SINGAPORE: Trade relations between Singapore and Africa are set to deepen, with several agreements signed on Wednesday (Aug 24) at the fourth edition of the Africa Singapore Business Forum.
These include the signing of the Avoidance of Double Taxation (DTA) with Ethiopia, a bilateral investment treaty (BIT) with Mozambique and an Air Services Agreement (ASA) with Nigeria.
According to a joint press statement from the Ministry of Trade and Industry, Ministry of Transport and Ministry of Finance, Ethiopia-Singapore DTA clarifies the taxing rights between both countries. This covers all forms of income flows from cross-border business activities and minimises double taxation of such income, they said.
Meanwhile, the Mozambique-Singapore BIT is a legally binding agreement on how the Mozambique government should treat investments from Singapore, and vice versa. With this agreement, Singapore companies operating in Mozambique will enjoy protection on top of what is already accorded under the country’s domestic laws.
The Nigeria-Singapore ASA provides a framework to enable the establishment of air linkages between both countries, as airlines from both countries can operate an agreed number of passenger and cargo flights between Nigeria and Singapore, and beyond both countries.
They were signed by Trade and Industry (Industry) Minister S Iswaran and respective representatives from the countries – Ethiopia’s Minister of Foreign Affairs, Tedros Adhanom, Mozambique’s Minister of Trade and Industry Ernesto Max Elias Tonela and Nigeria’s Minister of State for Aviation Senator Hadi Sirika.
Mr Iswaran said that for companies looking to internationalise, Africa is a market they can consider, with various initiatives led by trade associations such as the Singapore Business Federation’s trade missions.
NEED FOR AFRICA TO INTEGRATE WITH ASIA
According to IE Singapore, Singapore-Africa bilateral trade grew at a compounded annual growth rate (CAGR) of 5.2 per cent since 2005. This reached S$11.5 billion in 2015.
At the end of 2014, Singapore’s cumulative direct investments into Africa stand at S$22.1 billion. The continent is expected to grow at 4.3 per cent from 2016 to 2020, and there are 60 Singapore companies operating across more than 50 countries in Africa.
But trade relations are also two-way, with African companies coming to Singapore to set up shop. Deputy Prime Minister Tharman Shanmugaratnam said there is a need for Africa to integrate with Asia, and in particular East Asia, as Africa and Asia are both the next biggest sources of consumption.
Deputy Prime Minister Tharman Shanmugaratnam speaking at keynote panel on Aug 24, 2016. (Photo: Calvin Hui)
Singapore can be a good hub for African countries looking to expand into Asia, said Mr Tharman, with Singapore’s role as a financial centre and logistics hub being a key advantage. He added that the Republic is also a “node” on China’a One Belt One Road initiative, and can help to provide expertise to African countries including in risk management.
Mr Tharman emphasised that in the current global economic climate of weak demand and uncertainty, it is important to build resilience in the economy. One way to do so is to diversify economically, with Africa being one such destination, he said.
IE Singapore is also opening its third overseas centre in Africa, in Nairobi, Kenya, in 2017. IE Singapore CEO Lee Ark Boon said the new centre will be a regional base to help Singapore companies venture into East Africa.
IE Singapore already has two other offices in Accra, Ghana, and Johannesburg, South Africa.