WT/TPR/S/130 Trade Policy Review
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IV. TRADE POLICIES BY SECTOR
(1) INTRODUCTION
1. Singapore’s major economic activities are manufacturing and services (26.3% and 63%,
respectively, of GDP). Electronics and chemicals form the main manufacturing activities with
electronics accounting for a major share of total merchandise exports. Competition from low-cost
producers in the region together with Singapore's rising labour costs and an apparent lack of
improvement in total factor productivity, have resulted in a gradual shift away from labour-intensive
to high-value-added capital-intensive activities. Industries such as electronics have had to restructure,
with production and employment moving out of consumer electronics into semiconductors. The
Government wishes to sustain manufacturing in Singapore at 20% or more of GDP, and is attempting
to direct manufacturing into high-value-added activities ,primarily through the creation of supporting
infrastructure and incentives; the sectoral "clusters" currently targeted are: electronics, chemicals,
biomedical sciences, and engineering (including transport engineering). Recent reforms in the
economy have also looked at ways to reduce input costs, including through increased flexibility in the
labour market, wage freezes, and appropriate pricing of land and electricity.
2. It is also acknowledged that in order for Singapore to compete, it must continue to liberalize,
particularly in the relatively more closed utilities and services sectors. In the electricity sector,
reforms have been implemented gradually. The main reforms include the separation of ownership of
generation and transmission and liberalization of the retail market; a new regulator for the sector;
and opening of the retail market to competition through the new electricity market. A number of
services (including electricity, gas, telecommunications, air services, port services) ,nevertheless,
continue to be dominated by companies owned by the Government's holding company. Similar
deregulation is planned for gas; the supply of water, however, is still subject to a monopoly and
prices are set by the Government at levels considered to be affordable.
3. Several services sectors have also been liberalized although government linked companies
continue to pervade the sector. In banking, the Government decided in 1999 that it would open up the
relatively closed domestic retail banking sector to competition and removed foreign investment
restrictions; steps have also been taken to strengthen the supervisory and corporate governance
frameworks. In insurance, limits to entry by insurance companies and a foreign equity restriction of
49% were removed. More widespread reforms have been carried out in telecommunications, with full
competition permitted as of 2000, two years earlier than originally planned. As a result, there has
been a substantial decline in telecommunication charges. In transport services, the Government has
put in place several long- and short-term incentives to encourage growth in the sector and to assist its
recovery from the SARS crisis in the region. Another key sector affected badly by recent
international developments is tourism; the Singapore Tourism Board has responded by offering tax
refunds, training, and other assistance for operators affected by the crisis. Singapore is also trying to
build up the health services sector, particularly to encourage its use by international patients; the
number of foreign medical schools that are recognized by the Singapore Medical Council has
increased, although the registration of foreign-trained medical staff remains tightly regulated. Legal
services remain relatively closed to non-Singaporeans practising Singapore law, although some
reform has taken place recently; Singapore did not make any commitments under the GATS in this
area.
(2) AGRICULTURE
4. Agriculture (including fishing and quarrying) contributed some 0.1% to Singapore's GDP
in 2003. Around 2,400 people are employed in agriculture. Production, which takes place mainly inSingapore WT/TPR/S/130
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Singapore's six agrotechnology parks, consists largely of vegetables and fruit and eggs and livestock
for local consumption and ornamental plants for export. Singapore imports over 90% of its food
needs and its exports consist mainly of orchids and plants and ornamental fish.
5. The main change in terms of policy infrastructure since 2000 was the establishment of the
Agri-Food Veterinary Authority, a statutory board, which replaced the Primary Production
Department (PPD) in the Ministry of National Development. The AVA is responsible for managing
all of Singapore's agricultural land. Land for agricultural purposes is principally managed in the form
of agrotechnology parks; plots of land in the parks are leased to farmers and companies for periods of
20 years through an open tender. The AVA provides basic infrastructural facilities, such as water,
roads, and electricity, as well as technical assistance to farmers in an effort to raise productivity. With
pressure on agricultural land, Singapore emphasizes the use of new technologies, such as
biotechnology, to improve productivity. The AVA and the Economic Development Board (EDB) are
currently promoting an agri-biotechnology "cluster" in the agri-bio park. Land in lots of one hectare
will be leased for 30-year periods for agri-biotechnology activities.
6. There have been no significant changes to agricultural trade policy. With the exception of six
tariff lines relating to alcohol products, agricultural imports do not face tariffs. Rice remains subject
to non-automatic import and export licensing for food security reasons (Chapter III(2)(v)). The Thai
exporter's price is used as the basis for comparison for the price of stockpile grades. According to the
authorities, the administration of the stockpile scheme does not necessarily translate into higher prices
for consumers as there is intense competition among local importers. The saturated market conditions
in Singapore do not allow importers to pass on additional costs to consumers without affecting their
market share. They state that in early 2003, for example, some importers actually suffered losses
through aggressive promotion. All imports of agricultural products, meat and fish must comply with
strict sanitary and health requirements. In some cases, imports of these products are permitted only
from establishments accredited by the AVA in selected countries. Import licences must be obtained
from the AVA prior to import (Chapter III(2)(vii)). With the exception of rice and rubber, which are
subject to non-automatic export licensing, Singapore does not restrict exports of agricultural products,
except where international agreements and conventions are involved.
7. There have been no changes to policy regarding fishing .Fishing in Singapore's coastal waters
is regulated through annual licences issued by the AVA. For offshore fishing, 112 fishermen are
licensed to operate 23 fishing boats; for inshore waters, 58 fishermen are licensed to operate 46 boats;
and for operators of coastal fish farms, 177 fish farmers are licensed to operate 69 boats.
(3) MANUFACTURING
(i) Overview
8. Manufacturing in Singapore accounted for 26.3% of GDP in 2003, compared with around
23% of GDP in 1999 (Table I.2). The main sectors, in terms of contribution to value added, are
electronic products and components, although their share of manufacturing declined from 40.7% in
1998 to 33.5% in 2002 (Chart IV.1). An industry that has been growing in importance is chemicals
and chemical products (from 12.4% to 21.6% during this period); and transport equipment is also
important. Exports continue to be led by machinery and transport equipment (75% of manufactured
exports) of which electronic valves, office and data machines and telecommunications equipment
(including electronic products) is the largest group (some 58.9% of total exports of manufactures).1
Singapore's manufacturing imports also consist mainly of machinery and transport equipment (72.4%
1Data provided by the authorities.WT/TPR/S/130 Trade Policy Review
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of imports of manufactures) with electronic valves, office and data machines and telecommunications
equipment accounting for 46.9% of imports of manufactures).2
Medical, precision & optical
instruments, watches 3.5Electronic products &
components
40.7
Electrical
machinery 2.6
Machinery & equip.
6.6
Fabricated metal
products
6.4Rubber &
plastic
products
3.1Chemicals &
products thereof
12.4Refined petroleum
products
3.8Printing & reproduction of
recorded media 4.5Food, beverages &
tobacco 3.4Chart IV.1
Value added in manufacturing, 1999 and 2002
1999
Source: Data provided by the authorities of Singapore.Total: S$30.2 billion2002
Total: S$36.4 billion
Note: Figures refer to establishments engaging ten or more workers. Rubber processing and granite quarrying are excluded.Per cent
Other 5.7Transport equipment
7.4Medical, precision & optical
instruments, watches
4.0Electronic products &
components
33.5
Electrical
machinery 2.0
Machinery &
equipment 7.4
Fabricated
metal products
5.3Rubber &
plastic
products
2.7Chemicals &
products thereof
21.6Refined petroleum
products
4.0Printing & reprod. of
recorded media 3.5Food, beverages &
tobacco 2.8Other 4.4Transport equipment
8.9
9. Electronics, after contracting by 21% in 2001, grew by 4.1% in 2002, largely led by export
growth of semiconductors, disk drives, and printed circuit board assemblies (PCBAs).3Growth
during the first quarter of 2003 was lower, however, at 3.2%, and the sector contracted by 4.3% in the
second quarter of 2003, again due to weak international demand. In contrast, the chemicals industry
continues to grow strongly; it was the only major industry to register positive economic growth in the
second quarter of 2003 (compared with a 7.2% contraction overall in manufacturing).4
10. In addition to the recent cyclical downturn, there appears to be a long-term decline in
Singapore's traditional electronics exports, such as consumer electronics, due to competition from
lower cost neighbouring countries, notably China. China's entry into the WTO is also likely to place
further pressure on higher cost countries such as Singapore, especially in electronics.5Thus, high-
value-added sectors, such as semiconductors, have increased their share in total electronics output,
while data storage and infocommunications and consumer electronics have declined (Table IV.1).
Exports have shown a similar structural change with the share of data processing machines falling and
electronic valves increasing. Employment in electronics has also declined steadily. In the chemicals
cluster, in contrast, employment increased during 1999-02.
2Data provided by the authorities.
3Ministry of Trade and Industry (2003) .
4Ministry of Trade and Industry (2004).
5IMF (2002b).Singapore WT/TPR/S/130
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Table IV.1
The electronics and chemical industries, 1999-02
1999 2000 2001 2002
Electronics
Employment (number) 105,826 102,320 98,012 ..
Production (S$ million) 68,719 81,803 60,514 ..
of which (%)
Semiconductors 20.9 31.0 27.0 ..
Computer peripherals 18.1 19.9 19.1 ..
Data storage 28.3 21.0 25.5 ..
Infocomms and consumer electronics 27.9 23.3 23.5 ..
Other electronic modules and components 4.9 4.9 4.9 ..
Exports ($ million) 106,687.0 132,741.7 114,884.8 116,564.7
Domestic exports 67,557.9 74,393.1 58,964.5 57,094.8
Re-exports 39,129.0 58,348.7 55,920.4 59,470.1
Imports ($ million) 76,158.3 98,946.5 83,169.8 83,376.8
Chemicals
Employment (number) 21,028 22,049 22,552 ..
Production (S$ million) 24,301 32,580 30,607 ..
of which (%)
Petroleum 58.0 61.7 59.7 ..
Petrochemicals 22.0 20.8 22.6 ..
Specialty chemicals 12.6 11.3 12.1 ..
Others 7.3 6.2 5.6 ..
.. Not available.
Source: Information provided by the authorities of Singapore.
(ii) Policy responses
11. To respond to these pressures, the recently issued Economic Review Committee report
reaffirmed the desire to sustain a manufacturing sector that contributes around 20% or more of GDP,
and to move into higher-value-added activities in order to meet the competition from low-cost
producers. Such a move is to be led by four "industry clusters": electronics, chemicals, biomedical
sciences, and engineering (including transport engineering). For the electronics industry, in which
Singapore has already built up a strong base, the Committee recommended efforts to develop, inter
alia, new capabilities in semiconductor equipment, chemicals and materials, industrial design as well
as R&D in new technologies. The Government has been trying to develop the biomedical sciences
sector since 2000 and has created an extensive infrastructure, including an integrated biomedical
research complex, to encourage investment by pharmaceutical and other biotechnology companies.
The key challenges are the development of human capital and the availability of venture capital in
Singapore to fund new ventures. The Government is taking action on both fronts, notably through
research scholarships by the Agency for Science, Technology & Research, incentives for training, and
a venture capital fund set up by the Economic Development Board. Recommendations for the
transport sector included: taking equity stakes (through government entities such as Temasek and
EDB Investments) in major local suppliers in key sectors with high entry barriers, to ensure that they
become internationally competitive (examples include the aerospace and automotive sectors);
industrializing and diversifying the marine sector; and maximizing air and sea connections to provide
more efficient services for Singapore-based manufacturers. The Government is currently working on
these recommendations.WT/TPR/S/130 Trade Policy Review
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12. Singapore's evolution from a low-cost, labour-intensive to relatively higher cost and capital-
intensive production base, has been aided by a change in the industries and activities being targeted by
Singapore's industrial policy. A general goal is to deepen Singapore's technology base and strengthen
knowledge-based manufacturing (and services) clusters with high-value-added activities. Thus
incentives, including tax and other incentives, are provided to encourage innovation by firms
operating in Singapore (Chapter III(4)(ii)). Singapore's research community, including government
and non-government agencies and companies, spend around S$3.4 billion a year on research, 2.19%
of GDP.6To meet its goals of moving into higher-value-added manufacturing, the Sub-Committee
on Manufacturing suggested more financial incentives for research and efforts to close the gap
between technology providers and manufacturing including better protection for intellectual property.
13. While emphasizing research, the Committee also encouraged the concept of "co-location",
whereby Singapore would be the focus of knowledge-related activities and the Indonesian Riau
islands for labour-intensive activities7, to take advantage of the strengths and resources of both
countries for mutual benefit. Active investment by Singapore-based companies in China in more
labour-intensive activities is also encouraged. Singapore does not maintain investment restrictions in
manufacturing except under the Control of Manufactures Act, which requires permission before
investment may take place (both by local and foreign investors) in eight (previously 14) products
(Chapter III(4)(iii)). There are no plans yet to phase out the Control of Manufactures Act.
