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Singapore Country brief

General Information

The Republic of Singapore sits 137 kilometres north of the equator, separated from Malaysia by the Strait of Johor and from Indonesia by the Strait of Singapore. Singapore is made up of the main island, which is 42 kilometres long by 23 kilometres wide, and 63 surrounding islets. The highest point is 163 metres at Bukit Timah Peak. Singapore has a total area of approximately 682 square kilometres.

Singapore's equatorial climate is warm and humid, with an average daytime temperature of 31ºC and a minimum average of 23 ºC at night. The country receives an average of 2.3 metres of rain annually, and has two annual monsoon seasons from December to early March and from June to September.

Population

The total population of Singapore is 4.8 million (2009 data). This figure includes approximately 1.2 million foreigners. The three major ethnic groups within the local community are Chinese (75 per cent), Malay (13 per cent) and Indians (9 per cent). Singapore has four official languages: Chinese (Mandarin), English, Malay and Tamil. English is the language of administration and commerce, and is widely spoken across the island.

Political Overview

Singapore is a republic, with a parliamentary system of government and an elected President as the Head of State. The Singapore Parliament has a single house, which is elected by general election every five years. The Parliament and the President of Singapore are known as the Legislature. Parliament first sat on 8 December 1965, with the first general election on 13 April 1968. The present Eleventh Parliament has 94 Members of Parliament (MP), consisting of 84 elected MPs, one non-constituency MP and nine nominated MPs who represent various professional and business sectors. The judiciary administers the law independently of the Executive.

The People's Action Party (PAP) dominates Singapore’s political scene and has held power since 1959, winning eleven successive general elections. The last general election was held on 6 May 2006, and the next one is due in 2011. There are three elected opposition members in the current Parliament. On 27 May 2009, Prime Minister Lee announced that from the next parliamentary election, opposition MPs will be guaranteed a minimum of nine seats in parliament instead of the current minimum of three.

Prior to 1991, the President was appointed by Parliament and had a largely ceremonial role. In January 1991, the Constitution was amended to allow Singapore’s citizens to elect the President for six year terms. Under the amended Constitution, the President may veto government budgets and appointments to public office. He may also investigate cases of corruption and examine how the Government exercises its powers under the Internal Security Act and religious harmony laws. The 1991 constitutional amendment also provided for the establishment of a Council of Presidential Advisors (CPA). The President must consult the CPA before performing certain functions, such as vetoing government budgets.

The first presidential election was held on 28 August 1993. The first elected President was HE Mr Ong Teng Cheong. The current and second elected President, HE Mr Sellapan Rama (S.R.) Nathan, was re-elected unopposed in August 2005 to serve his second six year term.

The President appoints the Prime Minister. Singapore's current Prime Minister, Mr Lee Hsien Loong, assumed the post in August 2004 and was re-elected in 2006. On the advice of the Prime Minister, the President appoints other Ministers from among the MPs to form the Cabinet. The Prime Minister and Cabinet are answerable to the Parliament.

The Cabinet is responsible for all government policies and the day-to-day administration of the affairs of state. It comprises the Prime Minister, Senior Minister, Minister Mentor, Coordinating Minister for National Security, two Deputy Prime Ministers, two Ministers in the Prime Minister’s Office and the Ministers for: Community Development, Youth and Sport; Defence; Education; the Environment and Water Resources; Finance; Foreign Affairs; Health; Home Affairs; Information, Communications and the Arts; Law; Manpower; Muslim Affairs; National Development; Trade and Industry; and Transport.

Foreign Policy

One of the guiding principles of Singapore's foreign policy is its commitment to working towards the enhancement of regional peace, stability and cooperation, the maintenance of economic progress and prosperity, and the consolidation and improvement of friendly relations with all countries. Singapore’s active membership of the Association of South-East Asian Nations (ASEAN) is central to Singapore's foreign policy. Singapore was Chair of ASEAN from August 2007 to July 2008.

