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1、Issue 24 November 2022|From Dezan Shira&AssociatesOpportunities in Singapores Manufacturing Sector in the Era of Industry 4.0How Singapore is Poised to Take Advantage of Industry 4.0Implementing Industry 4.0 in Singapores Manufacturing Sector Incentives Available for Foreign Businesses for Innovatio

2、n and Capacity DevelopmentPg 04Pg 11Pg 15 AseAn Briefing Issue 24 November 20222IntroductionCreditsPublisher-Asia Briefing Media Ltd.Lead Editor-Melissa CyrillEditor-Ayman Falak Medina Designers-Ha Ngoc Anh Thu,Aparajita Zwww.india-www.vietnam-www.china-www.russia-Singapores manufacturing sector is

3、well-positioned to face the challenges and reap the benefits of Industry 4.0.As an established regional powerhouse for advanced manufacturing,the country has already embraced Industry 4.0 and is steadily moving its production base up the value chain.By making use of technologies that are part of Ind

4、ustry 4.0,Singapores world-class manufacturing system has become the fourth largest global exporter of high-tech goods,ranging from medical devices and pharmaceutical products to electronics.In this issue of ASEAN Briefing magazine,we provide an overview of the factors favoring Singapores ability to

5、 adopt Industry 4.0 and key advantages as a result.We then explore the countrys sub-sectors with high growth potential under Industry 4.0.Finally,we highlight the incentives available to foreign businesses for innovation,research,and capacity upgrades.With offices located across Southeast Asia and y

6、ears of experience helping foreign enterprises set up operations in Asia,Dezan Shira&Associates is well positioned to assist your company in entering ASEAN markets.For more information,please email us at .With kind regards,Alberto VettorettiALBERTO VETTORETTIPartnerDezan Shira&A AseAn Briefing Issue

7、 24 November 20223Asia Briefing Ltd.Unit 507,5/F,Chinachem Golden Plaza,77 Mody Road,Tsim Sha Tsui East Kowloon,Hong Kong.Annual SubscriptionASEAN Briefing Magazine is published four times a year.To subscribe,please visit please explore the clickable resources below.Opportunities in Singapores Manuf

8、acturing Sector in the Era of Industry 4.0ContentsHow Singapore is Poised to Take Advantage of Industry 4.0Pg 04Implementing Industry 4.0 in Singapores Manufacturing Sector Pg 11Incentives Available for Foreign Businesses for Innovation and Capacity DevelopmentPg 15ReferenceASEAN Briefing and relate

9、d titles are produced by Asia Briefing Ltd.,a wholly owned subsidiary of Dezan Shira Group.Content is provided by Dezan Shira&Associates.No liability may be accepted for any of the contents of this publication.Readers are strongly advised to seek professional advice when actively looking to implemen

10、t suggestions made within this publication.For queries regarding the content of this magazine,please contact:All materials and contents 2022 Asia Briefing Ltd.Like ASEAN Briefing on FacebookFollow ASEAN Briefing on TwitterConnect with Dezan Shira&Associates on LinkedinView Dezan Shira&Associates on

11、Youtube Follow usScan the QR code to follow us on WeChat and gain access to the latest investor news and resourcesConnect with us for the latest news,events and insights across Asia.Legal,Tax,Accounting N and W S Advisory and C AseAn Briefing Issue 24 November 20224How Singapore is Poised to Take Ad

12、vantage of Industry 4.0 The Fourth Industrial Revolution is already upon us and presents challenges and changes to businesses worldwide.With its robust manufacturing ecosystem,high-skilled talent base,and government support for businesses doing research and innovation,Singapore is well-positioned to

13、 take lead in the transition to Industry 4.0.The country is home to a vibrant start-up scene,which offers opportunities for co-innovation with large multinational companies(MNCs).By some estimates,Singapore is used as a regional headquarter by more than 37,000 international companies and 7,000 MNCs.

14、More than ever,Singapores importance as a base for Industry 4.0 can help foreign businesses reduce investment risk,maximize profit,and harness business opportunities in the region.We explore in greater detail as to why Singapore is ready to take advantage of Industry 4.0.Singapores manufacturing sec

15、tor is well-positioned to face the challenges and reap the benefits of Industry 4.0.As an established regional powerhouse for advanced manufacturing,the country has already embraced Industry 4.0 and is steadily moving its production base up the value chain.The Singapore Smart Industry Readiness Inde

16、xIn 2017,Singapore launched the Smart Industry Readiness Index(SIRI),the worlds first Industry 4.0 tool that helps manufacturers regardless of their size to start,scale,and sustain their manufacturing operations.SIRI was developed together by the Singapore Economic Development Board(EDB),leading tec

