U.S. Business Presence in Singapore

Singapore is home to over 1,500 American firms, most of which serve the regional market.

During the first six years of the U.S. Singapore Free Trade Agreement, which came into effect on January 1, 2004, two-way trade has increased 41% and U.S. exports
by nearly 74%. In 2009, the United States overtook Malaysia to become Singapore’s largest supplier of imported goods. The other major suppliers were China, Japan, Indonesia, South Korea, Taiwan, France, Thailand and Saudi Arabia.

Using agents or distributors is a common and effective way to serve the Singapore market and, from here, other countries in Southeast Asia. Many distributors in Singapore deal not only with the local market but also with the broader regional market. Establishing a distributor in Singapore is an excellent way to start looking at the wider Asian market. It is important for U.S. firms to visit their representatives, maintain a good relationship with them and respond quickly to inquiries.

Foreign Direct Investment Statistics
The United States is one of Singapore's largest foreign investors, with over 1,500 U.S. firms in operation. According to the Singapore Department of Statistics
(Singapore DOS), U.S. cumulative foreign direct investments in Singapore totaled US$35.4 billion in 2007 (latest available data). According to U.S. Department of Commerce statistics (USDOC), U.S. firms (manufacturing and services) in 2008 had cumulative total investments in Singapore of $106.5 billion. Discrepancies
between USG and GOS FDI numbers are attributable to differences in accounting methodologies.

TABLE A

STOCK OF FOREIGN DIRECT INVESTMENT (FDI) IN SINGAPORE BY COUNTRY
(As at Year-end, Historical Cost)
(US$ million)

	2004	2005	2006	2007
Total FDI	169,433	194,581	241,570	317,113
United States	25,107	24,381	24,990	35,429
Canada	1,736	1,556	1,784	2,169
Australia	1,637	1,711	2,164	2,940
New Zealand	81	891	1,112	1,123
Europe	73,758	84,117	113,481	136,102
European Union	59,807	65,465	85,684	104,624
France	3,886	4,208	5,276	6,892
Germany	4,455	4,921	4,950	6,406
Netherlands	19,317	19,314	31,710	35,836
Norway	3,805	5,147	9,922	11,920
Switzerland	10,065	13,384	17,680	18,506
United Kingdom	26,885	29,800	34,079	43,618
Asian Countries	38,103	47,022	53,785	72,210
China	20	547	1,102	1,542
Hong Kong	1,957	2,825	4,119	4,308
Japan	22,954	26,927	29,323	32,285
South Korea	518	762	509	2,034
Taiwan	3,508	4,333	4,917	5,563
India	294	783	1,681	8,884
Asean	5,059	6,832	7,901	11,693
Brunei Darussalam	219	229	202	211
Indonesia	668	411	662	1,208
Malaysia	3,080	4,903	5,485	8,530
Philippines	433	445	568	604
Thailand	634	823	965	1,055
Vietnam	20	13	7	18
Cambodia	0	0	0	0
Myanmar	5	9	11	65
South & Central
America/Caribbean	25,507	30,130	39,695	60,684
Other Countries Nec	3,504	4,775	4,558	6,455

Source: Department of Statistics, “Foreign Equity Investment in Singapore, 2007”

TABLE B

STOCK OF FOREIGN DIRECT INVESTMENT (FDI) IN SINGAPORE BY INDUSTRY
(As at Year-end, Historical Cost)
(US$ million)

	2004	2005	2006	2007
Total FDI	166,338	211,151	257,058	317,113
Manufacturing	57,226	67,597	74,767	80,270
Construction	678	603	526	1,052
Wholesale &
Retail Trade	26,010	35,569	43,650	51,435
Hotels &
Restaurants	1,516	1,333	1,939	2,086
Transport &
Storage	7,866	11,510	16,115	20,761
Information &
Communications	2,071	2,408	2,471	3,298
Financial &
Insurance Srves	61,236	79,329	101,920	133,354
Real Estate,
Rental & Leasing
Srves	4,737	5,395	7,080	12,275
Professional/
Technical/Admin
Support	4,563	5,000	6,573	7,097
Others	90	275	680	1,314

Source: Department of Statistics, “Foreign Equity Investment in Singapore, 2007”

TABLE C

STOCK OF DIRECT INVESTMENT ABROAD BY COUNTRY
(As at Year-end, Historical Cost)
(US$ Million)

	2004	2005	2006	2007
Total Direct
Investment	110,015	121,392	158,900	206,461
Asia	52,227	62,770	76,735	94,578
Asean	24,151	28,733	34,181	43,399
Brunei	39	38	74	90
Indonesia	7,360	8,792	10,909	12,677
Malaysia	9,018	10,743	12,340	14,682
Philippines	1,825	1,980	2,182	2,589
Thailand	4,420	5,132	6,760	10,662
Vietnam	934	1,032	1,083	1,349
Cambodia	n.a.	n.a.	n.a.	n.a.
Myanmar	430	880	650	1,132
Laos	n.a.	n.a.	n.a.	n.a.
Hong Kong	7,203	9,208	10,158	12,153
Taiwan	2,335	2,830	3,405	3,472
China	13,577	16,377	21,856	27,265
Japan	1,380	1,527	1,648	1,667
South Korea	1,732	2,035	2,174	2,095
India	400	757	1,625	2,940
Europe	10,159	10,525	22,050	30,938
European Union	6,876	7,482	17,960	27,106
Netherlands	607	1,522	1,994	2,152
United Kingdom	4,420	4,338	13,170	21,656
France	146	158	146	91
Germany	241	365	391	430
Switzerland	366	375	387	2,983
United States	5,918	5,905	5,574	9,373
Canada	75	143	147	162
Australia	6,782	5,369	7,089	10,957
New Zealand	788	809	827	1,015
Caribbean/
Latin America	26,174	28,418	34,944	36,583