Maintaining good relations with Singapore's immediate neighbours and the major powers is one of Singapore's foreign policy priorities. In addition to ASEAN, Singapore is continuing to strengthen its links in the Asia-Pacific region and beyond. Singapore is a founding member of the Asia-Pacific Economic Cooperation (APEC) forum and has always been an active participant, viewing it as a premier regional forum. It is hosting APEC in 2009. To build links between East Asia and Latin America, Singapore instigated the Forum for the East Asia-Latin America Cooperation (FEALAC). Contacts are increasing between Singapore and Europe bilaterally and through the multilateral Asia-Europe Meeting (ASEM). Recently, Singapore has intensified its contacts with the Middle East. It was the first country outside of that region to conclude a Free Trade Agreement (FTA) with the Gulf Cooperation Council, which was signed in December 2008. At Singapore’s initiative, an Asia-Middle East Dialogue (AMED) was established with the inaugural meeting held in Singapore in June 2005. The second AMED was held in Egypt in April 2008.

Singapore has a strong relationship with the United States. An FTA between the two countries entered into force in January 2004. A Singapore-United States Strategic Framework Agreement was concluded in July 2005, extending bilateral cooperation to the areas of defence and security.

Singapore supports a strong, cohesive and effective United Nations (UN) that is responsible to the needs of its members. It completed a two-year term as a Non-Permanent Member of the UN Security Council in December 2002. As ASEAN Chair, Singapore helped organise the ASEAN-UN Pledging Conference in May 2008 following Cyclone Nargis. Singapore has been a member of the Commonwealth since gaining independence in 1965, and hosted the first Commonwealth Heads of Government Meeting in 1971.

Economic Overview

Singapore is an important hub for the South-East Asian region. It has traditionally had a dynamic economy, with strong service and manufacturing sectors, and one of the highest per capita gross domestic products (GDP) in the world. Its airport, port and road systems are among the best in the world. Singapore's economy has always depended on international trade and on the sale of services. Its major industries include electronics, financial services, oil drilling equipment, petroleum refining, pharmaceutical manufacturing, processed food and beverages, rubber products and ship repair. In recent years, the Government has moved to reduce reliance on the manufacture and export of electronics by developing its services sector, as well as its biotechnology, chemical and petrochemical industries.

Singapore's small population and dependence on external markets and suppliers has pushed it towards economic openness, free trade and free markets. This, as well as government policies that foster economic development, have been key factors in Singapore's historically strong economic performance. The Government has continued to pursue an outward-looking, export-oriented economic policy that encourages two-way flows of trade and investment. Singapore’s trade policy approach has been to work with like-minded countries like Australia to advance the cause of free trade within international fora, and particularly through the World Trade Organization (WTO), as well as through regional fora such as ASEAN and APEC. Another integral part of Singapore’s trade policy is its bilateral approach to developing FTAs with a range of states, including Australia.

A key objective of Singapore’s Government has been to position the country as a regional hub and pacesetter in economic development and reform. In particular, the Government has introduced measures to enhance Singapore's position as a hub for education, financial and transport services. In recent years it has also taken measures to improve the education and training of Singaporeans, with a focus on developing a “knowledge economy”.

As the second most open economy in the world (according to the 2009 Index of Economic Freedom), Singapore’s ability to protect itself from the effects of a global recession is limited. With its high dependence on international trade and on the sale of services, Singapore’s economic performance is inextricably linked to the fortunes of key trading partners including the European Union, Japan and the United States.

Recent Economic Performance

Despite strong growth in recent years (7.8 per cent in 2007), Singapore’s economy suffered a dramatic decline in the fourth quarter of 2008, plummeting by 4.2 per cent year on year, followed by an even steeper decline of 10.1 per in the first quarter of 2009. However, preliminary figures show that real GDP in the second quarter of 2009 increased at an annualised rate of 20.4 per cent. Singapore’s Ministry of Trade and Industry announced on 11 August that it was maintaining its GDP growth forecast for 2009 at between -4 and -6 per cent.

On 11 August 2009 the Singapore Government also announced an increase in Singapore’s total external trade in the second quarter of 2009.On a quarter-on-quarter seasonally adjusted basis total trade increased by 3.8 per cent in the second quarter 2009.

