WORLD TRADE  
ORGANIZATION  G/SCM/Q2/SGP/12 
28 November 2006 
 (06-5701) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
SUBSIDIES 
 
Replies to Questions from the UNITED STATES1 
Regarding the New and Full Notification of SINGAPORE2 
 
 
 The following communication, dated 24 November 2006, is being circulated at the request of 
the Delegation of Singapore.  
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 According to a publicly available report 2, the LEAD programme will support up to 70 
percent of eligible costs for qualifying projects.  The support will be provided to SME's, which 
must have good export potential,   
Q1.  Could Singapore please explain how this pr ogramme is consistent with its obligations 
under Article 3.1 (a) of the Subsidies Agreement?  
 
Reply
 
 
 The information presented in the question is not accurate.  LEAD is not provided to SMEs 
with “good export potential”.  Instead, support is extended to industry associations to initiate and 
drive all kinds of industry development project s that promote higher value-added and innovation 
activities.  
 
Q2.  Could Singapore explain why this programme  should not be subject to the notification 
obligations under Article 25 of the Subsidies Agreement?  If this programme does meet the notification requirements, we ask that Singapore notify it in accordance with the provisions of 
Article 25 of the Subsidies Agreement.  
Reply
 
  The scheme is not a specific subsidy as defined under Article 2.  Therefore, it is not subject to 
the notification obligations under Article 25. 
 
 According to a publicly available docu ment, the DTD scheme allows for approved 
companies to deduct against their taxable inco me twice the eligible expenses incurred for 
approved projects and this incentive is target ed at companies whose primary purpose is to 
promote the trading of goods and aims to enco urage Singapore companies to expand overseas 
markets. 
                                                     
 
1 G/SCM/Q2/SGP/11 
2 G/SCM/N/123/SGP G/SCM/Q2/SGP/12 
Page 2  
 
    
Q3.  Could Singapore please clarify if this pr ogramme is contingent upon exportation? If so, 
please explain how this programme is cons istent with Singapore's obligations under 
Article 3.1(a) of the Subsidies Agreement?  
Reply
 
  The scheme is not contingent on export performance.   
Q4.  Could Singapore explain why this programme  should not be subject to the notification 
obligations under Article 25 of the Subsidies Agreement?  If this programme does meet the 
notification requirements, we ask that Singapore notify it in accordance with the provisions of 
Article 25 of the Subsidies Agreement. 
 Reply
 
  The scheme is not a specific subsidy as defined unde r Article 2.  Therefore, it is not subject to 
the notification obligations under Article 25.  
Q5.  Please explain whether this is the same programme as the Double Tax Deduction for 
Local Trade Exhibition.  This programme en courages Singapore companies to expand their 
markets by participating in international trade-orient ed exhibitions held in Singapore.  If this is 
a different programme then please also answer questions 3 and 4 above, for the Double Tax Deduction for Local Trade Exhibition.  
Reply
 
  The Double Tax Deduction for Local Trade Exhib ition applies only for participation in local 
trade fairs. 
 
 It appears that under the MES program, GST registered businesses which export a 
majority of their goods (i.e. major exporters") are not required to pay Goods and Service tax 
(GST) on imported goods at the point of importation.  Q6.  Could Singapore please explain whether this GST exemption only applies to imports 
that are consumed in the production of the final exported product?  
 
Reply
 
 
 The suspension of GST under the MES applies to all goods imported, whether or not said 
goods are then used in the manufacture of exports or sold locally. 
 
Q7.  Could Singapore explain why this programme  should not be subject to the notification 
obligations under Article 25 of the Subsidies Agreement?  If this programme does meet the notification requirements, we ask that Singapore notify it in accordance with the provisions of 
Article 25 of the Subsidies Agreement.  
Reply
 
  The MES does not constitute a financial contri bution, as the Government does not forgo any 
revenue otherwise due.  As such the scheme is not  a subsidy as defined by Article 1 of the SCM 
Agreement, and is therefore not subject to th e notification requirements set out in Article 25.   G/SCM/Q2/SGP/12 
 Page 3 
 
 
   According to publicly available information' , RFS is a fixed-cost financing programme 
designed to assist Singapore-based compan ies establish operations overseas.  Through the 
program, the Government hopes to assist Singapore-based enterprises globalize their 
operations, sell in the global market place and leverage on global resources to grow.  
Furthermore, the overseas operations must co mplement the activities of the Singapore 
operations and result in economic spin-offs to Singapore. 
  Q8.  Could Singapore please provide th e terms of the loans being offered?  
 
