Introduction

The city-state of Singapore is among the world’s smallest countries. Starting from Third World conditions at separation from Malaysia in 1965, it has transformed itself into a modern state with one of the world’s highest levels of GDP per person.

Singapore’s population of just over 5 million is comparable to that of Sydney, but the country covers only 700 square kilometres giving it a very high population density (over 7,000 people per square kilometre). Singapore’s success in urban and social planning to achieve harmony and a high quality of life is admired and studied in Asia and beyond.

Singapore’s small population, its dependence on external markets and suppliers and its strategic location at the heart of the Malacca Strait trading route, means it is a strong supporter of economic openness, free trade and free markets. As a major regional trade and economic hub, Singapore has long been Australia’s largest bilateral trading partner within the Association of Southeast Asian Nations (ASEAN), and is likely to remain so for some time to come.

Singapore is a founding member of ASEAN and the Asia–Pacific Economic Cooperation (APEC) forum, and active ASEAN membership is central to its foreign policy settings. It has supported Australia’s closer regional integration, including Australia’s involvement as a founding member of the East Asia Summit, the Asia–Europe Meeting and the ASEAN Defence Ministers’ Meeting–Plus arrangements.

Government, business and people-to-people links

With excellent infrastructure and a business-friendly environment, many multinational companies now base all or part of their Asian and global operations in Singapore. Over the past decade, many Australian companies have established a presence in Singapore, including all our major banks, which base their Southeast Asian operations there. Large Australian mining companies, and a range of other Australian business interests, from engineering to legal services, also use Singapore as a regional base.

Historically, Singapore and Australia have had strong people-to-people links through our shared Commonwealth membership and ties forged during World War II. Educational exchanges built on that foundation, bringing some 1,000 young Singaporeans to study in Australia under the Colombo Plan from the 1950s to the 1980s. Many of those students, who typically took degrees at Australian universities, have gone on to play key roles in business and government. Over 6000 Australians listed Singaporean ancestry on the 2011 census.

Today, educational exchanges are prominent in the bilateral relationship. In 2011, 9,391 Singaporeans were enrolled at Australian institutions, and another 20,000 were studying Australian programs in Singapore, through either offshore campuses or Australian partnerships with local providers. By 2012, an estimated 150,000 Singaporeans were alumni of Australian educational institutions. The bilateral relationship is also characterised by high tourism and business exchanges. In 2011, around 318,500 Singaporeans visited Australia, while nearly 1 million Australians visited Singapore. In 2012, more than 25,000 Australian citizens live in Singapore, and this expatriate population is forecast to grow. Many work in Australian or multinational companies.

Australia and Singapore have developed a strong bilateral defence and security relationship, including high-level policy dialogues, combined exercises, personnel exchanges and training. A major feature of the relationship is access for the Singapore Armed Forces to Australian training areas and facilities. The Forces conduct annual unilateral exercises at the Shoalwater Bay Training Area in Queensland, and Singapore maintains aircraft training detachments at Oakey (Queensland), Tamworth (New South Wales) and RAAF Base Pearce (Western Australia).

Australia and Singapore are both members of the Five Power Defence Arrangements agreed by Australia, Singapore, Malaysia, New Zealand and the United Kingdom in 1971. The arrangements are a valuable component of the regional security architecture and the only one with an operational dimension, including combined and joint exercises. Although originally focused on the defence of Malaysia and Singapore against conventional threats, they now encompass non-conventional security issues such as humanitarian assistance and disaster relief.

Australia’s bilateral trade and investment links with Singapore are strong and growing. Major services exports include transport, business and professional services, particularly in education and tourism. Singapore’s investment in Australia is substantial ($48.7 billion in 2011), placing it fourth overall as a source of foreign investment in Australia in 2011. Singaporean investment has traditionally been concentrated in real estate, but has become more diversified in recent years.

Singapore and Australia share an interest in deepening regional economic integration. Being heavily trade dependent and a highly globalised economy, Singapore is likeminded with Australia on the importance of advancing free trade within international forums, particularly the World Trade Organization, as well as through regional forums such as ASEAN and APEC.

Both Singapore and Australia approach bilateral and regional trade pacts as building blocks for wider multilateral liberalisation, which reinforces our overall goals for the WTO. The Singapore–Australia Free Trade Agreement, which entered into force in 2003, was the first free trade agreement Australia had concluded in the 20 years since the trade pact with New Zealand came into effect. Australia and Singapore are also parties to the ASEAN– Australia–New Zealand Free Trade Agreement. There is potential to deepen economic integration with Singapore further through negotiations on the Trans-Pacific Partnership Agreement and other trade pacts that are being developed in consultation with ASEAN and the East Asia Summit.

Towards 2025

Australia’s trade and investment relations with Singapore will strengthen further as Singapore develops its services sector and as regional economic integration advances. Singapore has positioned itself as a hub for global firms coming to Asia and Asian firms wanting to go global. It is also focused on maintaining its reputation as an important base for high-value manufacturing, and its financial sector and legal services sectors are growth areas.

Singapore has set itself a growth target of 3–5 per cent per year over the period 2010– 2020, and intends to switch from a labour-intensive growth model to one driven by innovation and productivity gains. This shift will provide significant commercial opportunities for Australian companies, as well as a wider platform for whole-of-government policy exchange at the federal and state levels. Australia’s record in productivity and innovation is widely recognised in Singapore as a model worth following, and Australian expertise in sectors as diverse as construction and hospitality is being studied closely. This will continue to open opportunities for further professional exchanges.

Increased investment in research and development (R&D) is central to Singapore’s aim of transforming into a knowledge-driven economy. Its Government’s commitment of S$16.1 billion on R&D over the period 2010–2015 was a 20 per cent increase on 2006–2010 levels. There is scope to broaden and deepen academic and institutional linkages with Singapore, particularly in areas such as clean energy and areas where we compete commercially, such as biotechnology. Singapore and Australia also share a focus on emerging cyber security issues and engagement in this area is expected to increase.

There are many complementarities between the two economies. Singapore is a strategic location for the marketing and trading of Australia’s mineral resources and commodities. As the Asian century unfolds, Australian investors and companies will be keen to capitalise on Singapore’s strategic position, stable governance, thriving financial sector and strong business links with China, India, Indonesia and other fast-growing regional economies. Already a large investor in Australia, Singapore will continue to invest in Australia, capitalising on our sophisticated infrastructure, skilled workforce and strong economic performance.

Singapore’s increasing attractiveness as a destination for Asian tourists, and its role as an international transport hub into and out of Australia, will continue to generate opportunities for Australia’s tourism sector.

Australia’s strong people-to-people links with Singapore have the potential to grow, particularly through student exchanges. Studying in Australia has long been one of the options available to Singapore students, although competition from other destinations and a strong Australian dollar will continue to challenge Australian growth.Singapore’s rapidly developing higher education sector, which includes a growing number of Australian and other academics specialising in Asia, will continue to attract more Australian students. Singapore has a thriving think-tank community and several highly ranked universities. More student and academic exchanges and stronger links with Australian universities specialising in Asia will provide a sure avenue for extending Australia’s Asia capabilities.

At the government-to-government level, Singapore will remain a valued partner for Australia. Australia and Singapore have similar outlooks: we have similar legal and government systems, we both strive for a stable strategic environment, and we both place a high value on increasing regional economic integration. This shared strategic space provides potential for reinforcing the already strong complementarities between our economies, and for continuing our cooperation bilaterally and across the regional and multilateral spectrum.