Why Is Singapore Attractive for Foreign Investors?
Updated on Saturday 05th December 2020
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ByVlad Cuc, specialist in company formation matters
Singapore has put all its economic efforts into attracting foreign direct investments (FDIs) and creating a suitable trade environment. All its strategies have turned Singapore in one of the easiest cities in the world to do business in. Among these strategies, one can find the advantageous loans for foreign investors, the tax incentives and exemptions, the pro-business legislation and the city’s financial stability. In 2013 Singapore was nominated as the eighth largest city in the world as a recipient of FDI by the UNCTAD Global Investment Report and the third among Asian countries. The countries investing the most in Singapore are the United States, the Netherlands, and Japan. The local government is keen on attracting investment in Singapore which is why it has enabled various schemes through which foreign entrepreneurs can benefit from various incentives.
If you are a foreign investor and want to open a company in Singapore, our local agents are at your disposal with complete company incorporation solutions. Even if Singapore does not have a specific legislation to provide for foreign direct investments, it has enabled other policies which offer more possibilities and alternatives to overseas businesspersons coming here.
What are Singapore’s most appealing attributes?
Foreign investors have various reasons to choose Singapore as their destination for setting up companies. Among these, surveys indicated that Singapore has one of the freest approaches to international trade and one of the most open economies in the world.
In terms of international trade, Singapore grants various tax breaks to companies in various industries related to the trading sector. Among these, small and medium-sized enterprises have the most to benefit from these incentives.
At the moment, the following schemes are available for SMEs companies in Singapore:
- the Angel Investor Tax Deduction Scheme which is available for angel investors which invest in eligible companies;
- the Fund Management Incentive which is granted to fund management companies under the form of a 5% tax concession for up to 10 years;
- the Global Trader Program under which companies can obtain a 5% to 10% corporate tax deduction for specific trading income for periods of 3 to 5 years;
- the Section 13H Tax Incentive under which fund management companies can obtain a 0%- rated tax relief for up to 10 years.
Our company formation consultants in Singapore can help you find out more information on the incentives granted by the government. It is also useful to know that SMEs benefit from the support of a special agency created by the government – the SME Portal enabled by Enterprise Singapore.
Our company formation specialists in Singapore can offer information on the laws related to foreign investments. If you are looking for investment in Singapore, you can rely on our local specialists for guidance on the best sectors to open a company in.
The main reasons to invest in Singapore are presented in the infographic below:
Singapore is one of the most important gateways to Asia
Most foreign investors and companies are attracted to Singapore due to its geographic location which allows them easy access to the greatest market in the world: China. The favorable tax system with one of the lowest corporate taxes in the region, the extensive number of double taxation agreements convinced enterprisers that is it easier and more prolific to open a company in Singapore, rather than to just pass through Singapore while on the way to the rest of Asian countries.
The immigration policies which has attracted a great number of foreign citizens working in the top industries in Singapore has also created an impressive pool of talent, Singapore being the country with “the most internationalized” workforces in the world. This has determined many companies to relocate here and take advantage of the labor force which is also one of the cheapest in the region.
Foreign investment in Singapore is one of the most important contributors to the city-state’s economy.
Company formation in Singapore compared to other countries
In order to see exactly why Singapore is a preferred business location compared to other Asian countries, it suffices to say that compared to China, India and Japan three of the strongest economies in the region, the city-state offers incentives targeted to specific industries and foreign investors can apply directly with the Government for them. When compared to similar countries like Malaysia and Hong Kong, Singapore has the great advantage of offering better support to foreign investors, an excellent road system and communications infrastructure. Singapore is also one of the most innovative countries in the world, being the first to create and test its own digital currency.
Singapore is a very appealing for European investors who can obtain EORI numbers and start trading with companies in the European Union. Before starting a business as an overseas entrepreneur, it is important to understand the legislation on investment in Singapore.
Singapore in international reports
Singapore can be considered as one of the most advanced cities in the world in various fields if we are to believe the international magazines and organizations which have placed the city-state on some of the top positions of their rankings. According, to the Singapore Economic Development Board, in 2018 the city-state was announced as:
- the 2nd most competitive economy in the world, according to the IMD Competitiveness Index;
- the 2nd easiest country do to business in the world, according to the World Bank’s Doing Business Report;
- the 4th in the world and 1st in Asia in terms of intellectual property protection, according to the Global Competitiveness Report issued by the World Economic Forum;
- the 1st place among Asian cities for sustainability according to the Sustainable Cities Index.
If you are interested in setting up a company in Singapore, our local advisors can guide you through the registration procedure of the selected type of structure.
If you have any questions about investment in Singapore, feel free to address them to our company formation agents.
Why should enterprisers invest in Singapore?
Being nominated the easiest city to do business in several times is one of the strongest arguments why foreign investors should open a company in Singapore. The city’s infrastructure, the banking system, and communication facilities are also very important as they are less time and money consuming factors when deciding to set up a company. Singapore provides many incentives for foreign investors putting money in certain industries such as financial services, tourism, healthcare, and telecommunications. Foreign enterprisers can also rely on Singapore’s double tax treaties with over 70 countries that allow them to reduce the tax burden.
The most appealing investment sectors in Singapore
During the last few years, Singapore has advanced a lot from a technological point of view. This is why along the traditional industries which were quite developed here, other new industries have started developing. Among these are:
medical technology and biotechnology as Singapore has many facilities offering innovative solutions for the healthcare industry;
engineering which has developed several branches among which precision engineering is one of the most appreciated;
the media industry has also become quite popular among foreign investors with branches like digital communications;
the logistics industry which is now one of the most technologically advanced industry in the country;
the environmental sector which relies on sub-sectors such as urban sustainability and innovative solutions for the improvement of the environment.
