Gone are the days of shopping at traditional retail stores. Today, e-commerce plays a significant role in how businesses sell and consumers buy. It accelerates the buying process and enables cost reduction. Now, companies around the globe can enjoy access to a broadened target market and affordable advertising.
Singapore, an important trade hub in Asia, never hesitated to jump on the e-commerce bandwagon, and rightly so. Around 3.3 million people shop through e-commerce platforms in the Southeast Asian city-state. Total revenue of USD 2,793 million is expected from e-commerce sources by the end of 2021. But, that’s not all; a compound annual revenue growth rate of 9.9% is anticipated by 2025.
To foster this industry and use it as a tool to flourish the overall economy even further, the government has taken specific initiatives. Continue reading to learn more about how government initiatives facilitate e-commerce businesses in the region.
Singapore’s Vision for E-Commerce
Singapore aims to emerge as the leading e-commerce hub in Asia. While this is not an unrealistic vision for Singapore, there are a few challenges. The very first challenge to this goal is competing against major players such as China, Hong Kong, Indonesia, and South Korea.
Not only is China the e-commerce hub of Asia, but it is also the largest international online retail marketplace. Home to Alibaba Group Holdings Ltd, China accounted for 59.2% of Asia’s online retail sales in 2020. Before Singapore can even compete with China, the nation needs to compete with South Korea, Indonesia, and Hong Kong – all of which have a very strong e-commerce presence on the continent.
First, Singapore should focus on alleviating more minor challenges and aim for steady growth of the e-commerce industry. E-commerce companies need plenty of resources to survive and dominate the industry.
Thankfully, the government has considered all of these and introduced several grants and initiatives to mitigate the risks of embracing e-commerce. Below is an overview of some of the efforts made by the Singapore government:
Singapore Industry Initiatives & Grants
Retail Industry Transformation Map (ITM)
The Retail Industry Transformation Map (ITM), launched in 2016, expects a flourishing Singapore retail industry. It entails a rich mix of local brand owners with international footprints and highly potent omnichannel retailers. What’s more, it is also supported by an array of skilled and professional individuals.
The Retail ITM includes vital strategies to aid sector transformation by emphasizing innovation and new technology adoption. These can help businesses stay agile, responsive to current trends in skills and jobs, and in turn, drive productivity.
In addition to the Retail Industry Transformation Map, several other innovative initiatives will be taken to accelerate the transformation and growth of the retail industry. For example, IMDA will enlist several stakeholders such as e-commerce marketplaces and wholesalers to empower retailers to sell through not only physical brick-and-mortar stores but also through online mediums. Furthermore, support will be provided to help retailers adjust to this transition and deliver efficiently. Overall, such efforts will allow traditional retailers to compete online too.
Due to the rapidly growing online space, more and more businesses want to tap into the e-commerce landscape. Startups are no exception. A support platform called the Action Community for Entrepreneurship (ACE) has been designed to offer a holistic package to foster a vibrant and connected ecosystem in the online space for startups.
This collaboration between JTC Corporation (JTC) and Enterprise Singapore offers co-innovation programs between startups and corporates and provides favorable tax regimes. Startups in the e-commerce industry can also take advantage of the different ACE support schemes. The schemes include corporate innovation, peer group mentoring, access to international communities and markets.
Enterprise Singapore also provides shared platforms to enable small and medium-sized enterprises to pool their resources. Resources like a shared e-commerce platform help SMEs enter e-commerce even if they cannot bear the initial capital costs. In addition, the platform will increase efficiency by 45% through functions like inventory management, integrated warehouse functions, and order-fulfillment capabilities.
ezyCommerce, a collaboration between Singapore Post and Enterprise Singapore, provides a subsidized rate for one-stop fulfillment service to SMEs. Plus, all SMEs can enjoy up to 70% financial support for specific development and adoption costs under the Collaborative Industry Projects initiative (CIP). Moreover, through CIP, SMEs can get up to 50% of support for equipment- and software-related costs. JTC’s LaunchPad @ one-north is another initiative that serves as a nurturing ecosystem and a conducive environment for e-commerce startups.
National Trade Platform (NTP)
The National Trade Platform (NTP) is an effort by The Inland Revenue Authority of Singapore (IRAS) to support Singapore’s e-commerce investments. The NTP is an up-to-date trade information management system that supports businesses in the trade and logistics industry. It is also helpful for companies in related sectors such as trade, where exporters and importers will benefit from having access to the commercial trade and government-related services. The NTP primarily includes the digitalization of bill of lading and sea freight e-commerce.
