Aug. 16 – Singapore has been increasingly successful in winning regional shipping investment, especially from competitors such as Hong Kong and Shanghai, by deploying an aggressive incentive scheme that offers up to ten year tax breaks for foreign investors. In signs that other regional nations are now prepared to directly compete with China, the shipping industry, which provides additional knock on investments such as logistics, freight, warehousing, repackaging and distribution, has increasing been spurning China and turning instead to Singapore.
The Maritime and Port Authority of Singapore has just announced a six month extension to its concessionary ports scheme for ocean going ships, an additional extension to a two year program that gives a 20 percent reduction in port dues for calling at the island state. Other incentives include tax holidays of up to 10 years – and in some cases longer – on income derived from shipping, a tax rate of not less than 10 percent on income from freight and logistics services, and subsidized staff training schemes. In a very different tack from China, Singapore now also offers to reimburse the costs of sponsoring expatriate employees on a Singapore attachment, in addition to the cost of relocation for such staff.
Just for this purpose alone, the Singapore government set aside US$33 million as a fund to assist with the cost of relocating overseas talent to the city state. Additional defrayment expenses can also be claimed for shipping businesses wanting to expand into other areas of commerce. Globally, the target market for Singapore is about 5,000 international businesses, ranging from shipping companies, maritime service providers, shipping financiers and banks, law firms, ship management and chandlery suppliers. In comparison, neither Hong Kong nor Shanghai provides much in the way of incentives for attracting foreign investment. Hong Kong has relied on mainland China for investment, a strategy that has seen its shipping register rise from 5.7 million metric tons in 1997 at the point of the handover, to 52.7 million metric tons today. Ships registered in Hong Kong pay lower port fees at mainland ports, while Chinese crew are classified as national seafarers on Hong Kong flagged ships, keeping them under the protection of the Chinese state. It also means that mainland crews are not subject to the same wage rate as other nationalities recognized by the International Transport Workers Federation, enabling Chinese shipping companies to keep wages deliberately lower than the international norm.
Singapore however has an additional advantage. Maritime companies, including foreign investors, are encouraged to list on the Singapore Stock Exchange, providing such businesses with the ability to raise local and international funding for Asian expansion plans. While China appears to be concentrating purely on its domestic businesses and providing cost reduction schemes for them, Singapore is going global and is reaching out to international investors in the industry, in moves that indicate that it is Singapore, and not Hong Kong or Shanghai, that is positioning itself to become the regional shipping hub for Asia.