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Singapore Seeks Digital Free Trade Agreement with the European Union
  • NEWSLETTER,SINGAPORE

Singapore Seeks Digital Free Trade Agreement with the European Union

Singapore aims to commence negotiations for a digital free trade agreement with the European Union (EU) this year. This development follows a non-binding digital partnership agreed upon in February between the two parties, with Singapore’s Minister-in-charge of Trade Relations S Iswaran indicating that both sides are identifying projects to pursue through the partnership. The initiative is expected to improve the interoperability of digital markets and policy frameworks, ultimately allowing businesses and consumers to transact online at lower costs. This digital trade agreement could significantly influence Singapore company incorporation and expand opportunities for new company setups in Singapore.

The EU-Singapore Digital Partnership (EUSDP) serves as a critical first step towards a bilateral digital trade agreement. Iswaran, who also holds the position of Singapore’s transport minister, stated that such an agreement would provide citizens and businesses with the clarity and legal certainty required to confidently participate in the digital economy. The negotiations for the digital trade agreement are anticipated to begin during Sweden’s Presidency of the EU Council in the first half of 2023. This builds on the existing Singapore-EU bilateral free trade agreement, known as the EU-Singapore Free Trade Agreement (EUSFTA), which came into force in November 2019.

The EUSFTA was the first of its kind between the EU and a member state of the Association of Southeast Asian Nations (ASEAN). It is considered a template for a broader future trade pact with regional economies. While an EU-ASEAN agreement remains a long-term ambition, a future EU-Singapore digital trade agreement could act as a stepping stone for closer region-to-region connectivity. Following partnerships with Japan and South Korea, the EU’s digital partnership with Singapore is the third such agreement with a key Asian trading partner.

The EUSDP seeks to facilitate research and regulatory cooperation in areas such as 5G and 6G adoption, artificial intelligence (AI) governance, and semiconductor supply chain resilience. It also aims to establish common rules on cross-border data flows, electronic invoicing, and payments, thus granting small and medium-sized enterprises (SMEs) more open access to overseas markets. However, data privacy differences between Singapore’s Cross-Border Privacy Rules (CPBR) and the EU’s General Data Protection Regulation (GDPR) may pose challenges in reaching a binding agreement.

For businesses looking to expand into Southeast Asia, the potential EU-Singapore digital trade agreement signals a favourable environment for Singapore company incorporation. The agreement aims to enable seamless integration between the EU, Singapore, and the rest of the region, promoting growth and expansion for companies seeking new opportunities. As the digital partnership progresses, the prospect of a digital free trade agreement could significantly enhance the appeal of a new company set up in Singapore, offering a strategic foothold in the region and fostering stronger trade relations with the EU. By partnering with experienced consultancies like IMC Group, businesses can navigate the complexities of the incorporation process and tap into expert insights, unlocking the full potential of this thriving market and seizing the boundless opportunities that lie ahead in Singapore’s vibrant and interconnected digital landscape.

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CPTPP Enlarged: Singapore Greets Britain’s Inclusion in Free Trade Agreement
  • NEWSLETTER,SINGAPORE

CPTPP Enlarged: Singapore Greets Britain’s Inclusion in Free Trade Agreement

Singapore warmly welcomed Britain’s recent decision to become the first European country and the 12th member to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

As Britain sets its sights on bolstering its global alliances post-Brexit, the decision to ease company formation in Singapore is a clear signal of intent. With its reputation as a business-friendly destination, Singapore is a natural choice for British firms seeking to expand their global reach. This move is a crucial step towards that end, paving the way for closer ties between the two nations and a bright future for cross-border commerce.

Trade and Industry Minister Gan Kim Yong posted on LinkedIn to congratulate Britain on achieving a “significant milestone” after nearly two years of negotiations, expressing his joy over the country’s inclusion in the trade pact.

Mr Gan added, “The UK’s accession to the CPTPP will provide more business opportunities and make it easier for Singapore companies to navigate the UK market”.

He further stated that this move would enhance the robust bilateral economic partnership between the two nations, supported by multiple agreements such as the UK-Singapore Free Trade Agreement, the UK-Singapore Digital Economy Agreement, and the UK-Singapore Green Economy Framework.

Minister-in-charge of Trade Relations, Mr S. Iswaran, shared a similar view on LinkedIn.

“Singapore remains strongly committed to ensuring that CPTPP remains high-standard, robust and relevant so that it continues to bring benefits to our people and businesses”, Mr Iswaran stated. “I look forward to the UK’s accession to the CPTPP.”

Mr Gan stated that all members of the CPTPP will collaborate towards finalising the accession protocol.

Other members of the CPTPP are Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru and Vietnam.

In a joint ministerial statement, member countries said the CPTPP is “one of the most comprehensive and ambitious trade deals ever concluded”.

“The CPTPP members and the UK are committed to further promoting free trade, open and competitive markets, the rules-based trading system and economic integration in the region and beyond,” they said.

By joining the CPTPP, Britain will enhance its current bilateral free trade agreements with most member countries, providing businesses with additional options for trade terms.

