Singapore and Kuwait have inked an open skies agreement.

The signing was witnessed by Singapore President S R Nathan and Kuwaiti Amir Sheikh Sabah.

The two countries have also agreed to cooperate in areas like e-government, energy and banking.

Over the last few years, there has been an increase in demand for passenger and cargo flights to the Middle East.

With the open skies agreement, Singapore Airlines (SIA) will now have greater flexibility to meet that demand.

Kuwait is one of the four Middle East countries that Singapore has such an agreement with. The others are Bahrain, Qatar and UAE.

With Saudi Arabia, Singapore has an open skies agreement with the city of Dammam, but has limited access to Riyadh and Jeddah.

Currently, SIA Cargo operates two weekly freighter flights between Kuwait and Singapore. As for passenger services, SIA is flying to Dubai, Abu Dhabi and Jeddah.

The Civil Aviation Authority of Singapore (CAAS) says Kuwait is on the horizon for SIA, and more studies are currently being done to determine commercial viability.

"With the financial crisis now, airlines are busy looking at all the routes and determining which one is profitable for them. And so far, traffic between Singapore and the Middle East has not been too badly affected by it, so I think the opportunities are there," said the director-general and CEO of CAAS, Lim Kim Choon.

Another area which presents opportunities is the banking sector. Senior Minister of State for Foreign Affairs, Zainal Abidin Rasheed, said: "Kuwait has been strong in terms of financial services and development, and so is Singapore."

"And I think Singapore would like to see itself as a gateway for Kuwait to develop joint projects, joint interests, not only for Singapore, but also for the region of Southeast Asia and East Asia. In fact, there has been some interest shown and we are working hard on these areas."

Since 2004, the Infocomm Development Authority (IDA) of Singapore has been working with Kuwait on implementing its e-government services.

On Nov. 4, Singapore President Nathan and Kuwait Amir Sheikh Sabah witnessed the signing of a third Memorandum of Understanding in e-government cooperation. New areas to be looked at include education and healthcare IT projects.

Singapore is ranked first in the world for its e-government services.

Deputy chief executive of IDA, Leong Keng Thai, said: "For Singapore companies, this hopefully will give them an opportunity to expand their business opportunities and share their expertise outside of Singapore."

Singapore and Kuwait have a longstanding relationship. When leaders from both sides met, Amir Sheikh Sabah expressed his people's gratitude for the support that Singapore has given Kuwait following the Iraqi invasion.

During this state visit, the foreign affairs ministries from both sides also signed an Agreement on Establishing a Joint Committee for Co-operation, which will lead to more partnerships in areas like trade, energy and culture.

The two leaders also discussed the current financial crisis, developments in the Middle East and the importance of seriously pursuing inter-faith dialogue.

President Nathan and his delegation of 38 people will be hosted to a state banquet on the evening of Nov. 4.