Author: Lawyer Zhang Jingxinyue | PRC Practising Lawyer | Singapore Registered Foreign Lawyer
This article is based on a presentation delivered by Lawyer Zhang Jingxinyue at the Fifth International Commercial Legal Cooperation Forum on 24 March.
Distinguished moderator and guests, it is a pleasure to attend the Fifth International Commercial Legal Cooperation Forum. I would like to thank the organisers for providing this platform for exchange. My topic today is “Singapore's business environment and the principal investment sectors for Chinese enterprises in Singapore”. I hope today's presentation will give you a deeper understanding of Singapore's investment policies and help you identify more opportunities in the Singapore market.
I will cover four areas:
- Singapore's business environment;
- Investment sectors for Chinese enterprises in Singapore;
- Investment incentives; and
- Successful cases of foreign-invested enterprises in Singapore.
01 First, Singapore's Business Environment
Singapore is widely recognised as one of the easiest places in the world to do business. Its government continues to improve policies and regulations, reduce investment barriers and provide foreign investors with high-quality services and protection.
- Singapore's advantages include political stability, a sound legal system, advanced infrastructure and strong innovation capabilities.
- Singapore is an international financial centre with mature financial markets and a robust regulatory system.
- Located at a key transport hub in Southeast Asia, Singapore is known as the “crossroads of the sea”. Its port is one of the busiest in the world and provides businesses with efficient logistics services.
- The Singapore government has established a strict intellectual-property protection system to ensure that foreign-invested enterprises can develop in a fair competitive environment.
- Singapore is a low-tax jurisdiction. The corporate income-tax rate is 17%, the top personal income-tax rate is no more than 22%, and there is no dividend tax or capital-gains tax. Newly established companies may enjoy up to SGD 125,000 in tax relief during their first three tax years. Singapore has also signed agreements for the avoidance of double taxation with more than 50 countries, including China, preventing the same income from being taxed in both countries.
- Singapore has also signed free-trade agreements with many countries and regions. The China–Singapore Free Trade Agreement provides businesses in both countries with more convenient opportunities for trade, investment and cooperation.
According to the Global Competitiveness Index published by ESADE Business School in 2021, Singapore ranked third globally, behind only Switzerland and Denmark. By the end of 2021, Singapore's GDP had reached USD 321 billion, with a growth rate of 6.2%. More than 7,000 foreign-invested enterprises had established operations in Singapore. As one of the world's most important trading hubs, Singapore has trade relationships with more than 200 economies, with total trade exceeding USD 1.1 trillion.
In short, Singapore's business environment and investment advantages are widely recognised globally. This is one of the reasons why many foreign companies choose to establish companies and regional headquarters in Singapore.
02 Key Investment Sectors and Opportunities for Chinese Enterprises in Singapore Today and in the Future
（一）Financial Services
As one of Asia's financial centres, Singapore has attracted many multinational financial institutions. In 2017, the Monetary Authority of Singapore relaxed regulations for the banking and insurance sectors, for the first time allowing foreign investors to acquire Singapore non-bank financial companies and shifting supervision towards risk-based regulation. Chinese enterprises can therefore conduct banking, securities, insurance, fund management and cross-border trade-financing activities in Singapore.
（二）Technology and Innovation
Singapore is one of the most innovative economies in Southeast Asia and the wider Asia-Pacific region, and ranks among the world's top ten innovative countries. It is developing rapidly in emerging sectors such as fintech, the digital economy, artificial intelligence, the Internet of Things, blockchain and life sciences, attracting substantial foreign investment. By 2021, Singapore's fintech investment had reached SGD 2.5 billion, approximately USD 1.8 billion. Alipay and WeChat Pay are now widely used in Singapore. MAS and the Digital Currency Research Institute of the People's Bank of China have also signed a cooperation agreement to promote collaboration in digital currencies.
