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4 reasons to have a professional corporate secretary for your Singapore Company

4 reasons why you should have a professional corporate secretary for your Singapore Company – Every company requires a few set of key office holders. You will require the director of the company that will be making executive decisions and also run the day to day work of the business. There is also the shareholders who usually are the one funding the business and also own the business as it is running. They will in turn appoint the directors that will be in charge of running the business.

Director’s work closely to deliver results for the betterment of the shareholders equity and therefore receive a salary or bonus.

There is also another set of company officials that are important to the running of the business and also the best to advise on the methods of running it. The corporate secretary is a key person in the running of your private limited company and making sure a few things are done right before you go ahead with either growing or selling your business. Let us share with you the 5 reasons why you should have a professional corporate secretary for your Singapore Company.

1. The corporate secretary ensures your corporate governance is done right

For most business owners that are first time starting up, you will have no idea what are some of the key concerns that you might have when it comes to corporate governance. Corporate governance might not be that much of a concern at birth of the company or when you are not funded by someone else. But once the business starts to mature and when other parties start to join the company, the differences in having a good corporate secretary versus not having one can be very clear.

Corporate governance also ensures timelines are met, there are many legal timelines to follow to make sure the meetings are in effect and an experienced corporate secretary will be a good person to have when you as an entrepreneur is not too familiar with such legal timelines.

2. Deadline reminders for busy business people

When you are busy running your business, you might miss timelines such as your AGM and tax submission dates. The good thing about having someone who is ready to remind you will outweigh many things. The corporate secretary of a company receives reminders as well and usually have a system to keep track of all the deadlines of their customers. With a good system in place, they will be able to alert you when the time is up to submit your annual return, do your AGM and make sure you do not miss any of them that might incur you late fees.

For most people who receive emails and forget them, this service will be great from the corporate secretarial services provider.

3. Advise you on legality of actions

Timelines and dates are very important in a legal document. If you need to give notice for a meeting to be effective, you need to give that notice.

The Corporate Secretary is well versed in this time lines and will be the best to advice how to make sure all processes are done legally.

Whether someone can or cannot appear at a meeting is also important, the corporate secretary will be able to give guidance when such disagreements appear.

4. Neutral person when there are arguments

Most businesses have multiple partners and directors. As a corporate secretary, you are suppose to be a neutral party in any discussions.

The corporate secretary will be able to give a fair opinion for the directors and shareholders to make decisions that will allow the best for the company and also for the shareholders.

The corporate secretary will also have to take the side of the company and not any of the members of the shareholder and directors.

 


K Cloud Accounting provides high quality corporate secretarial services in Singapore for Singapore startups and SMEs.

Contact us to find out how to work with us today!

4 reasons why you should have a professional corporate secretary for your Singapore Company

How to legally save/reduce your Singapore personal income taxes in 2019

How to legally save/reduce your Singapore personal income taxes in 2019 – Common question asked by many people in Singapore especially since the year has ended for the year of 2018 and we have about 3 months plus to start worrying about how much taxes you are needed to contribute to the building of our nation!

According to the IRAS website: https://www.iras.gov.sg/irashome/web/pages/taxCalendarListing.aspx , the due date for your personal income tax is 18 April 2019, for those who are not into e-filing, 15 April 2019 is the deadline for paper filing! So remember this date and do your filing as soon as possible, preferably now!

If you are filing through e-filing, here is the link: https://mytax.iras.gov.sg/ESVWeb/default.aspx

With the links provided and aside, lets start on the ways of How to legally save/reduce your Singapore personal income taxes in 2019, while we explain how Singapore’s tax works.

singapore personal income tax rate

Singapore personal income tax rate from IRAS website

Singapore follows a progressive income tax system where the lower income group pay little or no income tax whereas the rich will pay more of a percentage of their income as taxes. Taxes contribute to the public goods that everyone in Singapore uses. Singapore mainly derives her tax revenue from personal income tax, corporate tax and goods and services tax.

