Committee of Supply – Head N (Ministry of Foreign Affairs)

Resumption of Debate on Question [6 April 2016],

"That the total sum to be allocated for Head N of the Estimates be reduced by $100". – [Mr Vikram Nair].

Question again proposed.

The Minister for Foreign Affairs (Dr Vivian Balakrishnan): Mdm Chairman, I thank the Members of the House for sharing their perceptive insights yesterday. I am gratified by our unity of purpose. The friends and protagonists that we have on the international stage will not be so much listening to what I have to say, but rather to the congruence of the discussions and the debates in this House. It is important that we demonstrate unity of purpose.

Foreign policy begins at home. Singaporeans must have a realistic, coherent and collective sense of our place in the world. Singapore's fundamental realities have not changed. We are a tiny island in a tough neighbourhood. At the Eighth Rajaratnam Lecture last year, Prime Minister Lee Hsien Loong said, "We have to take the world as it is and not as we wish it to be, but we believe that we can and must defend ourselves and advance our interests".

What this means is that we must have no illusions about our significance in the world or our ability to influence global events. Our survival as an independent sovereign city-state and our economic viability cannot be taken for granted. If we ever become disunited or unable to defend ourselves or become an economic failure, we would rapidly become irrelevant.

Since our Independence in 1965, we have assiduously forged national unity, achieved economic success and built strong partnerships at the bilateral, regional, and international levels. These partnerships and relationships safeguard Singapore's external political and economic space. But, quite frankly, the world is becoming messier. And Singapore needs to become sensitive to changes in the global environment and global economy and we must always be nimble enough to respond quickl and, hopefully, in advance of these changes.

Mr Vikram Nair and Mr Cedric Foo emphasised yesterday that we live in a region where the economic and strategic interests of major powers intersect. Indeed, as a small country, Singapore benefits when major powers focus on cooperation and constructive engagement in the region. Good relations among the major powers are essential for our continued stability and development.

The state of the United States (US)-China relationship is the key variable. This determines whether there will be peace and stability in our region. And their relationship is complex. There will always be elements of both cooperation and competition between the US and China. We hope that they will continue to cooperate effectively on the global and regional stage. We hope that they will be able to effectively work together to resolve challenges involving nuclear security, climate change, piracy and cybersecurity, just to mention a few.

But we must acknowledge that there will always be some degree of competition, if not outright rivalry, between the US and China. China's emergence as a rising power has shifted the strategic balance. And China has also become far more assertive in recent years. We see this in our region, for instance, in the South China Sea. Fortunately, for us, Singapore is not a claimant state in the South China Sea. We take no position on the merits of specific territorial claims. But as a small state, we do have a vital interest in and we have to strongly support the maintenance of a rules-based international order and to support the peaceful resolution of disputes, with full respect for legal and diplomatic processes. This is of vital importance to us; that is, the integrity of international law and international agreements, such as the UN Convention on the Law of the Sea, or UNCLOS. We must make sure that these agreements, these arrangements are not in any way undermined. As a small state, Singapore cannot accept that "might is right".

In the South China Sea, China has conducted extensive reclamation works, constructed runways and port facilities, and it has deployed significant military assets on disputed features in the South China Sea. Whilst, to be fair, some claimant states have also conducted similar activities, but these activities by other claimant states have not been on the same scale or pace as they are conducted by China. And what a major power does inevitably carries a far bigger signature. China, for its own reasons, has become more assertive in the East and Southeast Asian regions.

Both the US and China recognise that a stable relationship is crucial for peace and security in East Asia, for regional economic growth and development, prosperity and, indeed, global stability. Despite their differences, there is one point worth noting, which is that never before in history has a rising power, in its engagement with an existing super power, had such an unprecedented level of economic interdependence. They are intertwined. And this means that they cannot embark on an all-out confrontation because the economic impact on both states will be too high. In addition to this, of course, the threat of mutually assured destruction will also ensure both nuclear powers have a powerful incentive to avoid direct confrontation.

I also agree with Mr Cedric Foo that the dynamics of the US-China-Japan relationship are complex. These are the top three economies in the world. They are major strategic players in their own right. Stable relationships amongst the three major countries are, therefore, vital for regional peace, stability and prosperity.

The US remains the world's superpower, with major economic and strategic interests in the region, including alliances and treaty obligations with Japan, the Republic of Korea (ROK) and the Philippines, amongst others. Regardless of the outcome of the US Presidential Election, we expect the US to remain engaged in this region. Even though Sino-Japan ties are complicated by long-standing territorial disputes and historical baggage from the Second World War, both sides have an interest in mending their relations. To address complex global and regional challenges, we hope the major powers would work closely together to tackle issues of common interest and avoid direct and destabilising confrontations with one another even as they search for a new modus vivendi.

I agree with Mr Vikram Nair's assessment of the regional security challenges. The recent spate of provocative missile launches in the last few months by the Democratic People's Republic of Korea (DPRK) has been unsettling. They are in clear violation of United Nations (UN) Security Council resolutions. The international community has imposed further sanctions on DPRK.

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Some Singaporeans have asked me, "Why do we bother? Why do we watch these developments in the DPRK with such interest?" The reason we watch developments with such concern is because tensions there will have a negative impact on the peace, stability and economy of the entire region, both in Northeast as well as Southeast Asia.

A nuclear-capable and unpredictable, unstable DPRK could also prompt countries like Japan and ROK to go nuclear and this will further raise tensions in the region. Given China's proximity and its influence over DPRK, China will have to play a key role in any resolution of this problem.

Ms Joan Pereira also asked about what we are doing to address non-traditional security threats, including religious radicalisation and extremism. We, in Singapore, are adversely affected by the conflicts in Libya, Syria and Iraq. Groups like ISIS use the Internet and social media to attract followers from all over the world, including us. More than 1,000 men and women from Malaysia, Indonesia, the Philippines and even Singapore are believed to have travelled to the Middle East to fight for ISIS.

There is even a battalion for Bahasa-speaking fighters. If you go on the Internet and search YouTube for ISIS and Bahasa, you will see slickly produced videos with beautiful Arabic scenery and music, English subtitles, spoken in Malay, Bahasa. Who else in the world are such productions targeted at? So, some of our people will go there or will intend to go there. They will gain operational and combat experience. They will learn to make bombs. They will establish networks with other militants. And we know what has happened in Europe when these militants return. And we have to worry about what will happen in Southeast Asia as these militants, our own from our region, return to our region. This, therefore, poses a direct and serious threat to Singapore and our multiracial society. It is, therefore, important that we stand up and do our part to support the international coalition against ISIS.

Ms Joan Pereira also asked about how the increase in global terrorist attacks is affecting Singaporeans abroad. Singaporeans are some of the most widely travelled people in the world and many of us also have to work or travel overseas. This often means exposing us, our people, to some risks, both to natural disasters as well as terrorism. Members of this House will recall that we all grieved when the late Ms Lo Hwei Yen became a victim of the Mumbai terror attack in 2008; a completely innocent victim.

Providing consular assistance is a top priority for the Ministry of Foreign Affairs (MFA). Wherever possible, our officers will assist Singaporeans who experience difficulties overseas, including those in conflict zones, as we did just last year in Yemen. We repeatedly urged Singaporeans to find out the facts before they travel and to exercise due care about where and how they will travel. We will continue to improve the range and quality of consular services for all Singaporeans. We will harness technology and also leverage our partnerships with our Association of Southeast Asian Nations (ASEAN) member states, both in the public and private sectors, to augment our existing network of 50 overseas missions and 31 Honorary Consuls-General.

