Singapore has reigned supreme as a lucrative market for domestic and international businesses, and according to many economists, it is the best country to do business.
So, what makes Singapore a favorable market for international companies?
Singapore’s location makes it an ideal place for foreign investments. The world’s busiest port and a pro-business environment position Singapore as an attractive market for foreign companies to expand into the Asia Pacific.
#1. Singapore presents an excellent balance of East and West.
Given Singapore’s colonial past and diverse population, there is much familiarity with many Asian, European, and American cultures. As a former British colony, Singapore’s legal, administrative, and taxation models are similar to those in the UK and the US.
“Singapore builds itself on this position of being kind of like a trading post,” said Philip Steggals, Managing Director at Kadence International Singapore.
Furthermore, English is widely spoken, and adopting a Western lifestyle has made Singapore an ideal international market. At the same time, Singaporeans are proud of their heritage, so it’s an excellent market for other Asian countries to enter. Therefore, Singapore is an ideal mix of the east and west and embraces everyone.
#2. Singapore’s economy is very business-friendly.
Geographically, the island of Singapore is small and lacks natural resources. Therefore, the economy relies on international operations. It has also focused on building a large manufacturing industry, making it a significant export market for the US.
“The Government very much has that mantra of helping people either come into the country or helping people in the country expand regionally to grow their business and improve everybody’s lives,” Philip said.
The government has also implemented economic policies to promote international trade and has a friendly business model. Foreign businesses are subject to the same laws as local businesses.
Businesses can also use agencies to get the help they need to secure capital and set up their Singapore entities.
“IE Singapore or Enterprise Singapore sits under the administrative trade, and it facilitates overseas growth of Singapore-based companies, regardless of nationality,” Philip said.
There’s another entity called Spring, which plays a similar role in growing enterprises.
“Spring is the place to go where you get quite a lot of government grants as well — the sort of tech investments and grants, which any small-to-medium-sized company can benefit from,” he added. “Then there is the Economic Development Board that also helps businesses. So the message is that if you are in Singapore and you want to grow, then we will help facilitate that process.”
If you have a good product or service, you could quickly expand it in Singapore. And if you’ve got a product or service that you’ve replicated quite well, Singapore is a great, safe, predictable market to grow it.
The legal help you get in Singapore is very transparent and secure. With sound finance systems, it is easy to get loans. If you are an SME, you can walk into one of the local banks and set yourself up with all the business accounts you need, likely on the same day. Many banks accept digital signatures and allow opening bank accounts online.
“You can also easily find advisors who will help you grow into other markets or advise you on how to grow your business in Singapore,” Philip added.
There is a massive opportunity for external investment, and international businesses own their companies 100% when they expand to Singapore.
Geographically, being a small market, it’s easy to meet people, even in times of a pandemic, because everyone lives in a small area. “You can network quite easily, and you can find somebody that will have the right skillsets or advice for what you need,” Philip said.
#3. Singapore also offers attractive tax laws to international companies entering the City, State.
The government offers attractive tax incentives to businesses in Singapore.
#4. Access to ASEAN.
Despite the small market, Singapore is well-known globally for its IP strengths and easy access to the broader ASEAN region.
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Top industries in Singapore
Tech, fintech and cryptocurrency, cyber security, and mobile payments are some of the fastest-growing industries in Singapore. FMCGs and food franchises from well-established brands overseas do very well.
“Singapore is a center for tech and innovation excellence. We have a lot of people that would typically be involved with big multinational companies setting up innovation hubs here or bringing their regional headquarters into Singapore,” Philip said.
Main challenges of doing business in Singapore
More than 99% of all imports enter Singapore duty-free as a free port. It levies high excise taxes on distilled spirits and wine, tobacco products, motor vehicles, and gasoline.
Other industries that pose challenges for international companies include livestock, and services barriers that restrict satellite dishes, pay television, legal services, banking, and healthcare procedural transparency.
Philip listed three main obstacles for companies trying to build a subsidiary in Singapore.
“While it’s fairly easy to set up a business in Singapore, it’s a challenge to bring in mid-to-low-level employees, which then gives you two options. You either have to come in with some top trainers, or you have to come in and know that much of the work will be done by people that aren’t necessarily familiar with the business,” he said.
“If you want to set up a business, you should be able to show that you are going to employ locals and, you’re going to train them so that they can eventually take over running operations and have more senior roles.”