On 22 January 2009, Singapore’s Government announced a SG$20.5 billion Budget “Resilience Package” (equal to 8.4 per cent of GDP) to address the economic crisis. Even after an injection from its reserves, the Budget will result in the largest ever budget deficit in Singapore (SG$8.7 billion or 3.5 per cent of GDP). The new Budget introduces a corporate tax rate cut from 18 to 17 per cent to promote commercial competitiveness. A range of other spending initiatives aim to preserve local jobs, unfreeze credit and trade flows, increase business competitiveness and investment, support families and develop long-term infrastructure. In early February 2009, the Singapore Government’s trade and investment promotion agency, International Enterprise Singapore, also announced it would make SG$4.2 billion worth of loans available through three financing schemes to further promote overseas trade and investment. On 27 May 2009 Prime Minister Lee announced that the Government had established an Economic Strategies Committee to develop new strategies for long-term economic growth.

Outlook

Singapore’s Economic Development Board expects the overall level of investment into Singapore to fall dramatically in 2009. But recent indicators, particularly the strong second quarter GDP figure, suggest a weak recovery may be underway. & Unemployment has remained very low in Singapore in recent years, but is expected to rise to 4–5 per cent in 2009 (Singapore’s Ministry of Trade and Industry).

Singapore’s long-term challenges include reducing vulnerabilities to external shocks, an ageing population, accelerating globalisation and growing competition from low cost producers like China and India, as well as increasing wage inequality between skilled and less skilled workers.

Singapore’s trade relationships

In addition to its bilateral FTA with Australia, since 2000 Singapore has concluded FTAs with New Zealand (2000); the European Free Trade Association, a group of countries covering Switzerland, Norway, Iceland and Liechtenstein (2002); Japan (2002); the United States (2003); Jordan (2004); the Republic of Korea (2005); Panama (2006); Peru (2007); China (2008); and the Gulf Cooperation Council countries Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (2008). It also finalised a comprehensive economic cooperation agreement with India (2005). It is currently negotiating bilateral FTAs with Canada, Mexico, Pakistan and the Ukraine. Regionally, Singapore has concluded the Trans-Pacific Strategic Economic Partnership Agreement ('Trans-Pacific SEP') with Brunei, Chile and New Zealand (2005) and, more recently, the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) (2009).

Singapore is a strong supporter of the WTO. It hosted the WTO's first Ministerial Meeting in December 1996 and the WTO Mini-Ministerial in October 2001, with the latter serving as an important event in the lead-up to the WTO meeting in Doha. It continues to work closely with other WTO member states for a successful conclusion to the Doha Round negotiations. Singapore is an active participant in the World Economic Forum (WEF), hosting WEF meetings in 1999 and 2003. In 2006, Singapore hosted the International Monetary Fund/World Bank Annual meetings.

Singapore also strongly supports trade liberalisation through its membership of APEC, where it has joined with Australia and other like-minded countries in pushing for identification of sectors for early liberalisation. The APEC Secretariat is located in Singapore, and Singapore is hosting APEC in 2009.

Australia-Singapore Bilateral Relations

The bilateral relationship with Singapore is one of Australia's closest and most comprehensive in South-East Asia. This is based on long-standing Commonwealth, defence, education, political, trade and tourism links, as well as on the two countries’ similar strategic outlook.

Singapore-Australia Joint Ministerial Committee

The Australian and Singaporean Governments have worked closely together to enhance the strong relationship between the two countries. Their respective Prime Ministers made a Joint Declaration, ‘A New Partnership’, in January 1996 encompassing cooperation in cultural, economic, political and security matters. It also established a biennial Singapore-Australia Joint Ministerial Committee (SAJMC), which is led by foreign ministers and attended by ministers responsible for other areas of bilateral cooperation (usually defence and trade). The inaugural SAJMC was held in Canberra in October 1996. Subsequent SAJMC meetings have been held in Singapore (1999, 2003 and 2009) and Australia (2001 and 2005). The next meeting is due to take place in Australia in 2011.

