Singapore is a small nation covering only about 700 square kilometers, but it has five Free Trade Zones. It could almost be said that Singapore itself is a free trade zone. What lessons can Shanghai draw from Singapore?

Singapore's status as a trading hub dated back to its colonial days.

On January 1819, this man - Sir Thomas Stamford Raffles - who is also known as the founder of modern Singapore, landed here and established the island as a trading station.

Today's Singapore has a highly developed trade-oriented market economy and has been ranked as the most open in the world, least corrupt, most pro-business and one of the highest per-capita GDP among all the developed countries.

How to replicate Singapore's success in embracing free trade? DBS economist says that Singapore wasn't built in one day.

Irvin Seah, economist, said, "There are many challenges and also prerequisite for successful free trade zone. One of it is to have world-class infrastructure. You must ensure that, for example power supply is reliable. Transport networks are all properly built, so that you can facilitate the individual movements of goods and human. This is important for the special function of an economic free trade zone. And in terms of policy wise, it has to remain consistent. It has to stay open, in a sense that it must be investor friendly, business friendly, the environment would have minimal administrative red tapes, so as to ensure that businesses can thrive."

But Shanghai has what it needs to become a very successful free trade zone Irvin says. Shanghai overtook Singapore to become the world's busiest container port in 2010. China is a magnet for foreign investment. So will Shanghai pose a serious threat to Singapore?

He said, "I think the biggest impact would be on Hong Kong rather than Singapore, cause Singapore's positioning is more towards Southeast Asia. I think, in the Southeast Asian region, you can't really find another free trade zone that is more efficient, more reliable than what we have in Singapore."

If Shanghai becomes. Unfortunately looks like Hong Kong's heyday is coming to an end. Irvin says Hong Kong will have to be more business-friendly in order to remain relevant in the north Asian region.