Deputy Prime Minister Tharman Shanmugaratnam speaking at keynote panel on Aug 24, 2016. (Photo: Calvin Hui)
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 minimizes 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 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.
Iswaran said that for companies looking to internationalize, Africa is a market they can consider, with various initiatives led by trade associations such as the Singapore Business Federation’s trade missions.
“I think we should look at these agreements from a context of a larger economic strategy and what we’re trying to achieve. So we’re in a context where there are opportunities in our immediate region, like in ASEAN, China and North Asia, as well as in South Asia. But as part of our ongoing efforts in broadening our economic base, we are also encouraging our companies to look at opportunities that might lie beyond traditional markets.
And he added that the average GDP growth rates and projects of markets like in sub-Saharan Africa are above global averages.
Iswaran also noted that Singapore companies can leverage on their strengths and cater to the needs of African markets.
“There are needs also in some of these economies, which actually play to the strengths of our businesses, such as urban solutions and working together on oil and gas, agri-business and so on.
“There’s both an opportunity as well as a potential area where our companies can compete with a significant competitive advantage,” Iswaran added.
According to IE Singapore, Singapore-Africa bilateral trade grew at a compounded annual growth rate (CAGR) of 5.2 percent 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 percent 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.
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