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Singapore

Singapore, a city state of 4.5 million people at the southern tip of the Malay peninsula, was the United States' 16th-largest trading partner in 2005, with two-way trade exceeding $35 billion. The island republic is one of the United States' strongest supporters in Asia.

Singapore is annually ranked as having one of the most open and transparent business environments in the world. It actively courts overseas investment and foreign professionals as part of its strategy to develop into a regional hub for transportation, financial services, health care, biotechnology, and information and communications technologies. Singapore tries to ensure that at least 25% of its GDP comes from manufacturing.

The country, which boasts some of the busiest and most efficient port and airport facilities in the world, aims to serve as a gateway for western companies entering neighboring Southeast Asia, China, and India - and for companies from China and India looking for opportunities in Southeast Asia and the West.

International trade and investment have played a key role in the country's steady economic growth, which averaged 8% a year between 1960 and 1999 and reached 6.4% in 2005.

Singapore is regarded by many American companies as one of the easiest countries in Asia in which to start a business and from where to launch regionwide expansion. U.S. companies are the largest investors in Singapore. By 2004, U.S. investments in the manufacturing and services sectors reached $56.1 billion. The lion's share is invested in electronics manufacturing, oil refining and storage, and chemical production. More than 1,500 U.S. companies operate in Singapore and make up more than one-fifth of the total number of foreign firms working in the country.

The U.S.-Singapore Free Trade Agreement (FTA) - the United States' first with and Asian country - took effect in 2004 and has fostered increased economic cooperation between the two countries. In the first year of the FTA, bilateral trade increased almost 10% to nearly $35 billion, and it rose by more than 2% in 2005. U.S. exports to Singapore in 2005 grew more than 5% to $20.6 billion, after having jumped by more than 18% in the previous year.

Most economic policy discussions between the United States and Singapore revolve around technical details in the implementation of the FTA. U.S. officials and American-owned companies operating in Singapore have an active dialogue with the Singapore government on such regulatory issues as competition law, intellectual property rights, telecommunications, health care, financial services, and other market access issues. The Singapore government is attentive to U.S. business concerns.

The close political and security relationship between Singapore and the United States buttresses their dynamic economic links. Singapore supports a strong American military presence in Asia. In 2005, the two governments signed a Strategic Framework Agreement that updated a 1990 Memorandum of Understanding under which U.S. military forces exercise with Singaporean forces, and military aircraft and warships regularly visit the Lion City.

Singapore is a member of the U.S.-led Container Security Initiative, which establishes procedures to ensure that containers posing a potential threat from terrorists are identified and inspected at foreign ports before they are placed on vessels destined for the United States. The two countries have cooperated closely in investigating and interdicting terrorist threats in Southeast Asia and in preventing the spread of weapons of mass destruction through the Proliferation Security Initiative.

RECOMMENDATIONS FOR IMPROVING TRADE AND INVESTMENT

FOR THE SINGAPORE GOVERNMENT:

  • Cooperate with the United States on strengthening intellectual property enforcement in Asia.
  • Continue to partner with the United States on regional policy and security issues.

FOR THE U.S. GOVERNMENT:

  • Support joint U.S.-Singapore military and anti-terrorism initiatives, particularly in maintaining security in the Straits of Malacca.
  • Strengthen U.S. Commerce Department and U.S. Embassy programs that support increased bilateral trade and investment.
  • Support educational exchanges that encourage students to study and do research in the United States.

Useful links:

The U.S.-Singapore Free Trade Agreement: Effects After Three Years