Singapore

Originally published: Mar-26-2009

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Official Name: Republic of Singapore
Internet Domain: .sg
International Dialing Code: +65
Time Zone: UTC+8

Table of Contents

Location and Size

Singapore is a city-state with an area of 704 sq. km. (271 sq. mi.).

The country comprises the main island - linked by a causeway and a bridge to the southern tip of Malaysia - and some 50 smaller islands.

Government

Singapore is a parliamentary republic, became internally self-governing in 1959, and gained formal independence from Britain on August 9, 1965.

Branches of the government include:

• Executive--president (chief of state) -- S R Nathan; prime minister (head of government) -- Lee Hsien Loong.
• Legislative--unicameral 84-member Parliament (maximum 5-yr. term).
• Judicial--High Court, Court of Appeal, subordinate courts.

Legal System

Singapore’s legal system is based on English common law. Singapore has not accepted compulsory International Court of Justice (ICJ) jurisdiction. (What does this mean?)

People

Singapore is one of the most densely populated countries in the world. Most of its people live in public housing tower blocks. Their way of life is characterized by one of the world's highest standards of living, and a system of punishments for acts deemed to be anti-social.

• Population: 4,657,542 (July 2009 est.). Chinese make up more than 76% of the community; Malays and Indians make up much of the remainder; Christian. There are many foreign workers.
• Population growth rate: 0.998% (2009 est.)
• Languages: Malay (national language); Mandarin (a Chinese language), English and Tamil (an Indian language) also are official languages. English is the language of administration and is widely used in business and the professions. The government has mandated English as the primary language to be used at all levels of the school system.
• Literacy: 92.5% (2000 census)
• Ethnic Make-up: Chinese 76.8%, Malay 13.9%, Indian 7.9%, other 1.4% (2000 census)
• Religion: Buddhist 42.5%, Muslim 14.9%, Taoist 8.5%, Hindu 4%, Catholic 4.8%, other Christian 9.8%, other 0.7%, none 14.8% (2000 census)

Economy

Singapore has a highly developed and successful free-market economy. It enjoys per capita GDP equal to that of the four largest West European countries. Its strategic location on major sea lanes and its industrious population have given Singapore an economic importance in Southeast Asia disproportionate to its size.

Often referred to as one of Asia's economic "tigers", Singapore's economy is driven by electronics manufacturing and financial services. In the face of strong competition from regional manufacturers, Singapore is seeking to strengthen its services sector and tourism industry.

The Economist Intelligence Unit forecasts that the economy will contract slightly in 2009. This downturn will reflect the fact that Singapore’s economy is highly exposed to the global economic slowdown. Weaknesses in this economy that may affect future economic growth include shortgages of skilled labor, and aging population, and potential social tensions that could emerge due to growing inequality and increasing long-term employment among less-skilled job seekers.

• Currency: Singapore Dollar (SGD)
• Leading Markets (2007): Malaysia 12.9%, Hong Kong 10.5%, Indonesia 9.8%, China 9.7%, US 8.9%, Japan 4.8%, Thailand 4.1%
• Leading Exports-commodities: machinery and equipment (including electronics), consumer goods, chemicals, mineral fuels
• Leading Suppliers (2007): Malaysia 13.1%, US 12.5%, China 12.1%, Japan 8.2%, Taiwan 5.9%, Indonesia 5.6%, South Korea 4.9%
• Leading Imports-commodities: machinery and equipment, mineral fuels, chemicals, foodstuffs
• Top Industries: electronics, chemicals, financial services, oil drilling equipment, petroleum refining, rubber processing and rubber products, processed food and beverages, ship repair, offshore platform construction, life sciences, entrepot trade
• Top Agricultural Products: rubber, copra, fruit, orchids, vegetables; poultry, eggs; fish, ornamental fish

Economic Indicators

(e) estimate (f) forecast

Comparative Economic Indicators – 2008 (estimates)

*PPP - Purchasing Power Parity

Credit and Collections

Overseas Press & Consultants (OP&C) Evaluation

• Collection Experience: Good-Fair
• Exchange Delays: 2 months
• Preferred Credit Terms: 30-day sight draft
• Minimum Credit Terms: Open Account

ABC-Amega's collection experience in Singapore

Singapore has retained a British-based system of Common Law. Their court system is very efficient and English is widely spoken making collections somewhat easier than other Asian countries, like China, that often require fluency in the local. ABC-Amega's local affiliate attorneys will accept contingent fees on amicable collection attempts. However, if legal action is required, all Singaporean attorneys require hourly fees. As Singapore has one of the most diligent and competent Arbitration tribunals (Singapore International Arbitration Centre), in the world, we recommend putting an arbitration clause in your Singapore credit applications and/or contracts. (Information provided by ABC-Amega's senior international collector, David Greenberg, Div. VP)

Dispute Resolution 

The dispute settlement procedures in Singapore promote compliance through consultation and trade-enhancing remedies.

