Debated in Parliament on 7 Nov 2022.
Mr Liang Eng Hwa asked the Minister for Trade and Industry (a) how much of external demand accounts for Singapore’s current GDP; (b) whether there is significant concentration in the demand markets; and (c) how is Singapore positioning itself for wider diversification given current geopolitical and other economic risks.
External demand is estimated to account for around 63% of Singapore’s GDP. Our external demand markets are diversified. China, Southeast Asia, the US and Eurozone account for 9.7%, 9.4%, 8.3% and 6.9% of our GDP, respectively.
As a small and open economy with a limited domestic market, Singapore remains heavily dependent on external demand for growth. Amidst ongoing geopolitical and economic risks, Singapore must remain a stable, trusted and well-connected location for companies to do business. We have embarked on a few key initiatives under our Trade 2030 strategy to do so.
First, we are strengthening economic connectivity and integration. This includes the establishment of regional trade agreements, such as the Regional Comprehensive Economic Partnership (RCEP), the Comprehensive and Progressive Partnership for Trans-Pacific Partnership (CPTPP) and new trade agreements with the Pacific Alliance and Mercosur countries in Latin America. We are also entering into new Digital Economy Agreements and Green Economy Agreements to help our businesses and workers harness new opportunities in these growth areas.
Enterprise Singapore has also been helping Singapore firms venture to markets further afield, to diversify beyond the traditional markets in our region. For example, in the first half of this year, it assisted more than 80 Singapore companies with projects in Africa, India and Latin America. In these markets, there are growing opportunities for innovation and technology, as well as in the Manufacturing, Built Environment and Sustainability sectors.
Second, we will accelerate efforts to build a strong ecosystem of trading companies and activities, by continuing to attract leading Global Traders and build a strong core of Singapore Global Traders. We will also build a skilled local workforce through initiatives like the Jobs Transformation Map and work with Institutes of Higher Learning to develop more talent in the trading sector.
Third, we want to capture more re-exports and transshipment flows, to embed Singapore more deeply into global supply chains. This will strengthen our enterprises’ regional distribution capabilities and enhance their competitiveness.
Taken together, these initiatives will help to diversify our sources of growth, widen the types of trading activities we engage in and expand our trade with new and emerging parts of the world.
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