14. In addition to encouraging investment in Singapore, especially in the targeted sectors, it was
recommended that the Government focus on reducing Singapore's costs, including pegging land
rentals to international rates, reviewing the cost of utilities with a view to making them more
competitive (section (4) below), and continued wage restraint "through good labour relations". For
example in 2003 a Tripartite Taskforce on Wage Restructuring, comprising representatives from the
government, employers, and unions, was set up to review the existing wage system. The Taskforce
has recommended the implementation of a flexible and competitive wage system that reflects the
value of the job, and rewards workers based on the companies' and individuals' performance. Such a
system would enable companies to make quick adjustment to their wage cost in line with the changing
business conditions so as to help them remain viable and save jobs for their workers.
(4) POWER AND WATER
(i) Electricity
15. Singapore currently has seven generation companies; one transmission company, SP
PowerAssets Ltd., a subsidiary of Singapore Power, a Temasek company; and six active companies
(Table AIV.1). Market support services, such as facilitating customer transfer, meter reading and data
management, are provided by SP Services Ltd. (owned by Singapore Power). The Energy Market
Company Pte Limited (EMC), a joint venture between the Energy Market Authority (EMA), the
regulator, and M-co Pte Ltd, operates the wholesale electricity market. After the initial market rules
were approved by the EMA, the EMC took over their administration in January 2002.
16. Deregulation of the electricity market in Singapore began in the mid 1990s. On 1 April 1998,
competition between electricity generators and suppliers was facilitated under the Singapore
Electricity Pool. The Government began further deregulation of the market in 2000, including
6Agency for Science, Technology and Research (2003).
7In the context of the Riau Province, Singapore signed an agreement in 1990, with the Government of
Indonesia, on Economic Cooperation in the Framework of the Development of the Riau Province and on the
Promotion and Protection of Investments, to invest in and develop the Indonesian Riau islands of Batam and
Bintan for offshore labour-intensive activities.Singapore WT/TPR/S/130
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separation of ownership between generation and transmission, and liberalization of the retail market.
At that time, there were three electricity generating companies8, one transmission and distribution
company9, and one electricity supply company.10The Government also decided that Singapore
Power, the main electricity generator and supplier, would divest itself of its two generating companies
(PowerSenoko and PowerSeraya), thereby separating ownership between the generation and
transmission of electricity and allowing entry by new players. SP Services Ltd (previously the
monopoly retailer) was not permitted to carry out retailing activities. PowerGrid, the owner of the
network is also prohibited from generating or retailing electricity.
17. The Energy Market Authority (EMA) of Singapore was set up on 1 April 2001 under the
Energy Market Authority of Singapore Act 2001, in the Ministry of Trade and Industry. Retail
liberalization began on 1 July 2001 when about 200 large consumers (each with a power requirement
of 2MW and above) were allowed to buy electricity from licensed electricity retailers. The authorities
estimate that these consumers account for around 40% of total electricity consumption in Singapore.
They could choose to buy electricity from one of the five electricity retailers in addition to buying
electricity directly from the wholesale market or indirectly from the wholesale market through SP
Services Ltd. To ensure a smooth transition, the remaining consumers will also be classified as
"contestable" and access will be opened to them in three phases. Phase 1, completed in
September 2003, allowed access to about 5,000 consumers with average monthly consumption of
20,000 kWh, who together with the earlier 200, represent 70% of total electricity sales. Phase 2
involves another 5,000 consumers representing 5% of total electricity sales. This phase is being
implemented in batches, starting in December 2003 and is to be completed in the fourth quarter of
2004. After Phase 2, 75% of the retail market will be opened to competition. The final phase, which
will result in full retail contestability, is currently being studied.
18. Electricity generation is dominated by three companies, PowerSeraya Ltd., SenokoPower
Ltd., and Tuas Power Ltd., all three owned by Temasek. Temasek declared in early 2001 that it
would be privatizing these companies in late 2001; however, in November 2002, the privatization was
deferred indefinitely owing to what were considered unfavourable market conditions.11Although the
share of the largest two, PowerSeraya and SenokoPower, has been declining since 1998, the three
together accounted for around 82% of the market in the third quarter of 2003 (97% in 1998). In order
to curtail their market power and to level the playing field for other generators, the EMA imposed
vesting contracts on 1 January 2004. The vesting contracts oblige generators to produce a specified
quantity of electricity. They also impose a limit on the price for the vested quantities. The limit
reflects the generation cost of the combined cycle gas turbine (CCGT), which is the most efficient
power plant in Singapore. Initially, the vesting contract would cover around 65% of overall electricity
demand. There are plans to review and roll-back applicable vesting contract coverage gradually,
starting from 2005.
19. The EMA is the regulator and issues licences and develops measures to protect consumer
interests (such as pricing, performance standards, reliability and safety of supply etc.). It implements
the main legislation, the Electricity Act, 2001. The New Electricity Market (NEM), formed on
1 January 2003, and operated by the Energy Market Company (EMC) is also established under the
Electricity Act and is also regulated by the EMA. An independent Market Surveillance and
8Two of these were owned by Singapore Power, which is owned by the Government's holding
company, Temasek.
9PowerGrid Limited, also owned by Singapore Power.
10Power Supply Limited, also owned by Singapore Power.
11Temasek Press Release, "Temasek Defers Sale of Electricity Generating Companies",
20 November 2002. [Online]. Available at: http://www.temasekholdings.com.sg/temasek_news/
new_release/20_11_2002.htm, [3 February 2004].WT/TPR/S/130 Trade Policy Review
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Compliance Panel monitors the functioning of the market on a regular basis and reports at least once a
year to the EMC Board on the state of competition in the market. The NEM also has a dispute
resolution counsellor, who is independent of the marketplace. The liberalization aims to "promote the
efficient supply of competitively priced electricity and to open the retail market to full competition"
enabling consumers to buy electricity from the supplier of their choice. Under the present
arrangement, generation companies bid every half hour to sell electricity to the wholesale market,
reflecting actual supply and demand.12In addition, the EMA works closely with SP PowerAssets Ltd.
to optimize utilization of the electricity infrastructure. In November 2002, the pricing structure for
use of the grid was revised to allow for greater differentiation between peak and off-peak use. A new
price regulation regime for PowerGrid was introduced on 1 April 2003. Under the regime,
SP PowerAssets is allowed to retain higher profits derived through efficiency gains during the
regulatory period. The efficiency gains will be taken into account when the price regulation
parameters are reviewed and reset for the next regulatory period to pass on efficiency gains to
consumers. According to the authorities, these changes resulted in a 3.5% reduction in average
electricity prices for consumers between November 2002 and April 2003.13
20. All generation companies with a capacity of 10 MW and above must be licenced by the EMA,
and all licenced generators must register with the EMC to participate in the wholesale market.14
Retailers must be licenced by the EMA; those who wish to participate in the wholesale market must
also register with the EMC. "Contestable" consumers may choose to purchase their electricity
directly from the wholesale electricity market (in addition to the choice of buying electricity from a
retailer or purchasing electricity indirectly from the wholesale electricity market through SP Services
Ltd) but must be registered with the EMC to do so.
21. The EMA has also developed codes of practice for licensees: a transmission code for SP
PowerAssets, setting out minimum conditions to be met and measures to ensure non-discriminatory
access to the grid; the regulated supply service code, the market support services code and the
metering code which apply to SP Services Ltd., to ensure that retailers and consumers have efficient
access to electricity supply; and the code of practice for retail electricity licensees setting out
minimum standards for sales to consumers.
22. As part of the Economic Review Committee's work, a recommendation was made by the Sub-
Committee on Manufacturing to reduce Singapore's infrastructure charges, including electricity. It
recommended that in order to determine how competitive Singapore's grid charges are, the EMA
could benchmark these charges against a basket of competitors and require SP PowerAssets to reduce
its transmission and distribution charges to competitive levels.15In the event that local suppliers did
not generate power at competitive rates, alternative sources should be evaluated, including opening
the market to external suppliers, if necessary. Another suggestion was to examine the interest of large
energy users (such as chemical and semiconductor companies) to generate their own electricity; it
was estimated that such co-generation would result in a 30% improvement in energy efficiency
compared with conventional generation technologies.16
12Previously, in the SEP, the generating companies made their bids every 24 hours, thereby having to
predict future demand (EMA, 2003).
13EMA, 2003.
14All generators with a capacity of between 1 MW and 10 MW and connected to the transmission
system shall also register as market participants.
15It was also suggested that instead of permitting SP PowerAssets to price on the basis of a return on
total assets (ROTA) of 7-8%, power should be seen as basic infrastructure provided by the Government and grid
charges should instead be set at a lower level to enable recovery of operating and maintenance costs.
16Economic Review Committee (2002b), pp. 46-47.Singapore WT/TPR/S/130
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(ii) Gas
23. Singapore began importing natural gas from Malaysia in 1992. More recently, it has
diversified its sources to West Nantuna in Indonesia since 2001, and Sumatra in Indonesia since the
end of 2003. In addition, the manufactured town gas system supplies gas to over 500,000 domestic,
commercial and industrial consumers. In 2003, about 60% of Singapore’s electricity was generated
using natural gas.
24. Until 2001, all of Singapore’s natural gas was imported and supplied by two companies:
SembGas, owned by SembCorp Industries, and Senoko Power, owned by Temasek Holdings.
Another Company, PowerGas Ltd. produced, transmitted, and supplied town gas prior to
2 January 2002.17SembGas was involved in importing and retailing natural gas in Singapore, whilst
Senoko Power’s natural gas imports were solely for its own power generation. The Gas Act, passed
in 2001, sets the legal basis for the separation of the "contestable" sectors of import and retail from the
monopolistic sector of gas transportation. Thus, on 2 January 2002, PowerGas’ "contestable"
business in gas import, production, and retailing was transferred to two companies formed as wholly
owned subsidiaries of the Government's holding company, Temasek Holdings, Gas Supply Pte Ltd
and City Gas Pte Ltd. As of 2002, therefore, SembGas and Gas Supply are involved in the import and
retailing of gas; SembGas in addition is involved in the transport of gas ,while City Gas will only
retail and manufacture gas in Singapore. Power Gas is involved only in the transport of gas. The
ultimate goal of the authorities, in creating a new market structure for the gas industry, is to have
SembGas and Gas Supply involved in import and retail and City Gas in the retail and manufacture of
gas; PowerGas will become the monopoly transporter and will own all of Singapore’s gas pipelines on
liberalization of the industry. The new industry structure is expected to be put in place in 2004.
25. Although Singapore does not yet have a generic competition policy, both the electricity and
gas sectors are subject to competition provisions under the Electricity and Gas Acts. Under the
respective Acts18, agreements, decisions or concerted practices by persons which have as their object
or effect the prevention, restriction or distortion of competition in the respective market in Singapore
are prohibited. Such agreements, decisions or concerted practices include: price fixing; limiting or
controlling electricity generation/ gas production, technical developments or investment; the sharing
of markets or sources of supply of electricity/gas; and the direct or indirect acquisition of shares in or
the assets of an electricity licensee or a gas licensee. The EMA may, however, with the approval of
the Minister of Trade and Industry, grant exemptions from these provisions. Consequences for
infringement include: modification or termination of the infringing agreement; disposal of all or any
of the relevant shares or assets within a specified period; modification or ceasing of the infringing
conduct; and a financial penalty of up to S$1 million or 10% of the annual turnover of the person’s
business in Singapore and a performance bond, guarantee or other form of security.
(iii) Water
26. Singapore's water supply comes mainly from local freshwater sources, such as reservoirs and
catchment areas, and from Johor in Malaysia. Singapore is also looking to additional water sources,
such as through desalination and waste water treatment, for potable (NEWater) and non-potable use.
Consumption in 2000 was around 455 million cubic metres and efforts are being made to encourage
water conservation through appropriate water tariffs and public awareness programmes. Water is
managed and supplied by the Public Utilities Board (PUB), previously the monopoly provider of
17PowerGas was set up in 1861 as the Singapore Gas Company and became part of the Public Utilities
Board in 1963. In 1995 it was corporatized as a wholly owned subsidiary of Singapore Power Limited, which in
turn is owned by Temasek Holdings, the Government’s Holding company.
18Part VII of the Electricity Act and Part IX of the Gas Act.WT/TPR/S/130 Trade Policy Review
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electricity, gas, and water. Following the decision to deregulate the electricity and gas sectors, the
PUB Act 2001 reconstituted the PUB as the water authority and it was transferred from the Ministry
of Trade and Industry to the Ministry of Environment.19Its mission is to "secure an adequate supply
of water at affordable cost". The price of water charged to consumers is regulated by the
Government. Water will be priced "at a level that supports economic growth and within the means of
society as a whole". To ensure affordability, PUB seeks cost competitiveness in its operations
through innovation and new technologies. PUB is also seeking private sector participation in the water
industry to keep the supply of water cost-competitive. In addition, the cost of water is managed
through promoting efficient use of water and water conservation measures.
