This week in 1965:A look back at the events that shaped Singapore 50 years ago

Tit-for-tat tariffs put on Malaysian goods

Move to protect local market came in wake of KL imposing tariffs on Singapore goods

The Singapore Government introduced tariffs on 154 types of manufactured goods on Oct 11, 1965, to protect the Singapore market from Malaysian goods and retaliate against Malaysia's imposition of tariffs on goods from Singapore.

Nearly all the new tariff rates announced by Singapore were the same as those set by the Malaysian government two days earlier.

Before the tariff wall was imposed in Singapore, only soap and paint from other countries were subject to such protective duties.

Finance Minister Lim Kim San said the immediate effect of the move was the protection of Singapore manufacturers.

Singapore and Malaysia were getting into position for future negotiations, he said. Singapore could not allow Malaysian manufacturers to enjoy the Singapore market as they did before.

The tit-for-tat tariffs further underlined the dashing of Singapore's dreams of entering into a common market with Malaysia, which was a key factor for the separation.

"We must first protect our market. Then from that position, we can say, 'Come and talk'," he said.

Protected goods ranged from dairy produce, sweets and chocolates, to insecticides and dental products. Also covered were rubber goods like tyres and tubes.

Businessmen were surprised by the tariffs and unsure about their impact. "All we can hope for is that they will not be imposed to an extent which makes people pay more for inferior goods," said Dr T. Eames Hughes, executive secretary of the Singapore International Chamber of Commerce.

But they were happy that Singapore and Malaysia lifted quota curbs and specific licensing imposed after the two sides separated on Aug 9.

The tit-for-tat tariffs further underlined the dashing of Singapore's dreams of entering into a common market with Malaysia, which was a key factor for the separation.

Asked about the chances of a common market, given the new developments, Mr Lim said: "Even with Sabah and Sarawak, they are a very limited common market. What more with us?"

He said he had some discussions with the Malaysians and their idea was that Singapore should pay for joining the common market.

But from what he understood, members of a common market did not pay each other, said Mr Lim.

"So unless and until they can work out the principle on which we pay, Singapore is not going to beg for a common market," he added.

Mr Lim was also asked about the impact of the tariffs on Singapore's free port status. He said Singapore was going to have the best of both worlds with a free port area and an industrial complex.

"Both trade and industries will prosper side by side," he said.

A version of this article appeared in the print edition of The Sunday Times on October 11, 2015, with the headline 'Tit-for-tat tariffs put on Malaysian goods'. Print Edition | Subscribe