Japan was Singapore’s seventh1 largest trading partner in 2010, with total trade increasing 23.7% from 2009 to ¥3520 billion (S$56 billion). Top export categories included machinery & equipment, miscellaneous manufactures and chemical & chemical products2.
In 2010, Singapore was the largest Asian investor in Japan, with a focus on real estate. Areas of interest for both countries include lifestyle (food and apparel), technology (environment), logistics and tourism infrastructure. The two countries continue to partner on third-country collaborations in the food, logistics and transportation sectors.
Japan is one of the top 3 investors in Singapore, with a strong base in the chemicals, electronics, precision engineering and bio-medical sectors. Japan’s Foreign Direct Investment (FDI) in Singapore totalled S$52.7 billion in 20103, a 7% increase from 2009, and approximately 60% of the Japanese companies in Singapore have regional headquarters functions here.
Rated as the world’s easiest place to do business by The World Bank Group from 2005-2011, Singapore is a world class business hub for the following factors:
- Pro-business environment
- Superior air and sea logistics
- Launch pad to the rest of Asia
- Highly skilled labour force
- English as the official business language
- Strong intellectual property (IP) Protection
- ISO certified companies
Strategically located at the crossroads of the east-west trading routes, Singapore offers access to fast-growing markets including China and India. It is also a key base from which Asian companies can internationalise and break into the global market. Recognising this, companies such as Mitsui Chemicals, Yokogawa Electric and Menicon have established R&D centres and key manufacturing plants to bring their most advanced products to the global market.
Singapore is ideal for Japanese companies setting up regional trading bases as it has an established financial sector and strong risk management ecosystem. Japanese trading houses like Mitsui and Sumitomo Corporation have their regional headquarters in Singapore.
There has also been growing interest by Japanese companies to partner Singapore for new business areas and sectors. For example, Marubeni has partnered Singapore Technologies Aerospace to set up a Joint Venture company for engine leasing, while Panasonic will be testing and developing Asia’s first total energy solutions system in Singapore’s public housing estate.
Singapore currently enjoys two Free Trade Agreements with Japan; the Agreement between Japan and the Republic of Singapore for a New-Age Economic Partnership Agreement (JSEPA) and the ASEAN Japan Comprehension Economic Partnership (AJCEP).
JSEPA was signed in 2002, and revised in 2007. JSEPA brought substantive benefits to Japan and Singapore, laying a solid foundation for better economic cooperation between the two countries. The revised JSEPA sees improved market access for goods and services, revised customs procedures and facilitation of investments.
AJCEP was signed in 2008. AJCEP Trade in Goods chapter allows Japanese companies preferential tariffs when sourcing from a larger base in Southeast Asia. Japanese companies can cumulate value content from Singapore and other ASEAN Member States to qualify for tariff concessions.
For more information, please visit the following websites:
Singapore Economic Development Board
International Enterprise Singapore
1 Ranked taking EU as a region.
2 Based on SITC 1 digit
3 Preliminary figures