Speech by Minister for Law and Foreign Affairs, K Shanmugam, at at the International Bar Association 4th Asia Pacific Regional Forum Conference

19 Mar 2015 Posted in Speeches

Introduction

1. Good morning

2. As you meet in Singapore, let me share a few thoughts about developments in this region and in Singapore.

3. This may be of some relevance to you in the context of today’s conference theme: “Borderless Asia”.

4. I will speak on 3 aspects:
   • First, observations on the growth, development and opportunities in Asia, in particular ASEAN;
   • Second, our role as a regional hub against this economic backdrop; and
   • Third, the steps that we have taken to enhance Singapore’s ability to serve the needs of the growing Asia legal market.

   The Asian economic back drop

5. Let me start with the Asian economic back drop.

6. As all of you know, Asia is booming.

7. Given that Asian countries are at different stages of economic growth; their large populations which are hardworking and bright; and the resources in Asia, this boom is going to go on for a very long time.

8. Asia’s GDP grew faster than the rest of the world, by more than 6% in 2013.

9. Trade and investment flows have also expanded substantially in this region.

10. Asia accounted for more than one-third of global trade and foreign direct investment (“FDI”) inflows in 2013.

11. This growth is happening not just in China and India, but also in many other parts of Asia.

12. Something that many people don’t realise - ASEAN is one of the largest economic blocs in the world.

13. It is the third largest in Asia and the seventh largest in the world.

14. By 2050, it is projected to be the fourth largest economy globally.

15. In 2013, FDI into Indonesia, Malaysia, the Philippines, Singapore and Thailand, known as the ASEAN-5, was larger than the FDI inflows into China. Not many people realise that either.

16. The total ASEAN trade also posted a six fold increase, from US$430 billion in 1993 to US$2.5 trillion in 2013.

17. It will get even better.

18. The ASEAN Economic Community (“AEC”) will seek to integrate ASEAN into one single regional market.

19. It will help in a freer flow of goods, services, investment, skilled labour and capital.

20. ASEAN is also reaching out to its major partners in the region - China, Japan, South Korea, India, Australia and New Zealand.

21. This will be done through the Regional Comprehensive Economic Partnership (“RCEP”), another free trade agreement.

22. Four ASEAN countries, including Singapore, are members of the Trans-Pacific Partnership (“TPP”), which is now being negotiated.

23. The TPP will go beyond elimination of tariffs and will cover areas such as intellectual property rights, technical barriers to trade, and competition policy.

24. All these partnerships present more opportunities for the ASEAN region to grow as a market.

    Singapore’s growth

25. In that context, Singapore is well positioned to ride on these opportunities.

26. We were the fourth largest economy in ASEAN in 2013 despite being the second smallest country in this region.

27. To give you another illustration, Singapore’s economy is almost the same size as Malaysia’s, although our geographical size and population is a small fraction of Malaysia’s.

28. Our trade and FDI were the highest in ASEAN in that year.

29. As a testament to our open economy, we are the 14th largest trading nation in the world in 2013 - a city of 718 square kilometers with 3.8 million population, which is equivalent to a medium sized US city.

30. We not only attract investments – we are also an important investor in our own right.

31. Again, something that is not well known, but as an illustration - we were the largest investor in China, India and Indonesia in 2013.

32. There has been a large inflow of capital into Singapore and we are well-positioned to become the New York of that vibrant economic region.

33. A McKinsey study in 2013 showed that the largest number of billion-dollar companies with global headquarters in South East Asia is to be found here.

34. Businesses are found to be here for many reasons.

35. First, our free trade agreements (“FTAs”) have attracted a number of businesses to base themselves here, and from here, to link up with the rest of the world.
    • We signed our first FTA under the ASEAN Free Trade Area (AFTA) in 1993.
    • Today, our network of FTAs includes 21 bilateral and regional FTAs with 32 trading partners, crisscrossing the entire globe.
36. Second, we are a key financial centre.
    • There are more than 700 financial institutions here in Singapore.
    • We are one of the key wealth management centres in the world. Assets estimated at over USD500 billion are managed out of here.
37. Third, because we offer a high quality of life. In international rankings, we were ranked as having:
    • The highest quality of living in Asia by Mercer;
    • The most efficient healthcare system amongst 51 countries by Bloomberg;
    • The best workforce in the world in terms of workers’ productivity and general overall attitude by the Business Environment Risk Intelligence; and
    • The second safest city in the world by the Economist Intelligence Unit. Our crime rate in 2013 was the lowest in 30 years.

38. Against that back drop, we see ourselves as playing a key role to support the legal needs of businesses.

    Singapore’s role as a choice location for dispute resolution

39. Let me focus on one area – dispute resolution.

40. Law essentially follows business.

41. As businesses grow in this part of world, we can also expect demand for legal services to grow to support regional commercial activity.

42. One key area is of course dispute resolution.

43. With increased commercial activity, it is natural that the need for dispute resolution will also rise.

44. Parties need a neutral, trusted forum to resolve their disputes efficiently, and there is really only one place in Asia for that.

45. Singapore aims to provide that platform by offering a full suite of dispute resolution services to businesses.

46. With this in mind, a few years ago, we embarked on a series of initiatives to make ourselves a leading arbitration centre.

47. That has been successful.

48. We are now the third most preferred seat of arbitration worldwide.

49. And the Singapore International Arbitration Centre (“SIAC”) is the fourth most preferred arbitral institution worldwide.

