China-Taiwan economic ties could hurt ASEAN: S'pore

China-Taiwan economic ties could hurt ASEAN: S'pore

SINGAPORE (DPA): The prospect of Taiwan integrating
economically with China would have serious implications for
Singapore's business activities and the "weaker and fragmented
ASEAN," trade officials warned in a report on Saturday.

The Ministry of Trade and Industry (MITI) examined the
outcomes of different scenarios in the turbulent China-Taiwan
relationship.

The 18-page report said it seemed beyond doubt that China and
Taiwan would head towards full economic integration in time, with
"serious implications" not just for the city-state but the 10-
member Association of Southeast Asian Nations (ASEAN).

Singapore's exports, particularly in electronics, might lose
their competitiveness in the global market due to Taiwanese firms
leveraging on the mainland's low-cost base, MITI said.

But the report also said that a prosperous China in an
environment of global trade would mean a bigger market, more
investment opportunities and a bigger trade partner for all.

Singapore "needs to transit from an economy which is heavily
dependent on electronics manufacturing to an economy which
emphasizes equally on services industries as well," MITI
stressed.

Maintaining current relations across the Taiwan Strait however
was deemed as beneficial for Singapore, because it would enable
the city-state to continue "to play its current role of a reverse
gateway for investments to China, by providing the vital link
between Taiwan and the mainland," MITI said.

In this case, investments brought in by Taiwanese companies
would have spillover effects in Singapore's banking and
manufacturing sectors, it added.

MITI noted Singapore and Taiwan share similarities in terms of
their exports to China, with machinery making up 42 per cent of
Taiwan's and 58 per cent of Singapore's exports.

As Taiwan shifts more low-end manufacturing to China, MITI
said it would be in "direct competition" with Singapore, since it
would move up to higher value-added activities such as services
and intellectual property.

The city-state may also lose out when China builds up its
technical capabilities and infrastructure, especially if
multinational companies relocate there in rising numbers.

The emergence of a dynamic triangle comprising China, Taiwan
and Hong Kong would have serious implications for Singapore and
ASEAN, as Taiwan's production and foreign investments in
Southeast Asia have tilted toward China, the report added.