So based on this chart for those who make an income below $20,000 is exempted from paying any tax.

Whereas someone with an income above $320,000 pays 22% of the subsequent amounts in personal income taxes.

So lets take a scenario where you are a desk bound job holder working in the CBD making $3,500 per month.

Based on that figure: $3,500 x 12 = $42,000, your tax rate will be ($550 for the first $40,000) + (7% x the remaining $2,000) = $690

*did you know you do not need to pay your income taxes at one go and instead could pay through GIRO monthly? Use this link to do it: https://www.iras.gov.sg/irashome/Quick-Links/Payments/Applying-for-GIRO/*


So for someone who makes in excess of $40,000, the tax rate starts to climb sharply and there are legal ways to reduce taxes, this is very different from evading taxes! Do not confuse the two different terms. Also note that the best way to reduce taxes is actually to do your tax planning earlier on in the year. Your tax is calculated from the 1st of January of the year to the 31st of December of the the year being assessed. So even if you missed out on doing some of this moves in 2018, read this article and do something about reducing taxes in 2019!

So lets begin.

1. Contribute more into your personal or your parent’s CPF account

Everyone in Singapore who holds a full time job in Singapore contributes to their on personal Central Provident Fund savings. (CPF) So this is also one of the main means of savings for your retirement.

The ordinary wages limit for contribution is $6000 for CPF. And the annual voluntary contribution limit is $37,740.

You could contribute to your parent’s CPF accounts to increase that limit because remember, when you contribute to CPF, you get to get some relief from it.

 

2. Donating to a charitable cause

Not every charitable cause is tax deductible. For those that are clear cut deductible, make sure they are institutions of public character: https://www.charities.gov.sg/setting-up-a-charity/Pages/About-Charities-And-IPCs.aspx

Donations can be counted as relief for you to reduce your tax burdens for the year.

So make more donations to causes you care about today! Oh and don’t forget the official receipt as proof.

3. Claim NSmen relief if you’re married

If the husband is a key appointment holder, you can claim up to $5,000 of relief, and for the married person, wives can claim $750 relief on their income.

Of course the relief amounts are higher for Key Appointment holders and also when they are active. For those who are not familiar, here is the link to learn more about NSmen relief and also spouse relief for NSmen: https://www.iras.gov.sg/irashome/Individuals/Locals/Working-Out-Your-Taxes/Deductions-for-Individuals/NSman-Relief–Self–Wife-and-Parent-/

 

4. Working mother child relief

For anyone who has studied Singapore taxes and tax relief, the working mother child relief (WMCR) is definitely the single most effective and powerful tax relief anyone can get.

As the name implies, you need to be a mother and have a child. Either you own, or adopted. Sorry gentlemen, this doesn’t apply for you.

So according to the link on IRAS website for this relief: https://www.iras.gov.sg/irashome/Individuals/Locals/Working-Out-Your-Taxes/Deductions-for-Individuals/Working-Mother-s-Child-Relief–WMCR-/

The Working Mother’s Child Relief (WMCR) is given to:

  • Reward families with children who are Singapore Citizens
  • Encourage parents to take up Singapore citizenship for their children
  • Encourage married women to remain in the workforce after having children

Single or male taxpayers are not eligible for this relief.

Child Order WMCR Amount
1st 15% of mother’s earned income
2nd 20% of mother’s earned income
3rd and beyond 25% of mother’s earned income

So the amount of a mother’s income that can be deducted can be seen from the table above. For the first child you get to deduct 15% of the amount of earned income to be taxed, the second child you add another 20% and 25% for the 3rd child onward. Do note that there is a cap on the amount of relief you can claim on a child and also the amount you can claim personally, so there is a limit to this!

5. There is a relief cap for total tax relief

Currently the tax relief is capped at $80,000. So the ones that are affected will be those who are definitely making more than $80,000 a year and able to claim a relief of more than $80,000.