The NTP will allow companies to improve productivity by streamlining their work processes and lowering manual trade document exchange inefficiencies. It also ensures that companies are well-prepared for the digital space by providing trade data analytics for insights.
What’s more, the NTP helps local SMEs become more competitive entities in the e-commerce field. By making SMEs more equipped for international trade, the NTP promotes Singapore as a great e-commerce destination for global shippers, traders, and logistics companies.
In line with this, electronic services company CrimsonLogic has introduced its Global eTrade Services (GeTS). GeTS helps businesses meet international compliance and regulatory requirements efficiently and quickly. This allows foreign government agencies and traders to exchange trade documents electronically and enables enterprises to clear customs without losing valuable time.
Talent development is another way to empower and enable workers. Individuals working in the e-commerce or related field are provided ways to upgrade their skills. This skill enhancement can make them more competent, confident, and productive.
SkillsFuture is one of the most significant talent development efforts in Singapore. It was introduced in collaboration between SkillsFuture Singapore (SSG) and Workforce Singapore (WSG). SkillsFuture presents a varied range of options for individuals to improve their professional capabilities and increase competency.
Skills Framework for Retail
The Skills Framework for Retail is an initiative by SkillsFuture. It was designed to assist the local workforce and help promote their skills mastery and overall lifelong learning. Developed by WSG, the Enterprise Singapore, and SkillsFuture Singapore (SSG), it is backed by industry associations, unions, organizations, and training providers.
The Skills Framework for Retail will give participants valuable information and guidance on occupations and job roles, career pathways, sector information, existing and emerging skills, and training programs for different skills, upgrading, and mastery. It is to be noted that the Skills Framework for Retails emphasizes omnichannel and e-commerce.
Logistics & Freight Gateways
Logistics players in Singapore have also played a significant role in mitigating challenges and promoting the e-commerce potentials of the country. Companies have invested millions in new systems and warehouses to maintain a strong position in the market. For example, in 2016, Singapore Post invested S$182 million in a 3-storied regional e-commerce logistic hub called eComm Log Hub. The 553,000 square feet hub provides an automated sorting capacity of a whopping 100,000 parcels daily.
Housed in SingPost’s Regional eComm Log Hub is another e-commerce logistics company called Quantium Solutions. In addition to its expansion to 19 markets, Quantium Solution and Alibaba’s joint venture has allowed the logistics service provider to grow in Oceania and Southeast Asia.
Another remarkable market player is Keppel Logistics. A wing of Keppel Telecommunications & Transportation is a leading logistics company in Singapore, Hong Kong, China, Indonesia, Malaysia, Australia, and Vietnam. UrbaFox, its urban logistics subsidiary, helps brands with channel management and omnichannel logistics for expansion.
Cargo transportation business YCH is another example of a noteworthy logistics service provider in Singapore. This leading company has recently ventured into the eCommerce logistics operations and dominates areas in India, China, and ASEAN.
Singapore Changi Airport is an important logistics hub for Singapore. The airport handles more cargo than any other Southeast Asian airport. The largest air cargo hub in the region is also 7th in the world rank. The Airport Logistics Park of Singapore (ALPS) and Changi Airfreight Centre (CAC) cover more than 70 hectares. The seven airfreight terminals within the CAC have three million tonnes handling capacity.
The airport hub has an outstanding material handling system. The best part of this international airport is access to other global cargo markets. Over 7,400 weekly flights serve more than 100 countries. The airport is connected with China through 35 links. This is great for the growth of e-commerce as a significant number of e-commerce goods are exported out of China.
Singapore airfreight terminal operator (SAT) flaunts a 6,000 sqm e-commerce air hub worth S$21 million. Integration with Singapore Post’s airmail consignment operations simplifies sorting and other processes. As a result, the turnaround time for international eCommerce mail is reduced by 50% – ensuring faster delivery.
Other mention-worthy airfreight gateways include SingPost’s Regional eCommerce Logistics Hub, The FedEx Singapore Regional Hub by FedEx Express Singapore, and DHL South Asia Hub by DHL Express Singapore. All of this helps provide speedier deliveries.
Sea Freight Gateway
Since its establishment in 1972, the PSA Container Ports & Beyond has leveraged Singapore’s strategic location and evolved into the largest container transshipment hub in the world. Today, with over 40 terminals spread across 16 countries, it is a primary enabler of global trade. In addition, Singapore PSA owns Keppel Distripark, a cargo distribution complex positioned in the Free Trade Zone. This allows exemption from the GST.
PSA has global partnerships. For example, it has invested in China United International Rail Container Co. Ltd., a Chinese container shipping company. It is also a participant in the Chongqing Connectivity Initiative, a government-to-government project between Singapore and China.