The point is that MFA cannot be represented in all the 200 countries of the world. So, in places where we do not have a diplomatic presence, we will have to work behind the scenes with other Government agencies as well as foreign governments to render the appropriate consular assistance. Senior Minister of State Maliki will speak more on consular services later on.

Dr Teo Ho Pin also noted the global economic slowdown and asked how Singapore can increase and diversify our global economic partnerships. There are, quite frankly, many challenges ahead of us beyond this region. The US Federal Reserve has ended its monetary easing policy. Europe is still struggling to resolve its economic malaise and unemployment. The migrant crisis, the political uncertainties of the United Kingdom's (UK's) possible exit from the European Union (EU), the conflicts in the Middle East – all these conspire to affect international political and economic stability, as well as the domestic stability in many countries, including those outside the immediate theatre of operations.

Singapore's openness means, by definition, that we will be exposed to external economic headwinds. But we have no choice. We have to remain plugged into the regional and international trade groupings and arrangements because this opens doors for our people and our businesses.

One example is the Trans-Pacific Partnership (TPP). Despite the headwinds we are facing right now, if and when it is ratified, will create even more trade and business opportunities for Singapore companies by providing access to new and existing markets. The EU-Singapore Free Trade Agreement (EUSFTA) is the first free trade agreement (FTA) between an ASEAN country and the EU. If this is ratified, it will also present numerous economic benefits for both sides and will strengthen linkages. We hope the EU will ratify this agreement soon.

Mr Ong Teng Koon sought an update on ASEAN's community building and integration efforts. Dr Teo Ho Pin asked about the ASEAN Economic Community (AEC).

In a weakening global economy, the establishment of AEC at the end of last year was timely. AEC will integrate and transform ASEAN into a single regional market with a freer flow of goods, services, investments, skilled labour and capital. With 620 million people, a labour force that is the third largest in the world, and an estimated gross domestic product (GDP) of US$2.5 trillion, our AEC has huge potential. Foreign investors will come to Singapore and will use us as a launch pad, as an interface, to invest in regional opportunities. Jobs will be created. Singaporean businesses and investors will benefit from these new opportunities. I need to emphasise that we must not view ASEAN integration with a zero-sum mentality. On the contrary, integration will create win-win opportunities for all ASEAN citizens by making us collectively more competitive vis-a-vis other continental-sized economies.

As ASEAN becomes more integrated, we must join hands to tackle some transboundary challenges and to do so in a credible and coordinated fashion. For instance, on transboundary haze pollution, our Leaders have already endorsed the vision of a haze-free ASEAN by 2020. Quite frankly, as a former Minister for the Environment, I do not see why we have to wait for 2020 to see clear blue skies.

ASEAN has further established a task force to develop an ASEAN Haze-Free Roadmap and we must continue to deepen cooperation to be able to do joint investigations, collaborate with civil society and put businesses on notice that they must behave responsibly and engage in sustainable development and fair business practices.

Another emerging challenge is the need to strengthen cybersecurity and to deal with cyber threats because these threats have no boundaries. ASEAN-led platforms, such as the ASEAN Regional Forum (ARF) and the East Asia Summit (EAS), have enabled Singapore and other ASEAN member states to work with our dialogue partners to build capacity and enhance regional cooperation in cybersecurity.

Mr Pritam Singh spoke about ASEAN-China relations and the South China Sea. Economics continues to be the centrepiece of the ASEAN-China relationship. China is already the largest trading partner for all members of ASEAN. ASEAN and China signed a protocol last year to upgrade the ASEAN-China Free Trade Agreement (ACFTA), and this will serve to further deepen ASEAN-China economic cooperation and integration. We will also celebrate the 25th Anniversary of ASEAN-China with a Commemorative Summit this year.

China is keen to play a major role in the evolving regional architecture and the global initiatives. In fact, it has proposed several regional economic initiatives, such as the Asian Infrastructure Investment Bank, and this concept of One Belt One Road. Singapore was an early supporter of both these initiatives because we saw a congruence of interests with the region's developmental needs. China's One Belt One Road initiative complements ASEAN's existing efforts to promote connectivity and regional integration and even our own latest bilateral project in China's Western Region, the Chongqing Connectivity Initiative. We welcome China's efforts in ensuring that these initiatives are open, inclusive and consultative by involving all relevant stakeholders and we will work with China to explore possible synergies.

But while ASEAN-China relations are substantive and mutually beneficial and positive, the fact remains – as Mr Pritam Singh observed yesterday – that the situation is not so tranquil in the South China Sea. We urge all parties to commit to non-militarisation, to exercise self-restraint and to refrain from the use or the threat of use of force. We all stand to lose if tensions escalate. It is thus important to maintain open dialogue on issues of mutual concern to prevent contentious issues from overshadowing the overall ASEAN-China relationship. We believe that ASEAN and China should remain committed to working towards the full and effective implementation of the Declaration on the Conduct of Parties (DOC) in the South China Sea, as well as the early conclusion of the Code of Conduct (COC).

Under DOC, we are currently working on a hotline between the ASEAN and China's foreign ministries for maritime emergencies. We also agreed to pursue the extension of the observation of the Code for Unplanned Encounters at Sea (CUES) and we hope that this will be expanded to all parties' naval vessels in the South China Sea. We believe this will help to manage the situation, prevent miscalculation on the ground by young men manning ships and planes at sea and in the air.

I have also suggested that the ASEAN-China CUES be extended to cover both navy and coast guard vessels. This will send a positive signal of our joint commitment to preventing loss of assets and lives, and ensuring peace and stability in the South China Sea.

In fact, China, the US, and eight ASEAN member states have already agreed to a CUES, under the ambit of the Western Pacific Naval Symposium in 2014, specifically for naval vessels. The US and China have also made considerable progress in agreeing on protocols for unplanned encounters both at sea and in the air, and have implemented them in practice. So, the point is: why not extend this to all ASEAN states? Why not extend it to go beyond naval vessels, but to include coast guard vessels, since we know that some of the coast guard vessels plying the South China Sea tend to be very large ships in their own right?

We have also had productive and frank discussions on COC. We have agreed to a paper on the "List of Elements of the Possible Outline of a COC", and to a discussion paper on the "List of Crucial and Complex Issues" in the drafting of COC. I apologise for all this jargon, but this is typical diplomatic foreplay – agreement not yet achieved.

On the ASEAN Defence Ministers' Meeting (ADMM) hotline, the 10 ASEAN Defence Ministers have witnessed the set-up of a hotline among the defence establishments, but this has not been expanded to include China. As earlier explained, discussions on the establishment of an ASEAN-China hotline are underway on the foreign affairs track.

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As for the "no first use of force", a proposal raised by Vietnam sometime earlier, we have expressed support for this proposal. But quite frankly, there has been no progress since then. Nevertheless, China has signed on to the Treaty of Amity and Cooperation which commits all parties to refrain from the threat or the use of force. So, amidst all these delicate negotiations, one central challenge is to maintain ASEAN unity and preserve ASEAN's centrality in the evolving regional architecture.

