PM Lee hsien Loong at US-Asean summit
U.S. President Barack Obama welcomes Singapore's Prime Minister Lee Hsien Loong upon his arrival at Sunnylands for a 10-nation Association of Southeast Asian Nations (ASEAN) summit in Rancho Mirage, California February 15, 2016

Singapore Prime Minister Lee Hsien Loong said the ASEAN nations should expand and deepen economic ties with the US.

Speaking at the US-ASEAN summit in California, Lee said the bloc should join hands with the US to create value through innovation and entrepreneurship and that greater economic integration is needed to ensure the prosperity of the region.

"To achieve prosperity for all our citizens, we need to go beyond lower costs or adding value. Instead, we need to create value – through innovation and entrepreneurship," Lee said.

Lee highlighted the advantages of the united bloc, saying the combined population of 600 million in the 10-member grouping will emerge as a significant consumer market in future.

"No single ASEAN Member country can match the size, the wealth and the sophistication of the American market, with 300 million plus consumers. But if you take ASEAN, it is a significant single market and production base, with a combined population of 600 million."

Lee said Singapore is committed to fund innovation and research and that the country's aim is to spend 3 per cent of its GDP on R&D in future.

"We have been spending about 1 per cent of our GDP on public R&D for many years. The private sector in Singapore is also spending about 1.5 per cent of GDP on R&D, catalysed by what the public sector does, making making a total of 2.5%," the PM said.

Lee said to leverage the bloc's strengths, the first step is to pursue greater economic integration within ASEAN through the ASEAN Economic Community (AEC).

President Obama lauded the creation of the AEC in his opening speech, saying it goes a long way in integrating Southeast Asia's economies.

Obama said US-ASEAN trade increased by 55 per cent in the last seven years, making the bloc the fourth largest goods trading partner for the US.

Referring to the South China Sea dispute, Obama said the summit should explore the means to ensure regional security and freedom of navigation.