27. Given the growing demand for water, and limited sources of supply, the Government’s goal is
to increase efficiency of water consumption and encourage water conservation. Water conservation is
encouraged, inter alia , through public education, recycling, mandatory installation of water saving
devices and legislation. In addition, water tariffs were restructured in stages between July 1997 and
July 2001. As a result, all consumers, domestic and non-domestic, pay a rate of 117 cents per cubic
metre for up to 40 cubic metres consumed every month.20Domestic consumers are charged 140 cents
per cubic metre for all consumption above 40 cubic metres per month. In addition, water
conservation taxes of between 30% and 45% of the tariff are collected by SP Services Ltd. for the
Ministry of the Environment. Other charges are waterborne fees of 30 cents per cubic metre for
domestic consumers, and 60 cents per cubic metre for non-domestic users; and sanitary appliance
fees of S$3 for each chargeable fitting each month.21Industrial Water, a lower grade water of non-
potable quality, produced from treated used water, is currently supplied to a small number of
industrial users for limited use in washing, and for cooling and processing after further treatment. The
current price is 43 cents per cubic metre, and it does not attract waterborne fees. These rates have
been in place since July 2001. It is not clear how they are determined. The authorities maintain that
the Government’s policy is to price water to recover costs, as well as to reflect the scarcity of this
precious resource and the incremental cost of additional water supplies. Efforts have also been made
to reduce water loss through leakage control, accurate metering, proper accounting of water usage,
and strict legislation. As a result of conservation and pricing measures, there has been a decline in per
capita domestic water consumption from around 176 litres per day in 1994 to 165 litres per day
since 1999.
(5) SERVICES
(i) Overview
28. The services sector accounted for around 63% of GDP in 2003 (Table I.1). It is also a major
employer, accounting for 75% of total employment. Labour productivity in services appears to be
considerably lower than in the economy as a whole. The main sectors are business services (13.3%),
wholesale and retail trade (13.1%), and other services (including public administration and defence,
education, health and social work) (12.3%). Financial services account for 11.6%, followed by
transport and communications at 11.1%. The fastest growing sectors have been other services (5.9%
between 1999 and 2003), wholesale and retail trade (5.2%), transport and communications (3.6%),
and business services (1.9%). Financial services grew by some 0.8%. Singapore has an overall
surplus in services trade of 1.2% of GDP.
19The PUB also administers the Sewerage and Drainage Act, previously administered by the Ministry
of Environment.
20Shipping services are charged a higher rate of 192 cents per cubic metre.
21Waterborne fees (WBF) and sanitary appliance fees (SAF) are fees payable for the provision of
sewerage services. The SAF is the fixed charge component of the sewerage fees, and WBF is a volume-based
component based on water consumption.Singapore WT/TPR/S/130
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(ii) Commitments under the General Agreement on Trade in Services (GATS)
29. Under the General Agreement on Trade in Services, Singapore made commitments in:
business services; communication services; construction services; financial services; tourism and
travel related services; recreational, cultural and sporting services; and transport services. Since the
previous Review of Singapore, in 2000, there have been no changes to its commitments or its MFN
exemptions. Under its Schedule of Commitments, market access for natural persons is unbound,
except for the temporary movement of intra-corporate transfers of personnel (for up to three years,
extendable for a further two years), who have been employed by the company outside Singapore for
not less than one year immediately preceding their application for entry into Singapore. Commercial
presence restrictions apply to foreigners registering their companies or businesses in Singapore.22
30. MFN exemptions under Article II of the GATS are unchanged since Singapore's previous
Review. They include: a preference for workers from traditional sources of supply; investment
guarantees against unforeseen contingencies (such as nationalization, war, etc.) only for signatories of
Investment Guarantee Agreements with Singapore23; and tax relief for income derived from a
Commonwealth country. Several service sectors also have exemptions including legal services,
broadcasting, maritime transport, insurance, banking and other financial services.24According to
Singapore's Schedule, these are valid indefinitely but subject to periodic government reassessment.
31. Singapore is a signatory to the Fourth (Basic Telecommunications Services) and Fifth
(Financial Services) Protocols of the GATS.
(iii) Banking and insurance
(a) Overview
32. The Monetary Authority of Singapore (MAS) regulates financial services and administers,
inter alia, the Banking Act, the Finance Companies Act, and the Insurance Act. Singapore has been
progressively liberalising the financial sector: there have been two rounds of liberalization (in 1999
and 2001), and foreign entrants have been allowed into the insurance market. The MAS also adopted
a new supervisory framework based, inter alia, on risk assessment. The MAS evaluates the key risks
faced by financial institutions and their ability to manage them, gives greater business latitude to
strongly managed institutions, and maintains stricter controls on weaker ones.25
33. Singapore continues to offer incentives to financial institutions; these involve mainly
corporate tax exemptions and concessional corporate tax rates of 10% and 5% instead of the standard
rate of 22% (Table AIV.2). According to the authorities, these incentives are used selectively to
develop high-value-added activities and to facilitate the sector’s growth. Incentives are targeted at
22These include the requirement that the firm have a local manager who is a citizen of Singapore, or a
Singapore Employment Pass holder. In addition, at least one director of the company must be a local resident
and all branches of the foreign company must have at least two locally resident agents who are either Singapore
nationals or Employment Pass holders.
23Signatories of such IGAs are: ASEAN countries; Belgium-Luxembourg Economic Union; Belarus;
Cambodia; Canada; China; Czech Republic; Egypt; France; Germany; Hungary; Laos; Latvia; Mongolia;
Netherlands; Pakistan; Poland; Peru; Republic of Mauritius; Riau Archipelago; Slovenia; Sri Lanka;
Switzerland; Chinese Taipei; United Kingdom; United States; Uzbekistan and Viet Nam. IGAs signed with
Bahrain, Bulgaria, and Zimbabwe have yet to come into force.
24WTO documents GATS/EL/76, 15 April 1994 and GATS/EL/76/Suppl.1, 28 July 1995; and
WTO (2000).
25For instance, banks deemed to have a good liquidity risk management system are allowed to
maintain lower statutory liquidity requirements.WT/TPR/S/130 Trade Policy Review
Page 78
financial intermediaries and specific services rather than at customers. Financial institutions (both
foreign and national) may obtain these incentives as long as they are able to meet the qualifying
criteria, including that most activities are carried out in Singapore. MAS monitors the effectiveness of
all incentives through a series of post-implementation reviews. The incentives contain sunset clauses;
a comprehensive review must be undertaken and justification provided to the Ministry of Finance for
an incentive to be extended.26
(b) Banking
34. Singapore maintains a two-tier banking system (wholesale and retail). Prior to 1999, the local
retail banking sector was protected from foreign competition; foreign banks were permitted to
operate more freely in the offshore market, particularly as part of Singapore’s strategy to develop a
strong offshore banking sector. Since 1999, however, local retail banking has been progressively
opened to greater competition.
35. The Banking Act (as amended in 2001) governs the licensing and operation of commercial
banks in Singapore. The Act and its accompanying regulations prescribe the minimum capital and
liquidity requirements as well as prudential limits on credit and investments. Commercial banks are
licensed by the MAS; they may operate as full banks, wholesale banks (previously called restricted
banks)27, or offshore banks (Box IV.1). As part of the liberalization programme started in 1999 (see
below), six of the 22 foreign full banks were granted qualifying full bank (QFB) privileges. These
banks may operate 15 locations of which ten can be branches28; share ATMs among themselves;
provide electronic funds transfer at point-of-sale (EFTPOS) services; and provide CPF Investment
Scheme and Supplementary Retirement Scheme accounts. Non-QFB foreign full banks can operate
only one office, though they can locate their administrative and other support functions in separate
offices; they cannot establish off-premises ATMs, ATM networks or new sub-branches. In this way,
Singapore has historically protected local banks’ retail services.
36. Financial institutions may also operate in Singapore as merchant banks, which need approval
from the MAS29, and as finance companies. The latter are regulated by and licensed under the
Finance Companies Act.
26This has resulted in the removal of some incentives, for instance the Tax Incentive for Credit Rating
Agencies.
27These were introduced in 1971 to allow more banks to enter the Singapore market. They were
renamed in 2001.
28The 15 locations can include both branches and off-site ATMs.
29The approval is equivalent to a licence.Singapore WT/TPR/S/130
Page 79
Box IV.1: Banking institutions operating in Singapore
Full banks may provide the full range of banking transactions such as deposit taking, cheque services, and
lending to residents and non-residents.
Wholesale banks engage in the same banking activities as full banks. However, they may not accept fixed
deposit accounts in Singapore dollars of less than S$250,000 per deposit from non-bank customers; they
may not operate savings accounts denominated in Singapore dollars or foreign currency except with the
prior approval of MAS; and they may maintain only one place of business in Singapore.
Offshore banks may not accept Singapore dollar deposits from residents but are allowed to transact freely
with other financial institutions. They may accept fixed deposits of S$250,000 or more from non-residents,
and extend Singapore dollar loans to residents but not exceeding S$500 million at any one time. There are
no restrictions on offshore banks’ foreign currency business. Offshore banks may operate only from one
office.
Merchant banks can engage in corporate finance, underwriting of share and bond issues, mergers and
acquisitions, portfolio investment management, management consultancies, and other fee-based activities.
Merchant banks cannot take deposits or borrow directly from the public, but may do so through banks,
finance companies, shareholders, and companies controlled by shareholders. As offshore banks, merchant
banks can operate only from one office.
Finance companies can accept fixed-term as well as savings deposits, but not demand deposits .It can issue
negotiable certificates of deposits (CDs) and grant consumer finance. Finance companies with capital
funds of at least S$100 million may deal in foreign currency or gold, subject to approval from the MAS.
Foreign ownership restrictions in finance companies were lifted in 2002. Nevertheless, MAS approval is
required when an investor acquires stakes of 5% and 20% in a finance company.
Source : The Monetary Authority of Singapore.
37. In 2003, there were 117 commercial banks operating in Singapore (Table IV.2). Foreign
participation in the banking sector is important, 22 out of the 27 full banks were branches of foreign-
incorporated banks. Apart from the 22 full banks, 31 foreign financial institutions operated as
wholesale banks, and an additional 59 foreign banks were offshore banks. As a result of the
liberalization programme initiated in 1999, the structure of the banking system has changed. Local
banks have consolidated; the nine banks that existed in 1999 merged into five. As at December 2002,
Temasek owned 12.6% of one of the local banks (DBS). According to the authorities, DBS is run as
any other commercial banks, and follows commercial bank criteria to provide credit. Its market share
was not provided to the Secretariat. Because of the new licences granted to foreign banks, the number
of wholesale banks increased from 13 in 1999 to 31 in 2003 and the number of offshore banks
declined from 98 in 1999 to 59 in 2003. Singapore has 53 merchant banks, most of which are locally
incorporated.30There are also three finance companies in Singapore, which focus on small-scale
financing.
38. Despite the large number of foreign banks operating in Singapore, it is not possible to
ascertain their market share owing to the lack of detailed data. Nevertheless, it seems that because of
the reform, foreign QFBs increased their market share of non-bank resident loans by 4% during
1999-02, while local banks’ share increased only by 1%.31In the same period, non-residents deposits
held at QFBs increased by 2% while non-resident deposits at local banks fell by 2%.32
30Exact figures were not provided to the Secretariat.
31Information provided by the authorities.
32Information provided by the authorities.WT/TPR/S/130 Trade Policy Review
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Table IV.2
Structure and performance ratios of the banking sector, 1999-03
(a) Structurea
1999 2000 2001 2002 2003
Commercial banks 142 140 133 120 117
Local 9 8 8 6 5
Foreign 133 132 125 114 112
Full banks 22 23 23 22 22
Wholesale banksb13 16 20 33 31
Offshore banks 98 93 82 59 59
(Banking offices including head offices and main offices) (561) (538) (485) (444) (405)
Merchant banks 70 63 58 55 53
Representative offices
Banks 69 66 62 55 51
Merchant banks 0 0 0 0 0
a As at end-March.
b Previously known as restricted bank.
Source: Monetary Authority of Singapore.
(b) Performance ratios
1999 2000 2001 2002 2003
Liquidity ratios (%) 21.6 21.3 21.7 22.0 23.2
NPL ratios as % of total assetsa7.2 5.1 4.5 4.2 3.6
Total Assets (S$ million) 321,045.4 335,816.0 373,747.9 353,115.0 362,542.8
a Non-performing loan ratios as at end of year. These figures pertain only to the total assets of Singapore-incorporated banks.
Source: www.mas.gov.sg; and information provided by the authorities.
39. Singapore’s economic environment and the banks’ sound management seem to have sheltered
the banking industry from most of the ill effects of the international economic downturn. This
resilience is reflected in the declining ratio of NPLs to total assets since 1999. (Table IV.2)
Nevertheless, the patchy recovery of the Singapore economy has also affected banking. Overall
lending to non-bank customers weakened significantly during 2000-02, largely reflecting a decline in
industrial loans; demand for loans started to improve in 2003. In addition to the weak demand for
loans, the highly competitive lending market amidst the prevailing low interest rates also depressed
banks’ interest income.33Interest rate differentials seem to have been increasing, especially since
1999 (Chart IV.2). During the last Review of Singapore, the authorities noted that the widening of
interest rate spreads started after the onset of the Asian economic crisis in mid 1997 and reflected the
high-risk premium rather than a change in competitiveness in the financial services sector (thus
interest rates increased between 1997 and early 1999). However, the spread between the prime
lending rate and the savings deposit rate increased from 4.44% in 1999 to 5.31% in 2003; the spread
between the prime lending rate and 3-month fixed deposit rate also increased during this period, from
4.12% to 5.82%. According to the authorities, the increased spread is not due to a higher risk
premium in the region but as a result of the decline of deposit rates in response to low inter-bank
interest rates. Moreover, they consider that the prime lending rate is not an appropriate indicator since
it reflects only the corporate sector and not the retail sector. Lending rates in the retail sector,
especially in housing, seem to have been going down.