I would like to reassure Mr Alex Yam that Singapore's political and defence ties with the US remain strong and substantive. Singapore will work with the next Administration, regardless of the outcome of the next Presidential Election. It is just worth reminding ourselves that we have no say, but we will have to work with whoever the Americans choose. This is the karma of a small state. The US is our largest source of foreign direct investments. It is our top trading partner in services and our third-largest trading partner in goods.

There is much that we can learn from the US. Its strength in its economy and the society, especially its cutting-edge research and innovation, as we ourselves move to focus on innovation and in our journey towards creating a sustainable Smart Nation. We welcome the US' location of one of its three centres for the US-ASEAN Connect initiative here. As I mentioned earlier, the US has enduring strategic and economic interests in Asia. The historic ASEAN-US Leaders' Summit in Sunnylands in February this year reflects the US' continued interest in this region. We will continue to support the US engagement of Asia, including encouraging the US to quickly ratify TPP. The significance of TPP goes far beyond trade. It is an important signal – an icon of the US' commitment to engage the Asia-Pacific, and we urge all Parties that have signed on this to ratify it quickly.

Ms Sun Xueling has asked about Singapore-China relations. China, indeed, is one of our key international partners. We commemorated 25 years of diplomatic relations with China last year. This culminated in the exchange of State Visits by President Tony Tan and by Chinese President Xi Jinping. We established an "All-Round Cooperative Partnership Progressing with the Times" – it sounds better in Mandarin – to demonstrate that our long-standing, innovative and multifaceted cooperation has kept up with the times and has evolved. Our bilateral cooperation has moved beyond the traditional areas of trade and commerce to include financial cooperation, social governance, sustainable development and food safety. Human resource development remains a key pillar of our bilateral cooperation.

During my recent visit to Beijing, I noted the good progress made on the Chongqing Connectivity Initiative (CCI). Both sides have agreed to achieve a comprehensive and substantive upgrade of the China-Singapore FTA by the end of this year. This upgrade is timely and it reflects the strength and depth of our economic cooperation. Not only is China our largest trading partner, we have also been China's top foreign investor since 2013. This is a fact that I could not believe and had to re-read several times, that little Singapore has been China's top foreign investor since 2013. My colleague, Senior Minister of State Josephine Teo, will speak more about our unique relationship with China and its domestic implications after this.

Relations with our other key partners are also growing. Mr Liang Eng Hwa asked for an update on our relations with Japan. We continue to find ways to deepen our engagement with Japan, the third largest economy in the world. To commemorate the 50th Anniversary of Singapore-Japan relations in 2016, a slate of high-level exchange of visits has been arranged. Japan remains Singapore's second largest foreign investor in 2014. We are also working with Japan to review the Japan-Singapore Economic Partnership Agreement (JSEPA) and the bilateral Air Services Agreement (ASA); and this, if we succeed, will raise our bilateral relations to new heights. We also enjoy warm people-to-people ties with Japan, best illustrated through the generous contributions by Singaporeans to the rescue and recovery effort coordinated by the Singapore Red Cross following the 2011 earthquake and tsunami in Japan.

Dr Intan Azura and Mr Vikram Nair asked about Singapore-India relations. The signing of the India-Singapore Strategic Partnership in November 2015 laid the foundation for us to step up cooperation in diverse areas, including finance, civil aviation, urban solutions and skills development. We hope to create more opportunities for our companies through new initiatives, which include the master-planning of Andhra Pradesh's new capital city and providing support for the Centre of Excellence for Tourism Training in Rajasthan.

India looks set to play an increasingly larger role in the economy and politics of our region. Under Prime Minister Narendra Modi's leadership, India has stepped up efforts to develop infrastructure and to attract foreign investments. A stronger India emerging from these successful reforms will inevitably play a more active role in our region. Prime Minister Modi's reaffirmation of India's "Act East Policy" allows us to further our economic cooperation with India, both on a bilateral basis as well as regionally. India is already quite involved in the ASEAN region as an ASEAN Dialogue Partner and as a member of the East Asia Summit (EAS), the ADMM-Plus and the ARF. It is also actively participating in the Regional Comprehensive Economic Partnership (RCEP), which is the other big trading bloc which we are working on. We welcome the commitment by all RCEP countries to intensify efforts to conclude the negotiations by this year. Ambitious, but worth the try.

Mr Saktiandi Supaat has asked about our ties with Australia and the Comprehensive Strategic Partnership (CSP) with Australia. In fact, right now, or over the next couple of weeks, we are in the final stages of negotiations and, if we are successful, we will see unprecedented levels of collaboration and engagement with Australia in diverse areas, including economic integration, investments in new growth areas like food and agribusiness, aquaculture, tourism, enhanced defence arrangements, further collaboration and engagement on foreign affairs, further joint-work and innovation, research and development (R&D), arts and culture, and people-to-people exchanges.

The fact is, actually, Singapore and Australia are quite complementary. We are a port, they are a continent. They have lots of land, we have no land. They have a population the size of Malaysia on a continent. We are a densely packed city in the midst of Southeast Asia. So, we are actually not in competition, but have a unique complementary role with each other and, at a strategic level, our perspectives are very well-aligned. So, watch this space in the next few weeks.

We will also continue to seek economic links and opportunities for our companies in emerging markets in Africa, Latin America, and the Middle East. Senior Minister of State Josephine Teo and Senior Minister of State Mohamad Maliki will elaborate on our engagement with these two important emerging markets.

Our international engagement with multilateral organisations is also critical. As a small state, we have to engage with everyone. We will continue to play a constructive role in the multilateral fora, including the United Nations, the World Trade Organization and the Asia Pacific Economic Cooperation (APEC). We have to maintain our international relevance. We have to support the rule of law. We have to strengthen the rules-based multilateral system. Whilst we are not a member of G20, we contributed actively when invited to participate, and, most recently, Singapore has been invited by China to attend the Hangzhou Summit this September. This will be our sixth time participating in the G20 Summit.

Closer to home, relations with our neighbours are vital for our security and national interests. These ties have to be maintained and nurtured at all levels. Assoc Prof Dr Muhammad Faishal Ibrahim asked about our relations with Malaysia and Indonesia.

During my recent visit just a few days ago to Malaysia, I caught up with many Malaysian leaders, including many old friends. My most recent trip was to Sabah. I thanked the Mount Kinabalu guides and the Malaysian authorities who provided invaluable assistance to Singaporeans who were affected by the June 2015 earthquake. The Malaysians' swift, instinctive and spontaneous response at our point of acute need reflects the close ties between our two peoples. It behoves us, as politicians, to build on the already strong ties of kinship, friendship and relationships.

The next major bilateral event will be the Leaders' Retreat in Malaysia. The Retreat will allow us to take stock of our various bilateral projects, and our economic ties remain robust. We are each other's second largest trading partners – I think that is after China – and Singapore has consistently been one of the top investors in Malaysia.

Connectivity is one key aspect that both governments are working to strengthen. Progress is being made on the Kuala Lumpur-Singapore High Speed Rail and the Johor Bahru-Singapore Rapid Transit System Link. Both governments are working to improve congestion at the Causeway and at our borders. We have conducted a joint study with the Malaysians. We have also done our own projections. The Causeway actually has sufficient capacity, replacing the Causeway is not the solution. Rather, the key is to continually enhance checkpoint efficiency and operations through measures, including the use of technology and improving the infrastructure at the checkpoints.