17、hnology companies,industry and academic experts,and consultancy firms.SIRI educates manufacturers on the concept of Industry 4.0 and how to develop in-depth understanding of a companys Industry 4.0 maturity level.Following this,SIRI can recommend the companys ideal business objectives and activities

18、 that can bring them the greatest benefits in the Industry 4.0 era.The SIRI index consists of three layers.The top layer is made up of three building blocks:process,technology,and organization.Under the building Chapter 1Ayman Falak Medina Author AseAn Briefing Issue 24 November 20225blocks are eigh

19、t pillars of focus,which are then divided into 16 dimensions of assessment.Companies can use this to evaluate their readiness for Industry 4.0.A world-class manufacturing ecosystemManufacturing accounts for approximately 20 percent of Singapores GDP and is an important cornerstone for the economy as

20、 well as the countrys competitiveness in Industry 4.0.Over the past few decades,the country has achieved growth capacity in high-value manufacturing,engineering,and innovation.Singapore is now an industry leader in various sectors,such as semiconductor manufacturing,pharmaceutical products,medical p

21、roducts,and aerospace engineering and has attracted MNCs like Siemens,Schneider Electric,Accenture,HSBC,IBM,Shell,UOB,and GlaxoSmithKline to set up here.Supporting Singapores manufacturing ecosystem are investments in research and development(R&D)within the engineering and advanced manufacturing fie

22、lds.For example,the National Robotics Program helps engineers and scientists translate their research into reality and is driving robotics adoption in Singapores manufacturing sector.Over the next five years,the country plans to spend over S$25 billion(US$17.6 billion)for R&D in a continuing effort

23、to build a more resilient and sustainable Singapore.One-fifth of the funds is allocated for innovation platforms,developing entrepreneurial talent,and supporting business innovation capabilities.The remainder is set aside for new programs that support future needs and emerging opportunities as well

24、as talent development.Further,built within the countrys universities and research centers are model factories that stimulate real-life production environments for the testing of new manufacturing techniques,technologies,and business models that can be exported from Singapore to the rest of the world

25、.Smart Industry Readiness IndexProcessTechnologyOrganisationOperationsSupply ChainProduct LifecycleAutomationConnectivityIntelligenceTalent ReadinessStructure&managementVertical IntegrationHorizontal IntegrationIntegrated Product LifecylesShopfloorWorkforce Learning&developmentInter-and Intra-Compan

26、y collaborationEnterpriseLeadership competencyStrategy&GovernanceFacititySource:EDB Singapore12345614161315111210987 AseAn Briefing Issue 24 November 20226opportunities to develop their fullest potential in life regardless of their starting point.The government provides the resources to help citizen

27、s attain a mastery of skills.SkillsFuture includes short training programs,online tutorials,and earn-and-learn industry internships.The four key focus areas under the initiative are:1.Helping individuals make well-informed choices in training,education,and careers.2.Developing an integrated and high

28、-quality education and training system that responds to industry needs.3.Promoting employer recognition and career development based on skills.4.Fostering a culture that celebrates lifelong learning.Continuous government supportThe Singapore government provides various support measures to make it ea

29、sier for companies to do business in the city-state.Apart from the fiscal and non-fiscal incentives(which we discuss in chapter 3),the country offers a stable socio-political environment,easy business setup,an attractive tax regime,and a plethora of free trade agreements to take advantage from.A hig

30、hly skilled workforceSingapore has a highly skilled workforce,ranked second globally in the 2021 Global Talent Competitiveness Index.The countrys bilingual education policy means students are proficient in English(first in Asia for English proficiency)and one other language,such as Mandarin,Malay,or

31、 Tamil.Further,the school curriculum has a strong focus on science,technology,engineering,and math subjects.Singapores higher education institutions have established with leading MNCs to develop corporate labs that develop cutting edge solutions for real Industry 4.0 challenges,such as cybersecurity

32、,computational engineering,blockchain,artificial intelligence,and smart industrial chemical production.The 2021 Global Talent Competitiveness Index also highlights that Singapore has one of the best pools for vocational and technical skills that matches labor market demands.More than 30 percent of t

33、he workforce holds a university degree with another 15 percent holding a diploma or professional qualification.Further,the government launched an initiative called SkillsFuture in 2015.The initiative is a national movement that aims to provide Singaporeans Singapores High-Value Manufacturing Capabil

34、ities at a GlanceBiomedical sciences60 percent of the worlds micro-arrays are produced in Singapore.One-third of the worlds mass spectrometers and thermal cyclers are also produced in the country.PharmaceuticalsFour out of the 10 drugs by global revenue are manufactured in Singapore.EnergySingapore

