2. Background of Singapore
• Singapore was founded as a British
trading colony in 1819
• Population: 4,608,595 (July 2003 est.)
• Ethnic Groups:
• Chinese 76.7%, Malay 14%, Indian 7.9%, other
1.4%
Suffrage:
• 21 years of age; universal and compulsory
3. Key Issues
• Company Formation of Free Trade Agreements
• Japan
• United States
• Multinationals in Singapore
4. Singapore & Japan
• Dec 1999 – Negotiations Began
• Early 2001 – Consensus on FTA was
reached
• Reduction of tariff and not tariff barriers.
• A mutual recognition of national standards
• Viewed by many as a possible template
for future FTA’s in the region
5. Singapore & Japan
• Bulk of Japanese Exports to Singapore
Include
• Machinery & Equipment
• Business & Financial Services
• Chemical & Mineral Products
• Singapore exports to Japan are
concentrated in the service sector
6. Areas of Trade
• Customs Automation
• Reduction of customs cost on bilateral trade
• Electronic Commerce
• To improve security and harmonize standards
governing e-commerce
• Decrease of 1.39% of the average price for ecommerce transactions
• Service Trade
7. Areas Of Trade
• Service Trade
• Liberalization of Service Trade
• Elimination of service trade barriers
• Lowered the effective price of business and financial
services exported from Singapore to Japan by
20.6%, and for construction services the price drop
is 29.9%
8. Impacts On Free Trade
Singapore:
• Higher rates of return
on investments
• Boost demand for
Singapore products
• Cost of Investing in
Singapore has fallen
Japan:
• Minor impact on
aggregate output,
trade, investment,
and GDP
• Advantages driven
largely by the
customs atomization
process, which affects
cost of trading with all
partners
9. Other Impacts
• All Asian economies gain in terms of GDP
• Largest impact felt in Malaysia & Thailand
– Two countries that do a great deal of trading with Singapore &
Japan
• Increase in foreign ownership in Singapore is
financed by a modest increase in outward
foreign direct investment by U.S. and Canada
• Many other Asian countries reduce their foreign investment
to increase investment in domestic countries.
10. The U.S. Free Trade
Agreement
Overvie
• Signed on May 6,
w
2003
• Focuses mainly on:
– services firms
• But also touches on:
– trading of goods
– protection of
intellectual property
rights, and
– Protections for
investors
11. The U.S. Free Trade
Agreement
T
rading of
Services
• Singapore and The U.S. services firms will enjoy fair and
non-discriminatory treatment in trade, through both:
– Travel of service professionals across borders, and
– Establishing a local services presence
• Market access commitments apply across a range of
sectors, including:
–
–
–
–
–
Financial services
Telecommunications services
Tourism
Advertising
Professional services
12. The U.S. Free Trade
Agreement
T
rading of
Goods
• Most U.S. tariffs on Singaporean goods
will be eliminated immediately upon entry
into the agreement
• Singapore guarantees zero tariffs
immediately on all U.S. products
13. The U.S. Free Trade
Agreement Property
P
rotection of Intellectual
Rights
• Protection of copyrights, patents, trademarks,
and trade secrets
• IPR Enforcement
– Tough penalties for piracy and counterfeiting
– Singaporean government guarantees that it has
authority to seize, forfeit and destroy counterfeit and
pirated goods and the equipment used to produce
them
“The U.S.-Singapore FTA contains ground-breaking protection for U.S.
intellectual property such as software, movies, music and books. These
protections are vitally important in the digital age.”
~Robert B. Zoellick, U.S. Trade Representative
14. The U.S. Free Trade
P Agreement
rotections for
•
Investors
The agreement
provided U.S.
investors operating in
Singapore with a
secure and
predictable legal
framework
15. Objections to Free Trade
• Less U.S. jobs for U.S. citizens
– Agreement provides laws that would create what is effectively a
permanent visa worker program for Singapore
• An increase in the U.S. trade deficit
“The U.S. trade deficit has increased in ever case where the U.S.
has entered a free trade agreement with another country.”
