Australia and Singapore have a strong and productive bilateral relationship based on long-standing political, economic, defence and Commonwealth links.
“Singapore’s outward-looking, export-oriented approach to trade has established the country as a strategic global hub for multinational businesses operating in Asia,” says Mr Stephen Skulley, Austrade’s Senior Trade & Investment Commissioner Singapore.
“Recent economic reforms have helped Singapore become a financial, trade and wealth management hub for the region and a global hub for currency and commodity trading, transhipment and oil and gas refining,” he continues.
According to government statistics, there are 37,400 international companies with headquarters in Singapore, which include 7,000 multinationals. More than half of these companies use Singapore as the regional headquarters for their Asia-Pacific business.
The total merchandise trade between Australia and Singapore in 2021-22 totalled A$46.8 billion, comprised of:
- Exports: A$21.2 billion
- Imports: A25.6 billion
In 2021, total Australian investment in Singapore was A$62 billion, and total investment from Singapore was A$121 billion. More comprehensive trade data can be found here on the DFAT website.
Long-standing bi-lateral ties
The Singapore-Australia Free Trade Agreement (SAFTA) was signed in 2003. SAFTA has been revised six times, with the most recent update on 8 December 2020. This revision reflected the entry into force of the Australia-Singapore Digital Economy Agreement (DEA) and updated SAFTA’s Electronic Commerce chapter into a Digital Economy chapter.
“The landmark DEA harnesses digital transformation and technology to expand trade and economic ties in our region,” says Mr Skulley. “The DEA also provides modernised trade rules that assist businesses and consumers to engage with and benefit from digital trade and the digital economy.
“Australia and Singapore – along with Brunei Darussalam, Cambodia, China, Japan, Laos, New Zealand, Thailand and Vietnam – are members of the Regional Comprehensive Economic Partnership Agreement (RCEP), which entered into force on 1 January 2022. The Republic of Korea followed on 1 February 2022 and Malaysia on 18 March 2022.
Australia and Singapore are also members of the Comprehensive and Progressive Agreement on the Trans-Pacific Partnership (CPTPP), which entered into force on 30 December 2018.”
Singapore and Australia have also signed the Australia – Singapore Fintech Bridge Agreement to strengthen cooperation between the FinTech ecosystems of both countries. Mr Skulley says the Australia-Singapore FinTech Bridge sets out a framework for both authorities to deepen bilateral and multilateral cooperation on fintech, to facilitate trade, investment and ecosystem development in the fintech sector.”
“The framework also supports the mutual establishment of fintech companies looking to expand in each other’s markets and encourages fintech companies to use the facilities and assistance available to explore new business opportunities and reduce barriers to entry.
It will also help both authorities build on current engagements to strengthen linkages between Australia and Singapore for policy officials, regulators and industry groups.”
The Singapore-Australia Green Economy Agreement (GEA) was signed by Trade and Tourism Minister Don Farrell and Singapore’s Trade and Industry Minister Gan Kim Yong on 18 October 2022.
“The GEA is a first-of-its-kind agreement that supports Australia’s economic, trade, investment, and climate change objectives,” he continues, “Under the GEA, Australia and Singapore will jointly implement 17 practical initiatives in the green economy. Examples of green growth sectors include renewable and clean energy, agribusiness and food, maritime and aviation and transition finance.”
Lucrative sectors for Aussie exporters
Food and Agribusiness
Singapore imports over 90 per cent of its agricultural needs due to limited land available for agriculture, and Australia is viewed as a trusted and reliable food partner.
Ms Amelia Walsh, Austrade’s Trade & Investment Commissioner Singapore says that Australia was one of the top five suppliers to Singapore for chilled meat, dairy, honey, fresh produce, cereals, flour, oil, sugars and beverages, including alcohol, in 2021.
Singapore is also Australia’s largest export market for pork and eggs. There is also demand for dairy products; fresh fruit and vegetables; seafood; and ready-to-eat convenience foods.
“Australian capabilities are widely regarded and promoted across ASEAN through partnerships with health accelerators Medtech Accelerator, Life Science Innovation hub (LSI) in Queensland and APACMed,” according to Ms Walsh.
Singapore is a leading location for fintech funding across ASEAN, attracting almost every fintech category seeking funding, with the payments category the most dominant. Singapore offers a springboard to ASEAN, with opportunities across ESG & Sustainability, and embedded finance/ extended finance/ decentralised finance.
“Australia has maintained its position as a preferred destination by Singaporeans seeking higher education abroad despite the flat trend in student commencement numbers onshore,” Ms Walsh notes. “Singapore is a small, competitive market with limited growth potential, in part due to decreasing birth rates and the expansion of local offerings.”
