| tHE
sINGAPORE BUSINESS ENVIRONMENT |
| There
are many superlatives attributed to Singapore. The
city-state has been consistently ranked as one of
the best places for business in the world. |
Some even describe
Singapore as a modern economic miracle. A country
with 4 million people, without own natural resources
and with a history of only 40 years, has risen to
become one of the world’s strongest trade nations.
This success story may be largely credited to the
conducive business environment: stability and good
governance, a progressive trade policy inviting foreign
investment, a good education system with a highly-skilled
multi-lingual workforce, transparent and efficient
authorities, one of the lowest crime rates in the
world, an excellent infrastructure and global connectivity
that makes it easy to do business in the Asia-Pacific
region.
At the junction of East and West, Singapore is host to
more than 7,000 foreign companies many of which have
regional headquarter functions. The CEO of a multinational
has this to say about Singapore: “It has the best
infrastructure for doing business, is very well positioned
geographically, has a great set of laws to protect intellectual
and personal property and is a good place to hire bright
people.” |
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| Situated at the crossroads
of international trade routes, Singapore is a top
location for foreign investors, be they multinationals,
part of Europe’s dynamic middle-market or technology
start-ups. The on-going liberalisation of markets
and industries and the privatisation of government-linked
companies (‘GLCs’) offer excellent opportunities
to invest in Singapore and the neighbouring markets.
Integration of the 10 ASEAN countries under a free
trade area (AFTA) with a population of more than
500 million people is on track. Free Trade Agreements
with the US, Australia, Japan and many other countries
provide easier access to the global market |
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| Still, there are daunting
challenges ahead for Singapore. The bulk of regional
investment has been directed to China in recent years.
Some multinationals have relocated production facilities
to low cost countries, but manufacturing still plays
an important role and contributed more than 25 %
of GDP in 2004. Singapore leads worldwide production
of, amongst others, retail point-of-sales machines,
disk drives, hearing aids, infusion pumps, food flavouring
and fragrances, photo flash lamps, offshore oil rigs
and refrigerator compressors. The island-state successfully
attracts foreign investment in particular in technology
and services as it moves up the value chain. Sophisticated
sectors such as education, bio-sciences, medical
and financial services expand rapidly to benefit
from a growing Asian middle class. Moreover, the
rise of the new Asian powerhouses China and India
also provide huge trading opportunities for Singapore. |
|
 South
East Asia’s finance and business hub has
a reputation for being responsive to changes and
has proven its resilience during the economic recession
two years ago. The economy made a strong rebound
in 2004 and Singapore with 8.1 % enjoyed the strongest
economic growth in South-East Asia. Unemploy-ment
is down to 3.4 %. The government’s efficient
approach in combating the SARS threat in 2003 was
widely applauded. Singapore was similarly praised
for its swift help in organising international
relief efforts early this year after the disastrous
earthquake off Sumatra that triggered tsunamis
across the Indian Ocean.
The government under new Prime Minister Lee Hsien Loong,
the son of Singapore’s first premier Lee Kuan
Yew, continues its drivetowards a ‘knowledge
economy’ to sustain the country’s competitiveness
against increasing international competition. |
| Establishing
a business in Singapore is easy, and the island-state’s
legal system is extremely efficient and reliable.
Employment and intellectual property laws in particular
are business-friendly. Singapore is no longer among
the world’s most expensive cities (26th place
EIU, 46th place Mercer) and a recent World Bank study
found Singapore the cheapest and easiest place to
start a business in Asia. |
|
| Still, for a foreign
company wishing to set up operations in Singapore,
the question of the appropriate business vehicle
is an important one. The following chapters provide
a brief summary of the complex rules governing the
legal, tax and accounting aspects relevant to this
decision. Where appropriate, the establishment of
an incorporated subsidiary is compared with a branch
and a representative office. However, the ‘Business
Pilot’ can only be a general guide and does
neither purport nor is intended to be specific advice. |
Singapore, January
2008
Luther |
| About
Luther Rechtsanwaltgesellschaft mbH |
| With 250 attorneys
and 13 offices in Germany’s major business
centers, Luther Rechtsanwaltsgesellschaft mbH ranks
as one of the leading law firms in Germany. Our close
cooperation with Ernst & Young enables us to
provide comprehensive services to our clients and
move swiftly between the fields of legal, tax and
commercial consulting. Our international network
enables us to provide worldwide services without
losing information and taking care of the cultural
differences. Outside Germany, Luther has offices
in Brussels, Budapest, New York and Singapore. |
|
| Singapore is hub and
regional headquarter for many European companies
in Asia-Pacific. From Singapore we support global
players and companies of Europe’s dynamic middle
market with their regional projects in the whole
of Asia. Our partners are leading law firms in Asia-Pacific
including Australia, China, Hong Kong, India, Indonesia,
Japan, Korea, Malaysia, Thailand and Vietnam. Supported
by 15.000 employees of Ernst & Young in more
than 50 locations in Asia, we provide integrated
legal and tax advice in diverse areas such as the
establishments of subsidiaries and branches, business
restructurings, joint ventures with local partners,
cross-border acquisitions (M&A) and the assignment
