3 Jun 2014 Posted in Speeches
Judge of Appeal Chao Hick Tin
Judge of Appeal V K Rajah, Attorney-General Designate
Colleagues of the legal profession
Ladies and Gentlemen
A very good welcome.
We are delighted that this In-House Counsel World Summit is being held in Singapore.
I think this is the first time the Summit is taking place in Asia, and we are honoured and privileged to be hosting you.
I would like to start out by congratulating our Singapore Corporate Counsel Association and supporting organisations for successfully organising this event in Asia.
- Today, I would like to share my thoughts on three topics:
- One, the greater economic backdrop and development in Asia, because the legal industry follows companies and business. What is the context and the business environment we are operating in?
- Second, the role that Singapore plays in the context of the growing economic development;
- And third, the legal framework in Singapore that helps us play that role.
- The Asian Economic Back Drop
- First let me talk about the Asia economic backdrop.
- All of us know that Asia has been performing relatively well in the last twenty years or so, and it has been attracting a higher share of international capital and trade. FDI into Asia and economic growth in Asia has probably been better than most other regions of the world. FDI inflows into Asia have grown by nearly 30 % since 2009, and reached US$400 billion as of 2012. That accounted for 30% of global FDI flows.
- Within Southeast Asia, the ten members of ASEAN with a population of 620 million and a combined GDP of US$2.2 trillion make up the third largest economy in Asia. Not a lot of people realise this, but ASEAN outranks India in terms of economic size, and is in fact also the eighth largest economy in the world.
- In recent years, ASEAN economies have demonstrated resilient growth supported by strong domestic consumption and investment. Last year,
- the combined ASEAN economies achieved an annual growth of 5%, while economic growth in the rest of the world was at about 3%.
- FDI into Indonesia, Malaysia, the Philippines, Singapore and Thailand, known as the ASEAN 5, grew by 7% to nearly US$130 billion.
- As relatively young democracies, one or more of these countries from time to time will face challenges in their political system structures. Thailand is currently undergoing such a challenge, but I am sure it will come out of it, as will ASEAN. Overall, the economic trajectory in ASEAN is positive.
- And for the first time, FDI into ASEAN was more than FDI into China. A big slice of this investment into ASEAN actually came from China, which is now the third-largest foreign investor in the world.
- ASEAN is also working towards creating ASEAN Economic Community (AEC) by next year.
- The AEC will integrate and transform ASEAN into one single regional market with freer flows of goods, services, investment, skilled labour, capital. It is not going to be completely like the European community, but it will be much freer than it is now. We are negotiating the reduction of tariffs and barriers and we are almost there, but the remaining portions will be the most difficult.
- Difficult questions are now being grappled with about professional services. Lawyers in every jurisdiction are quite careful about how much inflow of professional services there is, and I suspect this will be quite a difficult topic to touch on. But if you get free movement of goods, if there is greater port connectivity, airport connectivity, road connectivity, and movement in people and services, businesses will start looking at the entire region as one – and they are beginning to because more mergers and acquisitions are happening in this region with the idea of working across the market.
- So what is Singapore’s role? If you look around, which is the one place that can be the New York of ASEAN, with the right legal services, regulatory services, deep capital markets, and the right sort of corporate governance? There is really one place that can be the service centre for this entire growing, booming market.
- So we expect to see continued economic growth in ASEAN, and significant investment opportunities here, with around US$1 trillion of infrastructure investment needed through 2020.
- If you look beyond ASEAN, but still within seven to eight hours from Singapore, you have China, Japan, India, South Korea – all the Asian economic powerhouses that are now amongst the largest economies in the world  .
- China – everyone knows the story.
- India has had sub-optimal growth for some years – but that may well change now.
- Another potential game changer if it gets successfully concluded is the Trans-Pacific Partnership (TPP):
- The TPP is envisioned to be a high quality, comprehensive trade agreement that will go beyond tariff elimination and other traditional trade issues.
- It will tackle issues such as trade liberalisation in goods, services, investments and government procurement. It will also go further and include areas like intellectual property rights, technical barriers to trade and competition policy.
- The 12 TPP countries , which include the United States, Australia, Japan and Singapore, represent 40% of the global GDP and one-third of all world trade.
- By bringing together both developed and developing countries, the TPP can achieve the ideal of free trade in Asia-Pacific, which can become an important engine of growth for the entire region and the US.
- Singapore's Role
- That’s the economic backdrop – what is Singapore’s role? We are situated at the crossroads where East meets West, and we are seeing these exciting developments unfold right here.
- We are now home to more than 7,000 MNCs from all over the world. Many of them use Singapore as their international or regional headquarters, and they coordinate their operations and investments across Asia. Many MNCs also have sizeable in-house counsel teams in Singapore overseeing operations both in Singapore and in the region.