Singapore enacted and subsequently amended the Arbitration Act of 2001 for domestic arbitration based on the United Nations Commission on International Trade Law (UNCITRAL) Model Law. It has ratified the recognition and enforcement of Foreign Arbitration Awards (New York, 1958), and the International Convention on the Settlement of Investment Disputes. The Singapore International Arbitration Center (SIAC) and the Singapore Mediation Center (SMC) actively promote mediation and reconciliation for settling commercial disputes.

Risk Assessment

Coface Country Risk Rating: A1 -- Rating watch listed with negative implications since December 2008. The political and economic situation is very good. A quality business environment has a positive influence on corporate payment behavior. Corporate default probability is very low on average.

Ducroire Delcredere Political Risk Rating: 1 – lowest risk
Ducroire Delcredere Commercial Risk Rating: A – lowest risk

Business Climate

Upon independence in 1965, Singapore was faced with a lack of physical resources and a small domestic market. In response, the Singapore Government adopted a pro-business, pro-foreign investment, export-oriented economic policy framework, combined with state-directed investments in strategic government-owned corporations.

Singapore's strategic location on major sea lanes, coupled with its pro export oriented policy framework, has allowed its small economy to be one of the most competitive and flexible in the world. The Singaporean economy has shown a high degree of resilience, recording solid economic growth rates. Owing to an efficient, well maintained business environment, Singapore has long benefited from vibrant entrepreneurial activity.

The country's largely corruption-free government, skilled work force, and advanced, efficient infrastructure have attracted investments from more than 7,000 multinational corporations from the United States, Japan, and Europe.

The government hopes to establish a new growth path that will be less vulnerable to the global demand cycle for information technology products, and less vulnerable to a world economic downturn. It has succeeded in attracting major investments in pharmaceuticals and medical technology production while continuing efforts to establish Singapore as Southeast Asia's financial and high-tech hub.

Foreign firms are found in almost all sectors of the economy. Multinational corporations account for more than two-thirds of manufacturing output and direct export sales, although certain services sectors remain dominated by government-linked companies.

Private Ownership: Foreign and local entities may readily establish, operate, and dispose of their own enterprises in Singapore. Except for representative offices (where foreign firms maintain a local representative but do not conduct commercial transactions in Singapore), there are no restrictions on carrying out remunerative activities.

Transparency of Regulatory System: Regulations are straightforward. Virtually all commercial operations are performed with transparency and speed.

Intellectual Property Rights: Singapore has developed one of the strongest intellectual property (IP) regimes in Asia. Singapore is a member of the WTO and a party to the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). It is a signatory to other international copyright agreements, including the Paris Convention, the Berne Convention, the Patent Cooperation Treaty, the Madrid Protocol, and the Budapest Treaty.

Singapore's piracy rate averages about 5-10% for audio and video and 39% for business software. Software piracy levels in Singapore, while among the lowest in Asia, are almost double the estimated level in the United States. Rights holders have encountered difficulties when attempting to prosecute IP cases based on tips provided by company insiders. Singapore currently does not offer specific protection to "whistleblowers". As a result, many informants refuse to provide crucial testimony in court.

U.S. industry has raised concerns that Internet piracy in Singapore is on the rise due to the increasing availability of the country's broadband facilities.

Conversion and Transfer Policies: Singapore places no restrictions on reinvestment or repatriation of earnings and capital, and maintains no significant restrictions on remittances, foreign exchange transactions and capital movements.

Corruption: Corruption is almost nonexistent. Singapore has, and actively enforces, strong anti-corruption laws. When cases of corruption are uncovered, whether in the public or private sector, the government deals with them firmly, swiftly and publicly. Singapore is not a party to the OECD Convention on Combating Bribery, but the Prevention of Corruption Act makes it a crime for a Singapore citizen to bribe a foreign official or any other person, whether within or outside Singapore.

Economic Freedom: Singapore's economic freedom score is 87.1, making its economy the 2nd freest in the 2009 Index of Economic Freedom. Singapore is ranked 2nd out of 41 countries in the Asia-Pacific region, and its overall score is significantly higher than the world average.

For more detailed information on these topics, visit the 2008 Investment Climate Statement – Singapore, of the U.S. Department of State.

Business Protocol

Singapore is a multi-ethnic society where Chinese, Malay, and Indian traditions coexist beneath the veneer of a western cosmopolitan metropolis.

