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Singapore: Latin America’s Asian Partner

Latin America is becoming more important for Singapore. Latin American companies can use Singapore as a bridge to China and India.


Latin America is an increasingly important market for Singaporean companies. At the same time, we are beginning to feel more of Latin America’s presence and interests in Asia. (..)

The only other combined market that outpaces this growth is Australia and the Middle East, but their base is too small for real comparison. Singapore’s trade with Latin America has also been increasing. Between 2004 and 2006, total trade involving Singapore and Latin America grew at an average of 29.1 percent per year to $7.8 billion. However, this constitutes only 1.46 percent of Singapore’s total trade.

In terms of investments, it is lesser known fact how much a small nation like Singapore invests in Latin America and the Caribbean. We have invested about $28 billion, albeit much of it directed towards tax havens such as British Virgin Islands, the Cayman Islands and Bermuda. Nevertheless, Singaporean companies have made significant, direct long-term investments in the region. At the end of 2004, Singapore’s stock of investments in Brazil ($129 million) and Mexico ($556 million) made us Asia’s second largest source of foreign direct investment (FDI) in each of those countries. Only Japan surpassed us.

What is more significant is the fact that our companies are not investing in resource assets. Instead, Singaporean companies are investing in high employment-generating sectors. Our footprint in the region numbers more than 60 companies in 21 countries throughout Latin America and the Caribbean. Unfortunately, the same cannot be said of Latin American companies in Asia.

In a survey conducted by International Enterprise (IE) Singapore last year, we found that companies generally venture into Latin America due to demand for their products and services. More encouragingly, 85 percent of respondents reported that investments have been profitable. Reflecting confidence in business opportunities, more than half (53 percent) of survey respondents expressed an intention to further expand Latin American operations. If we had done a similar survey looking at Singaporean companies doing business in China and India, I do not think we would have found a similar level of profitability.

Today, China and India account for 37 percent of the world’s population and constitute 18 percent of the global economy. We can only expect these figures to grow in the foreseeable future, given both real gross domestic product (GDP) growth and the level of private consumption in Asia. It is becoming apparent why most Boards of Directors of Asian and Latin American companies are forcing their business development teams to come up with an Asian strategy.

Two or three years ago, in my position at International Enterprise Singapore—a government agency responsible for helping Singapore-based companies to internationalize operations and foster the development of Singapore as a thriving global trading hub—there was a little procrastination when I wanted to meet Latin American multinational corporation executives. Today it is different; they want to meet and see how we can help with their Asian strategy.


The sheer size and strength of China’s economy poses both challenges and opportunities. Singapore’s strategy has been to identify niches and complementary areas where we can add value rather than directly compete.

In 2006, Singapore’s trade with China stood at $55 billion, an increase of 27 percent over the previous year, making it Singapore’s fourth largest trading partner. Since 1997, China has also been the number one investment destination for Singaporean companies. Singapore is China’s seventh largest investor, having accumulatively invested more than $15 billion.

Singapore’s relationship with China is marked by a very significant role that we played in the early stage of its open door policy. In the late 1980s, our ex-Deputy Prime Minister Mr Goh Keng Swee acted as an economic advisor to Shenzhe—China’s first special economic zone.

In 1994, the two countries strengthened their relationship by jointly embarking on a large-scale township development project—the Suzhou Industrial Park (SIP). Today, the SIP is a well-managed and integrated township of over 70 square kilometers with excellent infrastructure and a high-quality environment, accommodating 80,000 residents. It has attracted $16 billion in investment, and since inception, its GDP has grown at an average of 45 percent per year.

However, the picture was not always rosy. We did go through our learning curve. We learned that it was not enough to just cultivate relationships at the central government level. From the SIP project, it became clear that relationships should be built at the provincial and municipal levels. It seems obvious today, but in 1990s it was not so apparent.

To ensure these strong relationships continue, we have since adopted several approaches. First, we are using political platforms to strengthen relationships. We have established several G-G level platforms. At the central government level, we have the Joint Council for Bilateral Cooperation chaired by the Deputy Prime Ministers from both countries. Also, we have developed provincial-level Business Councils to raise awareness about business opportunities and to facilitate Singaporean companies' commercial interests in certain provinces. These Councils allow stronger relationships to be built between the political leadership and also provide avenues for co-investment and dispute resolution.

We are also helping Singapore-based companies internationalize in China. IE Singapore has set- up offices in nine locations in China to provide on-the-ground support for our businesses. Importantly, we have chosen to be selective in our approach and focused on a few key sectors where Singapore companies have solid track records and international reputation (e.g. environmental engineering, water and waste water treatment, healthcare management, education services, infrastructure, and industrial park development).

To attract Chinese investment, Singapore is positioning itself as a gateway to the global economy. Our wide network of free-tade agreements (FTAs), excellent logistics and communications network, and similar language and cultural background make Singapore a natural choice. To date, over 2,300 Chinese companies have established operations in Singapore. Of them, 116 companies have also chosen to list in Singapore to capitalize on our corporate governance standards and capital market depth.


Bilateral trade between India and Singapore has grown to record levels, reaching $13 billion in 2006, an over 20 percent increase from 2005. Singapore investments in India have also grown. We are India’s seventh largest inward investor country with cumulative investments worth $1.6 billion. In 2006, Singapore was India’s second largest investor.

How have we strengthened our engagement with India? In the last three years, Singapore secured a solid FTA with India. The Comprehensive Economic Cooperation Agreement (CECA) is providing the framework for a more attractive business environment. The Indian government has also recently decided to set up special economic zones (SEZs) to provide a catalyst for the growth of manufacturing and export sectors. Singapore and India have agreed to jointly set up an SEZ in India, and both sides are working to implement it.

In return, Indian companies have also found Singapore to be a logical springboard to other markets. The more than 2,000 Indian companies in Singapore are using our infrastructure and services to do business globally.

If you are wondering why this is happening, I will let you in on the best kept secret in the business world: the Singapore government has been actively supporting and investing in the export growth of foreign companies based in Singapore that are doing business in Asia and beyond. We provide incentives and grants for business development being coordinated from Singapore for the rest of the world. Shouldn’t Latin American companies wanting to grow in Asia also join the club?

Satvinder Singh is the Americas Regional Director at International Enterprise SingaporeThis column is based on a Viewpoints Americas from the Americas Society and the Council of the Americas.

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