Five reasons you shall start a business in Singapore
Entrepreneurs often focus on industries where they are familiar with but very often, a conducive business environment could add a lot to entrepreneurial success. This has been vital to Singapore’s open-economy model. Being named by World Bank as the easiest place to do business globally for the past nine years in a row and No.1 in Asia in recent Global Startup Ecosystem Ranking, Singapore has got it right in many areas in attracting capital and talent.
Generally, Singapore enjoys great competitive advantage over its regional peers over ease of setting up and running a business, and with financial considerations such as repatriation of profits and access to finances. Below, we discuss five main reasons why it would be desirable to start your business in Singapore, namely – Business friendly taxes, easy access to capital, strategic location & first-class infrastructure, supportive government policies and world-class talents.
Singapore is marked as offering the lowest effective tax rates in the world. Employing the single tier income tax rates system, the city-state avoids double taxing its business stakeholders. Taxes paid by companies on their chargeable incomes are the last tax paid since all dividends distributed to shareholders are tax exempted.
Local companies enjoy very generous and favourable tax treatment in Singapore. As from year 2010, the Singapore corporate tax rate is reduced to a headline rate of 17% on their chargeable income. However, effective tax for chargeable income below SGD 300,000 sits just below 9% and your first SGD 100,000 of chargeable income is tax-free. Tax rebate, though varies by years of assessment, have been generous in recent years. For instance in YA 2013-2015, corporates enjoy a 30% tax rebate, with a cap of $30,000 while for YA2016 and YA 2017, the cap is reduced but remains at an attractive $20,000. Let’s say your firm earns SGD $1 million of profits, you would roughly be paying 11-12% of taxes effective.
Ease of capital access
Over the years, Singapore has grown to secure a place among world’s top financial centers. Ranked fourth among the largest financial hubs, it offers global firms competitively-priced trade financing, sophisticated risk management and top notch insurance service options for businesses. Singapore is known as the biggest foreign exchange center in Asia for trading, according to a survey conducted by the Bank for International Settlements in 2013, boasting the highest USD liquidity in Asia and the largest offshore RMB hub outside of Greater China.
Commercial banks in Singapore are very mature in product offerings and international reach, providing small business owners with numerous financing options for their finances. Currently, there is a total of 124 commercial banks operating in Singapore, with 5 local banks and 119 foreign banks with bases covering all key trading partners of Singapore including the US, China, India, Malaysia, Indonesia, Thailand, Philippines and Taiwan. Debt financing is available to entrepreneurs seeking to jump start business through international and regional banks. Local banks like United Overseas Bank (UOB), Overseas Chinese Banking Corporation (OCBC), or Development Bank of Singapore and International banks like HSBC, Citibank, or Standard Chartered Bank also offer financing for under private terms to entrepreneurs. Working capital financing such as factoring loans, short term loans, or overdrafts are readily available.
On top of solid fundamentals of the financial system, Singapore is guided by various government bodies such as International Enterprise, which spearhead the overseas growth of local companies and actively promote international trade. The Monetary Authority of Singapore has also been tremendous in fostering financial services supervision and financial stability surveillance as well as developing Singapore as an international financing center.
Excellent infrastructure & strategic location
Strategically located between the east and the west and key Asian trading routes, Singapore is labeled as Asia’s most competitive business country, tapping on demand from 600 million populations living in the economic region of ASEAN.
Singapore’s container ports are one of the busiest in the world. Each day, more than 60,000 containers are loaded and unloaded from 60 container vessels. This port is serves as the focal point for 200 shipping routes, with linkages to 120 countries. The award-winning Changi International Airport, has been named World’s Best Airport by travelers for third year in a row in 2015, linking 300 cities in 70 countries, with more than 6,500 weekly flights. All these provide unparalleled connectivity that both passengers and cargoes would benefit.
Supportive business policies imposed by Government
Singapore as a nation has been marked 1st in Asia and 7th globally in Transparency International’s anti-corruption index. The city-state is also a top arbitration center in Asia, and fourth in the world. The Singapore International Arbitration Center (SIAC) is very active in handling trade related cases and improving business clauses that facilitate smooth operations of business.
The labor regulations in Singapore are listed among the world’s most conducive in business, according to the latest Global Competitiveness Report 2015-16. This goes a long way recognizing the government’s efforts in enforcing business-friendly framework and laws. The government also takes an active stance in supporting budding small businesses with various subsidies and grants.
Quality talent & cosmopolitan city
Last but not least, your business would benefit from the highly educated workforce available locally. With 47% of the local workforce receiving a tertiary education who can readily conduct business in English (and majority of them also knowing Mandarin), your local team would be competent on a global scale. Due to the high number of professionals available, global institutions find it easy to use Singapore as a regional or global hub of operations.
One of the key considerations for foreign entrepreneurs when it comes to global or regional expansion is the respective quality of living, education levels, and domestic infrastructure that make a stress-free transition when businessmen relocate to their new home. As the most livable city in Asia for 16 years and running, Singapore continues to be a top destination for expatriates. The city is safe and orderly, with excellent transport systems and leading healthcare facilities. The hospitality scene has also come to the limelight due to the well-established hotels, resorts, and a vibrant night life. You will find it extremely easy to fit into Singapore.
Start your Singapore business today and get a piece of the action
If you want to explore the numerous business opportunities in Asia, there is no better way to starting with Singapore.