What is the problem with the Singapore relationship?

Questions are being asked about the fate of what was supposed to be a major economic and strategic agreement with Singapore.

The Enhanced Partnership agreement would, in effect, have set up the kind of Closer Economic relationship with Singapore that we have with Australia with some specific strategic and political elements added to it.

Singapore has already signed an Enhanced Partnership agreement with Australia and there was a hope that once New Zealand signed, all three countries would form a triangular strategic and economic partnership.

This would be an important block not only in South East Asia but across East Asia generally.

Foreign Minister Winston Peters was in Singapore last week and a communique issued by the Singaporean Minister of defence – who he had talks with — did not mention the agreement despite the fact that the draft agreement included the provision for Singaporean F15s to be based at Ohakea Air Base.

POLITIK understands that officials had been expecting that the agreement would be signed by the end of this month.

Peters did not respond to requests for comment last night.

However, there is speculation in Wellington that the agreement has been held up because of a deterioration of relations between New Zealand and Singapore caused by the Government’s proposed ban on overseas house buyers.

POLITIK has seen briefing notes on the proposed agreement prepared by Ministry of Foreign Affairs and Trade officials which say that the two countries’ goods and services exporters already enjoy high-quality market access through agreements like the Singapore-New Zealand Closer Economic Partnership and Trans-Pacific Strategic Economic Partnership (‘P4’ Agreement, which also involves Chile and Brunei). 

“Therefore the upgrade of the Singapore-New Zealand Closer Economic Partnership will be firstly strategic: as a model for other South East Asian economies and to lay the groundwork for future potential economic integration involving Australia,” the notes say.

“Secondly, it is an opportunity to secure improved commitments in non-traditional areas such as temporary entry for business people and regulatory cooperation (including on issues affecting New Zealand’s food exports). “

But it is apparent that Singapore has a particular interest in protecting and enhancing its investments in New Zealand.

Colliers says the country was the origin of 26% of the investment in the New Zealand hotel sector in 2015 — making it second behind Hong Kong.

MFAT’s officials are clearly conscious of this.

“Singapore will no doubt seek improved conditions for Singaporean investors in New Zealand,” the notes say.

And those will include Singaporeans wanting to buy houses here.

But there has been a standoff with Singapore since October last year over the Government’s proposed ban on foreign house buyers.

The existing Singapore – New Zealand “Closer Economic Partnership” agreement includes a Most Favoured Nation clause in its investment section which means that New Zealand cannot impose any restriction on Singapore which would be “no less favourable than that it accords in like situations to investors and investments from any other State or separate customs territory which is not party to this Agreement.”

That means that Singapore is entitled to the same exemption from the proposed legislation as Australia.

At first, it seemed simple.

In October Housing Minister Phil Twyford said discussions with Singapore about the ban were underway.

“Ultimately, if we were unable to reach an agreement with Singapore on that, Singapore could be exempted through the regulations in the same way as Australia will be,” he said.

But four months later those talks were still underway.

When Trade Minister David Parker launched the text of the Closer Progressive Trans Pacific Partnership (CPTPP) in February he said the talks were “still in flux”.

“The one prior agreement that we have which is complicated by our house buyer ban is the closer economic partnership that we have with Singapore,” he said.

‘They are a valued, long-standing and close partner of New Zealand.

“And we are trying to resolve those issues.”

Obviously, they haven’t been, and there is another potential problem.

One of the key proposals in the proposed new agreement was to base a squadron of F15 fighters at Ohakea for training.

New Zealand agreement to this now seems to be delayed.

In March, after meeting his counterpart in Singapore, Defence Minister, Ron Mark, said that New Zealand would continue to evaluate the proposal.

And when the Minister, Dr Ng Eng Hen met Peters last Sunday, the communique issued by the Singaporean Ministry of Defence simply said that both ministers had reaffirmed the close and long-standing bilateral relations between Singapore and New Zealand, “of which defence is an important pillar.”

The fact that the Enhance Partnership was not mentioned; suggests that the signing of the Partnership Agreement is unlikely to take place over the next five days and that there may be a major holdup because of the house buyer ban.