Latest Development

Current Economic Situation

Domestic Economy

According to advanced estimates by the Singapore government, the country's GDP grew by 2.5% in 2008 after a growth of 7.7% in 2007. Economic growth contracted YoY by 0.6% in the third quarter 2008, down from the second quarter's 2.3%. On a quarter-on-quarter basis, 3Q GDP contracted at an annualised rate of 6.8%, as a result of the contraction in manufacturing industry in the third quarter, which dropped YoY by 10.5% in the third quarter of 2008. Singapore's services industry also growth rate slowed to 6% in the third quarter. The weakening demand for financial services is expected to persist, as the downturn in global markets and the US financial crisis worsen. Against this background, Singapore's GDP growth rate is expected by the governement to fall into a range between -1% and 2% in 2009.

Singapore's services sector contributes more than two-thirds of the country's GDP. In recent years, Singapore has been keen to develop its MICE industry (i.e. Meetings, Incentives, Conventions and Exhibitions) Upon the completion of the Marina Bay Sands and other MICE-related developments in late 2009, Singapore will have a combined MICE space of 200,000 sqm.


External Trade

Singapore's exports rose by 12% YoY in the first three quarters of 2008. Major export items were petroleum & products, machinery & equipment, including integrated circuits, parts of personal computers and telecommunications equipment. Major export markets include Malaysia, the US, Hong Kong, the Chinese mainland and Indonesia.

Singapore's imports grew by 22% YoY in the first three quarters of 2008. Major import items included integrated circuits, parts of personal computers and telecommunications equipment. Major sources of imports include Malaysia, the US, the Chinese mainland and Japan.

Free Trade Agreements (FTAs)

Singapore is active in establishing strategic relationship with its trading partners. In recent years, Singapore has concluded bilateral FTAs with many countries, namely Japan, Korea, Australia, New Zealand, the US, Panama and India, with ongoing FTA negotiations with countries like Canada, Mexico, Pakistan, Peru and Ukraine.

Singapore has also engaged in FTA negotiation under the auspice of ASEAN - the Trade in Goods Agreement was implemented in July 2005, followed by the implementation of Trade in Services in July 2007.

In October 2008, China and Singapore signed the China-Singapore Free Trade Agreement (CSFTA) after two years of negotiation. CSFTA is a comprehensive bilateral FTA with trade-in-goods & trade-in-services elements. Under CSFTA, which takes effect from January 2009, more than 85% of Singapore exports to China will be granted zero-tariff access. An additional 10% will become duty-free on 1 January 2010. Key exports that will benefit include petrochemicals, processed foods, and electronics and electrical products. In 2007, China was Singapore's third largest trading partner, of which bilateral trade reached a record high of US$61 billion.

In December 2008, Singapore and the Cooperation Council for the Arab States of the Gulf (GCC) signed the GCC-Singapore FTA (GSFTA). Under GSFTA, Singapore's domestic exports will have tariff-free access for about 99%.

Foreign Direct Investment

Singapore's stock of inward foreign direct investment (FDI) reached US$237 billion as at year-end of 2006. The UK and Netherlands were major investors, respectively, accounting for US$ 35.8 billion and US$ 31.5 billion, followed by Japan (US$ 29.4 billion), the US (US$ 24.2 billion) and Switzerland (US$ 17.6 billion).


Import Policy

Singapore adopts a liberal trade policy. Very few goods are dutiable or under control. High tariffs are imposed only on liquor, tobacco, petroleum products and motor vehicles. Under the country's APEC commitments, tariffs on all imported goods are scheduled to be phased out by 2010.

The country imposes no quota restrictions. Most goods can be imported freely without licences. However, import licences are required for pharmaceuticals, hazardous chemicals, films and videos, arms and ammunition.


Hong Kong's Trade with Singapore

Singapore is the sixth largest export market for Hong Kong. In the first three quarters of 2008, Hong Kong's total exports to Singapore increased YoY by 14.6%. Over half of Hong Kong's exports to Singapore were intermediate goods. Major export items included semiconductors, electronic valves & tubes (18% share of total exports), telecommunications equipment & parts (17% share) and engines & motors, non-electric & parts (11% share).

Hong Kong's imports from Singapore rose YoY by 3.6% in the first three quarters of 2008. Major import items included semiconductors, electronic valves & tubes (49% share), petroleum other than crude oils (18% share) and telecommunications equipment & parts (7% share). 

* compare with the same period (Jan-Sept) in 2007


Singapore's Involvement in the Hong Kong Economy

Singapore is well represented in finance, logistics, electronics and information communications technologies and other services sectors of Hong Kong economy. Prominent examples include the DBS, Oversea-Chinese Banking Corporation (OCBC), United Overseas Bank (UOB), Keppel Logistics, Singapore Airlines, Pacific International Lines, Singapore Technologies Electronics Limited (ST Electronics), Singapore Telecom and Informatics.

Many Singapore companies have set up offices in Hong Kong. As of 2 June 2008, there were, respectively, 46 Singapore companies with regional headquarters, and 255 with regional and local offices in Hong Kong.