Here is the link for the relief information: https://www.iras.gov.sg/irashome/Individuals/Locals/Working-Out-Your-Taxes/Deductions-for-Individuals–Reliefs–Expenses–Donations-/#title7

 


Here are 5 easy ways to help you legally reduce taxes if you’re making an income from either a salaried job or a directorship.

For self employed persons or business owners, there are ways where you could use the startup tax exemptions of Private limited companies to reduce taxes legally as well. There are also expenses that can be legally claimed if you decide to start up a business at home and contribute towards corporate taxes instead of personal taxes.

K Cloud Accounting Pte Ltd is a full suite services company that works with companies from all kinds of industry in Singapore. We work closely with Startups to provide the best advise for their growth and work along side them to grow their companies and capabilities.

If you are keen to get some assistance on tax advisory services or tax planning services, do set up a meeting for discussion.

How to legally save/reduce your Singapore personal income taxes in 2019

How Xero Accounting Software saves you time and money

There are many cloud based accounting software in the market right now. Accounting has over the years really changed a lot from the days when paper and pen was used and also when beads are suppose to mean something in calculation. We have slowly translated to using real books to keep track of numbers of transaction and also who it was transacted with and now we moved on to software on the computer that is based on the hard drive or server. We slowly evolved into online based platform where customers are able to check on accounting details as and when they want to.

Xero Accounting Software is slowly becoming one of the leading software in Singapore because of various reasons that we will like to discuss with our potential customers. We will also like to share how we as Xero Advisors could take advantage of this software to provide high quality accounting services for our customers who require high level of standards when it comes to accounting requirements.

1. Bank Reconciliation done digitally

Any accountant will know that the toughest part of doing bookkeeping is the actual work of doing bank reconciliation. The bank records need to tally with the cheque records and also your invoices and this process is very time consuming. With many bank statement pages, comes way more work to trying to tally every transaction.

Most of your time is spend doing something that can be easily done by technology and this is where Xero Accounting Software Singapore helps to cut down on the actual time needed for accounting and bookkeeping work using the bank reconciliation function it has with the banks in Singapore.

UOB and DBS are currently linked up and OCBC is going to join in soon. We look forward to more banks working with XERO to provide this service for Xero Clients.

2. Ease to invoicing and quotations

Startup founders and young businessman do not like to have to go back to office just to get invoicing done. Most business people are on the move all the time. How best it is to have the invoicing and quotation process done easily with an application.

Xero accounting software is able to assist with such needs through a smart phone application that can be used to issue invoices and quotations on the go.

The application is easy to use and has quite a number of flexibility in allowing you to customize the look and style of the invoice and also to be able to input email address for your customer to easily accept the quote through your emails.

3. Around the clock and around the world access

When you are someone who goes around the world a lot to do business, the easy thing to monitor your business is to have access to this data world wide. How best than to have the information in the cloud. Xero is a cloud based accounting software that you can access from anywhere around the world as long as you have internet access. Go through your web browser for the full accounting software or use the application to do most of the basic accounting work that you need to carry out.

There is also 2FA functions that allow you to have added security when it comes to making sure your accounting data do not get leaked because of a misplaced password.

 


 

K Cloud Accounting is glad to assist you if you require help and training for your Xero accounting software. We are accounting services providers who are keen to work closely with you to deliver high quality work for your company in Singapore.

Contact us to find out more about how we can work together to assist you in your management service requirements.

 

Hopes and Wishes for Singapore Budget 2019

2018 was quite a normal year for most businesses in Singapore. What wasn’t really normal was the trade war that has affected the businesses that are directly engaged in the crosshairs of both China and the USA and that would be those involved in trading. With such headwinds still building up with not much of a clear sign of clearing up, we expect things to remain equally challenging for those in the trading sector.

Oil and Gas hasn’t seen much of a big gain and has been fairly still on the low side and with the recent fall of oil prices, unlikely to make much of a recovery this year with the trade war still pretty much in full swing.

The world economy has shifted towards autonomous production and services. Gone are the days where industries that rely on high volume of manpower continue to rely on high volume of manpower.

