SINGAPORE'S business community has welcomed Friday's signing of the European Union-Singapore Free Trade Agreement (EUSFTA), with exporters of electronics, pharmaceuticals, chemicals and processed food products particularly well-placed to benefit.
Calling it "a timely development given the growing international trade tensions", Singapore Business Federation (SBF) chief executive officer Ho Meng Kit said: "SBF is committed to support the successful implementation of the EUSFTA by promoting the new economic opportunities it offers to our companies, especially SMEs (small and medium enterprises)."
Association of SMEs president Kurt Wee said the EUSFTA will create a "greater marketplace for our SMEs in a time when there's a great push towards internationalisation".
"We welcome this move as the broadening of freer markets for Singapore SMEs is important at a time when there are trade tensions in other parts of the world," he added.
The agreement - the first between the EU and an Asean country - will improve market access across many sectors, increase government procurement opportunities and progressively eliminate tariffs on exports, among others.
It is also the first bilateral FTA with enhanced market access for Asian food products made in Singapore, such as lap cheong (dried Chinese sausage) and roti prata. These can enter the EU tariff-free under flexible rules of origin, up to a combined quota of 1,250 tonnes annually.
HSBC Singapore managing director and head of commercial banking Alan Turner noted that the FTA's impact "goes to the heart of sectors and issues that matter for Singapore including electronics, pharmaceuticals, and chemical manufacturing".
The EUSFTA was signed on the sidelines of the 12th Asia-Europe Meeting Summit in Brussels, Belgium. Also signed was the EU-Singapore Investment Protection Agreement (EUSIPA), for bilateral investments.
Minister for Communications and Information and Minister-in-charge of Trade Relations S Iswaran said the EUSFTA "reflects the EU's continued interest in engaging Asean and anchoring its presence in the region", adding that both agreements serve as building blocks towards an eventual EU-Asean FTA.
The agreements will be sent to the European Parliament for approval, and the EU and Singapore will work towards ratifying them. The EUSIPA will also be sent to the regional and national parliaments of the EU member states for approval before it enters into force.
The EUSFTA also stands to benefit other Asean states as it includes the concept of Asean cumulation for Singapore's key export interests. In determining whether such exports qualify for tariff concessions, materials from Asean states will be deemed as originating from Singapore.
Said HSBC APAC regional head of global trade receivables finance Ajay Sharma: "A high proportion of Singapore products have parts produced in other Asean countries. With the rule of 'Asean cumulation', more Singapore exports produced along
intra-Asean value chains can benefit under the EUSFTA."
Mr Ho said the SBF has been working with the Singapore government, the EU delegation in Singapore and the European Chamber of Commerce (Singapore) to raise awareness and prepare Singapore-based companies to make the most of the EUSFTA. The SBF will be organising two events on the EUSFTA, one in November and another in January.
"The EUSFTA is a real game changer for all European companies already present in Singapore or considering an expansion in this part of the world," said EuroCham president Federico Donato.
UPS president for Asia-Pacific Ross McCullough said the FTA is expected to open up new opportunities for its customers - particularly Singapore exporters in electronics, machinery and chemicals - to find new markets and diversify trade lanes.
CapitaLand International chief executive officer Gerald Yong said the property firm stands to benefit from the expected uptick in investment, expatriates and business travellers in both markets, generating greater demand for its lodging and commercial properties. CapitaLand can also look forward to a greater competitive edge and equal treatment when bidding for contracts in Europe, he added.
CapitaLand will continue deepening its presence in gateway European cities where it is now present, and explore "opportunities across various asset classes in key gateway cities as well as growth locations and sectors".