In the 5G sector, China Mobile and Singapore telecommunications provider StarHub jointly launched the world's first 5G innovation-application platform. They plan to integrate 5G, the Internet of Things, cloud computing and big data, develop industry-specific application solutions and promote their use worldwide. China Mobile, China Unicom and China Telecom have also established research centres in Singapore to strengthen cooperation in technology.
（三）Healthcare and Biomedicine
Singapore is one of the world's innovation centres for healthcare. It has advanced medical facilities and technologies and invests heavily in research and development. Its biomedical ecosystem is also well developed, bringing together globally recognised pharmaceutical companies, excellent research institutions and specialised talent. For Chinese enterprises, Singapore's healthcare and pharmaceutical sectors offer significant potential for investment and cooperation.
（四）Sustainable Energy and Environmental Technology
Singapore has advanced research capabilities and infrastructure in sustainable energy and environmental technology. Chinese enterprises can participate in investment and development in renewable energy, water and waste management, solar power, wind power and energy storage. For example, China Solar Energy Green Technology Corporation established its Asia-Pacific headquarters in Singapore to develop and promote solar technologies and projects.
（五）Education and Training
Singapore has an excellent education system, a mature talent-training market and world-renowned higher-education institutions. Chinese enterprises can conduct primary and secondary education, vocational training and language-training businesses in Singapore, or cooperate with local educational institutions to promote talent development and exchange. For example, Chinese education company TAL Education Group established its global research and development centre in Singapore to develop and promote online-education technologies and courses.
In addition to the sectors above, e-commerce, tourism and hospitality, logistics and supply chains, infrastructure construction, the digital economy and smart manufacturing are all important investment areas in Singapore. They represent global trends and important directions for Singapore's future development. Overall, China and Singapore have many opportunities for economic and trade cooperation. The two countries can continue deepening cooperation in innovation, services and trade liberalisation, promoting economic development and mutual benefit.
03 Support Policies and Incentive Programmes Offered by the Singapore Government to Foreign Investors
（一）Headquarters Programme: This programme aims to attract multinational companies to establish Asia-Pacific headquarters in Singapore. It offers financial and non-financial support, including tax incentives, professional services, talent training and assistance in finding suitable office premises.
（二）Singapore Plus One Policy: This policy encourages foreign companies to establish at least two production bases in the Asia-Pacific region, one in Singapore and another in a different Asia-Pacific country. This reduces dependence on a single country and promotes a more diversified and resilient business model.
Other current incentives and support programmes include innovation and technology funds, start-up accelerators and professional-services support schemes. These are not exhaustive; many other policies and programmes target particular industries and sectors. Foreign investors may contact the Singapore Economic Development Board or the Singapore investment-promotion authorities to discuss further policies and incentives.
04 Successful Cases
Chinese companies that have successfully invested and operated in Singapore include Alibaba, Tencent, Huawei, ZTE, China State Construction Engineering Corporation, China Merchants Group, Aviation Industry Corporation of China, Haier, Bank of China, China Merchants Bank and China Mobile. These companies have established offices, research and development centres and regional headquarters in Singapore.
Singapore has also attracted many leading global companies, including Google, Apple, Facebook, Microsoft, Dyson, HP, BMW and Unilever, to establish headquarters or conduct business there.
Of course, in addition to well-known large companies, many lesser-known Chinese enterprises have established companies and operations in Singapore and obtained support from Singapore's incentive policies and programmes.
These cases demonstrate the effectiveness of Singapore's government incentives and support programmes and the significant opportunities available to Chinese enterprises investing in Singapore, whether in technology, digitalisation, finance or other fields. Looking ahead, as economic and trade cooperation between China and Singapore continues to deepen, we believe the result will be mutually beneficial, and Chinese enterprises will achieve even greater success in Singapore.
That concludes my presentation. I hope it has provided useful insights and assistance.
Thank you. Singapore welcomes you all!
—
This article is for information only and does not constitute formal legal advice.
This article is general information and not legal advice. Specific matters require assessment by appropriately qualified professionals.