50. Since 2000, the SIAC has handled close to 2,000 cases.

51. About 80% of the cases administered by SIAC are international in nature.

52. This is a result of calibrated and deliberate measure to put in place arbitration-friendly policies and regulations.

53. We have a completely open regime for international commercial arbitration.

54. Parties that arbitrate here can engage lawyers of any nationality and use any governing law.

55. Our Courts have been supportive of the arbitral process and have consistently supported the finality of arbitration awards.

56. We are a signatory to the New York Convention and our International Arbitration Act is UNCITRAL Model Law compliant.

57. Looking beyond arbitration, we are now building capabilities and infrastructure to support international commercial mediation and litigation.

58. The Singapore International Mediation Centre (“SIMC”) and the Singapore International Commercial Court (“SICC”) were both launched a few months ago.

59. The SIMC provides international commercial mediation services.

60. It has a panel of high quality international mediators with more than 65 highly experienced international mediators from 14 jurisdictions.

61. The SIMC also presents parties with the unique option of the Arb-Med-Arb protocol, which is jointly administered by the SIMC and the SIAC.

62. If parties are able to settle their dispute through mediation, their mediated settlement can be recorded as a consent award.

63. The consent award is accepted as an arbitral award and enforceable under the New York Convention.

64. If parties are unable to settle their dispute through mediation, they can of course continue with arbitration.

65. On the other hand, the SICC provides the option of a court-based dispute resolution mechanism for international and commercial disputes.

66. The key points of the SICC are:

67. First, disputes before the SICC will be heard by a distinguished and diverse panel comprising Singapore Judges and eminent international jurists.
    • 11 international judges from USA, Australia, the UK, Hong Kong as well as civil law jurisdictions such as Austria, France and Japan have been appointed.
    • They include present and former judges as well as senior academics.
    • More appointments will be made.

68. Second, parties can choose foreign counsel to represent them in cases with no substantial connection to Singapore; or where the Court grants leave, to make submissions on points of foreign law.

69. Third, SICC procedures follow international best practices for commercial disputes. This allows for flexibility in various aspects such as evidential rules.

70. Fourth, SICC provides the ability to deal efficiently with cases governed by foreign law.
    • Parties can apply to have any question of foreign law be determined on the basis of submissions instead of the usual mode of proof.
    • Measures have also been taken to enhance the enforceability of SICC judgments.
    • The recently amended Supreme Court of Judicature Act provides for parties to automatically waive their rights to challenge the enforcement of an SICC judgment unless they indicate otherwise.

71. We will also sign the Hague Convention on Choice of Court Agreements later this month.

72. The Convention has two basic aims.
    • One, to ensure that exclusive choice of court agreements are effective; and
    • Two, to ensure that judgments by the chosen courts are recognised and enforced in Contracting States.

73. The Convention will help to enhance the enforceability of SICC judgments vis-à-vis other parties to the Convention when it comes into force.

74. We are also looking at expanding the scope of our reciprocal enforcement legislation so that SICC judgments can be more effectively enforced throughout the world.

75. The approach we took with SICC encapsulates our entire approach in this field as well as other fields to make ourselves a vibrant centre.

76. We thought about the idea two years ago; took us two years to conceptualise and prepare the legislation.

77. In September last year, the constitution as well as all other legislatures that were necessary to be amended was amended in a single sitting of parliament in one day.

78. The court’s formation was then announced in January.

79. The SICC, SIAC and the SIMC’s unique features are targeted at deep, international and cross-border disputes.

80. They seek to reduce, or if possible, remove barriers to resolving disputes efficiently across borders.

    Singapore’s role as a choice location for in-house counsel and home base for international firms

81. Apart from dispute resolution, we also want to make Singapore a conducive place for MNCs to base their regional in-house counsel teams.

82. We have been ranked top in Asia in the rule of law, for example by the World Justice Project, and in IP protection, for example by the World Economic Forum.

83. As businesses expand in the region, companies now have to grapple with a wide range of legal matters including extraterritorial laws, regulatory and compliance issues.

84. To support the work of in-house counsel based in Singapore, we amended our Evidence Act, and provided for them to have legal professional privileges and made it absolutely clear that they are covered.

85. Many of our Singapore law practices are also developing strong regional practices with expertise in the laws of the region.

86. Our university has set up an institute that focuses on developing expertise on laws in the region as well.

87. Our top five law firms are among the largest in Southeast Asia.

88. With their knowledge and networks, they can serve as market connectors to the rest of Asia.

89. Many international law firms and lawyers have also made Singapore their home base in Asia to service other places in the region.

90. 40 of the top 100 law firms globally by revenue are in Singapore.

91. There are now close to 1,200 foreign lawyers based in Singapore.

92. The international law firms bring with them a wealth of international networks and expertise.

93. This concentration of legal activity in Singapore has resulted in a significant growth in our legal sector in the last few years.

94. We have provided flexibility for tie ups between foreign and local firms, in a variety of forms and legal structures.

    Conclusion

95. These are, as most of you know, exciting times to be in Asia.

96. Asia may not be truly “borderless” yet, but we are taking steps to reduce trade barriers and support business activities in this region.

97. We want our legal services sector to play a pivotal role in this growth trajectory.

98. And for lawyers and law firms operating here to be part of that action.

99. The Government will strongly support businesses and law firms to tap on to opportunities in the region.

100. It is incumbent on all of us - governments across the region, lawyers and businesses - to truly make Asia borderless.

101. On this note, I wish all of you a good conference. Thank you.

Last updated on 14 Jul 2015