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UK forges deeper economic ties with Singapore

Bryan Wu
Bryan Wu • 7 min read
UK forges deeper economic ties with Singapore
Owen says there are an “astonishing” 5,700 UK companies based in Singapore, many of which are using the country as a base for their operations in Southeast Asia. Photo: Albert Chua/The Edge Singapore
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Some 60 years since British rule over the island of Singapore ended, the partnership between the two countries has remained resolute across the often complicated spectrum of international relations. Considering Prof Tommy Koh — one of Singapore’s foremost diplomats — famously remarked that British rule in Singapore was “60% good and 40% bad”, this steadfast bilateral relationship might not surprise observers.

Although the origins of the relationship are not to be overlooked, the multi-faceted partnership between Singapore and the UK goes further than what might simply be described as a post-colonial hangup.

Notably, Singapore was the UK’s 20th largest trading partner in 2022, with total trade in goods and services between the two countries amounting to GBP20.2 billion ($34.6 billion) and accounting for 1.2% of total UK trade. This was an increase of 16.6% or GBP2.9 billion in current prices from 2021, the year in which foreign direct investment from the UK in Singapore reached GBP11.4 billion.

In 2019, the two governments launched the Partnership for the Future to “celebrate [the] nations’ historical links” as well as shared achievements in areas of long-standing cooperation. With both countries regarding themselves “like-minded, innovative and forward-looking partners”, the programme aimed to launch collaborative initiatives on next-generation issues such as digital trade, emerging technologies and climate action.

Since the launch of the programme, some of these bilateral initiatives have seen significant progress. The UK-Singapore Free Trade Agreement (FTA) entered into force in February 2021, followed by the UK-Singapore Digital Economy Agreement (DEA) in June 2022. In March, a memorandum of understanding on the UK-Singapore Green Economy Framework (GEF) was signed.

The latter two economic partnerships are major milestones for the UK. Whereas the UK-Singapore DEA was the first signed by any European nation, Singapore’s DEA with Australia entered into force in December 2020, followed shortly by its DEA with Chile and New Zealand in January 2021.

See also: ICAEW economic report: Singapore’s trade-weighted economy will likely remain subdued

The UK-Singapore GEF is also a first of its kind for the UK, combining elements of climate, economic and trade policy to enable both countries to achieve their national decarbonisation targets. Singapore had already signed a similar Green Economy Agreement with Australia in October 2022.

Same priorities for both countries

Kara Owen, who has served as British High Commissioner to Singapore since June 2019, has seen four separate tenants of 10 Downing Street in her current appointment. Yet, her role, as mistress of Eden Hall, to oversee innovative areas of economic collaboration has remained unchanged. “It’s one of the best positions in the UK diplomatic network, and supporting business is a major factor in what I do,” she tells The Edge Singapore in an interview.

See also: UK inflation slows to 2% goal for first time in three years

According to Owen, there are an “astonishing” 5,700 UK companies based in Singapore, and many are using the country as a base for their operations in Southeast Asia. “They’re interested in Singapore for Singapore, but they’re also interested in using Singapore as a base to expand into the region.”

She explains: “We try to make sure that we have the best possible kind of legal framework for our companies to trade and set up in each of those countries and ensure that we’ve got the highest amount of regulatory and standards alignment, so that the companies are not dealing with [policy] that is very different to and difficult for their home market.”

Owen adds that her team also provides support for business-to-business matching, as well as with innovation and research for companies that are looking to develop suitable products for international markets. “There’s a whole suite of end-to-end support we can offer, drawing not only on our business and trade team but also all of our policy experts that we’ve got across the board in various areas,” she says.

She notes that while the UK government conducts “a level of business” wherever its missions or embassies are located, the “dynamism” of the market in Singapore and the strong interest of UK companies means that her time is spent heavily on promoting business ties between two nations. “We have to do everything guided by business, because at the end of the day, one of our top priorities is jobs and growth for the UK, and that priority is very much the same for Singapore,” she shares.

According to Owen, the substantial “direct contact” between the various government departments within the two systems goes beyond the bilateral relationship and extends to policy decisions at international level. “For rules and regulations that govern what happens internationally, the UK and Singapore can work together to put in place or to seek to achieve the kind of frameworks that might suit our economies the most,” she says.

‘No monopoly’ on good ideas

The DEA, which entered into force just over a year ago, has become “totemic” of the Singapore-UK trade relationship as it is the “highest quality, most ambitious digital partnership in existence”. “It characterises the trade policy and business relationship we have with Singapore,” says Owen.

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She believes the DEA has captured the attention of the private sector in both Singapore and the UK because of the benefits it brings to digital trading and services, and it also makes the trading of goods more efficient, effective and sustainable.

An area that could benefit digital companies is the DEA’s commitment not to require the localisation of data in any country for source code protection. “We’re already starting to see companies that are taking advantage of the DEA’s provisions because they have more confidence in areas like the duty-free movement of data,” says Owen.

Building on the success of the DEA, the GEF between Singapore and the UK is another example of the forward-looking partnership between the two countries.

Aside from the aim of achieving national decarbonisation targets, the GEF combines elements of climate, economic and trade policy to enhance energy security and promote green growth through new investment, job creation and export opportunities. Owen believes the framework will help both countries contribute to the development of a vibrant green economy private sector ecosystem with a global impact. Already, there have been around half a million new jobs created around the green economy in the UK, with Singapore the provider of some.

Sembcorp Industries’ wholly-owned subsidiary Sembcorp Energy UK, for instance, operates an energy storage system (ESS) in Teesside in Northeast England, where it is also exploring carbon capture and storage (CCS) and hydrogen-based energy. Owen adds that the UK is looking to build a carbon-zero power generation facility in the area and that Sembcorp will be a “major player” in that effort.

She points out that Sembcorp’s experience from its operations in the UK enabled the company to be “really quick off the blocks” when the Singapore government decided to develop a battery storage facility on Jurong Island. Commissioned in just six months, the Sembcorp ESS became the fastest in the world of its size to be deployed.

In policy terms, Owen says that the partnership between the two countries means that they can also collaborate on enabling existing international regulations around cross-border carbon movement. “In action, this framework will leverage the UK and Singapore’s strengths in areas like low-carbon technology, shipping and finance to deliver long-term sustainable policy, regulation and technical solutions and projects between our private sector and academic communities.

“No one country is going to have a monopoly on good ideas or innovation. We’re going to have to all work together on that,” she adds.

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