|
Originally published:
Aug-21-2003
Legal System
Based on English common law; has not accepted compulsory ICJ jurisdiction.
Economy
Currency: Singapore Dollar (SGD)
Inflation (%): -.04% (1998), 0.4 (1999), 1.4 (2000), 1.5 (2001), -0.4% (2002)
Real GDP Growth Rate: 0.3% (1998), 1.2% (1999), 10.1% (2000), -2.21% (2001), 2.2% (2002)
GDP Per Capita: $20,885 (1998), $20,598 (1999), $22,769 (2000), $20,544 (2001), $20,887 (2002)
Leading Markets (2002): United States (17.7%), Malaysia (17.4%), Hong Kong (9.2%), Japan (7.1%)
Leading Suppliers (2002): Malaysia (18.2%), United States (14.2%), Japan (12.5%), Thailand (4.7%)
SGD per US Dollar: 1.7520 (As of August 20, 2003)
Top Industries: Electronics, financial services, oil drilling equipment & pharmaceuticals
General Economic Situation
Singapore's economic policy is focused on the creation of national wealth through sustained and stable economic growth. However, like many export-oriented nations, Singapore was effected by the global economic slowdown following September 11, 2001. As a result, its GDP dropped by 2% that year.
Singapore's economy contracted again in 2003. A sharp 4.3% drop in GDP was recorded in the second quarter, with SARS having a far greater impact than expected. With the end of the SARS crisis, the travel and tourism industries are expected to gain momentum through the second half of the year. Increased demand is also expected in the pharmaceutical industry. The government's current GDP growth forecast for 2003 is 0.5-2.5%, which has already been lowered from an initial forecast of 2.0-5.0%. The Ministry of Trade & Industry will be reviewing this estimate in August.
Singapore's economy is based primarily upon manufacturing, with wholesale and retail trade also serving as strong economic sectors. As it moves from an investment-driven to an innovation-driven economy, the country is expected to continue to grow the traditional sectors of electronics, engineering and chemicals. In addition to the financial sector, it is also expected to diversify into new high-growth sectors and activities including biomedical sciences, logistics, transportation and education.
Business Climate
Much of Singapore's economic achievement can be attributed to its strategic location as a port of call between the East and West. This link is increasingly important with the globalization of economies and increasing economic interdependence. Singapore's free trade policy, where virtually all goods enter the country duty-free, has been fundamental to their success as a world trade partner.
Singapore welcomes foreign investment, especially in the services sector and in areas that develop technological, management and labor skills. There are generally no restrictions on the foreign ownership of businesses, although some types of businesses such as banks, finance companies, insurance and stockbroker firms may require a special license from the government. The high-tech and financial service industries are lightly-regulated, and telecom was privatized in 2000. There are, however, restrictions on media and entertainment businesses wishing to enter the market in Singapore.
Singapore is a member of the ASEAN Free Trade Area (AFTA), as well as a contracting partner to the World Trade Organization. On May 6, 2003 President Bush signed the United States-Singapore Free Trade Agreement (USSFTA), which will remove barriers in the goods and services trade and in investments. It will undoubtedly expand opportunities for American businesses in Singapore.
Credit and Collections
- Collection Experience: Good - Fair
- Exchange Delays: 3+ months
- Preferred Credit Terms: 30/ Sight Draft
- Minimum Credit Terms: Open Account
Risk Assessment
Singapore is extremely vulnerable to changes in the international market due to its openness to foreign trade. The growth in international demand for chemicals and pharmaceutical products has lagged. More sustained growth would require a pick-up in the electronics sector, which accounts for two thirds of exports. Recently, Singapore has attempted to diversify into the service sector in an attempt to decrease its dependence on electronics.
Singapore is nevertheless suffering from a loss of competitiveness vis-à-vis other countries in the region because of high taxation and wages. Its re-export business is decreasing and its development as a regional financial center is hampered by continuing regional political risks. Generally the risk of political instability within Singapore remains low, but friction between the island state and its regional neighbors could undermine investor confidence. Investors' perceptions of Singapore have recently deteriorated due to a series of terrorist attacks in neighboring countries. However, Singapore has held on to its many assets as it seeks to reposition itself mainly by strengthening ties with China and promoting economic agreements with various industrialized countries.
Total foreign debt is expected to rise from an estimated $8.2 billion at the end of 2002 to $9.4 billion by the end of 2004 as firms start to take on new debt in line with improvements in sentiment and capacity utilization rates.
Country Risk Rating: (A2) Default probability is still weak even in the case when one country's political and economic environment or the payment record of companies are not as good as A1-rated countries.
Sources for further information on doing business in Singapore
Doing Business in Singapore: 2008 Country Commercial Guide, U.S. Department of Commerce
Singapore Embassy in Washington: Official site of the Singapore Embassy in Washington D.C. Provides current news stories on Singapore, as well as more general information on the country's history, government, economy, culture, and agriculture.
Owens Online-Singapore Credit Grantor's Fact Sheet: Provides information that is specific to the credit industry in Singapore.
US-ASEAN Business Council: Provides information on the business environment in Singapore including a general overview on economic conditions, establishing a business presence, and taxation issues. Also includes a section with current news and press releases from the US-ASEAN Business Council.
*****
This information is provided by ABC-Amega Inc. Providing international receivable management and debt collection services for exporters to more than 200 countries including Singapore. For further information, contact info@abc-amega.com.
This report represents a compilation of information from a wide variety of reputable sources including: the U.S. Department of State, the U.S. Commercial Service, CIA World Factbook and Coface North America Country Risk Assessment.
Risk Assessment information: Coface
Information on credit terms and the probability of prompt payment are provided, with permission, from Overseas Press and Consultants (OP&C) as published in IOMA's Report on "Managing Credit, Receivables & Collections", July 2003.
|
