The value of Singapore’s trade with 11 other major Asian markets could grow by over 50% by 2030, according to an industry study released by UPS.
Singapore’s trade with other major Asian markets set for 50% boost
Trade in 12 key markets, referred to in the report as the Asia 12, accounts for 88% of intra-Asia trade today, and could more than double in value from US$6.4 trillion in 2020 to US$13.5 trillion in 2030.
Trade is critical to Singapore’s economy, valued at more than three times that of its gross domestic product (GDP). As an essential hub for facilitating regional trade flows, UPS estimates that the value of Singapore’s trade with the rest of the Asia 12 could potentially grow from US$450 billion in 2020 to US$679 billion also by 2030, underpinned by the country’s strategic location and strong trade relationships.
Intra-Asia trade holds incredible potential over the coming decade, built off the immense economic success that key regional economies have accomplished in recent years.
High-tech segment will drive Singapore’s trade growth
Across the Asia 12, the four segments driving the surge in intra-Asia trade are retail, industrial manufacturing and automotive (IM&A), high-tech, and healthcare. These segments accounted for 76% of Singapore’s trade with the rest of Asia, and 75% of total intra-Asia trade in 2020.
In Singapore, the high-tech segment is a key export industry that constitutes nearly half of the country’s intra-Asia trade. It will drive future growth given the rise in digitalization across the Asia 12 and particularly in ASEAN markets. Singapore is well-positioned to ride this digital growth facilitated by several key trade lanes including its economic interdependence with Malaysia and potential benefits through foreign direct investment in the Vietnamese manufacturing sector.
Multistakeholder effort needed to unlock Singapore’s trade potential
While intra-Asia trade holds significant potential, there exist a number of barriers that, unless addressed, may stagnate trade within the Asia 12. Specifically for Singapore, as a regional trade hub that is highly dependent on the free flow of goods and people, geopolitical tensions or restrictive trade policies across Asia – including tariffs and other punitive measures – could impact its long-term trade prospects.
Hence, multistakeholder action is required to reduce impediments to regional trade and harness the opportunities to steer intra-Asia trade towards take-off. Singapore-based stakeholders and businesses with trade interests in Asia must build resilience against potential headwinds while at the same time being ready to capture opportunities presented by the growth in intra-Asia trade.
Three key actions that can be taken include digitalizing completely, diversifying supply chains and promoting the integration of MSMEs (micro-, small-, and medium-sized enterprises) into regional supply chains.
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