Indonesia Increases Minimum Wage for 2022

ASEAN Briefing

December 14, 2021  

by Ayman Falak Medina

 

Indonesia has increased the average minimum wage of each province by 1.09 percent for 2022. The figure was obtained through the new guidelines on minimum wage under Government Regulation 36 of 2021 (GR 36/2021) — one of the implementing regulations of Indonesia’s Omnibus Law.

Under GR 36/2021, the minimum wage is based on the economic and employment conditions, which are:

• Purchasing power parity;
• Manpower absorption levels; and
• Median wage variables (the margin between the 50 percent of the highest wages and 50 percent from the lowest 50 percent of the lowest wages from employees in the same position).

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What are the new rates for 2022?

The following rates represent the minimum wage of each province in Indonesia. The rates in cities or districts are normally higher than the provincial minimum wage.

Read full article:

https://www.aseanbriefing.com/news/indonesia-increases-minimum-wage-for-2022/

 

 

 

Cambodia to Increase Minimum Wage for 2022

 ASEAN Briefing

Oct. 19, 2021

Written by Ayman Falak Medina 

On September 28, 2021, Cambodia’s Ministry of Labor and Vocational Training (MLVT) issued Prakas 264 which sets the new minimum wage for the garment, textile, and footwear industries for 2022. Unlike other countries, Cambodia’s minimum wage rates only apply to these industries.

Under Prakas 264, workers in the garment, textile, and footwear industries will be afforded the following minimum wages:

• Regular workers – US$194 per month (an increase from US$192 in 2021); and
• Probationary workers – US$ 192 per month (an increase from US$187 in 2021).

Prakas 264 also sets out the minimum wage for piece-rate workers who are paid by the number of textile/garment/footwear pieces they produce. For such workers, the pay rate is determined by their level of production and if this results in the worker earning more than the minimum rate, then that worker will be entitled to that higher amount. However, if their production brings in a pay rate lower than the minimum wage, the employer must adjust the worker’s pay to equal to the minimum wage.

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What other benefits are workers entitled to?

In addition to a minimum wage, workers in the garment, textile, and footwear industries are also entitled to:

• Attendance bonus — US$10 per month;
• Transportation or accommodation compensation — US$7 per month;
• Food allowance — US$0.50 per day (or one free meal per day);
• Overtime and seniority bonus — US$2-US$11 per month for those between their second to the eleventh year of work.

...

Read full article: https://www.aseanbriefing.com/news/cambodia-to-increase-minimum-wage-for-2022/

 

What to Expect from Cambodia’s Chairmanship of ASEAN in 2022?

Nov. 4, 2021

Chheang Vannarith / Khmer Times 

 

Cambodia has assumed the chairmanship for ASEAN for 2022 amid unprecedented challenges caused by the Covid-19 pandemic and the urgency to carry out a safe and sustainable post-pandemic socio-economic reopening and recovery. The unfolding political crisis in Myanmar—some refer to it as a civil war—and the consolidation of the Quad and the formation of AUKUS pose pressures on ASEAN centrality. Navigating ASEAN through such an increasingly volatile and vulnerable geopolitical environment requires strong leadership.

...

Foreign Minister Prak Sokhonn acknowledged that while the context of Cambodia and Myanmar’s crises were different, he hoped that the lessons learnt from Cambodia’s experience could be helpful for the resolution of the Myanmar crisis. Yet, while the grouping respects the principle of non-interference, ASEAN’s credibility is on the line.

Cambodia is ready to appoint a special envoy to facilitate inclusive political dialogue. However, the lack of flexibility and sincere cooperation from the military regime remains the main stumbling block. At the latest ASEAN Summits, Hun Sen expressed his disappointment with the military government over its lack of cooperation. The Cambodian Chair will need to robustly apply quiet diplomacy to convince the military leaders to cooperate and compromise.

