German trade with Singapore: an overview
Bilateral relations between Germany and Singapore began to strengthen after the Cold War, with bilateral trade reaching over US$17 billion in 2021, up from US$11 billion in 2020.
Germany enjoys a trade surplus, Singapore imports more than US$10.3 billion of products in 2021, consisting mainly of; electrical machinery and equipment (US$2.4 billion); machinery, electrical appliances, nuclear reactors ($2.2 billion); optical, medical, surgical and photographic equipment (US$978 million); vehicles and their parts and accessories ($853 million); and pharmaceuticals ($465 million).
Singapore exported some 7 billion US dollars of products in the same year, which was dominated by electrical and electronic equipment ($3.3 billion), machinery and mechanical appliances ($1.6 billion) and medical equipment ($940 million) . Singapore’s medical device industry is expected to be worth US$1.3 billion by the end of 2022. Some 60% of the world’s DNA chips and a third of the world’s mass spectrometers are made in Singapore.
German-Singaporean trade relations continue to grow
The European Union-Singapore Free Trade Agreement (EUSFTA), which entered into force in 2019, has been an important economic bridge to strengthen trade and commercial relations between Germany and Singapore. Singapore is the EU’s largest trading partner in ASEAN with annual two-way trade in goods and services exceeding US$103 billion. In addition, bilateral foreign direct investment between the EU and Singapore exceeds $368 billion.
More than 10,000 European companies are active in Singapore, including more than 2,000 German companies such as Bauer, Lufthansa, Dorma and Schaeffler. These companies, in addition to many German small and medium-sized enterprises (SMEs), used the city-state as a regional base, allowing for easy expansion into other Southeast Asian markets. German SMEs, also known as Mittelstand, form the backbone of the country’s economy and are often global leaders in their respective industries.
Moreover, despite the COVID-19 pandemic, Singapore continues to be 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 latest sustainable warehouse management system.
German testing, inspection and certification company TUV SUD has opened its new 100 million Singapore dollar (US$72.8 million) facility at Jurong Island International Business Park, in 2021. The facility houses more than 60 labs and will be a launchpad for collaboration in new areas of economic growth, such as the digital economy and sustainability.
Additionally, in mid-2019, German chemical giant Evonik established its second methionine plant in Singapore. The plant allows Evonik to double its methionine production capacity from 150,000 tons to 300,000 tons. Methionine is a key additive in animal feed. Built at a cost of $768 million ($559 million), the plant is a twin to the first built in 2014 in the city-state.
These examples highlight the important role Singapore plays for German companies looking to expand their presence in Asia Pacific.
Benefit from Singapore’s free trade agreements
An important aspect of why German companies have continued to invest in Singapore is the city-state’s extensive network of free trade agreements, in particular the European Union-Singapore Free Trade Agreement (EUSFTA) .
Although regional players maintain strong FTA networks, they are not as extensive as those in Singapore.
The country’s 14 bilateral and 13 regional FTAs include some of the largest combined trade deals in the ASEAN-China, ASEAN-India and ASEAN-Hong Kong trading blocs, offering Singapore-based businesses access to preferential markets, free or reduced imports. , as well as stronger intellectual property regulations.
There are two types of FTAs: bilateral (agreements between Singapore and a single trading partner) and regional (signed between Singapore and a group of trading partners).
- China-Singapore FTA (CSFTA);
- India-Singapore Comprehensive Economic Cooperation Agreement (ECSC);
- Japan-Singapore Economic Partnership Agreement (JSEPA);
- Republic of Korea-Singapore FTA (KSFTA);
- New Zealand-Singapore Comprehensive Economic Partnership Agreement (ANZSCEP);
- Panama-Singapore FTA (PSFTA);
- Peru-Singapore FTA (PeSFTA);
- Singapore-Australia FTA (SAFTA);
- Singapore-Costa Rica FTA (SCRFTA);
- Singapore-Jordan FTA (SJFTA);
- Sri Lanka-Singapore FTA (SLSFTA);
- Turkey-Singapore FTA (TRSFTA);
- United States-Singapore FTA (USSFTA); and
- UK-Singapore FTA (UKSFTA).
- ASEAN-Australia-New Zealand Free Trade Area (AANZFTA);
- ASEAN-China Free Trade Area (ACFTA);
- ASEAN-Hong Kong Free Trade Area, China (AHKFTA);
- ASEAN-India Free Trade Area (AIFTA);
- ASEAN-Japan Comprehensive Economic Partnership (AJCEP);
- ASEAN-Republic of Korea Free Trade Area (AKFTA);
- ASEAN Free Trade Area (AFTA);
- Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP);
- EFTA-Singapore FTA (ESFTA);
- Singapore-Eurasia Economic Union (EAEUSFTA);
- Regional Comprehensive Economic Partnership (RCEP);
- GCC-Singapore FTA (GSFTA); and
- Trans-Pacific Strategic Economic Partnership (TPSEP).
How to Apply for Tariff Concessions for Exporting Goods from Singapore
Once a Singaporean business has identified its target market, it can begin using tariff concessions through the Enterprise Singapore website.
Take advantage of Singapore’s double tax treaty network
Singapore has one of the most extensive DTA networks in the world, attracting international companies from a multitude of conventional and nuanced industries. The country has signed more than 90 DTAs, which include three types: comprehensive, limited and exchange of information (EOIA) agreements.
Full DTCs provide double tax relief for all types of income between the two signatories. However, limited DTAs only provide relief from revenue generated by air and sea transport, and EOIAs are provisions for the exchange of tax information.
The tax breaks provided by each CDI treaty differ for each country. They normally cover several types of income:
- Tax on royalties;
- Dividend tax;
- Capital gains tax;
- Interest tax;
- Sea and air transport;
- attendance fees ;
- Independent and dependent personal services;
- Students; and
- Income from real estate.
How to Get the Benefits of a Singapore DTA
To benefit from Singapore’s extensive network of CDIs, the person or company must be a tax resident of Singapore or the other country.
A resident of Singapore is defined as:
- A company or group of persons whose business is controlled and managed in Singapore; Where
- A person who resides in Singapore and is physically present or engaged in employment in Singapore for 183 days or more in a calendar year.
Meet our Senior Director of International Business Consulting, David Stepatand our European Business Development Manager, Riccardo Benussito 17th Asia-Pacific German Business Conference (APK) which takes place in Singapore from November 13 to 14, 2022.
Organized by the German Chamber of Commerce in Singapore and the OAV (German Association of Businesses in Asia-Pacific), German Chancellor Olaf Scholz and Vice-Chancellor Robert Habeck graced the conference with their presence and active participation.
The aim of the conference is to provide a platform to deepen dialogue on current economic developments in Europe and the Asia-Pacific region as well as to build and strengthen personal and economic ties.
ASEAN Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia and has offices throughout ASEAN, including Singapore, Hanoi, Ho Chi Minh Cityand Da Nang In Vietnam, Munichand Esen in Germany, Bostonand Salt Lake City in the USA, Milano, Coneglianoand Udine in Italy, in addition to Jakartaand Batam in Indonesia. We also have partner companies in Malaysia, Bangladeshthe Philippinesand Thailand as well as our practices in China and India. Please contact us at [email protected] or visit our website at www.dezshira.com.