From fairway to greenway

THIS year marks the 20th anniversary of the US-Singapore Free Trade Agreement – the first such agreement that the United States signed with an Asian country. To date, it is still the US’ only FTA with an Asean partner.

Remarkably, this historic partnership began with a golf game between two leaders – then prime minister Goh Chok Tong and president Bill Clinton. We’ve all heard the cliche of using golf as a business networking and dealmaking tool. Yet the US-Singapore FTA has proven to be a significant milestone in the bilateral relations of the two countries.

More importantly, we’ve seen this relationship continue to thrive through other initiatives, including the bilateral Climate Partnership in 2021, and more recently, the Indo-Pacific Economic Framework for Prosperity (IPEF). Launched in 2022, this framework consists of four pillars that cover trade, supply chains, clean economy, and fair economy.

Teeing up for clean energy cooperation

As we look to the future, the IPEF emerges as a crucial next step in fostering economic cooperation, particularly in the clean economy sector. The US-driven IPEF comprises 14 partners in the Indo-Pacific – a region particularly vulnerable to climate change threats due to its geography, weather patterns, and dependence on natural resources.

Addressing the clean energy sector is vital not only for tackling climate change but also for fostering economic growth, enhancing energy security, improving public health, and aligning with global sustainability goals. While the IPEF might not offer the full benefits of a comprehensive FTA, it provides significant advantages. The framework streamlines customs procedures, making exporting and importing across the region cheaper and faster.

Under the clean economy pillar, IPEF seeks to promote the adoption of clean energy technologies and boost energy efficiency. This includes initiatives to support the widespread rollout of these technologies, opening doors to new markets and partnerships. The framework also encourages investments in sustainable infrastructure and fosters innovation in green technologies.

By creating a more predictable and secure business environment through standardised regulations and fair, transparent business practices, the IPEF lays the groundwork for tangible cooperation in areas of mutual interest. This approach ensures that businesses in the Indo-Pacific region can thrive in a more integrated and supportive economic landscape.

Playing a winning game

Singapore, with its advanced infrastructure and vibrant innovation ecosystem, can play a leading role in accelerating the deployment of clean energies and facilitating investment among IPEF economies. The inaugural IPEF Clean Economy Investor Forum, held in Singapore on Jun 5 to 6 together with IPEF partners, showcased Singapore’s catalytic role in fostering dialogue. The forum also facilitated matchmaking between investors, entrepreneurs, governments, and businesses on sustainable infrastructure and climate technology investments.

Singapore’s proactive policies and robust clean energy ecosystem offer international businesses and investors a platform to explore technology possibilities in the energy transition. The S$5 billion Future Energy Fund, which provides financial support to nascent technologies to transit from fossil fuels to low-carbon energy, is an opportunity for businesses in the IPEF economies to scale up the establishment of hydrogen supply chains in Asia.

Singapore companies have demonstrated remarkable foresight by proactively identifying market gaps and spearheading innovative solutions in the clean energy sector, positioning themselves at the forefront of this evolving industry. Their readiness, bolstered by initiatives such as the IPEF that promote common standards and facilitate access to public-private capital, holds significant potential for advancing environmental sustainability.

Several Singapore companies are already poised to seize these opportunities. For instance, Global Enviro Holding, a waste-to-energy company, is looking to expand its waste-tyre recycling capabilities by investing in a new plant in the US. Similarly, Green Li-ion is seeking to broaden its footprint in on-site recycling of waste batteries. Meanwhile, FlyOro is exploring the US market to offer an innovative last-mile blending concept for sustainable aviation fuels, enabling greener flights.

Hitting the green

But despite promising developments in clean energy, significant hurdles impede progress. Substantial upfront costs for technology and infrastructure, complex regulatory landscapes, and the relentless need for innovation present major challenges. These factors necessitate supportive policies, increased funding, and robust international cooperation to create a conducive environment for the growth of the clean energy sector.

However, with the support of frameworks such as the IPEF and the collaborative spirit of Singapore’s business ecosystem, these challenges can be effectively addressed, paving the way for a sustainable and prosperous future.

In this context, regional economic integration, particularly in the clean economy, remains a cornerstone of Singapore’s international economic policy.

This integration is vital for small economies to ensure continued growth and resilience. Singapore’s commitment to integrating clean energy initiatives is demonstrated through active participation in multilateral forums such as the World Trade Organization and Asia-Pacific Economic Cooperation. These engagements help shape a more level and predictable global playing field for businesses focused on clean energy solutions.

Additionally, key FTAs such as the Regional Comprehensive Economic Partnership and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership are vital. These agreements enhance market access and strengthen supply chain links for Singapore-based clean energy businesses. Moreover, the Asean Economic Community and Asean FTAs, along with partnerships with countries such as Australia and New Zealand, are crucial for fostering economic integration, promoting sustainable development, and boosting Singapore’s global economic connectivity.

Through initiatives such as the recent IPEF Clean Economy Investor Forum, we are not merely playing the game but thriving with strong partners, securing long-term economic resilience and environmental sustainability. We look forward to continuing this journey, where every strategic move and collaborative effort brings us closer to a prosperous and sustainable future.

The writer is CEO of the Singapore Business Federation