On the South China Sea issue, Cambodia will try to facilitate the negotiations on the Code of Conduct (COC) with a slim hope of concluding it by the end of next year to mark the 20th anniversary of signing the Declaration of the Conduct of Parties in the South China Sea (DOC). Notably, the DOC was one of Cambodia’s key deliverables in its 2002 ASEAN chairmanship. There will be a joint statement to commemorate the 20th anniversary of the DOC.

 

Full article: https://www.khmertimeskh.com/50964697/what-to-expect-from-cambodias-chairmanship-of-asean-in-2022/

 

Cambodia Introduces New Pension Scheme

October 15, 2021 by ASEAN Briefing Written by Ayman Falak Medina

In March 2021, Cambodia introduced Sub-Decree 32 which implements a new pension scheme in the country. Before Sub-Decree 32, only schemes related to occupational risks and healthcare were enforced.

Under the current social security scheme, employers with one or more employees must register themselves and their employees with the National Social Security Fund (NSSF) within 30 days of operating. The NSSF provides three schemes:

1. Occupation risk insurance – work-related accidents;
2. Healthcare insurance; and
3. Pension scheme.

The NSSF first implemented the occupational risk insurance scheme in 2008 followed by the healthcare insurance in 2016. In 2019, the government introduced the Social Security Scheme, but its implementation has been pended.

Sub-Decree 32 introduces the mechanism and procedures, contribution rate, and benefit claim for the four types of pension schemes provided under the decree. These are:

• Old-age pension;
• Disability pension;
• Survivor’s pension; and
• Funeral allowance.

What are the conditions for eligibility?

Old-age pension

To be eligible, the NSSF member must be registered under the pension scheme, must be at least 60 years of age, and have made contributions to the pension fund for at least 12 months.

Disability pension

To be eligible, the NSSF member must be registered under the pension scheme and have made contributions to the pension fund for at least 60 months before becoming disabled.

Survivor’s pension

The benefits are given to family members on the death of an NSSF member who has made contributions to the pension fund for at least 60 months.

Funeral allowance

The allowance is given only on the death of a person who is eligible for the old-age or disability pension.

Sub-Decree 32 stipulates that companies that have not registered with the NSSF must do so within 30 days of the effective date of the decree and that their employees must also be registered within three days of commencing employment.

What are the components of the pension scheme?

The pension scheme consists of two components:

1. The compulsory pension scheme; and
2. The voluntary pension scheme.

The compulsory scheme

Under the compulsory scheme, the contribution rate will be borne 50 percent by the employer with the remaining 50 percent by the employee.

The contribution rates will be done in three states, as follows:

• 1^st stage – four percent of the contributable wage (wages before tax deductions) whereby the employer will contribute two percent and each employee two This will be implemented for the first five years of the scheme;
• 2^nd stage – eight percent of the contributable wage, whereby the employer will contribute four percent and each employee four This will be implemented after the first stage is completed and for five years; and
• 3^rd stage – there will be subsequent increases of 2.75 percent every ten years.

Employers are obligated to remit their pension contributions to the NSSF by the 15^th of the following month and the contribution report — which includes the number of employees — must be submitted on the 20^th of the following month.

 

The voluntary scheme

NSSF members can also request to participate voluntarily in the pension scheme if they meet the following conditions:

• The applicant is under the age of 60 and unemployed, but is still able to make the pension payments;
• The applicant is under the age of 60 and wishes to pay the monthly contribution to receive a much higher old-age pension than the amount they are receiving under the compulsory pension scheme; or
• Have income higher than the wage ceiling.

The rate of the contribution under the voluntary scheme must be equal to or greater than that paid under the compulsory pension scheme.

Read full article from ASEAN Briefing

Hiring Costs in ASEAN

 ASEAN Briefing, Oct. 4, 2021

Indonesia

Minimum wage

Indonesia’s Ministry of Manpower issued circular No. M/11/HK.04/X/2020 in late October 2020, which advised that due to the economic impact of the pandemic, regional governments should keep monthly minimum wage rates the same as 2020.