According to British Prime Minister Rishi Sunak’s office, the agreement is the largest trade deal since Brexit, with a combined GDP of £11 trillion (S$18.1 trillion) once Britain becomes a member, which accounts for 15% of the global GDP.

Natalie Black, Britain’s Trade Commissioner for Asia-Pacific, highlighted that as the second-largest member of the CPTPP, Britain’s participation would increase the trade bloc’s combined GDP from its current £9 trillion and offer improved access to 67 million UK consumers.

“CPTPP is one of the world’s most progressive trade agreements, and the UK’s accession will take it from a Pacific agreement to a truly global one,” said Ms Black.

According to a statement released by the British High Commission in Singapore, Kemi Badenoch, the Secretary of State for Business and Trade, expressed the following: “Our accession to CPTPP sends a powerful signal that the UK is open for business and using our post-Brexit freedoms to reach out to new markets, including in the Asia-Pacific region, and grow our economy.

“Joining this influential trade bloc will help us to shape the rules of global trade with like-minded nations and work even closer together on our shared priorities of prosperity, security and free and fair trade.”

Kara Owen, the British High Commissioner to Singapore, reported that trade between Britain and Singapore increased by 24.8% from the previous year, with a total value of £20 billion during the 12 months leading up to September 2022.

“We continue to see very strong interest from UK companies in Singapore and the broader Asia-Pacific region,” said Ms Owen.

“Joining the CPTPP will further strengthen our existing agreements with Singapore to grow trade and investment. We look forward to supporting UK and Singapore companies as they take advantage of all it offers.”

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Singapore’s New Due Diligence Requirements for Corporate Finance Advisers
  • NEWSLETTER,SINGAPORE

Singapore’s New Due Diligence Requirements for Corporate Finance Advisers

By October 1, 2023, corporate finance (CF) advisers in Singapore are required to adopt new due diligence requirements. The objective behind implementing these new requirements is to enhance the quality and standards of corporate finance advisers in the city-state.

Deployment Plan

From October 1, 2023, all corporate advisory engagements in Singapore must comply with the due diligence requirements. In anticipation of this, MAS has advised CF advisers to begin formulating and executing policies that align with these new requirements.

To whom do the new requirements for business conduct apply?

The following are subject to the new conduct requirements:

  1. Banks that have obtained licenses, merchant banks, and finance companies are not required to hold a capital market services (CMS) license
  2. Individuals or entities who possess a CMS license and provide advice on corporate finance; or
  3. Persons who provide advice on corporate finance, including those who are representatives of options a) and b)

Requirements are related to the overall conduct of business activities

Under Notice SFA o4-N21, one of the newly introduced requirements for business conduct is this.

Dealing with conflicts of interests

Corporate finance advisers must avoid conflicts of interest with their clients. If they can’t mitigate material disputes, they must stop advising on that transaction or decline new projects.

To protect price-sensitive information its directors or personnel receive, a CF adviser should implement policies, controls, and procedures, including limited access to sensitive information and separating roles of those involved in corporate finance.

Policies, controls, and procedures must be implemented by a CF adviser to protect sensitive information received by its personnel, including limited access based on necessity and separating corporate finance advice from other roles.

The CF adviser should have policies, controls, and procedures to prevent insider trading and clear reporting lines for issue escalation with representative oversight.

Requirements for due diligence in general

The CF advisor is responsible for performing due diligence with reasonable care, which involves verifying the accuracy and completeness of statements and confirmations made by customers or others involved in the transaction.

The corporate finance advisor should also oversee any new information during the transaction that may question the credibility of the initial information received.

Providing guidance to listing applicants regarding their regulatory obligations

The CF advisor must inform listing applicants about their responsibilities under Singapore’s Securities and Futures Act, as well as their obligations upon admission to the Singapore Stock Exchange.

The corporate finance adviser must conduct background checks on listing applicant’s key personnel, directors, group entities, and controlling shareholders as per the notice.

Corporate finance advisers in Singapore must examine the physical assets of listing applicants and conduct interviews with significant stakeholders such as creditors and key suppliers. In the case of material issues, the adviser must scrutinize supporting documents such as invoices, contracts, and title deeds. They may also gather information from public record databases or delegate the relevant checks and reviews to a third party.

When appointing a third-party service provider, the corporate finance adviser must ensure that the third party’s due diligence meets satisfactory standards and quality.

The corporate finance advisor’s foremost responsibility is to ensure the Singapore Stock Exchange’s suitability of the listing applicant. This includes verifying the completeness of the listing application information and assessing the qualifications of the applicant’s directors in managing the business. The CF advisor plays a vital role in upholding due diligence requirements.

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India’s SME-Friendly Budget Creates Profitable Opportunities for Singaporean Businesses, Reports Singapore Chamber
  • India, NEWSLETTER,SINGAPORE

India’s SME-Friendly Budget Creates Profitable Opportunities for Singaporean Businesses, Reports Singapore Chamber

The future of small businesses in Singapore and India is looking brighter than ever! The SICCI has hailed India’s SME-friendly budget for 2023-24, paving the way for exciting new collaborations and growth opportunities. Joining forces for company formation in Singapore and India, the possibilities are endless for both nations’ dynamic small business sectors.