Defence and Security Links

Australia and Singapore have developed a strong bilateral defence relationship covering a comprehensive range of activities including high level policy dialogue, significant combined exercises, personnel exchanges and training. A major feature of the relationship is the access to Australian training areas that Australia grants to the Singapore Armed Forces. Under a five year agreement signed in August 2005, Australia grants access to Singapore’s Armed Forces for the use of the Shoalwater Bay Training Area in Queensland. A successor ten ear agreement, signed by Australia’s and Singapore’s Defence Ministers in May 2009, is now undergoing domestic ratification processes with a view to the agreementent eringinto force in late 2009, if approved. Singapore, as one of the most advanced armed forces in the region, is one of the Australian Defence Force's most valuable combined exercise partners in South-East Asia.

In August 2008, Prime Minister Rudd and Prime Minister Lee signed the ‘Memorandum of Understanding between the Government of Australia and the Government of the Republic of Singapore Concerning Defence Cooperation’. This MOU articulates the principles of the Australia-Singapore defence partnership and the key areas of defence cooperation. It also provides a framework to manage existing areas of defence cooperation and to promote new areas of cooperation.

Australia and Singapore are both members of the Five Power Defence Arrangements (FPDA), which is a joint defence arrangement between Australia, Malaysia, New Zealand, Singapore and the United Kingdom. The FPDA is a valuable component of the regional security architecture and the only one with an operational dimension. This arrangement has existed for 38 years and, although it originally focused on the defence of Malaysia and Singapore against conventional threats, it now also encompasses asymmetrical challenges such as humanitarian assistance and disaster relief and counter terrorism.

Australia and Singapore are also active participants in the annual International Institute for Strategic Studies (IISS) Asia Security Conference (Shangri-La Dialogue). The former Minister for Defence, Mr Fitzgibbon, led the Australian delegation to the 8th Shangri-La Dialogue, which was convened in Singapore from 29–31 May 2009. Prime Minister Rudd delivered the keynote address to the Shangri-La Dialogue on 29 May. Singapore is an influential and active member of the ASEAN Regional Forum (ARF). It also supports the Proliferation Security Initiative (PSI) and hosted a major PSI exercise, Deep Sabre, in August 2005.

Singapore and Australia have similar views on regional security issues. Singapore is a strong ally in global efforts to combat terrorism. In recent years, bilateral collaboration on counter-terrorism has strengthened, including in the areas of law enforcement, intelligence sharing and through the FPDA. In 2005, the Australian Federal Police and Singapore Police Force signed a Memorandum of Understanding (MOU) providing the framework for ongoing police collaboration to combat transnational crime. This is the first Police-to-Police MOU that Singapore has signed with another country.

Other Areas of Cooperation

Singapore and Australia are engaged in significant cooperation and dialogue on major regional and global economic, political and security issues, including through the East Asia Summit (EAS), APEC and the ASEAN Regional Forum (ARF). Australia also has links with Singapore in disarmament and arms control. There is also growing cooperation on social issues such as ageing and childcare.

Australia and Singapore signed an Agreement for the avoidances of double taxation in 1969. In September 2009 the two countries signed an Exchange of Information Protocol in relation to taxation.

Bilateral Visits

The many high-level visits between Australia and Singapore reflect the strength of the bilateral relationship. Prime Minister Kevin Rudd visited Singapore on 29 May 2009 to give the keynote address at the 8th Shangri-La Dialogue. This visit came shortly after his brief visit in April when he met Prime Minister Lee Hsien Loong and Senior Minister Goh Chok Tong. The Minister for Foreign Affairs, Steven Smith, the Minister for Defence, John Faulkner, and the Minister for Trade, Simon Crean, visited Singapore on 27 July for the 6th Singapore Australia Joint Ministerial Committee (SAJMC) meeting. They met their Singaporean counterparts for the SAJMC and also with Senior Minister Goh Chok Tong and Prime Minister Lee. The Australian Governor-General HE Ms Quentin Bryce AC visited Singapore in November 2008, meeting with HE President S.R. Nathan and Mrs Nathan, Prime Minister Lee, Senior Minister Goh Chok Tong and Minister Mentor (and first Prime Minister) Lee Kuan Yew.There have been numerous other Ministerial visits to Singapore over the past year.

