South Africa President Thabo Mbeki, en route to the Asia-Africa conference in Indonesia, agreed to start free-trade talks between Singapore and the Southern African Customs Union (SACU) this year, the statement said.

The union, a free-trade bloc comprising South Africa, Botswana, Lesotho, Namibia and Swaziland, will discuss the issue next week.

Singapore, which in 2003 became the first Southeast Asian nation to sign a free-trade agreement (FTA) with the United States, has led its neighbours in tearing down trade barriers.

It has sealed six free-trade pacts so far and is in talks with 14 other nations.

A deal with the union would be Singapore's first FTA in Africa.

Southeast Asia's wealthiest nation by per capita income, the island is fighting threats to its manufacturing base from low-cost competition in China and India.

"Singapore is not price competitive so it wants to use its openness as an attraction and forge trade linkages with the rest of the world," said Nizam Idris, an economist with IDEAglobal.com.

Northern neighbour Malaysia was Singapore's top trading partner in 2004, with S$88,3 billion worth of trade flowing between the two states.

The European Union and the United States ranked second and third.

Trade between Singapore and South Africa was worth US$1,4 billion (N$8,4 million) in 2004 mostly in the logistics, light manufacturing and services sectors.

Singapore has concluded free-trade agreements with New Zealand (2000), the European Free Trade Association (2002), Japan (2002), United States (2003), Australia (2003) and Jordan (2004).

It is in talks with the Association of Southeast Asian Nations (ASEAN) and China, Bahrain, Canada, Egypt, India, South Korea, Mexico, the Pacific Three, Panama, Peru, Sri Lanka, Kuwait, Qatar and the United Arab Emirates.

-Nampa-Reuters

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