Singapore and Taiwan signed an economic partnership agreement covering trade in goods and services, investment, government procurement and other areas on Thursday morning.

The agreement between Singapore and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu on Economic Partnership (Astep) is the first such agreement which Taiwan has signed with one of its major trading partners.

Singapore is the economy's fifth largest trading partner and its sixth largest source of foreign direct investment.

Negotiations on Astep officially began in May 2011 between the Singapore Trade Office in Taipei and the Taipei Representative Office in Singapore.

With the agreement, Singapore firms will find it easier to invest in Taiwan and will be able to take part in municipal government tenders, among other benefits. Taiwan is Singapore's eighth largest trading partner.