It should also be noted that the government has collaborated with private companies and regulatory bodies in these sectors in order to provide the proper mechanisms for their development.
Another industry which has gained a lot of popularity among foreign investors is financial technology which relies on blockchain technology and cryptocurrencies. It is also useful to know that Singapore was among the first countries in the world to create an appropriate environment for the development of fintech activities.
If you want to open a company in Singaporein the fintech sector, our consultants are here to guide you.
Investment aids and opportunities in Singapore
Foreign investors opening their first company in Singapore can be assisted by institutions like the Singapore Trade Development Board (STDB) that promotes FDI and exports and the Economic Development Board (EDB) that provides different incentives for foreign businessmen setting up companies in the city. Apart from the industries mentioned above, the government strongly supports themanufacturing and services sectors which are part of its policy to replace the low-valued labor activities that were moved to China. Singapore has three free trade zones (FTZs) that provide the same opportunities for local and foreign companies. Enterprises can use the free trade zones for storage, repacking and export activities.
For more information on investment in Singapore and its favorable development, please ask our local consultants.
Among the industries which benefit from assistance schemes is the financial and banking industry with incentives for both resident and non-resident investors. Among these, the Withholding Tax Exemption Regime for Banks is one of the most appreciated by foreign entrepreneurs who can obtain an exemption for interest payment and other qualifying incomes related to their businesses in Singapore.
Recognized as one of the most importantmaritime centers in Southeast Asia, Singapore also offers several incentives to those setting up maritime companies here. Among the most popular benefits granted to Singapore companies in this sector, the Maritime Sector Incentive which provides for tax concessions for up to 10 years is quite important.
No matter the type of company you want to establish in Singapore, you can rely on our local representatives who can assist you.
Research and development activities in Singapore
Singapore is one of the most innovative countries in the world, as research and development (R&D) activities have expanded in all economic sectors. From healthcare to manufacturing, there are R&D facilities to respond to all companies’ needs.
Foreign investors interested in this sector of activity can enjoy no less than 4 industry-specific incentives under the form of:
- the Development and Expansion Incentive which encourages companies to expand their activities in innovation;
- the Pioneer Incentive Scheme which was created to accommodate the needs of manufacturing and services companies seeking to invest in innovative products;
- the Productivity and Innovation Credit Scheme which is was renewed several times thanks to benefits it has brought to companies and to Singapore’s economy.
When added to the fact that the company registration procedurein Singapore is quite simple, these incentives complete the picture of why the city-state is so attractive for foreign investors.
We also invite you to watch our video below:
Investment in Singaporerelies on a diversified economy
If until a few years ago Singapore was mainly known for the financial and trading facilities it offered, in the last ones, the city-state has evolved into a diversified economy relying most on investments from foreign businesspersons.
Among the industries that have contributed significantly to the economy these years, pharmaceutical, shipping, fintech and innovation have become pillars of Singapore’s Gross Domestic Product. The number of multi-national companies has also increased, especially when it comes to developing innovative-related operations. The government played an important role in offering support for these industries by specializing the workforce in these fields and providing financial assistance through various incentive schemes.
If you are interested in investing in Singapore and need information on a specific industry, you can rely on our local advisors for detailed information. Moreover, we can also assist with the company registration procedure of a Singapore-based business.
Singapore a great real estate investment destination
One of the sectors that have had a favorable evolution in the last decade is real estate. Based on a thriving construction industry, the number of residential and commercial properties has soared thus allowing foreign citizens and companies seeking to relocate here to have multiple options.
Foreign companies seeking to make a significant investment in Singapore can choose real estate for the high returns they can obtain. The same investment but in residential property this time can qualify a foreign citizen for some of the lowest property taxes in the entire Southeast Asian region.
Apart from these, Singapore is one of the safest cities to live in, according to various surveys. If you want to apply for a residence permit, our local consultants are at your service with information and assistance in obtaining it.
The skilled workforce attracts investment to Singapore
One of the strongest points and reasons to invest in Singapore remains the workforce. Foreign companies and single entrepreneurs come here for the well-prepared and skilled labor force who is also in its majority made of English-speaking individuals. Also, according to a recent survey, Singapore attracts more foreign workers than any other Asian country. When adding the fact that most of these workers are white-collar employees, no wonder it also attracts an equal number of foreign companies seeking to establish regional headquarters here.
Infrastructure favors foreign investments in Singapore
With one of the most developed infrastructures in the region, Singapore has connections with even the most remote corners of the world which makes it very appealing for other industries like shipping, logistics and transportation to thrive here. Investment in Singapore relies on these sectors which have registered a remarkable increase in the last few years.
Singapore alone has more than 100 airlines that connect it to the entire world.
Free zones – one of the main reasons to invest in Singapore
Like other countries in the world, Singapore also has free zones and industrial parks which are mainly dedicated to foreign investors. Singapore has 9 free zones and 6 industrial parks ready to accommodate businesses in sectors like trading, storage and transportation when it comes to free zones, and logistics in industrial parks, given the fact that these are located near some of the most important residential zones in Singapore. The government has helped with the modernization of these zone making them very appealing for investment in Singapore.
- is expected to overtake Switzerland in terms of agricultural commodities by 2025;
- currently offers funding to a market of no less than 4 billion customers;
- is home to around 7,000 international companies from the USA, the European Union and Japan;
- is also host to nearly 3,000 companies in China and in India.
Our company incorporation representativescan provide all the details about investment opportunities to foreign businessmen wanting to open a company in Singapore. For a personalized offer, do not hesitate to contact us.