One of south-east Asia’s original ‘tiger’ economies, Singapore offers huge potential for UK firms, especially in the digital and tech sectors, and in the wake of a recent post-Brexit trade deal.
One of the world’s great international trading hubs, Singapore has deep-rooted ties to the UK, which offers tremendous prospects for enhanced business post-Brexit. But that relationship extends far beyond trade and investment, into areas ranging from culture to education and academia — huge numbers of Singaporean students attend UK schools and universities every year.
A small wealthy city-state in south-east Asia, at the end of the Malay peninsula, it was once a far-flung colony, which explains its historic ties and high concentration of expatriate Brits living and working there today. English is widely spoken, alongside Malay, Mandarin and Tamil, though Chinese make up roughly three quarters of Singapore’s multi-racial population, alongside Malays and Indians.
UK links date back over 200 years, when Sir Thomas Raffles established it as a trading outpost for the British East India Company — the legendary Raffles Singapore hotel, opened in 1887, is still a major tourist attraction today. The country finally declared independence in 1965, breaking off from the Federation of Malaysia in the aftermath of the post-war years; during World War Two, Singapore also fell under Japanese control for three years. Its success story in the years since has been nothing short of remarkable.
Despite its small population of around 5.3 million, the country punches well above its weight economically and is now ranked among the top 10 most affluent states in the world, in terms of gross domestic product (GDP) per capita. One of Asia’s original ‘tiger’ economies, it has established itself as a world-beating global financial and services hub with a thriving export sector.
Key exports include machinery and manufactured products, fuels and petrochemicals — the country is a major refining centre despite producing no actual oil and gas of its own, a measure of its success in positioning itself as a world trade hub. Singapore has also thrived over the past 25 years or so with the advance of the high-growth Asia-Pacific region, now led by a resurgent China.
What’s more, this highly successful trade-driven economy is ready to do business with the UK. The two nations in December signed a UK-Singapore free trade agreement (FTA), which came into effect on 1 January 2021. Although mainly a continuity agreement, it establishes a platform for a more bespoke deal later on to nurture bilateral trade that is already worth over US$22 billion.
This includes developing a “cutting-edge relationship in digital”, according to the Department for International Trade. That means slashing red tape for UK businesses and setting global standards in key areas such as cyber-security and emerging technology. The deal also secures benefits for UK fintech firms in Singapore.
The country has agreed to start a review in 2021 to consider an increase in the limits imposed on e-wallet payments, which affect British firms operating locally, as well as to discuss opportunities for UK companies to apply to become digital wholesale banks in Singapore. It also marks the first UK trade pact with a member of the dynamic Asean (Association of South-East-Asian Nations) group, a combined marketplace of 650 million people among its 10 states. (A similar deal was concluded on the same day with Vietnam, another Asean member.)
Singapore is currently the UK’s largest trading partner across the south-east Asia zone. In 2019, HMRC estimated that around 10,300 VAT-registered UK businesses exported goods to the country. Indeed, there can be no greater flattery than imitation, with Prime Minister Boris Johnson said to be keen to emulate this tech and trade triumph to position the UK as the ‘Singapore of Europe’.
According to the World Bank, the country is today one of the easiest places in which to do business — second only in fact to New Zealand, the bank reported in its Doing Business rankings for 2020; the UK scores eighth in the same index. Singapore’s standing is built on its stability and security, and its reputation as a corruption-free country — though it is also renowned for its conservatism and strict local laws.
The new trade deal means Singapore will stick to current levels of duty-free access for all UK products entering the country, including protections for iconic goods like Scotch Whisky. Among the new breed of UK firms excited by the prospect of a more dynamic trading relationship, one that is centred around technology, is Deliveroo, which has helped transform the home delivery market for takeaway food. It already operates in Singapore, but sees further potential going forward.
“By reducing barriers to digital trade and developing a deeper understanding of how technology is evolving in both markets, this new agreement can help fast-growing tech companies like Deliveroo as we work with more and more restaurants across Singapore to get their great food direct to customers doors,” a Deliveroo spokesperson commented after the signing of the December trade pact. Singapore is now estimated to house 80 of the world’s top 100 tech companies.
