UK/Singapore: The Lord Mayor’s Visit: 24-25 May: Background Note

British High Commission Singapore

May 2012

Summary

Lord Mayor’s visit follows hard on heels of stopover by Prime Minister and substantive visit by Foreign Secretary. Singaporeans have certainly noticed our increased interest and engagement. This visit will allow us to sustain the momentum, in particular on two important objectives: reassuring our hosts about the strong fundamentals of the UK economy and the continued pre-eminence of the City,; and securing an EU-Singapore FTA, which delivers on financial and legal services liberalisation.

Detail

The Singaporean government and opinion formers have been left in no doubt in recent months that HMG takes Singapore  - and this region  -  seriously, and wants to take forward genuine and equal partnership in a number of areas.  Our Prosperity agenda tops the list: the Foreign Secretary majored on it in his keynote speech here on 26 April, saying “Today, Britain is looking East, as never before”. He described the shift of significant numbers of FCO staff into Asia, including 50 into SE Asia, and announced the re-opening of our Laos Embassy.

Whilst much of the recent focus on economic opportunities in South East Asia has centred on Indonesia, Vietnam and lately Burma, this is mainly about potential.  For now, Singapore remains by far the biggest recipient of UK exports and, in turn, exports much more than other ASEAN countries to the UK.  British exports to Indonesia last year were less than 20% of those to Singapore, for example. The numbers for the first two months of this year are promising too: UK goods exports to Singapore in Jan-Feb were up 18% to £638 million.

The number of Brits living and working here is also on the rise: roughly 32,000, many of them in the services sector. We have over 700 British companies here, most of them making this the base of their S.E. Asian or wider Asia Pacific operations. The Lord Mayor will have plenty of opportunity to engage with UK businesses at our reception, at the working breakfast with MNCs and at the British Chamber lunch.

Singapore continues to punch well above its weight and to impress with its ability to evolve to stay competitive.  And big British players continue to show faith in Singapore by expanding their footprint here: witness Rolls Royce’s £350m new campus at Seletar which will make jet engines and wide chord fan blades, as well as providing significant training and research. Standard Chartered have recently announced that it will subsidiarise here. And GSK has sunk a lot of money into their production and research facilities here too.

Despite the positives, the Lord Mayor will find some  nervousness about economic events outside Singapore’s control, but overall the mood is still relatively upbeat. Singapore’s vulnerability resides in its huge reliance on exports. The government is sticking to the 1-3% growth prediction it made at the end of last year for this, which looked conservative then, a bit less so now, perhaps.  A hard landing in China would hit Singapore hard too, as it is their 2nd largest trading partner after Malaysia (2-way trade with China in 2010 was £47bn).

As for the eurozone crisis, the Singaporeans are keeping a very close eye. Most of their own financial institutions have little exposure to Europe, and their banks are well-regulated. But the ripple effect of deleveraging by European banks, and consequent reduced liquidity concern them, as does the fall-off in consumption of their exports that an extended recession in Europe would mean. The Lord Mayor will have the opportunity to spread the positive messages about the City’s continuing attractiveness both in his lunch-time speech to the British Chamber and during an in-depth interview with the Business Times – part of their prestigious “Raffles Conversation” series.

The meetings with the Monetary Authority of Singapore, the Singapore Stock Exchange and the Sovereign Wealth Fund, GIC will allow the Lord Mayor to discuss the local economy and  markets in detail..  At his meetings with the Attorney- General and the Finance Minister he will be able to discuss the EU-Singapore FTA, particularly our interest  in further liberalisation of the financial and legal services sectors here.

All in all, plenty for us to build on for our bilateral relationship, including the UK-Singapore Economic and Business Partnership, signed in October last year by Vince Cable and his opposite number.

Disclaimer

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