Singapore will continuously face the challenges of the new world where production and services get lower in cost and price pressures will be to reduce prices overall. We will see some of the lower level jobs slowly move overseas even further and also some financial jobs that are more basic to start shifting to our neighbours.

Some of the businesses in Singapore are therefore seeking assistance and we are looking forward to a few things from the upcoming budget and hope to see good progress for the nation from it:

1. Continuing its support to digitize the economy

The economy which has its main focus in services especially financial services will need to keep growing to keep the economy of the country going strong. The government has over the years supported the digitizing of the economy and we hope to see more being done on this portions to help other service sector businesses to grow further down the digital stage. With the advent of E-Commerce, more and more retail businesses are suffering great competition and could really need some help with going online.

2. Supporting those who have to and need to shift overseas to cut cost

High cost in terms of manpower and land in Singapore is pushing most factories in Singapore out. There are barely any space left for Singapore manufacturing to chug ahead, for those that are low margins, the government could provide some support through its agencies to assist those who were to choose the option of moving out to help them set up overseas.

3. Sector based manpower deployments

Manpower is still very tight in Singapore and everyone knows that its tough even for the government to get it right. We should really look more closely into not just sectors but also into specific industries where Singaporeans are really not seeking jobs in and help to supplement with foreign labour, if not we are really stuck in the cycle of not being to deliver much because of the manpower limitation.

 

Looking forward to a good budget!

 

What are some of the advantage of hiring payroll services

What are some of the advantage of hiring payroll services – Hiring payroll services has become quite a common move by businesses in Singapore for the past 5 to 10 years. Gone are the days when you run most of the administration services in your own office. Many business owners have found that it might be more advantageous to outsource portions of the business to cut cost and also to improve the productivity on the dollar they pay for the services to be done up.

Advantages of hiring payroll services cannot be seen up front but there are a few of them that we will like to discuss with you:

Advantage 1: Saves cost by hiring payroll services

Do you have to get an administrative staff right now just to get your payroll work done and that will cost you easily a few thousand dollars for a fresh graduate. The funds can be better spent in marketing and other means of growing the business if you outsource it for probably a fraction of the cost.

The best thing about outsourcing your payroll services is that you reduce monthly overheads and this is one thing that makes or breaks business in their infancy.

Outsourcing the services out helps you to grow and grow better!

Advantage 2: Changes from the government are updated by hiring payroll services providers

Is your payroll staff aware of all the changes that the government announces every year? Some things can be big mistakes if you do not react to them and this is one thing that can go very wrong if you are on the wrong side of the law.

Payroll Services providers will ensure that they are on the ball in knowing what are the changes and therefore work to ensure that you have the most updated information for your submissions.

They are the professionals who stay abreast on the information and thus ensures that all your work is delivered to the highest quality possible.

Advantage 3: Hiring payroll services providers improves your time efficiency

As an entrepreneur, will you rather want to make more income or bother more about administrative work?

If i were you i will choose income and making more of it. Doing sales and branding the company to go a long way should be the main focus of the entrepreneur.

It makes your time more worth while and that means more time with planning and strategy.

 


K Cloud Accounting is one of the leading payroll services providers, if you are keen to find out more, contact us!

 

What are some of the advantage of hiring payroll services

K Cloud Accounting Launches $388 incorporation package

Happy New Year to customer old and new. 2018 was a challenging yet fulfilling year, with the start of K Cloud Accounting, a Subsidiary under Koh Management Pte Ltd, we have managed to gain a foothold in the startup accounting space.

In the year of 2019, K Cloud Accounting will like to take this opportunity to share with our customers that we will be launching a $388 incorporation package that is inclusive of $315 paid to ACRA for registration.

How do you enjoy such a package? You are to join us as a full suite accounting + corporate secretarial + tax package that starts from a very affordable $160 per month.

We are able to do your monthly bookkeeping, give advise on your corporate governance and at the same time worry about your tax submissions for you!

