Doing business in Singapore (Full Episode)

Doing business in Singapore (Full Episode)


– Welcome to Singapore, the economic jewel of Southeast Asia. I’m Tim Harcourt, the Airport Economist, and I’m going to show
you how to do business in this dynamic city state. Singapore’s a global financial center, a regional trade and logistics hub, plus a significant
economy in its own right. It’s one of the easiest
places to operate in Asia with English as an official language, few barriers to entry, and a strong, pro-business
legal framework. Singapore is clean, efficient,
and it’s air-conditioned. What’s not to love? Coming up one of the
city’s leading executives explains why Singapore is such
an easy place to do business. We discover the city’s emerging
start-up and tech scene, and learn how Singapore is a great base to access the Southeast Asian market. Singapore is located on the
tip of the Malay Peninsula, across from Indonesia,
between the South China Sea and the Indian Ocean. There’s a population of
just 5 1/2 million people but it churns out GDP of
around $300 billion US dollars, making it the 39th biggest
economy in the world. On a per capita basis, Singapore is ranked seventh in the world, not bad for a tiny city state with no natural resources or agricultural land. Singapore’s economy is growing
at just over 2% a year. There’s barely any inflation,
and unemployment is only 2%. So what’s the secret? Singapore woos overseas investors, welcomes foreign trade, and
is strategically located on major trade routes in and out of Asia. Its Changi Airport is
a global aviation hub, and ranked the best airport
in the world by Skytrax. It has almost 7,000 flights
a week to 80 countries. It’s also one of the world’s
busiest air cargo hubs, transporting goods like
electrical components. Shipping is also big
business in Singapore. Its port handles half the
world’s crude oil supply, and a fifth of all shipping containers. The port is a vital asset, as Singapore has to import most of its food and natural resources. The country’s top trading partners are China, the US, and Malaysia. The World Bank has ranked Singapore as the world’s easiest
place to do business for the past 10 years, and it’s the second-most
competitive economy in the world, according to the World Economic Forum. Pretty impressive. I spoke to ANZ Bank’s
Singapore CEO to find out why Singapore is so special. – It’s well located in
an important region, in terms of its proximity
to other markets. Has great connectivity globally. From a physical perspective,
obviously, it’s a major hub for shipping and airlines,
so it’s attracted a lot of logistics activities in the region. There’s been a real focus on technology, so there’s fantastic connectivity here both within Singapore and globally. We have a strong, stable government, that’s business-friendly. We have a market that’s
very attractive for labor, so it’s a real centre of
excellence for many skills. – [Tim] Do you find that
this market only suits the top end of town, or do you think other small and medium-sized businesses in various industries can succeed here? – I think there’s a very broad opportunity in this market, from
small through to large. We’ve seen many great success stories across a wide range of industries. There’s some industries that are obvious and have been here for some time, but there’s many emerging opportunities, for instance, in the health tech space, for instance, education. Agriculture is something
that is of great importance to this region and Singapore
is at the heart of that as a commodity trading centre. If you want to get involved in Asia, Singapore’s a great place
to start that journey. – In general, do businesses
set up in Singapore to service Indonesia, and
Malaysia, and Thailand? Or, if you had a business that had a factory or an office in Indonesia, wouldn’t you just go straight there? Why would you use Singapore necessarily? – So, establishing yourself
in Singapore as a base, I guess you, particularly for smaller businesses, it gives you the
opportunity to create scale, rather than spreading your resources around a range of markets. Operating from Singapore
allows you to have a range of activities and
explore those markets, from a strong location. – [Tim] The ANZ Opportunity
Asia Report shows that Australian businesses in
Asia are far more profitable and have better growth prospects than their domestically-focused peers. Can your business really afford not to consider the
opportunities that Asia presents? Read the ANZ Opportunity
Asia on thesbhub.com.au. South Australia’s Cafetto makes cleaning products
for coffee machines. It chose Singapore for
its regional headquarters and, with the help of ANZ, has expanded throughout the region. – I think Singapore’s
got a lot of advantages for a company in Australia. The first thing we discovered was how difficult it was to be exporting our products into Asia without some local presence. People wanted to deal with local people. They wanted to be able to handle their transactions locally. We needed to provide some mechanism by which people could do that. Singapore’s got the lovely advantage that English is the prime language, and so for an Adelaide company, it was relatively easy to get to, compared to other places. – So you’d say it’s been an easy process, exporting to Singapore,
having a regional hub there? – I think Singapore is a very
good place to do business, for an Australian company. I think the business
practices in Singapore, the structure, the legal structure, to be able to set up a company
is very straightforward. There’s no surprises there. It’s a very open economy,
which makes it very simple for us to do business, and then of course, it
really is a regional hub for Southeast Asia. – Where there any particular challenges in setting up in Singapore? – The only thing is that it’s obviously a more expensive country to
