Singapore - Market Entry and Business Opportunities

Singapore, the capital city of Singapore, has a population of around 5.7 million people. English is the most widely spoken language, serving as the medium of instruction and business communication. The country is known for its diverse ethnic groups, including Chinese, Malay, Indian, and other minorities, contributing to its cultural richness. Despite a decline in population growth in 2021, Singapore remains a thriving city-state located in Southeast Asia, with a land area of approximately 721.5 sq. km. The currency used in Singapore is the Singapore Dollar (SGD).

Economic Overview

Singapore's economy rebounded strongly in 2021, with a growth rate of 7.6% after a contraction in 2020. Manufacturing, construction, and services sectors all experienced positive growth. Domestic demand and investment saw robust growth, while inflation increased primarily due to higher food prices and transport costs. Despite a decline in exports and imports, Singapore's trade surplus widened. The country's economic freedom, business-friendly environment, and low unemployment rate contribute to its prosperity. Services dominate the economy, but Singapore is also a significant manufacturer of electronics and chemicals. Key exports include integrated circuits, refined petroleum, and computers.

Market Overview

Singapore has one of the highest GDP per capita levels in Asia, standing at around US$67,000. Its economy relies on transhipment activities and its reputation as a business hub. The electronics sector is crucial to manufacturing, while fintech and technology companies have seen significant growth. Despite the impact of the Covid-19 pandemic, Singapore's real GDP grew by 6.0% in 2021. The government supported the economy through budget revisions, focusing on infrastructure, upskilling, and digitalization. However, near-term GDP growth is expected to return to the range of 2.5% to 3% as further subsidies are unlikely. Singapore is recognized as a prosperous country and a global financial centre, with a high GDP per capita of US$72,795 in 2021. It has a skilled workforce and a favourable regulatory environment for local entrepreneurs. The economy is driven by exports in IT products, machinery, and mechanical appliances, as well as sectors like tourism, retail, and financial services. The pandemic impacted external demand and service sectors, leading to a 4.1% contraction in 2020. However, with effective control of the pandemic and strong fiscal responses, the GDP grew by 7.6% in 2021. Challenges remain, such as high core inflation driven by food and fuel prices, adding uncertainty to the economic outlook. The IMF projected a 3% growth in real GDP for 2022.

Bilateral Relations between India-Singapore

• India-Singapore relations are characterized by shared values, strong political engagement, and extensive economic and technological ties. The two countries have a comprehensive partnership based on regular bilateral dialogues and exercises across various sectors, including defence.
• The defence relations between India and Singapore are particularly robust, with annual ministerial and secretary-level dialogues, staff-level talks between their armed forces, and regular training of the Singapore Army and Air Force in India.
• The naval exercises between the two countries, including the longest uninterrupted naval exercise India has with any other country, have further strengthened their defence cooperation.
• In addition to defence, India and Singapore also collaborate on various international platforms, including the East Asia Summit, G20, Commonwealth, IORA, and IONS. Both countries have a convergence of interests on a broad range of international issues and use these forums to coordinate positions on regional matters.
• India and Singapore share concerns about terrorism and extremism and have established a framework of security cooperation to address these challenges. Both countries recognize the importance of working together to tackle these common threats.
• Recent developments include the inaugural Trilateral Maritime Exercise (SITMEX) between India, Singapore, and Thailand, announced by Prime Minister Modi in 2018. This exercise, held in the Andaman Sea, is intended to take place annually at alternative locations, further enhancing maritime cooperation among the three countries.

Taxation and Subsidies Offered by Singapore

Singapore follows a territorial basis of taxation, taxing income derived from Singapore. Foreign sourced income is taxed in Singapore when remitted, unless already taxed in a jurisdiction with a minimum tax rate of 15%.

