Indian startups are literally going places today. Anil Advani from Inventus Law spoke to an enthusiatic crowd at Yourstory’s office recently on setting up US operations.
Singapore is the other ‘go to place’ for several Indian startups. Couple of weeks back, at the Singapore Walkabout, we met many expat startups that viewed Singapore as a favorable location to set up their businesses. We spoke to many of them over the last few months, asking: how they are able to manage it all so seamlessly in an alien country. What makes Singapore tick? How do you go about it?
Based on these conversations, here’s the Guide to Starting up in Singapore. What you read here is a birds eye view for all Indian startups, aspiring to set up Singapore operations.
Ease of operation ranks highest in this list (Singapore is one of the most politically stable economies, almost zero rate of corruption). Other tangible benefits include:
Strategic location: Situated in the heart of Southeast Asia, Singapore works as a perfect hub to access the South East Asian markets. It’s difficult to enter markets like Malaysia, Vietnam, Indonesia and Philippines without a Singapore set up, which helps ease issues like language constraints and cultural habits of people and businesses in those countries.
Virat Khutal from Twist Mobile, who have an office in Singapore, says, “Talent in art and game design, is hard to find in India. Singapore is the right approach for Indian companies thinking of going global. With countries like Malaysia and Thailand on one side and Vietnam and Indonesia on the other, Singapore gives exposure to a diverse region”. He refers to Singapore as ‘the right mix of developed and developing market access’.
Government aid: Several government outfits support enterprises in Singapore.
- Economic Development Board (or EDB) is a government agency responsible for planning and executing strategies to enhance Singapore’s position as a global business centre and grow the Singapore economy. EDB initiated the Business Angel Scheme and the SPRING Seed Scheme, which now fall within the purview of SPRING.
- SPRING, an agency under the Ministry of Trade and Industry, supports growing innovative companies and assists SMEs in the areas of finance, management, technology innovation and access to markets. SPRING has various financing schemes for startups fulfilling certain criteria. SPRING also manages EnterpriseOne, a comprehensive network and know-how on starting up, growing and sustaining a business in Singapore. ACE, a one-of-a-kind ‘national movement by the private and public sector’ to seed and nurture entrepreneurship in Singapore, led by the director of SPRING, also has a Startup Grant, available to foreigners, subject to certain conditions. Rajiv Mathew from Compassites, who are looking at establishing a Singapore presence says, “meeting government agencies has been a breeze. They have a fairly open door policy and we are greatly impressed to see such a proactive government at work.”
- Accounting & Corporate Regulatory Authority (or ACRA) is the national regulator of business entities and public accountants in Singapore. ACRA also provides information on new business structures, compliance requirements, and corporate governance practices. Like Indian law, Singapore’s legal system is based on principles of common law, making it easily palatable to Indians looking at setting up businesses here. Compared to Indian legal system, our interaction with lawyers in Singapore gave us the impression the Singaporean legal system and processes are more straightforward.
Taxation: While corporate taxes in Singapore range from 9% (for the first S$300,000 annual profits) to a maximum of 17%, individual tax rates in Singapore are capped at a maximum of 20%. There are no capital gains or dividend taxes in Singapore. Also, companies headquartered in Singapore can benefit from their 70 comprehensive Double Taxation Avoidance Agreements.
IP laws: According to the World Economic Forum’s Global Competitiveness Report 2012-2013, Singapore has the best IP protection in Asia, and the second best in the world. In 2009, the World Intellectual Property Office (WIPO) set up its first Asian regional office in Singapore. This pro-IP stance, makes Singapore an attractive market for setting up offices for several tech and pharma companies, among others.
Entrepreneurship environment: Accelerators such as JFDI, collaborative community space of entrepreneurs Plugin@Blk71, which is an initiative of the National University of Singapore Entrepreneurship Center, and co-working spaces like the HUB, nurture entrepreneurship in Singapore, encourage foreigners to build and pursue opportunities in Singapore.
The big question: How?
Foreign entities can set up a subsidiary, a branch office or a representative office in Singapore. It is also fairly easy for an individual living in India to set up a new company in Singapore.
Visa: The first step for a foreigner who wants to work in Singapore is to obtain a visa. In order to facilitate the entry of entrepreneurs looking at starting up and operating a company in Singapore, the Singapore Government launched the EntrePass scheme in 2004. The EntrePass is a multiple entry visa, with an initial validity period of up to two years (and renewable), which is issued upon the submission of a sound business proposal.
The Ministry of Manpower of Singapore, lists down certain eligibility criteria and the process here.
Establishing a company, branch or representative office
Singapore allows for 100% foreign ownership of the locally-incorporated companies.
- The legal liabilities, the registration process and the activities permitted vary depending on whether the entity is a company, a branch office or a representative office. A comparison of various forms of business organization can be found here.
- All new businesses in Singapore are required to be registered with ACRA. More details of registration can be found here. ACRA also has regulatory and business guides for startups, available for sale.
- Singaporean subsidiary of a foreign company is treated as a separate legal entity and it is taxed as a Singapore entity. A branch of the foreign entity is treated as an extension of the foreign entity, and therefore, the income is not eligible for tax exemptions and incentives, which may otherwise be available to tax resident companies in Singapore. A representative office is a temporary setup with no legal persona and cannot engage in any trading or business activities, making it feasible only for market research or for liaison work on behalf of the parent entity.
Disclaimer: The contents of this article is for information purposes only, and is not meant to be legal advice. Please consult a legal advisor for any queries that you may have