35、is the fifth largest exporters of refined oil in the world.ChemicalsSingapore is ranked in the top 10 globally for chemical exports by volume.AseAn Briefing Issue 24 November 20227A streamlined business setup processSingapores efficient business environment is demonstrated by the ease with which for

36、eign investors can incorporate a business in the country.Registering a company can take as little as one day provided all the files are in order.The private company limited by shares,commonly known as a private limited company,is the most preferred type of entity among foreign investors in Singapore

37、.This entity is the most flexible,advanced,and scalable type of business form.Below are some key characteristics of a private limited company that makes them an attractive option for foreign investors:A separate legal entity the private limited company is a legal identity and separate from its share

38、holders and directors.Furthermore,this entity can also acquire assets,enter contracts,or enter debts in its own name.Foreign ownership this entity can be 100 percent foreign-owned.Limited liability the personal liability of the members that contribute towards the paid-up capital is limited to the am

39、ount that was contributed towards the paid-up capital.Tax benefits and incentives a Singapore private limited company is eligible for various tax incentives.For instance,the corporate tax rate of 17 percent is effective only for chargeable income above S$200,000(US$147,000)with a 50 percent exemptio

40、n on the next S$190,000(US$139,000)of chargeable income.Furthermore,there is no capital gains tax.Ease in the transfer of ownership through the selling of all or part of the shares of the private limited company,the ownership of the company is transferred,thus not requiring any complex legal documen

41、ts or processes.If the incorporation documents have been prepared,the company can be officially registered with the Accounting and Corporate Regulatory Authority ACRA.The process is done online and only takes one hour.Upon incorporation,the paid-up capital must be immediately paid and transferred in

42、to the companys bank account.The minimum paid-up capital is at least S$1(US$0.73).Taking advantage of Singapores double tax agreement networkSingapore has one of the worlds most extensive DTA networks,attracting international businesses from a multitude of conventional and nuanced industries.The cou

43、ntry has signed over 90 DTAs,which comprise of three types:comprehensive,limited,and exchange of information arrangements(EOIAs).Comprehensive DTAs provides relief from double tax for all income types between the two signatories.Limited DTAs,however,only provides relief from income generated from ai

44、r transport and shipping,and EOIAs are provisions for the exchange of tax information.The tax relief under each DTA treaty differs for each country.They normally cover several income types:Tax on royalties;Tax on dividends;Tax on capital gains;Tax on interests;Shipping and air transport;AseAn Briefi

45、ng Issue 24 November 20228 Directors fees;Independent and dependent personal services;Researchers;Students;and Income from immovable property.Claiming relief under the DTATo obtain the benefits of the DTA,the company must first submit its Certificate of Residence(COR)to the IRAS as evidence it is a

46、tax resident in Singapore.Only Singaporean tax residents and the tax residents of the treaty partner are recognized.To qualify as a Singaporean tax resident,an individual must be employed in the country for 183 days or more during the year.For companies,they must be registered in Singapore.Tax resid

47、ents of the treaty partner must also submit a COR certified by the tax authority of the treaty partner to the IRAS in order to obtain relief under the DTA.Singaporean tax residents can still avoid double taxation even if Singapore does not have a DTA with a particular country through the Universal T

48、ax Credit(UTC)scheme.This applies to all foreign taxes paid by a Singaporean tax resident on the following income categories:Royalties derived from outside of Singapore;Foreign income from professional services or consultancy;Foreign-sourced dividends;and Foreign branch profits.The IRAS will grant t

49、he tax exemption if the following conditions are met:At least 15 percent in corporate taxes(headline tax)are paid on the income sourced from the foreign jurisdiction;The company has been subjected to tax in the foreign jurisdiction,which can be different from the headline tax;and The IRAS is satisfi

50、ed that granting the tax exemption will benefit the tax resident in Singapore.Determining the treatment of profitsDefining a permanent establishment(PE)is an important feature within all DTA treaties in order to determine the treatment of business profits.The PE refers to the fixed place of business

51、 through which the taxpayer carries out their business operations.Under Singapores tax law,the tax residency of a company is determined where the business is controlled and managed.The company is considered a tax resident if the control or management of the business was exercised in Singapore in the

52、 preceding calendar year.Using Singapore as a Base for ASEAN ExpansionIn this issue of the ASEAN Briefing magazine,we provide an overview of the efficient incorporation process in Singapore and compare Hong Kong and Singapore as holding locations.We then explore how investors can benefit from Singap

53、ores tax policies and free trade agreements before finally focusing on Singapores potential as a hub for digital expansion in Asia.READ MORERELATED READING AseAn Briefing Issue 24 November 20229Taking advantage of Singapores free trade agreementsDespite regional players maintaining strong FTA networ

