Singapore and Australia first signed the Singapore-Australia Free Trade Agreement (SAFTA) in 2003 to strengthen trade and commerce ties between the two countries.
As Australia’s second oldest free trade agreement (FTA), after Australia’s first bilateral agreement signed with New Zealand in 1983, the FTA has undergone several rounds of amendments throughout the years – namely in 2006, 2007, 2011, 2017, and 2020. These amendments cleared some discrepancies in earlier agreements and reflected changes in legislation that promises fair treatment to businesses and investors from both countries.
How does the current Singapore-Australia FTA impact your business?
Service industries gain market access
The amended SAFTA benefits Australia's services industries, which make up more than 70% of the gross domestic product (GDP) and cover the education, travel, professional services, and financial service sectors. Australia’s finance and insurance industry, for example, is the fourth largest sector and generates 8.1% of the economy.
The two countries are also establishing mutual recognition arrangements (MRAs) under the SAFTA in order to recognise certain professional qualifications. A high priority for the MRAs will be given to the engineering and accounting industries. Companies providing financial services on a cross-border basis can soon include investment advice and portfolio management services and brokerage services for insurance.
Both Australia and Singapore boast sophisticated financial services sectors and Singapore is well-regarded as a financial hub in the Southeast Asian region.
The third SAFTA review delivers big wins for financial service providers by opening up access in both countries. These services include investment advice, portfolio management, and brokerage services for maritime, aviation, and transport-related risks insurance.
Australia’s services industry accounts for significant trade with other countries. Singapore currently ranks in fifth place for Australia's export destinations – behind China, US, India, and New Zealand. With the recent updates to the free trade agreement, Singapore is well positioned as a gateway to the growing Southeast Asia market for Australian businesses.
World-class education recognition
Education services, Australia’s largest export, has been recognised in the SAFTA’s third update. Singapore has recognised the Juris Doctor degrees of Australian universities listed under the SAFTA. The SAFTA update will also provide recognise universities offering postgraduate legal education – for instance, the University of Melbourne and University of Australia.
Australian law firms and universities can now access the legal sector in Singapore, providing a more level playing ground. Australian lawyers can practice Singapore law and work in international commerce arbitration – creating more job opportunities for Australians living in the island state.
Singapore will also be accepting applications from allied health degrees in physiotherapy, occupation therapy and speech therapy from several Australian universities, broadening the job market for Australia’s graduates.
Better investor protection
The SAFTA will continue to protect investors from both countries, including a minimum standard of treatment, the right to compensation for certain types of expropriation, and protection against discrimination.
According to the third review in 2016, Australia will offer more bidding opportunities to Singaporean companies, especially small and medium enterprises, to compete for government business as well as opportunities in Australia’s eight states and territories.
In addition, the SAFTA has modernised the investor-state dispute settlement to give Australian companies investing abroad the right to bring a claim against a host state for compensation in the case of breaches in investment obligations.
Win-win in government procurement
The latest update to SAFTA focused on government procurement practices (GPA).
Although Australia is not a party to the WTO Agreement on GPA, Singapore will reflect current procurement practices under GPA – ensuring better access to tender bids for government business with 47 Singapore ministries, agencies, and statutory authorities.
Australian companies will now be able to explore opportunities in road transport, construction, and engineering, on top of existing high-value contracts with the Singapore government. In addition, under SAFTA, Singapore is committed to providing opportunities for GPA through electronic means or e-procurement.
Australia has strong relations with Singapore – the island state is one of its top ten trading partners among larger economies such as China, Japan, the United States, and the United Kingdom. SAFTA further eases the landing for Australian businesses into Singapore and opens up regional opportunities beyond Singapore’s shores.