There are plenty of other high-profile UK names well established and operating successfully in the market as well, beyond the tech sector, including major retailers like Marks & Spencer and Lush.
That’s true in the professional and services sectors too, from banks and law firms to headhunter recruitment companies. Major names here include the likes of Standard Chartered, Barclays and Prudential, while fund manager M&G also recently set up a new investment presence locally.
UK transport operator Go Ahead last year won a two-year contract extension to continue operating its 450 buses in the Loyang region — it follows an initial five-year deal which saw the company’s entry into the Singaporean bus market in 2016. In a country renowned for its high-efficiency transportation, it marks quite an achievement.
UK firms are supported by networks such as an active British Chamber of Commerce Singapore. Overall, Singapore represents the UK’s largest trade and investment partner in the Asean region, while Britain is the city-state’s top investment destination in Europe. HMRC estimated that in 2019 some 10,300 VAT-registered UK businesses exported goods to the country.
For much of the past 50 years, with a few exceptions, Singapore has enjoyed either strong or steady growth rates, often reaching double digits. Though this has slowed in recent years, averaging between 2-4% for much of the past decade, the economy continues to grow in sophistication.
Manufacturing — particularly in the electronics and precision engineering sectors — and services remain the two pillars of the economy. This includes heavy industry as well, with major shipyards like Damen and Keppel, building out some of the world’s most advanced ships, rigs, platforms and tankers.
These centres of excellence are increasingly engaged in the roll out of offshore clean energy facilities as well, use as wind farm installation vessels. It has resulted in Singapore being one as the world’s top maritime hubs.
The Port of Singapore is the busiest container transhipment centre and the largest publicly-owned port in the world, attracting around 130,000 vessel calls annually. It stood resilient in 2020 despite the unprecedented disruption of the Covid-19 pandemic with container throughput relatively stable at 36.9 million Twenty-foot Equivalent Units (TEUs), a measure both of its efficiency and strategic significance.
The Singapore Registry of Ships also ranks among the top ship registries in the world, with total gross tonnage under the Singapore flag reaching 95 million by the end of 2020. As a major international city-state and destination, Singapore hosts a melting pot of cultures and cuisines, offering everything from Michelin-starred restaurants to cheap street food — its cosmopolitan ‘hawker culture’ was recently added to the UNESCO heritage list. Key tourist attractions range from natural parks and gardens like the National Orchid Garden and Singapore Zoo to big theme parks including Universal Studios Singapore.
With a hot, tropical climate year-round, it attracts huge numbers of visitors and those passing through from all over the world and serves as a gateway to the wider region. Across the border to the north sits Malaysia, while just across the water is Sumatra, one of Indonesia’s largest islands.
Into the future
As well as being a safe, dependable place for doing business, and with a familiarity for UK firms, Singapore boasts a highly-educated workforce and low bureaucracy. But what’s even more remarkable is that the country continues to innovate and push the boundaries into new areas, not just in technology and the digital space, but in clean energy and environmental issues.
Its energy perhaps derives from the region’s youthfulness, with the median age of south-east Asia’s population a mere 30 years. Many of the country’s skyscrapers are slowly being transformed to look more like living ecosystems, supporting lush vegetation where there was once only steel and concrete.
Even in the foods sector, local regulators in November approved what is the world’s first ‘clean meat’ that does not come from slaughtered animals. The lab-grown chicken meat is ‘designed’ by San Francisco-based start-up Eat Just. Unlike plant-based meat options though, its product is different because it is grown from animal muscle cells in a laboratory. The cultured meat was served and sold to guests for the first time shortly before Christmas.
Another firm, Singapore’s own Shiok Meats, is working on lab-grown crustacean meats. This energy, dynamism and pioneering spirit reflects its history two centuries ago as a former trading outpost. It also presents big opportunities for fast-thinking businesses from all over the globe.
With such deep-rooted connections already, UK firms will find Singapore an inviting place and an ideal start point for exploring the broader Asia region.