do your logistics from, in terms of warehousing, and that sort of operation, but I think the other
transactional costs make it, compensate for that, which
makes it very simple. The costs of doing business
are very, very low, compared to other places,
and very few surprises. – Singapore has a diverse history, with Chinese, Malay,
Indian, and European roots. A small fishing village and trading port colonised by the British, and then flattened in World War II. In just 50 years, Singapore developed from the ruins of Japanese
occupation to one of the world’s most sophisticated financial powerhouses. Here’s its amazing story. Singapore was first known as Temasek, which means, sea town. It was an ancient trading
port for the Chinese, the Portuguese, and the Arabs. The British beat the Dutch as colonists, and Sir Raffles claimed
Singapore for the Empire in the early 1800s. Over the following
century, also it developed as a trading hub and financial centre as banks and commerce were
established in the city. Singapore suffered
greatly in World War II. The Empire’s Asian fortress fell in a surprise attack in early 1942. It was the largest surrender
of a British force in history. The People’s Action Party won
the country’s first election in the late 1950s, and every one since. Singapore gained full
independence in 1965, and Lee Kuan Yew became
its first prime minister and the father of the nation. Under his leadership,
Singapore founded ASEAN, developed one of the world’s
highest living standards, diversified industry, and boomed as a global financial centre. Singapore’s style of
government has its critics, but it certainly works, and it’s ranked as the most
stable economy in Asia. The Lion City lead the region
into the Asian century. It’s now diversifying
from shipping and finance, and building a local
technology and start-up scene. Singapore is fast becoming
the Silicon Valley of Asia, and attracting start-ups in
technology, communications, and other industries. INSEAD ranks Singapore as the most innovative country in Asia and third in the world. Talk about a bunch of over-achievers. muru-D is a start-up
accelerator in Singapore, founded by the Australian
technology company, Telstra. I paid a visit to find out what’s attracting new
business to the city. I actually think Singapore’s future is the thing that’s really the most attractive about it. We’re talking about a
centre of gravity here which is surrounded by 600
million upwardly-mobile, young, socially-engaged customers, all coming into the middle class, and I think that the next 10 years will bear out the argument that Southeast Asia as a subset of Asia more broadly, is the next vibrant tech scene. – What does the Singapore government do to create this environment? What sort of incentives do they provide? How does it sit? – It’s very well known
that Singapore government actively supports innovation. They provide business-friendly policies. They provide tax incentives. They provide a range of grants in R & D. – Even for an experienced industry player, how do you actually get
started and networked in Singapore in the start-up scene? – Well, you have to have a clear view as to why you’re coming to Singapore. So that’s the first thing I’d say. Secondly, I think that there
are incredibly strong networks of both ecosystems of entrepreneurs as well as investors here, so I’d be first of all, obviously, looking at the Tech in
Asia, e27 publications, to get a sense of the players. There are some well-known resources which you can familiarise yourself with, but nothing beats introductions
and conversations. I would suggest that you get in touch with anyone you know within
the Singapore ecosystem. The other thing to
familiarise yourself with would be the type and
number of VC firms here. They’re all a little
different, and make sure, if you’re coming here to start a business, that you have a clear view
as how you’re going to participate in this market,
why you’re gonna win, and who specifically
would be investing in you. – So in short, is it
the power of proximity, or the power of partnerships? – I think proximity yields
opportunities for partnerships. You can’t do partnerships from abroad. Being here is 90% of the answer. – Where are you seeing
the strongest growth? – I think over the last 5 years, there’s been incredible
growth in e-commerce, and that’s probably a
function of the development of Southeast Asia more generally. You know, you’ve got a
whole range of consumers that for the first time are
gaining access to the internet, that are having their first smartphones, and are starting to consume
from products around the region. I think e-commerce was and still is one of the big sectors here,
marketplace businesses. I definitely think the
opportunities are broad within Southeast Asia and
I think, my gut tells me, that B2B is the great unsolved opportunity around Southeast Asia. – [Tim] Just 5 1/2 million people, why would you want to start selling to this little red dot on the Asian map? Let’s find out after the break. (edgy digital music) Singapore may be small, but it’s one of the richest
countries in the world. It has a large middle
class with money to spend and attracts shoppers
from around the region to its glitzy malls and
tree-lines promenades. Let’s look at how you can
get your product over here. Pretty much everything can
be imported into Singapore, duty free, except cars, alcohol, tobacco, and petroleum products. That’s pretty attractive for about almost all exporters. The country does have a sales tax, or GST of 7% on all imported goods. Vet Products Direct is
an Australian company that recently established in Singapore. Let’s find out how it’s going. – We started work there five years ago, five or six years ago,
