Why So Many Business Owners Choose to Set Up Companies in Singapore? An Analysis of Singapore's Economic, Geographic and Business Advantages
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Singapore stands as a crucial node in Southeast Asia, benefiting from its strategically advantageous geographic location. In recent years, it has also evolved into an innovation hub for many tech giants1. Also, numerous fast-growing SMEs have also entered the Singapore market2. From the perspective of SMEs from Hong Kong, you may wonder: What are Singapore’s advantages, and why is Singapore so attractive? What kind of business opportunities exist when setting up a company in Singapore? Let's dive into the following article and discover more.
Singapore’s Business Environment Overview
Singapore has well-developed hardware and talent resources3. Singapore-based companies can reach a vast amount of potential buyers in Southeast Asia while leveraging the rich natural resources in the region and capitalising from relatively favourable cost competitiveness. For foreign companies, it is a triple-win situation. The Singapore government has implemented a series of “Singapore +” business policies to augment a business-friendly environment and elevate Singapore’s multiple advantages1.
The Global Innovation Index 2022 rewarded Singapore as Asia's second most innovative country and the 7th worldwide1. The Singapore government has initiated various innovative projects with neighbouring countries. Take Indonesia as an example: a brief 40-minutes ferry ride from Singapore can take you to a new digital downtown, Nongsa D-Town, on the Indonesian island of Batam, where you will have access to a wealth of talents from the emerging market and the tech industry4.
The truth is, the Southeast Asian region has been witnessing tremendous and rapid growth in recent years - it is estimated that by 2030, 80% of the population in Southeast Asia will be internet users, and the middle-class demographic is expected to swell to 65% of the overall population1. This is a compelling reason for foreign companies to establish a presence in Singapore and Southeast Asia. Success is for first-comers - the companies who will plant the flag first in the market to build rapport with local consumers are likely to be rewarded with loyalty to the brand1.
Singapore’s Advantage #1: Business-Friendly Policy “Singapore +”
Government business policies play a particularly crucial role at every stage of a company’s development, especially for SMEs that are experiencing rapid growth. The Singapore government has established a series of business-friendly policies under the “Singapore +” strategy, such as the forming of the Southeast Asia Manufacturing Alliance (“SMA”), offering support for research and development activities, facilitating business partnerships, and streamlining the setup process, etc5.
Foreign companies planning to set up a company in Singapore are eligible to apply for various support and incentive programmes. These programmes benefit diverse sectors, including sustainability businesses, technology and innovation businesses, industrial land development, and corporate training, etc6. These support and incentive programmes include:
● Tech@SG: to facilitate access to global skilled talents for eligible companies6
● Resource Efficiency Grant for Emissions (“REG(E)”): to provide assistance to support the construction of energy efficiency facilities6
● The Training Grant for Company (“TGC”): to encourage the application of new technology, industrial skills and professional knowledge through supporting training programmes for employees6
Singapore’s Advantage #2: Location and Infrastructure
The SG+ model has accelerated manufacturing companies’ expansion of their production line. The Southeast Asia Manufacturing Alliance (“SMA”) consists of more than 10 industrial zones in countries like Indonesia, Malaysia, and Vietnam, and assists companies in establishing production lines or with sales activities. This is to increase the flexibility of their supply chain and minimise the dependence on a single manufacturing base3.
For retail, online or trading companies, Singapore is a prime hub for international logistics companies now. With 200 shipping routes connecting Singapore with ports in 123 countries, up to one-seventh of the global container transshipment throughput is routed through Singapore7. This strengthens businesses' confidence in their logistics operations' efficiency and cost control.
Singapore’s Advantage #3: Talent Resources and Education System
Singapore has always been recognised as one of the most competitive countries in the world8, and is home to a large pool of talents who are instrumental for foreign companies aiming to enter the Southeast Asian market. The education system in Singapore is a key contributor to this. Like Hong Kong, Singapore adopts bilingual education. Besides being fluent in English and Chinese, the general population in Singapore are also proficient in Malay or Tamil. Singaporeans’ unique ethnic and linguistic blend can assist Hong Kong businesses with communicating in Southeast Asian countries and can facilitate a smooth collaboration between Hong Kong businesses and their counterparts in Southeast Asian countries9.
Singapore government has put complementary measures in place for those who are interested in hiring or working in Singapore, including investing S$100 million in supporting businesses to upgrade and skills training. It has also provided a number of training and support programmes for employees to ensure that the talent stays competitive9. Moreover, Singapore has set up the SkillsFuture programme to encourage locals to learn new skills, prioritising training digital-related talents9.
Are you planning to set up a company in Singapore and leverage the many advantages of the country to expand your business to the Southeast Asian market? DBS SME Banking will stay by you, while you explore what the Southeast Asian markets can offer. With DBS' extensive service network, we can help you unlock business opportunities in Singapore and Southeast Asia. Open a business account now, and contact your Relationship Manager to learn more about Singapore's merits and opportunities.
Article Published on 1 February, 2024
^Terms and conditions apply.
*** Account opening can be completed in as fast as 1 working day for Hong Kong-incorporated entities with all shareholder/director/sole proprietor/partner holding a Hong Kong Permanent Identity Card. For Hong Kong-incorporated entities with at least 1 shareholder/ director/ sole proprietor/ partner holding the People’s Republic of China Resident Identity Card, account opening can be completed in as fast as 5 working days. Subject to eligibility and conditions.
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