More and more Chinese companies go to Singapore for financing and investment, and the bilateral economic relationship between the two Asian countries continues to grow stronger.

"In recent years, a rapidly growing number of Chinese enterprises are considering Singapore as their first choice when seeking overseas expansion," says Lim King Boon, Counsellor of industry and investment at Singapore's embassy in China.

Lim also heads the Beijing office of the Singapore Economic Development Board to promote Chinese investment in his country.

According to Lim, more Chinese companies sought direct or indirect listing in the Singapore Stock Exchange during the past few years.

Since the COSCO Corp (Singapore) Ltd, a subsidiary of the China Ocean Shipping Group, got listed in Singapore in 1993, a total of 85 Chinese companies have been listed in the country by the end of last month.

The number was only 20 in 2002.

However, "integration with the international capital market is just a beginning for Chinese companies' globalization," Lim says.

The Singapore government encourages Chinese enterprises to directly invest in the country.

Chinese enterprises can leverage on the country's world-class seaport and airport facilities, excellent IT and telecommunications infrastructure as well as its network of Free Trade Agreements for wide market access.

Singapore has signed FTAs with countries and regions like the United States, ASEAN, Australia, Japan and the European Free Trade Association, which account for about 60 per cent of the world market.

More than 1,600 Chinese companies had incorporated there by the end of last year, rising from some 600 in 2002.

Statistics from Lim's office indicate these companies had accumulatively invested US$600 million in Singapore.

However, these companies, mainly small and medium-sized ones, are focusing on commercial related businesses like trading, consultancy, shipping, construction and financial services.

"The Singapore government expects more companies would invest in manufacturing in the country," Lim says.

In fact, manufacturing accounts for one-fourth of Singapore's total gross domestic product (GDP), and the government aims to maintain that level.

The country has advantages in four industrial sectors as electric and electronic appliances, petrochemical, biotech, and machinery and engineering.

To attract investment in manufacturing, research and development (R&D), or regional headquarters, the government has adopted a series of preferential policies.

The first is preferential taxes. In Singapore, the corporate income tax is 20 per cent. But, the tax could be exempted for five to 10 years for foreign-invested factories.

And a preferential tax rate of 10 to 15 per cent is adopted for foreign-invested regional headquarters in Singapore.

In addition, the government offers subsidies for talent training and R&D activities.

Chinese companies like TCL, Baosteel, ZTE and Lenovo have set up regional headquarters in Singapore.

As more and more Chinese companies go to Singapore, the country also continues to be among China's leading foreign investors.

In 2004, Singapore's contractual investments in China amounted to US$4.4 billion, an increase of 29.4 per cent year on year.

A total of 1,279 Singaporean projects were invested in China, an increase of 11.8 per cent compared to 2003. As a result, Singapore was China's eighth largest foreign investor last year.

Singaporean companies like CPG Corporation Pte Ltd plan to continue to invest in China.

CPG, engaged in architecture and engineering design, programme management and water projects, said that it will increase investment to expand its business in China.

On the trade front, the bilateral relationship has also been growing.

In 2004, the bilateral trade between China and Singapore amounted to US$26.68 billion, an increase of 44.5 per cent compared to 2003.

Imports from China reached US$27.4 billion, representing an increase of 41.9 per cent while exports to China amounted to US$26.0 billion, increasing by 47.2 per cent.

In terms of its proportion of Singapore's total trade, China's share grew from 7.8 per cent in 2003 to 9.2 per cent in 2004. This makes China the fourth largest trading partner for Singapore, after Malaysia, the EU and the US.

The bilateral trade is expected to top US$50 billion by the year 2010.

This goal is put forward by Wu Bangguo, chairman of the Standing Committee of the National People's Congress, during his visit to Singapore in May.

Peter Ong, Permanent Secretary of Singapore Ministry of Trade and Industry, said that he believes China and Singapore could achieve a win-win partnership, at the China-Singapore Economic & Trade Forum held on 18 May.

"We hope the two countries would launch FTA talks soon to further foster the bilateral economic relationship," Lim says in the interview with China Daily.

(China Daily 08/09/2005 page1)