Of Indonesia’s 34 provinces, only five have decided to increase the minimum wage for 2021. Calculations for the monthly minimum wage are carried out by the provincial or district wage council.

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Malaysia

Minimum wage

Malaysia’s 2020 monthly minimum wage rates are set to continue to 2021, although the government will launch a review later in 2021 to ensure earnings remain relevant to current economic conditions. The monthly minimum wage in 56 major cities is 1,200 ringgit (US$291), whereas the minimum wage in non-urban areas and rural towns is 1,100 ringgit (US$266).

...

Philippines

Minimum wage

The Philippines has daily minimum wage rates that vary from region to region, ranging from PHP316 (US$6.57) to P537 (US$11.17) a day for 2021. The wages are set by tripartite regional wage boards located in every region.

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Singapore

Singapore does not have a minimum wage, but it does have a comprehensive social insurance system. The Central Provident Fund (CPF) is a social security savings scheme, in which contributions are mandatory for citizens and permanent residents only. Foreign workers are not eligible for the CPF scheme. Employers and employees contribute 17 percent and 20 percent, respectively, of ordinary monthly wages, up to an income ceiling of S$6,000 (US$4,530). The rates are applicable to employees aged 55 years and below.

 ...

Thailand

Minimum wage

The daily minimum wage in Thailand is between 313 baht (US$10.03) — 336 baht (US$10.77) for 2021.

 ...

Vietnam

Minimum wage

Vietnam sets a different minimum wage level across its four regions. Region I (urban Hanoi and Ho Chi Minh City) registered the highest minimum wage of VND 4,200,000 (US$181) while Region IV registered the lowest at VND 3,070,000 (US$132). Moreover, employees that have had vocational training must be paid at least seven percent higher than the applicable minimum wage rate.

 ...

Read full article: https://www.aseanbriefing.com/news/hiring-costs-in-asean/

 

 

The US-ASEAN Trade and Investment Facilitation Agreement Explained

 ASEAN Briefing, 27 Sept 2021

The US-ASEAN Trade and Investment Facilitation Agreement (TIFA) is a framework that defines economic engagement between the two parties. While short on specifics, the TIFA — which was signed in 2006 — sets forth broad goals and principles for the US and ASEAN to cooperatively work toward strengthening trade and investment.

ASEAN is currently the US’ fourth-largest trading partner, accounting for over US$354 billion in trade in 2019. As of 2020, the US was the largest source of foreign direct investment in ASEAN, responsible for over US$328.5 billion in investments. Close to 42,000 US companies export to ASEAN, supporting over 625,000 American jobs.

As trade tensions with China persist, deepening economic relations with ASEAN has become a higher strategic priority for the US. The TIFA, as an overarching framework, provides a useful guide for how the US and ASEAN will increase their economic integration.

Strengthening the relationship

The TIFA contains several references to strengthening the relationship between the US and ASEAN. The TIFA builds upon the two parties’ goals to create an open, multilateral trade environment while building upon previously signed agreements. These include the 1990 Memorandum of Understanding between the US and ASEAN, the Enterprise for ASEAN Initiative, and the US-ASEAN Enhanced Partnership.

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Read full article: https://www.aseanbriefing.com/news/the-us-asean-trade-and-investment-facilitation-agreement-explained/

EU-ASEAN Trade Facilitation: The ARISE Plus Program

 ASEAN Briefing, 20 Sept 2021

The ASEAN Regional Integration Support by the EU (ARISE) was an EU-led trade facilitation program between 2013 to 2016. The program consisted of three components:

• High-level capacity building;
• Supporting the development and realization of single market goods; and
• Enhancing the capabilities of the ASEAN Secretariat to support the ARISE program.

The EU has since continued its support for the facilitation of trade to ASEAN countries and greater economic integration of the bloc through ARISE Plus. The program also supports the implementation of the ASEAN Economic Community Blueprint (AEC) 2025. From 2017-2022, the ARISE Plus program will provide €40 million (US$46 million) to enhance economic integration and an additional €50 million (US$58 million) from 2019 onwards for country-level trade support programs...