54、ks,they are not as extensive as Singapores.Due to these factors,the country will continue to be the default location for businesses seeking to expand into Southeast Asia and neighboring regions.The countrys 14 bilateral and 13 regional FTAs include some of the largest combined trade agreements in th

55、e ASEAN-China,ASEAN-India,and ASEAN-Hong Kong trade blocs providing Singapore-based businesses with access to preferential markets,free or reduced import tariffs,as well as enhanced intellectual property regulations.There are two types of FTAs:bilateral(agreements between Singapore and a single trad

56、ing partner)and regional(signed between Singapore and a group of trading partners).Bilateral FTAs China-Singapore FTA(CSFTA);India-Singapore Comprehensive Economic Cooperation Agreement(CECA);Japan-Singapore Economic Partnership Agreement(JSEPA);Republic of Korea-Singapore FTA(KSFTA);New Zealand-Sin

57、gapore 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(USS

58、FTA);and UK-Singapore FTA(UKSFTA).Regional FTAs ASEAN-Australia-New Zealand Free Trade Area(AANZFTA);ASEAN-China Free Trade Area(ACFTA);ASEAN-Hong Kong,China Free Trade Area(AHKFTA);ASEAN-India Free Trade Area(AIFTA);ASEAN-Japan Comprehensive Economic Partnership(AJCEP);ASEAN-Republic of Korea Free

59、Trade Area(AKFTA);ASEAN Free Trade Area(AFTA);Comprehensive and Progressive Agreement for Trans-Pacific Partnership(CPTPP);EFTA-Singapore FTA(ESFTA);Singapore-Eurasian Economic union(EAEUSFTA);Regional Comprehensive Economic Partnership(RCEP)GCC-Singapore FTA(GSFTA);and Trans-Pacific Strategic Econo

60、mic Partnership(TPSEP).How to apply for tariff concessions for exporting goods from SingaporeOnce a Singaporean company has identified their target market,they can start applying for tariff concessions through the Enterprise Singapore website.LOCATION ANALYSIS AND SITE SELECTIONDezan Shira&Associate

61、s can help your company overcome various market entry and expansion challenges.Through in-depth research and analysis,we provide clients with the ability to better understand their options in new markets and make informed decisions on where to invest.To arrange a consultation,please contact us at or

62、 visit our website at .EXPLORE MORE AseAn Briefing Issue 24 November 202210Determine the relevant FTAs for your target market Determine the Harmonised System(HS)code of your productCheck if your product benefits from lower tariffs Choose qualifying FTA(based on ROO)with highest tariff savingsSend PC

63、O to customer for presentation to importing authoritiesReduction in tariffs by importing authoritiesCheck the FTAs Rules of Origin(ROO)Visit Enterprise Singapores website for a list of Sinagpores FTAsUse the Tariff Finder Tool to search for the HS code of your product(using relevant keywords-e.g.avo

64、cado)in the destination country.Key in the destination country and the correct HS code and compare the tariff rate for your Singapore-originationg product to the generic rate applicable to most countries(i.e MFN rate).Refer to the ROO section for your product to determine the business processes nece

65、ssary to benefit from lower tariffs.Some examples are:Change in HS code during manufacture Minimum%for local value-added contentIf Preferential Certficate of Origin(PCO)is required by your chosen FTAFollow self-certification prcedures as per FTA requirementsIf self-certification is required by your

66、chosen FTASubmit the relevant documents to Sinagpore CustomsGo to Singapore Customs Certificate of Origin website to check document requirementshttps:/www.customs.gov.sg/businesses/certificates-of-origin/overview123456a6b78Source:mti.gov.sgHow to Apply for Tariff Concessions for Exporting Goods from

67、 SingaporeOnce a Singaporean company has identified their target market,they can start applying for tariff concessions through the Enterprise Singapore website.AseAn Briefing Issue 24 November 202211Implementing Industry 4.0 in Singapores Manufacturing SectorIndustry 4.0 will impact operational proc

68、esses and technologies used in Singapores manufacturing sector.Chapter 2Ayman Falak Medina AuthorIndustry 4.0 will impact operational processes and technologies used in Singapores manufacturing sector.This includes everything from automation and the application of the Internet of Things(IoT)to robot

69、ics and 3D printing.Manufacturers that can embrace Industry 4.0 stand to benefit from higher efficiency,cost savings,and a boost to bottom line growth.We explore key sub-sectors within Singapores manufacturing sector that can implement or have already implemented Industry 4.0 practices.Electronics a

