Channel NewsAsia 28 Nov 07;
SINGAPORE: Asia and the Middle East depend on each other, according to Senior Minister Goh Chok Tong.
Speaking at the Middle East and Asia Energy Summit on Wednesday, he said the two regions should work more closely together and suggested four ways to do so.
Asia's economic boom is being fuelled in a large part by one key ingredient – oil, which is supplied mainly by countries in the Gulf.
That is why the destinies of the Middle East and Asia are increasingly intertwined – economically, socially and politically.
Mr Goh said: "What happens in the Middle East will affect Asia. What is less obvious is that the Middle East too has a strategic stake in Asia's stability and prosperity. It has been estimated that between 2000 and 2006, Asia accounted for 60 percent of the increase in exports of Middle East oil.
"Therefore, just as Middle East stability ensures an uninterrupted flow of oil and gas to Asia, Asia's stability and economic growth also ensure that demand for, and hence price of, oil remains high. If Asia catches a cold, it will quickly spread to the Middle East through reductions in oil revenue."
Mr Goh said Asia can continue to grow only if it is not overwhelmed by rising oil prices and inflation. He said rising oil prices have economic and political ramifications for governments that subsidise energy use.
In Singapore's case, it does not have fuel subsidies. But it has been estimated that every US$10 increase in oil prices would shave 0.4 percentage points off Singapore's annual GDP growth.
Mr Goh suggested four ways for the two regions to work together on energy cooperation.
Firstly, there could be co-investment by the Middle East and Asia in energy infrastructure.
Secondly, they could join forces in energy research and development on renewable energy sources, energy efficiency and green technology to mitigate global warming.
And thirdly, the two regions can work together to ensure security in energy transit routes.
Mr Goh said the Straits of Malacca and Singapore are especially important energy sea lanes for Asia.
About 60 percent of China's imported oil – as well as 90 percent of Japan's and 80 percent of Korea's – passes through the Straits from the Middle East, so any disruption would have far-reaching consequences for the global economy.
To improve navigational safety and environmental protection in the Straits, a co-operative mechanism between the littoral states and user states was launched in September this year.
Mr Goh noted that some Middle Eastern countries, such as the UAE, have committed to contributing to the mechanism and he hoped this would spur others to follow suit.
Lastly, the senior minister also called for the two regions to encourage inter-regional energy dialogue through conferences such as the Middle East and Asia Energy Summit.
Deepening ties between the Middle East and Asia was also a theme for Saudi Arabia's Oil Minister, Ali Al-Naimi.
He said his country supplies Asia with more than 4.5 million barrels of oil per day. This is equivalent to approximately half of all the oil Saudi Arabia produces and about 25 percent of total Asian imports.
Saudi's non-oil trade with Asia is expanding rapidly. Last year, this was estimated to be more than US$50 billion, compared to just a few billion dollars in the early 1980s.
Mr Ali Al-Naimi said Saudi Arabia is committed to being a reliable oil supplier for Asia's economic growth.- CNA/so
