Singapore: Country and Foreign Investment

Singapore History, Population, Language and Culture

The population was estimated to be 4.66 million in July 2009. The main ethnic groups are Chinese (74%), Malay (13%) and Indian (9.2%). According to the 2000 census, languages include Mandarin (35%), English (23%), Malay (14.1%), Hokkein (11.4%), Cantonese (5.7%), Teochew (4.9%) and Tamil (3.2%). English is the language most used for business purposes.

Religions include Buddhist (42.5%), Muslim (14.9%), Taoist (8.5%), Hindu (4%), Catholic (4.8%) and other Christian (9.8%) (2000 census).

Despite its multi-ethnic and diverse religious cultures, Singapore models itself on a western cosmopolitan metropolis with distinct leanings towards money and business. However, etiquette and protocol very much follow Asian traditions; westerners looking to do business in Singapore would do well to study these carefully.

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Singapore Government

The government of Singapore is a parliamentary republic. The unicameral parliament comprises 84 seats, to which members are elected by popular vote for five-year terms.

The president, who is head of state, is elected by popular vote for a term of six years; the current president is Sellapan Ramanathan. The president usually appoints the leader of the majority party or of a majority coalition as prime minister, who is head of government. The current prime minister is Lee Hsien Loong. The president also appoints the deputy prime ministers and the cabinet. The next elections are due to be held on April 1, 2011.

The legal system is based on English common law, and is executed by the Supreme Court, the Court of Appeals, and the Subordinate Courts.

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Singapore Economy and Currency

Like most financial centres, Singapore was hit badly by the recent recession, and growth tumbled from around 7.8% of GDP in 2007 to 1.1% in 2008 and -2.6% in 2009. However, there was a strong rebound in 2010, when the economy grew at 14.5%, according to the Monetary Authority of Singapore (MAS). More muted growth of 6% is expected by the MAS in 2011 due partly to the spike in oil prices and the after effects of the natural disasters in Japan. GDP per capita was estimated in 2009 to be USD50,300, putting Singapore fifth in the world and ahead of the USA.

Singapore’s main industries include electronics; financial services; chemicals; oil-drilling equipment and petroleum refining; ship repair; rubber processing and products; offshore platform construction; life sciences; and entrepot trade.

Exports are key to Singapore’s economy; in 2009, it was estimated that exports amounted to USD245bn (a drop from an estimated USD343bn in 2008). Singapore’s main export partners are Australia, China, Hong Kong, Malaysia, Indonesia, Japan and the USA. Imports amounted to an estimated USD210bn in 2009, down from around USD310bn in 2008; main import partners include China, Indonesia, Japan, Malaysia, Saudi Arabia, South Korea and the USA. Both imports and exports shot up in early 2010, however.

The local currency is the Singapore Dollar (SGD).

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Singapore Entry and Residence

Visitors to Singapore must meet the following entry requirements:

Visitors from the following countries require either a business visa or a social visit visa: Afghanistan; Algeria; Armenia; Azerbaijan; Bangladesh; Belarus; Burma (Myanmar); Egypt; Georgia; India; Iran; Iraq; Jordan; Kazakhstan; Kyrgyzstan; Lebanon; Libya; Moldova; Morocco; Nigeria; Pakistan; People’s Republic of China; Russia; Saudi Arabia; Somalia; Sudan; Syria; Tunisia; Tajikistan; Turkmenistan; Ukraine; Uzbekistan; and Yemen. Holders of a Hong Kong Document of Identity, a Macao Special Administrative Region Travel Permit, a Palestinian Authority Passport, a temporary passport issued by the United Arab Emirates or a Refugee Travel Document issued by Middle-East countries must also apply for a visa.

Those wishing to work in Singapore require a Work Pass, which can be one of the following:

There are various other Work Passes, including for employment of foreign students, training employment, the work holiday programme and work passes for foreign spouses of Singapore citizens.

Foreigners eligible to apply for permanent residence in Singapore are:

Note that all male Singapore Citizens and Permanent Residents must register for National Service on reaching 16½ years of age. They must serve two years of full-time National Service from 18 years, followed by 40 days of Operationally Ready National Service per year till the age of 50 years (for officers) or 40 years (for other ranks).

