Do you want to start a business in Singapore as a foreigner? If YES, here is a complete guide to starting a profitable business in Singapore with no money. Singapore is a very good location to do business in the world today thanks to its strong trade and investment ethics. Singapore is one of the most competitive Asian countries and the world’s easiest place to do business.
The country is officially known as the Republic of Singapore, and often referred to as the Lion City, the Garden City, and the Red Dot is a global city and sovereign state in Southeast Asia and the world’s only island city-state. It lies one degree (137 km) north of the equator, at the southernmost tip of continental Asia and peninsular Malaysia, with Indonesia’s Riau Islands to the south.
Singapore’s territory consists of the diamond-shaped main island and 62 islets. Since independence, extensive land reclamation has increased its total size by 23% (130 km2), and its greening policy has covered the densely populated island with tropical flora, parks, and gardens.
The economy is diversified, with its top contributors – financial services, manufacturing, oil-refining. Its main exports are refined petroleum, integrated circuits, and computers which constituted 27% of the country’s GDP in 2010 and includes significant electronics, petroleum refining, chemicals, mechanical engineering and biomedical sciences sectors. In 2006, Singapore produced about 10% of the world’s foundry wafer output.
Facts and Figures of Singapore That Will Interest You as an Investor/Entrepreneur
There are loads of facts and figures that make Singapore a place to invest. It is no wonder that people throng Singapore to do one form of business or the other there. This is because of the vast minds and resources that the country possesses. Here are some real facts that you might find handy;
- Singapore has strong international trading links, as its port is one of the world’s busiest regarding tonnage handled.
- Singapore is a global commerce, finance, and transport hub.
- For ten consecutive years, it was regarded as the easiest place to do business by the World Bank.
- The World Economic Forum (WEF) also considered the country as the most technology ready country.
- The WEF also viewed it as the 2nd most competitive country in the world.
- It is also the 3rd-largest foreign exchange center.
- Singapore is the 3rd-largest financial center in the world.
- The country possesses the 3rd-largest oil refining and trading center.
- It also has one of the top two busiest container ports since the 1990s.
- For the past decade, it has been the only Asian country with the top AAA sovereign rating from all the leading credit rating agencies, including S&P, Moody’s and Fitch.
- Singapore is Asia’s most influential city and 4th in the world by Forbes.
If you’re looking for a healthy environment which is especially good for sustaining a start-up business, then Singapore is your one-stop destination. In fact, there is scope for all kinds of businesses to flourish here. Read on to know more about the most successful and lucrative business options that you can start in Singapore.
Starting a Business in Singapore With No Money as a Foreigner – A Complete Guide
1. Have a viable idea
The very first step to starting any business is to conceive an idea that is viable and has the potential to be profitable when implemented. Next you should make some investigations and inquiries from the people who are in the niche you wish to go into.
The aim of doing this is to find out if your product or service is really needed over there and if your idea is already over saturated in the market. Probably you will need to make changes to your business plan. Calculate your overhead and try to cut them down as much as possible.
Economic Analysis
When looking to start a business in the Singapore, a whole lot has to be looked at from the economic point of view. Some of the factors in consideration include the following; Human Capacity Building and Job Creation, Social policies and corporate social responsibility initiatives, Infrastructure improvements, Technology and knowledge transfer.
Did you know that Singapore also offers an extremely business-friendly environment to foreign investors? In fact, it has recently been adjudged the best-value city for foreign businesses.
All the factors that are conducive to starting and running a new business such as a strong forex market, free market economy, financial stability, robust legal and regulatory framework, advanced and efficient infrastructure, a corruption-free system, strategic geographical advantages and skilled manpower are easily available which make it a very attractive investment hub.
Top international firms like Apple, Google, Credit Suisse, DBS Bank, Procter and Gamble, Microsoft, et al have already acknowledged the potential in Singapore and have set up successfully running businesses here. There is also immense scope for business entertainment, which Singapore considers a crucial part of promoting foreign investment.
2. Write a business plan
When you have conceived an idea for your business, the next thing will be to draw a road map in the form of a business plan. Among other things, it should contain your business goals, how to attain them, financing needs and marketing plans. It may also contain background information about the organization or team attempting to reach those goals.
