Singapore’s real GDP grew 4.9% in 2011 but the government expects growth to slow to 1% to 3% in 2012. Foreign investments, combined with investments through Singapore government-linked corporations (GLCs), underpin Singapore’s open, heavily trade-dependent economy. The World Bank Report “Doing Business 2011” cited Singapore as the world’s easiest place to do business. The World Economic Forum Global Competitiveness Report 2011 – 2012 ranks Singapore as the world’s second most competitive country and having the best protection of intellectual property.
In 2011, Singapore was the 11th largest export market and 15th largest trading partner of the United States. The U.S. is the number two supplier of Singapore’s total imports just behind Malaysia. Singapore’s other top import sources include China, Japan, Taiwan, Indonesia, South Korea, Saudi Arabia, India and United Arab Emirates. The U.S. and Singapore signed a Free Trade Agreement (FTA) in May 2003 that went into effect January 1, 2004. During the first eight years of the U.S.-Singapore FTA, two-way trade increased 59.1% and U.S. exports by 89.4%.
Singapore offers excellent opportunities for U.S. companies to sell their products and services as the country is virtually a free port. However, doing business in Singapore is not without some challenges. The open economy attracts suppliers from throughout the world providing tough competition and reducing margins. Singapore is also seeing increased business costs, mostly in rentals and a tightening labor market. In response to the concerns voiced by the indigenous population, the government has made a decision to tighten the inflow of foreign workers and has accepted the policy will result in slower growth for the country.
Despite its liberal trading regime, foreign companies face barriers in certain service sectors such as pay TV, basic telecommunications, audiovisual and media services, legal services, banking and education.
Singapore is a major trading hub, importing and exporting all kinds of products from consumer goods to high technology and industrial goods for re-export to third countries. U.S. companies will find attractive market opportunities in the following best prospects sectors: electronics, oil and gas equipment, aircraft and parts, pollution control equipment, medical devices, laboratory and scientific instruments, computer hardware and software, telecommunication equipment, university education services and franchises.
The Singapore government and private industry are expected to invest in several major projects including:
$600 million to carry out 20 drainage improvement projects over five years to achieve a higher level of flood protection;
Construction of US$1 billion LNG terminal that will start operations in mid 2013;
Construction of a US$530 million underground oil storage facility;
Construction of several public hospitals and medical centers scheduled to be ready by 2014, 2015 and 2018;
Private medical groups will spend more than $270 million to build, expand and upgrade their healthcare facilities;
Construction of new Mass Rapid Transit rail lines costing over US$30 billion that will increase Singapore’s subway network to 278km in 2020.
Many American exporters use agents or distributors to serve the Singapore market and other markets in Southeast Asia. Finding prospective partners presents no problem.
Singapore firms are aggressive when it comes to representing new products and usually respond enthusiastically to new opportunities. In addition, most Singaporean companies are open to joint venture proposals, and many are interested in manufacturing under license.
Price, quality and service are the main selling factors in Singapore. Prospective exporters to Singapore should be aware that competition is strong and that buyers expect good after-sales service. Selling techniques vary according to the industry and product, but are comparable to the techniques used in any other sophisticated market. It is also important for U.S. firms to visit their representatives and maintain a good relationship with them.