33Monetary Authority of Singapore (2003b).Singapore WT/TPR/S/130
Page 81
0.02.04.06.08.0
1996 1997 1998 1999 2000 2001 2002 2003Chart IV.2
Interest rates of commercial banks, 1996-2003
Per cent
Average of end of month rate of ten leading banks.
Monetary Authorities Singapore (2003), Annual Report 2002/03 .Note:
Source :Fixed deposit rate
(3-month)
Savings deposit ratePrime lending rate
40. Singapore has progressively liberalized its banking sector. In May 1999, the MAS announced
a programme to liberalize the domestic banking sector over five years. The liberalization was aimed
at moving towards a more open and competitive environment to strengthen local banks and to
enhance Singapore's position as an international financial centre by attracting more foreign banks. In
1999, the MAS started issuing a new category of full banking licence to foreign banks, known as
qualifying full bank (QFB) licences34, gave offshore banks greater flexibility in the Singapore dollar
wholesale business, increased the number of wholesale banks, and removed the foreign shareholding
limit.
41. The dollar lending limits of qualifying offshore banks (QOBs) approved by the MAS were
increased from S$300 million to S$1 billion and they are now allowed to engage in Singapore dollar
swaps. In addition, the dollar lending limits in all other offshore banks were increased to
S$500 million (from S$300 million) and they are allowed to engage in specific Singapore dollar
swaps.35The aim is to upgrade the remaining offshore banks to wholesale banks depending on their
financial strength and ability to contribute to Singapore’s financial industry.
42. The MAS removed the 40% shareholding limit on local banks in 1999 but maintained the
existing safeguards on the accumulation of significant single or associated share ownership to prevent
undue control of local banks and protect national interests; as a result, foreign investors may not
become controlling shareholders. A new 12% threshold on the acquisition of shares in banks by a
single shareholder or shareholders was put in place, in addition to the existing 5% and 20% stakes.36
Moreover, the MAS will grant additional market access only if three conditions are met: the foreign
investor must become a "strategic partner" bringing specialized skills, new technologies or business
34The MAS issued up to six QFB licences to foreign banks over the 1999-01 period.
35These are in respect of proceeds from the issue of Singapore dollar bonds managed or arranged by
them.
36The Ministers must approve these types of acquisition. The same requirements apply to both
nationals and foreigners.WT/TPR/S/130 Trade Policy Review
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strategies; foreign entities must be strong and well-managed; and the "Singapore character" of the
bank must be retained.37This means inter alia , that control of the bank must lie with Singapore
citizens or permanent residents.
43. The second phase of liberalization, which began in 2001, increased competition in retail
banking by giving foreign full banks more business opportunities38, and improved corporate
governance practices. In 2002, the Council on Corporate Disclosure and Governance (CCDG) was
created (Chapter III(4)(iv)(b)), and in 2003 the MAS issued a consultation paper on corporate
governance guidelines for Singapore incorporated banks and direct insurers.39Additional corporate
governance regulations have also been issued for public consultation40, these include rules that require
banks to separate their management from those of the affiliates of their substantial shareholders and to
separate the roles of Chairman and CEO within a bank or insurance company.
44. The legal requirements to establish a bank in Singapore remain, in the main, unchanged since
its last Review.41However, the MAS is reviewing the capital adequacy requirements of locally
incorporated banks and is considering whether a more risk-based approach that would allow better
managed banks to maintain lower capital requirements would be appropriate. For foreign banks to
obtain a licence to operate in Singapore, their head office must have a minimum capital of
S$200 million, and they must satisfy Bank for International Settlements (BIS) capital adequacy
requirements. They are allowed to set up as branches in Singapore. Domestic banks are still subject
to the same capital adequacy requirements as in 1999. They must have a majority of Singapore
citizens and permanent residents on their board of directors. There are no formal requirements for
local banks to perform community service, but they are expected to serve smaller depositors. Foreign
banks are not subject to community service requirements.
45. The evaluation of new licences is based on, inter alia , the applicant’s track record,
international standing, its reputation and financial soundness and that of its parent institution or major
shareholders. MAS also takes into consideration the home country’s supervisory strength and the
willingness and ability of the home supervisory authority to cooperate with MAS, and whether the
applicant has appropriate risk-management systems and processes in place. The commitment to
contribute to Singapore's development as a financial centre has also been taken into account when
granting licences.42The refusal of the MAS to grant a licence may be appealed to the Minister.43
46. Since 1998, the MAS has been moving towards a risk-based regulatory and supervisory
framework. The MAS evaluates the risk profile of each institution and the adequacy of its risk
management practices to determine the institution's overall health and to identify key risks and the
37Monetary Authority of Singapore (2001).
38Since July 2002 QFBs have been allowed to provide services through EFTPOS network, offer
Supplementary Retirement Scheme accounts and offer bank accounts under the CPF Investment and Minimum
Sum Schemes; and accept CPF fixed deposits.
39The guidelines indicate the role of the boards of directors and chief executive officers, and their
duties towards shareholders, depositors, and policyholders. They also aim to strengthen the independence of
boards, and that of nominating, audit, and compensation committees.
40Monetary Authority of Singapore (2003d).
41Locally incorporated banks need a minimum of S$1.5 billion in paid-up capital to obtain a licence,
while finance companies are required to have a minimum paid-up capital requirement of S$50 million. All
locally incorporated banks and finance companies must meet a minimum capital adequacy ratio of 12% (Tier I
and II) of which 8% must be Tier 1 capital. The minimum paid-up capital requirement for subsidiaries of
Singapore-incorporated banks, which have already met the S$1.5 billion capital requirement, is S$100 million,
provided that the Singapore-incorporated parent bank retains control over the subsidiary.
42Monetary Authority of Singapore (2003e).
43Information provided by the authorities.Singapore WT/TPR/S/130
Page 83
effect that these may have on Singapore's financial system. Greater attention is paid to banks
considered "systemically important" and/or more risky.44The MAS has also introduced a Liquidity
Supervision Framework, where individual banks may opt for a risk-determined minimum liquid asset
requirement specific to themselves.
(c) Insurance
47. The insurance sector continues to be regulated by the Insurance Act and accompanying
regulations. The MAS is the regulatory authority. To carry out insurance business in Singapore
registration with the MAS is required. In registering an insurer to write either life or general
insurance business, the Authority will specify the registration as being for direct insurance,
reinsurance, or captive insurance.45Insurers registered to write both life and general insurance are
known as composite insurers. A direct insurer can write both direct and reinsurance business;
however, a re-insurer is confined to writing only reinsurance business.46Insurers in Singapore are
subject to prudential and market-conduct standards.
48. At the end December 2003, Singapore’s insurance market comprised 55 direct insurers
(42 general direct insurers, six direct life insurers and seven composite insurers), 49 captive insurers,
and 34 re-insurers.47As at 31 December 2003, 40 of the 55 direct insurers in Singapore were foreign-
owned. Foreign-owned insurers accounted for 87% of the gross premiums for the general insurance
market and 52% of the gross premiums of the life insurance market. Of the 34 re-insurers, 31 were
foreign-owned.48The MAS has encouraged local insurers to merge or form strategic alliances with
other players. The MAS believes that consolidation offers significant benefits and that this is
especially necessary in direct general insurance where there are a large number of players each with a
small market share; larger firms with more capital and expertise are considered better able to take on
the large and specialized risks.
49. After three years of rapid growth (1999-01), the insurance sector experienced a decline in
activity in 2002, when premiums fell by 9.2% to S$16.7 billion, and in 2003, when they fell to
S$15.5 billion. Life insurance reported a significant decline in premiums. General insurance fared
better with the premiums collected growing by 23.7% to reach S$4.7 billion in 2002; growth
continued in 2003 with premiums reaching S$4.9 billion. Despite the slowdown, total assets have
continued to increase, from S$31.3 billion in 1999 to S$66.7 billion in 2002 (latest data).49
50. Since the last Review of Singapore, the insurance industry, like the banking sector, has
undergone a process of liberalization aimed at creating a more contestable market that will foster the
development of an efficient industry. In 2000, the 49% restriction on foreign ownership of local
insurers was eliminated. However, both local and foreign shareholders who wish to hold 20% or
more of the shares in a locally incorporated insurance company, need MAS approval. MAS approval
is also required if a single shareholder wishes to become a substantial shareholder by acquiring 5% or
more of the voting power. The MAS also lifted entrance restrictions to direct insurers in 2000; there
are now no fixed limits on the number of new entrants.50However, the admission of new entrants
44A "systemically important" bank is one whose failure would have a significant impact on
Singapore’s financial system.
45A captive insurer is an insurer set up by a corporation principally to protect in-house risks. Captive
insurers write the direct insurance and reinsurance risks of related companies.
46Monetary Authority of Singapore (undated a).
47Monetary Authority of Singapore (2003d).
48Information provided by the authorities.
49Monetary Authority of Singapore (2003d).
50Prior to 2000, insurers who wrote traditional lines were not offered entry into the Singapore market .WT/TPR/S/130 Trade Policy Review
Page 84
"will be paced out to minimize the risk that the sudden entry of many new players, all intending on
building up market share, will pressure new and existing insurers to pursue unsound, short-term
market practices".51Since 2000, ten new foreign entities have entered the direct insurance market.
51. To award a direct insurance licence, the MAS takes into account: domestic and international
rankings; present and past credit ratings; track record and reputation, with regard to compliance with
regulations; and commitment to contribute to Singapore's development as a regional insurance hub
and an international financial centre.52Applicants with a strong record in innovative products and use
of alternative channels (e.g. new technologies) or specialists in niche fields, such as credit and
political risks or financial guarantee insurers, receive favourable consideration.53
52. MAS policy on admission to the reinsurance or captive insurance markets remains
unchanged. The MAS has given captive insurers approval to write certain non-in-house risks.54
53. The minimum capital requirements of S$25 million for direct insurers and re-insurers, and
S$400,000 for captive insurers (noted in the last Review) remain in place.55However, with the
introduction of the risk-based capital framework in 2004, MAS intends to reduce the paid-up capital
requirement for direct insurers from S$25 million to S$10 million. The minimum paid-up capital
requirement will remain unchanged, at $25 million for re-insurers as well as for some insurers, such
as protection and indemnity clubs and credit and political risk insurers. For insurers who write only
short-term accident and health insurance policies or only investment-linked product business, the
paid-up capital requirement is S$5 million.
54. In 2002, the MAS put into operation a risk-based framework to supervise the insurance
industry.56It represented a fundamental change in approach from the previous framework, which
employed audit-based inspection, to one that emphasized prevention.57However, in 2004, the MAS
will implement a Risk-Based Capital Framework, which involves a "consistent approach" to the
valuation of assets and liabilities to provide clearer information on the financial strength of
companies.
55. Along with the liberalization programme, MAS has introduced measures to raise standards of
corporate governance and market conduct, and to strengthen protection of policyholders' interests.58
In 2002, the Committee on Enhancing Standards of the General Insurance Industry (CESGI),
comprising members of the General Insurance Association of Singapore (GIA), Singapore Insurance
Brokers' Association, and the MAS, developed a Code of Practice, which sets out the minimum
standards regulating sales, and advisory and service standards for general insurers, insurance
intermediaries and anyone acting for general insurers. It also developed training and competency
51Monetary Authority of Singapore (2000b).
52The commitment to contribute to Singapore's development as a regional insurance hub and an
international financial centre will be assessed according to the "breadth and depth" of services and expertise that
the applicant brings to Singapore.
53Monetary Authority of Singapore (2000b).
54Monetary Authority of Singapore (undated b).
55In 1999, the minimum paid-up capital for captive insurers was reduced from S$1 million to
S$400,000.
56This framework identified areas in an insurer’s operation that had significant inherent risks and
examined how such risks could be mitigated.
57Monetary Authority of Singapore (undated c).
58Based on Monetary Authority of Singapore (2000b).Singapore WT/TPR/S/130
Page 85
requirements. The MAS is also introducing measures to raise the level of disclosure to the standards
of international best practice.59
(iv) Telecommunications
56. Singapore introduced full competition in the telecommunications market on 1 April 2000, two
years earlier than planned.60This included lifting all direct and indirect foreign equity limits
(previously 49% and 73.99%, respectively) on service providers. According to the authorities,
although the Government continues to be the majority shareholder in SingTel, through Temasek, in
principle there are no foreign investment restrictions in SingTel.61Temasek also announced a
reduction in its shareholding of SingTel by up to 5%, from 67%, in January 2004. As a result of
liberalization, the number of telecommunications service providers has increased significantly and,
according to the authorities, international call rates have declined by between 60% and 80%
(Chart IV.3).62Penetration rates, especially for mobile telecommunication services, and value-added
services have also increased substantially since 2000.63Currently, only SingTel and Starhub provide
fixed-line services. Both operators, through their mobile subsidiaries, as well as MobileOne (M1)64
compete in the mobile market. SingTel and Starhub continue to dominate the fixed-line market with
near 100% market share, while for the mobile market, the market share is fairly evenly distributed
amongst the three operators. In addition to SingTel65, Temasek also holds half of StarHub's equity
indirectly, through ST Telemedia.66
59Monetary Authority of Singapore (undated c).