Which sectors in India are expected to benefit the most from the budget?

The sectors that are expected to benefit the most from India’s SME-friendly budget are infrastructure, healthcare, education, and agriculture. These sectors have been given significant attention in the budget, with a considerable amount of funds allocated to their development.

Neil Parekh, the Chairman of SICCI, expressed his optimism about the target of Saptarishi announced by India’s Finance Minister Nirmala Sitharaman. He highlighted the potential for green growth, leveraging youth power, and promoting the development of the financial sector.

He stated that our team looks forward to collaborating closely with our counterparts in India to drive growth and innovation in the SME sectors of both countries.

He praised the SME-friendly budget and stated that the first step would be to reach out to the leadership of ASSOCHAM (The Associated Chambers of Commerce and Industry of India), with whom they have already signed an MoU, to expand further their areas of cooperation outlined in the Indian Budget 2023-2024.

He noted that the proposed 30 international skill centres would be set up across various states to provide skill training for youth to pursue global opportunities.

The SICCI sees excellent potential in collaborating with our Indian counterparts to transfer technology, expertise, and talent to equip the younger generation in India with the skills and knowledge to seize global opportunities. The proposed international skill centres, especially in sectors such as green technology, IT and digital technology, and healthcare, where skilled professionals are in high demand, present excellent opportunities for cooperation.

He also expressed his interest in tourism development in India, stating that SICCI is keen to connect state governments with officials from the Singapore Tourism Board and Enterprise Singapore to exchange the best practices for developing the sector. This collaboration will bring benefits to the citizens of India and global tourists.

With India’s economy projected to grow by 7% in 2023, the SICCI and its members are poised to seize many exciting opportunities, including forming companies in India and collaborating with Singapore for business growth. The 99-year-old Indian business group with over 550 members eagerly anticipates the potential for innovation and expansion highlighted by Parekh, the group’s leader.

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The Singapore Budget 2023: What Entrepreneurs Need to Know
  • NEWSLETTER,SINGAPORE

The Singapore Budget 2023: What Entrepreneurs Need to Know

The Singaporean government announced the country’s budget for 2023 on February 14th. The theme of the budget centres on enhancing Singaporeans’ abilities and taking advantage of new opportunities amid increasing global uncertainty.

In 2023, the government is expected to spend S$104.2 billion (US$78.1 billion), and the fiscal deficit is expected to be S$400 million (US$299 million), or 0.1 per cent of GDP. The range of 0.5 to 2.5 per cent is forecast for positive but sluggish economic growth. However, external factors like the protracted conflict between Russia and Ukraine and the deterioration of the US and Europe economies will significantly impact world trade. As a result, Singapore’s inflation is likely to continue to be high, particularly in the first half of 2023.

Support is provided for Singaporean businesses, including those looking to set up a new business in Singapore, as they adapt to life after COVID-19 and deal with high inflation and slow development. These include, among other things, tax deductions for invention and research and development (R&D).

BEPS 2.0

It was announced in Budget 2023 that Singapore will implement a minimum effective tax rate of 15 per cent for large multinational enterprises (MNEs) located in Singapore starting on January 1st, 2025.

Base Erosion and Profit Shifting (BEPS) has been a long-standing issue in global taxation, with companies exploiting loopholes in tax laws to avoid paying their fair share. The Organisation for Economic Co-operation and Development (OECD) has been working on a solution to this problem, known as BEPS 2.0, which is set to change the landscape of international taxation.

Starting in 2025, multinational enterprises (MNEs) with combined yearly revenues of EUR 750 million (US$797 million) or above will be required to pay a tax rate of 15 per cent on the profits they generate in the jurisdiction where they operate.

Innovation Enterprise Scheme

To promote innovation and R&D among businesses, the government has launched the Enterprise Innovation Scheme (EIS) in Budget 2023. The EIS offers tax incentives for eligible companies and introduces new measures to boost their innovative capabilities further.

Below are the Five Qualifying Activities Stated:

Maximising the Benefits of Singapore's Qualifying R&D Activities

At present, companies conducting R&D in Singapore can claim a 100 per cent tax deduction on all qualifying expenses related to R&D projects. Additionally, they can avail of an extra 150 per cent tax deduction for staff costs and consumables incurred for such tasks. The recent Budget 2023 has introduced a new incentive where companies can now claim a 400 per cent tax deduction on the first S$400,000 (US$298,000) of costs related to consumables and staff for qualifying R&D projects conducted in Singapore. This incentive will be effective from the year of assessment (YA) 2024 until the year of assessment (YA) 2028.

Boosting Innovation: Enhanced Tax Deductions for Intellectual Property Registration Costs

Currently, companies can avail of a 200 per cent tax deduction on the initial S$100,000 (US$74,600) of eligible costs for registering intellectual property, including patents, designs, trademarks, and other related expenses. With the introduction of Budget 2023, this incentive has been improved to a 400 per cent tax deduction for the first S$400,000 (US$298,000) of qualifying IP registration costs for each assessment year from 2024 to 2028.