A business plan does not have to be very long, it just has to contain the essentials of your plan, and it can be expanded as the business grows. The focus of your business plan may also change over time depending on your use for it. For instance, if you intend to use it to raise funds, then you’ll have to focus very carefully on the management, financial aspects and growth potential of your company.
List of Legal Documents You Need to Run a Business
Several documents must be in place to run a business in Singapore. The inability to have all or more of these documents in place means that you just might be found wanting along the line. As such, here are some of the documents that you will be needing;
- Certificate of Incorporation
- Repossession Clearance Certificate
- Business License
- Business Plan
- Non – disclosure Agreement
- Memorandum of Understanding (MoU)
- Apostille
- Employment Agreement (offer letters)
- Operating Agreement
- Company Bylaws
- Operating Agreement for LLCs
- Insurance Policies
3. Determining the Business Structure
In Singapore there are many business structures you can choose from. Some of them are sole proprietorship, partnership, Limited Liability Company, a subsidiary, a branch office, a representative office, and so on.
However, you shouldn’t choose at random because the form of business formation will actually impact a lot of aspects of your business: your personal liability and credibility in customers’ eyes, abilities in borrowing money and expanding the company, attitude of banks and creditors – just to name a few.
Which one you settle with depends on a number of factors, and you should choose the structure that best meet your needs. To determine what those are, ask yourselves the following questions:
- how much capital are you prepared to invest?
- How many owners will there be in the business?
- What liabilities and responsibilities are you prepared to assume?
- What risks are you prepared to take?
- Will a company of that particular structure be easy to close?
For instance, Sole Proprietorship is best suited for people who want to establish small businesses without partnering with anyone. If you are going to share your business with a partner, you should better consider registering a partnership firm.
These two entities are winning from the tax point of view (your activity is subject only to personal taxes), so you save a lot by avoiding corporate taxes. The sole proprietorship is a great choice for self-employed individuals or freelance activity.
But the main drawback of both forms of Proprietorship is that your liability (as an owner) isn’t limited to your company’s assets, and when any legal claims rise, you risk losing your own assets. If everything goes great, you win, but if you face problems, you may lose everything you have. So you aren’t protected.
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Limited Partnership
A Partnership must not have more than 20 partners. Once there are more than 20 partners, the partnership must be registered as a company under the Companies Act, Chapter 50. It will then have its own legal personality i.e. rights to own properties, have perpetual succession and can sue or be sued in its own name.
The partners of the LLP will not be held personally liable for any business debts incurred by the LLP. A partner may, however, be held personally liable for claims from losses resulting from his own wrongful act or omission, but will not be held personally liable for such wrongful acts or omissions of any other partner of the LLP.
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Private Limited Company
The best option for a new company in Singapore would be a private limited company that limits owner’s liability to the company’s assets, plus it gives the company better credibility when dealing with investors, customers, and banks if you would need a loan. It is more flexible and sustainable due to the wider options of ownership transferring and growth. It usually has the words ‘Pte Ltd’ or ‘Ltd’ as part of its name.
Another important benefit concerns taxes. The Singaporean government pampers new private limited companies by giving them incentives and tax discounts. It frees new Pte. Ltd. companies from paying the corporate tax for the first 100,000 SGD of their profit, and halves the tax (from 17% to 8.5%) for the next 300,000 SGD. What is over this income is taxed at 17% rate.
It is good to note that in order to register a private limited company, you will need to have at least one shareholder and one director (although they can be the same person). One director must be a Singaporean or a Singaporean permanent resident.
If you are a foreigner with no right to stay in Singapore, you may be puzzled by the last requirement: how are you going to look for the Singaporean director for your company? But it is actually not an issue at all if you involve an agency that provides incorporation services.
Their incorporation packages include appointing a nominee director and even secretary services. Leveraging the expertise of incorporation teams is a good choice also because they can advise on the most winning business entity for your startup, help you to calculate all prospective expenses and tweak your business plan.
4. Choose a Business Name
In order to get your business registered, you will need to first choose an appropriate and unique name for your future company. The government demands that the name would represent the philosophy of your business and not sound similar to the names of other existing companies or obscene.