Why you should go ahead with monthly bookkeeping services you may ask?

1. You do not need to worry about losing your documents

The worst thing that can happen is when you lose your supporting documents at the end of the year and is unable to find them. You don’t have documents to attach and that is bad because you might end up not being able to claim expenses on items that might cost quite a bomb. Getting your suppliers to print them out for you again might prove troublesome and this is a bad situation for any business.

Getting them sorted out every month means that you will not need to worry that much and get things done without fearing of losing them

2. You get updated of your business progress every month

You need to know if you are making good progress every month, how best then to get your accounting done monthly. This also means that you will be able to give your investors progress reports that will keep them interested and happy with you every month. The seasoned entrepreneurs might also be able to give advise if they are familiar with accounting documents and help you save a cent or two.

Contact us to find out more about what you can get out of this package now! Incorporation services done fast and affordable! Outsource bookkeeping services today!

Thank you for the good year of 2018 and looking forward to 2019

Thank you to all customers and friends of K Cloud Accounting. 2018 was the actual founding year of this new startup accounting company and we are glad to say that we have went through quite an eventful year to achieve Silver Status within this short period of time.

Our customers trusted us and worked closely with us to get their accounting, corporate secretarial and tax work outsourced to us through our package price.

With the new year coming, we are looking forward to reach the gold status by the end of the year with a much faster growth in customer count and also with it support staff count.

We are targeting to grow our head count by at least 2-3 more to better serve our customers this year.

We will also be coming up with a series of referral packages to encourage our customers to introduce their friends and family to us.

In this coming year, we expect business conditions to be a little tougher than before with rising interest rates in the western world and also the trade war causing things to tighten on the trading front. There are still many opportunities in the technological startup scene as well as fintech scene where Singapore stands to have a strong advantage in.

We work closely with startups from all walks of life and we wish to continue this close partnership with all startups and SMEs alike in Singapore.

K Cloud Accounting will like to thank everyone from all walks of life for helping us in this road to assisting more companies in delivering high quality accounting services and corporate services for the startup world.

Wishing everyone a happy new year and a great 2019 ahead!

Benefits of doing your bookkeeping monthly instead of yearly

Benefits of doing your bookkeeping monthly instead of yearly

Every business needs a few support work done so that they can run their business well and smooth and also be the best to make decisions with especially when you are running a big budget business. There are many things to watch out for and you should be prepared to do more when you are running this business at the most efficient way as possible.

Running a business is tough, running a business without good information to make business decisions is even tougher. Here comes some of the best consultants that you can have in place for your business to grow and also prosper and at the same time be able to grow fast and strong with the help of good consultants able to guide you and give you a good idea of how to go about giving the best for your business and also for the operations of the business.

So what are some of the reasons you may ask that you should do your bookkeeping services in Singapore monthly instead of doing it yearly?

  1. You get data to make decisions monthlyThere’s a business saying that goes about how business decisions are best made with more data on hand and when you are trying to get the best out of your business, you need to be able to use data to your advantage.

    This is the generation of big data and there has been a tough period of time of consolidating and making use of such data for good use. Usages such as planning your staff count to the amount of money to throw into marketing and so forth.

    There is a strong need of using the accounting data that is generated by the business to make a plan of how best to grow the business and also staff count and also where to allocate the marketing dollar to best serve the long term growth of the company.

  2. You lessen the risk of losing documents

    The worse thing that can happen when running a business is when you lose things. Not only your stock or good but also your important documents such as those of the accounting work and documents that you are suppose to file up and keep for 5 years.There is a law by the Singapore government that will require you to keep legal expense claims document for up to 5 years and between this period the government can choose to audit you and check whether you are claiming your expenses properly if you’re not, you are liable to pay the expenses in terms of taxes and also be in for some penalty.

