Singapore

1) As a percentage of GDP

 

Singapore has had a history of high GDP growth, but the last years’ figures have not been as positive. First the global meltdown of the IT industry came, and with it a weaker demand for electronic components. Then the terrorist attacks in USA on the 11. September 2001 spiralled the American and world economy downwards-bringing Singapore along. Just as the economy was picking up, Singapore was seriously hit by the SARS pandemic Singapore’s small, open economy is very vulnerable to external shake-ups. However, strong fundamentals, including large foreign reserves and a strong banking system, help Singapore deal with such crises. The government is also very dynamic and adapts easily to changes in the world economy.

The government has through the last years unveiled a several stimulus package, worth several billons of dollars. Singapore will spend on infrastructure, lower certain taxes and allow citizens to temporarily cut payments to the state pension fund. The country has shown a remarkable recovery and The Ministry of Trade and Industry have forecasted that the 2004 growth would range from eight to nine percent, among the highest in the region.  In 2005 the projections are between four and five percent.

In order to sustain future growth Entrepreneurship is highly encouraged and supported financially by the government. Life sciences and ICT are among the sectors that will see the strongest growth in the years to come.     

 

Singapore maintains few import duties or tariff barriers to trade. Most goods can be imported without licenses. Tariffs are minimal with 96% of goods entering Singapore duty-free. However, companies must make an inward declaration of all goods imported into Singapore. The inward and outward declarations for imports and exports respectively are submitted to the Controller of Imports & Exports.

 

The Government poses no restrictions on foreign ownership of businesses. There are no performance requirements on foreign investors as a condition for establishment. However, all businesses in Singapore must be registered with the Accounting and Corporate Regulatory Authority (ACRA). Foreign investors are not required to enter into joint ventures or to share management control with local interests. The Singapore Government generally does not restrict or discourage foreign investment either to protect local industries or for any other reason. There is also no requirement for investors to purchase from local sources or specify a percentage of output for export, nor is there any limit access to foreign exchange. Foreign investors face no requirement to provide for local equity ownership in the investment, or to reduce its equity over time. The risk of expropriation or nationalization of foreign investments in Singapore is virtually zero. There are no rules on the level and period for investors to effect transfer of technology. There is free mobility of capital, profits, and current accounts in Singapore.

 

The Economic Development Board (EDB), along with IE Singapore, the Monetary Authority of Singapore (MAS), and The Agency for Science, Technology and Research (A*STAR), offer a broad range of incentives to attract specific types of investments to Singapore. These agencies also have great discretion in administering these incentives. The EDB does screen investment proposals to determine their eligibility for any incentive schemes and to provide assistance. As a one-stop service that helps foreign investors avoid red tape, the EDB has a reputation for being responsive to changing business conditions and investor needs.

The Government uses tax policy to enhance its international competitive position. There are no taxes on capital gains, turnover or development. Foreign firms are taxed on the same basis as local companies. Also, there is no withholding tax on the remittance of profits. There is however, a property tax of 12%. The corporate
tax rate has gone down considerably the last few years and is expected to reach 20 % this year.

The top rates of personal taxation will also be cut over the next few years. It currently ranges from 2 to 26 percent. The Government introduced a consumption-based tax, the Goods and Services Tax (GST) in 1994, as part of its long-term move to reduce taxes on earnings. The GST of 5% is levied on all domestic consumption of goods and services with certain exceptions, and on imports of goods into Singapore. GST, however, is not levied on exports of goods and services. There is a tax agreement between Norway and Singapore, which limits double taxation for Norwegian companies and individuals.

 

The Monetary Authority of Singapore (MAS), Singapore’s central bank, is overseeing the market opening and reform measures introduced by the government to expand fund management services, develop the bond market, and gradually allow greater foreign competition in domestic retail banking and other financial services. The MAS administers generous tax and other incentives to encourage leading banking and financial institutions to invest in new operations or upgrade existing ones, with the view to spearhead Singapore’s drive to become an international financial center for the region, investment policies are transparent and the government is known in business circles to be clean, non-oppressive, and corruption free. It is in fact one of the world's most open investment regimes. In an survey by PricewaterhouseCoopers Singapore was declared the most transparent economy in the world. The survey looked into factors such as legal protection for businesses, macro-economic policies, corporate reporting, corruption and government regulations.

 

Three types of commercial banks operate in Singapore, depending on the type of license they possess. There are 142 commercial banks in Singapore, comprising 31 full-license banks, 13 commercial banks with restricted licenses, and 98 with offshore licenses. 3 Norwegian linked banks operate branches in Singapore.

Besides its high per capita GDP, Singapore is also highly ranked for its economic competitiveness, and was last year ranked as the second most competitive country in the world according to the World Competitiveness Yearbook, published by International Institute for Management Development.

 

Singapore has a highly pro-business and modern infrastructure. The city-state enjoys reliable and sophisticated networks for information-technology, telecommunications services, transportation, and utilities.

The mobile phone penetration is currently more than 80 percent. Over 50 percent of households own personal computers and almost half of the population uses Internet regularly. To promote the growth of information industries, the country has installed Singapore ONE, a nationwide high-speed fiber optic broadband network that provides multimedia applications and Internet services to all homes, schools and offices. Singapore has one of the most advanced telecommunication infrastructures in the world.
The roads and highways hold a high standard, and with help of the public transportation system any major traffic problems is avoided. There is an extensive bus network, and the subway is one of the most efficient in the world.

The Port of Singapore - the world's busiest in terms of shipping tonnage - is key to Singapore's growing prosperity and continued economic health. Singapore acts as the trading and distribution hub for the rest of Southeast Asia and as the major transshipment point linking the region to the rest of the world.

Changi airport is one of the major hubs in the region, and has the last decade been awarded best airport in the world. The government has also taken advantage of lower building costs during the Asian economic crisis, and the latest economic downturn to intensify the construction and upgrading of its physical economic infrastructure. These include several new metro lines and engaging in reclamation works to increase the land stock of the city.

 

Singapore is the city outside Norway with most Norwegian companies in the world. Currently more than 100 Norwegian companies are represented here. Approximately 2/3 of these are related to the maritime industry and the oil/gas sector. Most Norwegian companies in Singapore are not only serving the Singaporean domestic market, but also operating regionally. There is also a Norwegian Business Association established. Innovation Norway offers a range of services for companies from Norway that wish to enter the Singaporean market.