For example, ICA will be equipping all motorcycle clearance counters at our land checkpoints with automated facilities by the end of this year. Our efforts to expedite immigration and custom clearance must be balanced against security considerations. We have a responsibility to Singaporeans to ensure that we maintain a stringent level of checks. The Malaysian government has also had to step up its own security measures.

Singapore and Indonesia have a long and close relationship at multiple levels. My first overseas visit this year was to Indonesia, and we look forward to Indonesia hosting the next Leaders' Retreat in the second half of this year. Economic ties remain strong. Singapore is Indonesia's largest foreign investor. Is that not amazing? We are the largest investor in China, we are the largest investor in Indonesia. We have some US$5.9 billion invested in Indonesia last year, and we are Indonesia's third largest trading partner, as well as each other's largest source of tourists. Our companies remain keen on Indonesia, and besides Jakarta, Batam, Bintan and the Karimun Special Economic Zone, our companies are also looking at other regions in Central Java. For instance, SembCorp is developing a 2,700 hectare industrial park in Kendal, Semarang.

We also remain committed to working with Indonesia to address the transboundary haze, as I have mentioned earlier. Year after year, the main victims of this haze are not Singaporeans; it is actually the Indonesians themselves, who live at ground zero. So, we want to do more with the Indonesian government and other interested stakeholders to promote sustainable agricultural practices, to strengthen our response to forest fires and to hold errant companies responsible for the fires that they start or allow to occur on their concession areas. Counter-terrorism is another common challenge, and we will continue to work very closely with Indonesia as well as our other neighbours to fight this common threat.

We are always looking to do more with our other neighbours and deepen cooperation. But issues will arise from time to time. Our bilateral relations with Malaysia and Indonesia are important to us. We have a long-term stake in each other's success. So, it is important that even when issues arise, we maintain a long-term perspective and a certain equanimity in the way we relate to each other.

Another key partner is Brunei. Singapore and Brunei share a very special relationship. It dates back to the personal friendship between the late Mr Lee Kuan Yew and the late Seri Begawan. As fellow small countries and as founding ASEAN member states, we still cooperate closely. The close defence relations, so many of us have trained in the jungles of Brunei, the long-standing Currency Interchangeability Agreement. All these are icons of our strong bilateral ties.

Singapore also has excellent ties with Thailand. Our economic and people-to-people links are robust. I paid a recent visit to Thailand two weeks ago and was honoured to be granted a royal audience with Princess Maha Chakri Sirindhorn, who hosted our delegation to lunch in her own palace; met the Prime Minister and other key members of the Cabinet. Senior Minister of State Josephine Teo will speak more about engagements with other Southeast Asian countries after this.

12.15 pm

Let me thank Mr Sitoh Yih Pin for his compliments to MFA officers. The job in MFA is highly demanding. It requires our officers to work under challenging conditions and, quite frankly, at great cost to their personal lives and their family lives. In all my 15 years in politics through many incarnations, through many Ministries, I have always found MFA officers to be dedicated, passionate and professional. What keeps them going is not their Minister but their sacred mission to advance the interests of Singapore. They understand Singapore's vulnerabilities. They also understand what we need to do to make ourselves relevant.

Foreign diplomats have always told me that they have been so impressed, not just by the superstars but by the fact that every single MFA officer in the delegation is professional, competent, carries weight, makes sense, is constructive, helpful. So, our officers are our key assets and I thank the Member for highlighting that yesterday. In fact, I want to thank Members of the House for your support because, after all, in the Budget session, you are providing resources, resources for my Ministry to recruit, nurture and deploy some of our best Singaporeans on this sacred mission.

On this note, I was gratified that MFA was recently voted by the students at our four local universities, that is, the National University of Singapore, Nanyang Technological University, Singapore Management University and Singapore Institute of Management as the "Best Employer in Singapore for Training and Development in 2016" in Universum's "100 Most Attractive Employers in Singapore" survey. I think this is a vote of confidence. I hope that also means we will continue to attract some of the best young Singaporeans because this is a mission that can only be fulfilled by Singapore Citizens.

MFA was also ranked as one of the top 10 employers among the Humanities Students in the same survey.

So, let me conclude by reminding all of us that the fundamental constraints we face as a small island city-state with a multiracial and multi-religious population remain unchanged. What have changed are the global and regional architecture and emerging powers. Whatever happens, we have to remember that we are price takers, we are not price makers. So, we have to confront the headwinds from the global economic slowdown, the uncertain geopolitical environment and the security threats. MFA and its officers will continue to help Singapore navigate through these difficult waters and pursue opportunities, so that Singapore would always remain safe, viable and relevant in an uncertain world. [Applause.]

The Second Minister for Foreign Affairs (Mrs Josephine Teo): Thank you, Mdm Chair. Earlier, when responding to Mr Ong Teng Koon and Assoc Prof Muhammad Faishal, Minister Vivian Balakrishnan spoke about the importance of ASEAN and maintaining good relations with our immediate neighbours. To address Assoc Prof Faishal's question on our relations with the other Southeast Asian countries, I will provide an update of our engagement with Cambodia, Laos, Myanmar, Vietnam and the Philippines.

Some of these countries will see a change of government this year. There has been a peaceful transfer of power following Myanmar's elections in 2015 which bodes well for its development. Laos and Vietnam concluded their party congresses in January, while the Philippines' Presidential election is due next month.

We have maintained strong ties with these countries through frequent exchanges of high-level visits. For example, last year alone, the Prime Ministers of Cambodia, Laos and Vietnam visited Singapore for our SG50 celebrations. We are ready to build on the good momentum of bilateral relations to foster closer cooperation with the new leaders and their governments.

This year, we will also officially launch the Singapore-Myanmar Vocational Training Institute as we celebrate the 50th anniversary of diplomatic relations with Myanmar. Our economic ties with Vietnam led to the establishment of the first Vietnam-Singapore Industrial Park (VSIP) in 1996. The seventh VSIP was launched last year. We expect more opportunities for economic collaboration under our Connectivity Framework Agreement with Vietnam.

Let me assure Members that with every neighbour, we will continue to seek opportunities for meaningful collaboration and enhance economic integration within ASEAN.

Moving on, I will expand on Minister Vivian's comments on our cooperation with China and address Ms Sun Xueling's question on how we can further strengthen bilateral relations.

We enjoy strong and active people-to-people links with China. About two million Chinese tourists visit Singapore each year and close to a million Singaporeans visited China in 2015.

Our economic ties remain strong. China is Singapore's largest trading partner and we have been China's top foreign investor since 2013, a point which Minister Vivian highlighted. At whatever speed its economy grows and however far-reaching its reforms extend, China will remain a key economic driver in the region. Our businessmen recognise this and have been in China for years. Singapore also supports China's One Belt One Road initiative and hopes to see businesses collaborate to capture new opportunities in the region. For example, last week, I witnessed the signing of an investment agreement between PSA Singapore and COSCO Pacific that will deepen their cooperation and improve their strategic positioning.

As many of our companies know, there remains untapped developmental potential in the inland provinces. It is, therefore, important that we build good relations not only with the central government, but also with provincial authorities. This also explains why MFA has four Consulates General in China, besides our Embassy in Beijing, which is more than in any other country.

