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.
Strong Economic ties between Singapore and Australia
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.
What businesses need to know about the Singapore-Australia Digital Economy Agreement
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.
How can the Singapore-Australia DEA help business growth?
1. Smoother cross-border access for companies in the fintech industry
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.
2. Australian business can reduce trading costs
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.
For more information on the opportunities which exist for Australian tech companies look to access fast-growing Southeast Asia, view our full article here.
Hawksford is an established facilitator of market entry and business expansion into Singapore. 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.
At Hawksford, we can guide your business expansion into Singapore.
*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.