On 1 April 2019, the European Commission recognized a number of Singapore trading venues authorised by the Monetary Authority of Singapore (MAS) as eligible for compliance with the EU trading obligation for derivatives. This decision will allow EU counterparties, essentially EU investment banks that operate as swap dealers in Asia, to comply with their EU trading obligation under the Markets in Financial Instruments Regulation (MiFIR) and in line with the G20 reforms for standardised derivatives when executing derivatives transactions with counterparties in Singapore.
Concurrently, MAS adopted regulations to exempt certain EU Multilateral Trading Facilities and Organised Trading Facilities from MAS' markets licensing requirements. Singapore participants can trade with EU counterparties on such EU trading venues in compliance with Singapore's derivative trading obligations.
Two weeks earlier on 13 March 2019, the Commodity Futures Trading Commission (CFTC or Commission) and MAS announced the mutual recognition of certain derivatives trading venues in the United States and Singapore. The CFTC issued an order exempting certain derivatives trading facilities regulated by MAS from the requirement to register with the CFTC as swap execution facilities (SEFs). Similarly, MAS announced the issuance of regulations exempting certain derivatives trading venues regulated by the CFTC from the requirement to be a MAS-authorized approved exchange (AE) or recognised market operator (RMO) before establishing or operating an organised market.
These agreements will help strengthen cross-border trading, enabling businesses in Singapore and the US and EU to hedge risks more efficiently.
(Source: Business Times; Monetary Authority of Singapore)
Singapore is seeking to develop an interoperability framework, called “TradeTrust”, for the exchange of digital trade documentation, in order to enable a more seamless and efficient flow of goods between digitally inter-connected trading partners. TradeTrust consists of a set of governance and legal frameworks, standards and a digital infrastructure, to facilitate the interoperability of electronic trade documents exchanged between different digital ecosystems. This is supported by the use of distributed ledger technology (DLT) or blockchain to provide participants with proof of authenticity and provenance for these documents. The technical infrastructure will be hosted on the Networked Trade Platform (NTP), Singapore's national trade information management platform, as a value-added service (VAS) to enable the exchange of electronic trade documents.
TradeTrust can reduce the risk of receiving fake documents/information as sources are intended to be accredited. This would remove the need for repetitive checks by the various trade ecosystem parties to ascertain the legitimacy of the documents/information received. It is also expected to eliminate costs associated with printing, handling and transportation of hundreds of pages of documentation, by digitising certain documents which are handled in paper form today.
The Infocomm Media Development Authority (IMDA) will partner the Maritime Port Authority (MPA) to lead TradeTrust development for electronic Bills of Lading (eBL), with support from Singapore Customs and the Singapore Shipping Association (SSA). Through close cooperation between government and industry, the initiative will focus on developing the TradeTrust digital infrastructure, promoting the digitalisation of Bills of Lading and conducting technical trials to demonstrate the interoperability of eBLs across different digital ecosystems. In January 2019, all four parties signed a Memorandum of Understanding to affirm their support for the initiative. IMDA will also be organising industry consultation workgroups with key stakeholders from the maritime trade, logistics and finance sectors to seek feedback on the initiative. Subsequently, a Request for Proposal willl be issued to invite the industry to submit proposals on the technical implementation of the TradeTrust infrastructure.
(Sources: Straits Times; Ministry of Communications and Information, Singapore)
The European Parliament approved the EU-Singapore Free Trade Agreement (EUSFTA) and EUSingapore Investment Protection Agreement (EUSIPA) in a vote on 13 February 2019 in Strasbourg, France. The EUSFTA and EUSIPA are the first trade and investment agreements concluded between the EU and an ASEAN member state.
Following the approval by the European Parliament, both the EU and Singapore will undertake their respective internal administrative processes to enable the EUSFTA to enter into force as soon as possible. As a mixed agreement (the EUSIPA falls under the shared competence of the EU and its member states), the EUSIPA under the EU’s processes will be sent to the regional and national parliaments of the EU member states for approval before entry into force. When the EUSFTA enters into force, EU and Singapore companies will benefit from greater market access across many sectors, increased government procurement opportunities and the progressive elimination of tariffs on exports into Singapore and the EU, amongst others. Singapore will remove tariffs on all EU products entering Singapore. The EU will remove tariffs on 84% of all Singapore products entering the EU within the first year, and the remaining 16% over a period of 3 to 5 years. 3. The EUSFTA will provide for liberal and flexible rules of origin (ROO) for the EU’s and Singapore’s key exports to each other’s markets including automobiles, chemicals, clothing and textiles, electronics, machinery, pharmaceuticals, and petrochemicals.
