Choose Singapore For Your Business Today
Are you an entrepreneur thinking about starting a new venture overseas? With its dynamic economy, business-friendly climate and great infrastructure, Singapore is an ideal choice for any company interested in enjoying the benefits of low taxes and proximity to the booming Asian market.
Incorporating in Singapore offers a whole host of advantages for foreign businesses, which include:
· A pro-business climate that encourages foreign investment
· An English-speaking environment with multi-lingual capability
· Strategically located as a gateway to Asia
· A major hub for international air and shipping routes
· An highly-educated and hard working labour force
· Excellent infrastructure ranging from transportation to connectivity
· Protection of intellectual property rights
· A politically stable political regime with few disruptions
· Some of the lowest corporate and personal taxes in the world
· A high-quality of life, particularly in safety, healthcare and schools
· Cultural diversity and religious harmony
· A thriving arts and entertainment scene with a vibrant nightlife
If you’re interested in Singapore as a location for your next business and want to find out more, start with our Resources section. The resources section provides you with all the basic information you need to know about Singapore, ranging from its taxation system to a guide on how to incorporate a business, hire employees, lease commercial space and source for funding.
Once you have a good introductory understanding of how business works in Singapore, keep updated with recent developments in the Singapore business sector, read our blog and subscribe to it via RSS to get the newest news. Here, we post the latest information relating to business and real estate news, as well as our own special features on entrepreneurs who have settled in Singapore as well as foreign-owned businesses in Singapore.
Have you already made the decision to choose Singapore for incorporating a business? We can help you find the right property for your business needs. Whether it’s finding the most vibrant retail space or an office location that provides value for money, we have the local knowledge and expertise to find you the perfect home for your business.
If you have any questions about Singapore or commercial real estate that isn’t answered here, just get in touch with us and we’ll be happy to help you out.
Why Start A Business in Singapore?
Facebook co-founder Eduardo Saverin made a huge splash in American media in 2012 when he decided to give up his US citizenship to take up residency in Singapore. But the Brazilian-born businessman isn’t the first foreign entrepreneur to move to Singapore, but just the latest in a steady movement that has picked up speed over the years.
Other high-profile entrepreneurs who have successfully settled in Singapore, bringing their businesses together with them include:
· Wall Street legend Jim Rogers, who founded the Quantum Fund and the Rogers International Commodity Index
· Owner of Spice Global Bupendra Kumar Modi
· Founder of Amtel-Vredestein Sudhir Gupta
· New Zealand Investor Richard Chandler
· Australian coal tycoon Nathan Tinkler
· CEO of Yanlord Land Group Zhong Sheng Jian
When asked, all of these entrepreneurs cited a number of reasons why they were drawn to live in Singapore. And below is a list of just some of the top reasons.
A Pro-Business Environment
There are few places in the world where you can incorporate a business in a mere day or two, but Singapore is one such place. Ever since achieving independence in 1965, Singapore’s government has aggressively wooed foreign investments, a strategy that has helped it turn from third world to first world in less than 50 years. Today, it remains strongly pro-business, offering government assistance and low corporate taxes to help new businesses set up shop.
Among Asian countries, Singapore has some of the strictest Intellectual Property laws to protect its largely knowledge-based economy, making it the best choice for tech and research-intensive companies. The official language here is English, which makes for a comfortable transition to working in Asia. In addition, you can easily hire multi-lingual workers fluent in both English and other Asian languages like Mandarin, Malay, and even Korean and Japanese, letting you effectively reach out to other Asian countries.
To find out more, please read our page about Singapore’s economy model, credentials and funding opportunities.
A Gateway To Asia
Although Singapore is a tiny island state, it is well-situated at the nexus of the world’s transportation routes. Singapore has long been the busiest port in the world, making it a major world hub for importing and exporting. Its Changi Airport is also one of the busiest in the world, and has been voted “Best Airport in the World” for over two decades.
With its high connectivity, Singapore is well-placed as a gateway to Asia. Neighbouring countries like Indonesia, Thailand and Vietnam are less than an hour away, while Asian giants like China, India, Japan and South Korea are less than six hours by air. This gives businesses operating in Singapore a potential market of billions of people within reach.
To find out more, please read our page about the Asian Boom.
An Educated Labour Force
Having few natural resources, Singapore has focused on the key resource it does have—people. Over the years, it has developed a well-educated, efficient labour force that is highly professional and productive. Singaporean workers are savvy, with an understanding of Eastern and Western culture that will help your company navigate cultural gaps. They are generally hard-working, driven and also easy to train for managerial positions within your company.
