Doing Business in Singapore

Doing Business in

A world-class infrastructure, supportive portive government policies, poli ies, s, and an an access to a larger market in the Asia-Pacific region make Singapore for doing business gapore an excellent destination des estii /Vimarsh Bajpai

W

hen n Nina Alag Suri landed in n Singapore in 2005, she had the dream to start her business from om scratch. Having done business earlier the rather difer in th ficult market of the UK, Suri found that starting a business siness in Singapore was a “cakewalk.” k.” Getting office space and quality people wa was extremely easy for Suri, the foun founder and CEO of Nastrac Group of Companies. “Singapore is like a hub. Most of the companies base their Asia-Pacific headquarters in Singapore. But the business does not limit to Singapore. You do a lot of regional business in Hong Kong, China and Australia,” says Suri, who recently concluded an acquisition. Nastrac is a player in the staffing and recruiting industry.

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Suri iss not tthe only one who is happy doing business siness in Singapore; there are over 3,800 In Indian firms in the country, o dotted across diverse sectors such as IT do services, education, logistics and manse ufacturing. The big names include IT u majors such as TCS and HCL, logistics

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Information Technology Telecommunications Health and Wellness Urban Solutions Education and Manpower Development

player Gati, and manufacturing sector biggie Usha Martin. Bilateral trade between Singapore and India has grown significantly in the last five years, and with the Comprehensive Economic Cooperation Agreement (CECA) in action, entrepreneurs in both the countries could look for more opportunities.

Why Singapore?

Singapore’s strategic location, worldclass infrastructure and a multilingual workforce makes the country an attractive destination to do business.

Take the case of TCS. The IT major has set up its international APAC headquarters in Singapore, which functions as a hub of operations for its regional offices in China, Korea, Taiwan, Malaysia, Australia and New Zealand. “The

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Eng Keat Lee Regional Director Singapore Economic Development Board How is Singapore reassuring investors during the slowdown?

The downturn has helped ease inflationary pressures and allowed us to turn our attention towards preparing for the future. From that perspective, we tend to call our efforts upturn measures rather than downturn measures!

The key focus iss training our manpow manpower.

Unemployment currently stands at about four ugh this is a relatively low rate, percent. Though ot taking things for granted and are we are not actively facilitating cilitating science, technology and engineering training. raining. We are helping to boost the capabilities and nd retaining experienced manpower, especiallyy in the growth industries.

There are new programs whereby instead of retrenching the workers, you could send them for training. A large part of the training raining cos cost is covered by the Singapore Government me and companies can claim absentee pay.

Some of the other efforts include facilitating cash-flow by enhancing tax exemptions on foreign source income, enhancing the provisions for capital allowance and allowing companies to convert some of their losses into cash refunds.

What are the new opportunity areas for investors in Singapore?

The key interest from Indian companies so far has been the use of Singapore as a base to tap the region. Interest first started from the IT industry. In addition, there has been significant awareness to set up trading activities here.

New areas where companies can explore opportunities are described by what we call growth themes such as urban solutions and health and wellness. Looking at some of the statistics and macro trends, half of the world’s population is going to be moving into cities.

With the increasing crowd in cities, the world would need solutions for urban mobility or transport, homeland security, environment and water. We are positioning Singapore as a living laboratory for companies to develop their ideas to products or solutions that could be eventually marketed to the world. The Singapore government is quite open to test bed new ompanies might migh bring innovative solutions that companies Singap forward, which could eventually use Singapore as a reference point nt to target other markets in the world.

The other area ea is of health and wellness.

This is partially bornn out of Singapore’s own need for solutions in thiss space. The ccost of ting rapidly and healthcare has been escalating Sin ation. We be Singapore has an ageing population. believe there are oopportunities to introducee innovative, cost-effective solu solutions to home care, and also the care in the hospitals.

What makes Singapore an attrac attractivee destination for investors? he ease of doing business in Singapore ngappore is The one of the key factors. Indians ns comp companies mpan are ortable that Singapore pract tic common comfortable practices law withh the ba background being the British law.

In recent times, some Indian companies are ap as an arbitration platform to using Singapore settle disputes.

There are a lot of business opportunities in Asia and Singapore is one of the good locations to use as a base to seek those potential opportunities because of the cosmopolitan nature and the connected nature of the Singapore economy. We are by no means a low-cost location but we are a cost-effective location because if you look at our rentals, the cost of infrastructure, etc. it is comparable to some of the Indian cities, like Mumbai.

Singapore is a home for talent. Its safe and secure environment allows talent to be comfortable as in a home away from home.