Unnecessary technical barriers to trade (TBT) will be removed to reduce cost for exporters. Provisions include rules on marking and labelling, reducing duplicative conformity testing for a range of electronic goods, promoting the recognition of international standards for motor and vehicle parts, and certifying systems for meat-producing establishments so that inspection of individual abattoir / food processing plants for companies to export their goods will not be required. The EUSFTA also provides enhanced market access for service providers, professionals and investors, covering a wide range of services sectors including financial services, professional services, computer and related services, research and development, business services, telecommunications and travel related services.
The EU, which has the largest government procurement market in the world, will grant Singapore enhanced access to city-level and municipal-level government procurement opportunities. In return, Singapore’s commitments will allow EU companies more opportunities to participate in our public tenders.
Furthermore, the trade agreement includes a comprehensive intellectual property rights chapter covering provisions on copyright, designs, enforcement and geographical indications (GIs). Singapore will enhance its existing GI regime by setting up a GI Registry to receive applications for GI registration.
The EUSIPA will replace the 12 existing bilateral investment treaties between Singapore and various EU Member States. It offers enhanced investment protection through modern provisions on investment protection that are not contained in the existing bilateral agreements.
(Sources: Ministry of Trade & Industry, Singapore; European Commission; Business Times)
In its 2019 budget, the Singapore government announced several initiatives to continue building enterprise capabilities. It is allocating an additional SGD 100 million (USD 74 million) for the SME CoInvestment Fund III, to continue supporting firms in their efforts to scale up and internationalise. The SME Co-Investment Fund III will continue the work of the earlier SME Co-Investment Funds. the Co-Investment Programme (CIP) was launched in 2010, comprising the SME Catalyst Fund (CF) and SME Co-Investment Fund (CIF). The SME Mezzanine Growth Fund (MF) and SME Co-Investment Fund II (CIF 2) were subsequently launched in 2014. To date, the Government has set aside SGD 400 million (USD 296 million) of government capital through these funds, to be invested alongside private sector capital into local SMEs. This has catalysed approximately SGD 1.3 billion (USD 963 million) of additional funding for our SMEs. Similar to existing funds under the CIP, Temasek Holdings will participate as a co-investor in the SME Co-Investment Fund III.
The government is also launching an Enterprise Financing Scheme (EFS) streamlining eight existing SME financing schemes- (i) SME Equipment Loan, (ii) SME Factory Loan, (iii) SME Working Capital Loan, (iv) SME Micro Loan, (v) SME Micro Loan for Young Companies, (vi) SME Venture Loan, (vii) Internationalisation Finance Scheme, and (viii) Loan Insurance Scheme Plus- into one scheme to help Participating Financial Institutions (PFIs) and SMEs navigate between the various financing schemes. The EFS is expected to be launched in October 2019.
A new Innovation Agents program is being launched as a two-year pilot for enterprises to obtain advice on innovation opportunities from experienced industry professionals. Enterprise Singapore will identify individuals with deep expertise in technology, strong track record in growing businesses, and access to global industry networks. These Innovation Agents will be matched with enterprises that aspire to use technology to improve existing businesses or build new ones. Innovation Agents will provide mentorship to enterprises to identify innovation opportunities, and facilitate connections to valuable technology and business partners. Further details on the Innovation Agents program are expected to be released later this year.
(Sources: Straits Times; Singapore government press releases)
The Monetary Authority of Singapore (MAS) is launching a new SGD 75 million (USD 55 million) Grant for Equity Market Singapore (GEMS) in support of Singapore’s vision to serve as Asia’s centre for capital raising and enterprise financing. GEMS will be a three-year initiative to help enterprises seeking to raise capital through Singapore’s equity market.
The Grant will have three components:
Three categories of firms will be eligible for the listing grant. Enterprises in new technology sector which includes financial technologies, consumer digital technologies, on-demand services as well as gaming services & peripherals, with minimum market capitalisation of SGD 300 million, can receive co-funding of 70% of eligible listing expenses, with grant capped at SGD 1 million. Enterprises from high growth sectors with minimum market capitalisation of SGD 300 million will be eligible for co-funding of 20% of eligible listing expenses, with grant capped at SGD 500,000. The high growth sectors, identified in the Committee for Future Economy (CFE) report, are digital cluster, advanced manufacturing, hub services, logistics, urban solutions & infrastructure and healthcare. Other enterprises from all sectors, with no minimum market capitalization requirement, can receive co-funding 20% of eligible listing expenses, with grant capped at SGD 200,000.
