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Australian tech companies looking to access the fast-growing Southeast Asia market should consider setting up their regional base in Singapore. In this article, we look at how the recently signed Singapore-Australia Digital Economy Agreement (SADEA) will benefit tech companies and their future expansion plans.
Economic ties between Singapore and Australia have remained strong for a long period. In fact, Singapore remains one of Australia’s top ten trading partners among larger economies such as China, Japan, United States and United Kingdom.
The two countries have recently agreed to start discussions on a fintech bridge which will enhance cooperation on fintech policy and regulation and help facilitate investments further.
This development builds on the earlier digital economy agreement (DEA) between Singapore and Australia (SADEA) signed in August 2020. The SADEA was the world’s first digital-only trade agreement that recognised the need for an online trading ecosystem. This was a timely move as economic activities have increasingly shifted online throughout the pandemic.
The digital agreement between Singapore and Australia has enhanced the earlier Singapore-Australia Free Trade Agreement (SAFTA) with new digital elements. It is the first of its kind to streamline the digitalisation of trade processes and ease cross-border business activities between the two countries.
In addition to the DEA, Singapore and Australia has signed seven Memoranda of Understanding (MOUs) pertaining to artificial intelligence (AI), data innovation, digital identities, personal information protection, e-invoicing, trade facilitation and e-certification on agricultural commodities.
These MOUs will help to operationalise some modules in the DEA through collaboration projects particularly in areas of e-payments, online consumer protection, cross border data flows, open government data, prohibiting data localisation, SMEs cooperation, source code protection and submarine cables.
Want to leverage the Singapore-Australia DEA to expand your business? Hawksford can help. Contact our experts today.
Singapore is a global financial hub and attracts many fintech’s from all around the world with its strong regulatory framework which welcomes innovation. It is the fourth place in the Global Fintech Ranking and takes the top spot in the Asia Pacific region with Australia following close behind in 6th place. In the 2021 Global Fintech Ranking report, leading companies were seen to gravitate to established financial hubs as Singapore to grab the attention of venture capitalists.
Australian fintech which operates a blockchain-powered registry for commodities has set up an office in Singapore to not only leverage on Singapore’s efficient tax rates but use it as a hub to grow it’s offering into Southeast Asia. This location is beneficial to Trovio as Singapore is positioning itself as a global bullion hub – exempting investment-grade gold, silver and platinum from a goods and services .
The digital agreement will also allow for easier cross-border payments and support non-financial institutions to offer e-payment solutions. Businesses will benefit from faster payments, lower transaction costs and simpler navigation.
The Digital Economy Agreement will minimise the red tape between the two countries through electronic invoicing and paperless custom procedures. In Australia, over 1.2 billion invoices are exchanged every year in Australia, and it will save about $28 billion in over 10 years with the adoption of e-invoicing.
Australian businesses will now be able to leverage on digital trade processes and e-payment solutions under the SADEA for easier cross-border business activities in the Asia-Pacific region as manual customs procedures, logistics and foreign currency exchanges are typically obstacles for foreign expansion.
The DEA framework will support Australia’s Digital Business Plan which is set to deliver e-invoicing for all agencies by 2022 and 80% of invoices to be electronic by July 2021.
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The growth of e-commerce has risen in tandem with the rise of Asia Pacific’s digital economy. By 2030, Asia is expected to fuel up to more than half of the consumption growth worldwide. A report by Google, Temasek and Bain & Company forecasts that Southeast Asia’s internet economy will grow to US$300 billion by 2025. This growth will be driven by its rising middle class and tech-savvy population.
In Southeast Asia alone, 65% of the population is expected to be middle class by 2030, with 60 percent under 35 years of age. Consumer-related digital businesses such as digital commerce, entertainment, and even healthcare may benefit from tapping on this growing customer base in Asia.
Singapore imports 90 per cent of its local food supply due its limited land for agriculture. In fact, the majority of its food imports come from Malaysia, Brazil, and Australia.
Australian Agritech businesses stand to benefit from Singapore’s focus on food safety, especially with restricted global trade during the protracted pandemic. Urban farming and indoor aquaculture are a few plans the city-state has pursued to raise homegrown food production to 30 per cent by 2030.
Under the SADEA, Australia’s Department of Agriculture, Water and the Environment and the Singapore Food Agency and National Parks Board of Singapore will cooperate on electronic certification of agricultural goods trade. This will enable agricultural-related companies to obtain government certification in digital format.
Cross-border data flows are an important component of the digital economy. With growing concerns from government about the safety, security and use of data, it is more crucial more than ever to have secure and uninterrupted data flows across borders.
