JEDDAH, 20 February 2005 — Singapore has had centuries of relations with the Arab world and Arab business, especially those of southern Arabia. Over the centuries, Arab traders stopped in Singapore and established trading posts, adding a new cultural dimension to the city-state. Even today there are many streets in Singapore which have Arabic names. Raffles, one of the most famous hotels in the world, began life as a house owned by the Arab businessman, Muhammad Al-Saggaf of Hadhramaut in what is today southern Yemen.
Trade and business ties grew stronger during the oil boom with companies from Singapore playing a role in the development of the Gulf. Major Saudi companies such as Saudi Aramco have also established offices there.
In the past few years, however, relations between Singapore and the region have cooled a bit. Many Saudi businessmen have complained of difficulties and problems involved in getting visas and also of tight controls.
They feel that Singapore is viewing the Arabs through others’ eyes. While we appreciate Singapore’s security concerns, we believe that direct contact can help in removing misconceptions and in returning to the ease of previous relations so that both countries can look together at a positive economic future. Singapore has a great deal to offer and here in Saudi Arabia, people have great respect for its people and its leaders.
The participation of Senior Minister Goh Chok Tong in the Jeddah Economic Forum is itself an indication that both sides would like to have close economic and cultural relations beneficial to both the people of Singapore and those of this country and this region. Arab News spoke to Senior Minister Goh Chok Tong and following are some excerpts from the conversation.
Q. 1: How does Singapore view the Middle East region?
A: The Middle East is in a stage of flux. There is increasing pressure for the region to change, both domestically and externally. As the region changes, we see opportunities for closer cooperation, given the region’s vast potential.
As prime minister, I had visited a number of Middle East countries over the past few years: Oman, Egypt, Jordan, Bahrain, and the United Arab Emirates. Their leaders showed a keen desire to develop their countries. They wanted to learn from the experience of other countries, including Singapore. I saw many opportunities for economic cooperation with them. Measures to enhance trade and investment with many of them are already under way.
I have thus proposed a dialogue between the countries in the Middle East and Asia. This Asia-Middle East Dialogue or AMED will be a dialogue between the eminent persons and peoples of our two regions. The aim is to promote better understanding which will then pave the way for closer cooperation in economic and other areas. The first dialogue will take place in Singapore in June this year. Fifty countries from the two regions will be invited. Many have already indicated interest to participate in the dialogue. As a leader of the Middle East region, Saudi Arabia can make important contributions in helping AMED achieve its objectives.
Q. 2: How do you see the future direction of Singapore’s economic ties with the Kingdom?
A: Our ties are limited now. I hope that my visit, followed by more exchanges of visits between our leaders and businessmen, will lead to further economic cooperation. Saudi Arabia is currently Singapore’s largest trading partner in the Middle East. Our bilateral trade grew by 34% between 2003 and 2004, rising to approximately $6 billion. Oil was the main commodity traded. I see potential for closer cooperation in manufacturing, logistics, financial services — particularly private equity investments, infrastructural development, research and development, procurement and distribution. Many Saudi investors are exploring investment opportunities in other parts of the world. I encourage them to look east toward Asia.
Asia, particularly China, India and Southeast Asia, can offer Saudi Arabia many lucrative opportunities. Singapore can be a gateway to these countries for the Kingdom. We can serve as another bridge linking the Middle East to Asia.
Q. 3: How do Singapore businessmen and investors see trade and investment opportunities in Saudi Arabia? How do they propose to take advantage of the vast opportunities available in Saudi Arabia’s investment and tourism sectors that have opened up?
A: Our businesses have traditionally focused on our immediate regions, principally Southeast Asia, China and India. But they are beginning to recognize Saudi Arabia’s economic potential. You are a resource-rich country with the largest market in the Gulf. Many Saudi corporations, such as SABIC and Saudi Aramco, have global reach. My visit aims to draw the attention of Singapore businessmen to the economic opportunities offered by your country.
Singapore companies will take some time to become familiar with the region’s business culture. But they are now actively pursuing opportunities in the info-comms technology, financial services, construction and real estate services, oil and gas supporting infrastructure, and chemicals sectors. Our governments can help by facilitating information exchange on business environment and opportunities, and by reducing barriers to trade and investment through economic agreements like Free Trade Agreements and Investment Guarantee Agreements.
Q. 4: Singapore requires visas for all Saudis visiting the country. The issuance of visas to Saudis from the Kingdom takes from a week to 10 days. What is the impact of such developments on tourist traffic from here?
A: Unfortunately, the global security situation compels us to require visas from visitors from many countries, including Saudi Arabia. Unavoidably, this causes some inconvenience to travelers and reduces the flow of visitors to Singapore. But I assure you that Singapore welcomes visitors from Saudi Arabia. We shall be enhancing our diplomatic representation to Saudi Arabia. We are regularly reviewing and streamlining our visa processes to make it easier for Saudi visitors. For example, we have established a special scheme whereby applicants who satisfy certain conditions may be issued multiple journey visas valid for up to 2-years. We want to see a greater flow of Saudi visitors to Singapore for business, tourism, health care or education.
Q. 5: Where does Singapore stand in terms of being a hub in the Pacific and as an outsourcing destination?
A: Singapore has developed steadily over the years as an international manufacturing and financial center. There are more than 7000 MNCs and 600 financial institutions in Singapore.
On outsourcing, Singapore aims to expand our current position as an outsourcing and captive off-shoring hub in Asia. We have an excellent business environment, telecommunications and technology infrastructure, and skilled & IT-savvy work force. This has helped Singapore forge ahead to become a prime location for activities such as regional oversight, high value-added and technology-intensive business processing, and disaster recovery.
Q. 6: Islamic banking has been growing by leaps and bounds here and elsewhere in the Gulf. Even Western banks have been taking interest in it. How does Singapore see this trend? What’s the island’s own track record in this field?
A: Yes, we have noticed the growing interest in Islamic finance in the past few years. Although volumes are still small in comparison to conventional products, Islamic finance has reportedly been growing quickly at 10 - 20% annually. Singapore is developing expertise in Islamic banking to meet the growing demand for Islamic financial products. Singapore would be leveraging on the critical mass of expertise in wealth management and capital markets here, while tapping on the Shariah expertise of Middle East financial institutions.
Some forms of Islamic financial services are already available in Singapore. They include Islamic deposits and funds and Takaful insurance. However, given our small domestic market potential, financial institutions including fund managers are also working with institutions in the Middle East to structure Islamic fund products for the Middle East market.
Q. 7: The Singapore stock market had a relatively good showing with stocks rising more than 13% for the outgoing lunar year. The predictions for the Year of the Rooster are mostly positive but there is room for some caution. On the one hand, some analysts believe the Year of the Rooster will deliver stability and growth to financial markets. Some investors, like JF Asset Management, are betting that Asia will be in favor this year because, they say, there is still superior growth. Your comment?
A: Asian stock markets have been generally strong in the past year boosted by healthy economic growth, foreign capital inflows and expectations of a soft landing for China’s economy. For 2005, fund managers are still most bullish toward Asian markets outside of Japan. Exports have risen and economies have been riding on China’s boom. In Asia, fund managers continue to favor ASEAN markets.
Singapore offers investors fundamentally attractive companies with decent yields. We also provide diversity into regional markets. Currently, 28% of listed companies are foreign. They make up 40% of the market capitalization of the market. The bulk of new foreign listings are Chinese companies.