Innovating with IP: A Guide to Acquisition and Licensing of IP Rights

Currently, businesses can claim a 100 per cent write-down allowance on capital expenses incurred on qualifying intellectual property (IP) rights, along with a 200 per cent tax deduction on the initial S$100,000 (US$74,600) of the costs related to licensing IP rights.

Under Budget 2023, this incentive has been improved further. Companies can now avail of a 400 per cent tax allowance/deduction on the first S$400,000 (US$298,000) of qualifying expenses incurred on acquiring and licensing eligible IP rights. This incentive is applicable for the years of assessment from 2024 to 2028.

Deductions on taxes for expenditure

Skills Future Singapore has authorised courses that are now eligible for a tax deduction of 400 per cent on the initial S$400,000 (US$298,000) of qualifying training expenses, which is an improvement from the earlier 100 per cent tax deduction.

Deductions on taxes for innovation projects conducted by qualified partners, including polytechnics

Budget 2023 has introduced a 400 per cent tax deduction program for qualifying innovation projects up to S$50,000 (US$37,300) of qualifying expenses for the years of assessment from 2024 to 2028. The initiative encourages companies to undertake innovation projects with local polytechnics, the Institute of Technical Innovation, or other eligible partners.

Enhanced Support for Business in the New Era

Enterprise Singapore, a statutory board under the Ministry of Trade and Industry that supports local SMEs in enhancing their capabilities, innovation, and internationalisation, will extend the current improvements provided by its Enterprise Financing Scheme, as announced by the government.

The Impact of the Enterprise Financing Scheme Trade Loan Extension

Starting April 1, 2023, and ending on March 31, 2024, the Enterprise Financing Scheme – Trade Loan (EFS-TL) will be available to enterprises. With the EFS-TL, borrowers can receive trade financing of up to S$10 million (US$7.3 million), and the government’s risk share on loan is set at 70 per cent, with a maximum repayment period of one year.

Extending the Enterprise Financing Scheme for Project Loans

The Enterprise Financing Scheme for Project Loans (EFS-PL) has been extended until March 31, 2024, to support eligible companies’ overseas and domestic projects. This program provides financing for various supportable loan types, including land/building/factory, working capital loans, machinery, equipment, other fixed assets, and guarantees. Borrowers can receive up to S$50 million (US$36.9 million) for overseas projects and up to S$30 million (US$22.1 million) for domestic projects. Additionally, borrower groups can receive up to S$50 million (US$36.9 million) for overseas projects and up to S$30 million (US$22.1 million) for domestic projects.

For fixed asset loans, the government will bear 50 per cent of the risk, and for young companies meeting specific criteria, the government’s risk share is 70 per cent. The maximum repayment period for fixed asset loans is up to 15 years, while working capital loans and guarantees have a maximum repayment period of up to five years.

Overview of the Enterprise Financing Scheme - Working Capital Loan

From April 1, 2023, to March 31, 2024, the Enterprise Financing Scheme – Working Capital Loan has been upgraded to provide an operating capital loan of up to S$500,000 (US$373,000).

Boosting Business Growth with Singapore Global Enterprises Initiative Top-Up

The Singapore company formation Global Enterprises initiative, aimed at supporting local companies with customised capability building programs, including internationalisation, innovation, and fostering of new partnerships, has received a top-up of S$1 billion (US$746 million) in Budget 2023.

Boosting Business Efficiency: The Top-Up for National Productivity Fund

The National Productivity Fund (NPF), created in 2010 to enhance business productivity and employee training, will receive an additional S$4 billion (US$2.9 million) in funding under the new Budget of 2023. The NPF’s mission has also been expanded to support companies in developing new capabilities, upskilling their workforce, and contributing more to the domestic economy.

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Singapore and the UK: Sign MoU for Increased Cooperation in Fintech and Sustainable Finance
  • NEWSLETTER,SINGAPORE

Singapore and the UK: Sign MoU for Increased Cooperation in Fintech and Sustainable Finance

Introduction

Singapore and the United Kingdom (UK) recently signed a Memorandum of Understanding (MoU) to strengthen bilateral cooperation on fintech and sustainable finance to optimize the regulation of finance in today’s digital era. The MoU was signed on November 25, 2022, at the seventh UK-Singapore Financial Dialogue held in Singapore.

Singapore is the leading fintech hub and sustainable finance power in Asia today and beginning in 2021, more than 40 percent of fintech companies in Southeast Asia were based in Singapore, underscoring its role as ASEAN’s financial center with a growing number of Singapore Company Incorporation from the foreign investors.

The recent MoU has been built upon the UK-Singapore FinTech Bridge which was launched in May 2016 in London during the sixth UK-Singapore Financial Dialogue by HM Treasury and the Monetary Authority of Singapore (MAS). The Bridge is structured by a regulatory cooperation agreement signed between the Financial Conduct Authority (FCA) and the MAS and enables the regulators to refer fintech firms that meet set eligibility criteria to their counterparts and sets out the process of sharing and using the information on financial services innovation by the regulators.

