulate the Paris Chamber of Commerce, as well as place on record Singapore's appreciation for your continued strong support of Singapore.

Today, I would like to speak to you about Singapore’s long term strategies to be a dynamic global business hub. Many of you have been to Singapore before. You will know that Singapore takes pride in being a business centre which is home to more than 6,000 multinational companies (MNCs) and large local enterprises. About 60 per cent of these operate their regional headquarters from Singapore. These include companies from Europe, the US, Japan and elsewhere. Prominent French companies with regional headquarters in Singapore include Michelin, ClubMed and Gemplus. The luxury good maker LVMH also uses Singapore as the main distribution point for its products in Asia.

France ranks as Singapore’s sixth largest investor. Over the last 10 years, cumulative French investments have increased threefold. In 2001, the cumulative manufacturing investments in Singapore from France stood at almost US$1 billion. Currently, there are about 420 French companies and about 3,500 French expatriates in Singapore. Last year, we received over 20,000 business visitors from France.

Singapore has thrived as a business hub primarily because we believe in keeping our shores wide open. We need to stay borderless to maximise business opportunities. Globalisation has opened up many opportunities by enabling the ready and easy flow of capital, information, people, trade and business across borders. Singapore has benefited from all these. Yet, this has also brought about uncertainties and volatility, as our openness makes us vulnerable not just to global challenges, but global threats as well.

Global threats can take all forms. Terrorism and the spread of SARS have been two threats the world faced most recently. Singapore was hit by the SARS virus in early March. It all started when three Singaporean women brought home the virus after a visit to Hong Kong for their shopping. This was even before the term "Severe Acute Respiratory Syndrome", or SARS for short, was coined by the World Health Organization (WHO). For the last three months, we had to mobilise the entire nation to fight this disease. In the meantime, aided by air travel, SARS spread to 29 countries. In Singapore, SARS was seen as a grave national threat. Our Prime Minister mobilised a Ministerial Committee to direct a broad national response and marshal the resources of the entire government to fight SARS.

We fought SARS on three fronts – the public health front; society at large and the economic front. On the public health front, a ‘detect, isolate and contain’ policy was adopted. We designated one of the public hospitals as a SARS hospital so that all the expertise would be there; introduced stringent infection control measures at all hospitals and restricted visits to hospitals. In fact, towards the end fight, all visitors were banned from hospitals. To break the cycle of infection, we instituted comprehensive tracing of all contacts of every SARS patient. The contacts were quarantined in their own homes to prevent them from infecting others should they develop the disease.

At the society level, each and every Singaporean was encouraged to exercise social and individual responsibility and to step up on their personal hygiene. As a fever of above 38 degrees Celsius is one of the first signs of SARS, thermometers and information booklets on SARS were distributed to every school student, and to every household. There were also enhanced public health measures at mass events. Today, the daily taking of temperature, by students and workers, has become the norm. All these efforts at the national and individual levels helped us to quickly contain and eradicate the SARS problem in Singapore.

On the economic front, the impact of SARS on our tourism, transportation and services sectors has been devastating. At the height of the SARS outbreak, our tourism arrivals were down as much as 70 per cent; air passenger traffic plunged by more than 50 per cent and hotel occupancies dropped to only 20 to 30 per cent it has been a devastating impact for us. As a result, we have revised downwards our GDP growth for this year to a range of 0.5%-2.5%. To help the most badly hit sectors, the Singapore government introduced an economic relief package with the value of US $140 million.

But while we fought SARS at home, we also knew that SARS was more than just a Singapore problem. SARS was also a regional, and as we have seen, even a global problem. We did everything possible to prevent the import of new SARS cases into Singapore. But we also did not want to inadvertently spread SARS to other countries. This is not easy, as we are an international air hub and a major financial and business center, and cannot close our borders.

So we decided to implement health and temperature screening of all travellers coming to and leaving Singapore. We did this at Changi Airport, sea entry points and at the land checkpoints. The problem was that thousands of travelers passed through these checkpoints every day. This was a massive operational challenge. We therefore developed a thermal imaging system that could measure body temperatures in a non-intrusive yet accurate and efficient way. We have deployed these systems at our land, air and sea checkpoints. Some countries asked us, so we also loaned or gave several sets to countries like Hong Kong, Canada, China and Cambodia.

As a result of our efforts in containing SARS, on 31 May, the WHO took Singapore out of its list of SARS affected countries. This shows that we have now contained the disease. Yet, life will not go back to what it was before we were hit by SARS. The vigilance will continue. The temperature checks at our checkpoints will continue. The emphasis on enhanced personal hygiene will continue. This is because we have not eliminated SARS from the globe. Any let-up or slip-up in our vigilance may allow SARS to rear its head again.

What is gratifying and satisfying is that, in the midst of all the gloom and doom brought about by SARS, many foreign companies in Singapore continued to place their trust in us. They were totally confident that SARS was only a short-term problem that Singapore would quickly overcome. Indeed, the Chambers of Commerce, such as the American, British and Australian Chambers of Commerce, came out openly to support us and to reassure businessmen that it was safe to come to Singapore.

Their confidence in Singapore is not surprising, based on their knowledge and belief in Singapore’s long term strategies towards investors, and in the CORE underpinnings of our economic philosophy ie, our Connectivity, Openness, Reliability and Enterprise.

Let me elaborate on the 4 CORE elements. First, Connectivity. Singapore today is one of the most connected cities, in terms of air, sea and telecommunications and IT links. Our airport is connected to 122 cities in 45 countries through 2200 flights a week by 56 international airlines. We are connected to 600 ports in 123 countries, with at least daily sailings to every major port in the world, whether in Los Angeles, Tokyo or Shanghai. In terms of Internet connectivity, there is now 21 terabits per second of bandwidth linking Singapore to the world. This is one of the highest Internet connectivities for any city in the world.