Source: Department of Statistics, "Singapore's Investment Abroad, 2007"; Yearbook of Statistics, 2009

TABLE D

GDP AND FDI FIGURES, 2003-2007
(US$ Million)

Year	GDP*	FDI	FDI as ratio to GDP**
2003	95,474	144,747	1.52
2004	113,456	169,433	1.49
2005	120,967	194,581	1.60
2006	144,199	244,538	1.70
2007	174,584	303,418	1.74

Footnote: *GDP at Current Market Price
**Based on Singapore dollars
2007 FDI data latest available
Source: Department of Statistics

TABLE E

TOP 20 FOREIGN INVESTORS BY TOTAL ASSETS
(US$ Billion)

	Country	Total	Business
Company	of Origin	Assets	Activities
Citicorp
Singapore	U.S.	29.21	Banking
Glaxo Wellcome Mfg.	U.K.	24.20	Healthcare Products
Prudential
Assurance Co.	U.K.	9.37	Insurance
Shell Eastern
Trading	Netherlands	6.70	Chemicals
Shell Eastern
Petroleum	Netherlands	6.13	Chemicals
Credit Suisse
Singapore	Switzerland	6.13	Banking
BP Singapore	U.K.	4.53	Chemicals
ING Asia	Netherlands	4.29	Banking
Citigroup
Investment	U.S.	3.41	Banking
Citigroup
Holding	U.S.	3.33	Finance
Seagate
Singapore	U.S.	3.28	Electronics
Texas Instruments
Singapore	U.S.	3.23	Electronics
National
Australia
Merchant Bank	Australia	2.97	Banking
Kuok Singapore	Cook Islands	2.74	Multi-industry
Aviva Ltd	U.K.	2.40	Insurance
Vitol Asia	Netherlands	2.36	Chemicals
Motorola Trading
Center	U.S.	2.28	Electronics
Asia Food &
Properties	BVI	2.28	Multindustry
GE Pacific	U.S.	2.16	Multindustry

Source: DP Information Group, "Singapore 1000, 2009"

Using an Agent or Distributor

Many American exporters use agents or distributors to serve the Singapore market and other markets in Southeast Asia. Finding prospective partners usually presents no problem as Singapore firms are aggressive when it comes to representing new products and typically respond enthusiastically to new opportunities. Most American companies that use the U.S. Commercial Service (CS) matchmaking and promotion services in Singapore find several interested and well qualified agents or distributors. Because of the relatively small size of the Singapore market, potential partners often ask to cover regional territories. With a strong history of trade, Singaporean companies are particularly successful in taking products to the region. CS Singapore offers a wide range of programs and has an excellent record of success in introducing U.S. firms to the market. A list of services offered by CS Singapore can be obtained from our website at www.buyusa.gov/singapore.

Establishing an Office

American firms wishing to establish a presence in Singapore have several straightforward options to do so. They can establish a Representative Office (RO),

Representative Office

Setting up a Representative Office in Singapore can be a good way for American firms to explore business opportunities in Singapore or the region. RO in banking and

insurance need to register with the Monetary Authority of Singapore (MAS) and meet the guidelines or requirements laid out by the MAS. RO in all other industries need to register with International Enterprise (IE) Singapore. ROs can only carry out market research, conduct feasibility studies or work as a liaison on behalf of the parent company. ROs may not conduct business directly or on behalf of the parent company. ROs cannot ship, transship or store goods in Singapore. American firms can either work through an agent or distributor to do so or establish their own commercial presence. If an American company wishes to carry out operations in Singapore, it should register a branch office or incorporate a local company with the Accounting & Corporate Regulatory Authority (ACRA) – http://www.acra.gov.sg.

ACRA publishes an excellent guide that takes the first-time registrant through the process of establishing a branch office or incorporating in Singapore.

Branch Office

For Branch Offices, the Companies Act requires a foreign company to appoint two local agents in Singapore to act on behalf of the company. The agents must be ordinarily resident in Singapore, i.e. a Singaporean Citizen, a Singapore Permanent Resident, or a person who has been issued an EntrePass/Approval-In-Principle letter/Dependent Pass.

Establishing a Singapore Business

American firms can also register a sole-proprietorship, partnership, limited liability partnership or incorporate a company in Singapore. For a sole proprietorship, the

process takes about one day, while more complex business entities can take up to six weeks and require lawyers and accountants to assist with incorporation documents. A point to bear in mind is that registration/incorporation of a company does not automatically mean that expatriate staff can be assigned to Singapore. Foreign staff must obtain employment passes from the Singapore Ministry of Manpower, although this is generally routine.

Franchising

Despite a small population of only about five million, Singapore is home to more than 400 franchise concepts. Foreign franchises are well received and the United States is by far the largest supplier of foreign franchises in the country.

Joint Ventures/Licensing

Foreign investors are not required to enter into joint ventures or cede management control to local interests. In Singapore, local and foreign investors are subject to the

same basic laws. Apart from regulatory requirements in some sectors, the government screens investment proposals only to determine eligibility for various incentive programs. Singapore places no restrictions on reinvestment or repatriation of earnings or capital. Licensing is a viable alternative in Singapore. With one of the strongest intellectual property rights protection (IPR) programs in Asia, a well-developed legal framework and an advanced manufacturing base, Singapore is an attractive location for American licensors.

The above is an excerpt from Doing Business in Singapore: The Gateway to Southeast Asia.