It takes time and effort, through regular exchanges and visits, to establish strong ties with the provinces and municipalities. For example, I will make a working visit to the provincial capitals of Yunnan (云南省) and Guizhou (贵州省) shortly after the Committee of Supply debate. To ensure continuity in our relationship-building, we recently updated our representation in the provincial business councils to involve younger political officeholders in Singapore.

The scope of our cooperation with China continues to deepen and broaden. Following the success of the Suzhou Industrial Park (SIP) and the Sino-Singapore Tianjin Eco-City (SSTEC) projects, the Chinese approached Singapore to launch a third Government-to-Government project in Western China.

This third G-to-G project, known as the Chongqing Connectivity Initiative (CCI), is based on the theme of "modern connectivity and modern services". It was launched by Prime Minister Lee and President Xi Jinping during President Xi's State Visit to Singapore last year. We are optimistic that, like SIP and SSTEC, CCI will play a pathfinder role in China's development. Mdm Chair, in Mandarin, please.

(In Mandarin): [Please refer to Vernacular Speech.] Mdm Chair, another unique feature of our substantive relationship is the establishment of bilateral mechanisms to institutionalise high-level interactions between our leaders and to exchange ideas on issues of common interests. We have three such bilateral platforms, co-chaired at the Deputy Prime Minister (DPM)-level, namely the Joint Council for Bilateral Cooperation (JCBC), Singapore-China Forum on Leadership, and Singapore-China Social Governance Forum. While JCBC has been held since 2004 and the Forum on Leadership since 2009, the Social Governance Forum is a relatively new platform launched in 2012.

It is rather unusual for two countries, particularly one that is a 5,000-year-old civilisation of 1.4 billion people and the other a small city-state that gained Independence just 50 years ago, to find value in sharing experiences on social governance challenges. Much of what we do in Singapore can only be practised in China with adaptation. But the successful implementation of our social management policies in a multiracial society with a Chinese majority provide references that our Chinese friends find useful. If we cannot make our system work in Singapore, they will be much less interested in us.

When Chinese Singaporeans interact with their friends in China, there is, undoubtedly, a sense of cultural affinity. We speak the same language and often celebrate common festivals, so much so that we could be mistaken as Chinese nationals outside China, also known as 华侨. However, we are, in fact, 华裔 or ethnic Chinese outside China with independent citizenship, loyalty and identity. China's programme of active engagement of its 华侨 may extend to cover local Chinese communities 华裔, including those in Singapore. But we must always remember that there are many Chinese in the world, including 华侨. A few undistinguished millions in a small island in Southeast Asia cannot be more than a curiosity. Ultimately, to be of special value, Singaporeans, as a community, must be outstanding, confident and cohesive. Having joined hands with other races and successfully built up modern Singapore over the last 50 years, the Chinese community in Singapore can engage our Chinese friends with a sense of confidence, as well as demonstrate our uniqueness and independence as a nation.

More so than ethnic Chinese elsewhere, the experiences and outlook of Chinese Singaporeans are rooted in a multicultural society where each community enjoys our common space and interacts respectfully with one another. Compared to China, we have a unique cultural make-up that is diverse and yet inclusive and which we are tremendously proud of. When travelling abroad, Singaporeans have no difficulty identifying one another from among a sea of ethnic look-alikes – our Singlish, infused with all sorts of local references, is an endearing and immediate giveaway. Chinese Singaporeans living overseas whom I have encountered as part of my National Population and Talent Division (NPTD) role, want to be identified and introduced as Singaporeans first and foremost, even after being away from Singapore for years.

This unique combination, where cultural similarity and difference with Chinese nationals co-exist, makes the Chinese Singaporean community interesting and relevant. We have much to learn from China on culture, language and so on, but we must maintain a sense of dignity and pride in our cultural destiny. Our value lies in our independent viewpoint and unbiased voice. It creates valuable opportunities for us to share perspectives with our Chinese friends that they are unlikely to find elsewhere. Even our businesses can leverage our ability to build bridges across cultures. We should continue to nurture this unique combination, strengthening links within our own local communities at the same time as we deepen engagement with China.

(In English): Mdm Chair, let me move on to our relationships with Japan and ROK. Mr Liang Eng Hwa has asked about Singapore's relations with both. Let me add to what Minister Vivian had said earlier. Singapore and Japan enjoy frequent high-level political exchanges. Over the last three years, Prime Minister Lee and Japan's Prime Minister Shinzo Abe have met several times annually. They had another good meeting in Washington during the Nuclear Security Summit (NSS) last week.

The Japanese Cabinet has decided to confer a posthumous award, the Grand Cordon of the Order of the Paulownia Flowers, on Mr Lee Kuan Yew. This would be the first time the award has been given posthumously to a foreign individual.

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Mr Lee had received the Grand Cordon of the Order of the Rising Sun, one of Japan's most prestigious decorations, when he visited Japan in 1967. The Grand Cordon of the Order of the Paulownia Flowers is one level up from the Order of the Rising Sun. Since the award was elevated to a class of its own in 2003, only four foreign personalities have received it. We are deeply honoured and appreciate the Japanese government's decision, which recognises Mr Lee's contributions to Singapore-Japan relations.

ROK is another important partner. We commemorated the 40th anniversary of diplomatic relations last year. Mr Liang Eng Hwa will be pleased to know that besides strong economic ties, we also cooperate on a variety of regional and international issues.

Singapore companies have growing investment interests in ROK, especially in sectors like real estate, transport and logistics, and infocommunications technology. Many ROK companies in Singapore are engaged in international trading, transport and logistics, electronics, construction and engineering. As our business ties and people-to-people exchanges continue to grow, we hope to enhance relations through a meaningful review of the Korea-Singapore FTA and the bilateral Air Services Agreement.

Ms Low Yen Ling asked about our relations with the European countries. Our ties with Europe are anchored by strong trade and investment links and regular high-level exchanges. The EU is Singapore's third largest trading partner and the largest investor in Singapore, with around 11,000 companies registered here. This will not change in the short term.

Even as Europe grapples with its challenges, we look forward to strengthening our economic relations through the EU-Singapore FTA. We are also keen on an EU-ASEAN Comprehensive Air Transport Agreement, which will enhance air connectivity between the two regions.

Beyond economic cooperation, Singapore continues to tap the experience of several European countries. Germany, for example, offers many useful lessons. As part of the SkillsFuture initiative, we are keen to learn from Germany's best practices in vocational training. This February, I led a working visit to Berlin to learn from their experience in supporting parenthood. Our engagement with Germany will deepen through such channels.

We will also continue to work with other European partners on issues of mutual interest. Of special note is our participation in the Arctic Council. Our three years as an Arctic Council observer has allowed us to monitor developments in the Arctic that may impact Singapore, for example, our maritime interests. It has also provided an additional platform to collaborate with the Nordic countries. I would like to especially record our thanks to Minister of State Sam Tan for continuing to lead our engagement on this front.

To address Dr Teo Ho Pin's question on emerging markets, let me assure members that MFA will continue to nurture our ties with the emerging markets and seek out opportunities to expand Singapore's economic space. In 2010, total trade between Singapore and emerging markets, excluding China and Southeast Asia, stood at about S$130 billion. By 2014, this trade had grown to more than S$160 billion. As part of our plans to build ties, we have concluded a number of FTAs, including with Panama, Peru and Costa Rica. We are continually on the lookout for opportunities to expand our network of FTAs and engage promising new markets.