• Corporate Tax - Singapore has a competitive corporate tax rate of 17% and follows a single-tier tax system. This system eliminates double taxation, as dividends distributed to shareholders are exempt from further taxation. The low corporate tax rate and single-tier system contribute to Singapore's attractiveness as a business destination, encouraging investment and entrepreneurship.
• Personal Tax - Singapore's personal tax system features progressive tax rates for residents, ranging from 0% to a maximum of 22%. Non-residents are subject to a flat tax rate ranging from 15% to 22%. The progressive tax structure and competitive tax rates make Singapore an attractive destination for professionals and high-net-worth individuals.
• Goods and Service Tax - Singapore's Goods and Services Tax (GST) is set at 7%, providing a balanced approach to taxation on consumption and income. The GST system strengthens fiscal resilience and diversifies revenue sources. With a moderate tax rate, it funds government initiatives while ensuring affordability for consumers. The GST promotes savings and investment by reducing the tax burden on income, supporting long-term economic growth and stability in Singapore.
• Income Tax - Income tax is levied on the earnings of individuals and companies. It is charged based on the income generated, with different tax rates applied to different income brackets.
• Property Tax - Property tax is imposed on property owners and is calculated based on the expected rental values of the properties. It is a recurring tax that contributes to the funding of public services and infrastructure development.
• Estate Duty - Estate duty, which was abolished since February 15, 2008, was a tax levied on the estate of a deceased individual. It was calculated based on the value of the assets left behind by the deceased person.
• Motor Vehicle Taxes - Motor vehicle taxes are imposed, apart from import duties, to discourage car ownership and alleviate road congestion. These taxes aim to manage the number of vehicles on the roads and promote sustainable transportation alternatives.
• Customs and Excise Duties - Singapore being a free port, has relatively few excise and import duties. Excise duties are mainly imposed on products like tobacco, petroleum products, and liquors. Import duties are applied to a limited range of products such as motor vehicles, tobacco, liquor, and petroleum products.
• Others - Singapore also imposes other taxes such as the foreign worker levy, which regulates the employment of foreign workers in the country.

Financing Business in Singapore

Singapore offers a variety of business loan options to support entrepreneurs in areas like expansion, working capital, inventory financing, commercial property rentals, and property purchases.

• Government-assisted business loan schemes: Enterprise Singapore collaborates with financial institutions to provide attractive loan schemes for SMEs, with a high government risk-share of up to 90%. These schemes, such as the SME Working Capital Loan and Trade Loan, aim to support working capital needs and trade-related activities.
• Unsecured business term loan: This financing option does not require physical collateral but relies on personal guarantees from company directors. SMEs can use these loans for various business requirements, from operational needs to expansion plans.
• Merchant Cash Advance: Tailored for retail or F&B businesses accepting credit card payments, MCA provides immediate funds based on the average monthly credit card transactions. Repayment is structured over 6 to 9 months, offering flexibility for working capital needs.
• Invoice financing: SMEs can leverage outstanding invoices as collateral to obtain early payment through invoice financing. This improves cash flow, meets working capital needs, and enhances financial management flexibility.

Top 10 Companies in Singapore – 2022

RANK	COMPANY	INDUSTRY	REVENUE IN 2022 (USD)
1	Flex	Electronics	$ 30.34 B
2	Great Eastern	Insurance	$ 13.72 B
3	Singapore Airlines	Air Transportation	$ 12.97 B
4	DBS Group	Financial Services	$ 12.91 B
5	Sea Garena	Technology	$ 12.59 B
6	OCBC Bank	Financial Services	$ 8.92 B
7	BOC Aviation	Aircraft Leasing	$ 2.04 B
8	Grab Holdings	Food Delivery	$ 1.73 B
9	Kulicke and Soffa Industries	Information Technology	$ 1.00 B
10	Singapore Post	Courier	$ 0.99 B

Most Popular E-Commerce Companies in Singapore – 2022

RANK	COMPANY	HEADQUARTER
1	Shopee	Singapore
2	Lazada	Singapore
3	Qoo10	Singapore
4	Mayer	Singapore
5	Courts	Singapore
6	Zalora	Singapore
7	Castlery	Singapore
8	Love Bonito	Singapore
9	Sephora	France
10	Amazon	USA

Top 5 Start-Ups in Singapore – 2022

RANK	COMPANY	INDUSTRY	FOUNDED IN
1	Qritive	Healthcare	2017
2	Nansen	Financial Services	2020
3	Next Billion	Artificial Intelligence	2020
4	Intellect	Healthcare & Wellness	2019
5	Multiplier	Human Resources	2020

