Companies have cheered the successful completion of talks for a free trade deal between Singapore and the European Union on Sunday, although some bosses said they were still assessing how it might affect their business.
Exporters will be particularly pleased as it gives many firms tariff-free access to the huge European market, although importers here will see fewer gains as only a handful of items now carry duties.
Singapore's Trade and Industry Ministry said on Sunday that electronics, pharmaceuticals, chemicals and processed food product exporters will benefit.
The trade deal will also improve market access for services such as financial, professional, legal, telecommunications and postal, as well as intellectual property protection, competition policy, technical barriers to trade, government procurement and sustainable development, the ministry said.
Mr Stefano Poli, president of the European Chamber of Commerce (Singapore), said in a statement yesterday that the chamber believed the free trade deal "will act as a catalyst to stimulate further trade and investment between Singapore and Europe".
Mr Sam Chee Wah, general manager of precision engineering firm Feinmetall Singapore, said the deal would help reduce business uncertainty and improve visibility for his firm, which serves the semiconductor industry.
"The market will be more positive... It will be easier to do business with companies in the EU," he said.
Around 90 to 95 per cent of Feinmetall Singapore's suppliers are in the euro zone, and about 80 per cent of its customers are EU firms.
Bosses said they hoped eliminating tariffs on some EU imports would help business.
Mr Jonathan Phoon, executive director of wet towel maker Freshening, which has EU customers, expects "very good benefits" from the trade deal, but has not yet looked into the details.
The deal also involves Singapore granting immediate duty-free access to all EU imports, the ministry said.
Singapore charges import duties on only six categories of items, including stout, porter, other sorts of beer and a medicated liquor called samsu.
Mr Michael Chin, general manager of Asia Pacific Breweries Singapore, which imports some EU beers, said the firm has not fully evaluated the new deal's impact.
While firms expect to benefit directly, analysts said consumers should not expect European cars or luxury goods to become cheaper overnight.
There are no Customs duties on cars and pricey items like designer shoes and handbags, according to the list of dutiable goods on the Singapore Customs website.
But cars are subject to excise duty and Additional Registration Fee.
"A Lamborghini will cost just as much, or more," said CIMB economist Song Seng Wun, who added that even if the price of a European car does drop due to the free trade deal, a bigger factor would be the exchange rate.
The Singdollar was around $1.61 against the euro yesterday, having weakened from about $1.575 a week or so ago.
But any tariff reduction and price decline due to a stronger Singdollar would still be outweighed by domestic factors such as certificate of entitlement (COE) premiums, Mr Song said.
COE premiums have been rising and have hit record highs in some categories this month.
Any effects from the trade agreement will take time to flow through.
While the talks concluded on Sunday, the deal still has to be approved by the European Council and ratified by the European Parliament, said the ministry.
The EU-South Korea trade agreement, for example, was initialled on Oct 14, 2009, but did not come into force until July 1 last year, after approval from both parliaments.