Brexit not expected to have direct impact on Singapore: Observers

A view of high-rise buildings in Singapore's financial district. (Photo: AFP/Roslan Rahman)

However, they noted that as economists trim their global growth and trade forecasts, Singapore - as a transshipment hub - is likely to see lower trade volumes.

Singapore's exports to the UK amounted to S$1.6 billion in the first five months of this year, which puts UK as the Republic’s 22nd largest trading partner.

Observers said trade relations with the EU could change, as the region loses a strong pro-free trade voice.

Said Mr Simon Baptist, chief economist at the Economist Intelligence Unit: "In the global context, most countries in the EU are relatively pro-free trade, but of course there's a distribution within the EU and the UK are of the camp that was more pro-free trade and more pro-free market.

"The UK was their largest economy and one of the strongest proponents. There are other sort of free trading economies - such as Denmark, the Netherlands, some of the Eastern European countries like Slovakia - but of course they're much smaller than the UK.

“If the UK ... exits the EU, it definitely will be the case that the pro-trade group will be a lot smaller and a lot weaker, and it will increase the importance of a country like France, which is less pro-free trade. And that's a problem for Germany, which has instincts on both sides and has been able to use the UK and France as a balancing point to maybe get the UK to do some of its dirty work and some of its hard negotiations.

“Now it will lose that ally. So the EU would move to being a bit less pro-free trade without the UK as a member."

RENEGOTIATING FREE TRADE AGREEMENTS

Going forward, the Singapore Business Federation (SBF) said the EU-Singapore Free Trade Agreement, which was agreed upon in 2012, could see further delays in ratification.

As for bilateral arrangements with UK, the Ministry of Trade and Industry said in a recent statement that new trade agreements will have to be negotiated. Still, observers are optimistic that a better deal can be worked out.

"If we do have to renegotiate our free trade arrangement with the UK, we have a very good template to start, and I think we can even do better,” said Mr Ho Meng Kit, CEO of SBF. “I'm certain we can do better. Am I apprehensive that the UK itself would turn inward and isolationist? I don't think so. And therefore, we can get a good deal with the UK, maybe even a better deal than we can get with the EU."

As a whole, the bloc of 28 economies is now one of Singapore's top three trading partners. Trade with the region amounted to S$90.5 billion for the whole of 2015, more than 10 per cent of Singapore’s total world trade numbers.

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