of employees across Asia. Our internationally experienced
lawyers are familiar with the legal, tax and cultural
issues foreign investors face in this dynamic growth
region. |
|
| Our
Singapore office provides integrated legal and tax
services in the Asia-Pacific region in all areas
of business law: |
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• |
Business
establishment and start-up advice |
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• |
Commercial
and contract law |
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• |
Corporate
restructurings |
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• |
Due diligence
and transaction support |
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• |
Employment & assignments |
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• |
Foreign
direct investment |
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International
trade and distribution |
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Joint ventures |
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Mergers & acquisitions |
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Outsourcing
and reorganization |
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Tax planning |
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Venture
capital investments |
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• |
German,
French and European Union (EU) law |
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| While we mainly steer
regional projects for European multinationals and
medium-sized companies across Asia, we also advise
our Asian clients on investments and business transactions
in Europe. |
| Contact
us |
Dr. Knut Unger
Partner, Attorney-at-Law
Luther LLP
10 Anson Road,
#09-24, International Plaza,
Singapore 079903
Tel : +65 6408 8000
Fax : +65 6408 8001
Website |
| Disclaimer
and Terms of Use |
| The contents
of this website are of the nature of general comment
only, and neither purport nor are intended to be
specific advice. No user should act on the basis
of any matter contained on this website without considering
and, if necessary, taking appropriate professional
advice upon their own particular circumstances. Whilst
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| News |
|
New
Competition Act |
After an unusually controversial
debate in Parliament and some candid feedback
from the public, Singapore passed its first
competition legislation on 19 October 2004.
Before this, Singapore lagged behind other
Asian countries like Japan, Indonesia,
Korea, Thailand and the Philippines which
have anti-trust laws for years. Singapore
at last committed to introduce general
rules of competition in its Free Trade
Agreements with Australia and the US. The
new Competition Act (“Act”)
is based on UK competition law which itself
is largely influenced by EU competition
law.
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The Act prohibits anti-competitive
conduct with an appreciable adverse effect
on the Singapore markets and distinguishes
three main areas: |
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1.
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Anti-competitive agreements
or behaviour, like fixing of purchase or
selling prices or other trading conditions,
sharing markets or sources of supply. Banned
are also so-called horizontal arrangements,
i.e. arrangements between business partners
at the same economic level. However, there
will be block exemptions for certain sectors.
Still permitted are vertical arrangements,
e.g. license agreements between manufacturers
and distributors or sales agency agreements. |
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Abuse of a dominant position
in any market in Singapore or elsewhere – which
means that the position of companies in foreign
markets (i.e. mainly affecting foreign-owned
businesses) may be taken into consideration.
The Act does neither provide a definition
of “dominant position” nor what
would amount to an abuse of it. However,
it contains examples for conduct that may
constitute such an abuse, such as predatory
behaviour towards competitors, applying dissimilar
conditions to equivalent transactions or
making the conclusion of a contract subject
to acceptance by the other parties of supplementary
obligations which, by their nature or according
to commercial usage, have no connection with
the subject of the contracts. |
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Mergers
and acquisitions which may result in
a substantial lessening of competition
within any market in Singapore. Implementation
rules are expected that may provide some
guidance. However, as a transaction will
not have to be cleared or notified in
advance, there will likely be a degree
of uncertainty in this respect.
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The most controversial
feature of the new Competition Act is its
personal scope. While the term “undertaking” generally
includes all private sector players, local
as well as foreign companies and other
persons, several exceptions are made in
the public sector. The new general competition
law in particular does not apply to
• The Singapore Government, authorities and the many “statutory boards”
• in case of a ministerial permission due to “exceptional and compelling
reasons of public policy”, and
• 10 industries like telecommunications, media, post, transportation, energy
and waste disposal that are partly regulated already.
Especially this last exemption has been criticised
strongly in Singapore and overseas as the excluded
key sectors tend to be dominated by large Government-linked
corporations (GLC) controlled by the state
holding Temasek. Complaints of an unequal competition
framework from the US and others have had some
impact: the Singapore Government confirmed
that after a transitional period the general
competition rules shall also be extended to
the currently exempted sectors.
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| Source:
Luther |
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