You may be thinking that Brexit is no real concern of yours. You're not based in the UK, or in any other EU state for that matter, so there's no need to spend any more time thinking about it, right? Wrong. Astute businesses in Singapore should at the very least be aware of Brexit and its potential implications for them (both positive and negative).
So what is Brexit?
Brexit, in short, is the UK's legal exit from the EU, a political and economic association of (currently) 28 European countries with the objective of ensuring free movement of people, goods, services and capital within its member states. Bre0078it was initiated following a public referendum in 2016 in which the UK population narrowly voted to leave the EU. Many reasons are proffered for this surprise outcome, but the growing feeling of resentment from certain sections of British society towards unelected bureaucrats in Brussels (EU headquarters) is one of the most commonly cited.
At the time of writing, the current UK Prime Minister, Theresa May's, proposed divorce deal with the EU has been voted down by the UK Parliament three times. As a result, the Brexit deadline has been extended to 31 October 2019 and we are little closer to knowing how Brexit will take shape than we were three years ago! Will the UK government be able to secure a deal with the EU providing for continued assurances with regard to trade and movement, for example? What if we see a so-called "no-deal" or "hard" Brexit? In 2016, I suspect many of us would have sent our crystal balls back to the shop had they shown the latter but this is rapidly looking like a very real possibility.
But why should I care?
Regardless of what (if anything) happens on 31 October, it is clear that the UK and the EU are in for a period of continued uncertainty. Given that Singapore is one of the largest trading partners of the UK in Asia, there's no question that this is also an important issue for Singapore businesses. Clearly there is a chance that we will see a lessening of UK/EU investment while there is still some uncertainty. On the other hand, Singapore may be an obvious alternative for investors who previously favoured the UK given the prominent use of the English language, the proximity to rapidly advancing economies such as China and India and its growing reputation as a hub for new and expanding industries such as Blockchain.
Ok, so what do I need to think about?
General Commercial Contracts
With so much investment from and trade with the UK, there will undoubtedly be existing commercial contracts vulnerable to some of the less welcome Brexit outcomes. Things to be aware of include currency fluctuations, the implementation of new trade barriers/tariffs under the terms of future trade agreements and the uncertain status of some intellectual property rights.
For Singapore businesses entering into contracts with UK parties during these unsettled times, it would be sensible to consider Brexit whilst still in the negotiation phase. Look carefully at your rights to termination: are Brexit-related scenarios provided for? Similarly, consider carefully the choice of law which governs your contract and, for certainty, maybe even think about pushing for arbitration as the forum for the resolution of any contract disputes.
The effect of Brexit on UK and EU intellectual property rights is likely to be significant. Especially if no deal is agreed before the deadline. Ownership of such rights is, of course, not restricted to businesses based in Europe but is open to those whose brands target a UK or EU market. Indeed, many (if not most) of our APAC clients have UK and EU intellectual property rights. As such, Brexit is the perfect opportunity to make a general audit of your current global brand protection strategies. This should include, for example, a review of the genuine use of trade marks registered in the UK and EU – if you are not currently using such marks then start using them in those territories before 31 October or be prepared to lose them!
Now if there's one thing that businesses might think about when thinking of the EU, it's the GDPR. As we are all aware, this is the data protection and privacy regulation protecting citizens of the EU and the European Economic Area, including by the regulation of the export of such personal data to non-EU countries. Any business in Singapore that deals with the personal data of EU citizens must be fully compliant with the GDPR or face significant consequences. So, what if the only EU market your business deals with is in the UK? Will Brexit relieve you of your GDPR obligations? As of Brexit day, the GDPR will be transposed into domestic legislation in the UK. So, whilst it is possible that aspects of the GDPR could be subsequently amended, there should be no sudden relaxation of data protection policies! Keep them in place!
With the uncertainty of Brexit already affecting financial markets, especially in the UK, now may be an excellent time for Singapore businesses to focus efforts on attracting foreign investors, especially those from the UK. This is particularly true for cryptocurrency and blockchain start-ups, who now have the perfect opportunity to present themselves as an attractive alternative investment to the traditional fiat currencies currently suffering against the backdrop of Brexit. Investors are showing an increasing interest in Bitcoin and other cryptocurrencies for this reason but with Brexit taking up everyone's time, it's safe to say that cryptocurrency is simply not a priority in the UK for government and regulators. Singapore on the other hand is a well-regulated, well-informed and investor-friendly hub for cryptocurrency and the government is actively encouraging investment in this area. Businesses here would be well-advised to act on this advantage and present themselves as the preferred option for interested foreign investors.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.