Key Features

Sustainable Finance

Collaboration on Sustainable finance was discussed between the two countries within the context of the Paris Agreement to limit global warming.

The two countries agreed to work together on transition finance such as boosting international consistency in the design and disclosure of transition plans.

The two countries agreed to continue working with international organizations to implement a global reference for sustainability-related disclosure standards including climate-related financial disclosures.

The requirement for a globally consistent framework for nature-based disclosures was also agreed upon, including collaboration on enhanced comprehension of the potential for natural degradation to create financial risks.

Fintech

Opportunities and challenges in the crypto and blockchain markets were also discussed and besides sustainable finance, the two countries agreed to collaborate on the fintech space.

An immediate need for a safe digital ecosystem of assets was agreed upon by both countries. The risks associated with volatile crypto assets and financial stability were discussed including the progress made on strengthening consumer protection and regulating stablecoins. Both agreed to work in association with international bodies to help stabilize digital assets.

Other fintech developments in recent times were also discussed including e-wallet caps and digital banking in Singapore.

At the beginning of 2022, Singapore and the UK signed the Digital Economy Agreement aiming at advancing digital trade by standardizing e-payments and e-invoicing systems and encouraging enhanced participation from the UK-based SMEs with foreign company registration in Singapore. Moreover, in late 2020, Singapore and the UK also signed a Free Trade Agreement, as the UK’s first FTA with a Southeast Asian country. The free trade agreement reduced non-tariff barriers, reduced tariffs, and provided improved market access in the financial services sector.

The Takeaway

In all likelihood, the UK-Singapore FinTech Bridge will build the stage for increased cooperation on fintech and sustainable finance over the coming years. The Singapore-UK partnership is likely to strengthen more with Singapore leading the fintech and sustainable finance in South East Asia.

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The Rise of Mergers & Acquisitions in Singapore
  • NEWSLETTER,SINGAPORE

The Rise of Mergers & Acquisitions in Singapore

Introduction

Business activities related to Mergers and Acquisitions (M&A) have made a strong comeback in Singapore after some slowdown during the Covid pandemic. As business confidence is gradually restored and the economic outlook becomes positive, growth-oriented businesses started looking for profitable M&As.

What are the key regulations relevant to M&A in Singapore?

The key regulations relevant to M&A in Singapore are as under.

  • Singapore Companies Act 1967-ACRA
  • Singapore Insolvency, Restructuring and Dissolution Act 2018 (IRDA)- Ministry of Law
  • Singapore Securities and Futures Act 2001 (SFA)- MAS
  • Singapore Code on Takeovers and Mergers (Takeover Code)- MAS
  • Listing Manual of the Singapore Exchange Securities Trading Limited
  • Singapore Competition Act 2004- Ministry of Trade and Industry

How are Private and Public M&A Transactions Structured?

Private and public M&A transactions in Singapore are normally structured either as a purchase of the issued shares of the company or as an acquisition of the business including the assets and liabilities of the company.

What are the main differences between the various structures?

Generally, the acquisition of shares becomes less cumbersome as compared to a business or asset sale as this involves the transfer of title to each of the assets from the target company to the purchaser. Moreover, a company’s assets and liabilities can be available in different forms including land, leases, premises, leases, book debts, intellectual property, etc. requiring different methods of transfer to pass title for each type of asset.

What factors typically influence the selection of structure?

Maximization of profit is the major factor followed by less time and resources requirements for due diligence and optimized tax consideration.

What documents are required during the preparatory stage of an M&A transaction?

A non-disclosure or confidentiality agreement before the start of the due diligence process and preparation of the transaction documents. A memorandum of understanding on key terms and conditions of the transaction may also be a document sometime.

What is Break Fee in M&A?

A break fee is a penalty paid by the party who breaks the M&A deal. Break fees are usually permitted in Singapore, although they are rare in the case of private acquisitions.

What is the code of takeovers and mergers in Singapore?

The Takeover Code needs all parties to a takeover or merger transaction to volunteer full and prompt disclosure of all relevant information. There must not be any statements made that may mislead shareholders or the market. Any breach of the takeover code may result in sanctions imposed by the Securities Industry Council, Singapore.

Is there any time limit for negotiations or due diligence?

For private M&A transactions, there are no time limits for negotiation or due diligence. In public M&A transactions, while there are no maximum periods specified for negotiations or due diligence, the Takeover Code however stipulates a strict timetable on the actual takeover process that must be fulfilled.

What are the means of acquisition of a publicly traded company?

The acquisition of a publicly traded company in Singapore is done through general offers, schemes of arrangement, reverse takeovers, and voluntary de-listings.

Are hostile takeovers common in Singapore?

Hostile acquisitions are allowed in Singapore, however, are uncommon.

Who makes decisions on behalf of a target company and what are shareholders’ roles?

In both public and private M&A transactions, the target company’s board of directors is the key decision-making body.

