Introduction: Why Singapore Is a Good Place to Start a Business
A business venture requires an environment in which it can flourish and grow continuously, providing its target audience with the required services or products, as well as meeting the needs of other stakeholders, such as personnel, business partners, etc. The choice of a location for the entrepreneurship often defines the success of the company. Indeed, when starting a business, it is essential to bear in mind that its efficacy depends on a large variety of external factors, including not only economic but also those that are cultural, social, political, financial, and technological. Despite the need to adapt to the unique cultural characteristics and legal requirements for setting up a business in Singapore, the state can be viewed as a perfect example of an impeccable location for a for-profit organization, mainly because of the encouraging environment for economic growth and the opportunities for building positive relationships with all stakeholders involved.
Safety Rates
Going into further detail, it is necessary to mention that the World Bank has declared Singapore to be the safest place to start a business (World Bank 2016). However, the opportunities for running entrepreneurship are not the only reasons to start a company in the identified environment. Also, Singapore is at the top of the list of politically stable countries, as well as home to the most qualified labor force (World Bank 2014). In fact, Singapore is considered to have the best rating in all of Asia for quality of life (World Bank 2015).
Financial Characteristics
The financial environment of the state is also quite favorable for doing business. For instance, the corporate tax rate is approximately 8.5%, which is relatively low, given the taxation policies in other countries (Library of Congress 2016). Furthermore, the absence of dividends, estate, inheritance, and capital gains taxes makes the process of meeting financial objectives comparatively simple for the leaders of an organization situated in Singapore. Similarly, the personal tax rates are very low in the state, ranging from 0% to 20% (U.S. Department of State 2016). In other words, the financial environment that Singapore has to offer to entrepreneurs is beyond impressive.
Political Environment in Singapore
Similar to the economic situation that can be observed in Singapore nowadays, the political risks are very few in the identified location. Singapore’s current political system can be defined as democratic, and the promotion of economic growth has been the focus of the state’s authorities since the day Singapore gained its independence. As a result, state authorities encourage entrepreneurial endeavors among the business persons who make up a part of the Singaporean economic environment. However, a tendency to silence opposition has recently been noted in Singapore, according to the latest reports (Holmes 2015).
Consequently, it can be assumed that the political environment in Singapore may include dangers to a developing company. One might argue that the limitations set on free speech in the country are unlikely to harm a business operation significantly. However, the fact that the identified regulation may trigger a defamation lawsuit implies that, under unfavorable circumstances, an organization may face the threat of legal repercussions for employing the right to free speech.
Besides, the fact that some members of Singaporean society are denied their rights creates a rather unstable political situation that may result in a military conflict between the current government and the opposition. Once pushed to the nth degree, the confrontation has the potential to create an environment in which running a business will be impossible. As a result, there might be a threat of losing all resources and sustaining significant economic damage for all the parties involved, including the company leaders and the people working for the company. Although the current state of affairs is far from deplorable, keeping an eye on changes in the political environment of Singapore is essential to the wellbeing of the people involved and the success of the entrepreneurship.
Legal Environment in Singapore
Much to the credit of the members of the Singaporean government, economic growth is sustained and encouraged by its members. Remarkably, the course for economic improvement was set quite a while ago. By integrating elements of the latest technological advances into the strategy of improving the state economy, the government created an e-commerce program intended to make the country’s private entrepreneurship segment enter a new era and gain the independence required to grow consistently.
A company set in Singapore is likely to receive powerful support from the local government and, therefore, enjoy a wide array of tools that can be used to increase the profitability of the entrepreneurship. The diverse e-commerce landscape of the state provides the foundation for building a company that may have a great competitive advantage and, thus, will be able to establish a strong presence in the global market, afterward expanding into the realm of the global economy.
The safety that the Singaporean legal framework provides is truly exceptional; since the country has been used as a trading hub for quite a while, it has created the premises for successful entrepreneurship as a means of maintaining relationships with the rest of the markets, and thus, retains its position as one of the key elements in the global economic environment. As a result, e-commerce platforms that allowed for a significant reduction in the impact of trade barriers for private organizations have evolved significantly, becoming the framework for building an efficient business from scratch.
It should also be borne in mind that the e-commerce platforms mentioned above serve as a means of addressing essential competitive bottlenecks in the target environment, creating a leeway for firms to grow quickly and focus on developing their competitive advantage.
One should also keep in mind that Singapore’s legal system puts a very heavy emphasis on the protection of intellectual property. Specifically, the Intellectual Property Office of Singapore (IPOS) coordinates issues related to the infringement of intellectual property rights and associated problems (Legal Service Commission n.d.). Similarly, the Trade-Related Aspects of Intellectual Property Rights as a part of the state’s legal framework aligns fully with the international principles of copyright. Consequently, when operating in the target environment, it is important to make sure that copyrighted ideas are used accordingly and that threats of abusing the specified regulation should be eliminated at first hand.