For example, Deputy Prime Minister Tharman and Russian First Deputy Prime Minister Igor Shuvalov agreed last year to review the Trade Agreement signed between Singapore and the former Union of Soviet Socialist Republics (USSR) in 1966. This will take the form of a new FTA between Singapore and the Eurasian Economic Union (EAEU), which comprises Armenia, Belarus, Kazakhstan, the Kyrgyz Republic and Russia. With a population of 180 million, these countries present good opportunities for trade.

In November 2015, we signed the Turkey-Singapore FTA (TRSFTA), a significant milestone for both countries. The TRSFTA will better position Singapore as a gateway to ASEAN for Turkish goods and services, and vice versa.

We are also stepping up engagement with other countries in South Asia besides India. In particular, we are exploring economic opportunities with Sri Lanka and Bangladesh. Our companies have made inroads in both recently, winning contracts for power plant projects in Bangladesh and master planning in Sri Lanka.

Latin America is another area with strong growth potential. If ratified, the TPP is expected to boost trade between Singapore and the Latin American TPP members Chile, Mexico and Peru.

High-level exchanges between both sides will maintain the momentum of our engagement. Singapore will host the State Visit by President of the Republic of Panama Juan Carlos Varela later this month. President Tony Tan will also be making a State Visit to Mexico in June 2016, the first by a Singapore Head of State to Latin America.

Mdm Chair, MFA will continue to deepen and broaden our engagement with other countries. I will turn the microphone over to Senior Minister of State Dr Maliki now.

The Senior Minister of State for Foreign Affairs (Dr Mohamad Maliki Bin Osman): Mdm Chair, allow me to respond to the remaining issues raised by Members.

Assoc Prof Fatimah Lateef asked about the situation in the Middle East, the Israeli-Palestinian conflict and our plans for engagement of the region. Mr Cedric Foo also asked about the implications of developments in the Middle East amid a sustained low oil price environment. The interests of the US and other major powers in the Middle East go beyond low oil prices. They will continue to be interested in the Middle East given the volatile security situation, terrorism and the various conflicts in the region, including the Israeli-Palestinian conflict. And the current conflicts in the Middle East are likely to persist. The situation in Yemen, Libya, Syria and Iraq remains of deep concern, given the humanitarian toll and the threat posed by terrorist groups like ISIS. We welcome UN-mediated efforts to seek a political solution to the conflicts, but the process will not be easy, given the geopolitical complexities. The leadership role of the US and other major powers will be critical in pushing the negotiating process forward.

Singapore welcomes the latest French initiative to convene an international conference to seek a political solution to the stalled Israeli-Palestinian conflict. The Israeli-Palestinian conflict is long-standing and resonates with many in Southeast Asia, including Singaporeans. We share in the hope that a comprehensive and just agreement can be reached to achieve the two-state solution whereby Israel and Palestine can live side-by-side in peace and security.

Singapore's position on this has been consistent. We support the rights of the Palestinian people to a homeland. We have also voted for several Palestinian-related resolutions at the UN General Assembly. A number of Singapore leaders have visited Ramallah. We want to help the Palestinians where we can, to rebuild their lives and develop their economy. Over the last 20 years, we have trained over 230 Palestinian officials in various courses under the Singapore Cooperation Programme. Further, since 2013, Singapore has also offered a special technical assistance package valued at S$5 million to support Palestinian capacity building. Under this package, we have hosted customised study visits in areas like education, anti-corruption and economic development. We are happy to do more within our means to share Singapore's experience and enhance the capacity of the Palestinians.

As a friend to Israel and Palestine, we urge both sides to engage in direct negotiations and to refrain from taking any unilateral actions to change the status quo, including through acts of violence.

We should be careful not to view the entire region through the same lens, though. Singapore will continue to seek economic opportunities in emerging markets, including the Gulf Cooperation Council (GCC) countries. Our FTA with the GCC will help further economic cooperation with its six members. I have visited almost all of the GCC countries since last November.

While lower oil prices have impacted the budgets of the GCC countries, there is admiration for the Singapore model of development and they remain keen to engage us and expand cooperation. In fact, our experience in diversifying our economy has taken on greater relevance to the GCC.

We should also not neglect the other countries outside of the GCC. There are potential opportunities in Iran following the implementation of the Joint Comprehensive Plan of Action. Our relations with Iran remain friendly. The Iranian Foreign Minister recently visited Singapore as part of a regional tour. We look forward to maintaining our political engagement in the months ahead.

Another promising market is Egypt. I joined Deputy Prime Minister Teo on his recent visit to Egypt to commemorate the 50th anniversary of our relations. The Chairman of the Suez Canal Economic Zone Authority briefed us about its development plans. Singapore will continue to explore opportunities for economic cooperation with Egypt and share our experience in development where relevant.

Singapore and the Middle East countries also share a common interest in combating religious extremism. Ms Joan Pereira had asked how Singapore is working with other countries to counter the spread of violent extremism. During my recent visits to the Middle East, religious scholars shared their concerns about extremism and the need to counter the threat of radicalisation. They categorically reject violence in the name of Islam.

I invited them to visit Singapore to share their experiences, so that we can learn from one another how to deal with this threat. Similarly, our students pursuing Islamic education in the Middle East also play an important role as they return and apply what they had learnt to Singapore's context as a multiracial and multi-religious society.

Singaporeans have always displayed tolerance for all religions and should continue to do so. But given the geopolitical complexities in the Middle East, there is a risk of Singaporeans, especially our Muslim community, being drawn into the narrative of sectarian strife. Some of the causes of these conflicts are historical and long-standing, while some are driven by current regional political rivalries. We should be careful not to be drawn into these conflicts that are exploiting religion for political ends.

Allow me to briefly return to Dr Teo Ho Pin's question on emerging markets. I will speak about Africa. There is a growing interest in Sub-Saharan Africa as a market for Singapore companies looking to expand overseas. In the last decade, trade between Singapore and Africa has grown by an average of 10% annually, with total investments in Sub-Saharan Africa exceeding S$21.1 billion in 2014.

Good relations with the respective governments can help open doors for our companies. This August, MFA will host the Second Sub-Saharan Africa High-Level Ministerial Exchange Visit that aims to foster closer political partnerships with key African leaders. The Fourth Africa-Singapore Business Forum will build on past editions that had attracted about 2,000 participants from Africa and the region to explore business opportunities and establish networks. Such efforts have helped our businesses expand into new markets like Kenya, Rwanda, Tanzania and Ghana in sectors, such as logistics, agri-business and real estate.

Mr Amrin Amin asked how Singapore can play its part as a responsible member of the international community. Asst Prof Mahdev Mohan also asked for details on our support for sustainable development and how this might enhance Singapore's standing internationally. As a small nation, Singapore has to be active in international fora to create space to advance our strategic interests. We do so by sharing our development experience and ideas, and this enhances our standing as a responsible and constructive member of the international community.

We have been working closely with our partners and UN agencies, learning from the experience of others and sharing with them what we do. Agencies like the World Health Organization and International Labour Organization, study our new policies like MediShield Life and SkillsFuture with interest, because we are tackling urgent questions like how to provide universal health coverage and the future of work in an outcome-focused way.

We have consistently been active at the UN as Chairman of the Forum of Small States since its inception in 1992 and convenor of the Global Governance Group.

