Singapore as the Business Hub of Asia
This guide will detail out why Singapore is known as the business hub of Asia. Explore the history, the consistent economy and the regional likeliness of Singapore that has given it this coveted title.
Reading on, you will be able to find out how to form a Singapore company. Besides, you will also get an introduction to the lucrative tax system in Singapore, and its thriving investment and securities industry.
Singapore is located ideally in South East Asia, boasting an effective free market economy with the following notable features:
- It is free from corruption
- It is an open market
- It offers stable prices
- The tax regime is low
- The per capita GPD matches that of Western Europe
SINGAPORE – HISTORY
Most people think of Singapore as a city, but the Republic of Singapore is a 700 square kilometer island nation located between the Malay Peninsula and Indonesia. Its city center was founded as a British trading center during the early quarter of the 19th century. It became a strategic naval and trading post for the British Empire during the 19th-20th centuries.
Post WWII, the era of decolonization began and Singapore moved on to join the Malaysian Federation in 1963. But Singapore had an independent identity and after 2 years, it separated from the Federation and formed an independent state. Eventually, it has turned out to become one of the most developed nations in the world with unmatched international trading relations and one of the top international ports.
Singapore has since maintained a parliamentary republic status with an elected government system. Carrying forward the legacy of its former allegiance to the British Empire, Singapore has followed the English common law for its legal system. Additionally, English is among the 4 official languages including Malay, Chinese, and Tamil.
Out of 5.3 million Singaporeans, around 75% are of Chinese origin, and the remaining population is made up of Malay and Indian minorities and a significant percentage of expats from North America, Europe and other parts of the world. Singapore Dollar, the currency of the country, continues to appreciate against the US Dollar. As of June 2012, the USD: SGD ratio stands at 1:1.27.
The economy of Singapore is mainly dependent on exports especially in manufacturing and electronics. The downturn in the technology industry made a major impact on its economy towards the end of the last century. The recovery was further affected by the breakout of Severe Acute Respiratory Syndrome in 2003, as the epidemic saw a dramatic decline in the purchasing power of the consumer and tourism.
After these events, Singapore’s economy surged with a genuine GDP growth of 8% in 2004. This was on the back of fiscal stimulus, lower interest rates, growth in exports and a flexible business environment. The GDP rose by an average of 7% during 2004-2007, but the economic recession of 2008 saw it fall to 1.2%. The Monetary Authority of Singapore reports that the GDP of 2.1% didn’t meet expectations in 2009, but 2010 saw the economy bounce back to 14.5%. The growth saw a slowdown in 2011 at 5% because of the rise in fuel prices and the impact of the Japanese natural disasters.
Under Prime Minister Lee Hsien Loong, the Singapore government is constantly engaged in making investor-focused reforms for diversifying the economy and insulting it against future impacts. The government is focused on taking Singapore to a higher position in the investment and financial services sector in South East Asia. One of the strategies that is instrumental in driving the country in this direction is through a wide range of tax incentives focusing a large number of sectors. Then there are special tax cuts designed for promoting the growth of small firms.
Singapore is ideally located close to regional markets and connects well with international markets, a combination that makes it the perfect business hub for international companies to establish their Asian office here. India, with its consumer base of over 1.2 billion is just 7 hours away for enterprises in Singapore. Another 1.3 billion consumers are located towards the north within the same time-gap, and another 593 million consumers are easily accessible within South East Asia. This means, Singapore has easy access to markets with a total size 3.1 billion consumers, which is close to half the population of the planet. There is no other international city that offers this advantage. As of 2010, the overall GDP of China, India, and South East Asia combine to be USD 10.6 trillion.
Singapore has long retained its reputation of being one of the most business-friendly places on the planet through its democratic, corruption-free, culturally varied and open market policies, all of which combine together to draw investors from across the world. Singapore is also embracing new business models in the region including new hedge fund enterprises, Islamic banks and wealth management organizations.