(Yicai Global) Nov. 13 -- China and Singapore have revamped their free trade agreement during Chinese Premier Li Keqiang's official visit to the island state. With the new deal, the countries will lower barriers in sectors including logistics, environmental protection, construction and legal services.
Premier Li and Singapore's Prime Minister Lee Hsien Loong penned the agreement yesterday, along with 10 memorandums of understanding, the Chinese Ministry of Commerce said on its website. Li's visit fell on the anniversary of Chinese leader Deng Xiaoping's trip to Singapore 40 years ago, which is the time span of China's economic reform. Li will attend Asean-related events tomorrow and leave the country on Nov. 16.
China has been Singapore's largest trading partner for many years and last December, Singapore became the biggest destination for Chinese foreign investment. The total bilateral trade reached USD137.1 billion last year.
What Chinese firms may primarily gain from the new FTA is a greater access to sectors such as logistics, and thereby e-commerce, and Singapore's environmental sector. Chinese firms may now deliver packages, and provide waste management services, as well as nature protection on the island.
The perks may also involve an easier access to cash for Chinese tourists. One additional Chinese bank may start offering a full range of services in Singapore, which includes planting automatic tellers. In 2012, the country provided two Chinese lenders, namely the Bank of China, as well as the Industrial and Commercial Bank of China, with such permissions.
For Singaporean companies -- in fact, mostly for those operating from a free trade zone in China -- the FTA primarily means that they may take up larger stakes in Chinese projects.
Singapore's shipping firms can form wholly-owned units in the FTZs of major port cities of Shanghai, Guangdong, Tianjin and Fujian.
Singapore construction companies that are set up in certain economic zones, such as the China-Singapore Suzhou Industrial Park, can team up with local partners for projects in Shanghai, Suzhou, Tianjin and Chongqing.
China will allow Singapore law firms that have offices in the Shanghai Free Trade Zone to partner with local law practitioners to offer services for Chinese clients.
Singaporean petrochemical exports, which are among its top exports to China, will also enjoy preferential treatment.
The FTA included the Chinese Belt and Road initiative for the first time. The countries promised to develop connectivity, financial cooperation, and policy support along with the cross-border investment plan that President Xi Jinping initiated in 2013.
Editor: Emmi Laine