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.