Singapore, October 26 (ANI): Singapore must continue with its strategy of global integration underpinned by free trade agreements (FTAs) and digital economy agreements (DEAs) with its trading partners in spite of the COVID-19 induced recession.
S. Iswaran, Singapore's Minister for Communications and Information and Minister-in-charge of Trade Relations made this point in a virtual address during the Singapore Business Federation's (SBF) FTA Day on Thursday last week. He further added that this strategy will help companies grow and create jobs for Singaporeans.
"Obviously, we are in a challenging economic environment, and how we emerge from this is going to depend critically on the manner of our response. That is true for countries and for the global economy," the Minister continued.
As Singapore emerged from its "circuit breaker" lockdown, which lasted from April 7 to June 1, the economy sparked back to life as advance estimates released by the Singapore Ministry of Trade and Industry (MTI) on October 14 showed expanding economic activity in Q3. The island nation's GDP rose 7.9 per cent on a quarter-on-quarter seasonally adjusted basis in the July to September quarter.
The rise in economic activity was a welcome relief after a 13.2 per cent quarter-on-quarter tumble in the second quarter, which included the circuit breaker period when business activity and personal movement were halted to curb the spread of the coronavirus.
On a year-on-year basis, the economy contracted 7 per cent, a significant improvement from the 13.3 per cent fall in Q2. However, this was slightly weaker than the 6.8 per cent decrease forecasted by a Reuters poll of 11 economists.
MTI maintained its earlier full-year GDP forecast range of between -5 per cent to -7 per cent. However, it will not be reporting the annualised quarter-on-quarter seasonally adjusted growth rate. This rate, which attempts to project the full year's GDP growth on the basis of a quarter's performance, fell a record 42.9 per cent in Q2.
Singapore's non-oil domestic exports (NODX) also fell short of market expectations. It rose 5.9 per cent in annual terms in September, rising at a slower clip than August's 7.7 per cent increase. The decline was primarily driven by a reduction in overseas sales of non-electronic products, particularly pharmaceutical exports. The September number was aided by a rise in electronic exports. In seasonally adjusted month-on-month terms, NODX exports fell 11.3 per cent in September compared with August's 11.3 per cent growth.
India is among Singapore's top trading partners. In recent years, it usually ranks around the tenth position. Whereas Singapore is ranked as a top-five trading partner by India in terms of bilateral trade. The Singapore Department of Statistics gives the value of trade between the two countries in 2019 as around USD10.5 billion.
Singapore has an FTA with India, which covers both merchandise trade as well as services, the Comprehensive Economic Cooperation Agreement (Ceca), signed in 2005.
With companies laying off workers and some companies shutting down due to the economic crunch caused by the pandemic, Singapore's FTAs with various nations came into sharp focus. Singapore citizens started to worry about their livelihoods as they perceive that some of these FTAs, which allow foreign companies to transfer staff from their countries into Singapore, deprive them of jobs.
Singapore FTAs cover economies that represent 85 per cent of the world's GDP and account for more than 90 per cent of its trade. Singapore has about 25 FTAs and the MTI estimates that in 2018, they have helped Singapore companies benefit from about SGD 1.2 billion (USD 884 million) in tariff concessions when selling to overseas markets. It has widened its service sector's market access opportunities including financial services, education services, health, logistics and transport services, in the process of creating good jobs for Singaporeans.
The Singapore Business Federation (SBF) say that FTAs help businesses here navigate pressing issues that impact supply chains, cross-border trade and investment. FTAs also build resilience in business processes and form the basis of a rules-based bilateral and multilateral trading system and service to improve the global competitiveness of Singapore businesses. It also improves access to overseas markets, lowers export costs and creates a more stable business environment.
Today, many Indian companies operate freely in Singapore and this has attracted many Indian nationals to its shores. From 2005 till 2018, bilateral trade rose almost 50 per cent and Singapore investments in India have soared almost 50-fold from SGD 1.3 billion to SGD 60.9 billion. Singapore is India's largest source of foreign direct investment (FDI) in the last Indian fiscal year, which ended March 2020.
Tata Sons for example has 20 operating companies and 28 entities in Singapore, employing a total of 3,300 staff.
At the SBFFTA Day event mentioned earlier, Minister Iswaran urged Singaporeans not to use the economic crisis caused by the pandemic as an excuse to retreat from free trade and openness. He added that in the long term, it is going to do great harm to the potential for growth opportunities.
Iswaran said in a Bloomberg interview that Singapore is speaking with more countries on developing further trade deals. The Republic is also looking at the Regional Comprehensive Economic Partnership (RECEP) and the ASEAN Trade in Goods Agreement while also negotiating bilateral arrangements, including those focused on the digital economy, he added.
"We've seen many partners want to do business with Singapore, and maybe even locate some of their regional headquarters here because of that network effect of our free-trade agreements," he told Bloomberg. (ANI)