Macroeconomic conditions are casting dark clouds for economies in the region, but Asean as a collective economy offers a powerful proposition with 650 million people and nearly US$3.6 trillion ($4.86 trillion) in total GDP, says Minister for Trade and Industry Gan Kim Yong.
“Of course, in the short term, there are always uncertainties, [but] there is always a promise of a silver lining behind the dark clouds,” says Gan at the Singapore Business Federation’s (SBF) 7th Asean Conference on Aug 31.
In a dialogue session with Kok Ping Soon, SBF’s chief executive officer, Gan says he sees two megatrends for Asean: digitalisation and sustainability. “Both are very important.”
However, Asean members are at different stages of economic development and therefore “different levels of preparedness” for digitalisation, says Gan. “The diversity among Asean members is one of the key challenges that we need to overcome. At the same time, diversity is also a strength of Asean; we are able to help one another, integrate with one another and unleash the potential of digitalisation among Asean economies.”
On the green economy, Gan highlights “a significant opportunity” for Singaporean companies to invest in other Asean markets. “In the short term, we need to work together to overcome supply chain disruptions [and] constraints in our resources, move towards sustainability [and] our digitalisation journey…. While there are clouds on the horizon, I think we can see the rainbow forming behind the clouds.”
More than 400 participants from 14 countries attended the one-day conference, where SBF also signed two memoranda of understanding (MOUs) to support Singapore businesses expanding overseas, particularly within Asean.
See also: SBF signs MOUs with UOB, Y3 Technologies to help local companies expand into Asean
SBF renewed an MOU with United Overseas Bank (UOB) U11 , first signed in 2021, to collaborate on joint initiatives promoting trade and investment between Singapore and other countries. Local businesses can tap GlobalConnect@SBF and UOB’s foreign direct investment advisory unit for market insights and talent solutions. SBF launched the GlobalConnect@SBF programme with Enterprise Singapore in 2019.
SBF also signed an MOU with Y3 Technologies, part of local supply chain solutions company YCH Group, to support cross-border e-commerce activities of Singapore businesses into Asean and beyond.
The two parties will offer complimentary workshops, diagnostic and consultation sessions, as well as networking for local businesses.
See also: A US$12 bil climate fund is readying a rare bond issuance
Carbon tax an ‘important signal’
Singapore became the first country in Asia to introduce a carbon tax in 2019, with companies that emit 25,000 tonnes of carbon dioxide equivalent (tCO2e) emissions or more in a year subject to a tax of $5/tCO2e.
“I know many of you are upset that we have introduced carbon tax but it is an important signal to the industries in Singapore that we mean business; we are serious about decarbonisation,” says Gan. “We introduced a tax so that we send a signal to industries: ‘You, too, have to begin to migrate into decarbonisation; you may need to change your business model [and] go towards more low-carbon solutions, focus on sustainable products [and] sustainable production, so that we can move towards a low-carbon future and achieve our zero-emission target by 2050.’”
Parliament passed the Carbon Pricing (Amendment) Bill on Nov 8, 2022, signing into law a carbon tax rate hike to $25/tCO2e in 2024 and 2025 and $45/tCO2e from 2026.
The Bill also introduced a framework for International Carbon Credits (ICC), tradable certificates that companies can use to offset up to 5% of their taxable emissions. The certificates represent projects that reduce or remove emissions, such as reforestation.
The government will partner businesses on this journey, says Gan. “You don’t have to join this journey alone… We see decarbonisation and sustainability as a challenge [and] we also look at it as an opportunity.”
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There are many opportunities to invest in green energy in the region, he adds. “Some of our companies are big players in wind farms in India… There are a lot of opportunities in the region. So, I encourage you to look beyond Singapore.”
Sembcorp U96 , for one, has a wind power capacity of 2GW in its India portfolio under self-operation and maintenance.
Gan also points to opportunities in the carbon markets, such as carbon trading and verification. “These are all opportunities emerging from the green economy, not just to serve ourselves but to serve the region too, because carbon trading will involve cross-border trading.”
First-mover advantage
Consumers and investors are becoming more and more conscious of sustainability, says Gan. “Buyers and consumers, for example, will demand that products are produced in a sustainable way; they will ask for green certificates and they will even ask for Scope 3 emissions to be accounted for.”
This will create new opportunities for companies that are able to move faster, he adds. “[They] may have a first-mover advantage when consumers and customers are looking for sustainable producers… I would encourage companies to think about decarbonisation as a business strategy. This way, you will be ahead of the competition in time to come.”
While the government can render assistance to businesses, corporates must remain adept and agile, says Gan. “At the end of the day, the government can create an environment, but business has to be done by businesses. So, we encourage our enterprises to move ahead, to be prepared to transform, to always be ready to change their business model when the market changes, when the conditions shift and the landscape evolves.”
Through innovation and lifelong learning — an oft-repeated mantra that Gan acknowledges some think is a “broken record” — companies can find new business and opportunities. “You’re not alone; the government will be there with you [and] SBF will be there to support you.”
Photos: Singapore Business Federation
