Setting Up A Business in Singapore details its pro-business environment, streamlined incorporation processes, tax incentives, and thriving technology and finance sectors, making it an ideal hub for international businesses.
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Originally posted on: https://iasg.com.sg/setting-up-a-business-in-singapore/
Singapore's pro-business environment did not happen overnight. Built on a long history of international trade and finance, a track record of open immigration and hardworking, talented individuals, Singapore's business landscape is recognized for its competitiveness, well-regulated nature and stability. Singapore is regarded as the "gateway to Asia" for its strong connections to the Southeast Asian region and beyond.
• Singapore is ranked 1st in Asia and in the top 4 financial centres worldwide by the Global Financial Centres Index (GFCI).
Singapore's pro-business environment is enabled by its diverse suite of financial services, transparency and competitiveness, business-friendly policies and exemplary political stability.
• This environment is built on a rich legacy of immigrant enterprise, trade and exchange given Singapore's historical role as a maritime trading port and regional business centre. Singapore was built on the backs of immigrants.
• Business owners working in Singapore's fast-growing industries will stand to gain from Singapore's regional and international connectivity, global reputation and tax incentives.
A Brief History of Singapore's Immigration
Singapore's history of business extends well beyond its colonial history, and is inextricably intertwined with immigration. Records from as early as the 14th century prove Singapore's key role as a centre of international trade during the Srivijayan period. During the colonial period, immigrants from Southern China and South India sailed to Singapore in search of a better life. Many of these immigrants became entrepreneurs, starting up businesses of their own once released from indentured labour.
Over the course of a century, their businesses evolved in complexity and function. Today, many of these old businesses have become large institutions: the United Overseas Bank (UOB) and Shaw Brothers and many more. More importantly, these immigrants leave behind a rich legacy of enterprise. Local success stories include that of the Ng brothers of the Far East Organisation; foreign business owners who have become Singaporean residents include Eduardo Saverin, co-founder of Facebook.
Incorporating in Singapore: A Global Financial Hub
In 2023, Singapore overtook Hong Kong to become the top financial hub in the Asia- Pacific and one of the top four financial centres in the world. The Global Financial Centres Index (GFCI) also revealed that Singapore is likely to become "more significant in the region", right behind Seoul.
There are several reasons for Singapore's feat. Firstly, Singapore is rich in talent in the key areas of banking, investment management and professional services. Over the years, Singapore has developed a rich ecosystem of bankers, legal counsels, management consultants and firms, creating a self-sustaining financial ecosystem. With a full range of services readily available in one place, business owners and financiers find Singapore an attractive destination for incorporation. On the GFCI, Singapore ranks 3rd in insurance, 4th in professional services and 5th in investment management and banking.
Secondly, Singapore's business landscape is supported by a robust and transparent regulatory regime. Institutions like MAS (Monetary Authority of Singapore) and ACRA (Accounting and Corporate Regulatory Authority) have laid down clear rules surrounding issues such as auditing and company incorporation. These rules are well- enforced through regular checks and rigorous registration processes. Singapore also hosts many local and multinational compliance risk agencies that help foreign companies decode and abide by the rules and regulations.
Thirdly, incorporating a business in Singapore is easy for foreigners. To encourage business activity, Singapore has streamlined the incorporation process by introducing clear incorporation roadmaps by business type, tax incentives & exemptions and policies. The headline corporate tax rate is 17%, which is lower than most countries. Newly-incorporated companies are exempted from paying certain taxes in their first three years of operation. All these policies lower the barriers to entry for foreigners wishing to incorporate in Singapore and make it an attractive destination for doing business.
Finally, the country's social and political stability is exemplary. Singaporean society is defined by diversity and harmony, cultural celebrations are observed year round and instances of instability such as riots are extremely rare. Singapore's stability creates the predictability needed for businesses to flourish and plan for the future, which is especially valuable given the unstable situation in other hubs such as Hong Kong. Foreign business owners will thus find in Singapore an extremely conducive environment for incorporation, growth and long term development.
Indeed, the success of Singapore as a financial and business hub can be seen from the slew of MNCs establishing headquarters in the country in recent years. In 2022, Dyson relocated its global headquarters to Singapore, settling down in the historic St James Power Station. Its founder, Sir James Dyson, has established a family office in the country. Google has also set up its APAC headquarters in Singapore, where it hosts its APAC data centre and plots its APAC-wide strategies.
For aspiring business owners interested in following in these MNCs' footsteps, incorporation in Singapore opens up the ability to tap on Singapore's numerous trade and business agreements with other states and the state's global reputation for integrity and transparency, opening up opportunities to enter or expand into markets that they may otherwise have limited access to.
Fast-Growing Industries in Singapore
Singapore's three fastest-growing industries are its technology, finance and aerospace sectors.
Technology
Singapore is experiencing rapid growth in Industry 4.0 technologies: artificial intelligence, machine learning and the Internet of Things. In line with the rise of these new technologies, demand for data analytics professionals, artificial intelligence scientists and tech entrepreneurs is increasing dramatically.
A key example of the rise of tech is the emergence of Web3 technology such as the metaverse. As more companies relocate to Singapore, many seek to integrate Web3 technologies into their business model. This represents massive potential for Web3 in Singapore: tech innovators and business owners can develop new technologies and experiences for Web3 platforms and deepen existing Web3 functionalities. Entrepreneurs can introduce the technology to emerging markets with large digital presences like Indonesia and the Philippines. Given its status as the "gateway to Asia" and its reputation for world-class talent, Singapore is seeing increased activity in these areas of Web3 development.
Finance
The finance sector is picking up again as more expatriates move back to Singapore. A huge part of this influx comes from China, many of whom are ultra high net worth individuals (UHNWIS).
One result of this development is the proliferation of family offices. Family offices are established to manage the finances of UHNWIS, who have the resources and capital necessary to support investment and business activity. With more UHNWIS in Singapore, more funds can go into investment vehicles that support local businesses large and small, giving rise to even more innovation and economic growth. As travel restrictions in China loosen and Singapore's economy recovers, we can expect momentum to grow in this area.
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