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Singapore has traditionally been a frontrunner in both economic and business trade in Southeast Asia. The market attracts business owners and investors with its modernity, eagerness to serve business expectations and energizing environment.
In recent years, slowing growth has meant that the Lion City has also had to come face-to-face with various challenges including its physically small economy, an aging population and high operating costs, especially in the competitive Southeast Asian region. And yet this free-market success story’s benefits still outweigh the challenges and it remains a global financial hub with a high standard of living.
Here are five reasons why companies and investors want to do business in Singapore.
Singapore is consistently ranked high among the best places to do business largely owing to its high connectivity, supportive business culture and good talent-cost ratio compared with other markets. This is reflected in the latest 2019 IMD World Competitiveness Ranking which places Singapore at the top of the list, even above Hong Kong and the USA.
One of the major benefits of doing business here is the low corporate tax rate set at 17 percent and business-friendly tax laws. These are especially favorable for foreign investors due to an extensive network of double tax agreements (DTA) with more than 80 markets across the globe.
For newly incorporated businesses, there is also a scheme that attracts zero tax for several years while tax rebates are generous and capital gains are not taxed. These allow start-ups and new enterprises to easily gain market entry into Singapore, and you will often hear Singaporeans boast that you can set up a business there within three hours.
Other pro-business points include an international reputation for strong arbitration procedures, firm anti-corruption laws and a proactive Corrupt Practices Investigation Bureau. It also has a robust intellectual property (IP) rights administration, backed by a trusted legal system and a strong IP infrastructure (it was recognized by the World Economic Forum in 2018 as the top Asian market for the protection of IP).
Singapore is globally recognized as an active financial hub for businesses. Its gross domestic product (GDP) is projected to reach USD 370 billion by the end of 2020.
According to UNCTAD's World Investment Report 2019, Singapore was the fourth largest recipient of foreign direct investment (FDI) inflows in the world in 2018, after the United States, China and Hong Kong. FDI inflows rose to nearly USD 78 billion in 2018.
Coming in fourth in the 2019 Global Financial Centers Index and with policies that are centered on ease of business financing, foreign companies here have extensive access to capital and attractive financing facilities. Also, risk management support and services like insurance are well-developed and cater to a climate of liquidity for local and foreign-owned companies.
With an export-driven economy, Singapore has a sound reputation with its network of 23 free trade agreements, both bilateral and regional, which accelerate entry into other markets as well as act as industry catalysts within the market itself.
The nation’s workforce is highly educated, multilingual and skilled with adult literacy rates at over 97 percent. The INSEAD Global Talent Competitiveness Index 2019 ranks Singapore first in the Asia Pacific and second globally in terms of talent competitiveness. To stay competitive, the government invests in skills and retraining to enable life-long learning and embraces an older workforce.
Singapore’s liberal immigration policy also continues to attract a steady flow of international talent. With nearly a third of the country’s workforce comprising foreign nationalities, it is relatively easy for a foreign professional to obtain and maintain work visas or permanent residence status.
To ensure that it continues to progress forward, the government introduced the National Artificial Intelligence (AI) Strategy as part of its Smart Nation journey. The goal is for the country's workforce to have the necessary capabilities to support an AI-driven economy by 2030 and for its engineers and entrepreneurs to create new AI products and services to serve the local and global markets.
Amid the ongoing digital revolution and advancements in digital technologies, Singapore’s Smart Nation initiative is the government’s effort to ensure that all segments of society can harness digital technologies and benefit from them.
The government identified several national projects that focus on key industry challenges, including intelligent freight planning in transport and logistics, chronic disease prediction and management in healthcare as well as border clearance operations in national safety and security. These form part of nine sectors that have been earmarked for heightened deployment as AI is expected to generate high social and economic value for Singapore.
With these initiatives, which include projects like SingPass mobile application, Singapore Quick Response (QR) Code which combines multiple payment QR codes into a single SGQR label and Smart Urban Mobility to further enhance public transportation, businesses can take advantage of these technologies to better serve consumers in the market.
Singapore has consistently been recognized as the region's most politically stable markets. Strong governance is backed by a robust legal system that has received global recognition for its efficiency and integrity, with the country deemed to be the least bureaucratic in Asia.
Its commercial legal system is renowned for its fairness and impartiality, making it the natural choice of venue for dispute resolution, especially mediation and arbitration.
Singapore is fast-moving and houses a constantly evolving business landscape. With GDP pegged to the purchasing power parity per capita, the International Monetary Fund declared Singapore as the third richest country in the world.
It has no foreign debt, high government revenue and a consistently positive surplus, while the economy is mainly driven by exports in electronics manufacturing and machinery, financial services, tourism and managing the world’s busiest cargo seaport.
To conduct business successfully here, you need to be well-informed of the stringent regulations, possess a clear understanding of the path-to-market procedures and constantly have your pulse on the dynamic market networks and distribution channels.
While you may attempt to undertake all these on your own, it is advisable to collaborate with a proven, reliable and knowledgeable Market Expansion Service business partner like DKSH who can support you with these tasks while you focus on your core business functions.
Read more on the DKSH Success stories and how we have helped other businesses across Asia and in Singapore.