Another positive aspect to setting up a company in Singapore is that the culture here values honesty and trust-worthiness. Doing business here is simpler because your dealings will be above-board and free of corruption.
To find out more, please read our page on hiring in Singapore.
One of Singapore’s most attractive draws for any investor is its low taxes. Singapore does not only offer low corporate and personal tax rates, it is a country that does not tax capital gains at all.
The maximum corporate tax rate in Singapore is 17% while the personal income tax rate ranges from 0% to 20% for annual incomes over $320,000. This compares very attractively with the UK, the US and Canada where taxes are high. In addition to the 0% capital gains tax, Singapore allows dividends to be issued tax-free.
Like most countries, Singapore has a value-added tax called the Goods and Services Tax (GST), but it is also one of the world’s lowest, coming in at 7% in comparison to the international average of 16.4%. This is why aside from being attractive to businesses, Singapore is also a hotspot for shopping.
To find out more, please read our page about taxes in Singapore.
Quality Of Life
Lastly, a crucial consideration that can make or break a decision to set up a business overseas is the ease of relocation to the new country. Many entrepreneurs are reluctant to move their families if it means sacrificing quality of life.
Fortunately, this is not the case in Singapore, which is renowned for its great safety, excellent health care, reliable public and private transport system, and quality education system. The East-Meets-West culture allows residents and their families to keep in contact with their roots, while learning more about Asian heritage and traditions. And the existing large expatriate community gives Singapore a cosmopolitan feel that is easy to adapt to.
To find out more, please read our page about immigration and life in Singapore.
Singapore’s Economy Model
Singapore may be a tiny city state but it consistently punches above its weight in the global economy. Despite having next to no natural resources, its government has made full use of its strategic location and an aggressively pro-business capitalist stance to build a robust economy that has now been deemed the third wealthiest country in the world.
How robust is Singapore’s economy, you might ask? Consider this. Singapore’s government owns huge surpluses and extensive reserves. Not only does it have no foreign debt, it has invested deeply into many other countries. It is the only Asian country to maintain a AAA rating from all major credit rating agencies.
Singapore’s fundamentals are so strong that despite a very open economy, it weathered the 1997, 2008 and even the 2010 global financial crises with only brief periods of recessions. Even as the United States and Europe continue to struggle, Singapore is enjoying a boom with an employment rate of 2%.
Singapore’s Key Industry Sectors
Singapore’s most important industry used to be the manufacturing sector. Its position as a major manufacturing hub for electronics was what helped it rise from a poverty-stricken country to prosperity by the 1980s. However, this sector began to weaken in the 1990s, with foreign investors moving manufacturing plants to cheaper countries like China and Indonesia.
While manufacturing remains important, the government has switched the focus away from electronics to research-intensive manufacturing in pharmaceutical products, chemicals and other products requiring technically-proficient and trained labour. This has kept the manufacturing sector strong, amounting to around 20 to 30% of the annual GDP.
2. Financial Sector
A rising player in Singapore’s GDP is its financial services sector which has gone from strength to strength in the last three decades. The pro-business environment and open economy naturally lend themselves to creating a thriving financial services hub. Singapore has been called the “Switzerland of the East” for achieving the same kind of quality in banking services.
Singapore’s only rival so far in the Asian financial sector is Hong Kong, but Singapore enjoys some advantages such as strong political stability, which is why increasingly MNCs, banks and investment firms are choosing Singapore to base their headquarters.
3. Imports and Exports
Since being founded by the East India Company as a trading post, entreport trade has been a major anchor of the economy. Today Singapore remains one of the top importers and exporters in the world. In 2010, it imported over $310 billion and exported over $351 billion of goods, mostly machinery, oil, chemicals, food and consumer products. Its 407.9 trade-to-GDP ratio shows how heavily the economy depends on the trading for its economy. Shipping and ship construction are also major sectors here.
Finally, an industry that is increasingly important is tourism. Aside from being renowned as a great city for shopping, culture and a vibrant night life, Singapore is also attracting more diverse types of visitors. Gamblers consist of one group as Singapore’s two casinos have made it the 2nd largest casino market in the world. Another group are medical tourists who come to make use of Singapore’s advanced healthcare treatments. And lastly, a third large group comprises students studying and training in Singapore.
