VZCZCXRO0910
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHGP #0019/01 0070031
ZNR UUUUU ZZH
R 070031Z JAN 09
FM AMEMBASSY SINGAPORE
TO RUEHC/SECSTATE WASHDC 6213
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHSG/AMEMBASSY SANTIAGO 0116
RUEHME/AMEMBASSY MEXICO 0098
RUEHZP/AMEMBASSY PANAMA 0019
RUEHPE/AMEMBASSY LIMA 0059
RUEHBR/AMEMBASSY BRASILIA 0172
RUEHSJ/AMEMBASSY SAN JOSE 0009
RUEHSO/AMCONSUL SAO PAULO 0027
RUEHUB/USINT HAVANA 0004
RUCNMER/MERCOSUR COLLECTIVE
RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 03 SINGAPORE 000019 
 
STATE PASS USTR 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON PREL ETRD SN
 
SUBJECT:  SINGAPORE EYES NEW OPPORTUNITIES IN LATIN AMERICA 
 
¶1.  (SBU) Summary:  Singapore's Prime Minister and other top 
officials took advantage of attendance at APEC meetings in Peru to 
strengthen and broaden relationships in Latin America.  After years 
of mostly indifference to the region, Singapore is making a push to 
expand trade and investment in Latin America, one of the few areas 
in the world where Singapore's exports are still on the rise. 
Singapore is already party to Free Trade Agreements (FTA) with Chile 
and Panama, is awaiting ratification of another with Peru, and would 
like to complete agreements with Mexico, Costa Rica and the Mercosur 
countries.  Singapore sees itself as a potential hub for Latin 
American businesses to access Southeast Asian markets.  New ties in 
the region are going beyond the economic realm, as Singapore signed 
agreements with Brazil in science and technology cooperation and air 
services and looks to cooperate on health, energy, and other global 
issues.  However, the economic push is hampered by a lack of 
understanding and few cultural, educational or other links that 
could help support and expand the new ties.  End Summary. 
 
¶2.  (SBU) In his first official trip to Latin America as Prime 
Minister, Singapore PM LEE Hsien Loong, accompanied by Foreign 
Minister George Yeo, took advantage of travel to November's APEC 
leaders meetings in Peru to make official visits to Brazil and 
Chile.  Minister of Trade and Industry LIM Hng Kiang made separate 
trips to Mexico and Panama.  In Brazil, PM Lee oversaw the signing 
of three memorandums of understanding on promotion of trade and 
investment, cooperation in science and technology, and a new air 
services agreement.  Lee also inked an education agreement with 
Chile to promote exchanges of students and educators and kicked off 
the first Singapore Food Festival in Santiago.  In Panama, Minister 
Lim conducted the inaugural review of the Singapore-Panama FTA which 
came into force in July 2006. 
 
Latin America back on Singapore's Radar 
--------------------------------------- 
 
¶3.  (SBU) After years of general indifference to Latin America, 
Singapore has renewed interest in dealing with the region as trade 
and investment have begun to take off.  LOH Tuck Keat, Deputy 
Director of the MFA's Americas Unit, told us Latin America had grown 
in importance for Singapore and the PM decided to visit to develop 
his own impressions of the region.  Alpana Roy, Deputy Director of 
the Americas division in the Ministry of Trade and Industry (MTI), 
told Econoff that during the 1990s business interest in Latin 
America had sparked, particularly in Mexico after the signing of the 
North America Free Trade Agreement.  However, with the recent 
economic rise of China and India and the flood of new opportunities 
there, interest in Latin America again waned.  In the past three or 
four years, Roy said, business interest began to pick up again as 
Singapore businesses recognized they had missed opportunities, 
particularly in Brazil, as economies there continued to develop 
strongly. 
 
¶4.  (SBU) Although Latin America is the destination for only four 
percent of Singapore's exports, it has been Singapore's fastest 
growing export market, hitting 55 percent growth for the year 
through November, 2008.  Even for the month of November, as the 
global financial crisis began to hit home and Singapore's main 
markets shrank by double digits, exports to Latin America posted a 
63 percent gain.  Singapore's main export markets in the region are 
Brazil, Mexico and Panama.  Singaporean companies hope to parlay 
their substantial experience in infrastructure, ports, oil and gas, 
information communications and food processing into investment and 
trade opportunities.  Singapore is keeping an eye toward 
opportunities in a post-Castro Cuba, including in oil exploration, 
tourism and health care. 
 
