When you think of economic powerhouses around the globe, you generally picture the United States, China, Japan, the United Kingdom and Germany. But there is one particularly nation that does not get the praise that it has earned in recent years: Singapore.
The Singapore economy is considered the most open in the world today. That’s right. Singapore is more open than the U.S., China, Great Britain and the Scandinavian countries.
In addition, Singapore has been ranked the seventh least corrupt, the most pro-business and an Asian jurisdiction with one of the lowest tax rates.
Because of these distinctions, some of the most prominent companies and billionaires have relocated to the Asian economic powerhouse. One of these billionaires includes Jim Rogers, chairman of Rogers Holdings and bestselling author of “Hot Commodities,” who has repeatedly stated that the 21st century will belong to East Asia. He moved to Singapore in 2007.
“In my view, moving to Asia in 2007 means my heirs are going to be much better off in the next 100 years,” Rogers told the International Business Times. “If I’m right about the future, you are going to have a better life [if you move there], better opportunities, and better everything going where the action is, where the assets are.”
He also provided a sound warning in an interview with Luxurious Magazine in 2011:
“Buy low, sell high. Be curious and be skeptical. And make sure that your children and your grandchildren are fluent in Mandarin.”
Whether you are looking to expand your business into the Asian markets or you are thinking of relocating your operations to this part of the world, Singapore is a nation to consider. Everything from lax regulations to attractive tax rates, your business can flourish in such a strong economy.
Here are a few statistics that will showcase Singapore’s economic strength:
- Gross domestic product growth rate of 9.1 percent.
- Unemployment rate is just 2.2 percent.
- Inflation rate is a minuscule 0.2 percent.
- A near perfect credit rating
- Government budget represents just one percent of the GDP.
There are many more, but these are just some of the economic indicators of a prosperous and fundamentally sound country.
10 Benefits of Doing Business in Singapore
Let’s take a look at the 10 benefits of doing business in Singapore:
A Leading Financial Hub
When it comes to the leading financial hub in the global marketplace, England generally tops the many international lists. However, London’s supremacy is coming to an end in this realm as Singapore is gradually climbing the ranking systems.
According to a 2016 PricewaterhouseCoopers LLP study, the Asian island nation is ranked just behind London as the leading financial hub. By using the Cities of Opportunity Index, Singapore is ahead of New York City, Toronto, Paris, San Francisco and Hong Kong.
The researchers alluded to efficient transportation, powerful infrastructure systems, high-end technology and low taxes as some of the reasons why Singapore is surging the list of leading financial hubs. Today, the financial and insurance industries account for 13 percent of the nation’s economy – banking in Singapore has never been this easy or big.
The Political Climate is Stable
If you look to Europe and the United States right now, you will witness an unstable political climate, a fierce upheaval by the electorate and regular domestic strife. It’s bad in the West.
Singapore, however, maintains a stable political environment. It is true that there has been one dominant political party – the People’s Action Party (PAP) – since 1959, but the government still takes the form of a parliamentary representative democratic republic with three separate branches of government: executive, legislative and judiciary. The head of state is primarily ceremonial, though he does have veto power and power regarding civil service appointments and national security. For the most part, the federal government is run by the legislature.
As numerous studies have shown, the Singapore government has a clean image and reputation that is corruption-free. The two biggest complaints that both foreign and domestic critics may have is the restriction of free speech and capital punishment.
Singapore is a Wealthy Nation
Singapore may account for less than one percent of the global economy, but it does have a gross domestic product of $300 billion. In other words, Singapore is a lucrative country.
Here are several statistics to highlight the island nation’s wealth:
- GDP per capita is $55 million.
- A homeownership rate of an astounding 90 percent.
- Gold reserves of close to 130 tonnes.
- Labor force participation rate is 70 percent.
- Gross national income is $455 billion.
With a growing economy, limited government liabilities and expenditures and soaring foreign investment, Singapore is an affluent state that can withstand global recessions.
Tax Rates are Attractive
If you read stories about Singapore in any business newspaper, you will often find a passage that refers to Singapore’s attractive tax rates for companies, and this plays a big part in its growth.
There are no taxes on inheritance, capital gains or dividends, and the corporate tax rate is just 17 percent. These are tax policies that lure in foreign capital, investors and corporations or startups.
For the individual, however, it may be a bit higher. The personal income tax rate is 22 percent, the sales tax rate is seven percent and the Social Security tax rate for employees is 20 percent.
A Commonwealth-based Legal System
Since Singapore is a Commonwealth nation, the country’s legal system maintains its roots in English law and practice. Singapore was founded in 1819 by Sir Stamford Raffles as an important shipping route, which also meant that Singapore adopted English law and customs.