Recent high-level Singaporean visits to Australia have included Prime Minister Lee Hsien Loong, Foreign Minister George Yeo and Trade Minister Lim Hng Kiang, who attended APEC meetings in Australia in 2007. In March-April 2007, Singapore’s Minister Mentor and first Prime Minister, Lee Kuan Yew, visited Australia. The then Deputy Prime Minister and current Senior Minister and Coordinating Minister for National Security, Professor Jayakumar, visited Australia from 16–18 March 2009.

Bilateral Economic and Trade Relationship

Singapore is Australia’s largest trade and investment partner in ASEAN and our fourth largest trading partner overall. Australia ranked 7th among Singapore’s principal merchandise export destinations and 18th among its principal merchandise import sources in 2008. The Singapore-Australia Free Trade Agreement (SAFTA), which came into force on 28 July 2003, has contributed towards a stronger bilateral economic partnership. In 2008-09 Australian merchandise exports to Singapore were A$5.5 billion (our 9th largest export market) and our imports from Singapore reached A$13.5 billion (our 4th largest source). Services are a key part of our bilateral trade, with exports to Singapore valued at A$3.9 billion and imports at A$4.8 billion in 2008.

Major services exports include education and tourism. In 2008, Singapore was Australia’s 14th largest source country for foreign students enrolments, with 8,845 Singaporean students enrolled in Australian educational institutions. Singapore is also one of Australia's major sources of short term visitors: with 270,800 Singaporeans visiting Australia in 2008, it was our seventh largest tourism market.

Singapore’s investment in Australia is substantial. At A$43 billion, Singapore ranked fifth overall in 2008. Singaporean investment has traditionally been concentrated in real estate, but has become more diversified in recent years. Key investments include: the Singtel acquisition of Optus in 2001; Singapore Investment Corporation's acquisition of the Mayne Group's portfolio of private hospitals in 2003; and Singapore Power's purchase of the US TXU Corporation's assets in Victoria and South Australia in 2004. The Singapore Investment Corporation has stakes in Myer Melbourne and Westfield Parramatta.

Australia's investment in Singapore climbed to $22 billion in 2008, making Singapore our ninth most significant investment destination. According to Singapore’s Economic Development Board, there are over 1300 Australian companies operating in Singapore. Significant recent investments include Toll Holdings’ acquisition of SembCorp Logistics (A$1.1 billion) and QANTAS's joint venture project to establish Singapore-based budget airline Jetstar Asia, which commenced operations in December 2004. In early 2008, the Melbourne arm of multinational Thales Air Systems secured a A$250 million contract from the Civil Aviation Authority of Singapore for the design, manufacture, installation, maintenance and commissioning of the Long Range Radar and Display System III (LORADS III) at Changi International Airport.

Australian Trade and Investment Strategies

The ASEAN-Australia-New Zealand Free Trade Agreement

On 27 February 2009, Australia’s Minister for Trade Simon Crean joined trade ministers from the ten member states of ASEAN (including Singapore) and New Zealand in signing the AANZFTA in Thailand. The Agreement will reduce or eliminate tariffs across a region that is home to 600 million people and has an annual GDP of A$3.2 trillion. It is expected that AANZFTA will enter into force by 1 January 2010.

The Singapore-Australia Free Trade Agreement

Following ten full rounds of negotiations between April 2001 and October 2002, the Singapore-Australia Free Trade Agreement (SAFTA) was signed on 17 February 2003. It entered into force on 28 July 2003. SAFTA was the first FTA Australia had concluded in the twenty years since the Australia New Zealand Closer Economic Relations Trade Agreement (CER) came into effect on 1 January 1983.

The Singapore-Australia Free Trade Agreement: A Business Guide explains in plain language how SAFTA has made it easier for Australian exporters, investors and professionals to access and do business in the Singapore market.

SAFTA is fully consistent with the two countries’ shared interests in a strong and effective WTO. Both Australia and Singapore have made commitments in SAFTA that go beyond our existing liberalisation obligations in the WTO.