The Research Talent Development Grant will co-fund 70% of the salaries for fresh graduates hired as equity research analysts and 50% of the salaries for re-employed experienced equity research analysts. This grant is for locals only. It aims to groom a pipeline of equity research analysts and retain experienced research talent to initiate research coverage primarily of listed mid and small-cap enterprises.
The Research Initiatives Grant can cover initiatives such as publication of industry or sector primers, innovative ways to distribute research and disseminate enterprise information to investors.
(Sources: Monetary Authority of Singapore; Business Times)
Singapore and the United States (US) have renewed the US-Singapore Collaboration Platform Memorandum of Understanding (MOU). Both countries agreed to deepen bilateral cooperation in traditional infrastructure areas such as energy and standards, and support the digital economy and new growth areas such as FinTech, e-commerce, smart city solutions, and deep technology.
Since the MOU was first signed in 2016, Singapore and US agencies have collaborated on key events such as the Asia-Singapore Infrastructure Roundtable (ASIR) and the Singapore FinTech Festival. ASIR 2017 provided a platform for Singapore and US companies to exchange views and best practices on infrastructure planning and development, particularly for Asia. In November 2018, several US companies also formed a US Pavilion and exhibited their innovations at the Singapore FinTech Festival.
Bilateral trade in goods and services between Singapore and the US reached nearly USD 75 billion in 2017. In the same year, the US remained the largest foreign investor in Singapore, while Singapore was the US’ second-largest Asian investor.
Singapore and the United States also signed a Declaration of Intent (DOI) to collaborate on a Singapore-US Cybersecurity Technical Assistance Programme for ASEAN Member States, further strengthening partnerships in regional cybersecurity capacity building. It builds on the strong ongoing collaboration under the Memorandum of Understanding on Cybersecurity Cooperation between Singapore and the US, signed in August 2016.
(Sources: Business Times; Ministry of Trade and Industry, Singapore)
Singapore and Indonesia signed an Agreement on the Promotion and Protection of Investments, also known as the Bilateral Investment Treaty (BIT), at the Singapore-Indonesia Leaders’ Retreat in Bali, Indonesia, on 11 October, 2018.
Singapore has been the largest investor in Indonesia since 2014, with realised investments reaching USD 8.4 billion in 2017. The BIT aims to protect investors’ interests and reinforce the strong economic ties and cooperation between Singapore and Indonesia.
The BIT is a legally-binding agreement between the two countries and it will complement the ASEAN Comprehensive Investment Agreement (ACIA), that Singapore and Indonesia are also Party to. It establishes rules on how Indonesia should treat investments and investors from Singapore and vice-versa. With the BIT, Singapore companies operating in Indonesia will enjoy protection on their investments, on top of that already accorded under Indonesia’s domestic laws. Similarly, Indonesian companies operating in Singapore will also enjoy investment protection. Some of the key areas of protection are:
(Source: Ministry of Trade and Industry, Singapore)
During the ASEAN Economic Ministers (AEM) Meeting in Singapore from August 29 to September 1, trade ministers from the 10 ASEAN member states signed the First Protocol to Amend the ASEAN Trade in Goods Agreement (ATIGA) and allow the implementation of the ASEAN-wide Self-Certification Scheme (AWSC)
AWSC allows certified exporters to self-certify the origin of their goods in order to enjoy preferential tariff rates under ATIGA while shipping goods within ASEAN. The protocol aims to increase the utilization of the free trade agreement (FTA) among member nations by streamlining procedures. The aim is to minimize burdens associated with administrative compliance and decrease transaction costswithin ASEAN, as the current system requires for the application for Certificate of Origin (CO) Form D for every shipment. It is envisaged that AWSc will help improve the utilisation of tariff concessions available under the ASEAN Free Trade Area and further enhance intra-ASEAN trade.
Efforts are being undertaken by ASEAN Member States to implement a single ASEAN Wide Self Certification for the past several years. Two pilot projects were undertaken with approval from the ASEAN Economic Ministers and ASEAN Free Trade Area Council. The First Self-Certification Pilot Project (1st SCPP) launched in 2010 involved Malaysia, Brunei Darussalam, Singapore and Thailand. The Second Self-Certification Pilot Project (2nd SCPP) between Indonesia, Lao PDR and the Philippines was implemented beginning 1 January 2014.
The Ministers urged ASEAN Member States to accelerate the work, on amending the ATIGA Operational Certification Procedure for a smooth implementation of the AWSC. AWSC is expected to be rolled out by the first semester of 2019.
