Bilateral relations between Germany and Singapore began after the Cold War, and the bilateral industry achieved more than US$17 billion in 2021, up from US$11 billion in 2020.
Germany enjoys an industry surplus, with Singapore carrying more than $10. 3 billion in product value in 2021, comprising basically; machinery and electrical appliances ($2. 4 billion); machinery, electrical appliances, nuclear reactors ($2. 2 billion); optical, medical, surgical and photographic devices (US$978 million); automobiles and parts and accessories thereof ($853 million); and prescription drugs ($465 million).
Singapore exported some US$7 billion. In the same year, mainly electrical and electronic equipment (US$3. 3 billion), machinery and mechanical appliances (US$1. 6 billion) and medical devices (US$940 million). Approximately 60% of the world’s DNA chips and one-third of the world’s mass spectrometers are manufactured in Singapore.
The EU-Singapore Free Trade Agreement (EUSFTA), which entered into force in 2019, has been a vital economic bridge for industry and industrial relations between Germany and Singapore. Singapore is the EU’s largest trading partner in ASEAN, with an annual bilateral goods industry. and installations exceeding USD 103 billion. In addition, bilateral foreign direct investment between the EU and Singapore exceeds USD 368 billion.
More than 10,000 European corporations are active in Singapore, in addition to more than 2,000 German corporations such as Bauer, Lufthansa, Dorma and Schaeffler. These corporations, in addition to many German small and medium-sized enterprises (SMEs), have used the city-state as a regional base, allowing for simple expansion into other Southeast Asian markets. German SMEs, also known as Mittelstand, shape the backbone of the country’s economy and are world leaders in their respective sectors.
Furthermore, despite the COVID-19 pandemic, Singapore remains an attractive destination for German investment. German logistics company DB Schenker opened its new warehouse in Singapore in August 2020, investing around S$150 million (US$109 million) in the process. Located in the Singapore Airport Logistics Park at Changi International Airport, the warehouse operates the newest sustainable warehouse control system.
German testing, inspection and certification company TUV SUD opened its new S$100 million (US$72. 8 million) facility at the Jurong Island International Business Park in 2021. The facility houses more than 60 laboratories and will be a launching pad for collaboration in new economic growth spaces, such as the virtual economy and sustainability.
In addition, in mid-2019, German chemical giant Evonik established its momentary methionine plant in Singapore. The Evonik plant will double its methionine production capacity from 150,000 tonnes to 300,000 tonnes. Methionine is a key additive in animal feed. $768 million ($559 million), the plant is double the first built in 2014 in the city-state.
These examples highlight the critical role Singapore plays in German companies expanding their presence in Asia-Pacific.
One facet of why German corporations have continued to invest in Singapore is the city-state’s extensive network of flexible industrial agreements, namely the European Union-Singapore Free Trade Agreement (EUSFTA).
While regional players have strong FTA networks, they are not as extensive as those in Singapore.
The country’s 14 bilateral and thirteen regional FTAs come with some of the largest combined industrial agreements of the ASEAN-China, ASEAN-India and ASEAN-Hong Kong trade blocs, offering Singapore-based corporations preferential market access, flexible or reduced import tariffs. , as well as strengthening intellectual asset regulations.
There are two FTAs: bilateral (agreements between Singapore and an unmarried trading partner) and regional (signed between Singapore and a trading partner organization).
Once a Singapore company knows its target market, it can start with tariff concessions through the Enterprise Singapore website.
Singapore has one of the most extensive DTA networks in the world, attracting foreign corporations from a multitude of traditional and nuanced industries. The country has signed more than 90 DTAs, which come with 3 types: Comprehensive, Limited and Information Exchange Agreements (EOIA).
Comprehensive DTAs provide double taxation relief for all types of revenue streams between the two signatories. However, limited DTAs only provide relief from revenues generated through air and sea transport, and EOIA are provisions for the exchange of tax information.
The tax allowances provided for in each DTA differ for each country. They cover several types of income:
To take advantage of Singapore’s extensive DTA network, the user or company must be a tax resident of Singapore or the other country.
A resident of Singapore is like:
Meet our Senior International Business Advisory Manager, David Stepat, and our Head of European Business Development, Riccardo Benussi, at the 17th German Asia Pacific Business Conference (APK) taking place in Singapore from November thirteen to 14, 2022.
Organized through the German Chamber of Commerce of Singapore and the FVO (German Asia-Pacific Business Association), German Chancellor Olaf Scholz and Vice Chancellor Robert Habeck honor the convention with their presence and active participation.
The aim of the convention is to provide a platform to deepen the discussion on existing economic developments in Europe and the Asia-Pacific region, as well as to build economic and people-to-people ties.
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