Singapore's Exposure to China's One Belt, One Road Initiative

Mr Dennis Tan Lip Fong asked the Prime Minister (a) what has Singapore's exposure been to China's One Belt, One Road initiative; and (b) what does the Ministry intend to do to mitigate downside risks given continued and likely persistent slowdowns in Chinese capital outflow.

Mdm Speaker: Who is answering on behalf of the front bench?

The Minister for Education (Higher Education and Skills) (Mr Ong Ye Kung) (for the Prime Minister): My apologies, Mdm Speaker. Singapore welcomes China's "Belt and Road" initiative. It is a mutually beneficial initiative that will encourage further economic integration, infrastructural cooperation and people-to-people linkages among countries in the region.

As a result of the "Belt and Road" initiative, there is increased interest from Chinese corporates and financial institutions to invest in and participate in infrastructure projects in the region, including Singapore. For example, Industrial and Commercial Bank of China Singapore branch recently signed an MOU with Singapore Business Federation to extend up to RMB 50 billion in funding to Singapore companies for infrastructure projects across Asia. This in turn opens up opportunities for Singapore companies to partner Chinese players in "Belt and Road" projects, in areas such as transport and logistics, mixed-use park developments, construction materials and financing. Given that the "Belt and Road" is a relatively recent initiative, Singapore companies' direct engagements so far are not large, but I am sure will grow.

Capital outflow from China is a separate matter. It is not surprising that there should be a slowdown in such outflows as the Chinese authorities seek to maintain stability in their currency. The slowdown does not pose any material risk for the Singapore financial system or economy.

As China grows and becomes more integrated with the world, its capital outflows and investments abroad will likely grow steadily over the long term, and the RMB will become more internationalised. Our cooperation with the Chinese authorities, monetary and financial regulators, fully recognise China's interest in ensuring that the journey is a stable and orderly one, and in guarding against sudden and excessive capital outflows.

Mr Dennis Tan Lip Fong (Non-Constituency Member): I thank the Minister for the answers. I have two supplementary questions. We have read that the One Belt, One Road investments all over the world have encountered various externalities, risks, problems such as corruption in certain countries, labour unrest, protest against land acquisition or against the use of Chinese labour at the expense of local labour, bureaucracy issues such as what we have seen in the Chinese investments in developing mines in Congo. So, what is the Government's assessment and consideration of such risks and externalities and how will it intend to manage such downside risks?

The second question I would like to ask the Minister is, in the event that the Chinese investments which Singapore investors take part in, lead to such problems such as mass protests or even abandonment of projects, how will Singapore be affected, and what actions can be taken to mitigate such risks?

Mr Ong Ye Kung: The two questions are related and not quite in line with the original question posed. If there are investments in "Belt and Road" initiatives, and we are really at a nascent stage of doing this, the investments will not be made by the Government, but by private entities. They have to do their own calculations on the viability of the projects, whether they will succeed, whether they bring greater benefits to the region and the host country. They have to abide by local laws and abide by very high standards of governance expected of all our corporates they invest overseas.

The best way to manage such problems, is to make sure they do not arise at all. And I am confident, Singapore with our reputation and the conduct of our companies overseas, this is the standard they will maintain.