German-Singapore relations accelerate amidst Industry 4.0

In 2017, trade between Singapore and Germany reached US$7.3b.

When global testing and certification company TÜV SÜD opened its Digital Service Center of Excellence in Singapore in 2016, the company believed that the centre would contribute to Singapore’s Smart Nation vision. Stable economies and positive growth are the top factors for German companies who decided to expand their business in Singapore and in the greater ASEAN region, where various initiatives have been made to liberalise markets and integrate economies.

The Singaporean-German Chamber of Industry and Commerce (SGC) revealed in its recent AHK Business Outlook Survey that the general business climate in Singapore and ASEAN remain favourable for German companies. Compared to last year’s 52%, 69% of respondents to the SGC survey in 2018 indicated that their current business situation in Singapore is good. According to SGC, this trend will likely continue until next year, based on the low number of respondents who think that their businesses will not make it.

The business climate will be made even more attractive to German companies, in the lead up to the entry into force of the EU-Singapore Free Trade Agreement (FTA), which will eliminate all tariffs within five years upon its entry into force as well as address non-tariff measures in key sectors. Market liberalisation and economic integration is of high importance for business as it makes the movement of goods and services cheaper and easier. Various initiatives in ASEAN, ranging from the ASEAN Economic Community (AEC), the Regional Comprehensive Economic Partnership (RCEP).

Dr. Tim Philippi, executive director, SGC said that 2018 saw greater opportunities for German-Singaporean collaboration, as the German and Singaporean startup scenes continue to grow and as German companies in Singapore increasingly adopt Industry 4.0 applications. Furthermore, Singapore has maintained its position as a testbed for German companies keen to expand into ASEAN.

“Germany is a knowledge base for the manufacturing and technology sector, and this position continues to be the glue that holds Singapore and German relations together. Both countries thrive in the two sectors, and both continue to collaborate to take their products and services always a notch higher,” he said.

Last year, trade between Singapore and Germany reached US$7.3b, with the top import products from Germany being machines and equipment (23,4%); electrical engineering (10,5%); motor vehicles and parts (9,5%); electronics (8,4%); measurement and control technology (6,4%); and other vehicles (6,1%). Meanwhile, the top export products to Germany from Singapore last year were industrial chemicals (46.6%); pharmaceuticals (11.8%); electronics (10.9%); measurement/control technology (5.7%); and machinery (4.2%).

Investments in Singapore
Several German companies took the opportunity to invest more in Singapore last year, with Linde launching a $30m initiative to develop digital capabilities for its plants across ASEAN. The hub, Asia Pacific Digitalisation Hub, is located in Mapletree Business City and is the first ever Linde centre of its type outside Germany.

Meanwhile, Audi Singapore launched an on-demand rental service in January 2018, the first European car company to offer such a service in the ASEAN region. “Since the founding of the chamber in 2004, the number of German companies in Singapore has increased to 1,700. This is a milestone as the chamber celebrates its 15th anniversary in 2019. Singapore remains Germany’s number 1 export market in ASEAN (€6.9b) and compared to German FDI in Japan which is 13,452 Mio Euro in 2016, German FDI in Singapore is 15,088 Mio Euro” said Philippi.

German companies looking for activities to get involved in the city can look into some of the following SGC events: Business Delegation: Energy Efficiency in Buildings; Workshop: Sustainable Water Management; Activities for the German National Tourist Board; and Activities for the State of Hessen.