Singapore has come a long way since its birth as a City-State in 1965, when it gained independence from the Malaysian Federation. During the same year, it had a Per Capita Gross Domestic Product (GDP) amounting only to US $500 . Today, Singapore is one of the wealthiest nations in the world, earning its reputation as one of Asia’s tiger economies.
For the past twelve years, Singapore has earned the top three rankings in the Ease of Doing Business metrics. According to the World Bank annual “Doing Business” 2017 and 2018 report, the City State ranks second in Ease of Doing Business index amongst 190 countries. Forbes also listed it is as one of the best countries in Asia for investors.
Indeed, Singapore has become an ideal hub for setting up enterprises within the Asia Pacific region. Why exactly is Singapore so attractive to start-up companies? Here are the reasons behind Singapore’s acclaimed role as a start-up magnet in Asia:
Friendly Tax Regimes For Start-ups
Singapore has one of the world’s lowest corporate taxes, which is currently set at a flat rate of 17 percent since 2010. To encourage enterprise growth, tax exemptions scheme is in place for new companies on their first $300,000 taxable income for the first three years of operations. Under the scheme, qualified start-up companies are fully exempt on the first $100,000 income. On the next $200,000, 50 percent exemption is allowed. From the fourth year onwards, start-up companies may avail of partial exemptions, at 75 percent for the first $10,000 and 50 percent for the next $290,000.
Besides having considerate corporate tax measures, the standard tax procedure for filing and collection is simple and expedient. It is less dependent on the individual assessment of revenue officers.
Access To State-sanctioned Grants And Incentives
Singapore has a supportive Government known for offering grants and incentives to its start-ups and small and medium enterprises. Among the most popular grants are:
- The Capability Development Grant (CDG)
The CDG financially supports enterprises in enhancing their business capabilities. The funding is used to augment business capability areas in need of an upgrade of a particular company, such as branding and marketing, product development, financial management and service excellence, to name a few.
- Financial Sector Technology and Innovation (FSTI) scheme
The Monetary Authority of Singapore launched the FSTI scheme to fund innovation labs and institution-level and industry-wide projects to increase competitiveness and efficiency in the financial industry. Under the sub-POC scheme, support is given to Singapore-based Financial Institutions to encourage development of novel solutions to financial industry problems.
- Early State Venture Fund (EVF)
Launched in 2008 under the initiative of the National Framework for Innovation and Enterprise, the Early Stage Venture Fund invests S$10 million on a matching basis and seeds funds through collaboration with capital firms to help provide funding to Singapore-based start-up technology companies.
- Angel Investors Tax Deduction Scheme
This type of incentive scheme encourages investors to invest in start entities. Investors who are often called “angels” are entitled to qualifying deductions to be applied against their existing tax liabilities.
Hassle-free Company Registration Procedures
Company registration procedures in Singapore are fully automated by the Accounting and Corporate Regulatory Authority (ACRA). Typically, the process of name reservation and registration proper can be completed within the same day.
Open Immigration Policies
Existing visa schemes allow ease of entry of migrant workers and foreign entrepreneurs who seek to engage in employment and business opportunities within the City State. Recognising the need to be more open to foreign participation to bolster economic growth, the State eased up the requirements for Entrepass, a special employment pass issued to foreign entrepreneurial talent, usually to owners of start-up businesses or entities yet to be incorporated. The following changes are effective beginning August 3, 2017:
- Abolition of minimum paid-up capital
- Validity of renewal has been extended to two years
- Broader evaluation criteria
Robust Intellectual Property Protection
According to the 2016 World Economic Forum Global Competitiveness Index, Singapore ranked fourth in terms of intellectual property protection. It boasts of robust legal frameworks providing vigorous protection to registered rights, whether it be copyrights, patents or trademarks. In 2002, it created a specialised Intellectual Property Court to adjudicate difficult Intellectual property rights cases and also established a WIPO Arbitration and Mediation Center, outside of Geneva.
With all these attributes, it’s not difficult to see why Singapore stands out as a start up magnet of Asia, with a striking allure that captivates investors and entrepreneurs, both foreign and local. If you are interested in setting up a business yourself, take a closer look at Singapore–you may have just found the perfect spot to grow your investment.