The chief engineer of Singapore’s success is undoubtedly its government. Singapore government has over the years created a rigorous system of selecting outstanding candidates to lead the country. Government leaders are well-paid, and consequently corruption is not tolerated. The result is a government that has had no foreign debt ever since 1995. The country is rich in reserves and assets, and has an AAA credit rating. Another notable point is that unlike many countries that constantly suffer revenue shortfalls, the government rakes in big bucks. Like most nations, the majority comes from taxes. But Singapore also has many other forms of collecting revenues, such as through issuing licenses for cars, rental of government land and fines, just to name a few. This allows the government to achieve a budget surplus every year amounting to $2 billion or more. Infrastructure When Singapore gained independence from the British, it enjoyed the benefit of already having a fairly well-planned infrastructure in terms of roads, ports and sanitation. The new government went on to improve, modernize and expand these systems on a large scale. Thanks to this, Singaporeans enjoy high standards in terms of transportation and connectivity.
Singapore’s public transport system is one of the most affordable and efficient in the world, servicing millions each day with its subway system, buses and taxis. Wait times are also short, at less than 10 minutes on average. While the cost of owning a car is high because of government restrictions, driving is fuss-free and without the massive traffic congestion seen in many Asian countries.
Singapore also has one of the busiest airports and shipping ports in the world. Changi Airport serves over 15 million passengers a year and is connected to over 180 cities world-wide. The port offers shipping via any of 200 shipping lines to over 600 ports around the world.
Businesses planning to set up here will have plenty of choices in terms of real estate. For industrial operations, the Jurong Town Corporation (JTC) offers 4 million sq m of industrial space and over 7,000 hectares of land. For commercial or financial businesses, a new downtown is currently being built in the Marina Bay areas that will double the number of high-rise offices in the Central Business District.
Lastly, Singapore is one of the most wired countries on Earth. 99% of the population have access to the internet and there are more cell phone subscriptions than there are people. Most popular shopping and entertainment stretches provide free Wi-Fi services. Business facilities have also been built with superfast broadband capability in mind.
Forecast Singapore’s economy enjoys a favorable forecast for the coming years. The economy grew by 4.9% in 2011 and had a GDP of S$326.8 billion. The government expects the rate to slow down to between 1 and 3% in 2012 because of the economic crises in Europe and US, but this is still positive growth and investments of over $10 billion are expected in 2012. The Singapore dollar is also strong and appreciating. It is now trading against the US dollar at 1.21, up from 1.25 early in 2012 and 1.36 in 2010.
Types Of Businesses In Singapore
You’ve made the decision to incorporate a business in Singapore. Now what? You should be aware that there are several types of business classifications that you can choose from when registering your company. Each one of them is meant to meet a different business need, and different tax and legal regulations will apply to them.
Choosing the right business format is vital because it can make a difference in terms of your ability to market your company, expansion plans and borrowing power. The following is a brief guide to the different types of businesses in Singapore.
Types of Entities
If you wish to register a new company as a Singapore firm, you can choose between the following structures:
· Sole Proprietorship
· Limited Liability Company
If you are an existing foreign firm wishing to expand your business to Singapore, you are looking at the following options:
· Representative Office
· Branch Office
Registering As a Singapore Firm
A sole proprietorship is the easiest and cheapest way to register a business in Singapore. Essentially you declare yourself to be the only owner of the business. You own all the assets and liabilities of the company, which means that all income also goes to you.
Compliance regulations are simplified here: you don’t have to audit or file returns as your income is taxed as personal income. However, this business format is also the most risky as you are personally liable for any losses. The limitations of this entity will also prevent you from raising much funds.
Limited Liability Company
A Limited Liability Company (LLC) is a business entity that is set up as a legal entity under the Singapore Companies Act and separate from its owners. Unlike a sole proprietorship, liability is not unlimited. Owners are responsible only to the extent of what the company owns in assets, with their personal investments remaining untouched.
There are three types of LLCs that can be created:
· Private Limited Company. This is the most popular type of business entity in Singapore. Here, shares must be owned by fewer than 50 owners and not publicly traded. Shareholders can be individuals or other legal entities.
· Public Limited Company. This refers to a publicly listed company on a stock exchange. It must have at least 50 shareholders, and is able to sell their shares to increase funding. Such companies are governed by strict rules and regulations since they affect the public.
· Public Company Limited by Guarantee. This is the type of business entity reserved for non-profit enterprises. There are no shareholders in this type of business. This type of business operates for a type of social cause and is forbidden from distributing any profits to any of its owners or membership. All profits must be kept for use only by the organization.
A partnership is in a way similar to sole proprietorship in the sense that it allows a few owners to share a company while sharing assets and liability in the manner of a sole proprietorship. Similarly, the company is not a legal entity as it can be terminated by any of the partners or upon death.
