In 2020, many industries have been affected by COVID-19. Industries such as the aviation, tourism, catering, finance, and construction industries have been greatly affected. Due to this reason, many multinational companies have started to look for business opportunities in offshore locations. Today we will be focusing on companies looking to expand globally in the Singaporean market.
1. Government Assistance
In February, the Singaporean government announced its budget for 2020, which included a series of major stimulus plans to manage the impact of the Covid-19. The Singaporean government has said it will assist in tax breaks and transitional loan schemes to the most affected industries by the epidemic. (Ex: tourism, aviation, retail, catering, and peer to peer services). It gives employees in these industries to take advantage of this period to train and upgrade their skills to prepare for the situation after the economic recovery.
2. International Trading Hub
Singapore is a famous commercial city and an entrepot trade center in the world and an important international financial center and aviation center. According to relevant scholars in Singapore, 99% of goods entering Singapore do not have to pay customs duties (wine, petroleum products, tobacco products, and automobiles are taxable goods). Goods can be freely stored, displayed, repackaged, and processed in the free trade port. Foreign exchange can be freely exchanged, and funds can flow freely.
Benefits include the following:
- Singapore implements ultra-low tax rates on enterprises and investors. For those enterprises that meet the requirements, such as excellent performance, high turnover, or can bring employment and other benefits to Singapore, the tax rate is lower.
- Singapore has a sophisticated legal system of international docking. It provides a fair and transparent business dispute mediation environment for multinational companies’ activities. The rule of law protects foreign business activities in Singapore.
- An ultimate service. The “Singapore style service” under the pro-business concept thinks that 99 points are equal to zero, and the service is to achieve 100 points. In addition to the business operation services, they also offer support services in the aspects of healthcare, education, finance, entertainment, and other aspects of life for investors.
3. Singapore Becomes A New Trend For Chinese Enterprises
In terms of GDP per capita, Singapore is ranked the fourth most prosperous country in the world. According to the global financial center index (GFCI) ranking report in 2018, Singapore is the fourth largest international financial center.
The booming economy, as well as the experience and contacts in Southeast Asia, attracts many Chinese enterprises to set up branches and offices in Singapore. According to the Statistics Bureau of Singapore, investment from China increased from S $16 billion (US $11.72 billion) in 2014 to S $41.7 billion (US $30.55 billion) in 2018, with an average annual growth of more than 65%.
4. Emerging From The Singaporean Market to The Global Market
For multinational companies going to Southeast Asia, it will be wise to set up branches or offices in Singapore as the first step. Because, this will improve their subsequent integration of resources, recruitment of talents, and market expansion progress.
From the perspective of geographical location, Singapore is one of the most important logistics hubs in Asia, which can radiate the entire Asia Pacific region. For example, in 2017, Sinopec built a lubricating oil production plant in Singapore, which is considered the first step for Sinopec going global. It first reaches the Southeast Asian market and then markets in the Middle East, Europe, and Africa.
In addition to logistics advantages, Singapore also has a profound financial foundation. Singapore is the headquarters of 1,200 banks, insurance, and other financial institutions in the world. According to Cushman’s data released in 2016, Singapore is the city with the most significant regional headquarters of multinational companies in the Asia Pacific region, with a total of 4,200 regional offices in the Asia Pacific region.
With the above four advantages in a business environment, professional services, language, and culture, Singapore will become one of the best choices for Multinational enterprises to expand their regional market. If you are interested in learning more about entering the Singaporean market, click here.
Data and Information Sources:
Original Article – Chinese Version