The prime investment grade indicates that investment confidence remains strong, despite external pressures and current restructuring challenges.
Singapore (PRWEB) March 19, 2013
Fitch, a global credit rating agency, has affirmed Singapore’s sovereign credit ratings, granting the city-state a triple-A (“AAA”) grade for Long-Term Foreign and Local Currency Issuer Default Ratings and “F1+” for Short-Term Foreign Currency IDR. Per Fitch, the outlooks on the ratings are stable.
Analysis by Singapore company registration consultancy AsiaBiz Services points to Singapore’s impeccable record of fiscal prudence as the main contributor to its superior investment grade. In spite of recent challenges following a massive economic restructuring, the Republic’s strong fiscal framework makes it one of the most attractive investment environments in the world.
STRONG BALANCE SHEET
Singapore’s positive balance sheet and robust surpluses have served as buffers against adverse macroeconomic headwinds. As revealed in Budget Statement 2013, Singapore has a current surplus amounting to $3.9 billion, which comprises 1.1% of the country’s total GDP.
According to data from Fitch, Singapore’s account surplus has allowed the city-state to accumulate considerable foreign-exchange reserves; and as such, Singapore is now one of the largest net external creditors among other “AAA” rated sovereigns.
ECONOMIC AND POLITICAL STABILITY
In addition, Singapore’s business-friendly regulatory environment, stable political system, sophisticated financial backdrop and consistent economic performance, among others, are significant driving factors.
The country’s banking system is particularly noteworthy, with domestic banks achieving a non-performing loan ratio of 1.2% and core Tier 1 capital adequacy ratio (CAR) of 12% - 13% at the end of 2012, mostly due to their solid asset quality and high capital reserves.
Commenting further, AsiaBiz Head of Taxation Mr James Nuben said, “The reaffirmed triple-A rating bodes well for investors and entrepreneurs who intend to form a Singapore company. The prime investment grade indicates that investment confidence remains strong, despite external pressures and current restructuring challenges. With its overall economic and political stability, Singapore indeed is ideal as a regional and global investment hub.”
To date, Singapore is the only triple-A nation in Southeast Asia. Other sovereigns with “AAA” ratings include Australia, Canada, Denmark, Finland, Germany, Luxembourg, Netherlands, Norway, Sweden, and Switzerland.
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