Openness. For a hub to be home to many different enterprises from diverse origins, it must be open, cosmopolitan, welcoming of ideas and talent, and allow free flow of capital and information. There has to be transparency in the way it works, with pro-business policies, without any hidden domestic agenda. It has to abide by good governance and subject itself to international norms and standards. Singapore faithfully practises all these.

Reliability. International companies have based their regional operations in Singapore because they know we are reliable. Things work in Singapore. Our system is based on meritocracy. This, plus our transparency, bring about greatest effectiveness and efficiency, reliability and trustworthiness. Policies and practices that have been properly thought through will be consistent over time, and give comfort that physical and intellectual properties will be protected. In today’s world, intellectual property is the most precious thing companies can have.

Enterprise. Companies today face increasing challenges at many levels. They must have the ability to adapt and respond to the continuous changes and challenges facing them, if they are to continue to grow and prosper. This requires well-educated and skilled people, with the enterprise to innovate and adjust constantly. Our education system is recognised internationally for excellence, for training people with the skills and expertise required by the business world. And we are continuing to evolve and improve our education system, to ensure that companies will continue to have personnel who are innovative and creative, in order to address the market place challenges of tomorrow.

Whilst our CORE fundamentals underpin our long-term strategies, we recognised that a strategic and structural response is needed to face the unique global challenges of today. The government therefore set up an Economic Review Committee last year, involving some 1000 people from industry, unions, academia and the government. The Committee’s role was to review our strategies and policies comprehensively and holistically, leaving no stone unturned. Every policy was reviewed and studied. Arising from the Committee’s recommendations, several significant changes have already been made. For example, corporate tax rate was reduced from 24.5% to 22% this year. It will be further lowered to 20% by 2005. This will make Singapore’s tax regime one of the lowest in the world.

The Committee’s blueprint for Singapore’s longer term development aims to remake Singapore into:

• A globalised economy where Singapore is the key node in the global network, linked to all the major economies;
• A creative and entrepreneurial nation willing to take risks to create fresh businesses and blaze new paths to success; and
• A diversified economy powered by the twin engines of manufacturing and services, where vibrant Singapore companies complement multinational companies, and new startups co-exist with traditional businesses to exploit new and innovative ideas.

The 5 components of this strategy will include:

• enhancing Singapore’s role in manufacturing. This involves engaging in the entire value-chain, from idea conceptualisation, to R&D, production, marketing and supply chain management, and will be underpinned by IT and financial systems and capabilities. This is what we call value manufacturing. In addition, we will tap new opportunities in the services industry in new segments like engineering and environmental services, energy and derivatives, healthcare, education, legal and conflict resolution services.
• strengthening our innovation and R & D capabilities by building up our intellectual capital. We also intend to unleash our innovative energy by providing more test beds for trial and experimentation. In line with this, we are building an area in Singapore, called One-North, to enable innovators, Venture Capitalists, researchers and business people to come together. Here, they can research, develop and test-bed new products and solutions before launching into the international markets. We also intend to strengthen our base to create, manage and exploit intellectual property. This includes the whole chain of activities from Intellectual Property creation, exploitation, valuation to licensing, technology transfer, protection and enforcement.
• Creating an environment that is conducive for entrepreneurs to emerge and thrive. We are doing this by becoming more pro-enterprise. For example, companies can be registered within a day. There is no capital gains tax. And very important for promoting and nurturing new start-ups, angel investors can deduct from their income tax any capital loss from venture investments. This is quite unique and it is an important motivation for investors.
• Developing our human capital to their full potential. Already, 60% of each primary school cohort or group go on to tertiary education, about 40% to polytechnics and 20% to universities. We are now increasing the university percentage to 25%. On top of this, Singapore adopts an open-door policy towards foreign talent. You may be surprised to know that out of the 4 million people in Singapore, 1 million are expatriates and foreigners. We welcome foreign talent to Singapore. Why do they come to Singapore? Because of the safe, secure and comfortable environment to bring up children, and for people to live, work, learn and play. These are necessary conditions for Singapore to be a talent hub.
• Building on our external ties by leveraging on our physical location. Singapore is well-located in the middle of a market of 2.8 billion people, all within a radius of a 7-hour flight from Changi Airport. We serve as a strong bridge between the East and the West. Apart from our long-standing economic linkages, Singapore is now the "most FTA-linked nation". We have 4 FTAs in force (viz. ASEAN, Japan, New Zealand, EFTA), have recently signed 2 new ones, viz, with the US and Australia, and we are one of the few countries with FTAs with the US. In addition, we are now negotiating FTAs with China, Canada and India. We are also exploring 2 other FTAs -- with Chile and New Zealand together, and with South Korea.

SARS was a short-term setback for us. Yet, in our usual Singapore style we continued to look forward with new strategies rather than backwards. We continue to be guided by our CORE fundamentals. It is this principle of sticking to our fundamentals that will give companies and businesses the assurance and confidence to do business in Singapore, and to use Singapore as their springboard to Asia. Crises like terrorism and SARS only served to reinforce this principle. Amidst the crises, we have remained opened, transparent and honest with the world community.

France is a key partner for Singapore in many fields – investment, trade, finance, research and culture. As markets in Asia and other parts of the world further open up, and as business, technology and people become more inter-connected, we believe that Singapore can play a key role as a partner for the global business strategies of French companies. I look forward to further strengthening our partnerships in future.

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