    Find the link here: https://www.iras.gov.sg/irashome/Businesses/Self-Employed/Learning-the-basics/Keeping-Proper-Records-and-Accounts/

  3. You can change your strategy on the go

    When there is data, there is the chance for change. If you only realize that you are losing money at the end of year, you might end up closing shop but if you realize something is not working along the way. You can tweak it as you go and this gives you a strong advantage over your competitors. Strategy planning is not as easy as just saying you want to grow and it will grow. You need to think through how to out smart and out work your customers and also brand yourself in a way that makes you stand out from the rest.

    On the go strategic planning can sometimes make a difference in how people run their businesses and win.

 

 

 

Benefits of doing your bookkeeping monthly instead of yearly

Taking advantage of Corporate Gifts to impress and gain customer loyalty

Taking advantage of Corporate Gifts to impress and gain customer loyalty

As a marketer would say, it is easier to get your customers to buy more from you than to recruit a new customer. The cost of retaining and also cross selling more products to customers are the best way to get them to do more to with your company than to go out and try to find a new customer and trying to convince them that you are able to do something more for their business and therefore to use your services.

There are many things that you need to take note of when you are trying to get your customers to work closely with you and also for you to reconnect with them once in awhile so that they will want to work longer with you. In the Asian context, the connection and also the relationship is more than anything. What makes things different is when you are able to stay in good contact with your customers and let them know that you still care. The fact that you guys have a good relationship is good enough reason for you to be continuously hired and used in terms of services and also for them to introduce you more customers for the long term.

Some of the best Corporate Gifts Wholesaler that you can give to your customers are those that they will place on their desk. Desk based gifts are great because they will see it everyday and the logo will get etched in their minds. If they are a front facing business and other customers do come by to visit them at their desk, they will also see your product being used. This is awesome because you give them something useful and therefore is placed in a visible spot and at the same time helping you to build brand value over the long term. You will only win big with such a choice.

Things that can be carried around are also great because while documents are carried around, the name of your brand is shown to the world and this will enforce the brand with your customers or even potential customers. This is great for people who are looking to brand with you.

So what are some of our suggestions that we have for you and what are some of the things that you should and could pay notice to when you are keen to get yourself some corporate gift items for your customers or for yourself.

 

  1. Portable Charger
    Power Banks or Portable Chargers are very popular items nowadays with the growth in number of mobile phones being used for not just phone calls and messaging but at the same time for games and also other productivity purposes. This means that most people will not have enough juice for a whole day of work and entertainment and will have to rely on charging to get through the day. Unless you are always desk bound or always near a socket for you to charge your phone. The best alternative is to have a portable charger for you to port into that extra juice you will need to take more photos and videos for the day to post on Instagram or Facebook to share your life with the world.Power Banks are very popular choices because they have nice surfaces for you to print your brand on and when they are used, your user will be able to see the brand of the printing and get associated to your brand name. This is also great for those that are looking to provide high value products or services to the target audience.
  2. Portable Radio
    Life is boring without music and for those who really enjoy their music especially when they exercise, go hiking or when they are generally out with their friends. The portable radio or speaker is one of the best way for them to bring their music with them and also for them to be able to share that music with people.High quality sound is important especially with the depth of music this days with the range of sounds that can be made, you need a good speaker that is able to last a good amount of time as well.The bluetooth speaker supplier is one of the most practical items that you can give for its convenience and also for its usability.
  3. LanyardsLanyards are one of the most useful items to have when you have events or courses that you need to identify your members of the group with. The printing can be done with various colors and you can also have designs on it so that you are able to get the groups in their respective color coding and names. This is also great for exhibition events when you need to print tens of thousands of such items and this is also for those who will want to make sure you are able to identify your own staff for security reasons.Lanyards are highly customziable and at the same time cheap for the purposes that it needs to serve. Lanyard printing is great for all purposes.
  4. Backpacks

Back packs are a great way to give your office staff members something that is useful and will be used. The worse kind of gifts are those that people have but will never use and this is bad because you want your customers or friends to use the items you gift to them.

When you are able to get a good design and material you are able to give them something that either they can use or their children could use and this is great because you will want your customers to actually put some good use into the items. Find a great backpack supplier now!

