Singapore: The case grows stronger
Article 3 minute read

Singapore: The case grows stronger

09 November 2018

Pick any global ranking of places to do business, and it’s safe to say Singapore will appear somewhere near the top. TMF Group’s own Financial Complexity Index ranks it among the most straightforward countries in the world in terms of financial compliance.

It’s no surprise that many companies have already chosen to make Singapore their de facto home in Asia Pacific. We believe some recent trends and developments build the case for incorporating in Singapore even further. 

As if to show it’s not resting on its laurels, Singapore’s government continues to introduce changes to enhance the overall business environment, as well as tweaks to encourage investment from specific industries. 

The Monetary Authority of Singapore’s recent introduction of the Variable Capital Company (VCC) structure is an excellent example. The VCC will significantly boost Singapore’s appeal as a centre for the domiciling and management of funds. It makes it easier for investors to enter and exit funds to manage multiple sub-funds and will also streamline accounting procedures. 

This development comes not long after changes to the tax treatment of Singapore-listed real estate investment trusts (S-REITs), which should further encourage the development of this asset class. Authorities have also put a host of incentives and support infrastructure in place to foster future-focused industries, from fintech to green buildings.

In August, the Monetary Authority of Singapore also announced and issued the new Code of Corporate Governance 2018³ with the desired outcome to support sustained corporate performance and innovation as well as strengthen investor confidence in Singapore’s capital markets.

Promising foundations 

Beyond pro-business policies, the city-state’s abundance of private wealth and high net worth investors (HNWI) – Singapore’s ultra-HNWI population is set to expand 40% by 2026, outpacing London and New York - mean investors benefit from a positive funding environment, as well as a rich pool of skilled local talent.  

None of this is to say Singapore isn’t without its challenges. The government has been tightening procedures for the hiring of foreign executives, and more stringent anti money-laundering/know your customer (AML/KYC) procedures mean processes like opening a bank account can sometimes involve more complications than companies expect. 

But even these challenges have corresponding upsides. Singapore’s stability and high quality of life means attracting and hiring foreign talent of a caliber that meets the bar set by the government is rarely a problem for long. The rigorous checks exercised by some banks are testament to the integrity and security of the local financial system, which enable investors to transact and house funds in absolute confidence. 

Tapping into a regional network 

Another of Singapore’s unique strengths is the role it can play as a gateway to one of the world’s most promising growth stories. The city is part of (and geographically at the heart of) the Association of Southeast Asian Nations (ASEAN), a region tipped to be the fourth-largest economy globally by 2030, home to a rising middle class. With its highly developed infrastructure and exceptional connections, Singapore provides the ideal foundation to develop a presence throughout Southeast Asia and beyond. 

However, it must also be noted that not all regional economies offer Singapore’s levels of regulatory and compliance certainty. This means potential investors planning to use Singapore as an entry point for ASEAN should seek local support to plan their strategies and navigate ASEAN’s still distinct bureaucracies. 

By engaging such a partner from the beginning, investors can structure their Singapore and subsequent operations in a way that will enable them to move quickly and effectively to tap into the regions significant potential. 

This article was originally published in Global Trade Magazine

Written by

Matthew Allen

Former Regional Director Business Development

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