Why 5,000 Indian firms have invested in Singapore

Rasheeda Bhagat | Updated on November 24, 2017

Lee Eng Keat

EDB is interested to engage Indian companies that have reached the critical mass to set up a strategic base overseas to manage better their international growth and tap international financing opportunities. – Lee Eng Keat

If Indian companies form the single largest foreign business community in Singapore, it is due to an enabling investment environment, and several business, R&D, and finance opportunities the government offers global companies, Lee Eng Keat, International Director (Asia-Pacific), Singapore Economic Development Board (EDB), told Business Line in an interview.

Excerpts from the interview:

What has attracted the presence of 5,000 Indian companies in Singapore? Is it tax breaks? Geographical proximity, frequent flights, easy/cheaper availability of finance?

The signing of the India-Singapore Comprehensive Economic Cooperation Agreement (CECA) in 2005 helped both countries strengthen their trade links. Given Singapore’s location and the growing Asia-Pacific market, Indian companies can use Singapore as a springboard to tap on growth opportunities in this region.

Global multinational companies, including Asian enterprises, find Singapore an attractive location. Singapore has vital supporting infrastructure, a highly skilled workforce, conducive business environment and stable taxation policies. The Indian business community is the largest foreign business community in Singapore.

An international financial hub, Singapore offers sophisticated financing solutions; rated AAA, Singapore lowers the cost of trade financing. It is also a wealth management hub with over $1.8 billion being managed out of Singapore. It is also a foreign exchange hub, and the fourth largest forex trading centre in the world ($337 billion average daily volume). A common legal system, a neutral location for arbitration, a strong IP protection regime (ranked among top five by the World Economic Forum since 2006), great business and flight connectivity are some other advantages the Indian business community find attractive.

How does your Board facilitate Indian/foreign companies setting up businesses in Singapore?

The Singapore EDB is responsible for creating vibrant business opportunities and good jobs in Singapore, particularly in sectors such as electronics, chemicals, info-communications and media, IT, biomedical, infrastructure, consumer, and marine and offshore.

We engage with Indian or foreign companies with a global outlook and a vision to operate in the global market and find ways to facilitate their international growth. By setting up regional headquarters in Singapore, Indian companies can leverage our connectivity, financial links, legal infrastructure, pro-innovation activities and skilled talent for their growth.

Singapore is the top destination for outbound investments from India, with RBI data indicating that total Indian FDI into Singapore reached S$23.8 billion in 2011. Bilateral trade between India and Singapore also doubled to almost S$29.8 billion in 2012, with Singapore currently ranking as India’s 10th largest global trading partner and India’s largest ASEAN partner.

EDB is interested to engage Indian companies that have reached the critical mass to set up a strategic base overseas to manage better their international growth and tap international financing opportunities.

Which sectors are most popular with Indian companies/investors in Singapore?

Infocomm and media. Singapore is traditionally an IT and telecom hub, with good infrastructure such as data centres and submarine cable capacity, talent pool – strong competence in areas such as mobility and analytics. Indian global companies such as Tata Communications, TCS, Mahindra Satyam/Tech Mahindra, Infosys and Wipro have established significant presence in Singapore.

The other area is FMCG; urbanisation and rising middle class incomes have boosted the growth of this sector, motivating global leaders such as P&G and Unilever to build up their presence in Singapore to access Asian markets.

Singapore brings together a strong ecosystem of players (design, innovation, market research, branding, marketing) that helps consumer businesses manage their regional and international brands. Also, the government is investing to build pan-Asian consumer insight capabilities for new products through detailed analysis of trends and consumption patterns. One example is the recently set up Institute of Asian Consumer Insights.

Pharmaceuticals and biotechnology is another area of interest. As Indian pharmaceuticals develop innovative, branded and biological medicines and penetrate new global markets, Singapore’s track record of manufacturing high quality medicines, R&D talent, world-class research infrastructure, and a strong IP regime to protect key R&D outcomes, give companies the confidence to establish global links through Singapore. This includes efforts to facilitate collaborative R&D with Indian companies to develop solutions for diseases prevalent in Asia.

Leading Indian companies such as Punj Lloyd and Quest Global have set up their regional operations in Singapore to tap the growth potential in Asia in the infrastructure and engineering, procurement and construction (EPC) sector.

Then there is the natural resource area: Many Indian companies are venturing overseas to secure upstream resources such as coal mines and plantations. Given Singapore’s 69 Double Taxation Avoidance Agreements with many resource-rich Asian countries, many companies use Singapore as a base to invest and manage these upstream resources and tap Singapore’s financial infrastructure.


Published on October 28, 2013

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