Risks and Opportunities for Starting a Business in Singapore
Threats
As seen from the description provided above, Singapore can be deemed a relatively favorable environment for starting a business and running a company. Although the location has its peculiar characteristics, it cannot be categorized as hostile to entrepreneurs. However, it would be wrong to claim that there are no obstacles to people running an organization in Singapore.
- Reasoning mainly from the lack of stability in the political regime of the state, in general, and the endeavors at silencing the opposition, in particular, the lack of concord between the members of Singaporean society may spark a confrontation that will make running a business in the state impossible. Moreover, apart from the constant tension between the members of the political parties in Singapore, the political issues may spark conflicts between employees working for the organization, thus reducing their performance efficacy. Similarly, political issues may have a tangible effect on the purchasing power of the customers, putting them in a difficult financial situation.
- Furthermore, there are other risks that businesses operating in the target environment will have to take into account when designing their marketing strategy. At this point, the significance of choosing an appropriate risk management approach needs to be brought up.
- The necessity of addressing information-sharing problems in the context of a company opens a Pandora’s Box of corporate issues related to values and ethics. In particular, the employees’ fears for their security as members of the organization, as well as their professional progress and financial gain, have to be addressed so that any problems establishing the data management approach described above should not reemerge.
- Similarly, problems related to data safety will have to be handled quickly. There is no need to stress that the issue of cybersecurity remains topical in the contemporary environment of breakthroughs in informational technology. Cyberattacks are, unfortunately, an integral part of the present-day business landscape, and they must be prevented accordingly.
Opportunities
However, the positive aspects of starting a business in Singapore definitely outweigh the disadvantages.
- For instance, the heavy emphasis on the promotion of private entrepreneurship that the state government endorses as its current primary goal can be deemed a significant advantage. Being supported by state authorities and enjoying the outstandingly favorable legal environment in Singapore will propel a business to the top of the market, making it profitable.
- Also, the taxation policies that the Singaporean government has established serve as a perfect foil for starting a business venture. In light of the fact that the tax burden is low in Singapore, a firm may use its financial resources to create a splendid promotional campaign and focus on the research and development processes. Thus, building an impressive competitive advantage becomes possible.
- Apart from keeping an eye on the possible political issues that may emerge in a hostile political environment of Singapore due to confrontation between the Democratic Party and its opponents, those starting a business in the identified area will have to consider the possibility of facing stiff competition. Indeed, in light of the numerous advantages that the owners of private companies may enjoy in the setting provided by Singapore, it is very likely that many people may consider the local environment to be the perfect location for their companies.
Guidelines for Doing Business in Singapore
Although admittedly complicated to solve, the dilemmas mentioned above can be addressed by creating a risk management approach that will enhance the company’s sustainability. In the case in point, it can be suggested that the leaders of the organization should pay special attention to the communication strategies used in the firm. Indeed, efficient mitigation of risks can be deemed to be the most sensible approach to managing the threats, and it can only be used once the company retrieves the necessary information in a timely and efficient manner.
Therefore, the development of current information management systems must be viewed as a necessity. For instance, the means of promoting the principles of information sharing among staff members must be designed. The company managers need to convey the idea of data sharing to the employees successfully so that the staff members might not withhold essential data from their coworkers in hopes of surpassing them in their performance.
As far as the information security issue and the threat of cyberattacks is concerned, it will be necessary to provide staff members with an opportunity for training to acquire the relevant skills that will help them avoid cyberattacks successfully, thus enhancing the security of the organization. Since the training sessions will require substantial investment, it will be sensible to adopt the principles of lean management and the sustainable use of resources.
Thus, the expense incurred for training will be covered, and the company will be able to maintain high production rates and quality levels. To manage the information-sharing issue, in its turn, it will be necessary to build a corporate philosophy that will place a very strong emphasis on corporate values and the need for the employees to assume responsibility for their performance.
Finally, to address the competition issue, a firm will have to work on developing its competitive advantage, delineating the key components of a quality improvement framework, and improving the communication systems that will help reach out to the target audiences. The choice of the tools and the images that will be used to appeal to the identified demographics will also become the challenges that the managers of the firm will have to meet to make the project successful and propel the company to the top of the Singaporean market, as well as the global market.
Reference List
Holmes, O 2015, ‘Singapore’s ruling party batters opposition in huge election win’, The Guardian. Web.
Legal Service Commission n. d., The legal branch. Web.
Library of Congress 2016, Global legal monitor. Web.
U.S. Department of State 2016, Singapore. Web.
World Bank 2014, Labor force participation rate, total (% of total population ages 15+) (modeled ILO estimate). Web.
World Bank 2015, Singapore. Web.
World Bank 2016, World Bank: stable growth outlook for East Asia & Pacific in 2016-18. Web.