and almost immediately got a very strong response,
and we’ve seen good growth year-on-year, and at this point, we don’t see a ceiling to that. We can see it continuing to develop. – How do you distribute your products in the Singapore market? – When we first launched, it
was very much a test market, and we had no idea. And so, we used all of our
infrastructure in Australia and just shipped direct,
so using Australia Post. There was costs and time
costs associated with that, but as soon as we started
to see the potential there, then we started to warehouse
locally in Singapore, and distribute there, and
we’ve been through a number of iterations of that, so
now the Australian products are still quite strongly
sought-after in Singapore, but now we’re tending to send
them in larger quantities and then distribute locally. – You have a bricks-and-mortar store in Singapore.
– Yes. – Why the decision to set
a store up in Singapore? – The local consumers
started to ask for that. So that was a really positive thing. It also drives some credibility. – You don’t have to set up
a bricks-and-mortar store to do well in Singapore. It’s a tech-savvy market, with around 95% of consumers shopping online as well as in-store. Our friends at Australia
Post can of course help you manage your inventory and fill orders from your home base, plus they have some great local tips. – The first step for a small business in wanting to export to Singapore is actually just to sell to Singaporeans. E-commerce transactions
are very big in Singapore; they’re very comfortable to buy online. Or maybe go through on of the marketplaces that they use quite regularly. Then, if you were to
start to be successful in selling to consumers in Singapore, you might like to export to them. If you were to do that,
really Singaporeans like a local relationship with a company that’s established there. So, Singapore would
probably be a great place to go and explore and start
to build a partner, so a local retailer,
even a local wholesaler, or maybe a complimentary brand. – Singapore is renowned for the best quality of life in Asia. Add that to a low tax environment, minimal red tape, and a
multilingual workforce, and that sounds like the ideal place to set up operations and do business. I spoke to Pete Allen,
of Grant Thornton Singapore, and asked him if his clients focused on the Singapore market, or use it as a launchpad into Southeast Asia. – This is a very small market. It’s not a cheap market. Particularly a lot of
expatriate goods are expensive, so relatively few of
our clients, certainly, come in here for the Singaporean market. They’re usually coming here as an entry point to
the region as a whole. – With globalization now,
many businesses can go direct to Vietnam or Indonesia, so what sort of business
would actually set up in Singapore as a hub for
other markets in the region? – I think a lot of
businesses choose Singapore because they have not yet decided what the balance of their portfolio in the rest of the region is going to be. I think if you already know that you are going to
do business in Vietnam and you are only going to
do business in Vietnam, then it makes limited sense, frankly, to do it through a Singapore
operation or a Singapore hub. But most businesses aren’t in that situation, in our experience. Most businesses know they
want to be in this region, and they see this as a natural place from which to start that process of investigation and development. – What are the major challenges facing businesses setting
up here in Singapore? – I think the one that I would encourage people to look at is cost and pricing. Singapore is an interesting market from a pricing point of view. Some things are very cheap, think taxes, some things are very expensive, think Gin. And you need to think about that, and depending on your business, you need to think about that in the context of pricing differentials with what you’re used to. – A lot of people say that Singapore is a low tax environment. How low are we talking here? – My effective tax rate’s 15.7%, which, compared with London, which is where I’ve just
come from, is pretty low. Corporation tax rates are around 17%, GST is at just 7%, so it
is a low tax environment. As well as being a low tax environment, it is a very simple tax code. It’s a very advantageous tax
environment for any business. – Singapore is a very mature market, successful OECD-style economy. What sort of new hot
sectors have you seen? – It’s got a very lively tech sector, lot of start-up activity. There are considerable tax breaks, even within the low tax environment, for financing tech start-ups. The government’s very keen on making Singapore a smart city
in which to operate. So tech, definitely. – Singapore is a stand-alone
market in its own right, but is also an ideal base
to access Southeast Asia and the entire region. We’re following Australian
natural health company Blackmores throughout the series, and
their journey into Asia. Blackmores chose Singapore
as its Asian hub, and most regional
executives are based here. I found out why. – So, Singapore is an attractive place, because of this pro-business environment, and the government has
always made it a point to make Singapore seamless connectivity with all the countries. Yes, Singapore makes sense, because Singapore is the mid-point between Australia and the Asian countries. Singapore has a pool of professionals, multi-discipline professionals where Blackmores can tap onto, to build its core corporate
functions in Singapore. We have corporate functions like strategic business planning, development, we have
marketing, e-commerce, and we are supposed to
build a very efficient supply chain to Asia,
and we have, of course, the finance and HR functions. – Does Singapore
