by Pardeep Boparai, founder of Janus Corporate Solutions
Pro-business policies and a strategic location have made Singapore a favored destination in Asia for global corporations. Its swank Marina Bay financial district is home to some of the largest global brands in technology to finance – it houses Google’s Southeast Asian headquarters, as well as the sprawling trading floors of companies Barclays Capital and Bank of America Merrill Lynch.
Over the last 5 years, Singapore has also created a vibrant entrepreneurial ecosystem that has lured some of the most prominent global entrepreneurs and venture capitalists to the island. They include legendary US investor Jim Rogers, who decided to move his family to Singapore in 2007, Facebook cofounder Eduardo Saverin, who relocated to the country in 2009 and has already invested in several local startups such as Anideo, and the Golden Gate Ventures (GGV) incubator fund which aims to build a partnership between Silicon Valley and Asia. According to serial entrepreneur Derek Sivers who recently relocated to Singapore from the US, “…(Singapore) feels like a small town in a big city, with the advantages of both. It’s a great place to set up a business, which is important to me.”
Why is this small Southeast Asian island such a hotbed for investment and start-ups? Here are six reasons that answer this question.
Access to capital
The continuous inflow of investment and wealth into Singapore over the last two decades has led to a concentration of angel investors, venture capitalists, and private equity firms here. In 2011, Singapore-based venture capital and private equity firms registered a total of S$26.5 billion in assets under management. These cash rich industry participants are actively seeking to make equity investments in new ventures. For those who prefer debt financing, three of Singapore’s largest banks (OCBC, DBS, and Standard Chartered) offer special lending schemes and banking services focused exclusively on startups.
The Singapore government provides a wide range of financing schemes and grants to encourage the development of the entrepreneurship in the country. These government-backed funding and assistance options for startups can come in the form of equity financing schemes, cash grants, business incubator schemes, and debt financing. The government’s enterprise agency SPRING Singapore can also help startups through mentoring and assistance with securing funding from third parties. For instance, SPRING Singapore offers a Micro Loan Programme (MLP) in conjunction with other financial institutions.
Through entrepreneurship programs, schools such as NUS also invest in startups or facilitate third-party investments; in addition, they provide mentoring to help a business grow. NUS’ annual business plan competition – StartUp@Singapore – is a very popular networking forum where participants can pitch their ideas to investors and meet potential partners and employees.
Ease of doing business
The Singapore government has created an extremely stable and efficient business infrastructure where red-tape and bureaucracy are rare. As a result, Singapore holds the #1 spot on The World Bank’s Ease of Doing Business rankings. Most of the typical day-to-day transactions with the government can be completed within hours and most can be done online. The procedures for incorporation and compliance are very efficient and transparent. For example, incorporating a company in Singapore typically only takes 1-2 days, whereas it can take weeks in California, home to the Silicon Valley.
Unlike most Asian countries, bribery and corruption are non-existent in Singapore. It is currently ranked as the fifth least corrupt country in the world according to Transparency International’s Corruption Perceptions Index 2011. Only New Zealand, Denmark, Finland and Sweden ranked higher in the report.
Attractive tax system
Singapore has an affordable and efficient tax system that appeals to companies of all sizes. The maximum corporate tax rate in Singapore is a relatively low 17%. Most important for startups, there are no capital gains or dividend taxes in Singapore. This is a big attraction for those who are risking their sweat equity or capital in a new venture.
In addition, the Singapore government offers several tax incentive schemes designed specifically for startups. For example, qualifying startups receive full tax holiday on certain portions of their taxable income for the first three years of incorporation.
Intellectual property protection
Singapore government has passed intellectual property (IP) protection regulations that are considered models by other industrialized nations. The country is a signatory to major IP conventions and treaties, such as the Patent Cooperation Treaty, Paris Convention, Berne Convention, Madrid Protocol, Budapest Treaty, Agreement on Trade-related aspects of IP rights, and World Intellectual Property Organization.
As a result of its IP protection policies, Singapore has become venue of choice for businesses seeking to manage their IP assets. The World Economic Forum (WEF), the Institute for Management Development (IMD) and the Political Economic Risk Consultancy (PERC) all rank Singapore as the top IP destination in Asia. Start-ups with breakthrough ideas can come to Singapore and be assured that they will receive the full economic benefit from their novel ideas.
Talented and dynamic workforce
Another advantage of Singapore is the access to a highly qualified workforce. The country has been ranked first in BERI’s Labor Force Evaluation Measure for the last thirty years. Singapore’s immigration policies on foreign talent are one of the least restrictive such policies in the world, and the country is ranked second on IMD’s list of ‘most attractive environment for highly skilled foreigners’.
As a result, Singapore attracts top quality professionals from all over the world. Earlier this year, local recruitment agency Robert Half reported a twenty percent increase in investment banking applicants from Europe since 2009. Many Asian-born professionals, such as Singaporeans who migrated to the U.S. or Europe to work at top firms, have also become more inclined to head back to the region to further their careers.
There are plenty of skilled local Singaporeans as well, thanks to the high quality of education available in the country, such as the highly ranked NUS and Nanyang Technological University (NTU). In a recent ranking of the top universities in Asia, NUS and NTU placed 2nd and 17th, respectively.
With the abundance of talent, startups in Singapore have plenty of options for finding individuals with the relevant skills.
Great place to live
Lastly, Singapore is an excellent place to live because of its overall quality of life. Factors such as a world-class healthcare system, a globally recognized K-12 education system, a multicultural and vibrant cultural scene, great shopping, dining and entertainment options, helped Singapore earn the title of ‘most livable city in Asia for expatriates’ by ECA International.
With excellence in fields ranging from business-friendliness to quality of life Singapore has become an attractive destination for entrepreneurs looking to start a new business. Next time you are thinking about launching a new venture, consider Singapore.
About the Author
Pardeep Boparai is the founder of Janus Corporate Solutions – a Singapore-based firm that helps entrepreneurs set up their operations in Singapore. Janus provides comprehensive and cost-effective services for company registration, immigration, accounting and tax advice to businesses and entrepreneurs worldwide. More information can be found on Janus’s website at http://www.GuideMeSingapore.com.