At more than 50 years old, Singapore has become a central business hub in Southeast Asia. There are many good reasons why Singapore is hyped as one of the economic powerhouses of Asia and perhaps the entire world. Apart from being situated in the perfect geographical location, the island city-state has a politically stable government. Corporate taxes are relatively low, and the government is happy to open its doors to foreign investors. Are you an entrepreneur who’s looking forward to establishing a business in Singapore? Congratulations! But you should know that there may be downsides as well. Here are the top pros and cons of doing business in Singapore.
- Peaceful Government and Safe Economy
Where there is stability, businesses can thrive. Singapore has enjoyed a peaceful political atmosphere for some time now. Crime rates are relatively low in the Lion City when compared to other developed countries like the United States.
Singapore’s economy is wealthy to the extent that it can withstand a 10-year recession without any problem. Due to the one-party system of government, corruption rates are very low in Singapore. The government has worked hard to create a conducive environment for anyone wishing to set up a business without going through excessively complicated bureaucratic procedures.
- Effective Legal System
Everyone is equal before the law, and the laws are very friendly to entrepreneurs. Singapore’s legal system is founded on honesty, accountability, and probity. So, it’s hard for anyone to corrupt the law. The signing of business contracts & agreements is passed through effective legal channels. Consequently, business dealings are safe with low levels of risk.
- Low Corporate Taxes
While some governments choose to heavily tax business owners, Singapore doesn’t need to do that to make money. With the oil, trade, and tourism sectors already booming, the government is already wealthy and this has allowed it to subsidize taxes for corporate organizations.
Singapore’s corporate tax rate stands at 17%, unlike the U.S.A where that figure can be as high as 35%. In some cases, small firms don’t have to pay taxes at all in Singapore. If your company’s yearly turnover is less than $30,000, you are tax-free.
If you are an investor who wants to move to Singapore, check out the Visa Express website for more info on Singapore visas for businessmen.
Here are some disadvantages of doing business in Singapore.
- Restricted Labor Pool
When it comes to hiring workers for the service and retail sectors, Singapore can be a bad place to do business. The reason is that the government pushes its local workforce to go into professions such as industrial engineering, finance, and education, as well as biochemistry. This situation creates shortages in the retail and tourism sectors because local Singaporeans have developed a distaste for low-tier jobs.
As a result, immigrants are pouring into Singapore to seek tier 1 jobs. This leads to high costs of labor for small businesses.
- Low Government Resistance
Even though Singapore’s government has implemented a lot of schemes to support entry-level businesses, they do not come without disadvantages. There are simply way too many grants (schemes) that the average business owner will have to investigate before they can identify what’s right for them. What’s the use of a million schemes if business owners cannot access them, or are not aware of them?
In summary, as a sunny island full of resources, Singapore can appear to be the holy grail for big dreamers. However, not every aspect of the economy favors business owners.