Interview with Peter Tan Hai Chuan, Ambassador of Singapore to Japan

Singapore-Japan relations in terms of trade, investments, economics or cultural ties

Singapore and Japan enjoy long-standing economic ties, underpinned by strong trade, investment and tourism linkages. Japan was Singapore’s 7th largest trading partner in 2019, with total bilateral trade amounting to S$50.5 billion. In 2018, Singapore was Japan’s largest Asian investor, while Japan was Singapore’s 3rd largest foreign investor. Major Japanese companies have established their presence in Singapore to access opportunities in the region. With nearly 10% increase in the number of visitors from Singapore visiting Japan in 2018, Japan is growing in popularity as a tourist destination amongst Singaporeans. Last year, 437,000 Singaporeans visited Japan, while 830,000 Japanese visited Singapore, hitting a 5-year record high.

Singapore and Japan are also like-minded partners in promoting free and open trade. Bilaterally, Singapore and Japan signed the Japan-Singapore Economic Partnership Agreement in 2002. This was Japan’s first Free Trade Agreement (FTA), and Singapore’s first with a major trading partner. At the regional level, both Singapore and Japan are parties to multilateral agreements – the ASEAN-Japan Comprehensive Economic Partnership (AJCEP), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the Regional Comprehensive Economic Partnership (RCEP), which concluded negotiations last year. Singapore and Japan are also close partners in new areas of trade, through efforts such as the Joint Statement Initiative (JSI) on E-Commerce at the World Trade Organization (WTO).

The ongoing COVID-19 outbreak has serious implications on the global economy, especially on the tourism and transport sectors. We are also seeing disruptions in the global supply chains which are in turn hampering trade and manufacturing. To overcome this global challenge, it is important that Singapore and Japan work together to maintain open and connected supply chains, and ensure that trade lines remain open to facilitate the flow of goods including essential supplies. We should also cooperate with the international community to ensure that trade continues to flow unimpeded, and that infrastructure such as our air and sea ports remain open to support the viability of supply chains globally.

Main Industry trends and opportunities of growth

There are three areas that I would like to highlight. First, Singapore and Japan can deepen collaboration in innovation and digital economy. As we transform our economies and enhance productivity, there is scope for closer innovation collaboration between Singapore and Japanese companies, especially in the digital economy. In fact, Singapore startups are already leveraging Japan’s market to scale up. For instance, ViSenze – a deep tech startup which builds visual search and image recognition software tailored for e-commerce websites – has successfully entered Japan and provided services to prominent Japanese retailers like Uniqlo.

Last year, Tokyo joined Singapore’s Global Innovation Alliance (GIA) network of Innovation Launchpads. To leverage each other’s innovation ecosystems, the Economic Development Board (EDB), Enterprise Singapore (ESG) and Japan External Trade Organisation (JETRO) will develop initiatives, organise events and information sharing sessions for startups and businesses from Singapore and Japan. To this end, ESG is also running outbound GIA Acceleration Programmes to connect Singapore startups and SMEs with Japan’s innovation ecosystem. Under this programme, ESG is working with Japanese science venture accelerator Leave a Nest to assist more deep-tech Singapore startups and SMEs to access the Japanese market.

Japanese startups are also entering Singapore to tap on Singapore’s pro-business environment, strong protection of intellectual property and geographical location within Southeast Asia. In the area of smart agriculture, Japanese aquaculture data analytics startup UMITRON, which builds aquaculture data platforms that leverage the use of Internet of Things (IoT), artificial intelligence and satellite remote sensing, established its headquarters in Singapore in 2016. UMITRON aims to use Singapore as a launchpad into other countries in the region such as Indonesia, China and Australia.

Second, Singapore and Japanese companies can collaborate on infrastructure projects in third-party markets, especially in Southeast Asia. Infrastructure demand in the region is growing and it presents opportunities for Singapore and Japanese companies to work together in third-party markets. Singapore companies with extensive master-planning experience and deep local market expertise can partner Japanese companies with exceptional engineering capabilities to take on joint projects in the region. For example, Singapore’s infrastructure consulting firm Surbana Jurong has partnered the Japan Overseas Investment Corporation for Transport and Urban Development (JOIN) to support the development of New Clark City, a smart and green metropolis in the Philippines.

Finally, with growing affluence in Asia, Singapore and Japanese companies can explore and leverage opportunities in the consumer and lifestyle sector. The rise in purchasing power of consumers and the growth of the internet economy in Southeast Asia present unprecedented opportunities for Japanese retailers to capitalise and scale up. Japanese brands looking to expand their reach in the rest of Asia can work with Singapore’s e-commerce players to capture the young and digital-savvy consumers in the region. On the other hand, given the growing demand for unique food offerings in Japan, Singapore food companies can participate in the Taste of Singapore Pop-up, an ESG-led initiative, to grow product awareness amongst the Japanese consumers. Irvins Salted Egg, for example, has set up a pop-up store in Daimaru Tokyo in 2019 to expand their market reach in Japan.

Vision for the future relationship between Singapore, Japan and the ASEAN region

Looking ahead, Singapore will continue working with other ASEAN Member States and Japan to support an open and rules-based multilateral trading system. Japan has been an important dialogue partner for ASEAN. It is ASEAN’s fourth largest trading partner (with bilateral trade standing at US$225.2 bn in 2018) and second largest investor into the region (Foreign Direct Investment inflows valued at US$21.2 bn in 2018). The AJCEP, signed in 2008, is one of the building blocks for the ASEAN-Japan economic relationship. In April 2019, ASEAN and Japan signed the First Protocol to Amend the AJCEP which will legally incorporate the chapters on Trade in Services, Investment and Movement of Natural Persons. Once it comes into effect, the First Protocol will bring tangible benefits for ASEAN and Japanese service suppliers and investors. We are also looking forward to the early signing of the RCEP, which will create more opportunities for our people.

The ASEAN-Japan relationship is wide-ranging, with cooperation activities in areas such as trade facilitation, intellectual property rights (IPR), micro, small and medium enterprises (MSMEs), infrastructure, energy, innovation and transfer of technology. In recent years, dialogues and cooperation initiatives on the digital economy and the transformative impact of the Fourth Industrial Revolution (4IR) have taken place. Singapore and ASEAN will continue to cooperate and enhance stronger trade and investment ties with Japan.

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