60As the Government had declared at the time of tendering for public basic telecommunications
licences in 1997 that it would not liberalize the market until 31 March 2002, and subsequently changed that date
to 2000, it agreed to compensate the two incumbent operators, SingTel and StarHub with S$859 million and
S$1.082 billion (net of tax), respectively. The compensation was offered because by the considerable business
and investment costs incurred by the two operators in preparation for a duopoly in the public basic
telecommunications market before the Government decided to liberalize two years ahead of time (IDA Press
Release, 11 September 2000).
61The Government's "golden share" in SingTel was discontinued in 2001.
62As at October 2003, there were 32 facilities-based operators and 683 services-based operators.
63Penetration rates for mobile telephones increased from 50.7% in March 2000 to 83.1% in
December 2003. The number of internet subscribers increased from 2,140 to 3,000 during this period as did
total internet dial-up, from 1,711,300 to 1,796,200; mobile data service subscribers increased from 11,500 to
15,600. The total number of fixed lines, has increased from 1,876,600 to 1,896,600.
64The shareholders of MobileOne are: Keppel Telecoms (14.16%); Singapore Press Holdings
Multimedia (14.16%); and Great Eastern Telecommunications (12.14%). The remaining shares are publicly
floated .
65SingTel's share ownership structure is Temasek Holdings (67.18%), the Capital Group Companies
(5.96%); and the rest is owned by the public. Temasek's share is expected to drop by up to 5% as a result of its
sale of SingTel shares in January 2004.
66The shareholders of StarHub are: ST Telemedia (owned by Singapore Technologies, which in turn is
owned by Temasek) 50%; British Telecom 12%; NTT Communications 15%; Singapore Press Holdings 9%;
and Media Corporation of Singapore 14%.WT/TPR/S/130 Trade Policy Review
Page 86
0.00.20.40.60.81.01.21.41.61.82.0
United States United Kingdom China IndiaChart IV.3
Maximum IDD rate between Singapore and selected countries
S$/minute
Source : Data provided by Infocomm Development Authority, Singapore.December 1999 (pre-liberalization)
October/November 2003
57. Under the Telecommunications Act 1999, the Info-communications Development Authority
(IDA), under the Ministry of Information, Communications and the Arts (MITA, previously the
Ministry of Communications and Information Technology), licences all telecommunications service
providers. Two types of licences are granted: for facilities based operations (FBO), defined as
"operations that require telecommunications systems to be installed beyond a single set of premises in
single occupation", and for services-based operations (SBO), defined as "operators who lease
telecommunications network elements such as transmission capacity, switching services, etc., from
FBOs to provide services to third parties or for resale".67There are no limits on the number of
licences that may be granted, except technical constraints, such as spectrum availability.68
58. To facilitate access by consumers and allow them to shift easily from one service provider to
another, all licensees are obliged to ensure interconnection, interoperability, and access with other
telecommunications operators. IDA has determined the cost-based rates for interconnection charges
for a comprehensive list of interconnection services that the dominant licensee, SingTel, must offer to
other licensees. Under the Code of Practice for Competition in the Provision of Telecommunications
Services, effective as of 29 September 2000, the dominant licensee is obliged to offer competing
licensees three options for interconnection. Recognizing that dominant licensees may not have
sufficient incentive to enter voluntarily into interconnection agreements, three options are provided
for in the Code: an IDA-approved reference interconnection offer (RIO) provided by the dominant
supplier; any existing interconnection agreement between the dominant supplier and any other
67FBO licences will be granted based on merits of the application. SBOs are licensed under
two categories, either as SBO (Individual) Licence or SBO (Class) Licence. Generally, operators who lease
international transmission capacity for the provision of services will be licensed individually. Operators who
provide their services over the public switched telephone network will be class licensed and should first register
with IDA.
68According to the authorities, where such constraints arise, the IDA will award the licences following
a "comparative auction-based selection exercise" (IDA online information, "Full Competition in the
Telecommunications Sector". Available at: http://www.ida.gov.sg/idaweb/pnr/infopage.jsp?infopagecategory
=&infopageid=I489&v [29 October 2003].Singapore WT/TPR/S/130
Page 87
licensee; and an individualized agreement between the dominant and requesting licensee. All
dominant providers69are required to submit a RIO with the IDA.70The RIO is reviewed by the IDA,
which may request changes.71In the case of the other two options to obtain interconnection, the
negotiations are pursued by the parties involved. The IDA may, however, intervene if there is no
agreement and if it is requested to do so.72
59. Price controls continue to apply for key services provided by the dominant operators regarded
as non-competitive and vital for promoting the competitiveness of the industry. Services subject to
price controls include fixed-line services, local leased circuits and international leased circuits and
they are subject to further reviews as the market conditions change. The IDA does not directly set
commercial prices but maintains guidelines and benchmarks to ensure that prices remain competitive
internationally. Dominant operators also have to file their tariffs for IDA’s prior approval, to ensure
that their services are offered at just and reasonable rates, terms, and conditions. Dominant service
providers must follow the principles governing the pricing of interconnection related services as
outlined in the Code.73Although Singapore does not have an explicit policy on universal services,
there is a requirement that FBO licensees designated as Public Telecommunication Licensee (PTL)
providing "critical infrastructure", namely SingTel and StarHub, should provide basic telephone
services to those wishing to have them. IDA does not provide compensation or assistance for the
provision of these services.
60. Although Singapore does not currently have a national competition law, certain sectors,
including telecommunications, are subject to sector-specific legislation on competition. The Code of
Practice for Competition in the Provision of Telecommunication Services was established in
September 2000 and is subject to a review at least once every three years. The first of these reviews is
currently under way. The Code defines unfair competition (including abuse of dominant position in
the market, predatory pricing, cross-subsidization, and discrimination), and authorizes IDA to take
action to ensure that competition is maintained. The Code also prohibits consolidation among FBOs
that would reasonably restrict competition among FBOs. All facilities-based licence holders wishing
to acquire or merge with another facilities-based licensee (consolidation) must obtain prior approval
from the IDA, which will assess the likely impact of the proposed consolidation on competition
before approving or rejecting the proposal or imposing conditions on the consolidation.74All changes
in ownership, shareholding or management of facilities-based licensees must also be approved by the
IDA. Enforcement measures for the contravention of the Code include warnings, orders to cease and
desist, orders to take remedial action, and financial penalties up to a maximum of S$1 million for each
contravention. The IDA may also temporarily suspend, reduce the period of or cancel the licence.
69Currently SingTel and Starhub CableVision Ltd. (SCV) are designated as dominant licensees,
although the latter has been exempted from interconnection provisions applicable to dominant providers due to
technical reasons. SCV has not been exempted from other dominant licensee obligations, such as tariff filing
etc. (Code of Practice for Competition in the Provision of Telecommunications Services: Designation of
Dominant Licensees, dated 15 September 2000).
70The RIO must contain information on prices, terms, and conditions under which the operator is
willing to provide interconnection-related services as well as a complete technical description of the
interconnection services offered. It must also be sufficiently detailed to enable the requesting licensee to obtain
these services without having to negotiate with the dominant supplier.
71Under Article 5.3.4 of the Code, the IDA has 30 days from the date of receipt of the RIO to respond.
If there is no action taken by IDA within this period, the RIO will be deemed to be approved.
72Under the Code, if the licensees fail to reach an agreement on interconnection within 90 days of the
date on which the request was made, either licensee may file a petition for dispute resolution by the IDA
(Article 5.5.6.1 of the Code).
73Appendix One of the Code.
74The licensee may also have to submit additional information enabling the IDA to study the impact of
the merger on competition.WT/TPR/S/130 Trade Policy Review
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Requests for examination of alleged contraventions may be brought to the IDA by private operators or
consumers. IDA may also examine alleged contraventions on its own initiative.
61. The IDA administers several incentives, mainly to encourage innovation and training.75
(v) Transport
(a) Overview
62. In 2003, the transport (including communications) sector accounted for 11.1% of Singapore's
GDP (12% in 1999) and provided employment to around 10.6% of Singapore's labour force.
Transport is one of the sectors identified by the Economic Review Committee as a potential high
growth area and thus to be prioritized by Singapore's industrial policy. The sector is regulated by the
Ministry of Transport and its statutory bodies: the Land Transport Authority (LTA), the Civil
Aviation Authority of Singapore (CAAS) ,the Maritime and Port Authority of Singapore, and the
Public Transport Council (PTC). The PTC, a statutory board, regulates public transport fares and bus
services. The Ministry gives strategic and policy direction to the transport sector while policy
implementation is carried out by the statutory boards in the three subsectors. The Ministry also
oversees the operations of the Air Accident Investigation Bureau of Singapore (AAIB), which is in
charge of aviation safety.
(b) Land transport
63. The Land Transport Authority (LTA), a statutory authority under the Ministry of Transport,
was set up in September 1995 to improve and manage Singapore's land transport system.76In 1996,
the Government issued a White Paper on land transport setting out its response to the challenges of
growing travel demand and limited land area.77The measures include developing an integrated,
efficient, cost-effective, and sustainable land transport network, widening the choice of high quality
public transport, and ensuring that the use of private cars is manageable. In general, public transport
infrastructure is paid for and built by the Government, while public transport operators only need to
pay the operating and maintenance costs. The improved public transport network resulted in increase
in mass transport use a 6.1% between 1996 and 2003. In the long run, the LTA expects public
transport usage to account for 75% of all travel trips.
64. The LTA has also been expanding the road network and relying more on road pricing to
manage traffic.78Singapore regulates the growth in the number of motor vehicles closely through its
Vehicle Quota System (VQS) (Box IV.2). Efforts have been made to shift the costs of motoring from
75These include: the Pilot and Trial Hotspots (PATH) scheme for supporting the trial of emerging
technologies; the Web Services Add Value to Enterprises (WEAVE) scheme for pilot programmes and
industry-wide projects including training costs, development of new software, and enhancement of existing web
services solutions; and the E-Business Industry Development Scheme (eBIDS) to help Singapore-based
companies and startups in their e-Business knowledge acquisition, and technology transfer. The training
programmes include the National IT Literacy programme (NITLP), which aims to equip workers with basic
computing and Internet skills; the InfoComm Competency Programme (ICP), which provides new infocomm
skills; the Strategic Manpower Conversion Programme, which provides retraining assistance; and the
InfoComm Training and Attachment Programme, to build local capabilities in emerging areas through local and
overseas training.
76It brought together functions previously performed by the Registry of Vehicles, the Public Works
Department's Road and Transportation Department, the Mass Rapid Transit Corporation, and the Ministry of
Communications Land Transport Division.
77Government of Singapore (1996).
78According to the LTA road capacity has increased by 6% since 1996 (some 400 kilometres of lanes).Singapore WT/TPR/S/130
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ownership to usage charges. Thus, charges on the purchase of vehicles, including customs duties, the
additional registration fee, and road taxes, have been progressively reduced since 1998, while the
electronic road pricing (ERP) and other techniques79, have been successful in reducing congestion
especially during peak hours.80Singapore continues to ban the registration of imported cars that are
three years and older. The ban is to help keep the local vehicle population young for environmental
reasons and to minimize vehicle breakdowns on the roads, as studies have shown that older vehicles
are more pollutive and more prone to breakdowns. Cars of three years and over in Singapore must
undergo mandatory testing. It is unclear why the ban is applied only to imported cars as the
mandatory testing required of three-year-old cars operating in Singapore could presumably also be
applied to imported three-year-old cars. The authorities argue that as the mandatory tests are not fool-
proof, it is better to solve the problem at source, hence the ban. Relatively high petrol taxes also serve
to restrain usage; all cars going to Malaysia must have their petrol tank at least three-quarters full to
prevent circumvention of these taxes.
65. The LTA also licences rail operators, buses, taxis, trishaws, and rental cars. The Public
Transport Council (PTC), under the Ministry of Transport approves bus routes, and regulates bus
service standards and fares for scheduled buses and Mass Rapid Transit services. Singapore's Mass
Rapid Transit (MRT) system is operated by two companies, Singapore MRT and SBS Transit, both of
which have to meet the LTA's performance and service requirements in the operating licenses granted
to them. LTA charges the Rapid Transit System (RTS) operators a licence fee in exchange for the
right to generate revenue from the operation of the RTS and the infrastructure provided to them. RTS
stations are leased to operators at a nominal fee of $12 per annum and the operators can keep any
commercial revenue (e.g. rental and advertising revenue) derived from the properties for the duration
of the licence. This is to keep public transport fares low. The Bukit Panjang Light Rail Transit (LRT)
system is run by a wholly owned subsidiary of the Singapore MRT, Singapore LRT, whilst the
Sengkang and Punngol LRTs are/will be run by SBST.81Taxi operators are licenced by the LTA and
must meet safety and service standard requirements ;in addition taxi drivers are required to know the
road network and taxis must complete safety and roadworthiness tests every six months. Taxi fares
were deregulated in September 1998, and taxi companies may now set their own fares. The
authorities note that fares charged by taxi companies have not changed significantly since this
deregulation. As part of Singapore's policy of keeping old vehicles off the roads, taxis and omnibuses
can only operate for a fixed period of time; this was increased from seven to eight years for taxis, and
from 15 to 17 years for omnibuses from 1 September 2003. This was to enable operators to reduce
overall operating costs in the long run. They will continue to have to meet stringent safety
requirements including regular, mandatory inspections.
