INTERNATIONAL MANAGEMENT

Module Leader : Mr. Mukul Madahar

GROUP MEMBERS Vinay Dubey Dilip Dhirwani Amit Madan Shubham Parashar MOUBI

SINGAPORE

OBJECTIVES
To study the business environment of Singapore To identify key issues that need to be considered by entrepreneurs while contemplating strategies for possible expansion and trade in Singapore

INTRODUCTION
Singapore- Population: 4,608,167 Official name Republic of Singapore Official Languages English, Mandarin, Malay, Tamil Currency Singapore dollar (SGD) Capital city Singapore city Government type: parliamentary republic. Location: Southeastern Asia, islands between Malaysia and Indonesia Ethnic Make-up: Chinese 76.7%, Malay 14%, Indian 7.9%, other 1.4% Religions: Buddhist (Chinese), Muslim (Malays), Christian, Hindu, Sikh, Taoist, Confucianist.

Culture of Singapore
Singaporeans are group dependent and rely on facial expression, tone of voice and posture to tell them what someone feels. They often trust non-verbal messages more than the spoken word. They tend to be subtle, indirect and implicit in their communications. They hint at a point rather than making a direct statement, since that might cause the other person to lose face. Rather than say 'no', they might say, 'I will try', or 'I'll see what I can do'. This allows the person making the request and the person turning it down to save face and maintain harmony in their relationship. Silence is an important element of Singaporean communication. Pausing before responding to a question indicates that they have given the question appropriate thought and considered their response carefully.

Business Etiquette and Protocol

There are strict rules of protocol that must be observed. The group (company or department) is viewed as more important than the individual. In order to keep others from losing face, much communication will be non-verbal and you must closely watch the facial expressions and body language of people you work with. People observe a strict chain of command, which comes with expectations on both sides. Business in Singapore is more formal than in many western countries.

Business Meeting Etiquette

Do not try to schedule meetings during Chinese New Year (late January/early February), since many businesses close for the entire week. Since questioning authority is a taboo, it is important to encourage questions when after making a presentation and then smile when a question is eventually asked. Presentations should be accompanied by backup material, including charts and figures. Never disagree or criticize someone who is senior to you in rank as it will cause both of you to lose face and may destroy the business relationship. Pay attention to non-verbal communication Punctuality is a virtue. There will be period of small talk before getting down to business discussions. Appointments are necessary and should be made at least 2 weeks in advance, whenever possible. The most formal way to schedule a meeting is to write to the person concerned, although most Singaporeans will schedule an appointment by telephone, fax, or e-mail.

Business Negotiating Etiquette

Always wait to be told where to sit. There is a strict hierarchy that must be followed. Business negotiations happen at a slow pace. Singaporeans are non-confrontational. They will not overtly say 'no'; likewise, their 'yes' does not always signify agreement Singaporeans give a respectful pause of up to 15 seconds before answering a question. Do not start speaking too quickly or you will miss the answer. Avoid losing your temper or you will lose face and damage your relationship. If you are signing a contract with ethnic Chinese, the signing date may be determined by an astrologer or a geomancer (feng shui man). Singaporeans are tough negotiators on price and deadlines . Decisions are consensus driven Be prepared with a mental list of concessions you would be willing to make that would not injure your own business. Always send a list of people who will be attending the negotiations and their title well in advance.

Taxation in Singapore
Singapore is often cited as the leading example of countries that continues to reduce corporate income tax rates and introduce various tax incentives to attract and keep global investments. Singapore ranks second, after the Maldives for the ease of paying taxes, says a recent report launched by the World Bank, IFC, and PricewaterhouseCoopers (PwC).

Inland Revenue Authority of Singapore (IRAS) is the statutory body that administers the effective assessment, collection and enforcement of all major types of taxes in Singapore including corporate income tax, personal income tax, property tax...etc. Single-Tier Tax System: Since January 1, 2003, Singapore has adopted a single-tier corporate income tax system, which means there is no double-taxation for stakeholders. Tax paid by a company on its chargeable income is the final tax and all dividends paid by a company to its shareholders are exempt from further taxation.

No Capital Gains Tax: There is no tax on capital gains in Singapore. Examples of capitals gains include gains on sale of fixed assets, gains on foreign exchange on capital transactions, etc.