There are several types of partnerships structures:
· General Partnership. This is a similar structure to sole proprietorship, the difference being that two or more people are allowed to share the company. They are personally liable for the company and each other.
· Limited Partnership. This is a concept where some partners are considered active owners, while others are limited or passive owners who do not take part in the decision-making. Limited partners are seen as investors and are not personally liable for any debts.
· Limited Liability Partnership. The newest of the partnership structures, it allows a partnership to operate like a private limited company and offers some amount of liability protection. However, to do so, owners must draw up very comprehensive contracts about how the firm is run and income distributed.
Registering As a Foreign Firm
The most basic business entity you can register in Singapore is a representative office. Note that this is not an official business entity. Rather it is considered a temporary structure for the purpose of researching the market in Singapore and is not allowed to generate income. It is used to assess whether a full-fledged business investment is viable.
As the name suggests, a branch office is considered to be one of the arms of an existing company. It is not considered to be a Singapore firm, and does not have a separate legal status apart from its parent company. The parent company is liable for any risks or losses made by a branch office.
An existing company can choose to incorporate a new, separate company in Singapore. This would be a private limited company with its own legal status. The parent company will then become its sole or main shareholder. The company can basically operate like a Singapore LLC and enjoy many government benefits extended to Singapore companies only.
Now you’re aware of the different types of entities, it’s time to ask the important question. Which one do I choose for my business?
Read on at our page on how to choose the right business entity for you.
What Kind Of Entity Should I Register As?
There is no straight-forward answer in terms of the absolute best type of business entity in Singapore, but there are definitely some that are better than others. Which one is best for you depends on the type of company you have, as well as the advantages and disadvantages that come with it.
But to start off with, we’ve grouped your options into three groups, “Avoid”, “For Certain Cases” and “Recommended”.
Sole Proprietorship. Unless you have taken up Singaporean citizenship and wish to register a small business that doesn’t carry much risk, we recommend that you avoid choosing a Sole Proprietorship. It is a very risky structure as you are personally liable for all business risks. Banks also consider it very risky to lend to such businesses so you are limited in fund-raising.
General or Limited Partnership. This structure carries much of the same risks as a sole proprietorship with marginal benefits.
Representative Office. A representative office does nothing for your company since it is not a legal entity and is not allowed to generate any income. Also it is only allowed to operate for 3 years with this status. It is only suitable if you are thinking of making a very large investment and want to be sure of the decision.
For Certain Cases
Limited Liability Partnership. A Limited Liability Partnership can be a suitable business structure for a business based on providing a professional service, examples being law, architecture and accountancy. This allows individuals to work together to create a joint practice. Owners do not have to answer to shareholders, and yet enjoy liability protection and better fund-raising powers. However, this entity is not well suited to other enterprises like manufacturing, trading or retail.
Branch Office. A branch office is a great choice if you already have a well-established foreign company and want to leverage on its brand and reputation. You can also benefit from economies of scale since you can carry out some of the operations outside of the branch office, thus requiring a smaller staff size. Only income generated in Singapore will be taxed at the corporate rate.
However, you should note also that a branch office is not considered a Singaporean entity. As such, your branch office will not enjoy the tax exemptions and benefits given by the Singapore government to resident firms.
Limited Liability Company. If you are thinking of establishing a small to mid-sized company in Singapore, choosing the LLC option and incorporating as a Private Limited Company is the best option for you. It is well worth doing the extra paperwork to meet the requirements so that you can enjoy the following benefits.
· Limited Liability. All shareholders are liable only to the sum of the assets they contributed, meaning that their personal assets are protected.
· Legal Entity. A LLC has its own legal status, which also protects its owners legally.
· Transferable Ownership. The LLC is not tied to its owners, but can be sold or transferred to other owners through its shares.
· Professionalism. A LLC is perceived to be a more professional, stable entity than a sole proprietorship or partnership both by the public and potential investors.
· Fund-raising capability. A LLC has more flexibility in raising funds compared to other entities since you can issue shares to raise capital. People are also more likely to lend to a LLC since it appears more credible.
· Lower Taxes. A LLC registered in Singapore enjoys great tax benefits, with corporate taxes capped at 17%, zero capital gains tax and other exemptions.
Foreign business owners should note that even if they have an existing foreign business to expand in Singapore, they can still incorporate as a Private Limited Company by choosing the Subsidiary option.
In most senses, a subsidiary is treated like a Private Limited Company, enjoying the above benefits of an LLC. While a Branch Office may offer some benefits, a subsidiary has some compelling advantages too.