70、nd semiconductor manufacturingElectronics manufacturing is the bedrock of Singapores manufacturing sector,contributing to approximately eight percent of the GDP and 20 percent of total manufacturing jobs.From its modest beginning as the only TV assembly plant in Southeast Asia,Singapore has become a

71、 vital manufacturing hub for higher value-added electronic components.The global electronics industry is projected to grow to US$3.3 trillion in 2030 from the US$2.2 trillion recorded in 2020.This growth will be driven by artificial intelligence(AI),5G,automation,and the electrification of automotiv

72、es,among others.These applications will increase demand for microchips and in-turn,semiconductors an industry with the potential to become a high-growth area for Singapore.The countrys semiconductor industry is,in fact,one of the most diverse in the region,attracting global players like United Micro

73、electronics Corporation and Siltronic AG,and contributing to seven percent of GDP.This makes the sub-sector a fundamental contributor to Singapores electronics manufacturing output.Further,the city-state accounts for approximately 11 percent of the global semiconductor market AseAn Briefing Issue 24

74、 November 202212share and manufactures one-fifth of the global semiconductor equipment.Through Industry 4.0,Singapores semiconductor producers can aim to transform their production lines into fully automated smart factories.Such factories can use machine vision algorithms to conduct automatic qualit

75、y control and relieve constraints on the available workforce,as well as use analytical software to account the cost of raw materials and components,resulting in better business intelligence for product pricing.Additive manufacturingAdditive manufacturing plays an essential role in meeting some of th

76、e important requirements of Industry 4.0.Commonly known as 3D printing,additive manufacturing simplifies the production process,particularly for the assembly of products.As a result,3D printing offers efficient solutions to facilitate personalized manufacturing and intelligent production.In the Indu

77、stry 4.0 era,the application of 3D printing reduces waste products and overall production costs since only the 3D data package of the product is required to produce a prototype.The inherent freedom of design allows engineers to create new geometric figures and manufacture parts with advanced feature

78、s.Companies like Airbus are using this technology to design aircraft components that are lighter and more efficient,and Adidas and Nike are producing lightweight,high-performance shoes that would have not been possible using conventional methods.Further,doctors are using 3D models to help design dia

79、gnostic and surgical tools.Value Added by the Semiconductors Manufacturing Industry in Singapore from 2018 to 2021YearValue(US$)20166.8 billion201713.2 billion201823.4 billion201922.9 billion202019.3 billion202127.2 billionMarket Share of Additive Manufacturing in Southeast Asia40%40%15%5%AseAn Brie

80、fing Issue 24 November 202213Within ASEAN,Singapore has a 40 percent market share of the additive manufacturing market,followed by Malaysia and Thailand with the next 40 percent.This industry is a vital enabler for Singapore to strengthen its global,advanced manufacturing foothold.The Singapore gove

81、rnment has established the National Additive Manufacturing Innovation Cluster(NAMIC),which aims to accelerate the adoption of additive manufacturing technologies in local industries,enabling them to operate in high value-added manufacturing fields.Additive manufacturing is expected to generate US$10

82、0 billion in economic value by 2025 in Southeast Asia.Medical devicesThe use of Industry 4.0 technology in the healthcare industry can deliver better care to patients.For example,AI can screen enormous amounts of data to recognize specific medical conditions that human diagnosis could easily miss.Mo

83、reover,AI tools can assist in running hospitals more efficiently,such as by identifying how staff and equipment can be better utilized.Singapores medical devices industry is expected to be worth US$1.3 billion by 2023 due to increasing government spending,an ageing local population,as well as demand

84、 from the region.More than 60 multinational medical technology(medtech)companies are leveraging the countrys strong engineering capabilities and high-quality assurance to manufacture high-value products,ranging from life science instruments to contact lenses.In addition,some 60 percent of the worlds

85、 microarrays and one-third of the worlds mass spectrometers are manufactured in Singapore.Investors are attracted by Singapores strong base for research and innovation that help medtech firms in designing new business models in healthcare,such as the use of big data to provide better patient-centric

86、 care.This,in turn,provides medtech companies with the capabilities to export their products or services to go-to-markets in the Asia Pacific.An Introduction to Doing Business in Singapore 2022For corporate entities hoping to establish a holding company,branch office,or regional headquarters,Singapo

87、re of fers a power ful advantage in terms of business opportunities,government incentives,and trade relation benefits.This publication,designed to introduce the fundamentals of investing in Singapore,was compiled by Dezan Shira&Associates,a specialist foreign direct investment practice providing cor

88、porate establishment,audit,business advisory,tax advisory and compliance,accounting,payroll,due diligence,and financial review services to multinationals and small-and medium-sized enterprises investing in emerging Asia.READ MORERELATED READING AseAn Briefing Issue 24 November 202214Pharmaceutical a