Singaporeans are very sensitive to retaining face in all aspects of their lives. Face indicates personal dignity and is a prized commodity that can be given, lost, taken away or earned. It is a mark of personal qualities such as a good name, good character, and being held in esteem by one's peers. It can also be greater than the person and extend to family, school, company, and even the nation itself.

Singaporeans claim they are an egalitarian society, yet they retain strong hierarchical relationships that can be observed between parents and children, teachers and students, and employers and employees. This reliance on hierarchy is drawn from Confucianism, which emphasizes respecting age and status, and even blind obedience to one's elders. In the workplace, this is seen in the increased deference that is paid to employees who are older.

Business in Singapore is more formal than in many western countries. There are strict rules of protocol that must be observed. The group (company or department) is viewed as more important than the individual. People observe a strict chain of command, which comes with expectations on both sides. In order to keep others from losing face, much communication will be non-verbal and you must closely watch the facial expressions and body language of people you work with.

Building Business Relationships: Doing business is a matter of being tied into the proper network, which is the result of long-standing personal relationships or the proper introductions. This is a group-oriented culture, so links are often based on ethnicity, education, or working for the same company. Once you are recognized as part of the group, you will be accepted and expected to obey the unwritten rules of the group. Relationships take time to develop. You must be patient, as this indicates that your organization is here for the long-term and is not looking only for short-term gains.

Business Greeting: Greetings will follow a strict protocol often based on both the ethnic origin and age of the person. Younger people or those who work in multi-national companies may have adopted the western concept of shaking hands with everyone, but this is not the case with older or more reserved Singaporeans.

Business Cards: Business cards are exchanged after the initial introductions using both hands. If you will be meeting ethnic Chinese, it is a good idea to have one side of your card translated into Mandarin. Have the Chinese characters printed in gold, as this is an auspicious color. Hand your card so the typeface faces the recipient. Examine business cards carefully before putting them in a business card case. Treat business cards with respect. This is indicative of how you will treat the relationship. Your own business cards should be maintained in pristine condition. Never give someone a tattered card. NEVER scribble notes on the cards you have received.

Business Attire: In general, day-to-day office attire is business casual. The foreign visitor, however, should dress a touch above the average dress code.

Names and Titles: Differ based on ethnicity of the individual (visit Kwintessential Cross Cultural Solutions for further info).

Conversation: Singaporeans are group dependent and rely on facial expression, tone of voice and posture to tell them what someone feels. They often trust non-verbal messages more than the spoken word. They tend to be subtle, indirect and implicit in their communications. They hint at a point rather than making a direct statement. Silence is an important element of Singaporean communication. Pausing before responding to a question indicates that they have given the question appropriate thought and considered their response carefully. They do not understand Western cultures' ability to respond to a question hastily, and regard this as an indication of thoughtlessness and rude behavior.

Gifts: For visitors it is always a nice gesture to bring something typical from home.

Meetings and Negotiations: Always send a list of people who will be attending the negotiations and their title well in advance. Always wait to be told where to sit. There is a strict hierarchy that must be followed. Business negotiations happen at a slow pace. Singaporeans are non-confrontational. They will not overtly say 'no'; likewise, their 'yes' does not always signify agreement. Singaporeans give a respectful pause of up to 15 seconds before answering a question. Do not start speaking too quickly or you will miss the answer. Decisions are consensus driven. Be prepared with a mental list of concessions you would be willing to make that would not injure your own business. Singaporeans are tough negotiators on price and deadlines. Avoid losing your temper or you will lose face and damage your relationship.

Acceptable Public Conduct: Elders are introduced first, are given preferential seating, are given the choicest food, and in general put on a pedestal. Men and women do not traditionally shake hands, since Muslim men do not touch women in public. Younger Malays may shake hands with foreign women, but it is more appropriate to use the 'salaam' (bowing the head) greeting. Littering and spitting are frowned upon and carry hefty fines if caught. Smoking is prohibited in all public buildings, transportation, all air conditioned places, and restaurants, including food courts. Eye contact is usually brief and longer stares are to be avoided.

Sources for further information on doing business in Singapore

American Chamber of Commerce in Singapore

Doing Busines in Singapore, U.S. Commercial Service

Embassy of the United States in Singapore

Enterprise One, Internet Portal of the Singapore Government

Singapore and the IMF (International Monetary Fund)

U.S. Chamber of Commerce Singapore

World Bank – Singapore

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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.

Economic Indicators: Variety of sources including the CIA World Factbook, Coface Country Rating, Economist Country Briefings, Federation of International Trade Associations (FITA) Country Profiles.

Risk Assessment information: Provided with permission by Coface Country Rating. Also Belgian credit insurance company Ducroire Delcredere

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".

Historical Exchange Rates: OANDA.com The Currency Site.