 

Corporate Gift Suppliers that are able to deliver high quality goods and also good service standards are hard to come by and if you are able to make this commitment to your customers you should also be advised that you should choose good corporate gift suppliers for your business so that they will be able to give you the best for those that you care for such as your customers and your staff members.

Taking advantage of Corporate Gifts to impress and gain customer loyalty today.

China’s Maritime Silk Road and it’s implications for Singapore & South East Asian Nations

China’s Maritime Silk Road and it’s implications for Singapore & South East Asian Nations

This is a blog entry by KCA Director, Tommy Koh who has just returned from a 4 day trip with the Singapore Chinese Chamber of Commerce & Industry (SCCCI) to Nanning, Guangxi Province, China.

The Maritime Silk Road (MSR) is one of the biggest projects endeavoured by a nation in modern history. Together with the Land based Silk Road, China intends to connect the Eurasian Continent together closely through multiple trade links to improve trade across the nations and also at the same time grow its influence in the regions linked to the rising power of China.

To give some background information into what the Silk Road stands for, it basically was an old trading route that started from China during its golden generation of the Han and Tang Dynasties where the demand for foreign goods and foreign demand for Chinese Silk , Tea and Porcelien started an ancient pathway from East to West since the Han Dynasty of 200BCE and lasted till the 1300s.

It connected China to the rest of the European continent through a land route cutting through land locked nations like Kazakhstan, Iran, Turkey through towards the heart of Europe. A good way to understand this is through the map below:

Silk Road

Credits: Wikipedia

 

This ancient pathway linked much of the land masses of Asia with Europe, Cutting through India and the Arabic States. The Maritime Route connected most of current day South East Asia, Indian Ocean states and some parts of Africa. Trade flourished amongst this stops where traders will trade gold and silver for silk, tea, spices and this was also the first sign of how globalization led to the betterment of humanity.

Trade Thrived along this routes and many civilizations flourished with the increased trade between the great Han, Tang and many more dynasties and the great nations of Europe.

Fast forward a few centuries with the rise of China and its 1.38 billion people, China is set to become the biggest economy in the world in the next 10 to 20 years, together with India, both Asian Nations are going to take a bigger role in the world. Similar to how it was before the Industrial Revolution that propelled the Europeans to the fore front of world’s development and GDP growth.

China intends to project itself through trade and with it the plans to have the One Belt One Road master plan that will include most of Europe and Asia into its plans.

Singapore and the ASEAN region, sits nicely in its Maritime Silk Road plans. Most of the trade that China conducts with the world and also its Oil imports come through the Malacca Straits and South China Sea and China will want to ensure that this areas are able to operate without obstruction so that they can continue their breakneck speed of growth and gains.

What are some of the implications of a rise of China and its Maritime Silk Road when it comes to the ASEAN, South East Asian and Singapore region and how we can take advantage of this world plan that China has for the next Century.

 

  1. China seeks to strengthen relationship with the ASEAN nations with joint projects for development and trade

China has the strategy of helping regional allies to grow their economies through building ports, high speed rails and encouraging the set up of technological and logistics hubs. China as a growing economy needs lots of raw supplies and materials which is abundant in the South East Asian regions. Having a better transportation system for the regional traders in ASEAN ensures that China has a sure and steady flow of supplies it needs to do business with the rest of the world.

Palm Oil and natural rubber from Malaysia, Timber from Indonesia, Jade from Myanmar, this are the few things that China will need and will want to import more of from the region. China also wants to make sure it is a Win-Win Situation for their partners if they were to convince the partners in ASEAN that the growth of the Chinese nation will not threaten the stability of the region. China has been offering their expertise and also loan large amounts of money to the regional countries to build up ports and trains that will make the world connect to China in a more efficient manner and thus make the world smaller to China

China has also always treated the ASEAN region as its own backyard. An Asia for Asians has been common throughout history, from the Japanese invasions to the recent rise of China. China has grown wary of US presence in this region and hopes to grow its strength and position in this region. What other way than through trade and commerce. South East Asia has through the many centuries been the main trading partners with China and will always remain so.