In order to prevent unnecessary delays, It is best to make a name check before the registration. Today, it would be wise to match the selected name with the available domain names for it if the website is crucial for your business. If you involve an incorporation service company, they would do a diligent name check for you to help you save time and achieve better representation of your business.
5. Getting the Right Address
One of the necessities for registering a business is the provision of a real local Singaporean address where you are going to rent premises. This address is crucial as all official documentation will be sent to this address only. Then you must approve this premises with the Urban Redevelopment Authority (URA) and get an approval to it in a commercial way.
If your business is a small one that you wish to employ only a couple of people and do not wish to get an office space, you can use your residential address to complete the registration. If you are renting an HDB flat, you must seek approval from the Housing Development Board.
If you are going to work from a rented house, you must look for permission for such activity via Home Office Scheme (HOS). Please, take into account that after registering your office in the private house under HOS, you won’t be allowed to employ more than 2 foreign workers and reveal the presence of your firm by using signs (boards et al.).
If you are not sure which way to choose, you should consult an incorporation service provider. Most of them offer free consultations (assessments) so even if you don’t book a full incorporation support, you can get a complex assessment and a piece of valuable advice absolutely for free.
Top 5 Cities to Do Business
While it is okay to do business generally in the Singapore, there are however some towns and states that have an edge over others because of the very favorable conditions they offer. Different companies have gone ahead to be bornhere, and they have birthed other businesses as well. Here is a list of top 5 best cities to do business in Singapore;
- Clementi
- Woodland
- Bukit Batok
- Jurong
- Novena
6. Business Licenses
In order to operate most businesses in Singapore, you will need to have one license or the other. And although you will be allowed to get the necessary licenses only after your company is incorporated (registered by ACRA), it is wise to study the legal field in advance to avoid any problems with law in the future.
You may refer to OBLS for specific licenses required for your niche. Probably you will need several licenses from different authorities if your future firm is going to operate in the sectors of entertainment, finance, education or producing beer, cigarettes, and other controlled stuff.
7. SME grants
Singapore is often said to be one of the easiest places to do business on earth, and one of the reasons for that is the large number of grants and assistant schemes that are available for small businesses. Many of these schemes are offered by government agency SPRING (now Enterprise Singapore), and can be used to fund everything from developing skills and boosting innovation to developing new products and expanding overseas.
One popular scheme is the Productivity and Innovation Credit (PIC), dispensed under the Inland Revenue Authority of Singapore, that allows your business to enjoy 400% tax deductions up to $400,000 or 60% cash payout up to $100,000, for investments in innovation and productivity improvements.
There is also a Startups Grant from ACE, a private sector-led movement for entrepreneurs. The grant helps fund Singaporeans starting their first enterprise.
8. Registering your business
You can register your business in Singapore by submitting an application online using ACRA’s BizFile service.
Login to BizFile using your identification number and SingPass to submit an online transaction. You can do this using your own computer, at CitizenConnect Centres located at Community Centres or at one of ACRA’s BizFile Kiosks at its premises.
You can also choose to engage the services of a professional firm such as a lawyer, accountant or chartered secretaries to submit the online application on your behalf. It takes around 15 minutes to incorporate a company after the registration fee is paid.
However, it may take between 14 days to two months if the application needs to be referred to other authorities for approval or review. ACRA will issue your business a Business Registration Number (BRN) which serves as a unique identifier (just like your NRIC) of your business.
Business Licenses and Permits You Needed to Start a Business
For you to start a business in Singapore, you will need federal and state business permits and licenses. However, there are basic and most common licenses and permits that all businesses need. Without these licenses, you risk being clamped down on by the authorities involved in the execution of trade laws in Singapore. They include the following;
You can easily register your business, including foreign branch offices, online at Bizfile by the Accounting and Corporate Regulatory Authority. Foreign businesses that wish to set up a representative office in Singapore may approach these government agencies:
- Banking, finance and insurance – Monetary Authority of Singapore.
- Legal – Legal Services Regulatory Authority.
- All other industries – International Enterprise Singapore.