In other words, Singapore has inherited the British legal foundation that can be found in contract, restitution and tort. Due to the fact that it remains intact today, you will find certainty, tolerance, stability and even acceptance in the Singapore legal system.
Although it has evolved over the years, you will still find justice in its legal system.
Maintains the World’s Best Banks
Unlike other nations that had financial institutions needing a bailout from the taxpayers, Singapore has the world’s best banking system, according to various studies, groups and outlets. Whether it’s the protection of the banks, such as capital, reserves or security apparatuses, or the ingenuity of a financial institution, banking in Singapore is secure, efficient and affordable.
In 2016, DBS Bank won the world’s best digital bank and was ranked, alongside OCBC Bank, as one of the world’s safest banks.
Simply put: it is unlikely that a financial institution in Singapore will require a bailout.
A Strategic Geographical Location
An island with the size of 646 sq. km, one way Singapore’s economy has been able to grow the way it has is its strategic geographical location. The island is located on a major sea route between China and India. Due to its sublime harbor and free trade harbor status, Singapore attracts investment from all over the world, including the United States and Japan.
Suffice to say, Singapore has taken advantage of its strategic location between the east and west, and has accessed every corner of the global marketplace. As a country, Singapore is able to provide companies with a global platform to expand their international business.
Various Double Taxation Avoidance Agreements
A double taxation avoidance agreement, otherwise known as a tax treaty, is an economic agreement between two nations that looks to eliminate or limit double taxation of the same income in the two nations.
Since the 1960s, Singapore has established numerous double taxation avoidance agreements, or DTAAs, with a wide array of other countries. Over the years, Singapore has entered into these arrangements with the likes of India, Cyprus, Mauritius, Canada and the U.S.
This is one of the major factors in Singapore being able to attract foreign investment.
Easiest Jurisdiction to do Business
New Zealand has overtaken Singapore has the easiest jurisdiction to do business in the world today, according to the World Bank. Singapore has held this title for the last 10 years. With that being said, Singapore still sits in a close second place.
Whether it is Singapore company formation, doing business in Singapore or banking in Singapore, the ease of achieving these elements remains significant. If you want to enforce contracts or obtain construction permits then Singapore is the best place to do these functions.
English is the Official Language
Singapore maintains a diverse culture and experiences a multicultural society with more than five million people. It welcomes various Asian cultures, such as Malaysian, Chinese and Tamil. Despite these trends, English has been adopted by the government as the country’s official language because of business and working relationships across the island nation.
Singapore prides itself as being an English-based bilingual nation. When you attend the education system, you will be taught in English as well as Mandarin or Tamil. Moreover, if you travel through the cities you will discover signage in multiple languages, but primarily English.
If you are considering relocating to Singapore, you don’t have to worry if your Mandarin is a bit rusty. A lot of people within Singapore speak English.
How to Set up a Company in Singapore
After all of these benefits being highlighted, are you fully convinced to starting a business in Singapore? As has been previously mentioned, Singapore company formation is affordable, easy to achieve and will be highly competitive on the global stage.
Here are a few tips to starting a business in Singapore:
Your Business Structure
Before you open up your retail shop in the heart of Singapore or you relocate your tech startup to the island nation, you need to first come up with the business structure. The government has several legal forms for registration, including a branch office, sole proprietorship, Limited Liability Company, a representative office, partnership and much more.
The Name of Your Business
Like in any other jurisdiction, you need to choose an appropriate, professional and unique name for your company. The government requires that your company name showcases the philosophy of your enterprise and refrain from being similar to other existing business names. This can be accomplished by performing a name check; officials recommend that you opt for a name that has an available domain name if the Internet is imperative to the success of your company.
What About Visas?
If you are bringing your team members with you to Singapore then you will need to get a visa for each employee. Everyone from executives to managers, your company will need to obtain an Employment Pass for personnel, which lasts for one to two years and can be renewed at any time if the employees still meet the requirements of the Singapore government. It should be noted that if the business founder needs to work in Singapore before incorporating the private firm then you will need to apply for an EntrePass.
Applying for a Business License
Although Singapore maintains one of the best economic freedoms in the world, many businesses are still required to obtain licensing. Once your company is incorporated, you will need to search for specific licenses that match the industry you’re working in. You should be ready to apply for several different licenses from a number of different departments.
As Jim Rogers said, if you want your offspring to be affluent then you will want to move to Singapore. An exceptional climate, a business-friendly environment, a stable political system, limited taxation and a strong economy, what else would you want from a country?
Asia will be the region of the world with the best economy in the 21st century, but it will be Singapore that will lead Asia to prosperity. You should hop on the Singapore bandwagon now.