In the Press - Free Trade Agreement

Exotic, delicate and beautiful, the orchid is internationally recognised as one of the symbols of Singapore – and they can be found in stores and markets around Australia. It is one small sign of the success of the Free Trade Agreement between the two countries, an arrangement which has, since it was first signed in 2003, been the cornerstone of the trading relationship between Singapore and Australia.

The Singapore-Australia Free Trade Agreement covers tariff-free access for goods as well as providing a framework for market access for services, particularly telecommunications, financial services and professional services, as well as for cooperation in areas such as e-commerce, education and customs arrangements. Under the SAFTA, a range of quality certificates and reports issued by each country are acceptable in the other, a significant benefit for trading companies.

For example, Singapore accepts Australia’s certificates relating to Australian meat and other food products, and Australia no longer automatically requires fumigation of plant material – including orchids – imported from Singapore. 

A key part of the SAFTA is its capacity for regular review, a process which has entailed steady expansion and refinement. The agreement also acts as a broad vehicle for negotiations relating to specific industry sectors, which since 2003 have ranged as broadly as airline access and co-production of movies.

From the Australian perspective, Singapore is one of the fastest-growing markets for Australian  imports, worth over $10.1 billion in 2008. About $4.6 billion of exports were bought by Singapore in the same period, ranging from crude petroleum to wine.

As one of the world’s largest oil refining centres and Asia’s key hub for the trading of oil and agri-commodities, there are advantages for Australian companies that base their trading activities in Singapore. They can also potentially reap benefits from Singapore’s package of assistance programs and its extensive network of Free Trade Agreements and Double Tax Agreements.

One Australian company that has utilised a Singapore connection is ESRI Australia, which works in the area of geospatial technology providing location intelligence solutions. ESRI Australia was acquired by Boustead, a Singapore-based engineering and technology solutions company, in 1993, and the arrangement has been of great benefit to both sides.

“Even though ESRI Australia is a subsidiary, the relationship is more like a partnership,” says Managing Director Brett Bundock. “Perhaps that is because the Chairman of Boustead, Mr Wong Fong Fui, studied engineering at the University of New South Wales, so he is very familiar with how we do things, and he knows what we can provide in terms of innovative technology.

“Singapore is the most sophisticated IT market in the south-east Asian region, and Boustead gives us connections to all of the key countries. For instance, last year ESRI Australia developed a new technology called Dekho, an intelligence-gathering package that links to databases to provide geospatial insight. Through Boustead, Dekho is being marketed very broadly – something we would find difficult if we were standing alone.

“Even more, Boustead is now moving into the Middle East, and that opens up a whole new field for ESRI Australia. At the same time, ESRI Australia has been asked by Boustead to actively seek out new partnership opportunities in this country.”

A Singaporean business that has built a strong relationship to establish its brand in Australia is Mothers En Vogue, which specialises in stylish maternity clothes.

“We first received trade inquiries from Australian companies through our website and other online avenues,” says Sharon Ho-Norton, the company’s founder and Director. “That led to a distributor partnership with a Sydney-based company, Fertile Mind. That relationship is built on open communication and mutual understanding, with the goal of seeing both businesses grow in the medium and long term.

“Our garments and manufacturing process fulfilled the SAFTA’s condition for a zero-rate of duty into the Australian market. It added to our price competitiveness and kick-started our first order from a distributor.

“With our partner’s expertise, we plan to expand our expand our presence, and our product representation, in the Australian market.”

The Singapore-Australia relationship recently took on a new dimension with the signing of a Free Trade Agreement between the ASEAN nations and the CER countries, Australia and New Zealand, in February. The largest FTA Australia has ever signed, the AANZFTA will reduce or eliminate tariffs across a region with an annual GDP of A$3.2 trillion.

Australia’s two-way trade with the ASEAN region is already worth $80 billion a year, more than trade with China, Japan, or the US.

Trade and Industry Minister for Singapore, Lim Hng Kiang, sees the AANZFTA as a key step for the long-term growth of the region. “Such a move is even more essential in these times of economic difficulties, when interdependence, cooperation, and openness are increasingly crucial to our economies,” he says. “When paving the way for businesses to reap tangible benefits, it is vital.”

Simon Crean, Australia’s Minister for Trade, agrees, pointing out that the AANZFTA includes an economic cooperation component to provide technical assistance and capacity building to developing ASEAN countries to assist in implementation of the agreement.

“The challenge to Australian business and exporters is to look to south-east Asia to take advantage of the new opportunities,” he says. “We see the agreement as an extremely strong signal to the rest of the world that the Asian region remains committed to pursuing economic growth, exports and jobs to help drive economic recovery. It represents a historic milestone for the region’s trade.”

The Australian, 11th March 2009