The Singapore economy grew by 7 per cent in the second quarter of 1996. Employment in the Singapore economy remained strong with 26,100 jobs created in the same period. Growth for the first half of the year came to 8.9 per cent.

In the second quarter of 1996, the manufacturing sector, affected by a slowdown in the global electronics industry, grew by 6.3 per cent, down from 14 per cent a quarter ago. The financial and business services sector expanded at 6.5 per cent, benefiting from demand for headquarters and information technology services, as well commercial and office space. The transport and communications sector registered a growth of 8.4 per cent, as the sector continued to experience strong demand for air travel and communications services. The commerce sector also expanded at 5.7 per cent, while the construction sector grew strongly by 14 per cent in the quarter, boosted by a strong pipeline of projects in the last two years.

Investment commitments in the manufacturing sector remained strong, reaching a total of S$2.5 billion, most of which were in the electronics and chemicals clusters. Foreign investors accounted for almost 75 per cent of these commitments. The US took the lead with a large demand investments of S$808 million in the electronics, industrial chemicals and petroleum industries. Japanese investments amounted to S$662 million, while investments from Europe totalled S$359 million.

In the area of business services, foreign investors also accounted for more than two thirds of the commitments in the quarter, with the bulk coming from Europe. These were in projects relating to headquarters activities, communication and information services.

As Singapore moves into the 21st century, its open economy is likely to become more exposed to global changes in international trade.

To meet these challenges, the government will focus its efforts on creating wealth and grooming talent through education and training. At the same time, sound population and immigration polices will be formulated.

In addition, Singapore will seek to maintain a pro-business environment by keeping costs competitive, increasing productivity yields, deepening the technology base, and promoting regionalisation.

Business/Company Registration

Singapore’s Business Registration Act requires all businesses to be registered with the Registry of Companies and Businesses (RCB). The registration process normally takes one working day.

An applicant needs to submit two forms with the necessary fees. The first form is the Application for the Approval of a Business Name (Form A), which is to be accompanied by a S$15 fee. The second form is the Application to Register a Business (Form B), which has to be submitted with a S$55 fee. Upon registration, a Certificate of Registration is issued, which is valid for one year and renewable annually at S$25.

The incorporation of accompany is a two-stage process that normally takes 10 working days. Five working days are needed to process the Application for Approval and Reservation of Name for a Company to be Incorporated Under the Companies Act (Form 14 ). A fee of S$15 is charged for each proposed name applied for.

Upon approval, the company name will be reserved by RCB for two months from the date Form 14 is lodged. The applicant will then prepare the incorporation papers and lodge them within the reservation period. A fee of S$10 will be levied for each incorporation paper lodged. A registration fee, based on the authorised capital of the company, will also be charged. For example, if the company has an authorised share capital of S$100,000, the minimum registration fee payable is S$1,200.

Similar procedures apply to foreign companies which may either set up subsidiaries or register branch offices in Singapore. When the foreign company’s name is approved, the applicant must then lodge the relevant documents with the RCB. These include a certified copy of the Certificate of Incorporation of the company, a copy of the Memorandum and Articles of Association, and particulars of all directors of the company. Likewise, there is a fee of S$10 per document submitted, and a registration fee based on authorised capital. The registration process also takes 10 working days, at the end of which a Certificate of Registration of Foreign Company is issued.

Branches of foreign companies registered with RCB must have two agents in Singapore. Both must be Singaporeans, permanent residents or employment pass holders. In addition, applications to station expatriate staff in Singapore are to be made separately to the Controller of Immigration. Applicants are advised to seek professional legal or audit help in preparing and submitting the documents.

Annual Requirements For Corporations

Under the Companies Act, every company must hold an annual general meeting (AGM) every calendar year, during which audited financial statements (not more than six months’ old) and the directors’ report are presented.

The first AGM must be held within 18 months of a company’s incorporation. After that, they must be held once every calendar year, and not more than 15 months apart.

Within a month of the AGM, the company directors must lodge with the Registrar of Companies an annual return, the audited accounts and the directors’ report. Failure to do so is an offence.

Minimal Regulations And Licences

Business regulations in Singapore are established to ensure that only legitimate businesses are set up. This helps protect the interest of the general public when they come into contact with certain business operations. Hence, some businesses need to contain the relevant licences before they can start operating.

Examples of such businesses include banks, financial houses, insurance companies, stockbroking firms, commodities trading companies, and money changers. Manufacturers of cigars, cigarettes, matches, and firecrackers also require a special licence to operate. Other companies like electrical work contractors, housing developers, shipping firms with foreign interests, broadcasting newspapers and printing companies, travel agents, massage and health centres, hotels, restaurants and entertainment companies also have to apply for relevant operating licences.

Tax System

The Inland Revenue Authority of Singapore is responsible for assessing, collecting, and enforcing payment of taxes, duties and levies under the various revenue acts.

Income tax is levied on any person who derives incomes in Singapore or receives income from outside Singapore.

The corporate tax rate in Singapore has been progressively reduced and stands at 26 per cent. Resident individuals, including foreigners who are either physically present or employed in Singapore for 183 days or more in a calendar year, are taxed on a graduating scale ranging from 2 per cent to 28 per cent. Non -resident employees are taxed at a flat rate of 15 per cent. However, non-resident employees(except director and entertainers) who work in Singapore for not more than 60 days in a year are exempt from tax.

Capital allowances are available to companies for their industrial buildings, plant, machinery and the expenditure incurred in acquiring approved know-how or patent rights.