(Sources: ASEAN Secretariat; Straits Times)
In his opening address at the 51st ASEAN Foreign Ministers' Meeting on 2 August 2018, Singapore's Prime Minister, Lee Hsien Loong, announced that in order to boost regional economic integration and the adoption of technology, Singapore will enhance its support for the Initiative for ASEAN Integration (IAI). The IAI, launched in 2000, helps ASEAN’s newer Member States implement ASEAN commitments and agreements. Through special assistance to Cambodia, Lao PDR, Myanmar and Viet Nam (CLMV countries), it aims to further regional integration in order to narrow the development gap within ASEAN.
The three IAI Centres in Vietnam, Cambodia, and Laos will be upgraded to become Singapore Cooperation Centres. The new Centres will expand Singapore's range of technical assistance and offer new modalities for capacity building that go beyond classroom training.
The PM also lauded the redoubling of efforts by ASEAN countries to conclude the Regional Comprehensive Economic Partnership (RCEP) by the end of the year. The RCEP comprises ASEAN and our six FTA partners. It will be the world’s largest trading bloc, covering a third of the world’s GDP. ASEAN is also working with the EU on the ASEAN-EU Comprehensive Air Transport Agreement, the first substantive aviation arrangement between two major regional groupings.
PM Lee said, "When established, these two - the RCEP and ASEAN-EU CATA will send a clear signal of ASEAN’s commitment to trade liberalisation and economic integration. I do not expect the negotiations to be easy, especially with the growing mood of nationalism and protectionism in many countries. Every participant will have to make trade-offs and difficult compromises. But I am glad that ASEAN Member States have taken a long-term approach and made a collective decision to stay on course, in order to bring tangible benefits to our peoples."
(Sources: Ministry of Foreign Affairs, Singapore; Straits Times; ASEAN)
The Ministry of Finance of Singapore has invited interested parties to provide feedback on the draft Goods and Service Tax (Amendment) Bill 2018 from 28 June to 18 July 2018. The proposed amendments to the Goods and Service Tax (GST) Act include the introduction of GST on imported services from 1 January 2020 to address the changes brought by the growth of the digital economy.
GST on imported services will be implemented through:
The draft bill includes five other changes to existing tax policies and administration:
(Sources: Ministry of Finance of Singapore)
Following the second review of the India-Singapore Comprehensive Economic Cooperation Agreement (CECA), India and Singapore have agreed upon tariff concessions, reduicng or eliminating tariffs for an additional 30 products. The new preferential tariffs apply to a variety of sectors, including food (e.g. sweet biscuits, curry paste and chilli sauce) and Nylon moulding powder.
Additionally, both countries have agreed to more flexible General Rule of Origin, inclusion of a de minimis provision; and new Product Specific Rules for goods such as machinery parts and edible oils. The General Rule of Origin refers to the criteria applied to determine if a good can qualify for preferential tariffs as a Singapore-originating Good while the de minimis provision provides flexibility for certain goods to qualify as a Singapore-originating good even when a limited amount of inputs used in its production does not meet the change in tariff classification requirement. Together with the Product Specific Rules, which are typically easier to meet than the General Rule, these improvements will make it easier for Singapore exports into India to qualify for preferential tariffs under CECA.
CECA entered into force on 1 August 2005 and the first review was concluded on 1 October 2007. It covers tariff reduction/elimination, enhancement to avoidance of double taxation agreement, mutual recognition agreement, education and movement of citizens. Since 2005, bilateral trade between the two countries has grown from S$16.6 billion in 2005 to S$25.2 billion in 2017, making India Singapore’s largest trading partner in South Asia. Singapore is India’s 2nd largest trading partner within ASEAN. Top imports from India to Singapore in 2017 included petroleum oils along with jewellery and precious metals. Top exports from Singapore to India in 2017 included machineries, petroleum oils, styrene and gold.
(Sources: Ministry of Trade and Industry, Singapore; Straits Times)
The Singtel Group and Razer have signed a Memorandum of Understanding (MoU) in May 2018 to foster strategic collaboration in the high-growth areas of e-payments, e-sports, gaming-related digital media and telecommunication services across the South East Asia.
As Asia’s leading communications group and the world’s leading lifestyle brand for gamers, respectively, the Singtel Group and Razer will leverage each other’s strengths and capabilities to engage the region’s consumers and audiences. The Singtel Group, which includes wholly-owned subsidiary Optus and regional associates Airtel (India), AIS (Thailand), Globe (Philippines) and Telkomsel (Indonesia), has a combined reach of over 680 million customers across the region.