What are the components of ARISE Plus?

The ARISE Plus program consists of four main components.

a)      Trade facilitation and transparency

Under this component, the program supports the streamlining of non-tariff measures and the transparency of trade laws and regulations. Furthermore, the program aims to enhance private sector engagement through three initiatives, namely:

• The ASEAN Trade Repository (ATR) – which provides a single online access point for all trade-related information of ASEAN members.
• The ASEAN Solutions for Services, Investments and Trade (ASSIST) – which is a trade facilitation tool that helps ASEAN-based businesses find solutions on cross-border issues related to the implementation of ASEAN economic agreements.
• The ASEAN Customs Transit System (ACTS) – which is a customs transit management system officially launched in November 2020 that assists businesses who move goods across borders without paying the required duties and taxes.

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Read full article: https://www.aseanbriefing.com/news/eu-asean-trade-facilitation-the-arise-plus-program/

 

 

E-Commerce License and Permit in Cambodia

 

E-Commerce License and Permit Fees in Cambodia

ASEAN Briefing, 1 Sept 2021

Companies and individuals engaging in e-commerce in Cambodia must now apply for relevant permits and licenses, or risk fines for non-compliance.

On May 12, 2021, Cambodia’s Ministry of Commerce and Ministry of Economy and Finance jointly released Prakas 315 and Prakas 316, which describe fees and penalties associated with e-commerce licenses and permits. Prakas 315 and Prakas 316 both came into effect on May 26, 2021.

Read full article:  https://www.aseanbriefing.com/news/e-commerce-license-and-permit-fees-in-cambodia/ 

Who needs to get e-commerce licenses and permits?

The e-Commerce Law is a far-ranging law that regulates both domestic and cross-border electronic transactions. The law goes beyond the standard retail e-commerce, as it also applies to all commercial and civil transactions that are done electronically.

 

What are the fees for e-commerce permits and licenses?

The fees to acquire a permit or license depending on whether the applicant is an individual person, a sole proprietorship, a legal person, or a branch office of a foreign company, as described in Prakas 315.

Building an e-commerce strategy in Cambodia

The Cambodian government has emphasized the importance of e-commerce for the country’s development in recent years.

In November 2020, the Cambodian government launched the e-Commerce Strategy, a 10-chapter document putting forth the country’s strategy to develop, integrate, and regulate the sector. A key factor in the strategy document is integrating Cambodia’s small and medium-sized businesses with e-commerce value chains to promote the development of the country’s digital economy.

Read full article: https://www.aseanbriefing.com/news/e-commerce-license-and-permit-fees-in-cambodia/ 

 

 

 

Cambodia and ASEAN Chairmanship 2022: Opportunities and Preparedness in the Process of ASEAN Political-Security Community Building

 IRIC, May 31, 2021

Read full article: http://iric.gov.kh/cambodia-and-asean-chairmanship-2022-opportunities-and-preparedness-in-the-process-of-asean-political-security-community-building/

Minimum Wages in ASEAN for 2021

 ASEAN Briefing 

May 4, 2021

• Minimum wages across ASEAN countries are gradually increasing to match the rise in the cost of living.
• However, due to the pandemic, many ASEAN members did not raise their minimum wages or did not raise them significantly.
• Despite the increases, minimum wage rates in ASEAN remain among the lowest in Asia.

Minimum wage rates across ASEAN countries are rising gradually to match the region’s increased cost of living and boost domestic demand. However, due to the pandemic, many ASEAN members did not raise their minimum wages or did not raise them significantly.

Despite rising salaries, minimum wages in the majority of ASEAN countries remain significantly lower than those in the developed economies of the world. Businesses must take note that the minimum wages in most countries vary regionally and as per the industry and job specifications. They may also be subject to periodic – national as well as local – regulatory changes.