79Other techniques include the Expressway Monitoring and Advisory System (EMAS), which provides
real-time traffic alerts to motorists about abnormal or dangerous traffic conditions ahead; and the Green Link
Determining (GLIDE) traffic light system, which monitors traffic demand automatically and adjusts traffic
signal timings in real-time, allocating green time according to actual traffic demand.
80The LTA estimates that the total fixed upfront cost (excluding the Certificates of Entitlement (COE))
for a medium-sized car has been reduced by around 15% to S$35,434 since 1998 (LTA online information, "Our
Achievements". Available at: http://www.lta.gov.sg/corp_info/corp_achieve.htm, [23 October 2003]). The
cost of purchasing a car in Singapore, nevertheless, comprises 130% of the open market value in charges and
registration fees (additional registration fee of 110% of the open market value, and excise duty of 20% of
OMV).
81LTA online information, "Modes of Public Transport". Available at: http: //www.lta.gov.sg/
public_transport/pt_modes.htm, [23 November 2003].WT/TPR/S/130 Trade Policy Review
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Box IV.2: Singapore's vehicle quota system
Singapore's vehicle quota system was implemented on 1 May 1990. The Land Transport Authority (LTA)
determines the annual quota to replace the number of vehicles taken off the roads permanently and allow
the vehicle population to grow at a pre-determined rate (currently 3% a year). The quota allocated to each
vehicle category is in proportion to that category's share of the total vehicle population. The vehicle quota
for each year is administered through a monthly release of certificates of entitlement (COEs).
In April 2002, the closed COE bidding system was replaced by an open bidding system. The open bidding
system was a recommendation made by the Government Parliamentary Committee on Communications in
1999. The system now allows bidders to monitor, submit, and revise their bids along with changing COE
prices.
There are two COE bidding exercises every month. In order to make the exercise more accessible, bidders
are no longer required to pay 50% of the COE upfront. Instead, they must pay a fixed deposit of S$200 for
motor cycles and S$10,000 for other categories of motor vehicle. The COE quota premium, which is
different for each category of motor vehicle (due to the different quota available for each category and their
corresponding demand), is the value of the highest unsuccessful bid plus one Singapore dollar. The COE is
granted for a period of ten years; once the ten-year period expires, the COE can be renewed by paying the
prevailing quota premium (PQP), which is a three-month moving average COE price. There are no
restrictions on the number of renewals for owners of vehicles without a statutory lifespan. Currently,
buses, goods vehicles, and taxis are subject to statutory lifespans.
Besides the COE, the owner is also required to pay excise duty (currently 20% of open market value
(OMV) for cars and 12% of the OMV for motor cycles and scooters) and the additional registration fee
(ARF)(currently 110% of the OMV for cars, 5% for goods vehicles and buses, and 15% for motorcycles).
The OMV is the value of the vehicle as assessed by Singapore Customs and includes the purchase price,
freight, insurance, handling, and all other charges incidental to the sale and delivery of the vehicle in
Singapore. Incidental charges include inspection and documentation fees, cost of registration and de-
registration, internal taxes, costs of accessories, commission, etc., which have been paid on the vehicle. A
car owner is entitled to a tax rebate on his/her next car if his/her present car is de-registered ahead of the
ten-year period of the COE. The rebate is pro-rated based on the unused portion of the COE.
To encourage cars owners to replace their cars in a timely manner, the Preferential Additional Registration
Scheme (PARF) was put in place in 1975. If cars are replaced before they are ten-years old, the owner is
entitled to a PARF rebate off the ARF for his/her next car. The rebate is based on a certain percentage
(depending on the age at which the present car is de-registered) of the ARF paid for the present car at the
time of registration.
Car prices declined by the end of 2002 due to reductions in ownership and other car-related taxes. The
ARF for cars was reduced by 10% (at present 110% of the OMV), and the excise duty on cars was also cut
from 31% of the OMV to 20%. In addition, the uplift portion of a car’s OMV, which is a charge based on
expenses incurred by a car company in selling its products, was also reduced by 2%.
Source: LTA online information. Available at: http://www.lta.gov.sg; Monetary Authority of Singapore
(2003), Macroeconomic Review Vol. II, Issue 1; and information provided by the authorities.
66. In recent moves to encourage competition in the sector, from 2000, Singapore has offered
market access concessions in vehicle inspection services in its bilateral free-trade agreements. No
such services are provided as yet by Singapore's FTA partners. As of August 2002, any private bus
operator wishing to run feeder services within the HDB (Housing Development Board) towns may do
so upon approval from the PTC; prior to this date, only public bus operators were permitted to
provide such services within HDB towns. Under the new framework, the PTC will stipulate
minimum service standards in only a few key areas, while the LTA will prescribe minimum
construction standards to ensure that safety, traffic efficiency, and environmental goals are met. Until
June 2003, the supply of taxis was regulated by the LTA. Since then, the supply of taxis has been
liberalized together with the introduction of a new licensing framework. Parties interested inSingapore WT/TPR/S/130
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providing taxi services can now apply for a Taxi Operator Licence (TOL) from the LTA. The
decision to grant such a licence will be based on, inter alia, the applicant's financial resources and the
required infrastructure to provide quality services to consumers. The TOL is valid for ten years and is
renewable if the licence holder meets licensing conditions, including compliance with a set of quality
of service (QoS) standards and codes of practice, issued by the LTA. Taxi companies may decide on
the size of their fleets but must maintain a minimum of 400 cars by the end of the fourth year of
operation. Individual taxis continue to be licensed by the LTA.
(vi) Air transport
67. The Civil Aviation Authority of Singapore (CAAS) is a statutory board under the Ministry of
Transport formed under the Civil Aviation Authority of Singapore Act in 1984. It advises on, and
implements, air transport policy and represents Singapore in international aviation agreements. The
principle legislation is the Air Navigation Act (Chap 6), which regulates all aviation in Singapore.
68. Singapore Airlines (SIA) is Singapore's national carrier and a publicly listed company. It is
majority owned (56.76%) by the Government through its holding company, Temasek. In addition,
SIA's wholly owned subsidiary SilkAir provides regional travel services. The share of passengers
travelling through Changi Airport with the two airlines increased from 52% in 1998 to 52.7% (49.5%
for SIA and 3.2% for Silk Air) in 2002. In addition, SIA owns companies involved in providing
airport groundhandling services (SATS, see below), cargo services (SIA Cargo), engineering services
(SIA Engineering Company), and travel.82
69. According to the authorities, Singapore's aviation policy is based on free and open
competition to provide an extensive and liberal framework for more air services and links to
Singapore. Singapore has air services agreements with over 90 countries and open skies agreements
with Brunei Darussalam, Chile, New Zealand, Peru, Samoa, Tonga, UAE, and the United States.
Agreements have also been reached with several other countries, including Australia, Germany, Sri
Lanka, and the United Kingdom, allowing unrestricted direct passenger services between Singapore
and these countries. Carriers must file passenger air fares with the CAAS for information or approval
depending on the tariff regime adopted in the relevant bilateral air services agreement. Approval
would normally be given unless there was evidence of predatory or unfair pricing. CAAS has
adopted, wherever possible, a no-filing tariff regime under its air services agreements. According to
the authorities, the CAAS has only disapproved proposed increases in fares when they were
considered to be against "overall national interests". Cargo charges must be filed with the CAAS only
for information. Allocation of landing slots and fees, which is in accordance with IATA rules, is
undertaken by a Schedules Coordination Committee; the Committee is chaired by the CAAS, and
comprises SIA as the slots coordinator and the two ground handling agents.
70. In anticipation of new Singapore-registered carriers, Singapore set up an Air Traffic Rights
Committee in October 2003 to allocate air traffic rights among carriers. The Committee, which
includes representatives of the EDB, Singapore Tourism Board, IE Singapore, the Ministry of
Transport, and the CAAS, will allocate air traffic rights "in a manner that maximizes both the interests
of Singapore as a nation as well as the benefits to the public".83In considering applications, factors
82Travel services are provided through Tradewinds, a company owned by SIA, which provides travel
packages to several destinations.
83Applicants will first have to obtain a valid Air Operators Certificate, certifying the airline's ability to
conduct safe aircraft operations; and satisfy necessary conditions under relevant air services agreements, and
have sufficient financial resources to operate the proposed service. In case of competing requests, the ATRC
would base its decision on, inter alia, how the proposed air service would contribute to Singapore's air hub,
promotion of competition, and consumer benefits.WT/TPR/S/130 Trade Policy Review
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such as the ability of the applicant to maintain adequate, safe, and efficient air services, demand for
air services along the proposed route, merit of the applicant’s proposals, etc. are taken into account.
However, the SIA group will retain its existing air traffic rights under a ten-year licence in recognition
of its role in building Singapore into an aviation hub. Upon expiry of the ten-year licence, renewal
may be sought for periods of up to five years by all carriers, including SIA, as long as the carrier
"continues to make good use of the rights to contribute effectively to Singapore as an aviation hub".84
Factors to be considered are listed under Regulation 2G of the Air Navigation (Licensing of Air
Services) Regulations 2003.
71. Singapore is actively trying to strengthen its position as a regional aviation hub. The CAAS
announced the Air Hub Development Fund (AHDF), which will provide S$210 million worth of
rebates and other incentives over three years. This includes a 15% discount on aircraft landing fees
and rental charges at Changi and Seletar Airports, S$30 million worth of incentives to attract new
airlines to Changi Airport and to encourage existing airlines to expand their network from Changi
Airport, and S$50 million on traffic development programmes and promotional activities with
airlines. The programme is expected to be in place for three years as of 1 January 2003. In addition,
visitors are encouraged to shop at Changi Airport through the Global Refund Airport Shopping
Vouchers scheme, which provides a further 10% on the refund value in GST refunds.85It is not clear
if airlines are granted corporate tax exemptions.
72. To mitigate the effects of the downturn in tourism, temporary financial assistance was
provided to airlines and passengers in 2001 and 2002. For example, a 15% discount on rental charges
for all tenants at Changi Airport was introduced in 1 July 2001, followed by a 10% discount on
aircraft landing fees on 15 October 2001; both expired on 31 December 2002 but have now been
replaced by the AHDF. A S$44 million relief package was put in place to help airlines and airport
businesses affected by the SARS outbreak. More recently, an Airlines Traffic Development Scheme
offered financial incentives to airlines if they could bring more passengers to Singapore between
June 2003 and October 2003; the size of the incentive was based on the increase in passengers.
Incentives to aircraft leasing companies, which seem to have been provided at the time of the last
Review, have been discontinued.
Airport services
73. Changi International Airport was opened in 1981 and has 67 scheduled airlines serving
152 destinations in 51 countries. The number of passengers using the Airport grew from 23.8 million
in 1998 to almost 29 million in 2002. The Changi Airfreight Centre (CAC) is a free-trade zone and
provides 24 hour services for cargo agents and shippers. In addition, access through TradeNet enables
a direct and quick link to regulatory bodies such as IE Singapore and Customs. As a result, almost all
applications are processed within 30 minutes and some even in under five minutes.86There has been
a steady increase in air freight movement through Changi airport, from 1.28 million tonnes in 1998 to
1.64 million tonnes in 2002. To accommodate passenger and cargo growth, a third terminal is
expected to be completed by 2006 and will increase airport capacity from the current 44 million
84Ministry of Transport Press Release, 3 October 2003 [Online]. Available at:
http://app.mot.gov.sg/data/p_03_10_03.htm, [5 November 2003].
85CAAS Press Releases, 1 August 2002 [Online]. Available at: http://www.caas.gov.sg/caas/
press_release_content.jsp?DYNAMIC_FOLDER%3C%3Ef [4 November 2003].
86Civil Aviation Authority of Singapore online information "About Changi Air Cargo: Air Cargo
Performance". Available at: http://www.changi.airport.com.sg/changi/level3.jsp?FOLDER%3C%3Efolder
_id=25343, [4 November 2003].Singapore WT/TPR/S/130
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passengers to 64 million per year.87In addition, the Airport Logistics Park, which officially opened
in March 2003 ,and is operated by the JTC Corporation and the CAAS (with the support of the EDB,
Immigration and Checkpoints Authority and Singapore Customs), aims to establish Singapore as a
regional logistics hub.
74. Ground handling services continue to be provided by two companies, Singapore Airport
Terminal Services (SATS), with majority ownership (87%) by Singapore Airlines, and Changi
International Airport Services, owned by the Government's holding company, Temasek, and five
international airlines.88According to the authorities, plans are under way to introduce a third ground
handling service provider. A call for tender was issued on 3 February 2004.
(vii) Maritime transport
75. Singapore's maritime transport sector contributes around 3% of GDP and provides direct
employment to over 23,000 workers. In 2003, Singapore was the world's busiest port in terms of
shipping tonnage, with 135,386 vessels (amounting to 986.4 million gross tons) calling at the port.
Singapore handled 18.4 million TEUs (twenty foot equivalent unit) of container traffic in 2003. It is
also the top bunkering port in the world, with 20.8 million tonnes of bunkers supplied in 2003.89Both
cargo and container traffic have generally continued to increase since 2000; cargo and container
throughput were 347.7 million tonnes and 18.4 million TEUs respectively in 2003. The Singapore
Registry of Ships is currently the seventh largest in the world and the largest in Asia, with 3,063 ships
in 2003 (25.6 million gross tons in 2003, compared with 23.6 million gross tons in 2002).
