The Japanese and Singaporean governments are moving to revise the economic partnership agreement they formed in 2002, with Prime Minister Shinzo Abe and his counterpart, Lee Hsien Loong, expected to affirm the plan on Saturday.
Japan will ask that Singapore ease regulations on financial and service industries, to help Japanese institutions expand in Asia. Singapore, on the other hand, will request that Japan eliminate import tariffs on more goods, according to sources close to the matter. At present, 84.4% of items shipped to Japan are exempt.
Under the current rules, when a Japanese bank launches operations in Singapore, it can set up only limited numbers of branches and ATMs. To obtain 5% or more voting rights in a local bank, a Japanese financial services provider has to get permission first from the Singaporean government.
Many Japanese banks consider Singapore a key market. If they can develop business there under eased rules, it would also help Japanese manufacturers expand in Asia.
Singapore was the first country with which Japan formed an economic partnership agreement. It stipulates that the two countries are to discuss revisions every five years.
The upcoming summit meeting, to take place during Abe’s visit to Singapore, will be the occasion to make official the revision proposals that working-level officials have been discussing since last fall. The timing of the revision will be determined based on the development of talks on Trans-Pacific Partnership free trade pact, since both countries are part of those broader negotiations.