7 - Expanding Singapore's Economic Space: Building Highways, Forging Links

Summary

INTRODUCTION

Trade and Singapore have long been synonymous. In the nineteenth century, poised at the tip of the Malay Peninsula and strategically sited at the crossroads of the China–India spice route, Singapore was a booming port-of-call for entrepôt trade. Today, as a small and open economy dependent on external demand, Singapore has pursued a proactive trade policy in order to make it a strategic hub and key interlocutor in global trade flows.

Given its small size, expansion of its economic space is an issue that Singapore has to grapple with as it develops. This chapter examines how Singapore has done this through its bilateral trade agreements. It also examines new ways in which Singapore is forging links with its economic partners, such as through sharing of public sector expertise and private-public partnerships which manifest in Special Economic Zones (SEZs).

The cornerstone of Singapore's trade policy has always been the World Trade Organization's (WTO) multilateral, rules-based system. In addition, Singapore is active in efforts undertaken at regional for a such as Asia-Pacific Economic Cooperation (APEC), Asia-Europe Meeting (ASEM) and Association of Southeast Asian Nations (ASEAN), as well as in bilateral Free Trade Agreements (FTAs). It believes that these efforts can accelerate the momentum of trade liberalization and in the process, also strengthen the multilateral trading system. This chapter postulates how an arterial network of FTAs, if WTO-consistent and WTO-plus, can be beneficial to all levels of trade flows.

To better understand Singapore's delicate position that necessitated an active trade strategy, one must first trace the kinetics of world affairs. The turn of the century ushered in a phase of globalization. This meant an exponential increase in the inter-connectedness of global sectors and industries, and a simultaneous rise in gains made from free trade. More importantly, the past two decades have witnessed the two Asian giants — China and India. With a strong foundation of engineering capabilities built through its network of educational institutions, and honed through undertaking outsourcing contracts for multinational corporations (MNCs), India has emerge as a global IT powerhouse.