To kick off 2022, Singapore has entered several important cross-border agreements with other countries to drive trade and business development. According to an article by The Straits Times, last January 2022 during a joint press conference at a leaders’ retreat, Singapore and Indonesia finally managed to reach agreements in three key areas: airspace management, defense cooperation, and extradition. As such, Singapore is also expected to create new trade policies that are relevant to the agreement.
Given that these agreements are seemingly beneficial only in a diplomatic context, one may not necessarily believe that such arrangements will have an impact on Singapore’s economic success. While this is initially true, it is still significant as Singapore’s eagerness to cooperate with other countries may possibly lead to future cross-border collaborations that will enable business development and further economic success for the Southeast Asian powerhouse.
Entering Foreign Trade Agreements (FTAs)
In addition to Singapore’s pre-existing FTAs, like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Trans-Pacific Economic Partnership (P4), and Peru-Singapore FTA, Singapore has now entered a multilateral trade agreement with the Pacific Alliance (PA); a trade bloc which consists of Chile, Colombia, Mexico, and Peru. The agreement – officially dubbed as the PA-Singapore Free Trade Agreement (PASFTA) – offers several benefits between the two parties, but perhaps none more important than the opportunity to increase cross-border trade.
The establishment of the PASFTA is significant for all parties involved, but for Singapore specifically, it serves a major milestone as they are currently the PA’s first ever first associate member. As such, Singapore will have the exclusive opportunity to engage, transact, and capitalize on the Latin American market with decreased tariffs and eased trade restrictions.
For instance, because of the PASFTA, Colombia pledged to reduce 85.7% of tariffs across all tariff lines for Singapore. The agreement will also prove to be mutually beneficial as the five countries involved agreed not to impose custom duties on e-transmissions. Considering that the eased restrictions will further drive trade between Singapore and the PA, Singaporean stakeholders stand to greatly benefit as exposure to foreign investment will inevitably generate new business and lead to new sources of profit.
Implications on 4IR Consolidated Strategy
Singapore’s influx of FTAs is especially relevant when considering ASEAN’s Consolidated Strategy on the Fourth Industrial Revolution (4IR), as the increased trade activity and cross-border transactions will heavily incorporate one of the strategic framework’s key focus areas: Digital Economy.
One of the ways that the Consolidated Strategy and its emphasis on growing digital economies across Southeast Asia can be achieved is via public-private partnerships, which is something that Singapore’s FTAs with other nations promotes. As the volume of cross-border transactions increases it is inevitable that strong relations will form throughout the supply chain (Business-to-business, business-to-consumer, business-to-government, third-party logistics, etc.). Eventually, the relations formed because of FTAs will serve as the foundation for the success of Singapore’s growing digital economy.
As Singapore’s trade industry benefits from the various cross-border agreements and partnerships that it has made, potential investors and stakeholders should take note as it could eventually lead to a significant business boom. Given that these new streams of revenue will likely have positive implications on the country’s transition toward 4IR, Singapore is set to enjoy a significant advantage over other nations amid the digital revolution most especially when it comes to the growth of its digital economy.
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