SINGAPORE - Embracing globalisation is critical to Singapore's survival and pursuing free trade agreements (FTAs) are key to the country's existence, said Health Minister Ong Ye Kung on Tuesday (July 6).
Mr Ong, who said he is a former trade negotiator, was giving a ministerial statement in Parliament about the FTAs, which are trade pacts inked between two or more countries to ease the flow of goods and services.
Singapore, Mr Ong said, is a country that is too small to live on its own, and which needs to tap global markets to earn a living and be self-reliant.
While it has no natural resources, Singapore does have its geographical location, which is its "one precious natural endowment", he added.
He said: "It is a lasting advantage, but one which requires us to work very hard to realise and sustain. If we succeed, it helps compensate for our lack of size."
The country's strategic spot has allowed it to capture trade flows through the Strait of Malacca and Singapore, as well as connect many countries in the East and West. That, Mr Ong said, has enabled home-grown port operator PSA to become the largest container transhipment port in the world.
Singapore's port now sustains about 160,000 jobs, he added.
Mr Ong, who is a former transport minister, said Singapore has also grown into an aviation node. Changi Airport was one of the busiest airports in the world and supported 190,000 jobs before Covid-19 struck, he added.
Good international connections have allowed Singapore to build up its manufacturing and service sectors too. Manufacturing, which accounts for about one-fifth of the country's gross domestic product, supports 440,000 jobs and services employs more than 170,000 people, said Mr Ong.
Singapore is also growing into a centre for technology, research and development, with many global tech firms choosing the country to set up their regional or global innovation centres, he said.
About 50,000 international firms operate in the country, with 750 of them making Singapore their regional headquarters, Mr Ong added.
He said none of these achievements would have happened without a clear strategy that was carried out properly.
Mr Ong said: "It was a long and painstaking process, part of the story of our island-nation. Clean government, rule of law and safety, where you can you can walk on the streets at any time of the day. With political stability, good infrastructure, high standards of education, openness to the world."
"All this, and more, come together to make us a good place to invest."
He added that Singapore has built a network of 26 FTAs, and the India-Singapore Comprehensive Economic Cooperation Agreement (Ceca) is one of them.
Mr Ong earlier in his speech said he would explain the importance of FTAs and address false allegations by the Progress Singapore Party that Ceca has given Indian professionals, managers and executives a free hand to work in Singapore.
Singapore's network of FTAs is not just a major selling point for the Government to persuade investors to come and do business, but is also fundamentally important to the country because it needs the world to "earn a living", he said.
FTAs are especially important to small and medium-sized enterprises because they free these businesses from being constrained by Singapore's small domestic market and give them access to overseas customers. The country's investments overseas have increased five times, from $200 billion in 2005 to more than $930 billion in 2019, he added.
Mr Ong said trade pacts require countries to remove or lower tariffs on all trade between partners, which is of "tremendous benefit" to Singapore.
He said: "This is of tremendous benefit to Singapore, because while other countries customarily impose tariffs on thousands of items, we are already very open, imposing duties on only three alcohol products - beer, stout and samsu."
Samsu is a type of Chinese wine.
FTAs also require governments to protect foreign investments and ensure that regulations are imposed fairly and equally on both local and foreign companies. They also set standards to protect intellectual property.
Mr Ong said: "Singapore always protects foreign investments and applies our regulations fairly. This makes us attractive to foreign investors. Abiding to these disciplines is not a problem to us at all."
These agreements also help local companies that are expanding overseas because they hope that Singapore can negotiate similar protections for them in overseas markets.
Mr Ong said newer FTAs even set certain environmental and labour standards.
And, although not every country supports such rules, Singapore believes that doing so would reflect "contemporary concerns" in free trade, he added.
Mr Ong said any attack on FTAs undermines the fundamentals of Singapore's existence, all the sectors the pacts support and the "hundreds of thousands of Singaporean jobs" created in these sectors.
He said: "If we accept the basic reality that Singapore needs the world to earn a living, then we would realise the fundamental importance of all our FTAs. They are a keystone of the economic super-structure we have built.
"We could not have advanced the welfare of Singaporeans to the degree we have without FTAs. We cannot take any of this for granted."