Meet The Ambassador

U.S.-Singapore Free Trade Agreement: A Year in Profile
Remarks by Ambassador Frank Lavin  at the IBM Forum
July 28, 2004

Thank you, Patricia. I'd like to thank everyone for coming. It’s a delight to be here.

I say this because the IBM team and the broader IBM family of customers and stakeholders represents, to my mind, some of the finest of the Singapore business community and I’ll explain why I feel that way as I get into my remarks.

I’d like to talk with you today about two topics: our current economic prospects, and the importance of technology in the modern business environment.

Let me start with the economy. A year ago, the environment was much softer. In fact, the first three quarters of last year saw a net negative growth in the economy. So the business community was thinking more in terms of survival than of expansion. The bad news was part of a broad pattern. We had a downturn in the IT sector, weak conditions in the U.S. and other markets, and the SARS crisis. Interestingly, both Singapore and the U.S. turned to similar policy tools: fiscal stimulus, a reduction in tax rates, and trade liberalization. The US-Singapore FTA was a key building block as both countries looked to build stronger economies.

Last year I spoke to you and told you that there was good news and bad news: The good news was that the bad news was largely behind us, the bad news was that the good news was not yet here. Today I am happy to say the economy is back and it is strong —in the U.S., in Singapore, and in Asia. To quote B.B. King: “We got our mojo working.”

In the United States, the economy since last summer has posted its fastest growth in nearly 20 years. Employment is growing among all groups. Incomes are rising, household wealth is near an all-time high, and consumer confidence is at its highest in two years.

Singapore’s numbers are even stronger in some respects, with first half growth projected to be over 10 percent Asia-wide, regional GDP is expected to grow by more than 6 percent this year.

We should not let this good news blind us to the fact that both Singapore and the U.S. have substantial economic challenges ahead. We need to make sure the economic recovery is sustained. We need to make sure that economic strength translates into improved employment. And we need to make sure that the good news we see today does not inure us to the structural challenges of the years to come.

This takes me to my second point, technology in business. When we talk about the business environment in an era of globalization, we frequently view this only as a political phenomenon. – the reduction in trade barriers, China’s move to market economics. But we should also recognize globalization as a technological phenomenon. Because it is technology that allows businesses to break down barriers to information and lets capital and production move across borders. Thanks to globalization, best practices are set on the world stage, and companies need IT to compete. These days, every business is an IT business.

Technology is a leveler. It allows a smaller company to use the same platform as a larger company. Whether it is industrial process control, customer contact, or enterprise planning, you can more or less place at your keyboard the same capabilities of your major corporate competitors.

These two aspects of globalization are mutually reinforcing. As trade barriers fall, we have new opportunities and potentially new competition. The size of our business has not changed, but the scale of our business needs to change. It is technology that lets us scale up and move to the next level.

The US-Singapore FTA is a case in point. It’s opened up our two economies, allowing for greater opportunity and greater competition. It has also broken new ground in tech areas such as e-commerce, and intellectual property.

With the FTA, Singapore has made a strong statement that it is the most IT-friendly and IPR-friendly locale in Asia. And by using IT connectivity to make itself a natural base for regional management, Singapore has positioned itself to take advantage of the opportunities created by the emergence of China and India. It’s no surprise that Singapore’s exports to China have nearly doubled in the past two years, and its exports to India leapt more than 50 percent in the first half of this year.

Now let me go back to my opening comments and share why I feel a special affinity for this group in the room today. Sir Francis Bacon once wrote, “If you begin your journey with questions, you end up with answers. But if you begin with the answers, you end up with only questions.” That sounds so wise, you’d think he just might be Chinese. But the point is this: what differentiates the successful business from the unsuccessful is the ability to deal with change. To recognize that the political environment is changing. The competitive map is changing. Customer requirements and preferences change. And business practices change. And we are only going to get the answers to this if we start asking the questions. You here in the room know this. It’s the people who aren’t in this room who think they already know the answers. And they’re going to be left only with the questions. But that’s OK – they’re your competition.

So, let me sum up. We have many challenges ahead. There are still threats out there—whether from terrorism or infectious diseases. But as we look back over the past year, we have seen steady improvement in our capacity to deal with these challenges.

And on the positive side, the US economy, the Singapore economy, the global economy have all come through some dark days, but the view looks increasingly sunny. Working with IBM and other tech-savvy companies will ensure you continue to adopt best practices and make globalization your friend and not your enemy. You will find no better business partners in this endeavor than U.S. companies --something you already know from your work with IBM. Moreover, Singapore itself will find no better partner than America, and we plan to be there through sunny and dark days.