Business Clusters in Singapore

• Financial Services: Global financial hub with major institutions
• Biomedical Sciences: Strong cluster in pharmaceuticals and healthcare.
• Information and Communications Technology (ICT): Leading ICT hub in the region.
• Precision Engineering: Focus on high-value manufacturing in aerospace and electronics.
• Logistics and Transportation: Strategic logistics and transportation hub.
• Chemicals and Petrochemicals: Well-established cluster in manufacturing and refining.
• Clean Energy and Environmental Technology: Promoting clean energy and sustainability.
• Aerospace: Thriving industry in MRO and aerospace manufacturing
• Digital Media and Entertainment: Vibrant cluster in animation, gaming, and digital content.
• Food and Beverage (F&B): Diverse culinary establishments and food-related industries.
• Education and Research: Cluster of universities, research institutes, and educational services.
• Retail and Consumer Goods: Cluster with a variety of retail establishments and consumer product manufacturers.

How to Set Up Business in Singapore?

Registering a company in Singapore is a straightforward process with simple requirements. You need at least one shareholder, foreign ownership is allowed, and the minimum capital is 1 Singapore dollar. Directors can be residents or foreigners, but at least one director must be a Singapore resident. A company secretary residing in Singapore must be appointed, and a registered address in Singapore is required.

• Decide the Corporate Structure and Collect Supporting Documents  
• Obtain Approval for your Company’s Name
• Sign Incorporation Documents
• Incorporate Company and Open Bank Account

To know more about our services and how we can help you in Singapore – CLICK HERE

Best Locations to Set Up Business in Singapore

Singapore offers several prime locations for setting up a business. Here are some of the best locations to consider:

• CBD: Singapore's central business district is a thriving hub for multinational corporations, financial institutions, and professional services.
• Marina Bay: A prestigious waterfront district known for its modern architecture and vibrant atmosphere, attracting businesses in finance, technology, and hospitality.
• Changi Business Park: A technology and research hub in the east, offering modern infrastructure, proximity to Changi Airport, and access to a skilled workforce.
• Changi Business Park: A technology and research hub in the east, offering modern infrastructure, proximity to Changi Airport, and access to a skilled workforce.
• One-North: A science, business, and residential park focused on promoting innovation and research in various sectors, including biomedical sciences and infocomm technology.
• Jurong Innovation District: A future-ready industrial estate in the west, fostering innovation and collaboration among industry players, research institutes, and educational institutions.
• Paya Lebar: A commercial and industrial area with good connectivity, proximity to residential areas, and suitable for businesses in logistics, retail, and light industries.

Visa and Immigration

Following are some of the major visas offered by Singapore for doing business in the country:

• Global Investor Program - The Global Investor Program (GIP) in Singapore attracts foreign investors and entrepreneurs who meet investment criteria, offering a pathway to permanent residence. Applicants must invest at least SGD 2.5 million in a new business or an approved fund. Successful applicants are granted an initial period of residency, renewable thereafter. Permanent residence eligibility requires meeting specific criteria such as business spending and local employment. The GIP provides benefits like a business-friendly environment, tax incentives, skilled workforce, and global business connections. It's a competitive program based on track record, business proposal, and economic benefits to Singapore.
• EntrePass - The EntrePass is a visa for foreign entrepreneurs starting a new business in Singapore. The business must be innovative, registered as a private limited company, and have substantial funding. Applicants need entrepreneurial experience, a comprehensive business plan, and supporting documents. The application is evaluated by government agencies, and the process takes about 6-8 weeks. The initial pass is valid for one year, with subsequent renewals up to three years per renewal.

With its strong economy, business friendly environment and advanced infrastructure, Singapore offers attractive opportunities for foreign investors. Additionally, due to its strategic geographical location, its airport, ports and deregulated telecommunications, Singapore is regional centre for every possible commercial activity. Despite all the attractions, one needs to be aware of the regulatory requirements, obtain necessary approvals and permits and study the market to understand vital fundamentals of local culture to ensure a successful market entry.

Our firm, India Law Offices has built a strong international presence and has formed strategic alliances with some of the largest international law firms that enable us to serve clients from across the globe. In Singapore we are working closely with various premier legal and professional firms that specialize in business, law, and other related areas.  

If you are a Singapore national or a company seeking legal assistance in India or an Indian planning to expand to the Singapore market, our firm can provide the necessary guidance and support you require.


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