government locally provide any incentives for you
to base yourself here as a hub for Asia, or for
Southeast Asia or both? – The EDB is actually
very supportive of new businesses, in this
setting up in Singapore. Basically, they provide a lot of support in terms of recommendations, partnerships, you know, so there’s quite
a number of incentives, depending on which
industry the company is in. Of course, there is also tax incentives, in terms of tax rates
or in terms of grants. – Singapore is efficient and transparent, with exceptionally talented people running business and government. To do well here, you must understand and respect the local culture and processes that are in place. It’s what makes this
country so successful. Take time to learn how Singaporean partners and clients think and operate. I love Singapore’s mix of Chinese, Indian, and Malay cultures, along with a lively
international expat community. I first visited the country
as a university student and had the privilege of studying with a number of talented Singaporeans, kicking off my education on local culture and business practice. Here’s what I’ve learned. Start by respecting the government badge. Singapore’s proud of its success and the government guidance
of economic activity. Remember, Singapore’s
first prime minister, the late Lee Kuan Yew, is much revered by
generations old and young. Follow regulations carefully. They’re strictly enforced. Take advantage of the diverse communities the hawker centers,
Chinatown, and Little India; try the incredible food
for all tastes and budgets. And finally, have a good time, and follow Singapore’s slogan, We Take Fun Seriously. Singapore has invested
in creative industries so entertainment and culture is important, despite the city state’s no-nonsense, industrious reputation. I sat down with Indrani Bit
from the Grand Hyatt Singapore, to get her insight on the
city’s diverse culture. – When you travel to Singapore, you will realize there’s
no such Singaporean face, because there’s so many
cultures in Singapore, like Malay, and Indian, and
even European influences, Chinese obviously. – What are some of the
cultural sensitivities that a foreign business
person should observe when they come to Singapore? – You do have four national
religions in Singapore. So we do celebrate all
of the religious holidays in Singapore, so no
matter if it’s Ramandan or if it’s Christmas, or Vesak Day. What you have to be very
sensitive of, obviously, is with Muslim business partners, that you obviously make
sure that you don’t necessarily offer alcoholic beverages or any pork dishes over
your business dinners. – What guidelines should
foreign business people follow, when undertaking business
entertainment here? – You should always know where your business partner is from, or what kind of religion he’s from. Most of the time, you can just ask them for their dietary requirements, especially because we’ve got the different religions in the country. That you make sure that
you know if they eat pork, or if they need a
halal-certified restaurant. A lot of Westerners prefer to be outdoors. Singaporeans don’t like to be outdoors, because obviously they are
exposed 365 days a year to the heat, so for them it’s… Their first thought is not necessarily to sit somewhere outdoors,
or to have a picnic outdoors. This is not necessarily preferred. Everyone likes to be, Singaporeans like to be indoors, so when you have business meetings, always choose indoor facilities. Always make sure there’s food. As Singapore is a very small country, it’s very easy to get around, so I would recommend not necessarily to walk to business meetings, because of the very humid and hot climate. Taking taxis is very cheap in the city, and also the MIT system. – Food is a big part of
the Singapore culture. Check out our website for
Indrani’s dining tips. Well, here we are at Singapore’s world famous Changi Airport. Thanks for joining us on this
tour around the Lion City. Let’s recap what we learned
about doing business here. Singapore is pro-business
and foreign investment. There are few barriers to entry, and a low corporate and
personal tax environment. The government offers generous grants and support for businesses
entering Singapore in specific industries. Stick to the rules in
all government dealings, and respect them. That’s what makes the
country so efficient. Look for professional
bodies that have chapters based in Singapore, like
certified practicing accountants. Join your country’s Chamber
of Commerce, and find out if your old university has
a network here, as many do. Enjoy yourself, work hard, but don’t forget to have
fun while you’re here. Singapore is a great tourist destination, as well as a business hub. Head over to our website,
theairporteconomist.com, where you can watch
extended guest interviews, discover exclusive
offers from our partners, and find out where we’re flying to next. So see you next time, I’m Tim Harcourt, and I’m the Airport Economist.

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About the Author: Oren Garnes

14 Comments

  1. Very insightful. Can you kindly direct me to material on shipping industry with supply chain management in Singapore. Thanks.

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  3. Sir you said not correct Singapore is kingdom country all things very expenses 20 years a go it is okey now very bad we pay for work permit high money the Singapore rules is very poolsit e ratio.and gulf u a e Qatar is best countr y please donot give wrong message totally Singapore is now no business country

  4. I currently do business in the Philippines and the Marianas islands. I am wanting to move into Singapore. I'd like to start meeting some import export people to get things rolling.

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