How to Overcome Common Challenges of Doing Business in Singapore

How to Overcome Common Challenges of Doing Business in Singapore

The ease of doing business in Singapore is almost legendary, with the country’s leadership consistently being held as a paragon of business-friendly management by foreign investors the world over. If that weren’t enough, Singapore offers foreign investors multitudes of unique opportunities, particularly in the bleeding-edge tech, pharmaceuticals, and finance sectors. 

However, even with these major positives, setting up a business in Singapore comes with challenges that will stump the unprepared. Often, investors who are used to how things work in other Asian countries can be a bit off-put by how different some things are in Singapore. Let’s delve into a few of the more common investment hurdles that help define the Asian powerhouse’s business climate:

Stringent Business Incorporation Procedures

Singapore’s ease of doing business is consistently ranked at the top of most global indices but, unlike many other economies, actually setting your foot in the door is a rather inflexible process. By design, there are very few exemptions and workarounds in the incorporation processes, which is a fair trade-off given the country’s solid opportunities. To quickly navigate this challenge, investors can check out relevant government resources or engage local professional services knowledgeable in how to register business in Singapore.

Costs of Doing Business

Singapore’s leadership might be focused on the ease of doing business partly because Singapore can be an expensive country to set up a business. Rental costs for business premises can be a concern, as can expenses for utilities and labour. Fortunately, the competitive market for some of these services means that businesses can often negotiate or find reasonably priced options for some inputs. Adopting energy-efficient practices and leveraging government subsidies when available should also help investors bring down business costs to a more manageable level.

Working Hours

Only Japan beats Singapore in Asia for the longest work weeks, which is officially capped at 44 hours but is often substantially longer than that, in reality. If you’re an employer, you don’t necessarily need to follow this pattern, but if you’re working with locally based businesses, it could lead to some alignment issues. Creating some leeway in your processes with flexible work arrangements and focusing on outputs rather than hours can help you achieve a happy medium between Singapore’s native work culture and less hectic global expectations.

Tax Compliance and Payment

Singapore's competitive corporate tax rate of 17% attracts investors worldwide, but as with registrations, compliance measures are enforced to the letter. If you’re used to more flexible tax authorities in other countries, Singapore’s processes may come as a shock. 

Fortunately, actually paying taxes is as easy as it gets for both companies and individuals. Once business and individual taxpayer requirements are complied with, online payments are generally quite easy. Still, it helps to find services that can help with Inland Revenue Authority of Singapore (IRAS) rules to help make sense of the system and avoid making unnecessary payments.

  1. Labour

While Singapore welcomes more foreign talents than any of its neighbours, labour shortages and skills gaps are still prevalent in certain sectors. Any investor setting up a business in the country must implement global talent acquisition strategies and explore upskilling for existing employees. They can also look into partnerships with educational institutions to bridge skill gaps and attract local talent.

  1. Work Pass Requirements for Foreign Employees

As mentioned, local labour shortages mean that investors in Singapore must be prepared to look globally to find talent. The country is very welcoming to foreign workers, but work passes are universally required for compliance. The Singapore Ministry of Manpower requires a variety of work passes for different categories of workers, so it will be important for businesses to stay on top of these and assist key foreign talents with their paperwork, as needed.

  1. Opening a Corporate Bank Account

Singapore banks are compelled to enforce stringent compliance checks and know your customer (KYC) requirements for opening corporate bank accounts. Investors who want to do business in the country must provide comprehensive documentation, which can be difficult for some to provide. Fortunately, several local corporate service providers specialise in helping foreign investors in this area. Singaporean banks themselves are also generally great at guiding foreign investors through KYC compliance.

  1. Import Licensing Requirements

While Singapore is one of the world’s leading logistics hubs, it does import restrictions and duties on certain goods. Depending on what sector an investor works in, these restrictions can sometimes be a burden, especially if the imported item is needed for production. Pharmaceutical businesses, for instance, will often require a long list of restricted materials. Regardless of an investor’s line of business, getting in touch with customs clearance experts and staying abreast of local laws will be necessary to avoid running afoul of these trade barriers.

The market and regulatory hurdles presented by Singapore are, by and large, quite modest compared to those of other comparable economies. Its openness to foreign investment, solid logistics and financial systems, and enviable internal stability make it a solid bet for investors, despite these challenges. All-in-all, these barriers are a small price to pay to enjoy Singapore's strategic location and business-friendly environment.

02 Apr 2024
Singapore Expats