Singapore is confident that global tax reforms will not hurt its competitiveness given the “strong value propositions” it has built up over the years, said Beh Swan Gin, chairman of the Singapore Economic Development Board (EDB).
“If there is indeed a global multilateral effort to stop offering such tax incentives, we are not at all concerned because we feel fairly confident and confident that Singapore has stepped up proposals for development over the last five or six decades of development value that can attract future businesses,“ said Dr. Beh in a detailed interview with Singaporean journalists on the occasion of the 60th anniversary of EDB this year.
He was referring to the Base Erosion and Profit Shifting (BEPS) 2.0 project, which is still under negotiation in view of growing pressure for an international consensus. In June, the world’s largest group of the Seven (G7) economies reached a milestone agreement to support a minimum global corporate rate of at least 15 percent, and it was approved by G-20 finance ministers last month. Singapore is very supportive of a serious multilateral effort to create a level playing field for attracting investments.
“Tax incentives are not really unique to Singapore, in fact, I can’t think of a country that doesn’t offer tax incentives. So it hasn’t been a differentiator for a long time,” he said, adding that Singapore is confident that it can negotiate effectively without having to offer tax incentives.
Instead, companies choose the locations that best suit their needs, and Singapore has proven to be a very stable and effective environment for activities that promote capital, technology and knowledge, and also protect property. When asked about the growing competition from cities that may reopen faster than Singapore, Dr. Beh said: “On the contrary, more companies want to come to Singapore because Covid19 has actually highlighted the importance of good governance.” This is due to the emphasis on the safety of residents while allowing businesses to operate as much as possible with reduced capacities at offices or factories.
With 70 percent of the population now fully vaccinated and travel arrangements ready for further relaxation, Dr. Beh said all these “bodes very well” for Singapore and that the EDB is now seeing more interest in companies that want to come here.
He noted that several industries such as semiconductors, pharmaceuticals and medical technology have flourished through the pandemic and these offer “hot areas” of opportunities for Singapore. Singapore has taken advantage of its small size to strike deals with vaccine manufacturers.
So far, the French pharmaceutical giant Sanofi announced in April that it would be investing 400 million euros (S$638 million) in vaccine production here, while Thermo Fisher is already planning a US$130 million facility in Singapore.
“They know that any plant they build in Singapore will have much more capacity than our small population can have. Therefore, they feel very comfortable selecting Singapore as the location for their plants,” said Dr. Beh.
EDB was established on August 1, 1961, to direct Singapore’s industrialization efforts. This includes the growth of Asia, which makes the region a significant part of Singapore’s operational landscape today, while the Republic initially serviced developed economies such as the United States, Europe and Japan.
Technological progress and digitization accelerated by Covid-19, as well as a slowdown in globalization due to geopolitical tensions, especially the dispute between the USA and China, are two other drivers.
In addition, more companies and countries have started to view climate change more seriously, which will also shape Singapore’s economic strategies, said Dr. Beh. Singapore is responding to these factors by moving from an investment-oriented economy to one that produces businesses and companies that offer innovative products and services outside of Singapore.
Dr. Beh said, “This will help us complement our activities to attract international companies to set up shop in Singapore, but also for such companies to become capital owners and entrepreneurs in Singapore to build regional and global leaders. In this way, it will serve as another growth engine for our economy and create good jobs for our people.”
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