Corporate Tax Rate: Singapore's headline corporate tax rate is a flat 18% at present. Effective YA 2010, corporate income tax rate will be reduced from 18% to 17% to help maintain Singapore's competitiveness. 1997-00 26% 25.5% 2001 24.5% 2002 22% 2003-04 20% 2005-06 2007-09 2010 18% 17%

Individual Tax: 0 20%. An individual is a tax resident in Singapore if he resides in Singapore, or is: 1.Physically present in Singapore for 183 days or more; or 2.Employed in Singapore for 183 days or more. Foreign income received in Singapore by non-residents is not subject to tax.The tax year is known as a year of assessment and runs from 1 January to 31 December. Tax is imposed on a preceding year basis.

Property Tax: The tax rate for industrial and commercial properties is 10%. owner-occupied residential properties are taxed at a concessionary rate of 4%. Property tax exemption for land under development may be granted in certain cases.

Tax Incentives
0% tax on S$100K taxable income The corporate tax rate is 0% on the first S$100,000 taxable income for each of the first three tax filing years for a newly incorporated company that meets the following conditions: 1.be incorporated in Singapore 2.be tax resident in Singapore 3.has no more than 20 shareholders of which at least one is an individual shareholder holding at least 10% of shares.

9% tax on taxable income of upto S$300K All Singapore resident companies are eligible for partial tax exemption which effectively translates to about 9% tax rate on taxable income of upto S$300,000 per annum. The taxable income above S$300,000 will be charged at the normal headline corporate tax rate of 18%. So, THE Effective Corporate Tax Rate:

First Three Years of Income Tax Filings Taxable Income (S$)Tax Rate 0 - 100,000 0% 100,001 - 300,000 9% 300,000 - 400,000 18%

After First Three Years of Income Tax Filings Taxable Income (S$)Tax Rate 0 - 300,000 9% 300,000 - 400,000 18%

Tax Treaties
A tax treaty between two countries is generally an agreement that specifies how the income earned will be taxed by the authorities of each country when a company is involved in doing business in both countries. Main benefit: To help businesses avoid double taxation of their income. Singapore has concluded tax treaties with more 50 countries and the list continues to grow. The treaties reflect Singapore's continual efforts to help businesses in relieving double taxation and to encourage and facilitate the trade and investment opportunities across-borders.

Singapore Goods and Services Tax (GST): Goods and Services Tax (GST) is similar to Valued Addede Tax (VAT) in other countries and is a relatively new form of tax in Singapore. The current rate of GST is 7% GST registration is mandatory for business entities with an annual turnover of more than S$1 million. Benefits of GST to business: 1. Getting your business GST registered is often a signal to the market that your business is competing in the same way. 2. GST is a fairer tax system. It taxes the self-employed and wage earners whenever they spend their money. 3. GST taxes apply only on consumption. Savings and investment are not taxed. 4. Cost of doing business is reduced, thereby contributing to lower prices. Businesses do not suffer a tax cost due to the multi-stage credit mechanism since the real taxpayer is the end-user.

What goods and services are/are not subject to GST?: 1.taxable supplies: A taxable supply, is a supply of goods or services made in Singapore, other than an exempt supply. 2.exempt supplies: GST is not chargable on exempt supplies of which there are two categories - sale and lease of residential land; and financial services.

Setting up Foreign Business in Singapore

In Singapore one can open foreign business through sole-proprietor, partnership, limited liability partnership or incorporate a company in Singapore.

All foreign business should register with (ACRA) Accounting & Corporate Regulatory Authority

Business Visas and Passes

EntrePass The EntrePass is required for foreigners who wish to start a new business in Singapore. The EntrePass allows registered entrepreneurs and their families to live in Singapore. You may leave and re-enter Singapore any time and it is renewable for as long as the business remains viable. Multiple Journey Visa The Multiple Journey Visa is ideal for business executives who travel in and out of Singapore frequently either to attend to business matters and investments or to look for business opportunities in Singapore. The visa is valid for 1, 2 or 5 years. Passes For Foreign Employees If your branch office, representative office or newly established business intends to hire employees from your home country, you will need to apply for Employment Passes and Work Permits.