Singapore has double taxation agreements with 34 countries providing for the avoidance of double taxation on a bilateral basis. Under these agreements, unilateral tax credit provisions are available for income received in and from outside Singapore, including service income from specified territories, dividends employment income and branch profits.

Investment Incentives

Several tax incentives are available to encourage foreign companies to make Singapore their regional manufacturing, servicing or financial base. These incentives are also offered to industries which require skilled labour, new and sophisticated technology and equipment

Subject to a company satisfying specific criteria, tax breaks are also available to a range of businesses . These include the financial services industry, venture capital companies incorporated and operating in Singapore, companies with new capital expenditure of at least S$10 million in new equipment, the export of certain goods, warehousing operations international consultancy services, shipping enterprises, and oil and commodity trading.

MNCs can also apply for incentives under the Regional Headquarters (RHQ) programme. Under this programme, MNCs can apply for either the Operational Headquarters (OHQ), Business Headquarters (BHQ) or Manufacturing Headquarters (MHQ) incentive. Companies awarded OHQ, BHQ or MHQ status will benefit from an attractive package of incentives. Likely candidates are companies which are well established in their respective business sector or industry, and have attained critical size in terms of equity, assets and employees.

Employment And Labour Laws

Democratic and responsible trade unionism is promoted in Singapore. This helps maintain harmonious industrial relations and create a conducive working environment that greatly encourages investments and industrial growth for the country.

The Employment Act stipulates terms and conditions of employment as well as the rights and obligations of employers and employees. Trade disputes in unionised establishment, which cannot be resolved through conciliation, can be referred to the Industrial Arbitration Court for resolution.

Where health and safety of workers are concerned, compensation is provided under the Workmen’s Compensation Act for workers who are hurt in accidents or contract a disease as a result of their work. Such incidents are reportable under the Act. Furthermore, serious and fatal accidents in factories must be reported in accordance with the Factories Act. The Ministry of labour has inspectors who carry out regular factory inspections to ensure that adequate safety measures are adequately taken to protect employees.

The Central Provident Fund (CPF), a comprehensive social security scheme, provides for old age, housing and medical needs of workers. Both employers and employees are required to contribute to CPF. The current contribution rates, as a percentage of salary, are 20 per cent for both employers and employees. Since August 1, 1995, new foreign employees and their employers are not required to make CPF contributions.

In line with Singapore’s emphasis on skills training, employers are also required to contribute to the Skills Development Fund (SDF), another employee related fund which is administered by the Singapore Productivity and Standards Board

Set up in 1979, the SDF extends financial assistance to employers for the training and upgrading of workers’ skills. The levy is pegged at 1 per cent of salaries of employees earning less than S$1,000 a month.

The government has a selective policy regarding the employment of foreign nationals, welcoming suitably qualified executives and technically skilled workers. To work in Singapore, they have to apply for an employment pass issued by the Singapore Immigration Department if their monthly salary exceeds S$2,000, or a work permit issued by the Ministry of Labour. Employers of work permit holders have to pay a foreign worker’s levy.

International Arbitration

Supported by the TDB and the Economic Development Board (EDB), the Singapore International Arbitration Centre (SIAC) provides facilities and services for the conduct of conciliation and arbitration of international and domestic commercial disputes.

The chairman of the SIAC has the authority to appoint arbitrators and conciliators when the parties in dispute or the parties fail to do so. The centre offers hearing and meeting rooms, administrative and transcription services, audio and video recording, and other amenities for these proceedings

Exchange Controls

Foreign exchange controls in Singapore reflect the government’s pro-business stance. With full liberalisation in mid-1978, capital and profits can be brought in and repatriated freely. This is a prime incentive for foreign corporations to put their investment dollars in Singapore.

Trade Documentations

Singapore is a free trade economy, where most goods can be imported without a licence or quota restrictions, although an import permit must be obtained. Certain categories of goods, like firearms, firecrackers, lighters in the shape of guns, toy currency notes and coins, are not allowed entry. A 3 per cent Goods and Services Tax (GST) is also levied on all imports.

In terms of trade documentation, Singapore has a highly efficient computerised system in TradeNet, the world’s first nation wide electronic data interchange (EDI). Implemented by TDB, TradeNet links the trading community with relevant government authorities and operates virtually round-the-clock, seven days a week. About 20 controlling agencies involved in trade documentation are accessible through TradeNet.

TradeNet is being extended by links with international EDI networks. This will enable Singapore traders to be part of the global trading network and to exchange business documents and information electronically worldwide.

The TDB is also developing a total electronic trade documentation system, TradeNet Plus, which will computerise the entire chain of trade procedures including financial and shipping documentation. In this way, the TDB can further enhance its efficiency and service standards for the business community.

Protection of Intellectual Property

Any disputes between copyright owners and users of copyright materials are dealt with expeditiously by the courts. In some instances, disputes may be referred to the Copyright Tribunal, comprising a president and three members appointed by the Minister for Law.

Protection for patents, trademarks, industrial designs and trade secrets are also available.

A Global Business Hub

Singapore’s world-class transport and telecommunication links, its intensive use of information technology, low political risk and pro-business environment helps the Republic to shine as an international business hub. In 1995, US-based Fortune magazine ranked Singapore as the number one location for doing business in the world.

Singapore has also consistently come out tops international competitiveness rankings, based on a wide range of criteria covering economic strength, infrastructure and government, to management, finance and the quality of its workforce.