Like most financial centers, 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, growth of between 7% and 9% is predicted for 2010. GDP per capita was estimated in 2009 to be $50,300, 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 $245 billion (a drop from an estimated $343 billion in 2008). Singapore’s main export partners are Australia, China, Hong Kong, Malaysia, Indonesia, Japan and the USA. Imports amounted to an estimated $210 billion in 2009, down from around $310 billion 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.
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, trans-shipment, 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 totaling 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.
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 the movement of goods within FTZs have been simplified and paperwork reduced.
Import, export and trans-shipment 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.
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 S$100,000 (capped at S$500,000 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 S$20 million can obtain permanent residence status in Singapore, and thus benefit from Singapore’s personal income tax rates of up to 20%, by either:
Investing at least S$5 million of financial assets with a financial institution regulated by the Monetary Authority of Singapore (MAS), or
Investing at least S$3 million of financial assets with a financial institution regulated by the MAS, plus at least S$2 million in properties purchased for residential purposes.
On December 1, 1999, the Stock Exchange of Singapore and the Singapore International Monetary Exchange merged to form the Singapore Stock Exchange (SGX). On November 23, 2000, it was the first Asia-Pacific exchange to be listed via a public offer and a private placement. The SGX’s stated aim is “to offer a highly trusted securities & derivatives marketplace for capital raising, risk transfer, trading, clearing, and settlement”.
The SGX has forged a number of strategic alliances with other exchanges, including a joint venture with the American Stock Exchange to promote Exchange Traded Funds; a securities co-trading link with the Australian Stock Exchange; an agreement with the Baltic Exchange for the provision of the Baltic Exchange’s benchmark prices for the settlement of Forward Freight Agreements; and a futures trading link with the Chicago Mercantile Exchange.