In a private M&A transaction, specific shareholder approval is not usually needed unless the transaction specifically requires shareholder approval as per Singapore legislation or a shareholders’ agreement.

Shareholders in a public M&A transaction will be able to either accept a takeover offer in respect of their shares or cast their vote to approve a scheme of arrangement.

What roles do employees and other stakeholders play?

Generally, employees have no statutory right to be consulted or otherwise to participate in the management of companies in Singapore.

Conclusion

M&A activity in Singapore has strong government support. The Singapore government announced enhancements to the Enterprise Financing Scheme – Merger & Acquisitions (Scheme) from 1 April 2022 to 31 March 2026 during budget 2022. The Scheme supports enterprises to scale and expand through M&A and provides financing for the acquisition of local or overseas targets. The government also encourages businesses to embark upon complementary businesses and emerging sectors and new-age businesses.

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Industry 4.0: A Look at The Manufacturing Sector Trends in Singapore
  • NEWSLETTER,SINGAPORE

Industry 4.0: A Look at The Manufacturing Sector Trends in Singapore

The Fourth Industrial Revolution often known as Industry 4, combines the physical and digital aspects of manufacturing technologies and helps address many challenges of today’s manufacturing sector. Singapore, as the leading manufacturing hub in Southeast Asia, has already embraced Industry 4.0 to take this sector up its value chain to an advanced level.

Singapore has a well-developed manufacturing ecosystem and the country, with the help of a highly skilled talent pool and government support is all poised to embark upon this advanced technology-based manufacturing transition.

Thousands of global business organizations and MNCs have chosen Singapore as their regional headquarter for an effective transition to Industry 4.0 to optimize profit and sustainable business growth. This in turn has led to an increasing number of Singapore-based startups collaborating with these global business houses for future business innovation and excellence and boosting the startup ecosystem for attracting foreign investment in the country.

Smart Industry Readiness Index: Supporting the Manufacturers in Singapore

The Economic Development Board (EDB) of Singapore in association with leading technology companies and industry experts developed the Smart Industry Readiness Index (SIRI) to support the manufacturing companies in Southeast Asia in assessing their readiness for Industry 4.0. This tool, as developed, has four main focus areas including Data analytics, Connectivity, Advanced manufacturing technologies, and Workforce development.

This tool was first launched in 2017 to help the manufacturers identify the areas where they need to make changes to be ready for Industry 4.0 by carrying out the initial gap analysis of their current level of readiness in each of these four areas to start, scale, improve and sustain their manufacturing operations. SIRI also helps the manufacturers conceptualize Industry 4.0 and develop an innate understanding of the present Industry 4.0 maturity level of the companies by evaluating their organizations, processes, operations, and technologies including IoT, AI, Cloud computing, and Robotics.

Industry 4.0: Singapore’s Increased Focus Upon Research and Development

Today, over 20% of Singapore’s GDP is contributed by the manufacturing sector which is considered the building block of the country’s economy.

The country is a global leader in various manufacturing sectors including pharmaceutical and healthcare products, semiconductor manufacturing, and aerospace engineering, and has attracted many internationally reputed giant companies like GlaxoSmithKline, Siemens, Schneider Electric, IBM, Accenture, HSBC, Shell, UOB and many more to set up their manufacturing bases there.

The country’s relentless drive and increasing budgetary spending in manufacturing research and development (R&D) are promoting smart technologies adoption in the manufacturing sector and attracting global investors for new company setup in Singapore. The Singapore government has plans to spend around SGD 17.6 billion for R&D over the next five years in its continued effort to build sustainable and more resilient manufacturing industries in the country.

While 20% of the funds are budgeted for innovation platforms and entrepreneurial talent development and enhancing business innovation capabilities, the remaining 75% is allocated for new programs focused upon future needs, disruptive emerging opportunities, and talent and skill development in the manufacturing sector.

The universities and research centers in Singapore are building model factories and processes to simulate real-life manufacturing environments for the development of new manufacturing technologies that can be exported to different countries across the world.

Industry 4.0: Why Choose Singapore

The biggest challenges in implementing Industry 4.0 lie with finding qualified employees, obtaining continuous government support, and upgrading equipment and facilities and Singapore continually strives for addressing these challenges effectively.

Singapore boasts of a highly skilled workforce and is ranked second globally in the Global Talent Competitiveness Index, 2021. The country’s robust education policy and system help the students become more focused on smart technologies and attain greater proficiency in science, technology, and mathematics. Singapore has a talent pool of the best available technical and vocational skills for catering to the manufacturing sectors’ manpower demands with more than 30% possessing a university degree and another 15% holding field-specific professional qualifications.

Universities and research centers collaborate with leading MNCs to establish corporate laboratories and develop innovative and smart solutions to address real-life Industry 4.0 challenges including cybersecurity, computational engineering, AI, blockchain, artificial intelligence, and green production techniques.

Skills Future, a national program launched in 2015 supports citizens in honing their technical skills and provides technical training programs, online tutorials, and industrial internships offering financial benefits. This initiative, in particular, helps people make well-informed decisions in choosing training courses, fields of education, and professional careers matching their qualifications. This program also encourages lifelong learning, promotes employee recognition, and focuses on developing skills to adapt to innovative technologies most needed and vital for Industry 4.0.

