Singapore, as a global business hub and international logistics nexus, has been actively seizing opportunities in the world's digital economy development in recent years. It has taken the initiative to participate in the construction of the global digital trade system, successively signing multiple digital trade economic agreements with various countries and regions. These efforts aim to reduce digital trade barriers and promote the development of global digital trade, thereby enhancing Singapore's competitiveness in the field of digital trade.

Expansion of Digital Trade Scale

On July 25th, Singapore and the European Union completed negotiations related to the Digital Trade Agreement (DTA) and will officially sign it after their respective internal procedures are completed. The DTA further refines the content related to the principles of digital trade. The successful conclusion of this negotiation marks another significant step for Singapore in actively promoting the development of global digital trade and the growth of the digital economy. This follows the entry into force of the EU-Japan Agreement on Cross-Border Data Flows on July 1st, representing another move by the EU in international cooperation on the digital economy. The signing of the DTA also reflects the EU's special attention to the economically vibrant Asia-Pacific region.

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To date, Singapore has signed digital economy agreements or accords with New Zealand, Chile, the United Kingdom, South Korea, Australia, and has completed digital trade agreement negotiations with the European Union, pending approval and implementation by each party. It is also actively discussing strengthening digital economy cooperation with countries such as China, India, and Canada. Concurrently, Singapore is committed to expanding the Digital Economy Partnership Agreement (DEPA) circle and enhancing the scale and quality of digital trade.

In terms of policy planning, Singapore actively promotes and constructs global digital trade rules, fulfilling its responsibilities as a co-initiator of the World Trade Organization's (WTO) Joint Statement Initiative on E-commerce, participating in the formulation and expansion of global digital trade rules. At the same time, Singapore introduces its own digital economy framework action plan to help various industries accelerate digital transformation, support small and medium-sized enterprises (SMEs) in enhancing technology application, and expand across borders.

Singapore also actively participates in the International Chamber of Commerce's digital standardization initiative, promoting the unification of global digital standards, reducing regulatory fragmentation, and fostering interoperability in cross-border digital economies. By signing digital economy agreements with other countries or organizations, Singapore strengthens innovation and regulatory construction while increasing consensus and inclusiveness, ensuring the free flow of cross-border data and providing businesses with greater flexibility.

The Singapore Digital Economy Report 2023, published by the Infocomm Media Development Authority (IMDA), shows that digital trade accounted for 17.3% of its Gross Domestic Product (GDP) in 2022, a significant increase from 13% in 2017. The value contribution increased from 58 billion Singapore dollars to 106 billion Singapore dollars within five years. Among this, the Information and Communication (I&C) sector contributed 33 billion Singapore dollars, while other industries contributed 73 billion Singapore dollars through extensive digitalization.

Digital trade has become an important engine for driving global trade growth. In 2023, the total digital trade scale of the top 10 countries globally accounted for 46.85% of the global digital trade scale. According to the United Nations Conference on Trade and Development, global trade volume may reach a high level of 32 trillion US dollars in 2024. Digital trade will play an increasingly important role in promoting global trade development, bridging trade gaps, and its contribution to global trade will continue to increase.

Data released by the trade research institution, Dingtao Industrial Research Institute, shows that the global digital trade scale grew from 4.99 trillion US dollars in 2020 to 6.67 trillion US dollars in 2023, an increase of 33.67% over three years. The proportion of digital trade in the total global export of goods and services reached 21.3%, with an annual compound growth rate (CAGR) of 7.52%, exceeding the growth rate of goods exports (5.6%) and services exports (5.57%) by more than 40%.

Data from the Dingtao Industrial Research Institute shows that in 2023, Singapore ranked eighth among the top 10 countries in global digital trade volume.Challenges in Sustained Growth

Singapore is actively shaping itself into a "digital hub" for the global economy, promoting rapid growth in global digital trade. However, like many other countries, it faces common challenges that could hinder the comprehensive popularization and sustained growth of digital trade worldwide:

The digital divide is one of the main issues. Despite the rapid spread of digital technology, the infrastructure gap between developed and developing countries remains significant, especially in Africa and the least developed countries, where internet access is difficult and costly. This exacerbates global economic imbalances, affects these countries' participation in global digital trade, potentially drags down global economic growth, and impacts the progress of digital trade.

The complexity of cross-border data flows increases the difficulty of global digital trade. Different countries have varying policies on data privacy and localization. For example, the European Union's General Data Protection Regulation (GDPR) policy increases legal risks and operational costs of cross-border data transmission, reduces the efficiency of data flow, and hinders the growth of global digital trade.

The imperfection of digital identity and trust systems is also a hindrance. The lack of a unified digital identity authentication system and trust mechanisms poses security and trust issues for cross-border e-commerce, especially in the financial and technology service industries. This limits the development of global e-commerce and necessitates the establishment of a credible global digital identity authentication system.

Small and medium-sized enterprises (SMEs) face bottlenecks in technology and funding, making it difficult for them to use digital technology for global expansion. Cybersecurity and data privacy risks are also becoming increasingly severe, with differences in privacy protection standards in cross-border data flows increasing the risk of data breaches.

The digital skills gap limits the ability of the workforce in many countries to participate in the global digital economy, especially in developing countries where the workforce lacks the necessary digital skills, affecting their competitiveness in the global market.

The widespread application and rapid development of digital trade have become a key engine for driving global trade growth. While helping to reduce global trade barriers, emphasizing international cooperation to promote balanced development is an urgent priority.