The 1st variation is the recognition of outward processing (OP) as a unique production pattern for Singapore. It acknowledges that part of the manufacturing process (usually the lower value-added or labour intensive activities) may be out-sourced to neighbouring areas.

Stage1      Stage 2      Stage 3      Singapore ---> Foreign Country ---> Singapore ---> Exported Conventional ROO --> Stage 3 = Local Content Recognition of OP --> Stage 1 + Stage 3 = Local Content

Conventional ROO does not allow the activities in Singapore prior to outward processing to be counted towards the local content. However, under the OP concept, such activities can be counted towards the local content. It must be noted, however, that only products with a VA rule can recognise OP. Recognition of OP will lead to the recognition of the various stages of the manufacturing chain as a Singapore group. It encourages higher value activities to be retained in Singapore, while out – sourcing labour – intensive and low – value processes. As an indication of how important this concept is, it is entrenched in every single concluded Singapore FTA.