· The parent company is not liable for the losses or failure of the subsidiary.
· A company can sell off a subsidiary to make a profit or cut losses.
· While a branch office is considered a non-resident entity, a subsidiary will enjoy resident tax rates and can benefit from tax treaties signed by Singapore and many countries.
In short, for most small to mid-sized business structures, a Private Limited Company is the best entity to register as when setting up shop in Singapore.
How Do I Incorporate A Business?
The World Bank calls Singapore the easiest place in the world to run a business. Without doubt, it is probably the quickest place in the world to incorporate a company, with a computerized process that only takes one to two days.
The process of incorporating a business depends on the type of business entity you are creating. To find out more about business entities in Singapore and which ones you should be considering, please first read the following articles:
· Types Of Businesses In Singapore
· What Kind Of Entity Should I Register As?
Important Information For Foreign Investors
1. You Need Professional Help
While incorporating a company is quick, you will require professional help in doing so. Foreign investors or companies are not allowed by Singapore law to register a new business entity by themselves. Therefore you must hire a professional incorporation service to do this for you.
2. You Don’t Need To Relocate
You don’t need to settle in Singapore to incorporate a Private Limited Company, Representative Office, Branch Office or Subsidiary. A regular visitor visa will do if you need to come to Singapore for business matters. However, you must appoint a local director to act as a “guardian” or executor for your firm. The incorporation firm you hire can provide this nominee for you.
3. You Don’t Have To Come To Singapore
You can actually incorporate a company in Singapore without setting foot in the country at all. Any firm you choose for the incorporation service can handle all the paperwork and formalities for you without requiring you to travel, the exception being if you need to open a bank account in person.
4. Singapore Wants You To Come
While it’s already been said that you don’t have to relocate or even visit Singapore to incorporate a company, the Singapore government actually encourages investors to resettle in Singapore. As such, it is quite easy for investors to obtain a visa to relocate to Singapore.
There is a special visa called the Entrepreneur Pass which allows entrepreneurs to relocate to Singapore if they can present a proposal to start up a Private Limited Company with a paid up capital of at least S$50,000. If you relocate at a later point, you can also apply for the Employment Pass as the owner of a Singapore-registered business.
To incorporate a company in Singapore, you or the firm you hire must prepare the following paperwork for the Singapore Registrar of Companies. The documents must be signed by you and all the persons involved.
Company Name. You must give your company a name that will be approved by the registrar. To ensure easy approval, make sure your choice of name is not already taken, too similar to any company names in Singapore or contains any vulgarities. You should also avoid word choices that require vetting by a government authority e.g. words like bank or law etc.
Brief on Proposed Business. This is basically a description of the activities your company will carry out in Singapore.
Paid-Up Capital. This is to fulfil the requirement of a minimum paid-up capital of S$1. This is a formality as you can increase your share capital as you like after incorporation.
Shareholders’ Particulars. A Private Limited Company can have between 1 to 50 shareholders. These shareholders are considered the owners of the company. They can be individuals or a legal entity like a company. Full foreign ownership is allowed. The company is also free to change the shareholder composition after incorporation.
Directors’ Particulars. The company must appoint at least one director who is a resident of Singapore. The director does not need to be a shareholder. A Singapore company can have a unlimited number of directors, but they must be above 18 years of age and cannot have any bankruptcy or business-related conviction history.
Registered Address. A Singapore address must be given as the registered address of the new company. It must be a physical place and not a PO box.
Company Secretary Particulars. By law, an incorporated company has to appoint a company secretary in the next 6 months. This must be a resident of Singapore.
Memorandum and Articles of Association (MAA). This is a standard document usually provided by the Singapore Company Registrar.
You will also have to attach identity documents with the incorporation paperwork. For foreign investors, this will be a copy of your passport, proof of residential address, as well as other pieces of proof such as a reference letter.
For a business, this will be a copy of its registration documents. If any documents are not in English, they must be translated and officially endorsed by the relevant organizations.
The Incorporation Process
Once the documents are in order, the incorporation process is extremely fast and efficient. The first step in setting up the company is to get the name approved with the Registrar. This is done electronically and usually approved in under an hour, unless it requires vetting by another agency. Once it is approved, the name will be reserved for 60 days.
The next step once the name is approved is to file the request for incorporation. You will have to pay a registration fee of S$300 to the Registrar at the time of incorporation. Approval can be received as quickly as a few hours.
And that’s it. Congratulations, you have incorporated a business in Singapore. But incorporating is only the first step to really setting up. For more advice on what happens next, read our page on What To Do Post-Incorporation.