Global tax reforms will not hurt Singapore's competitiveness: EDB chairman

SINGAPORE is confident that global tax reforms will not hurt its competitiveness given the "strong value propositions" it has built up over the years, said Singapore Economic Development Board (EDB) chairman Beh Swan Gin.

"If indeed there is a global multilateral effort where such tax incentives are no longer offered, we are not concerned at all because we are quite comfortable and confident that over the past five, six decades of development, Singapore has built up very strong value propositions that can attract companies to come," Dr Beh said in a wide-ranging interview with Singapore journalists to mark the EDB's 60th anniversary this year.

He was referring to the Base Erosion and Profit Shifting (BEPS) 2.0 project, which is still under negotiation amid growing momentum towards an international consensus.

In June, the Group of Seven (G-7) largest economies in the world reached a landmark deal to back a minimum global corporate rate of at least 15 per cent, and this has since been endorsed by G-20 finance ministers last month.

Dr Beh said Singapore is very supportive of a serious multilateral effort to create a level playing field for attracting investments.

"Tax incentives, actually, it's not unique to Singapore - in fact, I can't think of one country that does not offer tax incentives. So actually, it has not been a differentiator for a long time," he said, adding that Singapore is confident it will be able to deal effectively without having to give tax incentives.

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Instead, companies choose locations that best serve their needs, he said, and Singapore has proven itself to be able to provide a very steady and effective environment for activities that are capital, technology and knowledge-incentive and that also offer protection in intellectual property.

Asked about increasing competition from cities that may be reopening more quickly than Singapore, Dr Beh said: "On the contrary, more companies want to come to Singapore because actually Covid-19 has underlined the importance of good governance."

This stems from an emphasis on keeping residents here safe while allowing business activities to function as far as possible with reduced capacities at offices or factories.

"We never had a complete lockdown so companies really appreciate the fact that the government was very thoughtful in how we introduce safe management measures," he said.

With 70 per cent of the population now fully vaccinated and travel arrangement set for further relaxation, Dr Beh said all these "bode very well" for Singapore, with the EDB now seeing more interest in companies wanting to come here.

He noted that a number of industries have thrived through the pandemic, such as semiconductors, pharmaceuticals and the medtech, and these present "hot areas" of opportunities for Singapore.

In particular, Singapore, being a small country, has used that to its advantage to ink deals with vaccine manufacturers.

So far, Thermo Fisher is already planning a US$130 million facility in Singapore, while French pharma giant Sanofi in April said it is investing 400 million euros (S$638 million) in vaccine production here. BioNTech in May said it is opening a regional headquarters in Singapore.

"They know that any plant they establish in Singapore will have way more capacity than our small population can have. So that's why they feel very comfortable deciding and choosing Singapore to locate their plants," said Dr Beh.

EDB was set up on Aug 1, 1961 to lead Singapore's industrialisation efforts, and Dr Beh said the organisation is now at an "inflection point" of transformation as a result of four main drivers of change on top of Covid-19.

This includes the growth of Asia, making the region a major part of Singapore's operating landscape today, whereas the Republic first started out by servicing developed economies such as the United States, Europe and Japan.

Technological advancements and digitalisation, which have been accelerated by Covid-19, as well as a slowdown in globalisation led by geopolitical tensions, particularly US-China contestation, are two other drivers.

In addition, more companies and countries have begun to take climate change more seriously, and this too will shape Singapore's economic strategies, said Dr Beh.

How Singapore is responding to these driving factors is to shift from an investment-driven economy and to extend into one that generates companies and businesses that have innovative products and services that operate out of Singapore.

Dr Beh said: "This then will help us complement what we are doing to attract international companies to set up shop in Singapore but also to have such companies - owners of capital and entrepreneurs in Singapore - to build regional and global leaders, and in that way then provide another growth engine for our economy and create good jobs for our people."