In full: https://www.aseanbriefing.com/news/minimum-wages-in-asean-for-2021/

Audit and Compliance in Cambodia: A Guide for Foreign Investors

 ASEAN Briefing

Ayman Falak Medina 

December 22, 2020

• Resident taxpayers are subject to tax on their worldwide income while non-resident taxpayers are taxed on their Cambodia-sourced income only.
• Non-Cambodians will be considered a resident taxpayer if they are in Cambodia for more than 183 days or have their principal place of abode in the country.
• Penalties for non-compliance apply to failure to file, late filing, or filing fraudulent returns.

Resident taxpayers are subject to tax on their worldwide income while non-resident taxpayers are taxed on their Cambodia-sourced income only.

Resident taxpayers will have their principal place of business in Cambodia whereas a non-Cambodian national will be considered a resident taxpayer if they are in Cambodia for more than 183 days or have their principal place of abode in the country.

All business entities, that meet the criteria set out in Prakas 643 of the Ministry of Economy and Finance must submit their financial statements to be audited by an independent auditor.

The business must fulfill at least two of the three following criteria:

• Businesses that have an annual turnover of 4 billion riel (US$977,000);
• Businesses that have total assets of over 3 billion riel (US$733,000); and
• Have more than 100 employees.

Appointing auditors

On July 10, 2020, Cambodia’s Ministry of Finance and Economy issued Ministerial Order 563 (MO 563), which sets out the requirements for the types of business entities that must be independently audited.

Under MO 563, public companies, companies with public accountabilities (businesses that have debt instruments), and ‘investment projects’, are obligated to be independently audited for each financial period. The regulation also states that other business entities that achieve a certain annual turnover or have assets of a certain value will also need to be independently audited.

Businesses that are obligated to be audited are required to do so for a minimum of three consecutive years, and the issuance of the audit report shall be completed no later than six months from the closing date of the accounting period.

How are these entities defined?

Companies with public accountabilities are those that have debt instruments traded in the domestic or international stock market.

These also include enterprises that hold assets in a fiduciary capacity (holding or managing assets on behalf of persons that are unrelated to the company. These are banks, insurance companies, credit unions, and mutual funds, among others.

Public companies are those that are effective under the Law on the General Status of Public Enterprise.

Non-profit organizations will also need to be audited if they meet the following criteria:

• Have annual expenses of more than 2 billion riel (US$489,000); and
• Have more than 20 employees.

Certificate of compliance

Enterprises that are classified as Qualified Investment Projects (QIPs) must submit a certificate of compliance (CoC) by March 31 of each year in which they were given a Final Registration Certificate by the Council for the Development of Cambodia (CDC). Without a CoC, the entity could lose its investment incentives.

The following documents need to be submitted to obtain the CoC:

• Articles of incorporation;
• Articles of incorporation issued by the MoC;
• Latest audited financial statements;
• Latest patent tax certificate;
• Certificate pertaining to tax obligations from the Tax Department;
• The latest information regarding the import of materials or equipment by the QIP;
• The CoC from previous years (if applicable); and
• Latest company information extracted from the MoC website (business extract).

Fiscal periods

The tax and accounting year in Cambodia do not need to coincide with the calendar year. If a company is established during the financial year, then the first period of accounts will run from the date of incorporation to December 31.

Accounting standards

The National Accounting Council of Cambodia has adopted the same standards as the IFRS for SMEs. The standards are referred to as the Cambodian International Financial Reporting Standards (CIFRS for SMEs) and the Cambodia International Financial Reporting Standards (CIFRS).

Businesses registered as QIPs must have their financial statements audited by an external independent auditor registered with the Kampuchea Institute of Certified Public Accountants and Auditors.

Investment projects are defined as QIPs. QIPs are projects that are eligible to receive fiscal and non-fiscal incentives from the Cambodian Investment Board. They are divided into three types – domestic QIPS, export QIPs, and supporting industry QIPs.

Annual reports

All companies regardless are required to prepare their documents in the Khmer language and must use the Khmer Riel on all accounting records. However, financial statements can also be prepared in English and other foreign currencies if the business activities are with foreign entities.

