Singapore ranked most trade-friendly nation

S’pore ranked most trade-friendly nation

July 9, 2009
By Gabriel Chen from The Straits Times

SINGAPORE is the most trade-conducive economy in the world, according to an influential report which put great rival Hong Kong at second.

The World Economic Forum (WEF) pointed to Singapore’s many advantages, including policy approaches, that have made it No. 1.

Its Global Enabling Trade Report cited the open market, highly efficient and transparent border administration, well-developed transport and communications infrastructure, and an open business environment.

‘Customs procedures are assessed as the least burdensome in the world, and time and cost for both import and export are among the lowest for all countries covered,’ the report said.

The WEF highlighted that the Singapore Government is highly transparent and efficient, while exporters face relatively low tariffs in target markets.

But it suggested one area in which action is needed: traffic and communications. It said less congested roads and improvements to the information and communication technologies infrastructure could help exporters.

Mr Phillip Overmyer, chief executive of the Singapore International Chamber of Commerce, agrees with that assessment particularly in terms of getting goods across to Malaysia, Singapore’s largest trading partner. ‘We all know the Causeway traffic is a significant problem,’ he said.

The WEF said Hong Kong’s open domestic market mirrored Singapore’s high dependence on exports and imports, but also noted that Hong Kong’s exported products faced more barriers than Singapore’s, as reflected in the tariffs it faced.

Barclays Capital economist Leong Wai Ho believes the differentiating factor for Singapore’s success has been the numerous Free Trade Agreements (FTAs) it has signed.

‘We’re the most trade-dependent economy in the world,’ Mr Leong pointed out. ‘These FTAs have given us access to key trading partners and it’s already showing up in the rankings.’

Minister Mentor Lee Kuan Yew recently told Malaysian leaders that Singapore businessmen have thousands of projects in China, Vietnam, India and the Middle East, and that they are benefiting from the web of FTAs the country has signed.

Still, the reality for Singapore is that being very open to trade with precious little domestic demand to speak of also means it cannot escape the global business cycle.

‘Singapore is a very export dependent economy that feels the pain once global growth collapses,’ said Mr Thomas Kaegi, senior economist at UBS Wealth Management Research.

A Ministry of Trade and Industry spokesman said that it ‘constantly strives to improve our institutions, policies, and services to facilitate trade activities and reinforce our position as a global trading hub’.

The report, published for the second time and covering 121 economies, assesses institutions, policies and services that facilitate trade across national borders.

The other economies in the top 10 are Switzerland, Denmark, Sweden, Canada, Norway, Finland, Austria and the Netherlands.

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