VZCZCXRO5764
RR RUEHCHI RUEHFK RUEHHM RUEHKSO RUEHPB
DE RUEHGP #3786/01 3490103
ZNR UUUUU ZZH
R 150103Z DEC 06
FM AMEMBASSY SINGAPORE
TO RUEHC/SECSTATE WASHDC 2049
INFO RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION
RUEHIN/AIT TAIPEI 6383
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 SINGAPORE 003786 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
USTR FOR DUSTR BHATIA 
 
E.O. 12958: N/A 
TAGS: ETRD ECN EINV USTR PGOV SN
SUBJECT: DUSTR BHATIA AND GOS OFFICIALS DISCUSS DOMESTIC 
AND REGIONAL GROWTH 
 
¶1.  (SBU) Summary: Singapore's growth opportunities and 
regional development figured prominently in discussions 
between Deputy U.S. Trade Representative Karan Bhatia and GOS 
officials.  Representatives from the Ministry of Trade and 
Industry (MTI) and the Economic Development Board (EDB) 
offered positive assessments for the future of Vietnam and 
Indonesia, while recognizing that 2007 economic growth in 
Southeast Asia might lag behind 2006.  MTI Permanent 
Secretary Peter Ong expressed cautious optimism regarding the 
 
SIPDIS 
feasibility of an Asia-Pacific Free Trade Agreement (FTA-AP). 
 End Summary. 
 
¶2.  (SBU) Deputy U.S. Trade Representative (D/USTR) Karan 
Bhatia met separately with Ministry of Trade and Industry 
(MTI) Permanent Secretary Peter Ong and Economic Development 
Board (EDB) Chairman Lim Siong Guan during his December 4 
visit to Singapore.  While in Singapore, the D/USTR also met 
with the Straits Times (on background), the Singapore 
Business Times (for an interview), the American Chamber of 
Commerce, APL Shipping, and, over dinner, financial and 
academic community representatives.  This message covers the 
D/USTR's meetings with GOS officials. 
 
¶3.  (SBU) MTI's Ong told the D/USTR that Singapore found 
Treasury Secretary Paulson's Strategic Economic Dialogue a 
laudable initiative and encouraged the USG to remain strongly 
engaged with China on multiple levels.  Ong agreed with the 
D/USTR that Asian economies might slow in 2007 but thought 
regional growth would still be driven ahead by China, whose 
economic power and influence would continue to grow.  Turning 
briefly to cross-straits issues, Ong opined that the 
mainland's bargaining position continued to strengthen due to 
growing Taiwan investments in China, China's greater 
willingness to take a long-term approach to the relationship, 
and the recent scandals involving Chen Shui Bien. 
 
¶4.  (SBU) Ong concurred with the D/USTR that an FTA-AP was a 
real possibility, though only in the longer-term.  It would 
not be practical or even necessary for all twenty-one 
economies to sign at once, he continued.  Rather, Ong 
envisioned a gradual process.  One way to move the plan 
forward, Ong suggested, would be to form a high-level 
advisory group to recommend benchmarks at an upcoming Senior 
Officials Meeting.  The D/USTR and Ong agreed that it would 
be important to maintain momentum once the idea was formally 
introduced. 
 
¶5.  (SBU) EDB Chairman Lim stated that Singapore was 
optimistic about Indonesia's economic prospects and was 
actively working with the GOI to promote foreign investment. 
A GOI trade mission had recently visited the 
Vietnam-Singapore Industrial Park (VSIP) outside of Ho Chi 
Minh City.  The group was surprised and disconcerted that the 
VSIP had surpassed in terms of development the 
Indonesia-Singapore Industrial Park on Batam Island, which 
opened before the VSIP.  Lim expressed confidence in 
Vietnam's commitment to economic reform, calling it 
"impressive," and said that Burma was now the only country in 
Asia not embracing economic openness as a long-term growth 
strategy. 
 
¶6.  (SBU) Lim said Singapore had two pieces of advice for 
Indonesia to attract foreign companies, particularly those 
from the United States and Japan:  first, Indonesia should 
decrease the rate of minimum wage growth; and second, it 
should establish a dialogue with labor unions in order to 
avoid strikes.  Through such investor-friendly measures, Lim 
believed Indonesia could attract 135,000 jobs and USD1 
billion in investment to a series of Special Economic Zones 
(SEZ) in Indonesia's Riau archipelago, just south of 
Singapore.  The EDB hoped that investors would one day view 
Singapore and these SEZs as single entity, with Singapore 
acting as not only the base for managers and their families, 
but also as the port for transferring raw materials and 
finished products into and out of Indonesia. 
 
¶7.  (SBU) Asked about Singapore's growth prospects, Lim said 
the country could not afford to be "in the same competitive 
space" as its neighbors.  Singapore was a highly developed 
economy that lost investments to Europe, not to other 
countries in the region, he continued.  The EDB planned to 
bill Singapore as a "high trust economy" and to attract 
IP-intensive business and R&D investment through its emphasis 
on rule of law, transparency, and efficiency.  Singapore was 
also still working on "cluster development" to attract 
certain high-end manufacturing segments, Lim said.  The EDB 
 
SINGAPORE 00003786  002 OF 002 
 
 
hoped to develop a silicon wafer fabrication cluster similar 
to the existing pharmaceutical and petrochemical clusters. 
 
¶8.  (SBU) Singapore viewed education as another growth area, 
and hoped to become a "global schoolhouse," according to Lim. 
 The EDB saw educating foreign students both as a means to 
generate income and as a way to augment the limited number of 
Singaporean-born PhDs.  Most foreign students did not stay 
for more that three years after graduation, he said, as they 
viewed Singapore as a stepping stone to the United States. 
However, Singapore could take advantage of this talent as it 
flowed through. 
 
¶9.  (SBU) Lim discussed Singapore's efforts to cope with 
citizens left behind by its rapidly changing economy.  He 
pointed to Prime Minister Lee Hsien Loong's recent 
announcement that the Workfare program, begun earlier this 
year, would be a permanent part of Singapore's social 
security system.  Workfare, which provides supplemental funds 
to low income adults, was an acknowledgement that structural 
underemployment would be an issue for the foreseeable future, 
Lim said. 
 
¶10.  (U) D/USTR Bhatia cleared this message. 
HERBOLD