IE Singapore helping firms benefit from FTAs

MANUFACTURERS face a seemingly convoluted set of procedures in order to qualify for benefits under the various free trade agreements (FTAs) of which Singapore is a part. But trade agency International Enterprise (IE) Singapore is keen to help local firms navigate their way through all these to enjoy the benefits of reduced trade barriers.

Take, for instance, the Asean-China free trade agreement (ACFTA) – in the pipeline since 2002 and which kicked off on Jan 1. In terms of reduced trade barriers, this FTA is worth about as much as the formation of the European Union or the North American Free Trade Agreement.

Local companies have much to gain by taking advantage of these FTAs to boost their export competitiveness.

Trade between China and the 10 Asean countries has soared in recent years, to US$192.5 billion (S$270 billion) in 2008, from US$59.6 billion in 2003. Under the new accord, China and the six founding Asean countries – Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand – are to remove tariffs on 90 per cent of imported goods, covering 7,000 product categories. The other four Asean members – Vietnam, Laos, Cambodia and Myanmar – will follow suit in 2015.

Hui Yee Coffee Manufacturer general manager Melvin Seah said that with 40 per cent of his exports going to China, the FTA would be very helpful and was a good bargaining chip in striking partnerships with mainland business partners.

Although the China-Singapore FTA took effect on Jan 1 last year, he had not acted as he was unsure of the proper procedures to follow, even after consulting government websites.

To qualify for tariff concessions under the ACFTA, local companies need to apply for a preferential certificate of origin, which specifies that the content of a product is at least 40 per cent from ACFTA countries.

Kleen-Pak managing director Tan Hock Kiam said some Chinese customers could not be bothered with the hassle, given the small volume traded.

Although his firm, which makes wipe products, exports only about 10 per cent of its output to China, Mr Tan hopes he will be able to take advantage of the FTAs in the next two years.

‘We hope to be able to offer more interesting products in the future, and hopefully Chinese customers will then be more interested in benefiting from such FTAs.’

Mr Wong Toon Joon, IE Singapore’s deputy director of trade services and policy group, said the application process was not overly onerous as the agency aims to provide a smooth trading process. Companies keen to find out more can attend seminars, customised consultation sessions or FTA certificate programmes, he added.

‘Our customised consultations, for instance, provide information on FTA fundamentals and the application process involved. We also advise companies on how to analyse their potential tariff savings, depending on the products they export and the FTA markets they export to,’ he said.

The Singapore Chinese Chamber of Commerce and Industry said it was still monitoring reactions to the ACFTA and was planning events to explain the agreement.

Singapore International Chamber of Commerce chief executive Phillip Overmyer said the onus was on business owners to understand their products and the laws that applied to them. ‘If necessary, our members can also approach us and we can refer them to the proper channels and even be the middleman if various parties have trouble agreeing on certain terms,’ he said. — The Straits Times