Reply
 
 
 The loan rates range from 6.25% to 6.75%.  There is a maximum loan quantum of 90% of the 
valuation or the purchase price, whichever is lower, and subject to a $10m cap.  
Q9.  Could Singapore define the statement that the overseas operations must result in 
"economic spin-offs" to Singapore?  Please expl ain whether one of the economic spin-offs to 
Singapore would include increased expo rts of Singapore-made products. 
 
Reply
 
  “Economic spin-offs” refer to the general be nefits that accrue to the Singapore economy 
through such operations and may be measured in te rms of employment and expenditure.  They are not 
related specifically to export volume. 
  
 
Q10.  Please clarify if this programme is contin gent upon exportation?  If so, please explain 
how this program is consistent with Singapore's obligations under Article 3.1 (a) of the 
Subsidies Agreement?  
Reply
 
 
 The availability of the loan scheme and th e prevailing rates are not subject to export 
performance. 
 
Q11.  Could Singapore explain why this programme  should not be subject to the notification 
obligations under Article 25 of the Subsidies Agreement?  If this programme does meet the 
notification requirements, we ask that Singapore notify it in accordance with the provisions of 
Article 25 of the Subsidies Agreement.  
Reply
 
  The scheme is not a specific subsidy as defined unde r Article 2.  Therefore, it is not subject to 
the notification obligations under Article 25. 
 
 According to publicly available informatio n, this programme caters to the more 
complex and extensive development needs of Si ngapore enterprises that are growing rapidly 
and seeking to break into new overseas markets. 
  
Q12.  Because this programme refers to Sin gapore companies breaking into new overseas 
markets, could Singapore please clarify if this programme is contingent upon exportation?  Ifso, 
please explain how this programme is cons istent with Singapore's obligations under 
Article 3.1(a) of the Subsidies Agreement? G/SCM/Q2/SGP/12 
Page 4  
 
   
Reply
 
  The approval for the scheme is not continge nt upon export performance.  The scheme’s 
objective is to enhance in-house capabilities so as to  allow the enterprise to fulfill its potential for 
growth. 
 
Q13.  Could Singapore explain why this programme  should not be subject to the notification 
obligations under Article 25 of the Subsidies Agreement?  If this programme does meet the notification requirements, we ask that Singapore notify it in accordance with the provisions of 
Article 25 of the Subsidies Agreement. 
 
Reply
 
  The scheme is not a specific subsidy as defined unde r Article 2.  Therefore, it is not subject to 
the notification obligations under Article 25.  
 
 According to publicly available resources, the Government of Singapore will spend 
about 12 billion Singapore dollars (US$7 billion) on the bio-technology industry in the next five 
years and that it spent five billion dollars durin g the years 2001 through 2005.  Singapore also 
built a research park at an estimated $300 million to promote the biotechnology industry.  In 
addition, the government has also encouraged th e growth of new local enterprises through 
programs such as the Biomedical Sciences Innova te 'N Create Scheme (BMS INC) which was 
launched in 2002.  Under this programme, comp anies can receive up to US$1.1 million in seed 
capital toward the execution of their business plans."   
Q14.  Could Singapore explain why this programme  should not be subject to the notification 
obligations under Article 25 of the Subsidies Agreement?  If this programme does meet the notification requirements, we ask that Singapore notify it in accordance with the provisions of 
Article 25 of the Subsidies Agreement.  
Reply
 
 
 This programme is part of another wider, broa d-based incentive scheme, and is therefore not a 
specific subsidy as defined by the SCM Agreement.  It is accordingly not subject to the notification 
requirements set out in Article 25 of said Agreement.  For further elaboration, please refer to our response to the US’ question on the Startup Enterprise Development Scheme.  
 
