Doing Business in Singapore
Singapore is an important partner of the United States with a bilateral gold standard Free Trade Agreement (FTA) signed in 2003 and implemented January 1, 2004 – the first U.S. FTA signed in Asia. In 2016, Singapore was the United States’ 13th largest export market and 19th largest trading partner. The U.S. exported more to Singapore (US$26.87 billion) than to many other economies with significantly larger populations, including Taiwan, Australia, India, Italy, and Malaysia. In 2016, the U.S. ran its sixth largest goods trade surplus of US $9.07 billion with Singapore.
Singapore’s gross domestic product grew 2.0% in 2016 and the official growth forecast for 2017 is 1.0% to 3.0%. The United States was Singapore’s third largest source of imports while China retained its top position followed by Malaysia, U.S., Taiwan, Japan, South Korea, Indonesia, Germany, France, and Saudi Arabia.
The World Bank ranked Singapore the second easiest place to do business in the world. Five reasons U.S. companies should consider exporting to Singapore are:
• Major distribution and logistics hub and gateway to the ASEAN region
• Lack of corruption
• Favorable tax codes
• Strong intellectual property protection
• English speaking population
Singapore is generally a free port as more than 99% of all imports enter Singapore duty-free. For social and/or environmental. reasons, it levies high excise taxes on distilled spirits and wine, tobacco products, motor vehicles, and gasoline.
U.S. companies face technical import barriers for beef, pork and poultry products, and service barriers include restrictions on satellite dishes, foreign newspapers, pay television, legal services, banking, and healthcare procedural transparency.
Details on the barriers can be found in the USTR 2017 National Trade Estimate Report on Foreign Trade Barriers available online at https://ustr.gov/about-us/policy-offices/press-office/reports-and-publications/2017/2017-national-trade-estimate.
Competing with global suppliers remains a key challenge for American companies. With the ongoing restructuring of Singapore’s economy, U.S. companies doing business in the country can expect increased operating costs and continued tightening availability of foreign labor. The next 50 years will present new challenges to Singapore in the form of a greying workforce, maturing economy, growing influence of social media, and increasing competition from other trade agreements and ASEAN partners. To counter the challenges, the Singapore Government’s Committee on the Future Economy has identified strategies to meet the challenges. Report on the Committee on the Future Economy (PDF-3.24MB)
U.S. exporters will find a promising market for the following industry sectors in Singapore: semiconductors, oil and gas, aircraft and parts, medical devices, telecommunication equipment, computer hardware, software and peripherals, environmental control equipment, industrial automation, laboratory and scientific equipment, and education.
The following are major infrastructure projects, significant government procurement and business opportunities in Singapore:
- US$500 million second Liquid National Gas (LNG) terminal is being finalized;
- US$150 million Very Large Floating Structure (VLFS) tender for petrochemical storage is postponed to 2018 due to the downturn in the oil and gas sector;
- US$580 million blueprint to grow the clean energy industry in Singapore;
- Major redevelopment of Singapore’s oldest and largest hospital is set to take place from 2025 to 2035;
- Over the medium term, five new public hospitals and up to twelve more polyclinics will be built by 2030 and there are plans to build new and replacement nursing homes to bring the total to 25 by 2020;
- A new 300-bed hospital for infectious disease will be built and is expected to be ready by 2018 while a new US$135 million National Heart Center building is currently being built at the Singapore General Hospital and scheduled for completion in 2020;
- Other infrastructure projects include the Woodlands General Hospital and the existing Tan Tock Seng Hospital. These are scheduled to progressively come on stream between 2020 and 2036;
- Construction of Singapore Changi Airport Terminal 4 and Terminal 5 and a third runway;
- US$2.6 billion Phase 3 and 4 port expansion at Pasir Panjang Terminal;
- Advance water technology and infrastructure in areas such as filtering and purifying machinery and apparatus, technologies involving wasterwater recycling and treatment, and desalination technologies;
- Singapore Government ICT tenders of more than US$1.9 billion;
- Smart Nation Initiatives.
Market Entry Strategy
Many U.S. exporters successfully use agents or distributors to serve the Singapore and other Southeast Asia markets while over 4,200 U.S. firms have set up operations in the country. Singapore firms are aggressive when it comes to representing new products and usually respond enthusiastically to new opportunities.
Price, quality, and service are the three main factors for Singapore buyers. U.S. exporters should be aware that competition is strong and buyers expect good after-sales service. Selling techniques vary according to the industry and product and are comparable to the techniques used in most other sophisticated markets. It is also important for U.S. firms to visit their representatives in Singapore and maintain close contact with them.