- What is our value proposition as an ideal location for MNCs and in-house counsel? There are many factors – I will mention six:
- First, it starts with a strong economy in the midst of a vibrant economic region.
- Second, a strong belief in the rule of law.
- Third, business friendly policies and regulations.
- Fourth, a deep pool of talent.
- Fifth, excellent connectivity with the rest of the world.
- And sixth, a high quality of life.
- In terms of the economy, we have a population of 3.8 million – second smallest in ASEAN, but the third-largest economy. ASEAN is doing well, and relative to ASEAN, we are not doing too badly.
- Second, there is a high degree of trust in Singapore’s legal system and our rule of law –
- There are many indices and rankings on this, but if you just look at the 2014 World Justice Project Rule of Law Index, we are ranked 2nd worldwide for Order & Security, and 5th for Absence of Corruption.
- We also recognise and accept the need to protect invention and innovation in a knowledge-based economy. We have put in place a strong IP protection regime which has been consistently ranked among the best internationally.
- Third, we take an active approach in ensuring that our policies and regulations remain business friendly –
- For the 8th year running, Singapore has topped the World Bank’s “Doing Business” rankings as the world’s easiest place to do business.
- Specifically for the legal profession, we made it more attractive for companies to base their in-house counsel in Singapore by amending our Evidence Act in 2012 to codify legal professional privilege for in-house counsel.
- Mr Creighton had spoken about how about in-house counsel were not able to be members of the Bar or be treated as equals with members of the Bar. I know the topic of regulation of in-house counsel is of interest to the community. In Singapore, we have preferred to take a light touch approach in that it should be up to the companies to decide whom they wished to employ. We regulate professional lawyers practising law in the market for two reasons:
- One, it is one of the few professions that is allowed to deal with clients’ monies; and
- Two, I think you would want some qualifications for someone to argue cases in Court. To what extent in-house legal counsel can or should play that role is a matter that can be discussed – that position is not static in Singapore. However, I was one of the strong believers that there is no reason why when it comes to legal professional privilege, in-house counsel should be treated differently from any other lawyer. They give advice and the company that they work for must have complete confidence that they can be completely frank and get advice from the counsel. Therefore, we have amended the law to provide that privilege by statute.
- Fourth, we have a strong base of talent supporting our knowledge-based economy –
- We have a highly educated, skilled multicultural workforce that is comfortable with science and technology.
- And our universities rank consistently well in Asia and in the world. The Law School at the NUS has been ranked within the top three law schools in Asia for the past three years.
- Fifth, we are well connected to the world.
- We are a global transportation and logistics hub supported by world-class infrastructure. We were rated in 2012 as the world’s number one logistics hub amongst 155 countries.
- We are an international financial centre home to over 200 banks. Financial institutions in Singapore trade around-the-clock with Asia-Pacific centres, as well as European and American centres, making Singapore a significant hub for 24-hour trading in forex and securities.
- We have also forged strong trade links with key markets. We have the most extensive network of free trade agreements (FTA) in Asia. Our network covers about 20 regional and bilateral FTAs and 31 trading partners, and it is still growing. The TPP will add significantly to that.
- That complements our 35 investment guarantee agreements that help protect investments made by Singapore-based companies in other countries against non-commercial risks.
- Sixth, we offer a quality of living in Singapore that is amongst the best in Asia – and I would say in the world.
- We have been a consistent top performer in Mercer’s Quality of Living surveys over the years, and are ranked as the top Asian city in this year’s survey.
- Singapore is also one of the safest cities in the world, with strict laws and effective enforcement. When you frame the laws, the penal laws in particular, it is always a question of striking a balance between individual freedom and the obligations an individual owes to society. We probably strike it slightly differently from say how the UK or US would. For example, we have extremely strict gun control laws, as well as very strict laws on drugs with very severe penalties. But the concomitant consequence is a freedom of movement which is almost unparalleled. This includes the freedom that every individual desires on a day to day basis; the freedom to walk on the streets at any time of the day or night, whether you are male or female; for parents, the knowledge that your child can take public transport at any time of the day and come back alive and safe – these and other essential freedoms are what people in Singapore now take for granted.
- In terms of our legal system and infrastructure, there are also significant developments.
- We have focussed quite a bit on arbitration and as a result of this, we are now the third most preferred seat of arbitration worldwide , while the Singapore International Arbitration Centre (SIAC) is the fourth most preferred arbitral institution worldwide – all from a standing start and within five to seven years – and it has continued to enjoy significant growth.