89、nd biomedical sectorsThe global pharmaceutical industry has already begun implementing Industry 4.0 practices with many pharmaceutical manufacturers switching from batch manufacturing to continuous manufacturing.Batch manufacturing is a lengthy process.After each step in the process,production is us

90、ually stopped to check for quality.During these hold times,the material is often stored in containers or even shipped to other facilities to complete the process.This increases the risk of defects and error as well as the lead time.However,under continuous manufacturing,the material is moved from en

91、d-to-end on a single,uninterrupted line,thus eliminating the hold times and shortens production times from months to days.Singapores pharmaceutical and biomedical sectors are fast-becoming leading drivers of economic growth,showcasing both improved healthcare and manufacturing capabilities.The count

92、rys deep base of skilled talents,pro-business environment,advanced infrastructure,and thriving research and development landscape has attracted some of the largest pharma firms in the world.This has resulted in Singapore being one of the few countries able to export more pharmaceutical products(appr

93、ox.US$369 billion in 2020)than it imports(US$8.92 billion in 2020).There are currently more than 50 manufacturing facilities in the country,with eight of the worlds 10 largest pharmaceutical firms owning plants in Singapore.Some of the major players include Abbott,GlaxoSmithKline,Novartis,and Pfizer

94、,who account for more than 40 percent of Singapores regional market.German biotechnology company BioNTech,who developed the COVID-19 vaccine BNT162b2 with American pharmaceutical CROSS COUNTRY COMPETITIVENESS BENCHMARKINGDezan Shira&Associates can investigate the competitiveness of your preferred/sh

95、ortlisted countries.Our experts evaluate the viability of the locations for manufacturing,examine the talent base available,and quality of existing infrastructure and logistics networks.Further,our reports cover the regulatory environment,operating costs,and available tax incentives in each destinat

96、ion for a comparative understanding.To arrange a consultation,please contact us at or visit our website at .EXPLORE MOREfirm Pfizer,has established its Asia-Pacific regional headquarters in Singapore,where it will also set up an mRNA manufacturing facility.The companys manufacturing plant is expecte

97、d to be operational by 2023 and will produce several hundreds of millions of mRNA vaccines.More importantly,it will help build a rapid-response production capability to address the threat of future pandemic threats in the Asia-Pacific region and open the company to a dynamic marketplace with a popul

98、ation of 655 million.In the last 30 years,there have been no major observations by regulators like the US Food and Drug Administration(FDA)that regularly audit manufacturing facilities,which speaks to the quality of Singapores infrastructure and workforce.Ready-built facilities,such as the JTC Space

99、 Tuas Biomedical Park(TBP),provide laboratory space that can be out-fitted for single-use technology(SUT)manufacturing activities.SUTs allow pharma companies to set up their manufacturing facilities quickly at reduced costs and allows the company to produce multiple products in a single suite.AseAn

100、Briefing Issue 24 November 202215Incentives Available for Foreign Businesses for Innovation and Capacity DevelopmentSingapore offers a variety of fiscal and non-fiscal incentives that have been tailored to assist the development of high-value Industry 4.0 activities.Chapter 3Ayman Falak Medina Autho

101、rSingapore offers a variety of fiscal and non-fiscal incentives that have been tailored to assist the development of high-value economic activities,as well as encouraging businesses to upgrade their capabilities and expand their scope of operations.Applicants must fulfil rigorous requirements,which

102、include committing to certain levels of investments,introducing leading-edge skills,technology,as well as contributing to the growth of research and development and innovation capabilities.However,most of these incentives have local ownership requirements.We highlight some of them here.Industry spec

103、ific tax incentivesThere are four main government agencies that can administer business and tax incentives for Singaporean entities in specific domains.These are:Singapore Economic Development Board(EDB)which is responsible for developing and executing strategies that facilitate investment into the

104、countrys industries;Inland Revenue Authority of Singapore(IRAS)the tax regulatory authority in the country;Enterprise Singapore(ESG)which aids Singaporean companies expand worldwide and promotes local exports;and Monetary Authority of Singapore(MAS)the central bank and financial services authority.A

105、 full list of industry-specific incentives can be found on the individual websites of these agencies.The industries eligible for tax incentives are:Financial services;Banks;Fund management;Tourism;Shipping and maritime;Global trading industries;Insurance;AseAn Briefing Issue 24 November 202216 Proce

106、ssing services;Research and development;Headquarter activities;Legal firms;E-commerce;and Event organization.Incentives for manufacturing and services activitiesPioneer tax incentive and development and expansion incentiveThrough the pioneer tax incentive and the development and expansion incentive,

