Singapore: US banks to get free run at Singapore

The USA and Singapore have entered into a free trade agreement, the USA's first in South East Asia.

According to US Trade Department officials, the agreement provides favourable conditions for US businesses.

Reading what the US says are the benefits to the US, it has to be asked what there is in the agreement for Singapore:

"-- Singapore will accord substantial market access across its entire services regime, subject to very few exceptions. Singapore will treat U.S. services suppliers as well as its own suppliers or other foreign suppliers.

"-- U.S. services firms will enjoy fair and non-discriminatory treatment through strong disciplines on both cross-border supply of services (such as those delivered electronically, or through the travel of services professionals across borders) and the right to invest and establish a local services presence.

"-- Traditional market access to services is supplemented by strong and detailed disciplines on regulatory transparency. Regulatory authorities must use open and transparent administrative procedures, consult with interested parties before issuing regulations, provide advance notice and comment periods for proposed rules, and publish all regulations.

"-- Market access commitments apply across a range of sectors, including but not limited to:

"- Financial services including banking, insurance, securities and related services

"- Computer and related services

"- Direct selling

"- Telecommunications services

"- Audiovisual services

"- Construction and Engineering

"- Tourism

"- Advertising

"- Express Delivery

"- Professional services (architects, engineers, accountants, etc.)

"- Distribution services, such as wholesaling, retailing and franchising

"- Adult education & training services

"- Environmental services

"- Energy services

"U.S. firms have the right to own equity stakes in entities that may be created if Singapore chooses to privatize certain government-owned services." Singapore is the USA's 11 biggest trading partner. Singapore recently joined the USA's Container Security Initiative, which allows US Customs Officers to be stationed at Singapore's ports. The Department of Trade says the following benefits will flow:

* New Opportunities for U.S. Banks

-- The financial services chapter includes core obligations of non-discrimination, most-favored nation treatment, and additional market access obligations.

-- The current ban on new licenses for full-service banks will be lifted within 18 months, and within 3 years for "wholesale" banks that serve only large transactions.

-- Licensed full-service banks will be able to offer all their services at up to 30 locations in the first year, and at an unlimited number of locations within 2 years.

-- Locally incorporated subsidiaries of U.S. banks can apply for access to the local Automated Teller Machine (ATM) network within 2.5 years. Branches of U.S. banks get access to the ATM network in 4 years.

* Expanded Market Access U.S. Insurance Companies

-- U.S. insurance firms have full rights to establish subsidiaries, branches or joint ventures.

-- Singapore to end its prohibition on foreign firms supplying insurance cross-border from their home country. U.S. firms will be able to sell marine, aviation and transport (MAT) insurance, reinsurance, insurance brokerage of reinsurance and MAT insurance, and insurance auxiliary services.

-- New principle of expedited availability of insurance services means that prior regulatory product approval is not required for insurance sold to the business community. Expedited procedures are available in other cases when prior product approval is necessary.

-- U.S. financial institutions may offer financial services to citizens participating in Singapore's privatized social security system under more liberal requirements.

* Securities and Related Financial Services Liberalized

-- U.S. firms may provide asset/portfolio management and securities services in Singapore through the establishment of a local office, or by acquisition of local firms.

-- U.S. firms may supply pension services under Singapore's privatized social security system, with liberalized requirements regarding the number of portfolio managers that must be located in Singapore.

-- U.S.-based firms may sell portfolio management services via a related institution in Singapore.

-- Singapore will treat U.S. firms the same as local firms for the cross-border supply of financial information, advisory and data processing services.