List of Government Agencies and Parastatals that are In-charge of Registering Businesses and Issuing Licenses and Permits in Singapore
Depending on the business that you wish to operate, business permits or licenses may be required to conduct a specific type of business. Your registered company may have to apply for business permits or licenses if you are in these trades: Professional services such as doctors, lawyers, accountants, pilots, commodity future traders need an occupational license. Others are private schools, travel agencies, childcare centers, foreign worker employment agencies; spas need to apply for a Compulsory License for operating the business.
In different countries of the world, there are various licensing bodies. Singapore is not an exception as it has its agencies that are saddled with the affairs of business permits and licensing. They see to it that before a business fully commences trade, they have to be well licensed.
All businesses must be registered with the Accounting & Corporate Regulatory Authority (ACRA). This includes any individual, firm or corporation that carries out business for a foreign company.
A foreign company that wants to set up a branch for its business in Singapore will need to appoint two local agents to act on its behalf. These agents must be Singapore residents, that is, either citizens or permanent residents, or foreigners with employment or dependant passes. Information on registering a branch of a foreign company is available here.
Special licenses are needed for some businesses such as banking, insurance and stockbroking. Special licenses are also required for the manufacture of goods such as cigars and firecrackers’ step-by-step guide to registering a business or company in Singapore is provided at the business .gov.sg website.
A lot of global businesses have shown preference to siting their bases in Singapore. A lot of global brands also use Singapore as the gate way to tap into other emerging Asian markets. However, there are still some challenges that are still inherent in starting a business in this country.
Here are a few challenges that are faced while starting a business in Singapore as a foreigner or non-citizen. It goes without saying that some of these challenges may also exist in an entrepreneur’s home market.
Possible Threats and Challenges of Starting a Business in Singapore as a Foreigner and Non-Citizen
- Huge taxation
- Language Barrier
- Dis-Jointed cities
i. Culture
Singapore as nation still hold on to its cultural value which to a large extent have been influenced by Asian philosophies. For example, there is a strong belief in Singapore that business relationship should not be rushed and that they should be based on personal development at first rather than on business statistics.
In other words, there is a general belief that a good relationship should exist between parties before going into business dealings with them. It is good to note that for a foreigner, striving to create cordial bonds when starting a business in Singapore can benefit you in the long run. Also, respecting hierarchy and seniority is very crucial.
ii. Criticisms
“Saving face” during communication is a concept that is ingrained into Singaporeans. Face is the basis on which an individual’s personal pride and an individual’s social status and reputation is judged. Therefore, in order to “save face” in public, a lot of Singaporeans keep their emotions in check and do not criticize people directly.
When doing business in Singapore, one should desist from being overly confrontational and critical as this type of behavior can be disastrous to building a healthy business relationship.
iii. Diversity among its population
Singapore is a diverse country and to an extent, this is one of its strengths as a nation. Singaporeans are mainly made up of Chinese, Malay or Indian descent. To be able to successfully carry out and sustain a business in Singapore, one would have to understand and appreciate this diversity.
Their various customs, cultures and traditions which affect business should be fully understood and put into perspective. A business can proffer a “Doing Business in Singapore Programme” to help it understand all the intricacies of doing business in Singapore and to also make the optimal use of the opportunities that exist therein.
iv. Labor pool issues
Hiring workers to fill up positions in your business can be quite an uphill task in Singapore especially if your business is in the service or retail industry. This can be blamed on the protective nature of the government as well as the attitude of the citizens.
For a couple of decades, Singapore has exerted a lot of effort in the education sector and as such there has been concerted efforts to steer its work force to occupations that create a perceived higher value. Occupations like medicine, biochemistry, engineering finance et al. are more likely to be preferred by the indigenes as opposed to occupations in tourism, retail, service industry et al. due to the status that is attached to the former occupations and the prestige they come with.
An easy way to combat this dichotomy would have been to employ more foreign nationals but the Singapore state makes this quite difficult through its imposition of high foreign workers levies and quotas.
v. High physical overhead costs
Labor isn’t the only expensive part about doing business in Singapore. Due to the country’s size, land also has a high tendency of being high in price. This goes for rent as well; building a factory, renting an office space or a small retail shop will end up costing an investor twice or more when compared to other neighboring countries.