Businesses should provide the following:

• Financial statements;
• Statement by directors on the financial statements;
• A statutory declaration by the director or officer primarily responsible for financial management; and
• Auditor’s report.

All business entities registered with the Ministry of Commerce (MoC) are required to file an Annual Declaration of Commercial Enterprises (ADCEs) on the MoC’s online system within three months of re-registration with the MoC. Failure to do so could result in a 2,000,000 riel (US$500) fine.

Tax returns for monthly taxes, such as withholding tax and corporate income tax, must be filed monthly, and within 20 days of the following month. This will be extended if the 20^th day falls on a public holiday or non-working day.

Penalties for non-compliance

Penalties for non-compliance apply to failure to file, late filing, or filing fraudulent returns. The resultant penalties range from 10 to 25, to 40 percent, and interest of 1.5 percent for late or unpaid taxes.

In full: https://www.aseanbriefing.com/news/audit-and-compliance-in-cambodia-a-guide-for-foreign-investors/

 

Cambodia Issues Decree on Tax for E-Commerce Transactions: How Can Businesses Comply?

 ASEAN Briefing

Ayman Falak Medina 

April 22, 2021

On April 8, 2021, Cambodia issued Sub-decree 65 on the implementation of value-added tax (VAT) on e-commerce transactions made by non-resident entities that do not have a permanent establishment (PE) in the country.  

Cambodia’s digital startups have helped blunt the economic impact as its garment manufacturing industry — which accounts for 80 percent of exports — has faced serious financial problems because clothing brands have either canceled orders or stopped placing new ones due to the COVID-19 pandemic.  

In addition, the government established a national e-commerce strategy in November 2020, which focuses on strengthening 10 sub-sectors:

1. Strategy and policy focus and institutional coordination;
2. Legal and regulatory frameworks;
3. SME regulations;
4. Information and communications technology (ICT) infrastructure;
5. Digital knowledge/skills infrastructure;
6. Payment systems;
7. Domestic e-commerce/trade logistics;
8. Cross-border trade;
9. Access to finance; and
10. Trade information and in-market support.

What are the obligations for non-resident entities?

What is the penalty for non-compliance?

 Read full article in the below link

In full: https://www.aseanbriefing.com/news/cambodia-issues-decree-on-tax-for-e-commerce-transactions-how-can-businesses-comply/

 

Prospects for EU-Asia connectivity: The 'European way to connectivity'

 

 European Parliament Think Tank

April 06, 2021

The EU strategy on connecting Europe and Asia

Following the 2016 Global Strategy, the European Union External Action Service (EEAS) and the Commission carried out a mapping exercise in which they examined the existing policies, instruments and projects related to Euro-Asian connectivity. The main findings of this exercise were summarised in a joint staff working document, published in November 2017.

In September 2018, the Commission and the Vice President/High Representative adopted a joint communication on Connecting Europe and Asia – Building blocks for an EU strategy, setting out the EU's vision on how to better connect Europe and Asia. It is also related to the implementation of the EU Global Strategy and is to be read together with the Commission's (then) proposal for the 2021-2027 multiannual financial framework (MFF), subsequently adopted in December 2020.
 

The joint communication acknowledges the EU's experience in creating its internal market through a sustainable, comprehensive and rules-based approach to connectivity. It proposes that the EU engage with its Asian partners along three strands:
 

1 efficient connections and networks between Europe and Asia through priority transport corridors (including air, sea and land transport) and high-capacity network links, the creation of which would promote the development, among other things, of digital connectivity, energy connectivity and people-to-people connectivity, whose synergies could spur innovation;
 

2 partnerships for sustainable, open, inclusive and rules-based connectivity with countries in Asia, and with regional and international organisations;
 

3 sustainable finance ensured through diverse financial tools and improved mobilisation of resources, reinforced leveraging of EU financial resources and strengthened international partnerships, to address a significant investment gap and create fair terms for business.