 According to publicly available information, the Government of Singapore provides 
grants to companies to offset the costs of developing or introducing new capabilities in 
Singapore.  To qualify for grants under this progr amme, activities must lead to the development 
or introduction of new capabilities including new technologies.   
Q15.  Could Singapore explain why this program  should not be subject to the notification 
obligations under Article 25 of the Subsidies Agreement?  If this programme does meet the notification requirements, we ask that Singapore notify it in accordance with the provisions of 
Article 25 of the Subsidies Agreement.   G/SCM/Q2/SGP/12 
 Page 5 
 
 
  Reply  
 
 The INTECH scheme is not a specific subsidy as defined by the SCM Agreement.  It is not 
targeted at any specific industries or enterprises.   The scheme is therefore not subject to the 
notification requirements set out in Article 25 of said Agreement.  
 
 According to publicly available sources, th e pioneer incentive provides a tax exemption 
on qualifying profits for up to 15 years for eligib le companies.  The purpose of this programme 
is to encourage the introduction and growth of  new and better industry technologies,  To be 
eligible for this programme, the project must result in the creation of new or strategically 
expand existing industries in Singapore.  It appe ars that pioneer status is usually given to high-
tech companies that introduce high-t ech skills to the Singapore economy. 
 Q16.  Could Singapore please explain whether or  not the pioneer incentive is usually provided 
to high-tech companies?  What percentage of companies qualifying for assistance under this 
programme during the notification period were high-tech companies?  
Reply
 
 
 The Pioneer Incentive scheme is open to all proj ects, irrespective of sectors.  Companies in 
various sectors have qualified for the scheme.   
 
Q17.  Please explain the criteria used by Si ngapore to determine eligibility for pioneer tax 
exemptions.  Please explain the criteria used by Singapore to determine the number of years of 
tax exemptions to provide to individual qualifying applicants. 
 Reply
 
  Eligibility is determined by whether the project  introduces into an industry know-how, skills 
or technology, which is substantia lly more advanced than the average industry.  The period of tax 
exemption will in turn commensurate with  the activities and scale of the project. 
 Q18.  Could Singapore explain why this programme  should not be subject to the notification 
obligations under Article 25 of the Subsidies Agreement?  If this programme does meet the notification requirements, we ask that Singapore notify it in accordance with the provisions of 
Article 25 of the Subsidies Agreement.  
Reply
 
  As the scheme is not a specific subsidy as defined by the SCM Agreement, it is not subject to 
the notification requirements set out in Article 25 of said Agreement.  
 
 According to publicly available sources, the Research and Incentive Scheme for 
Companies provides partial grant support for qua lifying costs resulting from R&D projects.  
The scheme aims to encourage companies to de velop R&D capabilities in strategic technology 
areas, and to support the company in increasi ng its industrial competitiveness over the long 
term.   
Q19.  Could Singapore explain the eligibility cri teria for this programme and what constitutes 
strategic technology areas?  
 G/SCM/Q2/SGP/12 
Page 6  
 
  Reply
 
 
 Eligibility is decided by whether the project brings about enhanced competitiveness through 
capability development and technology transfer.   
 
Q20.  Could Singapore explain why this programme  should not be subject to the notification 
obligations under Article 25 of the Subsidies Agreement?  If this programme does meet the notification requirements, we ask that Singapore notify it in accordance with the provisions of 
Article 25 of the Subsidies Agreement.  
Reply
 
  As the scheme is not a specific subsidy as defined by the SCM Agreement, it is not subject to 
the notification requirements set out in Article 25 of said Agreement.    According to publicly available sources, e ligible companies may receive a capital 
allowance on qualifying equipment costs.  The qualifying equipment must contribute to greater 
efficiency or introduce new technology to a Singapore industry.   Q21.  Could Singapore explain the eligibility criteria for this program and explain what constitutes new technology? 
 
