SINGAPORE - Singapore businesses can look forward to greater protection for their investments in China, fewer barriers to investing in China and more access to China's services sector.
This will be the outcome once both countries conclude talks on the review of the current China-Singapore free trade agreement (CSFTA) , targeted for next year.
Minister for Trade and Industry Lim Hng Kiang exchanged letters with his Chinese counterpart, Minister of Commerce Gao Hucheng on Saturday to officially start talks to broaden the scope of the pact first signed in 2008.
"A forward-looking, substantive and comprehensive upgrade of the CSFTA will enhance support for ongoing and future collaborations between Singapore and China," said Mr Lim.
A Ministry of Trade and Industry statement noted that the enhanced CSFTA will "inject new dimensions" and "refresh its relevance" to the business communities in both countries.
It will include a "high-quality" upgrade of the investment chapter, to give investors better protection and "addresss" investment barriers.
Through the upgraded agreement, the two countries will also explore greater cooperation in the services sector, in areas such as legal services and financial services.
New areas such as environment and e-commerce will also be included to keep the CSFTA "abreast of global developments".
The CSFTA was the Chinese government's first such agreement with an Asian country. It has since gone on to sign several FTAs with other countries, some of which are more updated, as they have taken into account current developments, said observers.
Under the current agreement, 95 per cent of Singapore's exports to China are already duty free, while there are no tariffs on all Chinese exports to Singapore.
Singapore and Chinese companies in hospital and selected business services sectors enjoy preferential access in each other's markets. In addition, Chinese companies in the education services sector also enjoy greater access to Singapore.
The business community in Singapore welcomed the upgrade, calling it a "timely move".
"It been nearly seven years since the agreement came into force (in Jan 2009), and the services sector in China has seen an increase in activities (since then)," said Singapore Business Federation chairman SS Teo.
"There could be new forms of investments in these sectors (for our businesses)," he said, adding that there is more room for China to lift market restrictions in the healthcare, education and elder-care sectors.