Why Do Business in Singapore

Singapore is favorable for business expansion in Asia as it offers easy incorporation procedures and intellectual property protection.

Small and medium enterprises (SMEs) looking to do business in Singapore can benefit from unique advantages. From being strategically located in Southeast Asia to having business-friendly policies, the country offers opportunities throughout the region.

In addition, the country also has a large network of tax and trade treaties, including double tax agreements (DTAs) with large countries like India and China, which impacts the taxes on capital gains.

Let's look at what Singapore offers and why you should consider it for your business expansion.

Robust free-market economy

Singapore not only has a thriving free-market economy, but it has also successfully created an environment of openness and integrity, ensuring price stability. According to The Heritage Foundation, its gross domestic product (GDP) per capita is higher than most highly developed countries. The government also contributes to the well-being of its citizens through foreign investments and subsidies for housing, transportation, education, and healthcare.

In the global context, the World Economic Forum ranks Singapore as the most open economy. You'll find that the country's gross national savings account for nearly 50% of its GDP, and its annual exports stand at approximately SGD500 billion, showcasing one of the highest trade-to-GDP ratios on the international stage. These combined factors have made Singapore a hub for innovation, entrepreneurship, and wealth management.

Infrastructure and geographical location

Being in the heart of Southeast Asia, Singapore has access to a population of over 650 million people within the ASEAN market, allowing businesses based in Singapore to tap into and serve a diverse range of customers, particularly in emerging markets such as Vietnam, Thailand, Cambodia, Indonesia and the Philippines.

Changi Airport is essential for businesses as a regional transportation hub connecting over 100 airlines to around 380 cities across 100 countries and territories. The airport maintains the title of being the busiest hub for cargo shipments worldwide, attracting logistics giants like UPS and FedEx who have chosen Changi as their main hub. Because of its advantaged location and strategic connectivity, Changi Airport plays an essential part in the efficiency and expansion of many different industries. You'll find that the International Maritime Centre in Singapore stands out globally. This is because the city-state is one of the busiest ports worldwide. It hosts 200 shipping lines and connects with 600 ports across over 120 nations, significantly contributing to almost 15% of the total global container transshipment throughput. This gives businesses the advantage to efficiently import and export goods, leveraging Singapore's strategic location as a distribution hub.

Favorable tax system

With no taxes applied to dividends or capital gains related to business activities, Singapore's tax system has some unique advantages. This places it among the most favorable tax structures in the Asia-Pacific. Now let's look at Singapore’s corporate taxation:

（1）Businesses in Singapore are subject to a 17% corporate tax on their chargeable income.

（2）The tax system employs a tiered structure for both corporate and personal taxes.

Newly established businesses enjoy a substantial tax cut for their initial three years of operation under the Tax Exemption Scheme for New Startup Companies. This scheme allows for a reduction to 0% tax on the first SGD100,000 earnings.

The government additionally implements a Goods and Services Tax (GST) at a current rate of 7%, which remains one of the lowest globally. This value-added tax is charged throughout the production and distribution process and ultimately paid for by the final consumer.

At the same time, Singapore has Double Taxation Agreements (DTAs) with up to 100 nations, preventing double taxation for Singaporean taxpayers in cross-border business activities.

Support for SMEs

The Singapore government offers various grants, funding, and subsidies to domestic and international SMEs which are designed to provide you with the financial resources to develop and expand your businesses. These supports encompass:

Startup SG Founder Grant:

1) For first-time entrepreneurs

2) To receive the maximum grant of SGD 30,000, the startup must invest SGD 10,000

3) Requires 30% ownership of the company

4) Applicable to citizens and permanent residents

Enterprise Development Grant (EDG):

1) Enhances business strategies, innovation, and market access

2) Provides up to 70% funding for SMEs and 50% for non-SMEs

Incubators in Singapore:

1) Provide mentorship, funding, and advice to startups

Angel Investors:

1) High-net-worth individuals invest in early-stage businesses for ownership shares

2) Individual: SGD25,000 to SGD100,000

3) Group: SGD250,000 to SGD750,000

Venture Capital Funding:

1) Venture capital firms invest in high-growth startups

2) Offer funding, advice, and mentorship

Private Equity (PE):

1) Investment for ownership of private companies

2) Focuses on expansion-stage businesses

With a wide range of grants and programs enabling you to launch and grow your businesses, Singapore's all-encompassing strategy provides a supporting business environment for individuals and SMEs.

Ease of doing business

Being a consistent top position in the World Bank's Ease of Doing Business Report, Singapore provides a strong economy that is suitable for international growth. Entrepreneurs have seamless access to capital, facilitated by the availability of 128 commercial banks, 31 merchant banks, and over 600 capital market service license holders nationwide. Businesses can secure funding and enter international markets due to easy access to capital provided by a large network of capital market service license holders and banks.