NON TAX INCENTIVE

 Legal Enterprise Finance Scheme (LEFS)  Local Enterprise Technical Assistance Scheme (LETAS)  Start-up Enterprise Development Scheme (SEEDS)

INCENTIVES FOR HIGH-TECH BUSINESS.  Skills Development Fund (SDF)  Initiatives In New Technology (INTECH)

LABOUR
 Workforce.

LABOUR SCHEMES
 Labour/Management Relations  Central Provident Fund(CPF)  Skills Development Fund

FREE TRADE AGREEMENT

ASEAN-Australia-New zeland(AANZFTA) FTAs embodied by WTO are as follows,
U.S., ASEAN, Australia, European Free Trade Association, Hashemite Kingdom of Jordan, India, Japan, South Korea, Panama and with Brunei, Chile and New Zealand under the Trans-Pacific SEP (Strategic Economic Partnership) Agreement.

Ongoing FTA Negotiations with Bahrain,

Canada, Egypt, Mexico, Pakistan, Peru, Sri Lanka, State of Kuwait, State of Qatar and the UAE (United Arab Emirates) and the Gulf Cooperation Council.

TOURISM INDUSTRY
A rich and amazing country with harmonious blend of culture, cuisine,arts and architecture Singapore Tourism Board Launches s$90 Million to boost Tourism Sector in 2009 Singapore Tourism Board has forecasted in 2009 budget 9-9.5 million in visitor arrivals and s$12-s$12.5 millions in tourism receipts.

Electronics Industry
Pick an electronics a gadget today there are very good chance that part of it was designed or made in Singapore. Singapore aims to be a world class electronics hub in creating manufacturing solutions and producing high-value-added components for global market. Electronics is the major industry for economic growth of Singapore. Electronics industry contributes 26% of the city-states manufacturing of s$18 billion in fixed asset investments in 2008. 91,645 people were employed in electronics sector in 2008. 6 of the worlds top 10 EMS companies have significant presence in Singapore.

Education Industry
Singapore is attracting many international students for the education abroad There are more than 18 international universities in singapore. It contributes about 2% of Singapores GDP and is forecasted to reach 5% by 2015.

OTHER INDUSTRIES SECTORS CONTRIBUTING IN THE ECNOMIC GROWTH OF SINGAPORE ARE: Service Sector Hospitality Sector Natural Resource Industry Marine Industry

IMPORTS
The total imports till Mar/09 were S$m 27,617.8 0 ASIA-276,406 7 USA-48,656
0

6 7

EUROPE-56,805 AFRICA-1,817

IMPACT ON MARKETS AND PRODUCT SEGMENTS

TAXES AND FEES

Customs and excise duties have to be paid to dutiable goods imported to Singapore. Includes liquors, motor vehicles, petroleum products and tobacco products. The goods which are imported in Singapore are subject to Goods and Services Tax (GST). Fees to customs for supervision and inspection of your goods.

EXPORTS
The total exports till Mar/09 were S$m 31, 8.8 Singapores key export partners included Malaysia, Indonesia, Hong Kong and China, as well as the G3 economies.

TAXES AND FEES

Customs and excise duties have to be paid to dutiable goods manufactured in Singapore. Includes liquors, motor vehicles, petroleum products and tobacco products. No need to pay GST on exports. Fees to customs for supervision and inspection of your goods.

GDP
GDP=176.543 US$ billon(as per IMF) GDP GROWTH= 1%-2% PER CAPITA GDP=US$37,169 INFLATION=0.04%
GDP had declined by 12.5 percent in real terms in the fourth quarter of 2008 and revised downwards its growth estimates for 2009

Slowdown in Financial Services. Fall in demand in Manufacturing.

FDI
WEAK GLOBAL OUTLOOK-The United Nations Conference on Trade and Development (UNCTAD)

EXPECTED DECLINE IN SINGAPORES FDI INFLOWS

MAJOR INVESTOR COUNTRY:

United Kingdom United State Netherlands Japan Malaysia.

MAJOR SECTORS ATTRACTED:

Manufacturing Wholesale and retail trade Financial and Insurance services Professional and technical, Administrative and support services Information and communications

CONCLUSION
Advantages
strong and stable physical, legal and social infrastructure pro-business tax regime wide range of flexible financial schemes highly skilled domestic labour force easy entry of foreign talent an ever-expanding network of free trade investment guarantee agreements that give Singapore-based businesses preferential safe access to international markets

THANK YOU