As a group devoted to connectivity, Singtel is making a big push to create an ecosystem of digital services for its customers, for whom the digital services from mobile payments to entertainment have become a big part of their lives. Its collaboration with Razer will help advance its goal to empower customers to spend seamlessly across borders and experience the thrill of e-sports.
The strategic collaboration covers three areas:
Creating the largest e-payments network in South East Asia: The e-payments scene in the region is currently fragmented across multiple platforms. Subject to regulatory approvals, the Singtel Group and Razer plan to enable the interoperability of their respective e-payments systems to create a seamlessly integrated regional network.
Growing South East Asia’s e-sports ecosystem and community: The Singtel Group and Razer will take steps to foster a vibrant e-sports ecosystem in South East Asia by leveraging Razer’s strength as an e-sports pioneer and Singtel Group’s regional footprint. Both companies plan to jointly organize activities such as regional invitational events and cultivate South East Asian e-sports talents.
Developing gaming-related digital media and telecommunication services: Both companies will explore the development of gaming-related telecommunications and digital media products and services such as broadband plans, mobile services and e-sports content for customers.
Both companies started collaborating on exclusive gaming initiatives in 2017. For example, Singtel was the first teclo to launch the Razer Phone in Asia in December 2017. Razer is also supporting Singtel’s community gaming events across Singapore.
Mobile payments in South East Asia is expected to be worth around USD 32 billion by 2021, a tenfold increase form 2013, as smartphone penetration increases. PC and mobile gaming is also gaining traction on the back of South East Asia’s large, young and tech-savvy population, with the number of PC online and mobile gamers projected to rise form 300 million in 2017 to more than 400 million by 2021.
The two companies recently announced initiatives in the e-payments area. In March 2017, the Singtel Group announced plans to connect the mobile wallets of Singtel and its associates through an interoperable platform, which will link over 50 million registered wallet users with more than 1 million merchant points across Asia. This interoperable platform can also connect with other third-party payment apps offered by telco and non-telco companies, providing ready access to the Group’s customer and merchant bases. It will start with Thailand’s largest mobile operator, AIS, with the commercial launch of the service planned for mid-2018. The Group plans to progressively expand this service from the second half of 2018 to other regional associates, which include Airtel, Globe and Telkomsel, taking into consideration the respective country’s regulations.
Last month, Razer announced its intention to acquire MOL Global, whose online payment gateway is used by major companies such as Lazada, Grab and UNIQLO, and offers more than 1 million offline payment points across south east Asia. MOL Global handled over US$1.1 billion of digital payments in 2017.
(Sources: Singtel Group; Straits Times)
According to the Singapore Ministry of Trade and Industry, the ASEAN digital economy has the potential to grow to USD 200 billion by 2025, with e-commerce accounting for USD 88 billion. More importantly, the digital economy can unlock the potential of SMEs across ASEAN as it affords an unparalleled opportunity for the smallest enterprises to access the most distant markets with relative ease.
Some of the recent achievements in digital economy in ASEAN include, for example, Malaysia establishing a digital free trade zone in 2017, and rolling out an online platform to help individuals register as digital workers and perform digital-based tasks, among others. Thailand 4.0 is pursuing the development of technology clusters and future industries. Robotics and the Internet of Things (IoT) have been identified as some of the key drivers for Thailand’s next phase of economic growth.
Indonesia unveiled its e-commerce roadmap in 2017, reinforcing e-commerce as one of Indonesia’s strategic sectors, and including measures to develop better communications infrastructure, faster and cheaper logistics for e-commerce businesses, and strong cybersecurity and consumer protection. The Investment Coordinating Board (BKPM) has also intensified its efforts to bring e-commerce related investments into the country.
In Singapore, the government has focused on driving the adoption of cross-cutting digital technologies across all levels, to have a transformative impact on the competitiveness of all sectors. Innovation and technology adoption are also important components of the Industry Transformation Maps (ITMs) that the country has developed for 23 growth sectors. In addition, Singapore is building an ecosystem to support the development and deployment of technological capabilities across the economy, and to equip its workforce with the requisite digital skills. The country is also pursuing bilateral innovation initiatives with its ASEAN neighbors. For example, it has established two start-up “Launchpads” in Indonesia. Through these platforms, start-ups from both countries can collaborate, access cost competitive co-working spaces, and scale-up their businesses.