Let me now talk about the Singapore Technical Cooperation Programme. During our early years, Singapore benefited from the assistance of others. We have consolidated our developmental experience and, in turn, launched the Singapore Cooperation Programme (SCP) in 1992 as a means to give back to the international community.

Over the years, the SCP has built us a strong network of friends and a strong international brand name as a constructive partner. Notably, the SCP reached a milestone with our 100,000th participant in July last year. To date, more than 170 developing countries have participated in the SCP.

Singapore remains committed to enhancing the human resource capabilities of our ASEAN neighbours, especially the newer ASEAN members. The majority of SCP alumni, over 65,000-strong, are from ASEAN. Our four Training Centres in Cambodia, Laos, Myanmar and Vietnam continue to deliver over 100 courses a year under the Initiative for ASEAN Integration.

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To Asst Prof Mohan's query, almost 11,000 foreign officials have learnt from our sustainable development journey through the SCP. Sustainable development will increasingly take centre-stage in international development, following the Paris Agreement on Climate Change and the UN 2030 Agenda for Sustainable Development last year.

Through the SCP, Singapore is doing our part in rolling out Sustainable Development and Climate Change programmes to include courses on energy efficiency, environmental management, disaster risk reduction, and climate change adaptation strategies. At the same time, the SCP is also working with the Centre for Liveable Cities to roll out a leadership programme in urban development. We will deepen these capacity building efforts in partner countries by responding to their new training requests arising from implementation of the Paris Agreement on Climate Change.

I agree with Asst Prof Mohan that the present global emphasis on sustainable development and clean energy presents opportunities for Singapore businesses. This is a broader area which our economic agencies are developing with the necessary coordination among the other relevant agencies. Through SCP, we are also exploring public-private partnerships to offer more sustainable development tools through Singapore businesses, non-government organisations and volunteer organisations, such as the Singapore International Foundation (SIF) to complement the Government's development toolkit. Our youths can continue to play a role through these and other organisations.

We are also partnering the Singapore-based United Nations Development Programme (UNDP) Global Centre for Public Service Excellence to conduct leadership programmes on sustainable development and good governance, under the new Sustainable Development Programme launched by Minister Vivian last September in support of the UN's 2030 Agenda.

Mdm Chair, everything we do in the international arena boils down to our recognition that we need to be a useful and relevant player to others. While we may not have deep pockets to provide assistance through cash grants or soft loans, we believe that the best way to help others is through developing human resource and sharing from our own developmental journey.

Mdm Chair, one of MFA's core responsibilities is to assist our nationals in distress situations away from home. In this regard, allow me to address Ms Low Yen Ling's question about consular support for Singaporeans overseas.

The safety of Singaporeans abroad is of paramount importance to MFA. Last year, MFA promptly deployed several Crisis Response Teams (CRTs) to assist the return of Singaporeans from places like Nepal, Sabah and Yemen, which were rocked by earthquakes and civil unrest. For example, our MFA officers worked tirelessly under challenging circumstances to contact over 100 Singaporeans who had registered with us following the 7.8 magnitude earthquake in Nepal last April. On the ground, the MFA CRT had to quickly establish a registration point at the airport to facilitate Singaporeans' return home. The task was made more challenging by aftershocks which disrupted telecommunications lines and Internet connection. CRT worked closely with our Embassy in New Delhi, the Ministry of Defence (MINDEF) and the SilkAir office in Kathmandu to secure landing slots for our Republic of Singapore Air Force C-130 aircrafts at the chaotic and congested airport and runway. Although we have no Singapore Mission in Nepal, we persisted with a whole-of-Government spirit and worked with the Nepalese government to bring home 70 Singaporeans and seven Permanent Residents safely.

To maintain a high level of readiness, MFA regularly conducts simulation and training exercises and reviews of our contingency plans. We and our Overseas Missions have rostered officers 24 hours a day so that Singaporeans in need of urgent help can get in touch with MFA.

While MFA is committed to do its utmost for our fellow citizens, Singaporeans should also play their part by staying in close contact with their next-of-kin and close friends, taking necessary precautions for their personal safety and planning properly for their travels. They should, for instance, purchase comprehensive travel and medical insurance, as our experience shows that emergency medical bills incurred overseas can be very costly.

I urge Singaporeans to e-register with MFA each time they travel overseas. This would allow us to contact them quickly in a crisis, like we did during the Brussels bombings last month. Some Singaporeans perceive that e-registering their whereabouts is a means for the Government to track their movements. This misperception must be corrected. It is in their interest that they e-register so that we can help them should they face any emergency situation abroad.

During the Paris terror attacks last November, our officers worked day and night to contact our e-registrants. We did not stop until every 263 registered Singaporeans were accounted for. This included an e-registrant who did not subscribe to auto-roaming services and required MFA to leverage social media, such as Facebook and Twitter, to contact him and ascertain his safety.

Against the backdrop of an uncertain global security climate and increased frequency of natural and man-made disasters, MFA's challenge is to meet Singaporeans' growing demand for prompt and effective consular services. We cannot, however, accede to unreasonable requests, especially those that divert our attention or limited resources away from more urgent cases. Singaporeans must also respect and observe local laws as MFA is not in a position to intervene in the legal or judicial process of another country.

Many of the consular cases are admittedly complex and difficult to handle. But I am glad to say that MFA officers have often risen to the challenge and this is occasionally recognised by the Singaporeans whom they have helped.

Mdm Chair, MFA will remain steadfast in advancing our national interests amidst an increasingly complex global environment. We will endeavour to work with our ASEAN neighbours and other key partners to promote peace, security and progress for Singapore and Singaporeans.

The Chairman: We have a little bit of time for clarifications. Mr Kok.

Mr Kok Heng Leun (Nominated Member): Madam, I would like to ask this question, in Mandarin, if possible.

(In Mandarin): [Please refer to Vernacular Speech.] I am grateful that a newbie like me get to hear the complex tasks of MFA. I have a question.

International relations are getting more and more complex. There are many conflicts of interests. Has MFA considered using cultural exchange as a buffer zone? In negotiation, cultural exchanges could, in fact, improve diplomatic relations. If it is, indeed, a strategy, has MFA considered setting up the post of cultural attache in every Singapore embassy and consulate? Because I find that cultural exchanges often require a cultural attache to promote this kind of activities.

Mrs Josephine Teo: Mdm Chair, the conduct of diplomacy is done through every means and channel that is available to us. Besides cultural diplomacy, in the past we have heard of "ping pong" diplomacy, golf diplomacy; every channel that is available to us to make friends, to extend our influence, we will engage in them.

One of the most significant ways in which we extend our diplomacy is economic cooperation. Hence, you will find that a lot of our attention and efforts are focused on those areas. So, the work of the Foreign Service Officer is not only to look at political developments but also to look at economic developments that could help to expand Singapore's economic space, to share these developments with our home base, and then to provide ideas on how we can take advantage of the opportunities that are presented. We do not require every one of our Foreign Service Officers and our diplomats to be economists or to have been engaged in business before.

We also, for example, link up with other countries and deepen our engagement with them through channels like exchanging understanding and extending our cooperation in science and technology and R&D. So, our Foreign Service Officers have to be a jack of all trades. They have to be good in everything, and that includes cultural diplomacy. They will have to invest time to pick up the relevant skills, to understand the context of both countries and then, when opportunities arise, to try and extend our international space in this manner.

