10 Singapore Economy Facts You Should Know
Whether you are contemplating global expansion for current enterprise or ready to invest in a new startup, there are numerous reasons that make Singapore an attractive location. Singapore is an appealing hotspot for business with the most business-friendly regulations in the world. As per the ranking by the World Bank, Singapore is the best country in this world for business. The city-state is ranked first among 82 nations by the EIU (Economist Intelligence Unit).
The business-friendly reputation of Singapore attracts excellent empire-building talents of the world. Whether you need talented sales representatives to nurture and navigate leads in foreign countries or require manufacturing support, the labor force of Singapore is enough for any business.
Excellent salary and low unemployment rates decrease the temptation for corruption and crime. The effective laws for intellectual property are enough to protect the innovations that you bring to their market.
We have 10 Singapore economy facts that you should know. These facts will help you to understand the reasons why people all around the globe continue investing money into new startups in Singapore.
- Strategic Position of Singapore and Network of Trade Agreements
Singapore is the top player in the world across all trades because of its proximity to nearby emerging markets and locality in the hub of Southeast Asia. By working in Singapore, you can access other countries of Asia effectively. Air travel is easy with regular outbound and inbound flights. It makes business operations easy and convenient. Singapore is famous for its good trade and business relations with other countries.
After the signing of first Free Trade Agreement (FTA) under ASEAN FTA in 1993, the network of Singapore includes almost 21 regional and bilateral FTAs along with 41 agreements for investment guarantee. The agreements facilitate trading and business across borders and make it cheap for firms in Singapore to internationally expand their business.
In the more recent years, 11 countries including Singapore, signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on March 8, 2018. This new version of the Trans-Pacific Partnership Agreement (TPP) seeks to lower tariffs and expand regional economic integration between advanced economies. Through the agreement, trade barriers to countries where Singapore did not previously have FTAs with, will be eliminated. This will likely open up new investment opportunities and strengthen Singapore’s position as an economic powerhouse in the region.
- Widespread Air Connectivity
Singapore expedites trade through effective management of supply chain and well-organized logistics infrastructure. The Changi International Airport serves over 100 airlines flying to almost 320 cities of 80 countries worldwide. These airlines fly around the globe to over 80 countries, granting the ability to reach almost 50% of the consumers of the world in six hours or even less.
Almost 6,800 flights depart and land from Changi with over 55.4 million passengers passing via airport each year. It is home to renowned logistic firms like FedEx and UPS.
- Affordable Funding and Vibrant Monetary Centers
Singapore is famous for its vibrant nerve center to 365 fund managers, 531 capital services markets, and 124 commercial banks. It is a hub for investment and wealth management in Asia. Singapore is the 4th biggest forex tradeoff center in the world.
Entrepreneurs have access to a combination of commercial and private banking services to fund the expansion of business at a low rate, as small as 1 percent per annum.
- Incentives for Setup of Headquarters
To encourage multinational companies to relocate their headquarters to Singapore, the EBD (Economic Development Board) offers RHQ (Regional Headquarters) and IHQ (International Headquarters) incentives.
Companies that are accredited the status of RHQ enjoy a concessionary rate of tax at 15% for qualifying increase in income from activities and operations of headquarter from Singapore. Companies with IHQ status enjoy attractive rates of taxes between 0 and 10%. Regional headquarters that consider Singapore as their IP (Intellectual Property) holding location can claim WDA (Writing-down allowance) for the procurement cost of IP.
- Exemption of Foreign Income
Singapore adopts a territorial taxation policy. Under the Income Tax Act, a Singapore tax resident company will be able to enjoy tax exemption on specified foreign income including dividends, branch profits and service income, that are remitted into Singapore under three conditions:
- The foreign income had been subjected to taxation in the foreign country from which the income was received.
- Headline tax, which refers to the highest corporate tax rate of the foreign country from which the income was received, is at least 15%.
- The Comptroller, which is the Inland Revenue Authority of Singapore (IRAS), is satisfied that the tax exemption is beneficial to the person resident in Singapore.
With the tax exemption, you may avoid paying double taxes and let the income be subjected to the low tax regime of Singapore.
- Roadmaps for Industry Transformation
Singapore’s government sector-specific roadmaps for industry transformation have spurred five key sectors to embark on transformation efforts.
In the globalized economy, SMEs and MNCs need to continuously innovate and improve in order for them to remain relevant in the long run. Since 2016, the Singapore government has been rolling out Industry Transformation Maps (ITMs) to assist 23 key sectors to ride the wave of digital transformation. The ITMs focus on four key pillars: Innovation, Productivity, Jobs Redesign & Upskilling and Internationalization.
The Retail industry has benefitted from ITMs.
For instance, to enhance confidence of retailers that are inexperienced in online business, E-Commerce Ready-To-Go Solutions have been developed together by SPRING (now Enterprise Singapore) and prominent digital partners such as Google, Qoo10 and Singapore Productivity Centre. Developments of new, innovative retail concepts are upcoming and most of which are manpower lean. Some examples include digital vending machines & “manless” stores in retail shopping malls.
- Export Opportunities
Singapore is the 13th largest export market in the world and the 13th largest trading partner of the United States. The United States is the largest supplier of Singapore for vegetable and fruit juices and frozen veggies with 57% and 40% market respectively.
Singapore is the leading destination for the medical services in the world. Singapore’s healthcare industry is booming at a fast pace with a heavy reliance on medical devices imported from other countries. In Singapore, the market share of the United States for medical devices is 30%.
Franchising is another flourishing industry in Singapore. Total revenue from this industry is $5.7 billion. Almost 70% of overseas companies are dominating the franchise market in Singapore.
- Internationally Oriented Transportation Services
Organizations in Singapore engage in business near Southeast Asia, India and China. Several foreign companies contract companies in Singapore as their distributors because they have a branch office within these particular regions.
Singapore utilizes its competitive advantage of the geographical location to become the best transportation center in the world for air cargo and sea. Singaporean companies have acquired sea, telecommunication capabilities, air and land capabilities to move services and freight anywhere around the globe.
- A Promising Crowd Funding Scene
In Singapore, the government has passed down several policies to attract investors, improve research and development, and promote innovation and expansion. Recently, Singapore set its sights on legitimizing crowdfunding platforms so as to protect investors and helping businesses grow.
The new regulations came at the right time for SMEs and Startups, which are usually struggling with capital issues during early stage of business. According to market studies, only 20% of businesses succeed in receiving the capital funding support required to grow the business.
Kickstarter, for example, claims to have a success rate of 45% for its all-or-nothing approach to fundraising. Overall, businesses that use crowdfunding succeed more often than those that rely on venture capitalism alone.
Other crowd funding platforms such as MoolahSense and FundedHere are also one of the few platforms that favors the common standards that come with new regulations, and are approved for CMS license in Singapore.
- Friendly Regulatory Policy
Infrastructure and business-friendly regulatory policy of Singapore are ideal for startups. As the founder of a startup in Singapore, you will have access to a strong labor force, a wide consumer base along and the ability to expand and export your business.
Given its strategical location, amicable relations with international economies and friendly business regulations, it is no surprise that Singapore has risen to the position of an economic powerhouse in the region. If you are a foreign entrepreneur or business owner, you should definitely consider incorporating your business in Singapore as your gateway into the Asian region.
At Enterprise Assurance, we offer you a broad range of business services spanning from company incorporation to auditing services. Our team of chartered accountants prides themselves with the expertise and experience to provide you with the most exceptional service. Let us help your business gain competitive advantage and tap into new opportunities here. Shoot us an email with your contact details and let our experts help you!