(Sources: Asia Business First Forum 2018)
Singapore hit a record high in tourist arrivals and spending for the second year in a row in 2017, with China overtaking Indonesia as the top source of visitors for the first time. The overall number of arrivals increased year on year by 6.2% to 17.4 million, while tourism receipts rose by 3.9% to SGD 26.8 billion (USD 20.34 billion), according to preliminary estimates released by the Singapore Tourism Board (STB) in February 2018.
The jump in spending was driven by the growth in arrivals across all 10 of Singapore’s top markets, including high-spending ones, such as China, South Korea, the United States and the United Kingdom. Chinese tourists were the biggest spenders for the third year in a row, spending SGD 3.08 billion (USD 2.34 billion), while tourists from Indonesia spend SGD 1.98 billion (USD 1.50 billion). Visitors from Britain and the US posted the highest growth in spending, based on Q3 of 2017 estimates on a y-o-y basis.
Visitors to Singapore spend 9% more on shopping between January and September 2017, compared with the same period in 2016, thanks to higher spending on confectionery, fashion accessories and health and wellness products. Sightseeing, entertainment and gaming enjoyed a 6% boost, while the food and beverage sector saw a 5% dip as tourists chose to forgo fine dining for casual eating and hawker fare.
For 2018, the STB forecasts tourism receipts to increase by 1% to 3%, and international visitor arrivals to be in the range of 17.6 to 18.1 million. With the global economic outlook favorable and Asia-Pacific tourism poised to expand, STB is generally optimistic about tourism prospects for the year ahead.
(Sources: Centennial Asia; Singapore Tourism Board; Business Insider; Straits Times)
According to the Singapore Economic Development Board (EDB), Singapore is expected to attract SGD 8-10 billion (USD 6-8 billion) in fixed asset investments in 2018, which refer to additional investment in facilities, equipment and machinery. Looking ahead, EDB also projects total business expenditure per annum to be between SGD 5-7 billion (USD 4-5 billion), together with the creation of additional 16,000 to 18,000 jobs. The investment outlook for 2018, according to EDB, is comparable to the previous two years, reflecting the continued confidence of global companies in Singapore as a strategic location to base key business functions driving innovation and growth.
At its 2017 Year-in-Review press conference, EDB said it will seek in 2018 to consolidate Singapore’s position as a high-value manufacturing base by deepening the nation’s advanced manufacturing and digital capabilities. It will do so by attracting investments from lead adopters of advanced manufacturing as well as continuing to transform Singapore-based companies through initiatives, such as the Singapore Smart Industry Readiness Index.
It will additionally work with other Government agencies like the Agency for Science, Technology and Research (A*STAR), Enterprise Singapore and the National Research Foundation, to facilitate the research and development of new technologies and solutions.
(Sources: Channel News Asia; Singapore Economic Development Board)
Singapore’s economy has expanded 3.5% in 2017 – more than double than initial forecasts, with the fastest pace in more than three years. The growth came in at the tip end of the Ministry of Trade and Industry’s forecast, which has been progressively upgraded over the year. Growing by 2% in 2016, the economy has picked up pace in 2017, powered by the healing in global trade, growth in manufacturing sector and the surging global demand for electronics. In particular, growth was driven by the electronics, biomedical manufacturing and precision engineering segments, while the services producing industries rose on the back of the finance & insurance, wholesale & retail trade, and transportation & storage segments. On the other hand, the construction sector continued to suffer, being weighed down by continued weakness in private sector construction activities.
According to Prime Minister Lee Hsien Loong, strong showing came despite uncertainties at home and abroad, including uncertainties over U.S. trade and foreign policy, lingering protectionist sentiments, and tensions around North Korea. Although the external environment is expected to remain uncertain in the coming year, economists anticipate this trade-driven lift to continue in 2018.
(Sources: Business Times; Bloomberg)
Singapore has another reason to cheer this month, as it maintains one of the top positions in the annual World Bank 2018 report on Ease of Doing Business, which compares 190 countries. The ranking uses 11 indicators to measure aspects of business regulation across 190 countries worldwide. Of the top 20 economies in the list, 14 are high-income OECD economies.
Singapore, which is ranked second after New Zealand, has amended its Companies Act to make ownership more transparent, and now requires locally-incorporated companies and foreign companies registered in Singapore to maintain beneficial ownership information and to make the data public upon request. It also made exporting and importing easier by improving infrastructure and electronic equipment at the port.
(Sources: World Bank; Business Insider; CNBC)
According to the Monetary Authority of Singapore, the pace of expansion in the Singapore economy accelerated over two consecutive quarters. On the back of the enduring upturn in the global tech cycle and firmer regional demand, this momentum has broadened from the IT-related sectors to external-facing modern services and some consumer-facing domestic-oriented segments. However, a few pockets of weakness remain, such as in the oil-related and construction industries.