107、businesses engaging in the manufacture of high-value-added products or services can apply for a pioneer certificate,which entitles them to tax exemption or a concessionary tax rate of five percent or 10 percent for five years.This can be extended depending on the companys commitment to further expan

108、sion.To qualify,applicants are assessed on a qualitative and quantitative criterion.This includes:Ability to introduce create employment for Singaporeans;Introduction of new skills and expertise;The capacity for business expenditure to create economic spin-off;Manufacturing projects must commit to d

109、eveloping soft and hard infrastructure;Introduce new technology and know-how that can advance an industry;and Business activities must be new and have not been undertaken by other companies in the country.After the pioneer tax incentive period has ended,businesses can attain the development and expa

110、nsion incentive.This awards companies that migrate to business activities that add more value(such as investing in projects that advance key industries like manufacturing),with a five to 10 percent tax break.The tax relief period is subject to a maximum of 40 years.The 100 percent investment allowan

111、ce schemeThe investment allowance incentive is administered by the EDB,from which businesses can enjoy a tax exemption of up to 100 of fixed capital expenditure incurred.The EDB defines fixed capital expenditure as expenditure incurred for qualifying projects within a five-year period,which can be e

112、xtended up to eight years.An extension of the 100 percent Investment Allowance(IA)scheme has been granted by the government until 2023.The approved 100 percent IA support is capped at S$10 million(US$7.4 million)and is part of the Automation Support Package(ASP),which comprises the following grants,

113、loans,and tax support:Grant support through the Enterprise Development Grant(EDG),capped at S$1 million(US$737,705)for up to 50 percent of qualified automation projects;Loan financing of up to S$15 million(US$11.1 million)for automation equipment;and The 100 percent IA scheme.The ASP support itself

114、ended on March 31,2021,but the 100 percent IA scheme will still be available.This program offers tax relief that can be used to offset taxable income for approved automation projects by the EDG and ESG.The approved projects by the EDB include,among others:Manufacture of new products or increase prod

115、uction of existing products;Promotion of the tourism industry in the country;AseAn Briefing Issue 24 November 202217 Research and development activities;Energy efficiency projects;Construction projects;Projects that focus on reducing water consumption;Provide specialized engineering or technical ser

116、vices;and Maintenance,repair and overhaul services for the aircraft industry.The category for expenditures covered by the investment allowance consists of:New productive equipment;Building factories in Singapore;and Acquiring patents and know-how.The land intensification allowance schemeIntroduced u

117、nder the 2010 State Budget announcement,the land intensification allowance(LIA)scheme is a targeted program that aims to promote the use of industrial land towards higher-value-added activities.Recipients of this scheme will enjoy the following allowances on qualifying capital expenditure incurred f

118、or the construction or renovation of an approved LIA building structure:Initial allowance of 25 percent;and Annual allowances of five percent until the total allowance amounts to 100 percent of qualifying expenditure.The LIA is available to businesses in the manufacturing and logistic sectors that h

119、ave large land takes and low Gross Plot Ratios(GPR).Incentives for innovation,research and development,and capability developmentTechSG ProgramIn January 2020,Singapores government launched the TechSG program,which aims to help Singapore-based technology companies recruit highly skilled foreign tale

120、nt,and expand in the region.Companies that qualify for this program are eligible to receive up to 10 new Employment Passes(EPs)to hire foreign nationals and is valid for up to two years.Further,TechSG will support the renewal of the EP and extend them for up to three years.Thereafter,the EP must be

121、renewed through the process implemented by the Ministry of Manpower(MOM).The EP is mainly issued to foreign managers,executives,and skilled professionals in Singapore.Individuals must also be earning a monthly salary of SG3,600(US$2,549)to be eligible.Companies that qualify for TechSG must meet the

122、following criteria:Must be a company incorporated in Singapore with the Accounting and Corporate Regulatory Authority(ACRA);Must be a company that has a digital or technology offering as part of its core business product or service;This includes providing hardware or software technologies,e-commerce

123、 activities,digital gaming,digital media,cybersecurity,data science,and fintech,among many others;Secure more than US$10 million(in cumulative)investment funding in the past 36 months;and Receive funding from one of the TechSG investment firms in the past 36 months.There are two methods of applying

124、for TechSG depending on the ownership of the applicant company.If the company has less than 30 percent AseAn Briefing Issue 24 November 202218local shareholding,it should submit its application to the EDB.For companies with at least 30 percent or more local shareholding,the submission should be done

125、 through Startup SG,as an entity under ES.Companies are usually told the outcome of their application within 10-15 working days.Tech.PassIn January 2021,Singapore issued a new work permit named Tech.Pass,aimed at attracting highly accomplished technology entrepreneurs,experts,and business leaders.Un