Several support measures are taken by the government to promote Industry 4.0 and make the country more business friendly. The country offers several tax exemptions, easy transfer of ownership, and avoidance of double taxation. Various fiscal and non-fiscal incentives including a stable socio-political environment are also conducive to boosting Industry 4.0.

The country has a simple but robust business setup process which is free of bureaucracy and streamlined for an easy and fast Singapore company incorporation for foreign investors looking to establish a business base in the country.

Singapore company incorporation is a hassle-free process and usually takes a day if all the required documents are in order. Private limited companies are the most preferred choices among foreign investors being the most flexible, scalable, and advanced business vehicle.

The Takeaway

The manufacturing sector in Singapore is witnessing continuous technology and processes transformation including 3D printing, robotics, AI, and IoT. Companies that are embracing Industry 4.0 have started to reap great benefits in terms of productivity, efficiency, and bottom line.

Successful implementation of i3D printing technology is helping companies to do away with huge inventories and manufacturing products only on demand. Storage, manufacturing, and inventory carrying costs are greatly reduced making manufacturing companies more resilient and sustainable in the long term. Increased use of data, the essence of Industry 4.0, is helping companies to achieve increased operational efficiency and improved demand forecasting.

As manufacturing in Southeast Asia plays a vital role in the region’s economy, Industry 4.0 can hugely transform business operations and bring about significant economic growth.

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Singapore: The Gateway for the UK Tech Companies in their Expansion into The Asia Pacific
  • NEWSLETTER,SINGAPORE

Singapore: The Gateway for the UK Tech Companies in their Expansion into The Asia Pacific

Technology companies based in the United Kingdom (UK) are eyeing Singapore as the gateway as they plan to expand into the Asia Pacific region and will leverage the UK-Singapore Digital Economy Agreement (DEA) encompassing the digitized trade in services and goods to support and enhance regional growth.

Starting September 21 2022, a major delegation of 24 cutting-edge technology companies based in the UK and exploring growth opportunities in the Asia Pacific, spent a week in Singapore hosted by the British High Commission and interacted with Singapore Government agencies including the GovTech, Cyber Security Agency; Defense Science and Technology Agency; the Infocomm Media Development Authority and the Ministry of Law.

On visiting Singapore and engaging with Singapore government authorities, the UK tech companies initiated the UK-Singapore Digital Economy Dialogue for the first time to enhance the benefits of digital trade, strengthen technology partnerships at both the government and business levels, and ensure a balance between technological innovation and regulatory framework.

The British Government in an official statement reported that 24 British technology companies who intend to expand in the Asia-Pacific region and explore projects related to driverless vehicles, lawtech, cybersecurity, and deeptech were warmly welcomed by Singapore.

DEA, the first digital economy deal between two major digitized and advanced economies in the world acted as the springboard for the UK technology companies’ expansion in the Asia Pacific. Digital trade between these two nations is presently worth over £17 billion per year. The UK tech companies visiting Singapore intend to use the DEA to support and promote their expansion into the Asia Pacific and explore opportunities for Singapore Company Incorporation.

Tech Nation, the leading growth platform in the UK for technology companies, also organized a delegation the same week and scheduled a programme of 90 meetings with investors and entrepreneurs.

“Singapore is a gateway to the rest of Southeast Asia, which has a digital economy projected to reach $1 trillion by 2030. The region has the demographics and openness that scaleups are looking for,” the UK Trade Commissioner for the Asia Pacific, Natalie Black highlighted.

She also said, “Our UK-Singapore Digital Economy Agreement will make the most of this opportunity – bringing together two high-tech nations in a living agreement that keeps up with the pace of digital innovation.”

Gabriel Lim, secretary of the Ministry of Trade and Industry, emphasized that this visit was an opportunity to help businesses, particularly startups and SMEs, “to seize new growth opportunities across our combined and growing digital markets.”

Lawtech deals with technologies that replace the conventional methods for legal services delivery or legal transactions by law firms or lawyers, presenting a bright spot for future business growth and ten UK-based lawtech firms visited Singapore to explore business opportunities in the Asia Pacific.

The UK-Singapore DEA is the first international trade agreement to include certain low-tech specifics. The British lawtech business is valued at £11.4 billion, as per data from Tech Nation research. The UK has traditionally remained the leader in law services and has the largest legal services market in Europe and second in the world just after the US.

The DEA focuses on helping law firms identify collaboration opportunities to exploit markets in the UK and Singapore as it brings two legal giants to the same podium with certain specific provisions that enhance electronic contracts and signatures; secure international data flows; and protection of vital proprietary data.

Businesses from both the UK and Singapore feel more confident as the DEA guarantees transparency in digital trading between the two countries. Funding for expansion in the Asia-Pacific will not be a problem for British technology companies and startups as many Single family offices in Singapore would be more than willing to invest in these companies.