With momentum building up faster than anticipated, It is highly likely that the Singapore economy may well exceed the current conservative government forecasts of 2% to 3%. In the latest Business Times-Singapore University of Social Sciences (BT-SUSS) Business Climate Q3 survey, Singapore's full year GDP growth in 2017 may be between 3.4% and 3.7%. The country is benefiting from a strengthening global economic recovery with increasing external demand supporting export-oriented sectors.
(Sources: Monetary Authority of Singapore; The Straits Times)
Singapore’s total population, which stood at 5.61 million as at end June 2017, is growing at an almost flat rate. The growth is at a mere 0.1% as compared to 1.3% in 2016, and is the country’s slowest growth in more than a decade. The slow growth is due to the reduced number of foreigners who are Work Permit Holders, which has led the non-resident population decreasing by 1.6% to 1.65 million. According to the National Population and Talent Division, the slowdown in the country’s two sectors - construction and marine and offshore engineering - contributed greatly to the decrease in the population, as the two sectors experienced a slow down in the number of work permit holders.
The old-age support ratio of residents continues to decline. As at end-June 2017, there were 5.1 residents aged 20-64 years for each resident aged 65 years and over, down from the ratio of 5.4 in 2016
More than half (52.8%) of the resident population aged 25 years and over had at least post-secondary qualifications in 2016, higher than 36.7% in 2006.
There were 1.26 million resident households (i.e. headed by a Singaporean citizen or a Singapore PR) in 2016, a growth of 3.1% over 2015, with the majority of resident households staying in Housing and Development Board (HDB) flats. Household sizes among resident households are getting smaller. The average household size shrank from the last peak at 3.53 persons in 2012 to 3.35 persons in 2016.
(Sources: Singstat; The Straits Times; Today Online)
According to the Ministry of Trade & Industry (MTI), Singapore's economy grew at 2.7% on a year-on-year in the first half of 2017. The agency has narrowed Singapore's economic growth to 2% to 3%, from a previous forecast of 1% to 3%. Singapore's manufacturing sector has been the main propeller for the past quarters and certain service sectors (wholesale and retail), transportation and storage, information and communications, finance and insurance, business services and other services industries, all increased year-on-year in the second quarter, with accommodation and food services segment decreased from a year ago. The construction sector growth is also contracting due to fall in both private and public sector construction output. Barring unexpected outcomes in the global economy and key sectors in the domestic economy for the rest of the year, MTI predicts that Singapore's GDP will grow by 2.5% in 2017.
(Sources: Ministry of Trade & Industry; The Straits Times; Today Online)
Singapore has ranked first for the second consecutive time as the Asia Pacific City of the Future by fDI Intelligence. The city-state attracted the highest number of FDI projects in the Asia-Pacific region in the five years to 2016, contributing to its first place ranking for Economic Potential. Singapore boasts an advanced economy and is renowned for its well-developed service industries. It has a high GDP per capita of more than $87,000 at purchasing power parity and a relatively low unemployment rate of 2.1%.
Singapore’s top three investment sectors were service based – 26% in software and IT services, 18% in business services and 9% in financial services. In January 2016, US technology giant Google established an engineering hub in the city to develop software for the Google Android operating system, creating 1000 jobs and spending an estimated $1.1bn on the investment. Sources at the company stated that Singapore was a “very good place for talent” and its business-friendly policies made the city-state an attractive place to invest.
Singapore also ranked first in the Business Friendliness category of fDi’s ranking. Companies need only two-and-a-half days to establish an operation in the city, which boasts the best credit rating and lowest country risk score of all Asia-Pacific cities. Singapore performed well on a range of economic indices, including the Index of Economic Freedom, Strength of Investor Protection Index and Corruption Perception Index.
(Source: fDI Intelligence, www.fdiintelligence.com)
Singapore has been admitted to the Latin American trade bloc, the Pacific Alliance Trade Group, as a new associate member along with three other countries, as the alliance seeks to expand commerce with the Asia-Pacific region. The alliance, which comprises Colombia, Chile, Mexico and Peru, has admitted Singapore, Australia, New Zealand and Canada as associate members in a first step to broadening the reach of its trade flows and investments. The economies of the four member nations, if counted as a single country, would form the eighth-biggest economy in the world.
