Companies keener to shift production to Asean amid US tariffs: PM Wong tells ABC News
He speaks with the Australian broadcaster ahead of his official visit to Australia and New Zealand
[SINGAPORE] Companies have shown growing interest to shift more production into South-east Asia amid US tariffs, even as uncertainty lingers, Prime Minister Lawrence Wong said in an interview on Australia’s ABC News on Monday (Oct 6).
As Asean works to become “a more attractive single market”, there will be projects where Australia can participate in, he said ahead of his official visit there this week.
A rewiring of supply chains towards the region had begun even before US President Donald Trump’s first tariffs in April, he noted, as many companies pursued “China plus one” diversification with factories in countries such as Vietnam and Indonesia.
But he added: “We start to see a lot more interest after the tariffs happened.”
Yet, businesses have also been holding back on new investments amid tariff uncertainty, he noted.
“So it is still early days, but if the trend continues in this direction, I would not be surprised if there will be more interest to shift more production into South-east Asia and capitalise on the supply chain network that we provide in Asean,” he said.
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He added that this is not to be taken for granted, as Asean may be “virtually tariff-free” but “is not an easy place to do business”.
“There are non-tariff barriers for investments, and we have to work even harder to bring all these down.”
The Asean leadership aims to do so and is working on bringing their economies closer, connecting their payment systems and better linking up infrastructure.
“So a whole host of projects that we are working on for which there will also be opportunities for Australia to participate in,” he said.
From plurilateral to multilateral
Trade was a key theme of PM Wong’s interview, which also touched on security and the economy.
He was asked about Singapore’s participation in the Future of Investment and Trade (FIT) Partnership, launched last month by 14 countries across continents.
PM Wong said this was a grouping of small, trade-dependent economies looking to advance “forward-leaning trade initiatives” showing commitment to the rules-based framework.
“If we develop some of these interesting and new ideas further, clearly, the intention is not just to keep it to ourselves or to replace the WTO (World Trade Organization), but to multilateralise it.”
Asked if he would like to see Australia become involved, he replied: “For sure.”
Initiatives such as the FIT Partnership are happening in parallel with WTO reforms, which Australia and Singapore have been working together on as well, he noted.
Another idea he has been discussing with Australian PM Anthony Albanese is for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership – of which both countries are members – to engage the European Union and Asean in a more formal partnership.
The three groupings, he noted, comprise more than 35 per cent of the global economy.
Economic impact
These initiatives come as the world enters a period of “greater economic fragmentation” with higher and more volatile tariffs, warned PM Wong.
“In the worst case, if the trajectory continues, we end up in a world with competing blocs and exclusive spheres of influence, and that would be unstable and dangerous for all – not just small countries like Singapore, but Australia and many other countries,” he said.
“So it is in our shared interest to try and avoid that, prevent that from happening.”
Singapore has yet to feel much economic impact from tariffs in the first half of the year, he noted, partly due to front-loading of activities.
“But we do see signs of spending, business spending and confidence coming down,” he said. Beyond tariffs, uncertainty is causing businesses to hold back on investments, which will affect the external environment and thus Singapore’s economy in the coming months and into next year.
Upgrading relations with Australia and New Zealand
PM Wong is in Australia from Oct 6 to 9 and will be in New Zealand from Oct 9 to 11, in his introductory visit to both countries since taking the helm last May, the Prime Minister’s Office (PMO) said on Monday.
This coincides with the 60th anniversary of the establishment of diplomatic relations with both countries.
In Australia, PM Wong and his counterpart Albanese are expected to sign a joint declaration to upgrade the Singapore-Australia Comprehensive Strategic Partnership (CSP) – signed in 2015 – to CSP 2.0.
The two leaders last met during Albanese’s visit to the city-state in May.
Australia was the first country with which Singapore established a CSP, and this is also the first such partnership to be upgraded.
The Republic also has CSPs with India, France and Vietnam.
New Zealand will soon join the list. Later this week, PM Wong and Prime Minister Christopher Luxon will sign a joint vision statement to launch the Singapore-New Zealand CSP, upgrading from an Enhanced Partnership signed in 2019.
During PM Wong’s trip, Singapore is expected to ink agreements with both countries to enhance cooperation.
In the ABC News interview, he noted that Singapore and Australia have been discussing a supply chain agreement that would allow essential supplies to continue flowing even during disruptions, building on their mutual help in the Covid-19 pandemic.
Both countries are also looking to strengthen cooperation in defence and economic areas such as in artificial intelligence and clean energy.
In 2024, Australia was Singapore’s 12th largest trading partner, with total bilateral trade in goods of S$30.3 billion. The city-state was Australia’s sixth largest bilateral trade partner and foreign investor in 2023.
Last year, more than 360,000 Singaporeans visited Australia, and over a million Australians visited Singapore.
New Zealand was Singapore’s 31st largest trading partner last year, with S$5.1 billion worth of bilateral trade in goods.
Singapore’s direct investments in New Zealand amounted to S$8.2 billion in 2023, primarily in the real estate, hospitality and agricultural sectors.
Last year, Singapore received 157,528 visitors from New Zealand.
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