Singapore takes pride in its ability to make the most out of globalisation. The island-state is renowned for enforcement of intellectual property & business rights, reliability, integrity, productivity, and quality. However, doing business in Singapore is not without its share of challenges, and it’s therefore crucial for startups to have local help.
The International Finance Corporation (IFC) and the World Bank rank Singapore top in the globe for ease of starting and doing business due to its numerous assets that are critical in the modern world of business. A strategic location and competitive tax rates make it a desired destination for startups looking to make something out of the country and the Asia Pacific region. The state has long been considered as an economically advanced stronghold within the tip of an economic boom region.
According to TMF Group, Singapore is an efficient and transparent state where every filing is done online meaning there are few complications that can interrupt business transactions. The group also noted that startups often consider Singapore for business due to its high corporate governance standards. They are also attracted by the numerous incentives offered to startups, including an exemption tax scheme for young businesses.
But, as previously mentioned, doing business in this island state is come with some challenges. For example, an increase in startup businesses is reducing margins and providing tough competition amongst the businesses, as well as raising operational costs, particularly a squeezed labor market and in rentals.
Starting a Business
Businesses looking to venture in the country must first register with the Accounting and Corporate Regulatory Authority. The authority conducts a name search and files for the business tax number (GST) and incorporation. Also to be completed by all startup businesses before the operation in Singapore includes registration for work injury compensation via an insurance agency and a business seal.
Dealing with Construction Permits
There are eleven procedures that startup businesses have to go through when dealing with construction permits in the country, although the entire process ought to take less than a thirty days to complete. If you are looking to start a business here, you must obtain written permission from the Urban Re-development Authority prior to getting structural your structural plans approved.
Businesses also have to consult with the Ministry of the Environment and Water Resources’ Central Building Plan Unit to obtain technical clearance. Finally, they have to seek approval from the Singapore’s Commissioner for Workplace Safety and Health as well as the Land Transport Authority.
It takes roughly 35 days to get connected with electricity, with most of the days being spent on paying the connection fee to Singapore Power Services Ltd and opening an electricity account before SP Ltd carries out external works from its power grid.
Registering Business Property
Registering business’ property can be an intricate ordeal, more so in relation to the fees you are required to pay. Startup business will spend quite a several days searching online for various government agencies, from the Water Reclamation Network Department, Land Transport Authority, the Inland Revenue Authority, Urban Redevelopment Authority and the Ministry of Environment.
The IFC and World Bank ranked the country in second place globally for investor protection strength thanks to its superb performance on the liability, protection indices, disclosure, and suits.
Singapore’s law requires that Businesses make 5 tax payments every year which generally takes an average of eighty-two business hours to complete. Social security contributions, VAT, and corporate income tax are all filed online.
Trading Beyond Borders
Historically, the country has always acted as an international trading hub and is one of the most cost competitive regions in the world for doing business beyond borders. If you are planning to start an import-export business in Singapore, there are four crucial documents that you must first prepare, and they generally take no more than five days to complete.
Resolving Insolvency and Enforcing Contracts
It takes five months to enforce a contract compared to the average 16 months of OECD. Insolvency resolving takes well under 12 months, compared to 33 months in Pacific and East and 19 months across the rest of the Organisation for Economic Co-operation and Development (OECD).
Singapore Business Culture
Singapore is a mixed society made up of Malay, Chinese, Eurasian and Indian communities. More often than not, your business counterparts will be Singaporean Chinese as they comprise a majority of the state’s population. It is necessary to cope with the Singapore’s business culture and this section will offer considerations and advice when dealing with local associates as culture has great influence on the performance of startup businesses.
Generally, Singaporeans are cosmopolitan and open in their outlook. In most cases, they aren’t likely to confront if you commit a social blunder, especially if you are from a culture different from theirs. The general advice would be to always courteous and do as “the Romans when in Rome”. As a general rule startups and any other business should try to keep away from discussions about issues such as politics, religion and racial issues. A few culture tips that owners of startup businesses in Singapore should consider are as follows:
Singapore’s working language is English while Tamil, Chinese, and Malay are the official languages. There is another local vernacular called Singlish, which is basically English peppered with local dialects and slang.
Avoid doing business during Ramadan or on Fridays when entertaining your Malay associates who are mainly Muslim. Never serve pork or alcohol. Also, have in mind that the Indian population doesn’t eat beef. If you invite Singaporean associates to your business social event, you are the one to pick up the bill, then they can reciprocate in the next event.
It is rare to have business breakfasts in Singapore. The preferred meal for business meetings is lunch. Even so, long lunches are not common in Singapore, and would, therefore, be wise to avoid planning meetings between 12 and 2 pm. Also, spouses are hardly ever invited to any business power meal.