76. The main legislation is the Merchant Shipping Act, and the Carriage of Goods by Sea Act.
The Maritime and Port Authority of Singapore (MPA) under the Ministry of Transport implements
maritime policy, manages port waters and ensures navigational safety in the ports.90It is in charge of
licensing and regulation of maritime and port services and facilities, and regulates "economic
behaviour of the port industry".91The main instruments to regulate economic behaviour are the
public licences issued by MPA to providers of cargo terminals and marine services. Regulation of
economic behaviour includes the setting of service standards, and the prohibition of anti-competitive
behaviour. Container and cargo operations are managed, under licence, by PSA Corporation Ltd. and
Jurong Port Pte Ltd. The MPA also issued a licence in March 2003 to Singapore Cruise Centre
Private Limited to operate passenger terminal facilities. SCCPL operates several passenger terminals
including the International Passenger Terminal, Regional Ferry Terminal, and Tanah Merah Ferry
Terminal. The MPA's main goals are to protect Singapore's strategic maritime interests and promote
Singapore as a major port and international maritime centre. It also advises the Government on
matters relating to sea transport, and port services and facilities. The MPA represents Singapore in
international fora like the IMO. Currently, MTI/IE Singapore takes the lead in representing Singapore
at international meetings relating to WTO matters, with the MPA providing inputs on maritime
services. However, with effect from 1 April 2004, IES’ shipping functions will be transferred to the
87CAAS online information, "Aviation Industry". Available at: http://www.caas.gov.sg/caas/
level3.jsp?FOLDER%3C%3Efolder_id= [4 November 2003].
88The shareholdings of these owners remain unchanged since the previous Review of Singapore:
78.4% by CIAS International, 4.4% each by China Airlines, Garuda Indonesia, KLM, and Lufthansa, and 4.0%
by Air France.
89Maritime and Port Authority of Singapore online information, "Port Statistics". Available at:
http://www.mpa.gov.sg/homepage/portstats.html, 2003 [24 March 2004].
90The MPA took over the activities of the Marine Department, the National Maritime Board and the
regulatory departments of the former Port of Singapore Authority.
91Maritime and Port Authority (MPA) Singapore online information, "Corporate Profile". Available
at: http://www.mpa.gov.sg/homepage/roles.html [2 February 2004].WT/TPR/S/130 Trade Policy Review
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MPA. The MTI/MPA will then be the lead on WTO matters. Singapore is a party to all the major
international conventions on maritime safety and pollution prevention.
77. Singapore does not have a freight rate filing system; shipping companies may determine their
own freight rates. There do not appear to be any laws and regulations restricting foreign participation
in the shipping industry. There are no restrictions on foreign participation for the provision of port
services in Singapore port. For the carriage of government cargo, "approved lines" are asked to
provide quotations, together with the other carriers. In practice, according to the authorities, most
government cargo is carried by carriers offer the most competitive rates. Information on the approved
lines and data on the share of government cargo carried by approved lines were not available.
Singapore has bilateral shipping agreements with the Republic of Korea (1981), China (1989),
Viet Nam (1992), India (1994), Myanmar (1997), and Germany (2000), aimed at expanding and
strengthening cooperation in maritime transport. None of these agreements, however, prescribes any
form of cargo sharing. Singapore does not implement any policies relating to liner conferences.
78. Singapore's registry of ships registers ships of citizens and permanent residents of Singapore
and of companies incorporated in Singapore. Foreign-owned companies with paid-up capital of
S$50,000 can register their ships with the registry; the ship must weigh at least 1,600 gross tons and
be self-propelled.92The latter requirement may be exempted on a case by case basis if the ship is
operated from, or based in, Singapore; and local companies are exempt.93Ships older than 17 years
require a special report on the condition of the ship prepared by an MPA authorized classification
society.94Ships may also be provisionally registered for a maximum period of one year. There are no
nationality requirements for the crew on board a Singapore-registered vessel.
79. Section 13A of the Income Tax Act exempts from tax the income of a shipping enterprise
derived from the operation of Singapore ships. The Approved International Shipping Enterprise
Scheme, which provides a tax exemption for ten years on income derived from the operation of
foreign-flag vessels is available for established international shipping companies with worldwide
networks and good track records (Table III.6). In an attempt to encourage bunker suppliers to achieve
a quality management system, the MPA is providing financial assistance for bunker suppliers who
qualify for the Accreditation Scheme for Bunker Suppliers within a two-year period between
1 June 2003 and 31 May 2005; the assistance is in the form of a 30% relief on the certification fee for
Technical Reference 8 (TR8):2003 on a quality management system for bunker supply (QMBS)
chain.95In April 2002, the MPA created an S$80 million Maritime Cluster Fund (MCF) to help
promote and strengthen the maritime cluster in Singapore. Around S$50 million of this has been set
aside for training while S$30 million will be used to help shipping companies reduce operating costs
in Singapore.96The $50 million portion will be used, among other things, to fund various maritime
training programmes to upgrade the expertise in the local maritime sector, and to set up maritime-
92Foreign owned is defined as non-citizens of Singapore having ownership of over 50% of total equity.
93Additional details required include evidence of ownership; builders, tonnage, class, and statutory
certificates; evidence of cancellation by the former registry; and a certified carving and marking note (MPA
online information, "A Guide to the Registration of Ships in Singapore". Available at: http://www.mpa.gov.sg/
homepage/procedures/ship_register/reg_contents.html, [23 October 2003]).
94American Bureau of Shipping; Bureau Veritas; China Classification Society; Det Norske Veritas;
Germanischer Lloyd; Korean Register of Shipping; Lloyds Register of Shipping; Nippon Kaiji Kyokai;
Registro Italiano Navale.
95The accreditation qualifications include: having a minimum paid-up capital of S$200,000; having in
place a Quality Management System for Bunker Supply Chain (QMBS) based on Technical Reference
8 (TR8):2003.
96MPA Singapore online information, "Maritime Cluster Fund". Available at:
http://www.mpa.gov.sg/homepage/mcf-programs.html, [2 February 2004].Singapore WT/TPR/S/130
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related professorships in the local universities. Other assistance programmes include the Maritime
Innovation and Technology (MINT) Fund and the Maritime Enterprise IT programme.
80. In the GATS, Singapore made commitments in several services, including shipping agency
brokerage services, and ocean freight transportation, except cabotage services. Singapore also
participated actively in the WTO Negotiating Group on Maritime Transport Services and made offers
in access to and use of port facilities, auxiliary services, and ocean transport. The offer was left on the
table when negotiations were suspended.
Port services
81. Singapore's ports are managed under licence by the PSA Corporation Ltd (terminals at Brani,
Keppel, Pasir Panjang, Sembawang and Tanjong Pagar, for container and conventional cargo), and
Jurong Port Pte Ltd, which operates cargo terminal facilities to handle conventional cargo, bulk cargo,
and containers. SCCPL, which is 100% owned by Hazeltree Holdings Pte Ltd, runs several
passenger terminals including the International Passenger Terminal. Singapore is also the third
largest oil refining centre in the world and the oil terminals are operated by the petroleum companies
who run the refineries. According to the authorities, the MPA is the regulator of port and marine
facilities and services in Singapore port. However, some port services, like shiphandlers and the
shipyards, are not regulated by the MPA; it is not clear who regulates these services. PSA is also
involved in 15 port projects in nine countries.97
82. Singapore liberalized certain port services, such as tug services, in phases between
September 1997 and 1999. The authorities state that this liberalization resulted in more competitive
rates and better service levels.98Recent agreements, such as PSA's agreement with Cosco in the
container market, according to the authorities, will also reduce turnaround times. The Government
announced in June 2002 that Singapore Port was open to more cargo terminal operators running
terminals in the port, including dedicated terminals. This policy change led to the joint venture
between PSAC and COSCO to run container terminal facilities in Singapore. In addition, most of the
other port activities like bunkering and ship chandlering are liberalized, with many players in the
market. Pilotage services is an exception; it has not been liberalized, largely due to navigational
safety considerations. In order to meet the challenge of competition from regional ports, the
authorities state that Singapore Port will continue to work to remain cost-competitive and provide
better value to its clients. The PSA Corporation, which is owned by the Government's Holding
Company, Temasek, was intended to be privatized in 2001. However, this plan was postponed
indefinitely. According to the authorities, the timing for PSAC's privatization will be determined by
PSAC and its shareholders, based on commercial considerations.
83. Assistance is provided to ensure that ships continue to use the Port of Singapore. A
concession of 20% on port dues offered to all container vessels in May 1996 remains in place and has
been extended to 30 June 2004. From 1 May 2003 to 31 December 2003, a 50% port dues concession
was granted to cruise ships, regional ferries, and passenger-carrying harbour craft to help them over
the SARS crisis. In addition, the PSA offered, for one year effective July 2002, a 10% discount on all
bills at PSA Singapore's cargo terminals and a 50% discount on handling charges for empty
containers.
97In addition to Singapore, these are: Belgium, Brunei Darussalam, China, India, Italy, Portugal, South
Korea, and Yemen.
98WTO (2000).WT/TPR/S/130 Trade Policy Review
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(viii) Professional services
(a) Accountancy services
84. The practice of accountancy in Singapore is relatively unrestricted. The registration and
regulation of accountancy services in Singapore is managed by the Public Accountants Board (PAB),
established under the Accountants Act. The main functions of the PAB are to register public
accountants and control and regulate accountants and accounting corporations. To practice in
Singapore, accountants must have passed the final examination in accountancy99, have structured or
unstructured experience, complete a pre-registration course, and demonstrate proficiency in local
laws. Structured experience includes: at least two years of structured practical experience in
accounting, auditing, and taxation after passing the qualifying examination; or not less than four years
of structured practical experience in a public accountant’s office in accounting, auditing, and taxation,
of which at least one year is acquired after passing the qualifying examination. Unstructured
experience includes: not less than three years experience in accounting, auditing, and taxation in a
public accountant's office after passing the qualifying examination; or not less than five years
experience in accounting, auditing, and taxation in a public accountant's office, of which at least two
years were after passing the qualifying examinations. Accountants must also be members of the
Institute of Certified Public Accountants of Singapore (ICPAS).
85. Accountants may set up two types of accounting entities: a sole proprietor or a partnership, in
which all partners are public accountants; or a public accounting corporation. For corporations, not
less than two-thirds of the board of directors (including the Chairman) must be Singapore-registered
public accountants; not less than two-thirds of the voting shares of the corporation must be owned by
Singapore-registered public accountants; and only natural persons may own shares in the company.
86. There are no special restrictions on foreign accountants wishing to practice in Singapore and
there are no nationality or citizenship requirements. Applicants with foreign qualifications who have
less than two years of relevant local experience are required, however, to pass an examination in
Singapore company law and Singapore taxation and tax management to satisfy the Board of
proficiency in local laws. Only persons who are registered with ICPAS and PAB can be appointed as
approved company auditors. Public accountants or at least one of the partners in the firm must be
effectively resident in Singapore.100
99Examinations are accepted from the following Singapore institutions: Singapore Polytechnic
(professional diploma and degree course in accountancy for the years 1961 to 1969), University of Singapore,
Nanyang University, National University of Singapore, Nanyang Technological Institute, Institute of Certified
Public Accountants of Singapore (ICPAS) – ACCA Joint Scheme ,Nanyang Technological University or ICPAS
Professional Examination, in Singapore. Examinations are also accepted from the following institutions outside
Singapore: Institutes of Chartered Accountants of Scotland (ICAS), England and Wales (ICAEW), Ireland
(ICAI), Australia (ICAA), New Zealand (ICANZ), the Association of Chartered Certified Accountants (ACCA),
CPA Australia, the Canadian Institute of Chartered Accountants (CICA), the American Institute of Certified
Public Accountants (AICPA) or the Chartered Institute of Management Accountants of the United Kingdom
(CIMA) (except that CIMA members should have passed the following subjects: financial reporting
environment and accounting and auditing practice).
100"Effectively" resident means that public accountants would have to practice substantially in
Singapore and non-Singaporeans would have to undertake to practice substantially in Singapore. The
authorities state that the PAB rules do not contain a firm definition of "substantially practising". However, there
is a rule that a public accountant has to be "maintaining or is about to maintain an office or place at which his
services may be engaged" and "is available or is about to make himself available to undertake work on behalf of
any member of the public".Singapore WT/TPR/S/130
Page 97
87. Singapore's GATS commitments on accountancy services follow closely current practice in
Singapore. No limitations are placed on market access for the first three modes of supply but
practising public accountants must practice substantially in Singapore. There are no national
treatment limitations regarding the first three modes of supply while the presence of natural persons is
unbound except as indicated in the horizontal schedule. Requirements for practising in Singapore
include registering with the ICPAS and the PAB, passing the required examinations, and acquiring
relevant experience. Singapore has not scheduled nationality or citizenship requirements for
accountants wishing to practice in Singapore; the only requirement is to meet the conditions of the
PAB and the ICPAS, which are applied to both nationals and foreigners.
(b) Legal services
88. Singapore currently has around 3,500 practising lawyers, a number that the Government
believes to be optimal on a per capita basis. According to the authorities, factors taken into
consideration when calculating this optimum level are Singapore’s projected economic growth,
concentrating on the specific growth sectors that would see a corresponding growth in support
services including legal services, Singapore’s population growth, and developments in legal practice.