In addition a lot of materials and resources that may be used in the production may not be produced in Singapore and as such the will have to be imported, thus further driving up the cost of producing goods in Singapore.
vi. Construction permits
When trying to get a construction permits in Singapore, there are not less than 11 procedures that you would have to go through before you can obtain it. This entire process will take you not less than a month to complete. Businesses must also get a written permission from the Urban Redevelopment Authority (URA), before the structural plan can be approved.
vii. Lengthy electricity procedure
Getting electricity connection can be quite a lengthy procedure for anyone intending to start a business in Singapore. It will take not less than thirty six (36) days in order to get an electricity connection. Most of this time is however spent on opening an electricity account and then paying the all the necessary connection fees.
viii. Registering a property
Registering a property for foreigners in Singapore can be a long and convoluted process especially when you factor in payable fees. Companies who are new to the operations of the country can spend a lot of time conducting researches on various governmental bodies that may or may not be involved in the process like the Inland Revenue Authority, The Land Transport Authority, Ministry of Environment et al.
ix. Accessing credit facilities
Even though Singapore is ranked 12th in the world for ease of getting and accessing credit, businesses should however note that individuals and firms are exempted in the public credit registry with information on their borrowing history from the past 5 years.
x. High competition rate
Like mentioned previously, Singapore is a lovely place to do business and as such, it attracts the interest of a lot of investors. This can however also present a peculiar problem to a foreigner who wants to startup a business in Singapore. Rising competitions with other foreigners and non-citizens, online platforms as well as local businesses pose a huge risk to anyone who intends to startup a business here.
Factors or Incentives Encouraging Investors to Venture into Business
It is the wish of investors to rip when they sow, as such it would be really vital that the country to be invested in has a highly fertile ground that can cause a yield on returns. Several incentives attract investors in Singapore. Here are some of the benefits of investing;
- Strong Economy based on GDP.
- Zero tolerance for corruption.
- Open market Economy.
- Stable Prices.
- Vibrant Transportation.
- Singapore has a highly developed and successful free-market economy.
- Skilled Manpower and workforce.
- Low tax rates.
- Advanced infrastructure.
- The Singaporean economy is known as one of the freest, most innovative, most competitive, most dynamic and most business-friendly.
The 2015 Index of Economic Freedom ranks Singapore as the second freest economy in the world. According to the Corruption Perceptions Index, Singapore is consistently ranked as one of the least corrupt countries in the world, along with New Zealand and the Scandinavian countries.
Singapore has the world’s eleventh largest foreign reserves and one of the highest net international investment position per capita. The currency of Singapore is the Singapore dollar (SGD or S$), issued by the Monetary Authority of Singapore (MAS).
It is interchangeable with the Brunei dollar at par value since 1967, owing to their historically close relations. MAS manages its monetary policy by allowing the Singapore dollar exchange rate to rise or fall within an undisclosed trading band. Facebook co- Secrecy Index of the world’s top tax havens, scoring narrowly ahead of the united states.
Singapore has the world’s highest percentage of millionaires, with one out of every six households having at least one million US dollars in disposable wealth. This excludes property, businesses, and luxury goods, which if included would increase the number of millionaires, especially as property in Singapore is among the world’s most expensive.
Singapore does not have a minimum wage, believing that it would lower its competitiveness. It also has one of the highest income inequalities among developed countries.
List of 10 Well-Known Foreign Brands Doing Business
Over the years, several brands have gone from being small to becoming household names. One of the good things about these brands is that they are foreign. Here is a list of 10 well-known foreign brands in Singapore;
- DHL
- McDonalds
- ExxonMobil
- Delliote
- Panasonic
- Philips
- Citibank
- Sony
- IBM
- General Electric
List of 10 Well Known Indigenous Businesses
- Wilmar
- Chin Han
- Pedro
- Creative Technology
- Prints
- Skinny Pizza
- Bakerzin
- Thai Express
- Browhaus
- Pirate3D
List of 10 Most Popular Indigenous Entrepreneurs
- Wilmar
- Razer-Tan Min-Liang
- Banyan Tree- Ho Kwon Ping
- Axe oil- Leung Kai Fook
- X-Mini – Xmi Pte Ltd.
- OSIM -Ron Sim
- Thai Express
- Akira
- BreadTalk- George Quek
- Charles and Keith