How Taiwan Became Singapore’s Largest Trading Partner
Economic ties are increasingly important, but Singapore cannot, and will not, become a defender of Taiwan's international status.
In 2025, Taiwan surpassed China to become Singapore's largest trading partner, with bilateral trade valued at around S$170.3 billion. This marked a significant shift from Taiwan's previous fourth place ranking. Singapore's Ministry of Trade and Industry reported that bilateral trade surpassed both Singapore's trade with China (S$162.9 billion) and Malaysia (S$145.0 billion).
The rise in trade between Taiwan and Singapore is driven by the booming AI industry, with Taiwan accounting for over 60% of global foundry revenue and more than 90% of leading-edge chip manufacturing. Meanwhile, Singapore has developed a robust AI ecosystem, including public research, service adoption, and commercial integration.
The trade relationship is mutually beneficial, with Singapore's non-oil domestic exports to Taiwan growing by 37.4% in 2025, the strongest performance among its major trading partners. Singapore's Prime Minister Lawrence Wong has established a National AI Council and unveiled a governance framework for agentic AI, solidifying its position as a standards-setter in AI.
Taiwan, on the other hand, has implemented a Ten AI Initiatives Promotion Plan, focusing on silicon photonics, quantum technology, and AI robotics. The foundation for this rapid trade growth was laid years ago through the Agreement between Singapore and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu on Economic Partnership (ASTEP).
Signed in 2013, this agreement eliminated tariffs on all Taiwanese imports and phased out duties on Singaporean goods, streamlining customs and investment protection. Additionally, Taiwan's New Southbound Strategy leveraged Singapore as a regional platform for Taiwanese investment and technology, expanding into ASEAN and South Asia markets.
Financial flows between Taiwan and Singapore have also increased, with Taiwan's economy growing by 8.7% in 2025 and its stock market capitalization reaching US$4.4 trillion. A significant portion of Taiwan's high-net-worth individuals now hold assets in Singapore, driven by Singapore's stable political environment, low tax rate, and mature financial systems.
Together, these factors have created a highly complementary and closely linked cooperative network in Asia's AI industry chain.
Written by urgent.news from The Diplomat's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