With more than 30 international partners, including governments, private companies, and shipping lines, PSA has a short position in the global e-commerce market. These strong relations will help them enjoy seamless connectivity perks. PSA has also expanded to cater to more relaxed supply chain management by presenting PSA’S PORT+ Solutions.
Agencies Supporting E-Commerce Development in Singapore
Since its conception in 2018, the government agency Enterprise Singapore (ESG) has been championing local businesses to build and enhance capabilities. It also promotes innovation and internationalization – and thus supports the e-commerce capabilities of businesses.
ESG follows a company-centric approach and caters to companies in different growth stages. With the assistance of its overseas partners and local networks, ESG enhances competitiveness through the Industry Transformation Maps. Among other efforts, ESG helps improve productivity by enabling the adoption of new technologies, which in turn is excellent for businesses looking to explore the e-commerce space.
Economic Development Board (EDB)
Economic Development Board (EDB) works with businesses by establishing partner connections and government incentives. It helps through growth initiatives and provides information. EDB also offers tax incentives that may help jumpstart e-commerce investments. It also boasts partnerships with government agencies to support and provide resources to e-commerce businesses.
Moreover, it has worked with IBM to establish the IBM Smarter Commerce Centre of Competency. The IBM Smarter Commerce Centre of Competency warrants the integration across the different business steps such as procurement, selling, and fulfillment – thus enhancing the country’s e-commerce footprint in the world.
Action Community of Entrepreneurship (ACE)
Action Community of Entrepreneurship (ACE) is a collaboration between JTC and Enterprise Singapore. ACE is an excellent support platform for startups hoping to enter the e-commerce industry. It is designed to offer an integrative package to further nurture a connected Startup environment.
Civil Aviation Authority of Singapore (CAAS)
As a Ministry of Transport Statutory Board, CAAS nurtures a national dream of growing a vibrant and safe civil aviation system and air hub. Understandably, this will have a significant role in the growth of the Singapore economy. The growth of the aviation industry and air hub will improve connectivity and overall business. On top of that, under the Aviation Development Fund, CAAS supported the eCommerce AirHub establishment. As a result, in addition to transforming Singapore Aviation, the e-commerce sector will be more competitive and productive.
A leading international port group, PSA Singapore has port projects all across the Americas, Europe, and Asia. Singapore can handle 20.67 million TEUs annually across 60 berths in Pasir Panjang, Brani, Keppel, and Tanjong Pagar. How this helps the e-commerce industry is by improving connectivity. It is one of the busiest transshipment hubs globally and is connected to 600 ports in different parts of the world.
Inland Revenue Authority of Singapore (IRAS)
IRAS has introduced The National Trade Platform (NTP) to assist e-commerce investments in Singapore. NTP is a trade information management service that supports trade and logistics companies. The NTP can immensely boost business productivity by simply streamlining work processes and reducing the number of manually prepared documents. On top of that, companies will have access to insights from data analytics.
Info-communications Media Development Authority (IMDA)
Since IMDA launched the Infocomm 21 blueprint, it has presented a revised master plan called Connected Singapore. The blueprint comprised four strategies that reveal IMDA’s vision: identifying potential and unleashing possibilities using info-communications. Indeed, this can help Singapore’s e-commerce development by simply boosting connectivity. IMDA utilizes competency centers, training programs, and the Infocomm Local Industry Upgrading Programme to attain this.
JTC Corporation (JTC)
JTC has substantially impacted Singapore’s economic development since its establishment in 1968. It develops the space and land to aid industry transformation and create high-quality jobs. In addition, JTC attempts to push innovation constantly and aids Singapore in its journey to embracing e-commerce. As Singapore is trying to transform the business landscape through e-commerce, JTC will facilitate innovation space and develop specialized land.
SkillsFuture collaborates with Workforce Singapore to support the Singapore e-commerce scene by offering skills development and improvement for people working in e-commerce or related firms. By providing the option to hone a plethora of skills to individuals, SkillsFuture helps increase workforce competency. This makes individuals more competent and therefore enhances overall workplace productivity.
As statistics imply, the e-commerce market in the ASEAN region will boom by 2025. Already a popular business hub in Asia, Singapore has immense capabilities to soar higher in the e-commerce industry. Good news for companies looking to explore the advantages of investing in Singapore e-commerce: The government and various agencies are promoting e-commerce services in Singapore. So, you may easily benefit from various incentives and grants. Surely, there is an immense opportunity to grow e-commerce in Singapore.
Want to be a part of this ever-growing industry, then read our blog on how to set up an e-commerce company in Singapore. We can also help you incorporate your company and handle all your secretarial matters. Contact HeySara today!