EuroCham head calls on Singapore firms to take advantage of EUSFTA

BEING a diverse world of 27 countries, Europe holds ample opportunities for Singapore businesses looking to venture abroad, said the head of the European Chamber of Commerce, Singapore (EuroCham).

"There is significant re-shoring of production capacity from China back to Europe and its domestic markets including Eastern Europe for its cost effectiveness," said Federico Donato, the Italian-born president of EuroCham in an interview with The Business Times.

"They are price-competitive and the quality of the output is quite high," he said, describing it as a good compromise between quality and price.

However, he believes that the reason many local entrepreneurs do not regard Europe as a priority is beyond simple economics. "There is a perception that Europe is bureaucratic," he said.

However, by relying on trade agreements, such as the European Union-Singapore Free Trade Agreement (EUSFTA) which came into force on Nov 21 last year, doing business in Europe does not have to be more complicated than doing business in the region.

"Singapore is profiting from easier access to Europe, and I think Singapore must show the way by remaining committed to global trade because if certain countries in the world become protectionist, then you need as many friends as you can to keep trading," Mr Donato said.

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"In a world presenting multiple challenges, having these relationships established will make it more difficult to dismantle global trade later, and this relationship is now here to stay," he added.

Level playing field

As for the EU, the FTA allows European companies to compete on a level playing field, Mr Donato said.

"Tariffs were already very low so it is mainly licensing, testing, regulatory aspects, so the benefits for European companies are mainly in non-tariff barriers, which sometimes can be even worse than tariff barriers," he said.

In addition, European companies benefit from Singapore's strong intellectual property (IP) laws.

"That is something that is increasingly valuable and that you can be reassured of in fewer places," Mr Donato said.

"IP will become an (even more) crucial field of competition and confrontation, and I think places which remain a bit more equidistant are places where people will feel more reassured... and Singapore has a very strong tradition (of that)," he said.

While the impression is that FTAs benefit larger companies, Mr Donato said small and medium-sized enterprises (SMEs) reap indirect advantages as well.

Using European plane maker Airbus as an example, Mr Donato said: "Besides managing Asia-Pacific and controlling a significant component of the company's global turnover out of Singapore, Airbus' contribution does not stop at only employing a sizable number of people, but also at supporting a whole group of smaller SMEs that sometimes work exclusively for them."

He added: "We are talking about livelihoods sustaining many families because Airbus and many other European companies contribute to support entire business ecosystems both big and small."

Mr Donato believes that Singapore companies looking to invest in the EU should also consider the potential of a sector rather than just its geographical location.

In that regard, sustainable farming and digital solutions such as fintech hold great potential for collaboration, he said.

In recent years, interest in urban agriculture has grown in land-scarce Singapore, which has set a target to produce 30 per cent of its nutrition needs by 2030.

"Sustainable food could be a huge driver of the next wave of investments, and Singapore understood it exactly very early. We have a lot of technology in agritech and sustainable nutrition at large in the Netherlands and other countries within the EU," Mr Donato said.

In fact, sustainability has become more important than ever for the EU, with the European Green Deal launched last November paving the way for the bloc to become climate-neutral by 2050.

Mr Donato believes there is a natural alignment between the EU and Singapore where sustainability is concerned.

Singapore and Europe, both philosophically and practically, are pursuing solutions to similar problems such as rising sea levels, he said.

"As a diverse continent, Europe allows you to examine what you're interested in, in a specific field, at a specific time and it has recognised leadership in sustainable technologies and a credible political agenda," he said.

"Singapore, specifically, has a platform for all of Asia-Pacific to become a place where sustainable investments are made," he added.

EuroCham, on its part, has also organised a flurry of activities, including holding classes, compiling a white book and giving out sustainability awards to both European and Singapore companies.

"As we commemorate the passage of one year since the EUSFTA entered into force, Singapore and the EU must continue to look for new ways to take our partnership forward," said Mr Donato.

"I am convinced that the EU and Singapore would benefit greatly from finalising and inking a Digital Economy Agreement soon. Such an Agreement could mark another important milestone in our bilateral relationship and would demonstrate our strong commitment to upholding the fair and rules-based approach of data treatment," he added.