Closing address by Law Minister, Mr K Shanmugam, at the International Conference on “Legal Convergence in an Asian Century” and launch of the Asian Business Law Institute
22 Jan 2016 Posted in Speeches
Chief Justices Sundaresh Menon, Robert French
And Geoffrey Ma
Ladies and Gentlemen
The Academy has had a successful conference and has launched the Asian Business Law Institute (ABLI).
The ABLI, when the Chief Justice discussed with me, is an exciting prospect.
It has great potential to be a catalyst for change.
It can play an important role in the region’s efforts, to have greater legal convergence.
Legal Convergence in turn, can play an important role in Asia’s economic growth.
- SUMMARY OF THE HIGHLIGHTS
- Today, I would like to take the opportunity to share my thoughts on four issues in this context:-
- First, briefly, the Asian economic growth story;
- Second, how legal convergence can help in economic integration;
- Third, how the ABLI can help in this process; and
- Fourth, the role Singapore can play.
- First: THE ASIAN ECONOMIC BACKDROP
- On the first point, the Asian economic backdrop, this is a well-known point. I can be brief.
- The world’s economic centre of gravity is shifting to Asia, certainly the Asia Pacific.
- In 2014, the region accounted for nearly two-thirds of the global growth .
- Cross-border flows of trade and investment in Asia are growing.
- Regional pacts such as the TPP, and the RCEP, will further increase trade flows.
- The TPP will create a trading region with a population of 800 million, and a GDP of US$30 trillion .
- The RCEP will be a trade agreement between 16 countries, with a population of three billion, and a GDP of more than US$17 trillion.
- That is a third of the world’s current annual GDP .
- We can say much more but I think most people accept the growth story.
- So we move to the second point:
- WE CAN LOOK AT LEGAL CONVERGENCE AND HOW IT CAN HELP IN ECONOMIC INTEGRATION FOR ASIA AND ASEAN
- At present, we have a wide diversity of legal systems and regulatory regimes.
- PwC did a survey in 2013.
- That survey showed that these different legal systems, diversity, and different regulatory standards, was the single biggest barrier, that was holding back investments into Asia .
- If we had greater convergence, the investment flows would be much more.
- In the 2014 iteration of that survey, half of the respondents indicated that bottlenecks in legal and regulatory infrastructure impacted their operations and growth within the Asia Pacific .
- Legal convergence is not new to us.
- UNCITRAL’s Convention on the International Sale of Goods (CISG) counts among its state parties China, India, Australia, Singapore and Vietnam.
- UNCITRAL gave businesses greater confidence that their cross-border commercial contracts will be enforceable, and they have a system which is predictable.
- Another example is the New York Convention, which provides for the recognition and enforcement of arbitral awards.
Almost all Asian countries are parties to this convention.
- It is timely now for us to start a dialogue on the modernisation of “Asian Commercial Law”.
- Legal convergence can also help deepen ASEAN economic integration.
In 2014, ASEAN ranked as the seventh largest economy in the world, with a population of over 600 million and a GDP of over US$2.4 trillion.
By 2020, it is confidently expected that the GDP will rise to US$4 trillion.
And by 2050 if it follows predictions, it could well be the fourth largest economy in the world.
A significant market, a significant economy.
- The ASEAN Economic Community’s 2025 blueprint commits ASEAN to legal convergence on e-commerce and other regulatory standards.
- But to fully address ASEAN’s existing challenges and deepen integration, serious action has to be taken to improve its current legal infrastructure.
- The third point that I will move to:
- WHAT ROLE CAN THE ABLI PLAY TO FACILITATE LEGAL CONVERGENCE?
- ABLI was founded by representatives from China, India, Australia, Hong Kong and Singapore.
- It will engage policy makers together with legal and business communities in ASEAN, as well as the rest of Asia.
- It aims to provide them with research, data, model texts, and recommendations on commercial law and related legal aspects.
- The ABLI can facilitate and develop common norms and practices.
These norms and practices can pave the way for greater ease in doing cross-border business.
- These in turn, can lay the groundwork, for dialogue between countries.
The dialogue can be on harmonisation and for businesses to change their practices in a way that can help reduce their costs and increase the business flows.
- Fourth and final point: WHAT ROLE CAN SINGAPORE PLAY IN THIS BUSINESS?
- First, we and our partners understand the importance of legal convergence.
- We ourselves are an active participant at UNCITRAL as well as the Hague Conference.
- And we have adopted several instruments geared towards international harmonisation.
- Our International Arbitration Act is based on the UNCITRAL Model Law for Arbitration.
We have kept our arbitration regime relevant to support commercial entities.
And as a result, we are now the third most preferred seat of arbitration worldwide.
- We are also in the process of drafting a new Insolvency Bill.
That Bill will include laws adapted from UNCITRAL’s Model Law on Cross-Border Insolvency.
- Singapore has also signed the Hague Convention on Choice of Court Agreements.
- This Convention provides for the enforcement of exclusive choice of court agreements between parties in international commercial transactions.
- We are currently in the process of ratifying this Convention.
- Beyond becoming parties to these conventions, we are a transnational business and legal hub with more than 7,000 MNCs from all over the world here.
Many of these use Singapore as their international or regional headquarters.
They coordinate their investments and operations across Asia from Singapore.
- We’ve also become a legal hub to support transnational businesses and their operations.
There are more than 6,000 local lawyers here.
We have about 1,000 foreign lawyers, 800 local law firms and 130 international law firms.
They provide a wide array of services.
There are also a substantial number of transnational commercial dispute resolution options such as the SICC, SIAC and SIMC, as well as other international organisations.
- We understand the value of legal convergence in the conduct of cross-border business and how it has brought great benefit to this region.
- And we, together with our partners, are very excited by this fact, and very willing to play this role.
- Legal convergence is one of the steps which will help unlock Asia’s full economic potential.
- The ABLI can play a role in the development of a harmonized commercial legal framework for doing business across Asia.
- I’m glad your discussions have gone well.
- Thank you for inviting me.
Last updated on 25 Jan 2016