(Source: Business Times)
The Singapore economy is looking positive for private economists as they lift their forecasts to 2.5% growth this year, up from their forecast in March of 2.3%. This growth is likely to be led by the manufacturing sector, projected to grow 5% this year. Moreover, the finance and insurance industry’s growth is also expected to grow at 1.9%. On the other hand, the growths of the construction sector and accommodation and food services sectors are expected to decrease from 0.3% to 0.2% and 1.3% to 1% respectively.
The growth forecast of exports has also been lowered with non-oil domestic exports projected to rise 5.6%, which is down for the previous forecast of 6.1%. As for expected inflation, it is set to be at 0.9% and for unemployment rate, it is expected to be 2.4% at year end.
(Sources: Channel News Asia, The Business Times)
In the first quarter of 2017, the economy expanded by 2.7% year-on-year, though it fell slightly from the previous quarter’s growth of 2.9%. According to the United Overseas Bank (UOB), the driving factors that contributed to overall GDP growth are the manufacturing and transport/storage sectors. On the other hand, the construction, household, demand, business investment, and accommodation & food services sectors are not doing as well.
Consumption expenditure dropped for the second consecutive quarter and this is the first time that household consumption contracted during a non-recessionary period since UOB’s data started in 1976. According to UOB, this figure demonstrates a deeper, structural issue with the labour market that that slowed consumer sentiments that resulted in a decline in household consumption.
(Sources: Singapore Business Review, Channel News Asia)
A bright outlook for Singapore’s economy in 2017 thanks to export-led growth in the manufacturing sector. This sector contributes one-fifth of the economy and it is profiting from a positive global outlook and robust demand for electronics, especially semiconductors.
In February 2017, factory output posted another month of growth at 12.6%, which exceeded the expectation of 10%. The export demand is led by China for semiconductor products.
(Sources: The Newpaper Singapore, The Straits Times)
Singapore’s February headline inflation increased to 0.7% from a year ago for the third consecutive month in line with market expectations. This is partly due to year-on-year rises in transport (4.2%), education (3.6%) and healthcare (2.6%) costs. Conversely, prices for housing and utilities, miscellaneous goods and services and clothing and footwear declined. Food inflation also fell from 1.9% to 1.3% due to the smaller increase in non-cooked food prices after Chinese New Year and a high base last year. According to the Monetary Authority of Singapore and the Ministry of Trade and Industry, a higher inflation rate in 2017 is mostly caused by energy-related components and some administrative price increases, rather than generalized demand-induced price pressures.
(Sources: The Business Times, Channel News Asia)
Led by an increasing export demand for manufacturing, Singapore’s economy expanded 2% in 2016, up from an estimate of 1.8%. GDP expanded an annualized 12.3% in the last quarter of 2016, rebounding from a previous quarter’s contraction of 0.4%.
As one of Asia’s most trade dependent nations, Singapore is benefiting its growth from a recovery in Chinese demands with exports and industrial output. However, the outlook is still questionable as there are still uncertainties in the trade relationship between the U.S. and China. Nonetheless, Singapore’s government projects that the economy will grow between 1% to 3% in 2017 and it plans to sustain the average growth rates of 2% to 3% in the coming years.
(Sources: Bloomberg, Channel News Asia)
Singapore’s non-oil domestic exports expanded 9.4% in December 2016 from the same period a year ago. Exports of electronics also rose 5.7%. Despite a slowdown in global trade and lower oil prices, a strong exports growth of 11.5% in November has provided optimistic outlook in the coming months. The economy is forecasted to expand at a modest pace. The forecast growth is 1% to 3% in 2017.
(Sources: Bloomberg, The Straits Times)
The GDP growth forecast for 2016 has recently been narrowed from 1%-2% to 1%-1.5% by Singapore’s Ministry of Trade and Industry (MTI). The economy has not been doing so well in recent years due to the decline in global trade as well as its exposure to sharp drops in commodity prices. Furthermore, the key financial services sector continues to deepen as default risks, driven by the oil and gas sector. As for 2017, the Monetary Authority of Singapore (MAS) has projected that the economy will expand by 1.5% on average with a range from 0.7% to 2.3%.
(Sources: CNBC, The Star Online)
Singapore’s economy expanded 1.7% in the first three quarters of 2016, slower than the 2.1% during the same period a year ago, due to sluggish economic conditions. The Ministry of Trade and Industry has revised the GDP growth forecast for 2016 to between 1% and 1.5%.
For the third quarter of 2016, Singapore’s economy grew 1.1% year-on-year, supported by growth in the information and communications, accommodation and services, and other services sectors. Growth was tempered by a 0.7% contraction in the finance and insurance sector year on year.
(Source: Singapore Government)