Exporting and Conducting Business in Singapore + Indonesia

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Kegler Brown, in conjunction with the Ohio Development Services Agency (DSA), presented a breakfast briefing on March 25, 2014, on export and business opportunities in the emerging markets of Singapore and Indonesia.

Vinita Bahri-Mehra presented "Exporting and Conducting Business in Singapore + Indonesia," with the research assistance of Katja Garvey. The presentation focused on the legal implications of doing business in Southeast Asia.

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Exporting and Conducting Business in Singapore + Indonesia

  1. 1. Exporting and Conducting Business in Singapore + Indonesia March 25, 2014presented by Vinita Bahri-Mehra
  2. 2. z + Population: 5.31 million (in 2012) + Official languages: English (language of instruction), Mandarin, Malay and Tamil + Unemployment rate: under 2% + Ranked in the top 3 in regards to investment potential, and foreign trade and investments + Leading industries: manufacturing and services (incl. tourism) + U.S.-Singapore Free Trade Agreement (USSFTA) came into force January 1, 2004 + Singapore's legal system is based on common law (influenced by UK) + Singapore is the 11th largest export market and 15th largest trading partner of the U.S. Overview: Singapore
  3. 3. z +Global Investor Programme (GIP) provides assistance for foreigners setting up and operating businesses in Singapore +EntrePass allows entrepreneurs to enter and stay while beginning operations in Singapore +Visa for Entry into Singapore (not required for US citizens if stay is <90 days) Access to Singapore
  4. 4. z +All businesses (individuals, firms or corporations) that carry out business for a foreign company, must be registered with the Accounting & Corporate Regulatory Authority (ACRA) +Investment proposals in areas (except the media and financial sectors) are only screened to determine eligibility for extensive incentive programs +Once registered, there are several forms of enterprises in Singapore: + Sole proprietorship, partnership, locally incorporated company, branch of foreign company or representative office + Two local agents need to be appointed if you open a branch +Overall, Singapore‘s legal framework is very friendly to foreign investors. Getting Started in Singapore
  5. 5. z +A company incorporated in Singapore may pay dividends to foreigners, who are not resident in Singapore. + Only subject to tax liabilities. +Profits arising from the operations of a branch can be freely remitted to the head office. + Only subject to tax liabilities. +Free Trade Zones with facilities for the storage and re-export of dutiable and controlled goods (both seaborne and airborne cargo) and for services. +M&A is governed by statutes/regulations (incl. Code on Takeovers and Mergers, Listing Manuals, Companies Act, Securities and Futures Act, Competition Act) Doing Business in Singapore
  6. 6. z + Income derived in Singapore or received in Singapore but derived overseas is subject to tax (territorial basis). + Corporate tax, remittance of foreign-sourced dividends, foreign-sourced branch profits and foreign-sourced service income into Singapore are exempt from tax if certain conditions are met. + Individual tax: exempt + Goods and Services Tax (GST): consumption tax levied on the import of goods, in addition to nearly all supplies of goods and services in Singapore.(Similar to VAT concept prevalent in EU) + Tax rates: + Corporate - 17% (applies equally to resident or non-resident companies) + No capital gains tax + Individual tax rate - 0 to 20% Taxation
  7. 7. z Exports to Singapore +Obtain an IN Permit through TradeNet® before importing goods into Singapore +Pay the Custom duty and/or Goods and Services Tax (GST) due at the prevailing rate at the time of importation +Leading imported goods: +Aircraft, crude oil, petroleum, electronic components, radio and television receivers, motor vehicles, chemicals, food/beverages, iron/steel, textile yarns/fabrics
  8. 8. z Finding Suitable Premises +Singapore often functions as a gateway for companies to set up trading offices or logistics and distribution centers to enter the Southeast Asian region +Singapore offers a wide variety of locations + Stack-up factories with loading and unloading bays + Wet labs or research facilities + Specialized industrial parks +Industrial Estates in Singapore are modern, well-developed and offer fully-serviced sites for the establishment of industries.
  9. 9. z Recruiting of the Right Staff +Skilled workforce +High productivity +Positive work attitude +Proficient English skills +Strategic Attachment and Training (STRAT) Programme
  10. 10. z Incentive Programs for Businesses + Development and Expansion Incentive (DEI) + International / Regional Headquarters Award (IHQ / RHQ) + Pioneer Incentive + Land Intensification Allowance (LIA) + Integrated Investment Allowance (IIA) + Mergers & Acquisitions (M&A) Scheme + Finance & Treasury Centre (FTC) Tax Incentive + Aircraft Leasing Scheme (ALS) + Research Incentive Scheme for Companies (RISC) + Initiatives in New Technology (INTECH) + Land Productivity Grant (LPG)
  11. 11. z +Population: 246.9 million (in 2012) +Official languages: Indonesian (Bahasa), English (is widely used and taught in most secondary schools) +Unemployment rate: 6.25% +Leading industries: Services, Energy, Manufacturing. +IP protection: Party to the Berne Convention, the Paris Convention, the Convention Establishing the World Intellectual Property Organization, the WIPO Copyrights Treaty, the Patent Cooperation Treaty, and the World Trade Organization (“WTO”) Agreement including the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs). +Free Trade Zones Indonesia - Introduction to Indonesia
  12. 12. z Registering a Business +Environmental License is a mandatory requisite for a Business License (Law No. 32 Year 2009) +Prior to investing in an Indonesian company, a foreign investor must apply for a registration approval from the Investment Coordinating Board (“BKPM”), and inform the BKPM of the nature of the intended investment. +Certain reporting obligations +“Negative List” which lists the areas that are not open to FDI
  13. 13. z (Tax) Incentive Programs for Businesses +Certain eligible investments (available for 5 to 10 years) +Regional Tax Incentives for Foreign Investors (depend on the business field and region) +Special incentives for companies conducting business in an Integrated Economic Development Zone (KAPET) or Bonded-Zone (KB status)
  14. 14. z Taxation in Indonesia +Anti tax-avoidance regulations: + Regulation on thin capitalization + Deemed dividends + Controlled foreign corporation + Anti tax treaty abuse + Standard salaries for expatriates +A resident taxpayer’s worldwide income is subject to Indonesian tax (territorial basis). +Fiscal losses can be used as deduction against future taxable income (up to 5 years).
  15. 15. z Export to Indonesia + Member of GATT and ASEAN Free Trade Agreement + Especially Japan and ASEAN members like Malaysia, Philippines,Thailand,Vietnam, but also important GATT members like the U.S. + Advantages of being a member of GATT or ASEAN: among the countries who are part of ASEAN and GATT, custom duties and tariffs on exporting products are eliminated/reduced + Importers need an Importer Identification Number and Custom Identification Number + Import duties are calculated on the basis of the Harmonized System Code + Manufacturing requirements: + Local content in products (certain percentage) – especially in electronic devices + Product labeling- Strict Requirements. + For example, cell phone products have to be equipped with an Indonesian manual
  16. 16. z Thank You! Vinita Bahri-Mehra vmehra@keglerbrown.com 614.255.5508 Katja Garvey kgarvey@keglerbrown.com 614.462.5490

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