Reply
 
  Eligibility is determined by whether the investment results in greater efficiency in resource utilization, or introduces a technology that is currently not available in Singapore. 
 Q22.  Could Singapore explain why this programme  should not be subject to the notification 
obligations under Article 25 of the Subsidies Agreement?  If this programme does meet the notification requirements, we ask that Singapore notify it in accordance with the provisions of 
Article 25 of the Subsidies Agreement.  
Reply
 
  As the scheme is not a specific subsidy as defined by the SCM Agreement, it is not subject to 
the notification requirements set out in Article 25 of said Agreement.    According to publicly available sources, eligible companies may receive preferential 
corporate tax rates on all qualifying profit above a pre-determined base, for a set period.  In order to qualify for this programme, the project must generate significant economic spin-offs 
for Singapore.   Q23.  Could Singapore explain the eligibility cri teria for this program and define significant 
economic spin-offs for Singapore?   Also please explain whether significant economic spin-offs 
would possibly include increased ex port sales from Singapore. 
 
Reply
 
 
 Firms engaging in new projects or expanding existing projects that provide significant 
economic benefits, in the form of enhanced le vels of know-how and capabilities, for Singapore are 
eligible for the scheme.  There is no e xport condition to qualify for the scheme.  
  G/SCM/Q2/SGP/12 
 Page 7 
 
 
  Q24. Could Singapore explain why this programme  should not be subject to the notification 
obligations under Article 25 of the Subsidies Agreement?  If this programme does meet the notification requirements, we ask that Singapore notify it in accordance with the provisions of 
Article 25 of the Subsidies Agreement.  
Reply
 
  As the scheme is not a specific subsidy as defined by the SCM Agreement, it is not subject to 
the notification requirements set out in Article 25 of said Agreement.    According to publicly available sources, SE EDS provides equity financing for start-ups 
in the seed stage of enterprise formation.  Its objective is to foster entrepreneurship and 
innovative activities in Singapore through matchi ng financing by the government.  This support 
is provided to innovative enterprises.  To be e ligible for assistance the project should engage in 
the development of new or better processes that are innovative and have potential for global 
markets. 
 Q25.  It appears that qualifying projects must  have potential for global markets; could 
Singapore please explain this requirement for as sistance under this programme?  Please explain 
whether potential for global markets anticipates th at only companies that will be exporting will 
be receiving assistance under this programme. 
 Reply
 
  The objective of this scheme is to foster  entrepreneurship and innovation activities in 
Singapore, with the possible emergence of Singapor e-based companies as global market leaders in 
areas of innovation.  Eligibility is not tied to export conditions. 
 
Q26. Could Singapore explain why this programme  should not be subject to the notification 
obligations under Article 25 of the Subsidies Agreement?  If this programme does meet the notification requirements, we ask that Singapore notify it in accordance with the provisions of 
Article 25 of the Subsidies Agreement. 
 Reply
 
  As the scheme is not a specific subsidy as defined by the SCM Agreement, it is not subject to 
the notification requirements set out in Article 25 of said Agreement.    According to publicly available sources, the purpose of the overseas investment allowance should be but is not limited to (1) th e establishment of new marketing channels or the 
acquisition of existing marketing channels so as to increase production, export sales and services 
from Singapore and (2) invest in new tec hnologies to enhance the company's Singapore 
operations. 
 
Q27.  It appear that one of the reasons a company will qualify for the overseas investment 
allowance is that the overseas investment will es tablish new marketing channels in order to 
increase export sales from Singapo re.  Please explain how, this programme is consistent with 
Singapore's obligations under Article 3.1 (a) of the Subsidies Agreement? 
 Reply
 
  The scheme is not contingent on export performance.   In any event, the scheme will expire on 
31 December 2006, and will not be renewed. G/SCM/Q2/SGP/12 
Page 8  
 
   
Q28.  Could Singapore explain why this programme  should not be subject to the notification 
obligations under Article 25 of the Subsidies Agreement?  If this programme does meet the notification requirements, we ask that Singapore notify it in accordance with the provisions of 
Article 25 of the Subsidies Agreement. 
 Reply
 
  The scheme was not specific as defined under Artic le 2.  Therefore, it was not subject to the 
notification obligations under Article 25. 
 
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