The Singapore advantage Part one

In conjunction with Singapore’s 50th year of independence, our local Managing Director writes for the Finance & Gestion magazine examining what makes the country one of the easiest places to do business in the world. We republish the article as a two-part series here. In part one, he explores Singapore’s strategic geographical location and position as a global financial hub.

Singapore is turning 50 this August. The country has never been better positioned for the future since its independence. Singapore is strategically situated in the heart of the emerging Southeast Asia. With the ASEAN Economic Community (AEC) slated for kick-off at the end of this year, Singapore is set to grow even further by leveraging on its position as the world-class logistics hub, global financial centre and ideal location for global companies to setup their Asia headquarters.

An ideal geographical location

Located at the nexus of major shipping lanes, Singapore is an essential logistics hub and conduit for world trade. The World Bank ranked the country as the No. 1 Logistics Hub in Asia in the 2014 Logistics Performance Index. The city-state is a prime location for major logistics firms, with 20 of the top 25 global logistics players conducts their operations there.

Changi Airport is one of Asia’s largest cargo airports and is served by over 6,500 weekly flights connecting to 280 cities in 60 countries, handling close to 2 million tons of cargo annually. Singapore is the world’s busiest trans-shipment hub, handling about one-seventh of the world’s container trans-shipment throughput or 31.24 million TEUs of containers in 2013.

The country is connected by 200 shipping lines to 600 ports in 123 countries, with daily sailings to every major port of call in the world. Singapore offers streamlined security regulations and operational procedures to help businesses cope with the adoption of many international customs and security programs. The city-state has highly efficient customs and business- friendly import and export procedures providing companies greater efficiencies in obtaining clearance and permits for their goods.

A financial hub

Singapore is also a well-established premier financial hub in Asia. Over 1,000 financial institutions are operating in the country to take full advantage of the socio-politically stable environment and robust economic fundamentals. The banking and financial sector employs 190,000 people, contributing 12% to the GDP.

The Singapore International Monetary Exchange (SIMEX) is Asia’s first financial futures exchange. The country is a premier wealth management centre with over US$1.8 trillion assets under management in 2013 thus making it the fastest growing wealth management centre in the world.

Singapore has built an outstanding network of international agreements that further enhances its attractiveness for investment holding and makes the island-state the logical choice for trade and investment in Asia.

The 74 Avoidance of Double Taxation Agreement (DTAs) serve to prevent double taxation of income earned in one country by a resident of the other country. The 41 Investment Guarantee Agreement (IGAs) are designed to promote greater investment flows between Singapore and the other country, and the 21 Free Trade Agreements (FTAs) and Economic Partnership Agreements (EPAs) are superhighways that connect the city-state to major economies and new markets.

The country’s emphasis on developing activities along the innovation value chain is consistent with the new principles being developed under the OECD’s Base Erosion and Profit Shifting (BEPS) project. Singapore is a highly suitable location for multinationals reviewing their IP strategies in light of the new international tax framework being developed under BEPS. Companies in city-state also benefit from the country’s Group Relief system for loss transfer. The scheme permits transfer of current year not utilized losses, donations, and unabsorbed capital allowances within group companies.

Singapore has what it takes for global companies to set up their regional hub here. In the second part of our article series, we will examine its solid legal framework and innovation-conducive policies that offer a stable operating environment to explore the enormous growth opportunities in Asia.

Read the second part of our article series here

This is an extract from the article entitled "Happy 50th Birthday, Singapore!” published in the July-August issue of Finance & Gestion, the magazine of the French CFO association.

Read more about doing business in Singapore

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