The Pacific Alliance-Singapore agreement reshapes trade dynamics, driving timely investment opportunities
Since its activation on 3 May 2025, the Pacific Alliance-Singapore Free Trade Agreement (PASFTA) has significantly transformed trade relations between Singapore, Chile, and Peru, marking Singapore’s 28th comprehensive trade deal. ELD Asset Management highlights that, as geopolitical uncertainty increasingly defines global commerce, this timely agreement is strategically positioned to diversify economic exposure and create compelling opportunities for investors and businesses.
Initially signed in January 2022, PASFTA faced extended delays largely due to prolonged internal ratification processes and logistical complexities in partner nations, compounded by shifting geopolitical landscapes since 2022. However, with recent approvals from Peru and Chile, momentum is now firmly behind implementation.
The Pacific Alliance, comprising Chile, Colombia, Mexico, and Peru, collectively represents the world’s ninth-largest economic bloc, with a GDP exceeding USD 2.7 trillion, approximately 40 per cent of Latin America’s total economic output. Bilateral trade between Singapore and these nations reached USD 13.1 billion over the preceding 12-month period, underscoring the immense economic potential the agreement unlocks.
Jason Harrison, Senior Vice President at ELD Asset Management, highlights the significance of PASFTA, noting that the agreement “comes at precisely the right moment to strengthen market resilience amid ongoing international economic volatility. The delays, while challenging, allowed for a more robust framework that directly addresses contemporary trading challenges.”
PASFTA notably eliminates tariffs on most traded goods, immediately enhancing competitiveness for Singaporean enterprises across strategic sectors including technology, digital economy, food trade, infrastructure, and logistics. Companies based in Singapore can substantially reduce operational expenses, benefiting from eased regulatory demands such as simplified customs procedures and self-certification for product origin, which greatly expedites market entry.
“The innovative simplification of rules of origin under PASFTA significantly reduces compliance costs,” Harrison observes, “enabling businesses to direct more resources towards growth and innovation rather than administrative processes.”
Enhanced maritime logistics provisions, a groundbreaking element of the PASFTA agreement, promise to streamline international supply chains, further reducing operational costs and enhancing connectivity between these economically vibrant regions.
Approximately 100 Singaporean companies already active in the Pacific Alliance markets are expected to greatly expand operations under these improved conditions. The anticipated entry of Colombia and Mexico into the agreement, pending their respective ratifications, will further amplify the trade agreement’s strategic importance.
Harrison points out that this strategic expansion is crucial: “Portfolio diversification into these emerging markets now becomes an essential aspect of managing capital amid global trade uncertainties.”
As Singapore is set to become the first Associate State of the Pacific Alliance, this expanded integration will deliver additional long-term benefits, particularly once Colombia’s sizeable economy becomes fully engaged.
The PASFTA agreement thus stands as a landmark achievement in contemporary trade policy, reinforcing Singapore’s reputation for economic agility and positioning businesses and investors to capitalise effectively on the Pacific region’s growth dynamics.
Established in 2017, ELD Asset Management Pte. Ltd. (UEN: 201725839Z) provides strategic investment counsel rooted in rigorous market analysis and global economic expertise. The firm consistently tracks international market shifts, enabling clients to anticipate emerging opportunities and align their investment strategies proactively. Further insights and detailed market commentary are available on the company's website at: https://www.eldglobal.com/news/ .
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Mr Luke Tan
Email: luke.tan@eldglobal.com
Website: https://www.eldglobal.com