SAFTA is a wide-ranging and comprehensive agreement, covering tariff-free access for goods, improved market access for services (including specific commitments on sectoral markets for telecommunications, financial services and professional services) and cooperation and trade facilitation in key areas, such as competition policy, customs procedures, e-commerce, education, intellectual property protection and standards. SAFTA presents trade and investment opportunities for businesses in Australia and Singapore. It also provides investors with greater certainty through provisions on the promotion and protection of investment.

To ensure its continued relevance for business, SAFTA contains specific review provisions. The first review in 2004 produced a balanced package of outcomes for both countries. For example, Singapore agreed to recognise law degrees from two additional Australian universities and Australia agreed to add four new entities to the list of government agencies subject to the national treatment provision on procurement, as well as to revise arrangements in relation to Certificates of Origin for Singapore exports. Ministers announced the substantive conclusion of the second review at the Singapore Australia Joint Ministerial Committee on 27 July 2009. The second review outcomes include updates to the chapters on investment and intellectual property.

Export Opportunities

Australia’s top ten merchandise exports to Singapore in 2008-09 were crude petroleum, gold, refined petroleum, milk and cream, copper, aluminium, meat (excluding beef), telecom equipment and parts, medicaments and civil engineering equipment and parts (this list excludes confidential items of trade).

Changes in Trade and Investment Conditions

Trade

With the entry into force of the SAFTA in July 2003, import tariffs on all goods originating in Australia and Singapore have been eliminated. Under SAFTA, Australian service suppliers enjoy improved conditions of access to the Singapore services market, particularly on the educational, financial and legal service sectors. SAFTA also offers a more open and predictable business environment across a range of areas, including business travel, competition policy, customs procedures, e-commerce, government procurement, intellectual property, technical standards and telecommunications regulation. In the past few years, these developments have encouraged new Australian exporters to enter Singapore’s market and established exporters to expand their operations there. Details of SAFTA benefits are provided in the Singapore-Australia Free Trade Agreement: A Business Guide.

Singapore maintains some import restrictions relating to environmental, health and public security considerations. Rice is subject to import licensing for food security and price stability reasons. Imports of cars that are three or more years old are prohibited for environmental and road safety reasons.

Investment

Foreign investment has traditionally been welcomed in Singapore and has accounted for a significant share of total investment in the economy. Through foreign investment, Singapore has evolved into a base for multinational companies to engage in high-end manufacturing and product development, deliver services and coordinate regional procurement, production, marketing and distribution operations. Reflecting the important contribution of foreign investment to the Singaporean economy, there are few restrictions on inward foreign investment. The restrictions that exist are mostly in broadcasting, the domestic news media, legal and other professional services, multi-level marketing, property ownership and retail banking.

The Singapore Government is working towards transforming Singapore from an investment-driven economy to an innovation-driven economy. As a result, it has introduced a number of promotion programs aimed at attracting investment by multinational companies and Small and Medium Enterprises. These include exemption of corporate tax on profits from pioneer activity for up to 10 years, double deduction for qualifying research and development expenses against income and operational headquarters’ income from the provision of approved services in Singapore taxed at 10 per cent. Innovation development projects may obtain grants of 30–50 per cent of approved direct development costs. Two areas specifically identified for further development are environmental and water technologies, and interactive and digital media.

Under SAFTA, Australian investors and investments are treated on the same basis as Singapore businesses (national treatment), including in relation to the establishment, acquisition, expansion, management, conduct, operation, liquidation, sale, transfer and expropriation of investments.

Australian Trade Commission (Austrade)

Austrade has identified potential opportunities for Australian suppliers of goods and services in a number of sectors. Austrade’s Singapore country page supplies general information on doing business and on specific export opportunities. The Austrade website has a database that can be searched by industry.

Austrade Singapore can also provide advice on accessing opportunities in Singapore. They can be contacted at singapore@austrade.gov.au.

Trade Successes

In 2008–09 Austrade assisted 410 Australian companies to export into Singapore with a total export sales value of A$378 million. Austrade also assisted 13 businesses to achieve outward investment outcomes in Singapore worth a total of A$13 million.

More information on Singapore

Australian Government

Singapore Government

Updated September 2009