Opportunities for research and development, partnerships and curriculum delivery in Singapore are set to develop further with the recent Singapore Australia Green Economy Agreement (GEA) signed in October 2022; Singapore’s Research, Innovation and Enterprise 2020/2025 Plan; and the 2022 SkillsFuture Report, detailing priority skills with demand growth across the green, digital and care industries.
Emerging Export Opportunities
Singapore has announced its target to reach net zero by 2050. In addition to domestically focused plans to drive sustainability (e.g. all internal combustion engine vehicles off the road by 2040, greening 80% of buildings by 2030), Singapore plans to be a regional hub for green finance and carbon markets.
“The Singapore-Australia GEA has laid the foundations for cross-border economy activities that drive green growth, including facilitating flows of environmental goods and services, green and transition finance, and clean energy. This will provide opportunities for Australian businesses in this emerging sector”, says Mr Skulley
Resources and Energy
At present, over 95 per cent of Singapore’s electricity is generated from imported natural gas. In keeping with its targets for net zero, renewable energy will become an increasingly important sector.
“Singapore aims to import up to 4 gigawatts of low-carbon electricity from neighbouring countries by 2035, spearheading regional grid connectivity. It also envisages up to 50 per cent of its domestic electricity to be powered by clean hydrogen by 2050,” he continues.
“As the world’s largest maritime bunkering hub, and one of the leading air hubs, Singapore will also play a key role in shaping global transitions to green shipping and aviation.”
Singapore has invested in becoming a digital economy hub. It is ranked first in Asia for digital readiness and start-up talent and has the world’s highest fibre-to-the-home penetration, which stands at 95 per cent. It also continues to pursue international agreements and mechanisms to increase its digital connectivity, seeking to be the connector between Southeast Asia to the rest of the world.
Key opportunities are linked to technology trends: Virtual reality, AI, Autonomous mobility, Edge computing and Quantum computing.
Mr Skulley says: “The innovative Singapore-Australia DEA will assist Australian businesses to take advantage through a range of new trade rules and a comprehensive framework for bilateral cooperation, including data innovation, artificial intelligence, personal data protection and trade facilitation.”
Aviation and Aerospace
Singapore is the regional hub for Original Equipment Manufacturer (OEM) aerospace aircraft engine and components manufacturing, as well as the hub for maintenance, repair & overhaul (MRO).
With the ongoing recovery of the aerospace sector to near pre-covid levels, the aerospace sector to near is seeing a higher demand globally for aircraft parts and MRO, and there are emerging signs of an uptick in the sourcing of accredited aerospace sub-components and systems. Mr Skulley notes that this is an area where Australia is well-positioned to participate in the GVC sourcing programs of the international primes, for example, Rolls Royce, GE, and Pratt & Whitney.
With a population of 5.64 million, Singapore has one of the highest median incomes in the world. However, 25 per cent of its population is projected to be aged 65 and older by 2030, so having a quality of life in their later years are major concerns for the elderly in Singapore.
Ms Walsh says: “The biggest challenges centre on biophysical and psychological health: physical frailty/disability, sensory impairment such as hearing loss, chronic conditions such as dementia or diabetes, and psychological challenges such as mental health and availability of community support.”
“Opportunities in mental wellness therapies/programs, assistive technologies (e.g., tech platforms for connecting caregivers and care recipients) and autonomous mobility solutions.”
Health and Medical
The Singapore Ministry of Health oversees healthcare in Singapore, which is a mixture of a government-run, publicly funded universal healthcare system and a private-sector model.
Financing healthcare costs is done through direct government subsidies, compulsory comprehensive savings, national healthcare insurance, and cost sharing. The Singapore public health insurance system is based on programs run by the Central Provident Fund, primarily Medisave, a mandatory medical savings account.
Emerging opportunities for exporters are:
- Growth in telemedicine and digital health (accelerated by the COVID-19 pandemic)
- Investment in the ageing population and chronic diseases (e.g., geriatric care, chronic disease management and palliative care)
- Personalised medicine and precision care (including genomics research)
- Investment in health and wellness (to promote healthy lifestyles)
What it takes to succeed in Singapore
Singapore is a mature, sophisticated, and highly competitive market, especially as it is a strategic global hub for multinational businesses operating in Asia.
Mr Skulley stresses that to succeed in the market, Australian exporters must build trust and relationships with service delivery agencies, and local industry partners.
He also notes that although establishing a presence in Singapore is relatively straightforward, operating costs for rents and staff are high.
Austrade contact information
Stephen Skulley, Senior Trade & Investment Commissioner Singapore, Austrade
Amelia Walsh, Trade & Investment Commissioner Singapore, Austrade
Email: email@example.com Contact: 13 28 78
To learn more about how Austrade can help your business, visit Austrade.gov.au