Manufacturing success in Singapore, what does it take?

Dario Acconci, Hawksford’s Managing Director Business Development in Asia, shares what manufacturers need to have to make it in Singapore

Singapore can serve as a strong foothold for businesses looking to expand into Southeast Asia, which is critical considering the high risk associated with entering a new international market.

Establishing a strong foundation for any international venture is essential, so it’s important that business leaders understand as much about the new environment as possible, before committing major time and resources.

Offering a myriad of advantages for foreign investors including tax benefits, a highly skilled workforce and a just legal system, Singapore is an ideal base for those expanding into Asia, one of the world’s fastest growing economies.

What’s more, those in the manufacturing industry are among those who can reap the most benefits from the Singapore market, considering the sector plays such a vital role in the economy. In fact, manufacturing represents 20% of the local GDP and is one that receives  comprehensive Government support.


Important considerations for manufacturing in Singapore

To truly benefit from the Singaporean business environment, it’s crucial to understand how it can serve you, as well as the benefits and risks involved. The market offers many advantages and the most attractive are the location, the legal system, the tax benefits and the people.


Location

ASEAN countries represent approximately 5% of global manufacturing (in value-added terms), presenting the opportunity for lucrative deals and exports to be made. This makes Singapore an ideal base for businesses of this kind because, thanks to its geographic position, most other Southeast Asian countries can be reached within a short journey, which is rendered even easier by the country’s award-winning airports and seaports. 


Legality

Singapore’s legal system presents another advantage for expanding businesses. Considered to be one of the least bureaucratic countries in Asia, the regulatory processes are extremely quick and easy to navigate.

Established by the government to encourage innovation and creativity, one notable policy provides robust intellectual property (IP) rights. In the case of manufacturing companies, they protect critical patents, copyright, designs and trade secrets.


Tax

Businesses establishing a presence in Singapore have access to an extensive network of double tax agreements (DTA). These apply to over 80 countries across the globe and allow companies to avoid paying double taxes, as well as lowering withholding taxes and offering an attractive tax regime. 

Furthermore, you would not be subject to paying tax on capital gains or dividends income, in addition to benefitting from a corporate tax rate on taxable income, standing at a maximum rate of 17%, in gross contrast to the maximum federal tax rate of 37% in the US.


People

Boasting a reputation for having one of the most diverse and multicultural populations in the world, Singapore has a vast and skilled multilingual talent pool for growing companies to recruit from.

What’s more, the country also has impressive immigration policies, which can aid your company during the expansion period.


Manufacturing company registration in Singapore

There are several options for establishing a business in Singapore including a representative office, branch office or subsidiary company. 

Foreign companies may choose to set up a representative office (RO), which allows them to explore the market or manage company affairs but not enact any revenue-generating endeavours. The RO must be staffed by a representative from the foreign company’s head office and must not operate in excess of three years. Companies seeking to scope and evaluate the Singapore market prior to committing investment and resources are recommended to establish an RO.

A branch office is seen as an extension of the parent company, meaning they cannot benefit from the same regulations as local companies or subsidiaries. These are ideal for medium to large businesses that perform specialised operations in international locations and intend to conduct a wide range of business activities. 

Alternatively, international investors may choose to set up a subsidiary company, which is the ideal option for small to medium enterprises (SMEs). Considered completely separate from the foreign parent, subsidiaries require one or more directors, with at least one being a Singapore citizen, permanent resident or employment pass holder. One of the biggest advantages is that subsidiaries will be treated as a local company, meaning they can receive the same tax benefits and protection against liabilities. 


At Hawksford, more than 500 global professionals are able to provide corporate, private client and fund services to support clients. Recently, the company supported MetaSensing, a European developer of high-resolution radar sensor technology, to expand business operations into the Asia-Pacific market for the first time by establishing their presence in Singapore. Find out more here.

Byline written by Dario Acconci, Hawksford

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