“The job creation equation is what Singapore is looking for when you set up a business, so you should have a plan on employing Singaporeans,” he added.
There is also fierce competition with other countries trying to enter Singapore, so international companies should be aware of this.
Impact of covid 19 restrictions
Singapore has had some of the most stringent lock-downs during the pandemic.
As a result, some businesses have shut down during the pandemic, and others have accelerated in Singapore, despite strict COVID-19 restrictions.
“I think the pandemic has just accentuated what was going on beforehand,” Philip said. “However, one of the issues has been a shortage of labor force coming in from other countries. Many expats have also left the country due to stringent COVID-19 restrictions.”
What do Singaporean consumers want?
Price, quality, and service are essential factors for consumers in Singapore. International companies entering Singapore must know that the buyers are discerning and that the competition in the market is intense. Singaporean consumers also like products and services that are well established in their home countries and have a story or history behind them.
So from a consumer standpoint, what are the key considerations Singaporean consumers have?
According to Philip, that depends on the category.
“We did some research on the luxury purchases made in Singapore and Asia. Consumers want to see some heritage and a well-defined story of where the brand is from and why it exists when it comes to the high-end market,” he said.
“The German manufacturers do very well in the automotive market, and there’s a sense of prestige associated with the well-known European luxury car manufacturers. There’s also a significant segment of people that are very practical and go for Hondas and Toyotas.”
Food and beverage outlets do very well if they are well-established in their home market. Brands with their roots in China or Taiwan for some novelty-type items and popular brands in Japan also do very well, as do Korean skincare brands.
In a nutshell, Singaporean consumers like understanding the brand’s roots, why it’s now Singapore, and what it’s doing. They are a discerning populous and are looking for quality products and services.
Selling and distributing products and services in the Singaporean market.
Selling techniques utilized in Singapore vary by product and are similar to sales practices in sophisticated western markets. Social media and online marketing are growing in Singapore, and it is essential for international companies that use agents in Singapore to visit them regularly.
“A lot of our clients at Kadence have their regional offices in Singapore because of a very transparent legal system. The government is also very predictable and pro-business, so if you’re going to set up a regional base, Singapore is the perfect place for it,” Philip added.
A favorable time zone gives it another advantage and makes it suitable for business. The commerce or the distribution networks from Singapore to the Southeast Asia and North Asia markets is pretty straightforward.
“Moreover, the ease of commuting makes Singapore the perfect base for operations. It’s also typically relatively easy to get visas for higher-paid staff members here, and it’s not considered a hardship posting to be based in Singapore, regardless of your home country,” Philip said.
How to strategize market entry into Singapore
If you have a successful product or service in your home country, expanding into Singapore is a good idea. One cannot emphasize the importance of a concrete market strategy and solid business plan for market entry into Singapore.
Over 4,500 US firms have launched business enterprises in Singapore. Many international exporters use agents and distributors to enter Singapore. These agents and firms aggressively represent new products and services in Singapore. Therefore, it is invaluable to find suitable partners and utilize agents.
The top three strategies that subsidiaries can utilize when planning entry to the Singaporean are:
1. Identify your growth plan. Singapore as a market is not very large unless you are a McDonald’s type company. But for most industries, your potential is relatively small. The population is 5.7 million people, so you have to identify where else you can go. It would help to calculate your maximum potential returns based on your target audience. For companies entering Singapore, knowing that growth plan would be substantial.
2. You need to have a sound training system. As a small company with one or two people set up like a distribution hub, you will probably be fine, but as soon as you start growing, you will be expected to recruit more Singaporeans. Therefore, you will need to have training in place.
3. Do your commercial research. The government is pro-business, and therefore, it is critical you research who to ask for help and what benefits you can receive.
Political and economic stability in Singapore
Singapore has had the same government since its foundation.
One of the reasons behind Singapore’s massive growth over the past five decades is the consistency of government. “You can put long-term visions in place without your political parties, flipping it as a political winning system to get elected,” Philip said.
Singapore has shown phenomenal growth in the last ten years and will continue to grow as it is a great place to live, do business, and is devoid of red tape or bureaucracy.
The next 50 years will present new challenges to Singapore in the form of an aging workforce, a maturing economy, social media’s growing influence, and increasing competition from other trade agreements and ASEAN partners. However, it remains an attractive market to enter and shows phenomenal potential in years to come.