SINGAPORE // Trade between the GCC and Singapore has declined by a fifth this year, but a newly ratified free trade agreement is shoring up officials’ optimistism.
Trade in the first half of this year declined to US$30.2 billion from $38bn last year, partly due to lower Saudi oil shipments, said Singapore’s trade ministry.
UAE trade with Singapore remained steady, accounting for $12.9bn of trade comprised mostly of oil and petrochemicals exports from the Arabian Gulf to the island state.
The free-trade agreement, which was signed in 2008 but took effect in September after Saudi Arabia’s ratification, lowers the tariffs for Singapore-made goods and refined oil products, and grants GCC nationals preferential treatment in Singapore in sectors such as the law, engineering and retail.
“The GCC-Singapore free trade agreement is a very important and powerful signal to the business communities on both sides that governments are making it easier for them to work with each other in areas that were restricted,” said Lee Yi Shyan, Singapore’s senior minister of state for trade and industry.
“They [the GCC] are looking more to the East. Singapore is a very good gateway for companies to base themselves [in].”
In the first half of the year, the UAE accounted for $3.1bn out of a total $4.8bn of Singapore’s exports to the GCC. Its imports from Singapore amounted to $9.8bn out of the GCC’s imports of $25.4bn.
Singapore, which inspired Abu Dhabi’s 2030 economic development plan, and the UAE have sought to deepen their trade ties.
Last Monday, both countries signed a memorandum of understanding to share knowledge and encourage private sector cooperation in energy efficiency, liquefied natural gas and other energy matters.
This year, Abu Dhabi National Oil Company upgraded its representative office in Singapore to a subsidiary, as it grows its Singapore presence to cater to the changing demands of customers in the region.
Like Singapore which has positioned itself as a gateway to Asia, the UAE has done the same for itself in the Middle East. But the region has a long way to go in attracting foreign investors, according to Masagos Zulkifli, Singapore’s senior minister of state for foreign affairs.
“The whole region is in turmoil right now,” said the minister. “If you look at the growth potential of the region, it is huge, but investments are not going to come fast because of what has happened there.
“This is probably the Asian century. Singapore is a gateway for the East.”
Earlier this year, Singapore released a white paper that said the country would likely increase its population to 6.9 million from 5.4 million currently, as it seeks foreign talents to boost its economic competitiveness. It sparked controversy among Singaporeans on the small island with land area of only about 700 square kilometres.