~Marcy Kaptur, Congresswoman
– FTA with China in 2000: increased 25% to $103 billion
– NAFTA increased the trade deficit by almost 10 times what it
was before it went into effect, from $9 billion to $87 billion
– NAFTA also put over a million workers out of jobs due to free
trade
– The U.S. trade deficit was the largest ever reaching $435.2
billion in 2002
16. Other Free Trade
Agreements
• New Zealand
• Australia – October 2002
• In the works:
•
•
•
•
•
Canada
India
Chile
Jordan
South Korea
18. Top Regional HUB for Multinational
Companies
Over 6000 multinational corporations have offices in
Singapore
– 3,600 use Singapore as their regional headquarters
– 1,400 of these are U.S.-based companies
• 300 of these use Singapore as their regional headquarters
• The U.S. is the largest Foreign Direct Investor in
Singapore: US$27.3 billion
• Intra-MNC trade accounts for over 60% of US-Singapore
trade
19.
20. Singapore as a Multinational in the
U.S.
• Singapore is the U.S.’s third largest
investment
• Second largest Asian Investor after Japan
• Foreign direct investments are twice that of South
Korea, Hong Kong, and Chinese Taipei
• Investments amounted to US$6.5 billion at the end
of 2001 in:
» Manufacturing
» Real Estate
» Depository Institutions
21. Why Multinationals Choose Singapore
as their Asia-Pacific headquarters:
• A well-developed, free-market economy
• A well-educated, English-speaking workforce
• Favorable incentives and tax breaks
– no capital gains tax
• A pro-business environment with the absence of
labor-management disputes
• One of the best connected countries in the world
– Air
– Busiest seaport
– telecommunications
22. The Effects of the USSFTA
on Multinationals
• The USSFTA will be felt most in two of
Singapore’s key sectors
– Retail Banking
– Information and Communication Technology
(ICT) industries
• Impact on the Real Estate Industry
23. The USSFTA Effect on the
Banking Industry
• U.S. companies will have access to
Singapore’s country-wide ATM network
• It will open the ranks of full-service U.S.
banks eligible to undertake retail business
• It will increase the number of branches that
licensed U.S. banks can operate
24. The USSFTA Effect on the
Information and Communication
Technology Industries
• Will initiate intellectual property rights laws
• Will create significant enhancements to
• Trademarks
• Copyrights
• Patents and trade secrets
• Singapore government is determined to position
Singapore as the regional ICT hub and is encouraging
joint ventures and overseas investments
25. Impact on the Singapore Real
Estate Market
• With the liberalization in bilateral trade and
investment brought by the USSFTA, it is
estimated that GDP will grow another 0.5%
• MNC’s have begun re-appraising various
investment destinations which will make it
more attractive to foreign investors worldwide
• As a result, this should raise demand for real
estate in Singapore
26. The USSFTA Effect
• Will save Singapore up to US$170 million
annually in tariffs
• Currently electronics account for 42% of
Singapore’s total industrial output
• The majority of the output is exported to the U.S.
• Singapore-based U.S. MNC’s therefore will benefit
the most from this new agreement
28. Notes
•
•
•
•
•
•
•
•
•
•
CIA - The World Factbook
International Economics - Regional Trading Agreements
Economic Intelligence Unit
ISI Emerging Markets
CNN
Asia Pacific Connections
Asian News
U.S. House of Representatives
United States Trade Representative
U.S. Dept of Commerce
Editor's Notes
The total amount by which money spent is more that money received…more imports than exports
PSA Corporation, the busiest container port in the world, offers shippers a choice of 200 shipping lines with links to some 700 ports in 130 countries. Its Singapore terminals handle 25 per cent of the world's transshipment volume.Change International Airport is linked to 140 cities in 50 countries, with more than 3,250 weekly flights ferrying passengers and cargo to and from all parts of the world.
Within Singapore, a broadband network reaches 99 per cent of the population. International connectivity now stands at 21 Tops and continues to expand. The World Economic Forum ranked Singapore among the top 10 in the world for network readiness in 2002.Getting around the island is effortless with the highly efficient Mass Rapid Transit system, and bus and taxi services. There is a wide choice of business premises - sophisticated commercial complexes, fashionable conservation areas, and specially structured industrial sites.