Is Singapore a good marketplace
Business location Singapore - an open gateway to Asia
More than 1,400 German companies are already based in Singapore today. The Asian location is particularly popular with medium-sized businesses. They appreciate the political stability, the protection of trademark rights and, last but not least, a highly developed infrastructure. The city-state supports the settlement of new companies through relatively high subsidies and low taxes.
The Singapore hub is located in the center of the Asian markets. In the city-state, 5.6 million people live in an area the size of Hamburg. In addition, there are more than 10 million visitors every year. Singapore's economy is one of the most liberal and most privatized economies in the world. The advantages of the location include the investment climate, the training of the people and the location. With 1.7% unemployed, there is virtually full employment. In 2016, Germany exported goods with a total value of 6.74 billion euros to the city-state - mainly machines, cars and vehicle parts as well as electronics and electrical engineering.
Taxes are falling
The Singapore government supports the settlement of foreign companies. These include moderate entry requirements, but above all low tax rates and high subsidies. Corporate tax rates are among the lowest in the world. As long as certain conditions are met, the transfer of foreign dividends, foreign branch profits and foreign service income is not taxed at all. With individual income tax, all foreign income is tax-exempt - as is the export of goods and international services. The trend is downwards: while taxes in Germany are rising continuously, they have fallen by around a quarter in Singapore in recent years.
Singapore's tax rates at a glance:
- Corporate tax: 17%
- Withholding tax rate: not applicable
- License fees for patents etc .: 10%
- Branch transfers: not applicable
- Individual income tax rate: 0 to 20%
- VAT rate: 7%
The state also invests
As part of the “Research, Innovation and Enterprise Plan 2020” project, the government has made 2 billion euros available to support public research in the field of advanced manufacturing - the Asian counterpart to Industry 4.0. Key industries in Singapore include electronics, precision engineering, specialty chemicals, automotive, medical technology and logistics. Another 2.5 billion euros will flow into health sciences and biomedicine.
Almost half of all exports in Singapore revolve around high-tech products. Accordingly, the patent density is particularly high: there are 900 patent applications for every million inhabitants. For comparison: In Germany there are 311, in Switzerland, as the European front runner, at least 892. The share of mid- and high-tech industries in manufacturing is the highest worldwide of around 80%. The manufacturing industry grew by a good 10% in 2016, and overall economic output by 3%. For the current year, the Ministry of Commerce traditionally conservatively expects a growth corridor of between 1.5 and 3.5 percent and sees risks - if at all - primarily in increasing protectionism and rising inflation.
Only two things are scarce in Singapore: labor and land. Despite the limited space, the government wants to keep the manufacturing industry as an important branch of the economy in the country. After all, the manufacturing industry accounts for more than 20% of the gross domestic product. The problem: unlike in the neighboring tiger states such as Hong Kong, factories cannot migrate to their own surrounding areas. They therefore have to relocate to neighboring Malaysia or Indonesia in the case of space-intensive expansions. This relocation process is tax-incentivized by the government and will continue. The only condition for receiving further subsidies and tax breaks is that the company's headquarters remain in Singapore.
Brief Singapore etiquette
Even if the street scene and the business world appear international, attention must still be paid to the local legislation and cultural imprint. Always follow prohibition signs everywhere! In Singapore, for example, smoking is generally prohibited within five meters of entrances and exits, parking garages, covered sidewalks and air-conditioned buildings. Eating and drinking in the subway, throwing away rubbish or kissing in public can quickly cost several hundred euros. Inappropriate behavior towards women (“outrage of modesty”) can lead to arrest and a fine or imprisonment. (mg)
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