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We Must Continue Hiring Global Talents: MAS Chief at Singapore Financial Forum 2022
  • NEWSLETTER,SINGAPORE

We Must Continue Hiring Global Talents: MAS Chief at Singapore Financial Forum 2022

The two-day Singapore financial forum conducted virtually aims to provide both local and global finance professionals with an insight into key career opportunities in the finance sector in Singapore. The forum was organised by the Monetary Authority of Singapore (MAS), Institute of Banking and Finance (IBF) and Singapore Global Network, a division of the Economic Development Board (EDB).

The forum was attended by local Singaporeans and foreign-based professionals, overseas Singaporeans, other international participants, and industry leaders and professionals from the financial sector in Singapore.

The Managing Director and Chief of the Monetary Authority of Singapore (MAS), Ravi Menon on Thursday, May 19 said that there are over 3,000 job openings in the technology of which 700 will be for software design and development. Data provided by Singapore’s central bank also reveals that there would be more than 9,400 new jobs in the financial sector this year, with about a third in the areas of technology.

This technological manpower is needed to support the design, development and maintenance of digital financial services, blockchain technology in trade finance and to detect fraud and money laundering with the use of AI.

Mr. Menon, in his inaugural address at the Singapore Financial Forum, highlighted that data from the Asian Development Bank signals strong exports and domestic demand, driving accelerating economic growth in Asia at more than 5% per annum in the coming years.

While discussing the issue of building a strong Singaporean core, Mr. Menon emphasized that it is “not a ‘Singaporeans-only’ strategy” because such a strategy might put Singapore’s position as a global financial hub in jeopardy, the reason being there are simply not enough high skilled local Singaporeans to fulfil the fast and ever-expanding need of specialists for the financial institutions. He advised that Singapore must grow a strong local talent pool while attracting and retaining global talent.

MAS Chief emphasized that Singapore must invest in developing the right skills and capabilities amongst the local workforce and ensure fair employment opportunities.

As per MAS, there were over 3,000 Singapore citizens in the financial sector last year in senior roles, 80% higher than those in 2016.

Mr. Menon said, “The financial sector is growing rapidly and creating more jobs than our small local workforce can meet. Our labour market is tightening with unfilled vacancies and rising wages.”

He also cautioned, “If we do not remain open to global talent, our financial sector will lose its competitiveness and growth will be sub-par,”

The MAS Chief stressed that Singapore must keep on hiring foreign professionals despite work pass policy changes.

“The changes are not to cut the intake of Employment Pass holders but to enable entry of high-quality global talent in a more transparent and flexible way”, he emphasized.

The MAS Chief also said that Singapore’s financial centre is performing its role very well and the prospects remain very bright over the coming years.

Mr. Menon informed that the financial sector in Singapore exhibited strong performance during all waves of the Covid-19 pandemic and registered an impressive annual average growth rate of 7.2% during 2020-21 which is four times higher than the overall economic growth rate in Singapore. The last two years also witnessed the creation of 5,800 jobs in the financial services area and the growth achieved in this sector has been across all areas including banking, insurance, asset management, and payment services.

While discussing the broad-based growth in the financial sector, the MAS Chief also talked about the well developed private equity and venture capital ecosystem for smart funding providing capital to the entrepreneurs who look for a company set up in Singapore.

Mr. Menon also discussed how the wealth management services sector is promoting Single family offices in Singapore and supporting wealthy Asian families to professionally manage their wealth and realize smooth hassle-free succession planning for the next generations.

He informed that in the insurance space, new capabilities are being developed to offer clients risk advisory services for complex and structural risks including cyber-attacks, pandemics, climate and environmental risks.

The MAS Chief informed that the economy of Singapore is well on track and would grow by 3–5% in 2022 despite geopolitical issues worsening the global economic environment. As per him, the ongoing conflict between Russia and Ukraine has triggered risky situations in terms of growth and inflation globally.

Mr. Menon, however, sounded optimistic due to the ongoing global economic recovery from the Covid-19 pandemic and associated restrictions on economic activities. He believed that the growth in the financial sector should be, at a minimum, at par with the overall economy.

“More importantly, the Asian growth story remains intact, and Singapore’s financial centre is well-positioned to support and grow with Asia. The Asian Development Bank estimates that strong exports and domestic demand will drive developing Asia’s growth at more than 5% per annum in the coming years. Demand for financial services typically grows faster than income as the middle class and mass affluent base expands,” Mr. Menon noted.

He also spoke of the widespread use of smart and innovative technologies in the financial sector as the key driver of growth

Mr. Menon confirmed that the financial institutions in Singapore are also heavily investing in technology as major banking and insurance houses are undergoing digital transformation at a fast pace and intensifying recruitment drive in AI, data science and application development.

As digital technology is the future of finance and global economies, the opening speech of MAS Chief was mostly centred on emerging technologies, skilled human capital and futuristic strategies. “To continue growing as a leading international financial centre in Asia, we need a future-ready workforce – comprising a strong Singaporean Core complemented by a pool of deep and diverse global talent,” the Chief of MAS remarked.

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