Chinese investments into the region will continue to grow, either through its purchase of big ticket businesses in the region, to more investments into infrastructure projects and property development projects. We can expect a Stronger China to take more interest in the region to secure its position and respect in this region.

 

2. China is opening up its Beibu Gulf area that directly connects to South East Asia

Bei Bu Gulf Maritime Silk Road

Maritime Silk Road, Image Credit: http://www.mcbc.com.my/en/business-news/1552

Having a plan and also assets in place to do trade can be seen as just talk. But not for China, China has the political and the financial will to get this whole Maritime Silk Road plan out and they have been working hard on it. With the whole communist party set in getting something done, the whole machinery is churning towards one direction. As you can see on the map above, China sees the ASEAN space as on of their main development plans and this means that there needs to be better communication and also trading routes and connections with the the cities in the South East Asian ASEAN regions.

Beibu Gulf area is equipped with 3 state of the art ports and also connected to the 2nd tier city of Nanning. This whole area will be the southern most port of China and will also get its supplies from Chengdu and Chongqing Cities. The produces of this two cities no longer need to go through Shanghai to be exported and instead cut short their journey through Nanning and the ports in its surrounding areas.

China intends to build up this city in Guangxi as it is the closest base and also in the region of the Southwards business circle, its western and eastern economic zones.

Nanning has since seen major growth spurts and lots of buzz that comes with it.

 

3. China is no longer cheap, ASEAN nations might be the new cheap factory locations of the century

ASEAN

ASEAN Flag. Credits Wikipedia

Gone are the times when people say that China is a cheap place to get things done. China does have its fair share of highly educated engineers that can help propel them to higher value industrial productions that they could not have done in the past 20-30 years. With that in mind together with the plan for “Made in China 2025” discussed by the Chinese Central government, China will move forward with focus in higher value industrial production.

The Association of South East Asian Nations (ASEAN) with its slower development status has been slowly taking up some of the old industries that used to thrive in China. Most branded clothing brands have set up shop is cities across Vietnam to produce fast fashion wear. Japanese business man have come to realize that the Vietnamese are good at certain industrial productions and set up a number of factories in the Capital City of Hanoi.

The Thai people are well known to be the car production capital of South East Asia. Malaysia is a great place for services outsourcing with its strong grasp in multiple language and very favourable exchange rates.

The Chinese have come to be aware of this and are looking south to take advantage of this cheaper source of labour and cost. With better transport through ports and high speed rail, we will see countries such as Vietnam, Thailand, Malaysia and Philippines industrialize even faster with Chinese money buying finished goods from them.

 

4. China will want a stronger political and also military presence in the region

It is common knowledge that the country with the strongest navy dominates the regions. This was true for China during the Ming Dynasty when the Emperor commissioned Admiral Zheng He to sail with thousands of ships and carried with them luxury items that many people have never seen before. They carried out trade and diplomacy around the South East Asian Region, went to India, Sri Lank and eventually East Africa.

With the rise of China as a Major nation in the world, we will be seeing a growth in military strength and also presence in influence for the region.

China has taken on many endeavors including the Regional Comprehensive Economic Partnership that aims to increase trade with China and build a China centric trade pact with China being the biggest economy in the group. The RCEP is set to be an influential pact considering the abandoning of the Trans-Pacific Partnership that President Donald Trump of the United States of America took.

China with its building of bases in the South China Sea will also mean that China will want more presence in this area and tension will be stronger with those neighbours in the area.

The South East Asian nations will need to ensure that their own benefits are kept in check if they choose to work closely with China.

 


There are still more views about how China’s Maritime Silk Road is going to affect and change things in the ASEAN region.

This piece is a work in progress and i will continue with more thoughts in the next few days and weeks.

Stay Tuned!

China’s Maritime Silk Road and it’s implications for Singapore & South East Asian Nations