A Committee on the Supply of Lawyers was appointed in September 1992 by the Government to
assess this optimum. This Committee makes periodic reviews to ensure that the optimum remains
relevant to Singapore’s economic growth. The First Committee on the Supply of Lawyers issued its
report in April 1993. In April 1999, a Second Committee for the Supply of Lawyers was constituted.
Its report, issued in January 2001, recommended a review of the supply of lawyers in Singapore in or
after 2005.
89. The regulation of lawyers, especially foreign lawyers in Singapore, is based on the policy
objective of maintaining a certain level of quality of legal services and to ensure that there is no
oversupply of lawyers in the domestic legal market. Thus, while Singapore maintains a liberal policy
regarding the practice of foreign law, the domestic market is tightly regulated in order to fulfil these
policy objectives.
90. Offshore legal services in Singapore are regulated by the Attorney General’s Chambers,
which handles all registration-related issues with respect to foreign law firms and foreign lawyers.
The Council of the Law Society of Singapore makes rules to regulate the professional practice,
etiquette, conduct, and discipline of advocates and solicitors. All legal officers (persons appointed as
legal officers in the Singapore Legal Service) and non-practising solicitors are subject to the control of
the Supreme Court. Law degrees from the National University of Singapore (NUS) and from
19 universities in the United Kingdom are recognized; in addition, degrees obtained by citizens of
Singapore and permanent residents of Singapore from eight universities in Australia and two
universities in New Zealand, are also recognized. J.Ds from four universities in the United States will
be recognized soon, once consultations are completed with the United States on the choice of law
schools. Legal practitioners from Malaysia with at least three years experience can apply for
admission as advocates and solicitors.
91. The conditions for accepting lawyers with overseas law degrees are relatively strict:
graduates from the recognized institutions in the United Kingdom must have obtained at least an
Upper Second Honours Degree, while graduates from Australia and New Zealand must be in the top
30% of their cohort, and in the top 40% of their class in the case of graduates from the United States.
All graduates from these foreign universities must also pass the Diploma in Singapore Law, complete
pupillage for a prescribed period of six months and complete the Postgraduate Practice Law Course
(PLC) examination conducted by the Board of Legal Education .WT/TPR/S/130 Trade Policy Review
Page 98
92. Singapore maintains a more liberal regime for foreign lawyers wishing to practice foreign law
(home country, third country or international law) in Singapore. At end February 2004, 63 foreign
law firms from 14 jurisdictions were practising foreign law, and there were 523 registered foreign
lawyers based in Singapore. Restrictions on foreign lawyers practising Singapore law were loosened
in2000, permitting joint law ventures (JLVs) and formal law alliances (FLAs) between local and
foreign law firms. There are presently 6 JLVs and 1 FLA. Foreign lawyers in such ventures are
permitted to render advice on Singapore law relating to banking, finance or corporate work, subject to
statutory conditions, such as not being permitted to appear in court. According to the authorities, the
JLVs and FLAs have brought benefits to the legal profession in Singapore, including giving
Singapore lawyers exposure to work in international finance and improving linkages with global law
firms.
93. Singapore has made no commitments in the GATS with regard to legal services.
(c) Medical services
94. The Government of Singapore is keen to expand medical services as part of the biomedical
cluster of industries and also to offer health services to other countries in the region. Over
150,000 international patients visit Singapore each year for medical treatment. According to the
Economic Review Committee, a target has been set for Singapore to service up to one million health
patients from abroad by 2012.101This is to be achieved by increasing the base of doctors and nurses
for the Regional Medical Hub. For example, Singapore National University has already increased its
intake of medical students and there are plans to start a second medical school. A nursing degree
course is also being planned. At the same time plans are being made to increase the number of
overseas-trained doctors and specialists in Singapore by expanding the number of foreign medical
schools that are recognized by the Singapore Medical Council for conditional and full medical
registration in Singapore from 24 to 71. The criteria for admitting medical specialists are also being
reviewed. The private sector is encouraged to expand its infrastructure and facilities in health
services. The registration of foreign medical staff, however, is strictly regulated through the Schedule
(see below). As at 31 December 2003 there were 5,838 medical practitioners with full registration, of
which 4,655 had been trained in Singapore; 454 medical practitioners had conditional registration.
95. Singapore has 29 hospitals of which 16 are private and the rest are operated by the Ministry of
Health. The Government has restructured its hospitals so that they are run as private non-profit
organizations, owned by the Government. Primary health care is mostly provided by the private
sector, with around 20% of patients being treated in Government polyclinics. Around 75% of patient
beds in public hospitals are subsidized. To ensure that Singaporeans are able to afford basic
healthcare, a portion of their Central Provident Fund (CPF) is put aside in their Medisave Fund.102In
2000, Singapore spent around 3.6% of GDP on the health sector with 1% of GDP to subsidize public
hospitals. For 2002, out of the 543,200 patients who received hospital treatment, about 20,400, or
3.8%, were foreigners.
96. The registration and licensing of doctors is the responsibility of the Singapore Medical
Council (SMC) under the Medical Registration Act (MRA). Under the Act, all doctors who wish to
practice medicine in Singapore must be registered with the SMC and hold a valid practising certificate
(PC). A PC is usually valid for two years. Other healthcare professionals are regulated by other
boards including nurses (Singapore Nursing Board), dentists (Singapore Dental Council), and
pharmacists (Singapore Pharmacy Board). PC renewal is subject to the fulfilment of the Compulsory
101Singapore Medicine online information, "World Class Healthcare". Available at:
http://app.singaporemedicine.com/asp/wor/wor01.asp, [30 January 2004].
102Singaporeans are required to save between 6% and 8% of their income in the Medisave Funds.Singapore WT/TPR/S/130
Page 99
Medical Education (CME) requirements specified by the MRA and the SMC. CME requirements
were introduced from 1 January 2003 and ensure that doctors keep abreast of medical advances. All
fully and conditionally registered doctors will need to obtain the required minimum CME points
during their two year qualifying period in order to be eligible to renew their PCs as from
1 January 2005. Other functions of the SMC include: determination and regulation of the conduct
and ethics of registered medical practitioners; making recommendations on the courses of instruction
and examinations leading to the Singapore degree; and making recommendations on the training and
education of registered medical practitioners in Singapore.
97. The SMC maintains a Register of Medical Practitioners listing those that have been granted
full registration and conditional registration. Full registration is granted to those who hold an MBBS
from the National University of Singapore. Conditional registration is granted to holders of medical
degrees from recognized medical schools overseas listed in the MRA Schedule, and of recognized
postgraduate medical qualifications.103The registration of foreign medical staff is regulated through
the Schedule, which currently recognizes 71 medical schools.104Foreign-trained doctors may only
apply for registration in Singapore if they already have a job offer. Foreign-trained doctors may
obtain only conditional registration; full registration is granted only to Singapore-trained doctors.
Conditional registration requires that the doctors work under supervision for a period of six years
before they can apply for full registration. Other forms of registration, such as temporary and
provisional registration may also be granted.105Once registered, the practitioner’s conduct is
governed by the Medical Registration Act (MRA) and the SMC’s Ethical Code and Ethical
Guidelines.
98. Before March 2003, the Schedule of recognized overseas medical schools contained only
24 medical schools, from Australia, the United Kingdom, Canada, and the United States. The SMC
then recommended expansion of the Schedule to the current 71 medical schools; this expanded
Schedule was incorporated in the MRA from March 2003.
99. Under the GATS commitments for medical services, mode 1 for market access is unbound
due to lack of technical feasibility, while there are no limitations on modes 2 and 3 except that the
limit on new foreign doctors registered each year depends on the total supply of doctors. Mode 4 is
unbound except as indicated in the horizontal section. With regard to national treatment there are no
limitations on modes 1, 2, and 3, while mode 4 is unbound. Singapore also made specific
commitments on dental services. No specific commitments were made under health-related and
social services.
(ix) Tourism services
100. Tourism accounts for a declining but significant share of total services receipts, some 17% in
2002, down from 23% in 1998. The number of tourist arrivals has continued to grow, however, with
almost 38% coming from other ASEAN countries. The major change since the last Review is the
share of visitors from China, which has almost doubled since 1998 (Table AIV.3). By 2005,
103Specialist registration is granted to persons holding a recognized postgraduate degree and with
acquired skills and experience in a particular branch of medicine but they must first obtain a certificate from the
Specialist Accreditation Board (SAB) of the Ministry of Health.
104The 71 medical schools are in Australia; Canada; Hong Kong, China; New Zealand; Ireland,
United Kingdom; and the United States.
105Temporary registration is granted for teaching, postgraduate training or research, for up to two
years, renewable for periods not exceeding one year at a time; and provisional registration is granted for a period
of one year to persons with registrable basic medical degrees who are employed as House Officers in the public
hospitals.WT/TPR/S/130 Trade Policy Review
Page 100
Singapore aims to increase tourism receipts to S$16 billion, from S$8.8 billion in 2002 and the
number of visitors to 10 million.106Singapore's tourism industry was affected by the spread of SARS
and developments in the Middle-East in 2003. Tourist arrivals during the April and May 2003 were
especially low, falling by 67% and 71%, respectively. However, visitor arrivals have slowly picked
up, in part due to promotional measures taken by the Singapore Tourism Board and Singapore
Airlines, and appear to be back to the levels registered during the same period in 2002. Overall visitor
arrivals for 2003 are expected to be down by 21% over 2002.
101. The Singapore Tourism Board (STB), under the Ministry of Trade and Industry, is the
statutory board responsible for promoting tourism. A new tourism strategy was identified in 2003
with eight main strategic thrusts. These are: to focus on regional markets, particularly traditional
markets such as Malaysia and Indonesia and new growing markets such as China and India; to grow
new sectors such as education and health, while revitalizing core segments such as sightseeing and
shopping; to improve quality, making quality of service a hallmark of Singapore's tourism sector; to
improve linkages between tourism-related activities and between Singapore and source markets; to
upgrade and improve existing tourism facilities; to strengthen private and public sector collaboration,
including the development of strong industry and trade bodies; to increase innovation by attracting
world class players and creating a more business friendly environment; and to position Singapore as a
tourism hub in the region. The STB was restructured in February 2003 to meet these goals.
102. To address the recent downturn, a number of measures were taken, including confidence
building promotional programmes and a S$230 million assistance package announced on
17 April 2003. This included: property tax relief; approval for companies to keep receipts from
services tax on tourism until 31 December 2003 (effectively a tax remission); a temporary freeze on
foreign worker levies until December 2003107; a bridging loan facility; and a manpower training
fund. This assistance was in addition to the STB's other incentives for Singapore-registered entities.
These are: double tax deductions for overseas promotion activities; income tax allowance of 20% for
building and structural expenditure for the first year of operation (2% thereafter) for tourism projects;
a tourism development assistance scheme, which provides up to 50% support for market and cluster
development activities; and a property tax concession for tourism projects with an investment of
S$3million. Efforts have also been made to liberalize tourism and recreational activities and to
provide easier access to Singapore through easier visa procedures.
103. Under the Singapore Tourism Board Act (Cap. 305B), the STB is responsible for licensing
and regulating tourism operators, enterprises and travel agencies. Tourist guides are licenced under
the Singapore Tourism (Licensing and Control of Tourist Guides) Regulations. The licences are
granted for three years and renewal applications must be made one month before the current licence is
due to expire. Travel agents are regulated under the Travel Agents Act (Cap. 334) and Regulations.
Under the Act, they must apply for renewable licences from the Board; the licence expires at the end
of the year following that in which it was issued. Hotels are registered and licenced by the Hotel
Licensing Board, which is within the Ministry of Trade and Industry, and operates under the Hotels
Act.108All hotel licences are valid for one year and expire at the end of the year. Some hotels,
106Singapore Tourism Board online information, "Realizing Tourism 21". Available at:
http://www.stb.com.sg/t21/realise.stm, [20 October 2003].
107The foreign unskilled worker levy ranges from S$240 to S$470 per month; the levy is S$30 per
month for skilled workers.
108Individuals applying for a licence are required to complete an application form and provide, inter
alia, grant of written provision from the Urban Redevelopment Authority as well as clearance from the Ministry
of Environment, Fire Safety Bureau and the Building and Construction Authority. The time required to process
the application is a minimum three weeks and the annual fee ranges from S$300 to S$500 depending on the
number of rooms in the hotel.Singapore WT/TPR/S/130
Page 101
including student hostels and clubs may be granted an exemption from annual renewal by the Hotel
Licensing Board.109The STB also collects cess from hotels, food establishments, and public houses
under the Singapore Tourism (Cess Collection) Act and Regulations .Revenue collected goes towards
STB’s marketing and promotional activities for the tourism industry as well as the industry
development efforts undertaken by STB.
104. In the GATS, Singapore has undertaken specific commitments on: motel services; travel
agents and tour operators and tourist guide services; and in restaurant and catering services.
109Hotel Licensing Board online information "Information and Instructions for New Application
(Certificate of Registration and Hotel Keeper's Licence". Available at: http://www.hlb.gov.sg/forms.stm,
[29 October 2003].Singapore WT/TPR/S/130
Page 103
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