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Senior Minister Goh Chok Tong is leading Singapore's drive to establish closer ties with the Middle East. He initiated the first Asia-Middle East Dialogue held here last year. He speaks to Insight:

On how far ties have come along since two to three years ago

Progress has been good. We have managed to broaden and deepen our political and economic relationships with many Arab countries, in particular, Egypt, Jordan, Saudi Arabia, Abu Dhabi, Qatar and Kuwait.

Singapore-based asset managers are also managing more funds from the Middle East. In 2005, assets under management in Singapore sourced from the Middle East grew by 30 per cent to about $28 billion. But this figure is still small compared to the region's abundant funds.

On Singapore coming later to the Middle East and whether its companies are too small to secure the mega billion-dollar projects in the region

We may be latecomers but we have already caught the eye of many Arab leaders and businessmen. With oil prices expected to remain buoyant in the future, the Middle East economies will continue to grow. Many of them, particularly the Gulf countries, want to diversify their economies quickly. So, there are many opportunities for Singapore companies.

Singapore and the Gulf Cooperation Council (GCC) countries will commence negotiations for a Singapore-GCC free trade agreement (FTA) in January next year. When completed, the FTA will help Singapore companies to gain inroads into the Middle East.

However, not all of the business opportunities available in the Middle East are suitable for Singapore companies. Some of the infrastructure projects are very large and outside the scope of what our companies are used to managing.

But there are other areas where our companies have the expertise and experience. These include masterplanning, utilities, oil-rig construction, transport and logistics and waste management.

We encourage our companies to be bold in seizing opportunities. If they require some expertise which is held within the government system, the newly formed Singapore Cooperation Enterprise can see how it could help.

They should also work with third parties, such as China and Japan, to form tripartite partnerships whenever feasible.

On Singapore's unique advantages

Singapore companies contributed to Singapore's economic development and infrastructural building.

When Singapore presents a proposal, it is more than a concept because it is backed by our experience of successful implementation in Singapore. That is why we have set up the Singapore Cooperation Enterprise. It is to export our public-sector capabilities. This is unique - exporting experience of good governance.

We also enjoy a good reputation for efficiency and the ability to deliver what we promise.

On whether there are payoffs or pitfalls beyond the economic realm in Singapore's engagement in the Middle East, especially in a fairly unstable region and given Singapore's pro-Israel stance in the past

Politically, the Middle East is an important region for Singapore. Developments there will have an impact on Asia and Singapore. They will have an impact on oil supply and prices and, hence, on global economic growth.

Beyond the economic impact will be the political and religious impact on our population, especially our Muslim population.

Today, events in Gaza and Lebanon are immediately beamed into our living rooms. It is extremely important for Singapore to have a deeper understanding of the Middle East so that we do not just react emotionally or in a knee-jerk fashion. This will enable Singaporeans to better anticipate and prepare for developments there.

Our engagement with the region has generated goodwill and gained us friends. Many of the countries there are small, some with populations that are even smaller than Singapore's.

Like us, they understand the vulnerabilities of small states. So instinctively, we reach out to each other. These countries want to grow and diversify their economies. We have expertise which they need. We are ready to help them.

Payoffs for Singapore will be in the form of stronger friendships and increased trade and investment flows between Singapore and the Middle East.

We are long-standing friends with Israel. This does not preclude us from making friends with the Arabs or even the Iranians, because we take a principled stand on the Israeli-Palestinian question and other issues.

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