Flexible with new trade policies

Singapore's 12th largest trading partner

Mr. Cao Xuan Thang, Trade Counselor, Head of the Vietnam Trade Office in Singapore, said that Singapore's trade with the world in May 2024 continued to grow positively when all three indicators of total two-way turnover and export and import turnover showed signs of recovery. For the Vietnamese market, two-way trade turnover in May 2024 still maintained a positive growth trend, especially exports to Singapore (up 31.6%). However, with the absolute value growth of other countries and territories, in the first 5 months of 2024, Vietnam fell to the position of Singapore's 12th largest trading partner.

Specifically, according to data from the Trade Office, in May 2024, the total import-export turnover between Vietnam and Singapore reached nearly 2.48 billion SGD, an increase of 8.36% over the same period in 2023; in which exports from Vietnam to Singapore continued to achieve high growth (31.6%) with a value of 683.32 million SGD, import turnover increased by 1.54%, reaching more than 1.79 billion SGD.

In the first 5 months of 2024, the two-way import-export turnover between Vietnam and Singapore reached more than 12.67 billion SGD, an increase of 6.72% over the same period in 2023, of which exports increased sharply by 26.09%, reaching nearly 3.29 billion SGD and imports were more than 9.38 billion SGD, an increase of 1.27%.

In the first 5 months of 2024, the two-way import-export turnover between Vietnam and Singapore reached more than 12.67 billion SGD, an increase of 6.72% over the same period in 2023. Illustrative photo

Notably, according to statistics from the Trade Office, in May 2024, all three main export groups of Vietnam to Singapore continued to increase sharply, specifically: Machinery, equipment, mobile phones, components and spare parts of all kinds increased by 28.87%; Reactors, boilers, machine tools and equipment and spare parts of the above machines (up 38.86%); Glass and glass products (up 1.74 times).

Some other export groups also had very strong growth such as: Iron and steel (up 2.28 times); Aluminum and aluminum products (up 10.8 times)... On the contrary, some groups had quite strong declines such as Iron and steel products (down 57.46%); salt; sulfur; soil and stone; gypsum, lime and cement (down 46.84%)...

On the other hand, in the past 5 months, Vietnam imported from Singapore items such as: Machinery, equipment, mobile phones, components and spare parts of all kinds; Plastics and plastic products; Reactors, boilers, machine tools and equipment and spare parts of all kinds of machines...

Energy - a field with much room for cooperation between Vietnam and Singapore. Illustrative photo

Emphasizing that there is still a lot of room for cooperation between the two countries, during the working session between Vietnamese Minister of Industry and Trade Nguyen Hong Dien and Singaporean Minister of Industry and Trade Tan See Leng in April 2024, the two leaders agreed that trade, industry, energy, digital economy, green, clean and sustainable economy... are potential areas that need to be explored to contribute to building the framework of the "Comprehensive Strategic Partnership" that the two countries are aiming for. In particular, the two leaders emphasized the room for cooperation in the energy sector; in which, special attention is paid to wind energy and clean energy sources.

To realize the goal, the Vietnam Trade Office in Singapore said that the Trade Office will continue to update the situation, mechanisms and policies of the locality; support Vietnamese enterprises in connecting trade, displaying goods, promoting business brands and product brands, increasing the presence of Vietnamese goods in the locality; support the export of goods to the Singapore market; support Singaporean business delegations to Vietnam to find sources of goods, promote industrial, trade and service investment in Vietnam.

Singapore's new trade policy

Singapore is a relatively small consumer market but is home to many multinational companies and is a major regional and global information, trade, financial and logistics center. Not only that, Singapore is a major international air transit hub, a very important gateway to Asia in general and Southeast Asia in particular, including Vietnam. Therefore, to successfully and sustainably export to this market, Mr. Cao Xuan Thang said that export enterprises need to carefully study market information, grasp changes in the import market to build export strategies.

Updating information on some of Singapore's latest policies, Mr. Cao Xuan Thang said that the Singapore Food Authority (SFA) has revised the Declaration Form for Qualified Persons (QP) on the declaration of food products exported by Singaporean enterprises. This revised declaration form will be applied from July 1, 2024 (all contents in the declaration are mandatory).

“ Food exporters to Singapore must clearly understand the current requirements of the competent authority in the importing country and ensure that export shipments comply with the standards and regulations of the importing country/region,” Mr. Cao Xuan Thang reminded businesses and recommended that state management agencies and related food import-export businesses should update the new regulations of the locality.

Singapore is increasingly cautious in its trade policy, which is both a challenge and an opportunity for Vietnamese businesses to penetrate deeper into this market. Illustrative photo

In addition, on February 16, 2024, the Ministry of Finance of Singapore proposed the Multinational Enterprises (Minimum Tax) Bill and the Supplementary Law to implement the Domestic Supplementary Tax (DTT) and Inclusive Income Rules (IIR) under Pillar 2 of the Base Depreciation and Profit Shifting 2.0 (BEPS) initiative. The Bill is being solicited for public feedback from June 10 to July 5, 2024.

The proposed Bill and the Complementary Law introduce significant changes to apply to multinational enterprise (MNE) groups within the scope of their activities. MNEs are understood to be groups with an annual group turnover of €750 million or more in at least two of the previous four financial years. The proposed changes will take effect for financial years beginning on or after 1 January 2025.

Some of the key provisions of this important Bill are the imposition of a Domestic Additional Tax on multinational corporate groups with legal entities operating in Singapore that are subject to low tax rates, to ensure that the effective tax rate applicable to the constituent units of the MNE for the legal entity domiciled in Singapore is at least 15%.

At the same time, the Income Rule, known as the Multinational Enterprise Supplementary Tax (MTT) in the draft Bill, will be applied to MNE groups with parent companies in Singapore, whose legal entities are operating outside Singapore and are currently enjoying low tax rates. This is to ensure that the effective tax rate applicable to the constituent units of the MNE group located outside Singapore is at least 15%.

The deal noted that, if passed, the Multinational Enterprises (Minimum Tax) Bill would be construed as one with Singapore’s Income Tax Act 1947 (ITA). Certain provisions, such as administration, enforcement and appeals, that apply under the ITA would also apply to the Domestic and Multinational Enterprises Additional Tax.

This is one of the new policy moves on Global Minimum Tax (GMT) in Singapore. These policies will directly impact the attraction of foreign investment into Singapore and investment from Singapore abroad, so the Trade Office especially notes that state management agencies and domestic corporations should monitor and update regularly to make appropriate policy adjustments.

“Singapore is increasingly cautious in its trade policy, avoiding dependence on one export and import market. This is also an opportunity for Vietnamese enterprises to penetrate deeper into this market, contributing to increasing Vietnam's export of goods,” said Mr. Cao Xuan Thang.

Source: https://congthuong.vn/xuat-khau-sang-singapore-linh-hoat-truoc-chinh-sach-thuong-mai-moi-330590.html