Strict laws on data localisation can restrict expansion into new markets as data privacy laws vary from one jurisdiction to the other. It may often deter Australian companies from exporting their services and investments due to the high data storage costs.
The SADEA will enhance data connectivity between Singapore and Australia, allowing companies to choose where they store their data and ensure that the business remains compliant in both jurisdictions.
The office of the Australian Information Commissioner and the Personal Data Protection Commission of Singapore will collaborate to share the best practices on data protection.
Businesses in DEA countries are encouraged to apply for APEC Cross Border Privacy Rules (CBPR) certification and similarly exchange data with certified companies under the APEC CBPR system. The DEA partners will cooperate to improve enforcement and compliance on personal information and consumer rights and overall, create a safer online experience.
The COVID-19 pandemic has significantly accelerated online services and furthered the debate on creating digital identities for real-time cross-border transactions. Know-Your-Business (KYB) and Know-Your-Customer (KYC) are often challenging for banks and financial institutions when the main business is in another jurisdiction. The DEA will help streamline safe and secure business processes more efficiently with digital identities to complete due diligence of overseas companies.
The Digital Transformation Agency of Australia and the Smart Nation and Digital Government Office of Singapore will develop policy to support digital identity system to minimise repeatedly providing personal information and provide seamless business-to-business transactions across borders.
If you’re in the tech sector, find out how you can benefit from this development. Contact our expansion specialists today.
The city-state of Singapore has long served as the regional hub of many organisations. It has emerged as a top spot outside Silicon Valley, according to KPMG’s Industry Insiders for its advanced IT infrastructure, intellectual property laws. It is no surprise then it has continued to attract investments in technology and innovation despite the pandemic. In 2020, Singapore scored about $17.2 billion in fixed assets in the electronics, chemicals and research and development sector in 2020.
It has historically been known for attracting big US companies as Facebook and Google. In May 2020, the latter announced that it was building a third data centre valued at $850 million to cater to the growing number of users and usage in the region.
Singapore is also increasingly on the radar of Chinese Tech companies like Tencent Holding to support other facilities in Malaysia, Indonesia, and Thailand. This places Australian tech companies in a vibrant tech ecosystem of investors, business partners and even employees.
The digital agreement’s focus on artificial intelligence (AI) aligns with Singapore’s Model Artificial Intelligence Governance framework released at the World Economic Forum (WEF) in 2019. It is the first of its kind in the ASEAN and aims to provide guidelines for private sector organisations on the fair use of artificial intelligence (AI). In the second edition of Model Artificial Intelligence Governance Framework, it includes real-life industry examples drawn from different industries as finance, healthcare, and transportation.
By 2030, Singapore is aiming to be a leader in the digital economy – developing and deploying AI solutions in key business sectors. In the 2021 budget, the government has set aside $18.1 billion over the next three years for initiatives such as the Emerging Technology Programme which will co-fund the cost of trials and adoption of 5G, AI and cybersecurity technologies.
Singapore’s thriving tech sector is a product of tech-friendly policies and infrastructure. It has been active in positioning itself as a global intellectual property hub for innovation over the next decade. Singapore has aligned its IP regime with major IPR treaties as Paris Convention for the Protection of Industrial Property, World Intellectual Property Organization (WIPO) copyright treaty. This strategic move is to make Singapore the go-to destination for innovators to register their IP rights.
The new SG IP Fast Programme, which began in May 2020, will help to speed up the registration of patents and trademarks and cut the processing time for businesses to six months compared to two years. Tech innovators based in Australia can be assured that their patent examination process can be shorten by referencing results from their home county IP office.
More references can be found on the Australia-Singapore Digital Trade Standards Research Report from the Australia Government Department of Foreign Affairs and Trade.
As businesses increasingly look to tech to innovate and transform, being in a thriving hub like Singapore provides an excellent springboard for future growth.
When looking to grow or expand your business into new regions it’s important to work with a corporate services provider who has the local knowledge and expertise to support you through all stages of growth and administrative procedures during the Singapore company registration process. From companies looking to expand their global foothold, Hawksford offers customised corporate solutions to help our clients achieve their goals.
With a sound knowledge of the tech sector and 10 offices globally, we take away the burden of regulatory, financial and tax compliance, corporate governance, and talent management so you can focus on growing your business.
*This article is intended for general information only and is not intended to apply to constitute legal advice. Hawksford accepts no liability for any errors or for any loss, of any nature, to any person by reliance on this article.
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