Singapore Permanent Residents who wish to travel out of Singapore must obtain a Re-Entry Permit to enable the person to retain permanent residence status while away from Singapore. Failure to do so will result in the person automatically losing their Singapore Permanent Resident status.

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Singapore Business Environment

Singapore has excellent telecommunications. It is estimated that, with landline and mobile phones combined, there are approximately 175 phones per 100 people. In 2008, there were 3.37 million Internet users.

There are eight airports in Singapore, the main one being Changi International Airport. There is a good road network, with a causeway linking Singapore with Malaysia. There is also a train service linking Singapore, Malaysia and Thailand, with trains running to Kuala Lumpur, Penang and Bangkok.

The Port of Singapore is the world’s busiest in terms of total shipping tonnage, transhipment and containers, handling some 140,000 vessels each year. The port is also the world’s third largest petrochemical refiner, and operates South-East Asia’s most technically advanced and efficient shipbuilding and ship-repair facilities. The Singapore Registry of Ships has over 3,000 registered vessels totalling more than 29 million gross tonnes, and offers tax advantages and financial incentives to Singapore-registered vessels under the Approved International Shipping Enterprise scheme, the Approved Shipping Logistics scheme, the Maritime Finance Incentive scheme, and the Maritime Cluster Fund.

There are six Singapore-incorporated banks which are owned by three banking groups: DBS Bank Limited, Far Eastern Bank Ltd, Oversea-Chinese Banking Corp. Ltd, Singapore Island Bank Ltd, The Islamic Bank of Asia, and United Overseas Bank Ltd. Over 100 foreign commercial banks are registered in Singapore, including some 40 or so offshore banks.

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Singapore Free Trade Zones And FreePort

There are five free trade zones (FTZs) located at the Port of Singapore, Jurong Port, Sembawang Wharves, Pasir Panjang Wharves, and Airport Logistics Park of Singapore. No duty or taxes are payable on goods stored in an FTZ, but they are payable when the goods leave the FTZ and enter into customs territory for local consumption. Customs procedures for movement of goods within FTZs have been simplified and paperwork reduced.

Import, export and transhipment of goods require a permit via TradeNet, and foreign traders must work with local freight forwarders and traders to obtain a permit. Permissions from Singapore Customs are required for repacking, sorting and reconditioning of goods held in the FTZ.

The Singapore FreePort is located at Changi International Airport, and offers integrated services that handle shipping, storage, display and trade of valuable assets such as jewellery, fine art, gems, antiques, vintage cars and fine wines. The FreePort provides maximum security and 24/7 security access.

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Singapore Investments By Foreigners

Foreign companies that manage their headquarters activities out of Singapore under the International Headquarters Award can benefit from a lower corporate income tax rate of 10% or less (compared to the standard rate of 17%). Companies that manage their Asia-Pacific headquarters activities out of Singapore under the Regional Headquarters Award pay corporate income tax of 15%. Both awards are subject to a number of conditions, such as Singapore-based personnel.

Companies incorporated in Singapore and engaging in international or regional trading, procurement, distribution and transportation of approved commodities can apply for the renewable five-year or non-renewable three-year Global Trader Programme. Such companies can benefit from reduced corporate income tax of 10% on qualifying income, subject to conditions.

Where an activity is not carried on in Singapore on a large enough scale, and it is in the public interest for it to be carried on, the Economic Development Board of Singapore may grant pioneer status to such an activity. Firms carrying on that activity are then entitled to tax relief for up to 15 years. Similarly, there is a development and expansion incentive with tax relief for up to 10 years. The relief in both instances includes tax exemption on certain dividends.

Under an incentive introduced in the 2010 Budget, individuals (known as “angel investors”) who invest at least SGD100,000 (capped at SGD500,000 per year) in a qualifying start-up business can benefit from a tax deduction of 50% of the investment at the end of the second year of holding the investment.

High net worth foreign individuals with net personal assets of at least SGD20m can obtain permanent residence status in Singapore, and thus benefit from Singapore’s personal income tax rates of up to 20%, by either:

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