¶5.  (SBU) Singapore is making a push into Latin America while trade 
is still light, according to MTI's Roy, in hopes of locking in 
markets before the rest of Southeast Asia discovers the 
opportunities there.  Nearly 60 Singapore-based companies are 
engaged in a variety of business and investment projects in Latin 
America.  However, as the only developed country in Southeast Asia 
and a producer of higher-end goods and services, Singapore is not 
necessarily competing for the same markets in Latin America as would 
the rest of the region, or India and China for that matter. 
Singapore is also pitching itself as a potential hub for Latin 
American businesses and a gateway to the rest of Asia.  Blue chip 
 
SINGAPORE 00000019  002 OF 003 
 
 
Latin American companies like Embraer, Petrobras, Vale, and Grupo 
Modelo from Brazil and Mexico have established a presence in 
Singapore.  Singapore also sees a role in boosting development in 
Latin America.  A number of countries reportedly see Singapore's 
rapid ascent to First World status as a model to follow and 
Singapore has offered assistance in improving economic growth, 
particularly in port operations and customs facilities. 
 
¶6.  (SBU) As the largest economy in Latin America, Brazil has taken 
the topmost rung of importance for the GOS, with Mexico and Panama a 
rung below.  Somewhat to Singapore's surprise, Brazil is taking 
seriously the new trade and investment agreement signed during PM 
Lee's visit.  MTI's Roy said Brazil has already submitted detailed 
proposals on areas to advance economic ties.  The two sides have 
developed a work plan, and a joint committee will meet in the first 
quarter of this year to discuss the proposals.  Nevertheless, MTI's 
Roy told Econoff that Brazilian business is far out front of the GOB 
in building economic ties. She was not entirely optimistic the 
official economic relationship would move at a breakneck pace.  Roy 
described advocates of change in the GOB as few and far between 
compared to those supporting the status quo. 
 
¶7.  (SBU) Ties with Brazil are going beyond trade and investment. 
Brazil's leadership in the Latin America region and in a number of 
multilateral fora helped raise Brazil's profile in Singapore, and 
the GOS is looking to build ties in other areas.  During PM Lee's 
visit, Singapore signed an agreement on cooperation in science and 
technology, to be kicked off with a joint research project on dengue 
fever.  Singapore hopes the cooperation will lead to further joint 
work on infectious diseases, with later work on biotech, 
pharmaceuticals and renewable energy.  Singapore is also looking 
forward to a possible official visit by Brazilian PM Lula in 2009. 
 
FTAs open the doors... 
---------------------- 
 
¶8.  (SBU) Singapore has FTAs in force with Panama and Chile, is 
awaiting ratification of another with Peru, and would like to 
restart long-stalled FTA negotiations with Mexico.  Singapore would 
like to take advantage of what it sees as unrealized potential in 
Mexico, given its proximity to the U.S., but MTI says talks have 
hung up on the Mexican side due to internal politics and concerns 
that Singapore is being used as a conduit for a flood of cheap 
Chinese imports.  Singapore will also begin FTA negotiations with 
Costa Rica.  The Costa Ricans were persistent in pushing for an FTA, 
including during a recent visit by PM Arias that clinched the 
commitment, but MTI sees little benefit from an eventual agreement. 
Singapore is more interested in a potential FTA with the Mercosur 
block (Brazil, Argentina, Paraguay and Uruguay) having already 
signed an MOU with the trading group in 2007.  However, MTI is frank 
that the purpose would be to open the market with Brazil; the other 
members of Mercosur are of much less importance.  Singapore is also 
interested in a broader ASEAN-Mercosur agreement.  During PM Lee's 
visit, Brazil hosted the first ASEAN-Mercosur Ministerial Meeting, 
and Singapore plans to follow up on the margins of other 
multilateral meetings later this year. 
 
¶9.  (SBU) Singapore's sovereign wealth funds (SWF) have made new 
inroads into Latin America as well, with Temasek Holdings recently 
opening offices in Mexico City and Sao Paolo.  According to MTI, 
Temasek expects lower growth rates in Latin America compared to its 
main focus countries in Asia, but sees a greater number of untapped 
opportunities.  One of Temasek's initial investments was an anchor 
stake in GP Capital Partners, part of Brazil's leading private 
equity player GP Investments, giving it a number of co-investment 
opportunities.  The Singapore Government Investment Corporation 
(GIC) has also made investments in equities and real estate in Latin 
America, including a recent stake in Mexican developer Mexico Retail 
Properties.  MTI insists, however, that despite the government 
ownership, the SWFs base their investment decisions on purely 
commercial and not political factors. 
...But Lack of Ties Bars the Way 
-------------------------------- 
 
¶10.  (SBU) Latin America holds potential in business and other 
areas, but GOS officials readily admit that a lack of strong links 
and understanding is hampering any rapid expansion of the current 
 
SINGAPORE 00000019  003 OF 003 
 
 
tenuous ties.  Singapore has no embassies in Latin America and 
handles relations through non-resident Ambassadors, typically 
business leaders or academics who reside in Singapore.  Singapore 
and Latin America lack any history of significant cultural or 
educational ties, with few Latin students studying in Singapore and 
vice versa.  There are no direct flights to Latin America, with 
Singapore caught in a Catch-22:  until trade and investment develop 
there is insufficient demand for flights, but without direct air 
links it is difficult to explore commercial relationships. 
HERBOLD