Singapore Announces Strategy for E-commerce Industry: Potential for Global and Regional Hub
- Singapore’s Minister of Trade introduced the latest plans to transform his country into a regional and global e-commerce hub.
- The plans include strengthening digital infrastructure, such as by expanding the 5G network in addition to expanding the digitalization of SMEs.
- Singapore has long been the pre-eminent destination for multinational tech companies to establish their regional headquarters.
- Many companies choose Singapore for its investor-friendly tax and legal regime, enabling them to focus on regional expansion.
- Singapore has developed its latest plans to transform the country into a regional and global e-commerce hub.
Singapore’s Minister of Trade and Industry Chan Chun Sing has introduced the latest strategy to transform the country into a regional and global e-commerce hub. The initiative was announced at the 2021 Amazon Southeast Asia Online Seller Summit, where the minister also noted that online sales in Singapore as a proportion of total retail sales had increased from 5.8 percent in January 2020 to 14.3 percent in November.According to a report conducted by Google, Temasek, and Bain & Company, Singapore’s e-commerce industry is set to be valued at US$22 billion by 2025, from its current US$9 billion estimations. Despite this small valuation compared to that of its ASEAN neighbors, the country’s strengths lie in its capacity to attract multinational firms from all industries.
Singapore has long been a preeminent destination for establishing regional headquarters for many international firms. The country’s tax and legal regimes are considered among the most investor-friendly in the world, and its financial industry is highly integrated with the global international markets.
Strengthening digital infrastructure
The first initiative will be to strengthen Singapore’s digital infrastructure, particularly in digital connectivity, data analytics, payment systems, and new business innovation.
A key initiative will be developing 5G infrastructure; the backbone of the country’s digital economy. Some 50 percent of the country will have 5G coverage within two years and there will be two nationwide 5G networks by 2025. The greater bandwidth from the networks will enable an increase in capacity to handle large e-commerce orders.
Furthermore, the government is encouraging local businesses to adopt digital solutions, such as e-payments and e-invoicing. For example, Singapore’s Myinfo SingPass, an electronic ‘Know-Your-Customer’ system, has already unlocked more online lending and the National Digital Identity (NDI) platform allows Singapore residents with the means to provide their identity and sign documents digitally.
A secure digital landscape
Singapore is ramping up its cybersecurity capabilities to protect businesses and ensure the flow of cross-border data is secure.
To strengthen this aspect, the country signed the world’s first digital-only trade agreement through the Digital Economy Partnership Agreement (DEPA) with New Zealand and Chile. Through this agreement, Singapore aims to develop international frameworks to support businesses engaging in cross-border digital trade and e-commerce. DEPA came into force in January 2021.
Businesses can benefit from more paperless trade and thus reduce the time needed for cargo clearance and document transits. It will also encourage the greater acceptance of e-payment solutions as payment systems become more interoperable.
In addition to DEPA, Singapore has signed digital economy agreements with Australia through the Singapore-Australia Digital Economy Agreement (SADEA), which has been in force since December 2020.
Robust supply chain capabilities
The growth of the e-commerce industry presents an opportunity to position the country’s logistics sector to be better integrated with global supply chains. This includes specializing in value-added capabilities, such as cold chain management and pharmaceutical logistics.
Singapore was ranked seventh in 2018 in the World Bank’s Logistics Performance Index and was ranked 14th in 2019 in the world’s busiest airport by cargo traffic category, ahead of London, Beijing, Chicago, and Los Angeles.
The e-commerce industry will also need the necessary data infrastructure to enable the secure sharing of data across these supply chains. One option would be to democratize players’ access to data across the whole value chain, impacting financial institutions, e-commerce businesses, and logistics providers.
Encouraging the digitalization of businesses
The government will increase its efforts to digitalize local SMEs and maximize their potential from the digital economy.
In 2017, Enterprise Singapore (ESG) and the Infocomm Media Development Authority (IMDA) developed the SMEs Go Digital Program, and which has since helped over 50,000 Singaporean SMEs adopt digital solutions in their operations.
In 2020, ESG and IMDA collaborated with Amazon, Lazada Singapore, Qoo10, and Shopee to launch the E-Commerce Booster Package, a program to assist retail businesses impacted by the pandemic to shift to online solutions; over 2,200 businesses have since joined this program.
Amazon has also assisted Singaporean sellers onto its platform, providing Singaporean businesses access to new international markets such as the US, India, and Canada. ESG has further supported these firms through its Market Readiness Assistance (MRA) scheme that provides market-expansion related services, such as IP protection in North America.
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