126、like the Employment Pass,the Tech.Pass scheme does not require the sponsorship of a local employer,giving the professional greater flexibility in their activities,such as being an employer,investor,starting a business,or becoming a director or consulting in one or more Singapore-based tech companies

127、.This work permit also allows holders to switch between employers.The government imposed strict eligibility criteria for Tech.Pass applicants.They must satisfy at least two of the following conditions:Their last fixed monthly salary of at least S$20,000(US$14,852),or its equivalent in foreign curren

128、cy;Having at least five years of experience in a leading role in a tech company that has a market valuation of at least US$500 million or have raised at least US$30 million in funding;or Having at least five years of experience in a leading role in the development of a tech product that has at least

129、 100,000 monthly active users or at least garnered US$100 million in annual revenue.Intellectual property development incentiveThe intellectual property development incentive(IDI)was introduced in 2018 to encourage the commercialization of intellectual property arising from research and development

130、activities.Recipients can enjoy a reduced corporate tax rate of five or 10 percent of qualifying IP income.This incentive period is limited to an initial period not exceeding 10 years,after which the taxation rate will then increase by 0.5 percent starting in the 11th year of the incentive period.Ta

131、x deductions on qualifying R&D expensesThe Singapore government has offered an enhanced tax deduction of 250 percent of qualifying expenditure for R&D projects carried out in Singapore for the years of assessment between 2019 to 2025.To qualify,companies must effectively own and can commercially exp

132、loit the IP or other results from the R&D activities.Activities that do not qualify as R&D include:Routine data collection;Management studies or efficiency surveys;Market research;Cosmetic modifications to products or production methods;or Routine modification to products or production methods.Intel

133、lectual property acquisition expensesAn enhanced 200 percent tax deduction is available for each of the following expenditure amount for the years of assessment between 2009 to 2025:The first S$100,000(US$70,700)of qualifying expenditure incurred during IP registration;and The first S$100,000(US$70,

134、700)incurred for the licensing of IP.AseAn Briefing Issue 24 November 202219Incentives for finance and treasury activitiesFinance and treasury centerUnder this scheme,income derived from finance and treasury activities is taxed at a reduced rate of eight percent.Such approved activities include inte

135、rnational treasury and fund management activities,investment and economic research analysis,and corporate finance and advisory services.Financial sector incentiveThrough the financial sector incentive,any income from high-value-added activities,such as transactions and services related to the equity

136、 market,derivatives market,and bond market,may be taxed at five percent,while other activities will qualify for a 13.5 percent tax rate.Financial sector technology and innovation schemeThis scheme provides co-funding to develop financial technology(Fintech)that enhances Singapores banking industry.T

137、he scheme offers support of up to 70 percent for qualifying costs such as IP rights,technical software,manpower skilling,and professional services,among others.Headquarter and internationalization incentivesInternational headquarters awardThe international headquarter award(IHQ)provides businesses a

138、 concessionary tax rate of five or 10 percent on income for businesses that commit to substantive headquarter activities,such as managing,coordinating,and controlling their regional operations from Singapore.Merger and acquisition schemeThe merger and acquisition(M&A)scheme provide the acquiring com

139、pany an M&A allowance of 25 percent(capped at S$10 million(US$7.3 million)of the qualifying acquisition value capped at S$40 million(US$29.5 million)per year of assessment,stamp duty relief capped at S$80,000(US$59,000),and double tax deduction transaction costs capped at S$100,000(US$70,700).Double

140、 tax deduction for internationalizationUnder this incentive,the business can receive up to 200 percent tax deduction on expenses used for international expansion.Most DTDi deductions are subject to approval from Enterprise Singapore(ESG)and the Singapore Tourism Board.However,certain activities do n

141、ot require approval on the first S$150,000(US$111,000)of eligible expenses.Progressive Wage Credit SchemeThe Progressive Wage Credit Scheme(PWCS)was introduced into the 2022 budget to help employers adjust to mandatory increases for lower-wage workers.The scheme enables the government to co-fund the

142、 wage increases of Singaporean employees earning a gross monthly wage of up to S$3,000(US$2,213).Singaporean residents and permanent resident employees are eligible for the scheme.Under the scheme,employees can receive support for gross monthly wage increases up to S$2,500(US$1,844)from 2022 to 2026

143、,as well as support for gross monthly wage increases above S$2,500(US$1,844)and up to S$3,000(US$2,213)from 2022 to 2024.Eligible wage increases will be co-funded for a period of two years.Eligible employers do not need to apply and will be informed by the Inland Revenue Authority of Singapore(IRAS)

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