Singaporeans are usually on time for their appointments and the same is expected with both local and foreign startup businesses in the country. Notify them as early as possible if you are not able to arrive at the meeting on time.
One common way of saying thank you to your business associates in Singapore is through business gifts. Small business gifts like pens or notebooks with your business logo would be great. Gifts are typically wrapped and presented to the receivers, who then open them later after leaving.
Gifts with cutting or severance connotation, such as scissors, aren’t appropriate because they are regarded as symbols of conflict in Singapore. Letter openers are however an exception. For your Chinese associates, the number 4 rhymes with death, so it is important not to give any gift that is in a set of four. For your Malay business associates, avoid giving them alcohol or pigskin products as gifts because these are against Islamic law.
Singapore Business Etiquette
There are essential differences in conducting business in the country and the following provides valuable etiquette considerations for startups in the country.
When making introductions informal meetings and for the first time, always use the individual’s title and family name then their personal name, if they have a Chinese name. If they have a western name like “Paul”, they should be introduced just like in the West, with the given name coming before the family name.
Malays don’t use family names. They use their individual names followed by binti (daughter of) or bin (son of) before the personal name of their fathers. The Indians use their individuals’ name followed by the daughter of (d/o) or son of (s/o) and the personal name of their fathers.
Business cards have to be treated with respect and exchanged upon meetings. Ideally, they ought to received and given with both hands. After receiving a business card from an associate place it in front of you on the table as per the placement of the people you are together within the meeting. Don’t ever write on a business card, stash haphazardly in a folder or casually put it in your back pocket. Any of these actions may be misinterpreted as lack of respect in Singapore.
There is an increasing emphasis on the equality of men and women. Females do hold powerful positions in businesses as well as in government agencies. Spouses of both sexes don’t usually go to business functions or events unless personally invited.
Although Singapore’s climate is tropical, ties and long-sleeved shirts are still the usual business attire for men, while smart-business wear is the most ideal for women. You can wear jackets when attending formal events.
Singapore Business Hours
- Shops> 10.00 – 22.00 daily
- Banks> 09.00 – 16.00 Monday to Friday. There are some banks that also open on Sundays and Saturdays
- Offices> 08.30 – 17.30 Monday to Friday.
Funding Options for Singapore Startups
One of the main challenges that startups face in Singapore is access to capital finance. Many of them are usually financed with informal capital by their founders, or their friends and family members. But, since informal funding sources are not sufficient to support the business, a majority of new people seeking to venture into the Singaporean and East Asia market usually seek private equity financing.
Private equity financing is capital sourced from private investors that are looking at dividend returns and capital gains in return for their investment in your startup business. This kind of funding is an attractive source for startups in Singapore, particularly those that have insufficient collateral to qualify for traditional loans.
To have a better chance of securing equity financing in the country, you need to present a good business plan, an experienced team of staff working with you, strong growth potential, a clear exit strategy as well as reasonable financial projections. The key to finding the best investor to finance your startup is determining your business’ life cycle. Business angels and venture capitalists are the two main sources of equity capital in Singapore. Other private equity capital sources include financial institutions, banks, and investment companies.
Singapore ranks twelve best countries in the world as far as ease of acquiring credit is concerned. However, startup businesses must be aware that firms and individuals are not listed in a national credit registry with info on their history of borrowing from the past 5 years.
Singapore Business Environment
Singapore continues to be recognised as one of the world’s best places for business. A 2013 World Bank report said this about doing business in the country “It takes a startup business just over six working days to get on the go in Singapore, due to low costs of setting up. Overall, considering other factors, such as credit legal issues, taxes, investor protection and licensing, Singapore has the friendliest business regulations in the world.”
Startups have also come to like the high levels of reliability and transparency in business, as well as regulatory and economic affairs in Singapore. In addition, the country’s literacy levels, and a highly connected society plus some of the top universities ranked globally provide for a very smooth environment for conducting any business.
A parliamentary democracy, a stable political structure, a transparent judicial system, and strong domestic institutions with excellent corporate governance, have made the country’ business environment even more conducive to both local and global startups.
Marketing Startup Business in Singapore
As previously mentioned, startups usually have limited budgets that are not able to cater for all their operations. As a result, some often find themselves between a rock and a hard place when trying to market their products or services to prospective customers in Singapore.
But, with so many affordable marketing techniques available today, a majority of startups have been able to make the most out of them by attracting customers for their products and services. Digital marketing and social media are particularly effective as they able to give your business a global reach and a lower cost, compared with traditional forms of marketing.