Singapore, being the tiny nation that it is, with a limited amount of natural resources, must embrace globalization in order to thrive. Signing Free Trade Agreements (FTAs) is one strategy to achieve that, said Singapore’s Health Minister Ong Ye Kung while addressing the Parliament on Tuesday. Singapore now boasts 26 FTAs, most notably a Comprehensive Economic Cooperation Agreement (CECA), which has been criticized by both the opposition party as well as active netizens. The need for Singapore as whole to rely on international marketplaces to generate income and be self-sufficient is of paramount importance and is critical to this nation’s financial stability.
However, although this country lacks certain natural resources, it does possess an optimal geographic position, enabling it to harness important trade routes between the Malacca and Singapore Waters. Establishing prominence over these trade routes has enabled the Port of Singapore Authority (PSA) to become the biggest cargo exportation harbor in the world. This port, which employs around 160,000 individuals, is critical for the expansion of this regional marine sector. It also aided Singapore in becoming an “aviation hub,” featuring one of the most celebrated airports on the planet, with related businesses accounting for the employment of over 190,000 individuals prior to the COVID-19 outbreak.
Singapore’s industrial and service industries grew as a result of its strong global linkages. It has also established itself as an emerging hub for tech, innovation, and research, with several major technology corporations establishing both regional and global development centers here. Over 50,000 multinational firms operate out of Singapore, with 750 of these naming Singapore as their respective regional base. It is in Singapore’s best interests to seek FTAs, a practice that began in the 1990s and has lent its economy benefits such as first-mover advantage as well as an increase in exports. For companies wanting to conduct trade in Singapore, the country’s system of FTAs is indeed a key selling factor.
Furthermore, FTAs are particularly important to micro and moderate-sized companies, as it offers them the option to not be restrained by the domestic aspects of Singapore’s limited market, and offers access to global markets as well. Governments are required under FTAs to safeguard international capital and to guarantee that rules are applied in an equitable manner to both domestic and multinational companies. FTAs also establish intellectual property protection rules, which are an essential assurance for local businesses that venture abroad to produce goods or offer services.