Why So Many Business Owners Choose to Set Up Companies in Singapore? An Analysis of Singapore's Economic, Geographic and Business Advantages

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

1Source: EDB Singapore - Singapore: An ideal launchpad for businesses in Southeast Asia (https://www.dbs.com.hk/sme/disclaimer.page?url=https://www.edb.gov.sg/en/business-insights/insights/singapore-an-ideal-launchpad-for-businesses-in-southeast-asia.html)
2Source: DBS - Hong Kong Pulp Mill Mil Mil Expands Into Singapore
(https://www.dbs.com.hk/sme/disclaimer.page?url=https://www.dbs.com/livemore/hk-zh/inspirations/hong-kong-pulp-mill-meow-house-mil-mill-expands-into-singapore.html)
3Source: EDB Singapore - Why Singapore is a top choice for biopharma firms seeking global expansion (https://www.dbs.com.hk/sme/disclaimer.page?url=https://www.edb.gov.sg/en/business-insights/insights/why-singapore-is-a-top-choice-for-biopharma-firms-seeking-global-expansion.html) 
4Source: EDB Singapore - Nongsa D-Town launched in Singapore-Indonesia tech park (https://www.dbs.com.hk/sme/disclaimer.page?url=https://www.edb.gov.sg/en/business-insights/insights/nongsa-d-town-launched-in-singapore-indonesia-tech-park.html)
5Source: EDB Singapore - SG+: Twin to win the supply chain long game with Singapore as the gateway to Southeast Asia (https://www.dbs.com.hk/sme/disclaimer.page?url=https://www.edb.gov.sg/en/business-insights/insights/sg-twin-to-win-the-supply-chain-long-game-with-singapore-as-the-gateway-to-southeast-asia.html) 
6Source: EDB Singapore - Learn about our Incentives & Schemes for Businesses (https://www.dbs.com.hk/sme/disclaimer.page?url=https://www.edb.gov.sg/en/how-we-help/incentives-and-schemes.html)
7Source: EDB Singapore - Logistics & Supply Chain Management (https://www.dbs.com.hk/sme/disclaimer.page?url=https://www.edb.gov.sg/en/business-insights/supplychain.html) 
8Source: World Competitive Center - Country Overview - Singapore (https://www.dbs.com.hk/sme/disclaimer.page?url=https://worldcompetitiveness.imd.org/countryprofile/overview/SG)
9Source: EDB Singapore - World-class talent (https://www.dbs.com.hk/sme/disclaimer.page?url=https://www.edb.gov.sg/en/why-singapore/world-class-talent.html) 

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