Exporting to Singapore: Flexibility With New Trade Policies

Singapore is increasingly cautious in its trade policy yet there is an opportunity for Vietnamese businesses to penetrate deeper into this market.

Rosie Nguyen

ngtrang12.ftu@gmail.com July 09, 2024 | 07:26

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Singapore's 12th largest trading partner

Cao Xuan Thang, commercial counselor, head of the Vietnam Trade Office in Singapore, said that Singapore's trade situation with the world in May 2024 continued to grow positively when all three indicators of total two-way turnover and export and import turnover show signs of recovery.

For the Vietnamese market, two-way trade turnover in May 2024 still maintains a positive growth trajectory, especially exports to Singapore (up 31.6%). However, with the growth in absolute value of other countries and territories, in the first 5 months of 2024, Vietnam has dropped to the 12th largest trading partner of Singapore.

Exporting to Singapore: Flexibility With New Trade Policies

Photo: congthuong.vn

Specifically, according to data from the Trade Office, in May 2024, total import-export turnover between Vietnam and Singapore reached nearly SGD2.48 billion (US$1.83 billion), an increase of 8.36% over the same period in 2023.

Exports from Vietnam to Singapore continued to achieve high growth (31.6%) with a value of SGD683.32 million, and import turnover increased by 1.54%, reaching more than SGD1.79 billion (US$1.32 billion).

According to statistics from the Trade Department, in May 2024, all three main export product groups of Vietnam to Singapore continued to increase strongly,

Specifically, the group of machinery, equipment, mobile phones, components and spare parts of all kinds increased by 28.87%. Reactors, boilers, machine tools and spare parts of the above machines (up 38.86%). Glass products (increased 1.74 times).

Emphasizing that the scope for cooperation between the two countries is still large, Minister of Industry and Trade of Vietnam Nguyen Hong Dien and Minister for Trade and Industry of Singapore Tan See Leng said that trade, industry, energy, digital economy, green, clean and sustainable economy are potential fields that need to be explored.

This contributes to building the "Comprehensive Strategic Partnership" relationship framework that the two countries are aiming for.

In particular, the two leaders emphasized the potential for cooperation in the field of energy, with special attention to wind energy sources and clean energy.

Singapore's new trade policy

Singapore is a relatively small consumer market. However, it is home to many multinational companies and is a major regional and global information, trade, finance, and logistics center.

Singapore is a major international air transit center and an important gateway to Asia in general and Southeast Asia in particular, including Vietnam.

Therefore, to export successfully and sustainably to this market, Cao Xuan Thang believes that export businesses need to carefully study market information, grasp changes in import markets to build export strategies.

"Food exporters to Singapore need to understand the applicable requirements of the Competent Authority in the importing country, and ensure that export shipments comply with the standards and regulations of the importing country/region," Cao Xuan Thang said.

He recommends that state management agencies, and relevant food import-export businesses update new local regulations.

Energy - a field with much room for cooperation between Vietnam and Singapore. Photo: congthuong.vn

Singapore's Ministry of Finance has proposed Multinational Enterprise (Minimum Tax) Bill and the subsidiary legislation to implement Domestic Top-up Tax (DTT) and the Income Inclusion Rule (IIR) under Pillar Two of the Base Erosion and Profit Shifting (BEPS) 2.0 initiative, as announced in the 2024 Budget Statement on February 16, 2024.

The proposed Bill and subsidiary legislation make important changes to apply to multinational enterprises (MNEs) within the scope of their activities.

MNEs are understood to be corporations with an annual group turnover of EUR750 million(US$812.9 million) or more, for at least two of the four previous financial years. The proposed changes would be effective for fiscal years beginning on or after January 1, 2025.

According to Vietnam Trade Office in Singapore, if passed, the Multinational Enterprises (Minimum Tax) Bill will be understood as one with Singapore's Income Tax Act 1947 (ITA).

Certain provisions, such as administration, enforcement and appeals that apply under the ITA will also apply to domestic and multinational enterprise's additional tax.

“Singapore is increasingly cautious in its trade policy, avoiding dependence on one export and import market. This is also an opportunity for Vietnamese businesses to penetrate deeper into this market, contributing to increasing Vietnam's export of goods," Cao Xuan Thang said.

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