Singapore Remains on Track to Grow 1 - 3% in 2012

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With a range of anti-inflation tools under its belt, and productivity and safety measures in check, Singapore is set to achieve modest growth this year, says Rikvin.

Singapore Company Registration

Singapore Company Registration

We are confident that as Singapore continues to be the best place in Asia to live, work and play; foreign entrepreneurs will opt for Singapore company formation and in turn demonstrate a high level of confidence in the city-state's economic prospects.

Singapore’s central bank, the Monetary Authority of Singapore (MAS), has recently released its annual report, the “MAS Annual Report 2011/12,” emphasizing its commitment to tackling inflation and maintaining high levels of investor confidence whilst closely monitoring the effects of the Eurozone on Singapore's economy.

In its economic outlook, the MAS said that the republic’s core inflation is likely to moderate to close to historical average of 1.7% by the year-end. Headline inflation, on the other hand, is said to remain elevated due to high imputed rentals on owner-occupied homes and private road transport costs.

Nevertheless, MAS noted that the city-state remains on track to grow at 1 - 3% in 2012 provided that there is no recession in US, no significant escalation of the Eurozone crisis, and no “hard landing” in China.

Analysis by Rikvin shows that the projected growth of 1 - 3% this year will moderate and bring Singapore’s economic growth to a sustainable level. “This is necessary to relieve cost pressures as the country has witnessed an average growth of 5.8% over the last half-decade, well over its underlying potential. That's why there are low levels of unemployment and high capacity utilization,” explained Mr. Satish Bakhda, Head of Operations at Rikvin, a Singapore company registration specialist.

There are already a few signs of inflation easing out. Electricity tariffs have fallen and domestic oil-related prices are stable now. Also, the 6% increase in domestic wages last year, which was passed on to a variety of services costs, is expected to be more restrained going forward.

The MAS also assured Singaporeans about the efficacy of the city-state’s exchange rate-centered monetary policy framework, which has come into question due to the persistence headline inflation. “As communicated by Mr. Ravi Menon, Managing Director of MAS, the exchange rate policy stance has had a restraining effect on inflation through two channels by filtering import prices, as well as by moderating economic activity in the export-oriented sectors. This policy remains our broadest and most effective anti-inflation tool as Singapore makes a transition towards productivity-driven growth,” added Mr. Bakhda.

MAS will be releasing the next monetary policy statement as scheduled in October this year.

Taking lessons from the 2008 financial crisis, MAS underscored the importance of building a sound financial sector through strong regulation and supervision. On track to fully implement the Basel III capital standards, locally-incorporated banks will meet Basel III minimum capital adequacy requirements two years ahead of the Basel Committee’s time-line of 1 January 2015. Also, all fund management companies will have to meet the enhanced competency, business conduct, and capital requirements by August this year. Those with assets under management greater than S$250 million will have to be licensed, while those below this threshold may operate under the new registered fund management company regime.

“Even though Singapore’s financial sector activity remains subdued amid a slowing global economy, long-term prospects remain bright, especially in areas of asset management, corporate debt market, insurance industry, and the Asian dollar market,” added Mr. Bakhda.

According to MAS' data for 2011, total assets managed by Singapore-based asset managers amounted to S$1.34 trillion; the outstanding stock of corporate debt increased by 9% year-on-year to S$203 billion; non-life insurance gross premiums recorded a growth of 14.5%; and offshore lending expanded, with non-bank loans growing by 17%.

“We are confident that as Singapore continues to be the best place in Asia to live, work and play; foreign entrepreneurs will opt for form a Singapore company and in turn demonstrate a high level of confidence in the city-state's economic prospects,” concluded Mr. Bakhda.

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Established in 1998, Rikvin has since partnered with thousands of investors, entrepreneurs and professionals in their pursuit to access business opportunities overseas. Rikvin’s areas of expertise include Singapore subsidiary registration, offshore company setup, accounting, taxation, Singapore payroll services and other related corporate services. Rikvin is also a licensed employment agency with the Ministry of Manpower (MOM) and offers a full spectrum of employment pass services for foreign professionals who wish to relocate to Singapore.

20 Cecil Street, #14-01, Equity Plaza, Singapore 049705
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