I recently returned from Singapore, the tiny city-state with the mighty, heavyweight economy that has captured my heart and my business mind for decades. While it may be business that brings me to Singapore, I always make time for a little fun like strolling the famous river walk and stopping along the way to take in some great local food like my favorite chili crab.
In fact, I’d tell you to go just for the spicy, delicious chili crab (and satay and laksa) but you need to stay for the only natural resource Singapore has in abundance: its people. The diverse, global-minded workforce continues to grow with forward-thinking government policies, such as the recently announced visa program for high-earning foreign talent.
If an organization aspires to set up in Asia Pacific (APAC), Singapore should be at the top of the list for establishing a legal presence.
My company, GoGlobal, is a global Employer of Record (EOR) that helps our clients hire full-time workers when they don’t have a legal presence in a country. So why suggest setting up an entity in Singapore? It’s because the EOR isn’t the right solution for every occasion, and I enjoy helping companies map out their international expansion and operational strategies.
There are also compelling reasons to engage an EOR in Singapore, including having a small headcount or wishing to explore the region before committing to a permanent operation. If you have longer term plans in the region, then establishing a regional legal presence and using an EOR to cover all or most of the region from there until there is a need to set up is a fiscally sound business approach.
Here are a few reasons why Singapore makes good business sense:
Top talent pools and cultural diversity
Singapore is less than 280 sq. miles with a population of less than 6 million people. Yet it offers a highly skilled and cosmopolitan labor force, ranking first in APAC and second worldwide according to the INSEAD Global Talent Competitiveness Index. Singapore also ranks first in its ability to enable and attract talent, according to the index.
The population has a nearly 98% literacy rate, with almost 62% percent of the population having post-secondary education. While English is the language of education and business, you will find a multilingual, multicultural community that can help you tap into the rest of the region.
Singapore’s forward-looking tax regime aims to support substantive economic activities in Singapore for long-term, sustainable growth. The city-state has also developed an extensive network of tax treaties with over 85 countries and territories.
Here are some of the highlights:
- 17% flat corporate tax rate
- 250% tax deduction for qualifying expenditure for eligible R&D activities in Singapore
- No capital gains tax
- No withholding taxes on dividend payments
Globally connected and growing
With 7,400 flights departing weekly from Singapore Changi Airport, the country is situated no more than six hours from any country in Southeast Asia. Over 640 million people live in Southeast Asia and more than 50% of the vast region is expected to be classified as middle class by 2030.
Singapore is home to the largest number of headquarter jobs from global Fortune 500 companies compared with other key Asia hubs, according to separate studies by AON and KPMG. With one of the largest concentrations of brand marketers in Asia Pacific, firms like MasterCard, P&G, Intel, Phillips and Unilever have chosen to develop digital expertise and grow regional brands from Singapore.
Approximately 46% of regional APAC headquarters are based in Singapore across a diverse range of industries. In terms of technology multinational companies (MNCs), Singapore hosts 59% of APAC regional headquarters.
Business procedures are streamlined and easy
The language of business and the courts in Singapore is English. Setting up a legal entity is relatively easy being that you can register a company the same day and become operational in weeks, depending on many factors. The regulatory environment is straightforward, with the World Bank ranking Singapore among the world’s most business-friendly countries.
The Singapore “hub and spoke” regional strategy
Breaking into the fast-growing, diverse Southeast Asia region can be challenging. It takes months to set up shop in many neighboring countries and the process can be hampered by capital requirements and complex, cumbersome compliance obligations.
By setting up regional headquarters or a hub in Singapore, your company can gain a distinct competitive advantage in a simple, tax-friendly location with incredible talent and infrastructure. You can then engage an EOR solution to hire business development professionals, build customer support teams or manage your distribution and supply chain footprint throughout the rest of the region.
Use Singapore as your regional hub and enhance the strategy through an EOR to cover the region without the headache – and stay for the chili crab!
By Andrew Lindquist, Partner, GoGlobal