How is the tax system in Singapore favorable for foreign companies?

The taxation system has a few key characteristics.

There is corporate tax, individual tax and the goods and services tax. For corporate tax, Singapore has a one-tier tax system whereby profits and losses at the subsidiary level could be pooled at the parent holding company level.

As for the foreign sourced income, if you are repatriating dividends, branch profits or service income from other countries which has a headline tax rate of more than 15 percent, that is also exempted in Singapore under the foreign rced in sourced income tax exemption. Capital gains are also tax eexempt in Singapore.

W When you are looking to bring dividends back to India, Singap Singapore does not withhold taxes on dividends repatriat repatriated back to India. This, coupled with the ccountry’s network of double taxation avoidance agreements in Asia, allows you to effectively manage your tax iincidence. ness ss in How easy is it to start a bus business Singapore? ore? How much tim time does it take?

And what iss the cost? deent nt dire You would need a re resident director to register a com gap apore. e Th company in Singapore.

The resident does not have to be a Singa SSingaporean apo or a Singapore Permanen ident or PR. Once that Permanent Resid Resident atiion iss rea information ready, most companies would be ablee too regis rregister st the company fairly easily online.

S me com Some companies take just a day to get it done.

To bbee on the safer side, we sometimes quote ten ddays to the companies we meet. The registration fee is around Singapore 300-600 dollars.

If you are dealing with the domestic economy, such as food and beverage or a night club or a hotel, there will be other regulations that are specific to these industries.

How does your agency help entrepreneurs wanting to set up shop in Singapore?

For those who are interested in exploring product development efforts or interested in using Singapore to serve the region, we help facilitate introductions that would help them achieve their goals faster.

For product development, the Economic Development Board (EDB) helps to identify possible technology partners, such as companies or research institutes that are able to augment their efforts and shorten their time to market.

For those wishing to use Singapore as a base for the region, EDB provides suggestions on various partners that have experience in overseas markets.

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Imports from Singapore

INDIASINGAPORE TRADE Exports to Singapore

overnment The Singapore g ey are very Th is just brilliant. reigners fo friendly towards p shop in u who want to set nderstand u y Singapore. The that build t e SMEs that it is th ry significantly. thhe economy ve ri – Nina Alag Su

ies

an strac Group of Comp Founder and CEO, Na

NOTE: Values in US$ Million, Source: Ministry of Commerce, Government of India

Pradeep Menon Chief Executive Officer Singapore Indian Chamber of In Commercee & Industry (SICCI) Most Indiann entrepreneurs nnow want to go global on the first day. How good is the strategy too venture abroad?

It is encouraging to know that Indian enoking beyon ress trepreneurs are looking beyond the shores of India. Every entrepreneur prene should look ookk at a global oppo ua opportunities too sou source better qualroduc or to locate ity andd cost-ef cost-effective products al forei nc markets for in external foreign currency cts oor for going in for technoltheir products ogy transferr or llearning the best practices.

Despite the fac fact that India has got a huge market, there are many merits in venturing out as we well. Of course, not at the expense he domestic market, but having both of of the them side by side. In that regard, we are seeing a constant stream of companies coming out. Invariably when they do so, Singapore seems to be the location of choice to have your first staging post.

How good is the presence of Indian companies in Singapore?

I think Singapore is home to most Indian 50

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companies than any other the world. We herr in i th have 3,500 plus companies mppaniies in Singapore.

There are comp companies coming out of India, anniess co basically majority-owned or controlled by ority rity-ow personnel Indian pers l of o Ind ndia nationality. This does not include the companies in Singapore includee th that owned by people of Indian origin. haat are ow If you yo add that, then it is a much bigger number.

The reason why companies come nuum out to be based in Singapore is because it is a stepping stone to the rest of the AsiaPacific region. Even in ASEAN countries, with a population of 550 million people and a trillion dollar economy, if you put that collectively, it is a very attractive market. You can’t find a better channel to enter into this market than through Singapore.

Within ASEAN there are tax concessions and a whole host of benefits. Today more than 50 percent of India’s bilateral trade with ASEAN flows through Singapore.

How could Singapore be helpful for Indian companies wanting to do business with China?

If you look at the trading relationships, one of the fastest growing is the one between India and China. That has grown from a mere $300 million perhaps a decade and

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strategy/going global DARE/doing business Ease of….

