MALAYSIA'S PROTECTIONIST MEASURES (Impact on Singapore's economy)

Mr Inderjit Singh asked the Minister for Trade and Industry (a) whether there will be any significant impact on Singapore's economy when the Malaysian government block Malaysian businesses from using Singapore's ports; and (b) whether such protectionist measures which the Malaysian government is planning breach any of the World Trade Organisation agreements.

Mr Lee Yock Suan: Mr Speaker, Sir, from The media reports, it is unclear has reported intentions by some quarters in what measures (if any) Malaysia will take to pass legislation to curb Malaysian businesses from using Singapore ports. The details of the proposed legislation are not available. If the measures which run counter to international rules and agreements, are imposed, Singapore will not hesitate to bring up the matter with the relevant Malaysian authorities and with international bodies such as the World Trade Organisation. This is in line with the free trading philosophy we subscribe to.

Any measure taken will impact both Malaysia and Singapore. Businesses operate most efficiently in an open and fair market place where they are free to make procurement decisions based on the competitiveness of services and supplies. Businesses should be free to decide which port to use on the basis of their commercial needs and considerations. . Singapore and Malaysia's economies are closely linked and complementary in many ways. Malaysia has traditionally been amongst Singapore's largest trading partners and top investment destination. Together, Singapore and Malaysia provide a platform for a number of MNCs to undertake distributed manufacturing to capitalise on the different comparative advantages of our two countries.

Any move to discourage Malaysian businesses from using Singapore ports will hinder bilateral trade and investment. Manufacturers who have invested in Malaysia and MNCs who undertake distributed manufacturing in both countries will face higher operating costs and constraints on their operations. This must affect the flow of new investments.

5. Our ports serve s diversified markets extending to as far as countries like India and Australia. Customers use our ports because it they provide good value for money.

Mr Chng Hee Kok (East Coast): Sir, a Malaysian Minister has been quoted as saying that we stole the business of their port. Is there any rational basis for such a statement?

Mr Lee Yock Suan: The statement is completely baseless. The companies and shipping firms use our ports because of the large number of shipping lines that call here, the efficiency and the competitive rates. So it is a free choice and there is no question of our stealing business from them.

Mr Low Thia Khiang (Hougang): Is the Minister satisfied that, in the event that Malaysia should go ahead and legislate requiring their exporters to use their own port instead of Singapore ports, we will not be adversely affected?

Mr Lee Yock Suan: If Malaysia does so, there will surely be some impact on Singapore.

Mr Low Thia Khiang: What is the impact?

Mr Lee Yock Suan: The impact will also be on Malaysia, because they will find it is more difficult to export their goods and services and there could be delays, higher costs, and so on. Our port will be able to meet up to new challenges that come its way. As I explained in my answer, this will affect the operations, both in Malaysia and Singapore, because there are companies, especially MNCs, which have factories in, for example, Johor, Penang and elsewhere which are linked to Singapore companies. They are supplying parts and components to Singapore companies and vice-versa. Similarly, they need to ship goods to the international markets. So if they do that, it is going to hurt them as well as us.

Mr S. Iswaran (West Coast): Could the Minister elaborate what recourse is available to Singapore should the Malaysian government's action come about and it is found to contravene international trading agreements? And also have we undertaken such recourse in the past vis-a-vis Malaysia?

Mr Lee Yock Suan: Sir, as I have explained in my answer, we have to wait and see what measures, if any, are taken. And if they contravene the international agreements like those under the WTO, then we will have to take up the problem with the Malaysian authorities as well as with WTO. Offhand, I cannot recall any past instance, but I am sure we have taken action if there were cases.

Mr Inderjit Singh (Ang Mo Kio): Sir, I am sure if the blocking of the usage of ports in Singapore goes ahead, Singapore businessmen who are doing business in Malaysia will find it very uncompetitive to remain in Malaysia. If that is the case, can I ask the Minister if he is prepared to assist these businessmen relocate out of Malaysia into other more suitable areas?

Mr Lee Yock Suan: Sir, that is a definite possibility. Besides locating in Johor, they could locate, for example, in Batam, Bintan or maybe even Thailand. So I am sure the businessmen, both the locals in Singapore as well as multi-nationals, are observing the situation and if things get too difficult to operate, they have to make the adjustments.

Dr Tan Boon Wan (Ang Mo Kio): I would like to ask the Minister how can the Government and people of Singapore repudiate the untruth brandished callously by Malaysian political and government leaders about what we are doing in Singapore, about our port and that we are stealing business from them. How can we remonstrate with our neighbours that such preposterous accusation, untruth, foolishness will further delay the restoration of international confidence in the regional economies and hurt our regional economic recovery? The world has eyes and ears and the world can think.

Mr Lee Yock Suan: Sir, an obvious channel is through the mass media. I think Members may be aware, for example, that yesterday there was an article in Business Times by some shipping association pointing out the errors and fallacies of the Malaysian approach. We want to take a very rational approach to the whole issue. We are good neighbours with them. We want to cooperate with them. But they must know that whatever action is taken will hurt both parties. So I hope Members, if they have opportunities, will also air their views and this could be carried in the mass media, not only by the local press but internationally.