- This did not happen by accident. It is the result of the very comprehensive approach that Singapore has employed to develop the arbitration ecosystem:
- First, we have a completely open regime for international commercial arbitration. Parties engaging in arbitration in Singapore have the freedom to engage lawyers of any nationality and use any governing law.
- Second, our Courts have been supportive and pro-arbitration, and consistently supported the finality of awards from arbitrations with minimal intervention, except within very clearly defined, internationally accepted rubric.
- Third, we are a signatory to the New York Convention and our International Arbitration Act is modelled after the UNCITRAL Model Law.
Fourth, in terms of hardware, we have set up Maxwell Chambers, which is the world’s first, and perhaps the most sought after, integrated dispute resolution complex. It houses many international arbitral institutions from around the world, including the ICC and the World Intellectual Property Organisation Arbitration and Mediation Centre.
- We will continue to make sure our arbitration services are attractive and continue to attract work, most of which comes from the outside.
- Beyond arbitration, we are now looking to develop our international commercial litigation and mediation services to offer international parties the full suite of dispute resolution options.
- Specifically, we will be setting up the Singapore International Commercial Court (SICC) and the Singapore International Mediation Centre (SIMC).
- The Singapore International Commercial Court will be a superior court of law that is part of the Supreme Court of Singapore.
- It will deal only with international commercial cases and aim to support and help international litigants engaged in cross-border disputes by leveraging on our strengths such as strong rule of law and high judicial integrity.
- The panel of judges will comprise specialist commercial judges and eminent foreign jurists from both the common law and civil law traditions. If an MNC, not necessarily based in Singapore, had an investment in one of the regional countries or anywhere else in the Asia Pacific, the normal choice would have been arbitration. But if the parties decide instead that they would prefer litigation, and would rather the tribunal comprise a judge appointed by the Chief Justice of Singapore, instead of party-appointed arbitrators, then they can come to Singapore. Depending on the nature of the case and the governing law, an appropriate jurist will be appointed.
- There is no exactly analogous model anywhere else. While Dubai has its financial centre, and London handles a lot of international commercial disputes, this will be a slightly different structure, and we think it will be an attractive destination for people who for one reason or another do not want to go for arbitration. Parties may be represented by lawyers from any jurisdiction where the case has no substantial connection to Singapore.
- The SICC will be attractive to parties who prefer having the transparency of open proceedings, the availability of appeal, and the avoidance of having party-appointed tribunals.
- We have announced the plans. The legislation will be in place this year and the Courts will start next year.
- We also see mediation as an important complement to arbitration and litigation.
- In a world that is becoming more interconnected and interdependent, businesses would need to look to forms of dispute resolution mechanisms that can also help to preserve long-term relationships. We will again appoint top experts from around the world to be on our mediation panel, and provide world-class, high quality mediation services.
- To summarise, there will be mediation services provided by a high quality panel, there will be litigation services provided through the SICC, and of course, there will be arbitration services provided by the various arbitral institutions.
- Singapore’s Legal Industry
- On to our own legal industry. We intend to make it more attractive for in-house legal counsel as well as lawyers to practise from Singapore.
- We have had a number of schemes in the last two years – for instance the Joint Law Ventures and the Qualifying Foreign Law Practices (which allow foreign law firms to practise Singapore law within specific areas).
- We now have about 130 international law firms and slightly more than a thousand foreign lawyers in Singapore. There are also over 800 local law firms, and a total of almost 6,000 lawyers.
- Out of the top 100 law firms in the world, about 40 have a presence in Singapore. Hence there is a deep pool of specialist expertise available on quick notice.
- Singapore law practices are also developing a strong regional presence, and with their knowledge and networks, they can serve as market connectors to the rest of Asia.
- Together, the international and local law practices can provide a comprehensive set of legal services to global clients.
- In conclusion, the rapid growth of Asia provides tremendous opportunities. We can expect tremendous development and unparalleled change over the next 10 – 15 years.
- We will continue to look ahead and develop both our business sector and ancillary services, including legal services, to keep pace and to achieve our own vision for where we think Singapore should be in the future.
- This World Summit comes at an opportune time, in providing a platform for the profession to come together and explore the possibilities that this changing world offers.
- On this note, I wish all of you a good conference and an enjoyable time. Thank you.
World ranking in terms of GDP at current market prices (2012): China: 2nd, Japan: 3rd, India: 10th, South Korea: 15th. Source: World Bank.
 Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, the United States, Vietnam and Singapore.
On par with Tokyo and Paris, and after London and Geneva. Source: 2010 International Arbitration Survey by White & Case.
After the ICC, LCIA, and AAA/ICDR. Source: 2010 International Arbitration Survey by White & Case.
Last updated on 05 Jun 2014