Doing Business Starting a Business Dealing in Construction Permits Employing Workers Registering Property Getting Credit Protecting Investors Paying Taxes Trading Across Borders Enforcing Contracts Closing a Business

2009 Rank 1 10 2 1 16 5 2 5 1 14 2

2008 Rank 1 9 5 1 13 5 2 3 1 3 2

Change in Rank 0 -1 3 0 -3 0 0 -2 0 -11 0

India 122 121 136 89 105 28 38 169 90 180 140

Source: World Bank Doing Business 2009 Report

reason why companies come out to be based in Singapore is because it is a stepping stone to the rest of the AsiaPacific region. Even in ASEAN countries, with a population of 550 million people and a trillion dollar economy, if you put that collectively, it is a very attractive market,” says Pradeep Me-

non, CEO, Singapore Indian Chamber of Commerce and Industry.

“The Singapore government is just brilliant. They are very friendly towards towa foreigners who want nt to set up shop iin Singapore. They understand that it iis the SMEs that build the economy ver very significantly. It was extremely easy to

a half ago to about $30 billion. Analysts who study the two economies say that if you look at the real potential, it should be around $100 billion by now. India and China are neighbors and they could have a lot of democratic similarities, but no two countries from a cultural and business standpoint can be further apart. The big players within the business fraternity would know how to go about tapping it. They will ources. But there is a have their own resources. huge number off SMEs on either side, and those companies anies have to think how they can tap each other’s her’s huge market. Because you are not familiarr with the place, p you don’t speak the language, ge, and you don’t know the culture, so there is this perfect perfe bridge called Singapore with which hich both the Indians and the Chinese are quite ite comfortable.

If you go through Singapore, it makes the job a lot easier. Take the example of TCS, TC which spring-boarded into China through Singapore. It used Singapore’s manpower and expertise to get into China.

you cannot do it in India. You have to be in Singapore, especially companies nies in the IT is not just a market. sector. Singapore S arket. It is a busiest port, it is a hub hub, has the world’s wo with more than for logistics, hub for finance n 1,600 financial institutions here. he It is a hubb for or telecom, tourism, hospitality, education, ed atiion, healthcare, althcare, etc. Being a hub, if you aree in thesee sectors, you have got to bee where whe here the core is. s. You got go to have a presence ence ce there. th If you are re not, you cease to be a regional re player, lett alone a global player. That is the reason whyy companies comp are coming here.

If they want to source, they can source it here in Singapore. If they want to sell, they he come here. With excellent infrastructure and co connectivity, this is an extremely conducive co environment for business.

How important is it for companies to be present in Singapore? How does it help?

Singapore is home to over 10,000 MNCs. If you are vying to tap this as your customer,

How easy is it to raise money for your business?

There is no such thing as free money, but it is a free market with a fairly easy environment. However, the onus is on the entrepreneur that he has a good business plan, a quality product and service and it is going to be a viable business. Money is available; it is a question of how you prove that you deserve that money. If you can put a plan

set up a company,” says Suri. Despite recession, she was able to get a loan at attractive interest rates, as part of the program launched by the government to battle recession. “The recession was so severe and cash was such a huge problem. The loan program was a big help,” she says. “You don’t have to run after them. They had an account manager, who would come to my office, and did all the paper work for me,” adds Suri.

No wonder, Singapore ranks top on wo the list ist of ccountries on the ease of doing business parameter of the World ng busin Bank’s Doing Business Report 2009. world-class infrastructure, Singapore’s world-c manpower, and suphighly educated m government policies make it portive governm an excellent destination to do business.

Globalisation ss. According to the Globa Index 2007, Singapore leads in foreign n for trade and d investments. The T Global Glob b Enabling Trade 2009 has ranked e Report 2 00 09 h Singapore on top ffor having the most or havin h open economy.

together her aand nd can c ffund un it yourself partially or find the money from your friends and he mo m prove ve thatt it’s i doing well at the mezzanine or the th pphase ha two level, then there are plenty institutions that have come in. The off inst government has lot of schemes and grants gov to help but only after a certain track record has been built.

What role does the Singapore Indian Chamber of Commerce play?

We are a Singapore entity but we are focused on Indian businesses and naturally the ethnicity also has the roots back to India. So we have a predominant portion of our resources and attention focused on India. We help Indian companies of Indian ethnicity here in Singapore to grow and expand outwards towards India and the rest of the world. We also help Indian companies coming in from India to establish themselves here and go beyond. Then, we also help non-Indian companies, be it multinationals who are based here or the local Chinese companies to engage with India. As far as SMEs are concerned, we help them depending upon which stage of development they are in. For SMEs we run DAR E between 70-100 events annually.

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