Singapore Businesses Concerned With Potential Impact Of Brexit.
Legal News & Analysis - Asia Pacific - Singapore - Regulatory & Compliance
21 August, 2016
Many businesses in Singapore that sell into Europe or aspire to do so are concerned about the potential impact on them of the UK's vote to leave the EU, an expert has said.
This is part of Out-Law's series of news and insights from Pinsent Masons experts on the impact of the UK's EU referendum. Watch our video on the issues facing businesses and sign up to receive our 'What next?' checklist.
Technology law specialist Bryan Tan of Pinsent Masons MPillay, said Singapore companies' worries including concerns over potential double regulation under competition and data protection rules in the UK and EU, as well as about what will happen to EU-wide intellectual property rights when the UK leaves the EU.
"Singapore tech companies realise that to grow into truly international businesses they need to move beyond development, testing and bringing companies to market in Asia and look to new markets in the US or Europe," Tan said. "Cross border trade is becoming increasingly important. For Singapore businesses the UK market has until now been an easy extension for them to reach into."
"The UK has traditionally been viewed as providing a springboard into Europe by Singapore companies, owing largely to its historical connection as a Commonwealth country, as well as familiarity with the language, culture and legal systems. Singapore companies are worried that they might need to consider entering Europe via other markets if the UK does not provide the same seamless access to the single market in future as it does at the moment," he said.
"The businesses are also concerned about the prospect of double regulation in Europe in the area of competition regulation and merger control post-Brexit, and have similar concerns about whether and to what extent their data transfer arrangements could be interrupted as a result of potentially divergent approaches to data protection in the UK and EU. There is also uncertainty over whether their EU trade marks will continue to apply in the UK after Brexit, as well as whether there will be any changes to customs laws," Tan said.
Tan said that he expects Singapore would want to agree a trade deal with the UK when the UK exits the EU. Singapore and the EU have already signed off a free trade agreement, but that the deal has yet to come into force as it awaits the scrutiny of the EU courts.
"Singapore is second only to Hong Kong in Asia in terms of the percentage of trade it does with the EU, including the UK, relative to its overall trade," Tan said. "The removal of the UK from the scope of a trade deal with the EU means there is likely to be some scrambling about trying to put in place a separate deal with the UK. From the UK's perspective it might seek a single deal with the ASEAN group of countries, which includes Singapore, or via a series of multilateral agreements. The EU had attempted to agree a trade deal with the ASEAN block some years ago but found difficulties in doing so and instead pursued a separate trade deal with Singapore on its own."
The terms of the UK's exit from the EU have yet to be negotiated. Tan said, though, that if the UK places restrictions on migration from the EU and agrees a new trade deal with Singapore then it could open potential opportunities for people from Singapore to compete for jobs in the UK, especially if those jobs are for training positions following university studies in the UK.
However, Tan warned Singaporean students might be put off coming to the UK to study subjects such as law, engineering, accountancy and medicine if UK qualifications become relevant only to the jurisdictional boundary of the UK. Students could instead look to study in other European countries to gain broader qualifications, he said.
Singapore's financial services market could, however, benefit from Brexit if an exit from the EU harms the strength of the London market. Tan said that Singapore's financial services market has steadily gained ground on Switzerland since the Swiss agreed to lifting banking secrecy and said it was an example of how business from Europe could shift to Singapore when market conditions change.
Diane Mullenex of Pinsent Masons, an expert in the Middle East legal market, said the drop in the value of the British pound since the UK voted to leave the EU could serve to attract an increase in investment in London real estate from investors in the Middle East.
"London has been an attractive market for real estate investment from the Middle East, including sovereign wealth funds," Mullenex said. "While the low value of the pound means that some existing investors from the Middle East have concerns about a drop in the value of their current portfolio, many cash-rich investors see an opportunity to invest in real estate projects that may now be cheaper as a consequence of the UK's decision to leave the EU."
For further information, please contact:
Mohan Pillay, Partner, Pinsent Masons