Benefits of Doing Business in Singapore

14.06.2024
Jeremy Cheong
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Jeremy Cheong

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+65 8800 8074

Singapore, often referred to as the ‘Switzerland of Asia’ has consistently been one of the most popular countries in Asia and further afield for start-ups and international businesses wanting to extend their reach in this part of the world. In 2020, Singapore had overtaken the United States for global competitiveness.

All these global companies can’t be wrong, so what makes Singapore the top destination for new and established global businesses? Here are some of the main reasons.

Business is easy in Singapore

Singapore has a thriving free-market economy and is a vibrant business centre. The World Bank has confirmed this, placing Singapore at the top of its list for ease of business.

Singapore is tailor-made for commerce. Its welcoming environment, plus supportive and well-thought-out business landscape facilitate commercial success.

Trading in Singapore is not overly bureaucratic. This does not indicate a lack of regulation; the whole system has been designed to make conducting business easy while protecting commercial organisations. So, there is no unnecessary red tape. A classic example is that it is possible to start a new business in Singapore in just a few days, whereas it takes much longer in most other countries and jurisdictions.

This stance is driven by the Singaporean government, which offers incentives and support to encourage new businesses and overseas companies to trade in the country. Grants and schemes are designed to foster innovation and growth, with a particular emphasis on technology, encouraging local talent, and attracting global foreign investment.

Singapore’s economy

Singapore has a stable and resilient economy, which demonstrates consistent and sustainable growth with controlled inflation.

Unemployment is low, meaning the job market is strong and confident, with a talent pool of skilled people attracting foreign companies. Underpinning the labour force is Singapore’s high-quality education system, which is coupled with a favourable immigration landscape that offers investors a mix of global and local talent. The majority of workers speak English, which makes communication easy for people of different nationalities.

The Singaporean government has no external public debt and focuses on sound foreign investments. It provides subsidies on health, transport, education, and housing to nationals, demonstrating a solid and robust position.

This landscape is transparent, secure, and reliable, with lower risks than other countries, presenting a stable yet dynamic environment and a real long-term prospect for new and established businesses.

Government in Singapore

Singapore’s governance is known to be open and accountable, creating a secure backdrop for a reliable and predictable business environment. It gives businesses the confidence to make long-term commitments in Singapore on a safe and solid foundation. Singapore is known to be politically stable, too.

The Singaporean government has clear legal and regulatory frameworks and strongly opposes corruption. Setting up a new company, obtaining permits, or navigating through sector-specific regulations are all designed to be swift, with minimal red tape but adequate protections.

As a result, the environment is associated with far less risk and uncertainty compared to other locations in Asia and further afield.

The financial landscape in Singapore

Companies looking to start or grow in Singapore will find a sophisticated landscape with major financial institutions in place to service all corporate requirements and business activities.

Under current legislation, foreign investors are allowed to own 100% of company stock and do not require local shareholders or partners. Profit repatriation is unlimited, and there are no restrictions on foreign currency entering or leaving Singapore, which is a huge advantage compared to the onerous taxation rules in other countries.

The favourable tax system is one of the most famous elements of Singapore’s financial landscape. There is no tax on dividends or capital gains made in business, and the tax that is imposed is part of a layered structure.

New businesses receive significant tax concessions for the first three years with 0% on the first S$100,000 of chargeable income. Moreover, corporate tax rates are capped at 17% when they do bite.

Singapore also has double taxation agreements (DTAs) with more than fifty countries, including all the most important global economies. A DTA is an arrangement between two countries that prevents income from being taxed twice as it flows between the two states.

Singapore has a strong and established legal system and strict anti-bribery laws to ensure government officials stay on the right side of the line. This is all part of Singapore’s transparency in government. It was ranked the third least corrupt nation in the 2018 Corruption Perceptions Index reported by Transparency International. 

Transport and logistics

Singapore has a highly developed port infrastructure and is a major international trade hub. Because its economy heavily depends on exports, Singapore has developed into a key player in the global supply chain with established routes and structures. A member of the World Trade Organisation since its inception in 1995, Singapore has always maintained low trade barriers to support its outward-looking and open economy.

It has a state-of-the-art international airport and a developed highway system.

Singapore’s strategic location gives access to other business hubs like China, India, Malaysia, and Australia. Trade connections across this region are easy, well established, and ideal for businesses who want a base to expand their operations in Asia.

What industries is Singapore known for?

Specific industries are at the forefront in Singapore, including technology, biotechnology, Fintech, clean energy, and research. The Singaporean government has driven this status via grants and incentives, developing homegrown talent and attracting overseas businesses as part of a long-term goal to engender sustainable development and protect its economy.

In biotech and pharmaceuticals, Singapore is home to Pfizer and GSK, which both have significant operations in the country. Top-level research facilities such as Biopolis have a skilled workforce, which is part of the attraction.

Singapore is rated as a technology hub and is expected to surpass S$714 million in revenue related to the Internet-of-Things (IoT) by 2025. In a survey by KPMG, conducted with more than 800 global tech leaders, Singapore claimed the top spot on the international rankings in 2020, and has been identified as one of the best innovation hubs outside Silicon Valley.

What are the grants and incentives offered by Singapore’s government?

  • Pioneer Certificate Incentive (PC) & Development and Expansion Incentive (DEI) – this initiative aims to help companies expand their economic activities in Singapore.
  • The Finance & Treasury Centre (FTC) Incentive encourages businesses to develop treasury management capabilities and conduct strategic financial activity in Singapore.
  • The Tech@SG Programme supports rapidly developing companies to advance their business opportunities via global technology talent.
  • Pass is a visa that allows established tech experts or entrepreneurs to come to Singapore to engage in frontier and disruptive innovations.

Tech.Pass is available from and run by the Singapore Economic Development Board (SEDB).

  • The Research and Innovation Scheme for Companies encourages businesses to anchor technological development and innovation in products and processes in the country. 

Are there any challenges or drawbacks to doing business in Singapore?

No location is perfect, and part of strategic corporate planning is being aware of any weaknesses or problem areas that could impact a new or developing business. None of these issues are insurmountable, but they are still worth knowing.

  • A new company registered in Singapore must have at least one director who is a resident of Singapore. Many businesses circumvent this by using corporate secretarial services that can provide a nominee director.
  • Singapore is a wealthy country, but doing business here has a high cost – amongst the highest globally. Living expenses are steep, and the labour market is competitive, which drives higher salaries. Commercial and residential property is expensive and complex to register.
  • As in any country, cultural differences exist, so understanding and respecting these is essential to doing business. with a bit of time spent, it doesn’t take long to overcome any cultural differences, particularly with a primarily English-speaking population.

Final thoughts

Singapore may be a small island nation, but it packs a heavyweight global punch when it comes to commerce. A combination of factors collide to provide an attractive and supportive trading environment, with a balance of freedom and regulation engendered by government policy, legislation, taxes, and location.

In 2023, Singapore led the world as the premier business environment for the fifteenth year in a row in annual rankings produced by the Economist Intelligent Unit (EIU), with a prediction that this will likely remain the case for the next five years.

Singapore is a very attractive location for new start-ups, entrepreneurs, and established businesses wanting to expand into Asia. If you are considering setting up in Singapore please feel to reach out to us for more guidance and support.

Jeremy Cheong
Author

Jeremy Cheong

WhatsApp

+65 8800 8074

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