 

In full: http://www.europarl.europa.eu/RegData/etudes/BRIE/2021/690534/EPRS_BRI(2021)690534_EN.pdf 

Seizing Investment Opportunities in Vietnam’s Garment and Textile Industry

 ASEAN Briefing, March 8, 2021

The garment and textile industry is one of the key industries in Vietnam with the second-largest export turnover in the country. In 2019, the industry’s export value contributed to 16 percent of the total GDP. In the past five years, the textile industry has continuously grown at an average rate of 17 percent annually.

In 2019, Vietnam’s garment and textile industry earned US$39 billion from exports, a year-on-year increase of over 8.3 percent, according to the Vietnam General Statistics Office. Garment manufacturing accounts for the majority of businesses, at 70 percent. Major factors driving the growth of the market are low labor costs and growing textile exports to the EU, the US, Japan, and South Korea.

Industry overview: 3 sub-sectors

Vietnam’s garment and textile industry consists of 3 sub-sectors: upstream sector (fiber production), midstream sector (fabric production and dyeing), and downstream sector (garment manufacturing).

Sub-sectors that produce fibers or fabric are mainly used for domestic consumption because of the low quality. The downstream sector of garment manufacturing accounts for around 70 percent of the total apparel and textile sector in Vietnam with Cut-Make-Trim (CMT) models being the main activities. In 2019, CMT accounted for about 65 percent of total exports, while the more advanced business models, like Original Equipment Manufacturer (OEM) and Original Design Manufacturer (ODM) accounted for only 35 percent.

The US, Europe, Japan, and South Korea are the main export destinations of Vietnam’s textile and garments products. Although Vietnam has a huge potential for cotton cultivation and production, the textile industry imports most of the cotton inputs. In 2019, Vietnam imported up to 89 percent of fabrics, of which, 55 percent were from China, 16 percent from South Korea, 12 percent from Taiwan, and 6 percent from Japan.

 

In full: https://www.aseanbriefing.com/news/seizing-investment-opportunities-in-vietnams-garment-and-textile-industry/

 

Singapore Announces Strategy for E-commerce Industry: Potential for Global and Regional Hub

 ASEAN Briefing 11 Feb 2021

Singapore’s Minister of Trade and Industry Chan Chun Sing has introduced the latest strategy to transform the country into a regional and global e-commerce hub. The initiative was announced at the 2021 Amazon Southeast Asia Online Seller Summit, where the minister also noted that online sales in Singapore as a proportion of total retail sales had increased from 5.8 percent in January 2020 to 14.3 percent in November.

According to a report conducted by Google, Temasek, and Bain & Company, Singapore’s e-commerce industry is set to be valued at US$22 billion by 2025, from its current US$9 billion estimations. Despite this small valuation compared to that of its ASEAN neighbors, the country’s strengths lie in its capacity to attract multinational firms from all industries.

Singapore has long been a preeminent destination for establishing regional headquarters for many international firms. The country’s tax and legal regimes are considered among the most investor-friendly in the world, and its financial industry is highly integrated with the global international markets.

Strengthening digital infrastructure

The first initiative will be to strengthen Singapore’s digital infrastructure, particularly in digital connectivity, data analytics, payment systems, and new business innovation.

A key initiative will be developing 5G infrastructure; the backbone of the country’s digital economy. Some 50 percent of the country will have 5G coverage within two years and there will be two nationwide 5G networks by 2025. The greater bandwidth from the networks will enable an increase in capacity to handle large e-commerce orders.

Furthermore, the government is encouraging local businesses to adopt digital solutions, such as e-payments and e-invoicing. For example, Singapore’s Myinfo SingPass, an electronic ‘Know-Your-Customer’ system, has already unlocked more online lending and the National Digital Identity (NDI) platform allows Singapore residents with the means to provide their identity and sign documents digitally.

In full: https://www.aseanbriefing.com/news/singapore-announces-strategy-for-e-commerce-industry-potential-for-global-and-regional-hub/

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