Trade is more pressing concern than Trump-Kim summit

Singapore

WHERE business prospects here are concerned, trade questions matter more than the positive conclusion of yesterday's talks between United States President Donald Trump and North Korean leader Kim Jong Un, say economists. Any impact will be felt in the longer term instead - assuming that engagement continues.

Commenting on whether the summit outcome would affect businesses here, UOB economist Francis Tan said: "It's a bit early to say. The Trump-China trade question is much bigger."

Even trade relations with US allies are tense enough, with Tuesday's summit coming on the heels of Mr Trump's abrupt withdrawal from the Group of Seven meeting in Canada over the weekend - a stark reminder of how Trump's America is disrupting the established world order.

Steven Okun, senior adviser at McLarty Associates and member of the American Chamber of Commerce (AmCham) Board of Governors, said: "While the Singapore Summit has now concluded, there is still a great deal of uncertainty when it comes to trade in the region."

More clarity may come on June 15, the White House deadline for finalising tariffs on US$50 billion worth of Chinese goods, he added. "Then, we can begin to see if this summit will change the course of these unilateral trade actions or if there will continue to be the divorcing of economic policy from security policy."

Still, the Singapore Summit is an encouraging sign of US commitment to the region, he noted.

Welcoming the prospect of continued US-North Korea talks, AmCham chairman Dwight Hutchins said: "We hope that an extended dialogue will bolster security and lead to more trade and greater trade liberalisation in the region."

If a lasting peace is reached, that would, of course, be a boon. Said Deutsche Bank chief economist for Asia Juliana Lee: "A durable peace on the Korean Peninsula, if achieved, would certainly add to the region's stability, while economic cooperation between the two Koreas would have positive economic spillover effects to the rest of the region."

But it is "too early to tell", noted CIMB Private Bank economist Song Seng Wun. "Once sanctions are lifted, then the open door will definitely help businesses," he added.

Singapore Business Federation chief executive officer Ho Meng Kit points out that Singapore had trade links with North Korea for many years before cutting economic ties in November 2017. In 2015, Singapore was North Korea's sixth largest trading partner, with bilateral trade reaching US$29 million, he said.

The SBF thus hopes "the anticipated easing of tensions on the Korean peninsula will be positive for trade".

Said Mr Ho: "We do not foresee any immediate impact for Singapore businesses until international sanctions are lifted, but will continue to monitor developments.

"Over the longer term, as North Korea pursues a new path of economic advancement and engagement, it will be a new emerging market which will likely present some opportunities for our companies."

For now, any gains may be due to the holding of the summit, rather than its outcome. And these too may be limited. Said Maybank Kim Eng economist Chua Hak Bin: "There will likely be a small and short-lived impact on hotel and occupancy rates, but the spillovers to the rest of the economy will be negligible."

A longer-term but less tangible benefit is the raising of Singapore's profile worldwide. "This whole event will put us onto the international stage much better than even our F1 can," said UOB's Mr Tan, referring to the Formula One race. He expects Singapore to now be top on the minds of organisers of Mice (meetings, incentives, conferences and exhibitions) events.

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