With its magnificent architecture, verdant green spaces, and blend of cultural diversity, Singapore has become a must for those visiting Asia. If you look a little deeper, you will find that there is far more to the city-state than just its scenic views and dazzling skyscrapers, that attracts visitors from all over the world. As South East Asia’s largest international hub, Singapore has a unique market-friendly environment to do business in. Its highly open economy, interconnectivity, and firm political circumstances make it very attractive for businesses looking to expand to Asia.
Many people tend to first look to China or Japan, but Singapore is one of the most thriving countries in Asia. It has played a long key role as a central hub for businesses and over 37,000 of them have placed their base operations out of Singapore, including 7,000 multinational corporations. Reasons to invest in Singapore include:
- A robust economy: One of the key indicators of deciding if a country is worth investing in, is to research what the economy has to offer and the range of economic opportunities that can benefit your business. Singapore has a well-developed free market that is based mostly on trade, manufacturing, and finance. It has over 20 free trade bilateral agreements with several key trade partners such as the European Union, the United States, and Japan.
- Real estate is booming: Over the last few years, Singapore’s real estate scene has picked up a lot of momentum and has become one of the biggest reasons to invest in the region. There has been huge development taking place across the country including new condos and houses. Furthermore, the increasing popularity of mixed-use developments where residential and commercial spaces are blended is transforming daily lifestyle. Singapore’s strong political leadership has also paved the way for sustaining a low tax long-term environment. Singapore does not impose a capital tax gain when it comes to property.
- The demographics are lucrative: Singapore is the fourth-richest country in the world based on GDP and is developing rapidly year on year. With excellent literacy rates, low rates of crime and corruption, Singapore can make for highly favorable returns. It also has one of the largest concentrations of millionaires and has an unemployment rate of 4.38%, which is one of the lowest among developing countries. Another good thing with investing in Singapore is that it is in close proximity to China. As the economy in China continues to expand it will help Singapore to expand on the business opportunities that it can offer investors.
- The CPTPP and RCEP trade agreements: Singapore is part of both the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP – read more on our full analysis of the RCEP here). The CPTPP eliminates tariffs for 94% of Singapore’s exports to CPTPP markets and strengthens the trade among countries in the Asia-Pacific. The RCEP eliminates at least 92% of tariffs on traded goods between members in the Association of Southeast Asian Nations (ASEAN). Additionally, this agreement simplifies the customs procedure and lowers transaction costs.
Foreign Direct Investment in Singapore
Singapore’s long-term development strategy has been based on its ability to attract foreign direct investment (FDI) and Singapore regularly ranks at the top as one of the largest locations for FDI globally. A lot of the FDI that goes into Singapore often leads to the outflow of FDI to other Asian markets, which allows Singapore to be the hub for foreign investors seeking an entry point into the region. Singapore is ranked as the 5th largest recipient of FDI in the world. Only the United States, China, the Netherlands, and Hong Kong have a larger inflow of FDI. According to UNCTAD’s World Investment Report 2020, FDI inflows rose to USD 92 billion in 2019, from USD 79 billion a year earlier. In the same year, FDI stock was about USD 1.7 trillion.
Top Industries to Invest in Singapore
In the past few decades, Singapore has placed a lot of attention on developing industries in order to scale for growth. The manufacturing sector (electronics, machinery, petrochemical, and equipment) and service sector (financial services, wholesale, and business services) have been a big part of the country’s overall GDP. Chemicals, pharmaceuticals, and medical research are also a big part of the national economy.
Some new emerging sectors that the government is investing heavily in include clean energy, robotics, automotive, and natural resources. Other sectors include cybersecurity and digital innovation, which has the potential to attract a lot of additional foreign investment.
Top Investors in Singapore
Singapore has a reputation for its ability to attract large foreign companies and multinational corporations, who continue to hold Singapore as an ideal location to expand their businesses. Some of the biggest multinational corporations that have invested in Singapore include:
- Deutsche Bank
- General Electric
- JP MorganChase
Outlook on Foreign Investment in Singapore
With some foreign investors uncertain about the outlook on Hong Kong being the central point for investing in China and other areas around Asia, Singapore is actively looking into ways to expand its relations with the rest of Asia and the APAC region. Singapore’s position of being the hub of Asia is only expected to increase in the next few years. This includes both investors from inside and outside of the region. Singapore’s International Arbitration Center (SIAC) is also well-known for resolving disputes and offering helpful tools to investors, which helps to increase its overall attractiveness. As Singapore continues to look for future drivers, its FDI is set to increase especially with Singapore’s Economic Development Board (SED) investing in companies that plan to expand to Singapore from overseas.
Singapore is considered one of the premiere countries in the world when it comes to investment opportunities. It can provide investors with a good opportunity to expand their investment portfolio into a collection of assets that provide a good return on investments. Its overall success is based on a well-developed infrastructure and a good taxation framework. As Singapore continues to attract the world outside of Asia, the investment opportunities that it continues to add to its current list of attractions will only continue to expand.
INS Global is well equipped to assist your business in its expansion to Singapore. Whether you are looking to hire staff, find the right talent or invoice clients in Singapore, we can assist you. Get in contact with INS Global today and let us provide your business with the best solutions and high-quality service.