We all hear about Singapore being the prominent hub for investors looking to expand in the Asia Pacific Region. No doubt, the city has been promoted to be one of the best places for business in the world.
But, it is no bed of roses.
However, with the right techniques and strategies in place, you can overcome the marketing challenges of doing business in Singapore. For any entrepreneur, it is important to know about the place before moving ahead with the investment. One needs to make sure if the rules, regulations, and the environment suit or align with the extending business virtues.
Factors like skilled resources, an efficient and open economy, stringent intellectual properties, etc- all help overcome the challenges of doing business in Singapore.
In this blog, today we will unravel the
- Benefits of doing business in Singapore,
- The challenges of doing business in Singapore, and
- How you can overcome and continue doing business in Singapore.
Why do Business in Singapore?
There are several advantages to moving or expand business in Singapore. Among other Asia Pacific countries, Singapore is known for its stable environment, business-friendly, ideal location and as a great gateway to other parts of ASEAN.
If you want to know why do business in Singapore, here are a few reasons why:
- Singapore ranked #1 for being most open to trade.
- Corporate tax rates are capped at a flat 17% on chargeable income.
- There are no capital gains or dividends in Singapore.
- Personal taxes start at 0% to 22% above $320K.
- There is no estate, death, or inheritance tax in Singapore.
Not convinced? No issues. We did our research on Singapore, its market, and how a business can flourish in the country.
Let us talk about the benefits of doing business in Singapore.
Benefits of Doing Business in Singapore
1. Robust Economy and No Currency Control
Besides a successful free market economy, Singapore also relies on finance, trade, and manufacturing for growth. Approx 75% of the country’s GDP comes from the Services sector employing about 80% of the eligible workforce. They have a low unemployment rate and low inflation. Additionally, it has no public debt externally but is in surplus currently. Also, the Singapore government carries out foreign investments and provides subsidies on education, transport, housing, and health to its residents. All these lead to a stable and robust economy.
Also, foreigners are allowed to own 100% of the stock of a company in Singapore without any partner or local shareholders. Sure, there are no limitations on profit acquisition and foreign currencies can be brought into or taken out without restrictions. It is one of the factors making Singapore highly attractive to large companies who face enormous taxes moving money.
2. Favorable Tax Laws
Singapore has a friendly tax system in Asia- as it imposes no tax on dividends or capital gain from a business. It has a tiered approach to both personal and corporate taxes in the country. Initially, for the first three years, the new businesses are eligible for considerable tax benefits bringing their liabilities down to 0% for the first income of $110K. Also, corporate taxes are capped at a rate of 17%. Singapore has Avoidance of Double Taxation Agreements in place with over 50 nations.
3. Infrastructure and Geographic Location
Singapore boasts of superior institutions taking first-time visitors by surprise. Offers a world-famous avant-garde international airport, awesome buildings, subways, highways, and other technological infrastructure. All of these add a benefit and play a crucial role in the ease of doing business in Singapore.
The geographical location of Singapore holds the unique advantage of having access to the Asian population. Especially to the other business hubs in Malaysia, Australia, India, and China. In case you plan to expand or move to Singapore for your business, form important and beneficial trade connections all across the region.
4. High Skilled Workforce Availability
Known worldwide for its superior and exclusive education system, Singapore brings the best available skilled workforces in the market. They are also known for their rule-abiding and hardworking nature along with their educational and technical expertise. In addition to all of this, the favorable immigration system helps attract a huge bunch of global talent to help recruit for your business in Singapore. When you pair with the best and most reliable reputable recruitment agency, you can have the best employees for your business.
5. Lack of Corruption
There is certain skepticism associated with doing business in Asian countries, due to the prevalence of corruption. Singapore, on the other hand, is one notable exception. The public servants are paid well by the government with strict penalties for corruption. Therefore, as a business owner, you are less likely to get caught up in unnecessary situations. Singaporean citizens are believed to be ardent followers of the law.
6. Smart Nation Initiative
Amid the digital revolution and advancement in digital technologies, Singapore is regarded to be on the path to the Smart Nation initiative. The government ensures that all the segments of society are able to harness the technologies and obtain benefits from them. They play a crucial role in key industry challenges, freight planning in logistics and transportation, chronic disease prediction, and healthcare management along with border clearance operations in case of national security and safety.
7. Pro-business Enterprise
Singapore ranked highly among the best places to operate businesses. It is largely due to the supportive business culture, high connectivity, and awesome talent-cost ratio compared to other markets and countries. The country offers a pro-business enterprise environment. It includes an international reputation for strong arbitration procedures, fir anti-corruption laws, and proactive practices on corruption.
Challenges of doing business in Singapore
1. High Cost
No matter how much we believe in expanding and moving to Singapore, you need to understand that it can be a little expensive to operate businesses in Singapore. Renting cost is believed to be the main culprit for it, it is the highest nevertheless. The high cost of electricity, labor costs, and the internet help in contributing to the high costs to maintain business in Singapore.
2. Long Work Weeks
While several western companies offer flexible work hours and are moving to 35 hours per week or even 4 days work per week, Singapore is still too traditional 5 days a week running from 9 to 5 every day. Singaporeans work approximately 45 hours a week. They are regarded as the hardest working city preceded by Tokyo. The work-life balance in the city-state does seem to be sound in comparison to the Northern European cities. In case you are more accustomed to the laid-back lifestyle, Singaporean work culture might be a challenge for you.
3. Strict Business Incorporation Procedure
Singapore is consistently recognized as the world’s best place to do business and is also the top choice for investors. When compared to other business hubs, Singapore is the easiest and quickest process for business registration, attracting a good list of Singapore. However, every Singapore business is registered only when the eligibility criteria and follows the registration procedure. Along with this, they also need to have an issued certificate of incorporation of a business.
4. Resident Company Directors
Every Singaporean registered company must have at least one director. The director is responsible to manage the company and provide it with a direction to success. It means that the Singapore resident director cannot resign until the company has another SIngpaorean director to take his or her place. In case of resignation, the company must notify ACRA within 14 days of the resignation of the director.
5. Work Pass
Even when you invest in Singapore, if you want to work there, you will need a work pass for yourself and the foreign employees. The Work passes are issued by the immigration department of Singapore- reserving the right to deny admission into the city-state. Also, it is important for work pass holders to work only for a designated employer. They are not allowed to work any second job or have another mode of earnings for additional income in Singapore.
6. Labor Shortages
Singapore welcomes foreign workers in its land open-heartedly in all sectors, ranging from investment banking to construction. About 40% of the tiny city-state are immigrant workers. However, in recent years, there has been an uneasy situation among growing local residents. This has led to labor shortages and employers report that approximately 54% of the jobs are unfilled. So, when you plan to expand or move to Singapore, take these into consideration.
7. Trading Across Borders
Singapore’s government imposes several import restrictions on certain goods, even though it is considered a global trading center. For example, you need to have a specific import license from the Agri-Food and Veterinary Authority. In addition to this, the importers are required to pay a duty or GST while importing goods.
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