Singapore's global reputation stems from its commitment to the rule of law, ensuring a just judicial system. While the English legal system significantly influences it, Singapore's legal framework has adapted through amendments to suit evolving business landscapes. According to the World Economic Forum's Global Competitiveness Report 2015–2016, Singapore provides the best IP protection, infrastructure, and incentives in Asia. This calls for a smoother and safer business operation in Singapore.

Here are a few examples that will show you how your business operations can benefit in Singapore:

1) Ease of starting a business: The government's pro-business approach, minimal bureaucracy, tax incentives, and available support help make incorporating your business hassle-free.

2) Efficient access to capital: As an entrepreneur or SME, you'll also find it convenient to access capital in Singapore. With 128 commercial banks, 31 merchant banks, and over 600 capital market service license holders nationwide, obtaining the necessary funds is easier.

3) Transparent economic and regulatory policies: They also maintain transparent economic and regulatory policies, ensuring equal opportunities for local and international businesses. These policies, backed by a business-friendly government, create an environment conducive to growth.

4) Streamlined construction permits: The government's implementation of an online system for permit applications and progress tracking adds efficiency to these procedures.

5) Efficient insolvency resolution: Singapore's efficient insolvency resolution procedures contribute to its business-friendly environment. The government's framework allows businesses to restructure and recover swiftly, fostering a smoother business landscape.

In addition, Singapore’s trade treaties allow businesses based in the country to expand easily overseas. Among these deals include:

1) The ASEAN Free Trade Area (AFTA): An agreement to encourage regional cooperation and economic integration within Southeast Asia among the 10 countries that make up the Association of Southeast Asian Nations (ASEAN), which are Burma, Thailand, Vietnam, Laos, Cambodia, Malaysia, Singapore, Indonesia, Brunei and the Philippines.

2) The India-Singapore Comprehensive Economic Cooperation Agreement (CECA): This agreement helps businesses grow by lowering import costs from Singapore to India and eliminating or reducing tariffs for India's exports to Singapore.

3) The China-Singapore Free Trade Agreement: Similar to the purpose of the AFTA this agreement removes tariffs for 95% of Singapore's exports to China to streamline business operations and customs processes.

Fast and simple incorporation

Singapore's simple incorporation makes it possible to open a business with simplicity. Just one shareholder, one director, a local company secretary, a local address, and a small share capital of SGD1 are all necessary to establish a company. This convenience reduces administrative complexities, making it quicker and more accessible for SMEs to initiate their business ventures.

Subject to approval by the compliance department, forming a company in Singapore usually takes three days to complete. The Accounting and Corporate Regulatory Authority (ACRA) of Singapore oversees this effective process.

Let’s look at the three stages of the procedure for establishing a new business in Singapore:

1) Choosing a business entity

2) Setting up a business and company registration

3) Opening a bank account

Do note that the process might involve additional requirements and steps depending on the specific circumstances and business type. It is possible to guarantee adherence to all legal and regulatory requirements throughout the process by hiring professional assistance or consulting experts.

Language

Expanding your business in an Asian country can often come with the challenge of adapting to new languages and cultures. A rich mix of cultures and languages can be found throughout the nation due to the nation’s independence from the British. Singapore embraces diversity and has four official national languages:

1) English

2) Singaporean Mandarin

3) Malay (Bahasa Malaysia)

4) Tamil

Since English is the primary language in Singapore, followed closely by Singaporean Mandarin, businesses from countries such as China would find it advantageous to translate important documents, presentations, and meeting materials into Chinese. This approach ensures effective communication and understanding within the local business context. If you’re considering starting a business in Singapore, this linguistic modification can greatly simplify your business dealings.

Skilled workforce and talent pool

Thanks to its world-class education system, Singapore has created a skilled workforce suitable for new businesses. Because they draw foreign talent, many who want to launch businesses or fill highly skilled positions are equipped with high literacy and numeracy rates. Therefore, with ongoing training and upskilling, the workforce maintains its adaptability and capacity to satisfy the shifting demands of the economy.

Singapore is also one of the most Western-friendly nations in Asia and has a diverse population. They have no trouble nurturing their native talent or luring in global talents due to their sophisticated infrastructure and high living standards.

Final thoughts

As you consider establishing a business venture in Singapore, this opens a variety of strategic benefits ready to take your company to new heights. Singapore company incorporation lays a strong foundation for your international endeavors with its thriving free-market economy, business-friendly regulations, and quick procedures. A vast market is accessible thanks to the country's strategic location within Southeast Asia, and its advanced infrastructure further improves your connectivity.

By choosing Singapore, foreign companies can access a vibrant ecosystem that fosters growth, innovation, and success in addition to a business-friendly location. Here is where your path to a successful and long-lasting business future begins.