The way in which we go about it is to be adaptive and to be cognisant of the unique circumstances in every country and region that we establish diplomatic relations with. There are no plans currently for specifically appointing cultural liaison officers. Where the need arises, we will examine whether there are opportunities for us to grow the capabilities of our Foreign Service Officers so that they can take on these multiple hats.

The Chairman: Mr Vikram Nair.

Mr Vikram Nair (Sembawang): Mdm Chair, one of the exciting developments this year was the start of the AEC. What I am interested to know is whether there is any plan to build some institutions around this, for example, a regulatory institution, and maybe a dispute resolution mechanism, because as there are more and more transactions, there are likely to be more and more issues that will crop up, not all of which will require government-to-government interactions. So, maybe it is good to build some institutions that can handle the small issues that crop up. Europe, for example, has the European Court of Justice, European Commission, European Parliament. I do not think we need all of that, but the minimum is some kind of dispute resolution and regulatory mechanism.

Dr Vivian Balakrishnan: I thank Mr Vikram Nair for his suggestions. Certainly, as the pace and scope of integration proceeds, there will be need for more institutional arrangements. I just want to caution that ASEAN works by consensus, so, we would have to make sure that everyone agrees. But, generally, the point that the Member is making is a valid one and we will work towards that.

The Chairman: Mr Cedric Foo.

Mr Cedric Foo Chee Keng (Pioneer): Mdm Chair, today's oil price based on the West Texas Intermediate (WTI) is about US$38 per metric tonne (MT). Many of the Middle Eastern countries would require something like US$80-plus, say, for Iran or Iraq to come out break even for their national budget. For Algeria, US$90-plus, for Saudi Arabia US$105. The Middle East may seem very far away from us, but if events there cause them to destabilise, or if the major powers of the world take their attention off the Middle East, I think it will be very bad for Singapore. So, I would like MFA's take on how low oil prices, if sustained, would affect the Middle East and, therefore, impact us.

Dr Vivian Balakrishnan: I thank Mr Cedric Foo for asking actually a very profound question that will require a full lecture to fully address. Let me try to encapsulate the key ideas. I will start with a story. I asked the Saudi Arabian Foreign Minister and the Saudi Arabian Minister for Energy. I asked him, "What is the cost of getting a barrel of oil from Saudi Arabia?" He said, "Well, the true cost, the real cost to us, depending on whose accounting standard is used, is somewhere between US$2-US$5 per barrel." That is the cost of lifting oil out from Saudi Arabia, which means everything else is plus, plus.

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What the member is referring to, however, is the fact that, for many years, oil producers have made certain budgetary assumptions about the revenue that they will derive from oil. What has happened, in the more recent times, with the dramatic fall in oil prices, is that except in the case of the Singapore Budget, in many other countries, especially countries which depend on the prices of natural resources, they have suddenly found themselves in a big deficit situation.

The first point we should make is that, fortunately for us, we are not dependent on natural resources. Secondly, we have got a good Finance Minister and we do not make these kinds of budgetary assumptions that lead us into a sudden deep hole. There are certain salutary lessons for us at the domestic level.

At an international level, the Member is absolutely right. Many countries, especially oil producers in the Middle East, and including some in our own region, now have to come to terms with a very significant budgetary squeeze. This affects them in multiple ways. They will have to cut back on services, on benefits to their people. They will also have to trim some of their budgets on other more esoteric adventures which they have intended to pursue. I do not want to get into details.

But I think the more fundamental question the Member is asking is, "What does this portend for stability in the Middle East?" Even the answer to that question is not so straightforward. On one level, you could say, "Well, there should be less liquidity to expend on an arms race." But on another level, we know that when the countries get into troubles, there is always a political temptation to draw attention to tensions elsewhere to distract your own people.

A third level of looking at this is and I think, the Member made the point yesterday – as oil prices fall and, indeed, as sustainable sources of energy emerge and even as the US itself has become de facto energy independent, does that mean the US would pay less attention to the situation in the Middle East? The answer is that, the energy and fiscal imperatives may become less but do not underestimate the political complexities of the Middle East and its propensity to entangle outside powers to its politics.

And I want to, again, emphasise the point that Senior Minister of State Dr Maliki made just now. The conflicts in the Middle East have their roots going back thousands of years. They are ethnic and pseudo-religious, sectarian conflicts, superimposed with regional rivalry. It is important that Singaporeans do not get caught up in these conflicts which, really, have nothing to do with us and, really, in fact, have nothing to do with religion. Religion is just being abused as a vehicle to further political ends.

The final point that I will make about oil crises is to also bear in mind the fact that what can come down very quickly can also rise very quickly, the moment you get any supply disruptions. The domestic implication of that for Singapore is the following: (a) we have never subsidised energy and we should not do so; (b) whether it comes to utilities, transport and all those other things, we must always be prepared to pay the full international price, whether it is high or low; (c) we must make sure our economy continues to be built on sustainable, sensible, rational economic principles; and (d) when we have debates on Budgets like this, examine people's assumptions and make sure that the Singapore Government never gets into situations when we make rosy projections which then suddenly run out of steam and, literally, regulatory and legislative panic breaks out. Those are the more important lessons for us from a domestic perspective.

Mr Zaqy Mohamad (Chua Chu Kang): Mdm Chair, the question for the Minister: with the Monetary Authority of Singapore (MAS) looking into some of the investigations into 1Malaysia Development Berhad (1MDB) and other transactions here as well as the recent Panama Papers exposé case, has that impacted our relationship with Malaysia and other foreign counter-parties? And has that impacted some of our diplomatic agreements with them, such as the high speed rail and so forth?

Dr Vivian Balakrishnan: That is a very sensitive question which I am not going to be able to give the Member a detailed answer to. Let me get this House to take a step back to understand that Singapore is a financial centre. It is in our long-term strategic interests to be above board, to be kosher, to have the rule of law and integrity being the hallmarks of our system.

Regardless of who and where and what those transactions are, I would expect MAS and the Ministry of Finance – unfortunately, they are not here to answer that – but I would expect that they would pursue and investigate and take all the necessary actions in order to maintain the integrity and the reputation of our financial centre. That is our paramount objective. Everything else becomes secondary.

Once people understand and know that we are consistent, we are governed by rules, the rule of law and that we will be fair, all this is what makes us relevant internationally, that we are trustworthy, reliable, honest people who are dependable. That is our key imperative. I will not be able to get into details.

The Chairman: Mr Vikram Nair, do you wish to withdraw your amendment?

Mr Vikram Nair:Mdm Chair, I would like to thank Members for their contributions and also the Minister and Senior Ministers of State for their responses. I also record my thanks to MFA. Not only is Singapore a small country, I think the MFA also has a relatively small budget. Yet, despite that, it has punched well above its weight on the international stage, all the way from the Asia Pacific to the Arctic Circle. I also understand that we are the largest investors for China, Indonesia and, I believe, second largest for India, the three most populous countries in the world. And I think it is quite extraordinary that Singapore has managed to achieve all this, given its size and scale.

I am also heartened to note that even though the Minister has changed portfolios, he still takes a keen interest in the haze problem and will bring blue skies to Singapore, hopefully, in the next few years. With that, Madam, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

The sum of $446,826,500 for Head N ordered to stand part of the Main Estimates.

The sum of $76,000,000 for Head N ordered to stand part of the Development Estimates.