How to do business in Singapore?

I. Introduction to the country
a.   Geography

b.   Demography structure

c.   Government

d.   Political Landscape

e.   Languages

f.   Religions

g.    Facts and features about current business situations

h.   Important days in Singapore

II. Singapore’s cultural particularities
a.   What to do & not to do?

b.   Business etiquette

c.   Cultural aspects affecting business

III. Economic attractions of Singapore
a.   Strategic Location

b.   The World’s Best Labor Force

c.   Outstanding Tax System

d.   Government Friendly-Environment

e.   A Higher Quality of Life

IV. Entrepreneurial Outlook in Singapore
a.   Pros

b.   Cons

V. Negotiating in Singapore
a. Key Considerations

b. Strategic Tactics

VI. References
 

 

 

 

I. Introduction to the country
a. Geography The official name of the country is Republic of Singapore, which is formed by 63 islands and it is situated in Southeast Asia; Singapore Island is the biggest and main island, it is located under Malaysia and above Indonesia (just divided by the Singapore Strait) and between the Indian Ocean and the South China Sea.

Singapore has 300 parks and 4 natural reserves, representing 10% of the total area of the country. The main objective of the many parks and protected land areas is to minimize the damage that the urbanization causes to the environment in order to improve the quality of the air and consequently, of life.

b. Demography structure

Singapore's population, until 2012, was around 5.31 million of inhabitants. The ethnic makeup of the country can be realized by the following figures: 74.2% of Chinese, 13.3% Malays, 9.2 Indians, and 3.3% as the smallest significant ethnic group, which is formed by Caucasians, Eurasians and a variety of other countries. The ethnic diversity in the country can be attributed to its recent economic growth and its ideal geographic positioning.

c. Government

Singapore is a sovereign republic; its government is primarily run through the executive branch which is comprised of the President and the Cabinet of Singapore. The President of the country plays very little role, as the executive branch is essentially controlled by the Cabinet. The composition of the Cabinet is determined by the party that wins majority in the Parliamentary Elections which take place once every five years. Within this cabinet, there is a leading Prime Minister along with those he appoints as his respected advisers. Along with the executive function, Singapore's government is also directed with the input of both a legislative and a judiciary branch.

The Legislative branch is also represented by the President and the Parliament; the main objective of this is to enact the legislation. The Presidential elections are held every 6 years and determined fairly by the citizens of Singapore. The Judiciary branch which is responsible for the law, is divided into two parts, the Supreme Court and the State Court.

d. Political Landscape 

Although clearly labeled as a democracy, some argue that the Singaporean government is actually something much different. Since 1965, the People's Action Party (PAP) have dominated Singaporean politics. Lee Kuan Yew was the prime minister from 1965 until 1990 and to this day he still plays a large advisory role. During the 2006 elections, the PAP won 82 or 84 seats in the nation's Parliament. With such strong control over the government, it is clear that all governmental decisions are being made without any chance for disruption from opposition. Authoritarian in nature, the government holds a great deal of strength over the people and economy. Highly centralized, the People's Action Party rarely elects its members but rather appoints them. Economic growth and political stability in recent years is primarily due to strong government intervention. In fact, some say that the economy is dominated by government-owned businesses. Although it seems that the Singaporean government is not a true democracy, the PAP has done a great job of maintaining a corruption-free image and remains well supported by the citizens of the country. There are some arguments however in relation to the restrictions on media held by the Singaporean government and also the lack of a means by which opposing parties can gain any true voice or power.

e. Languages

Singapore is a rich linguistic landscape because it was first populated by a huge amount of immigrants from around the world (as a former colony of the Great Britain and Malaysia). We can observe a wide variety of spoken languages on the island, which makes the city-state such a unique place. For business travelers that’s much easier to communicate with Singaporean partners on English due to its popularity.

Due to cultural and ethnic diversity of Singapore there are four official languages: English, Malay, Tamil and Mandarin Chinese. It should be mentioned that Indian dialects are also used in Singapore. English is the common language for all Singaporeans though. This language was firstly introduced by British Colonists in 1819 after the creation of the Port of Singapore, later a colony of the Great Britain. During the colonial period the English has become prestigious for public administration, medicine, law and business fields. Nowadays, it is widely spoken, what makes doing business much more accessible and reasonable for foreign companies and multinational corporations, which would like to use English as an operating language.

In everyday life Singaporeans prefer to use the local version of English – Singlish (Singapore + English), which is broadly spoken across the island and viewed by natives as a special feature that identify them as uniquely Singaporeans. In fact, Singlish is a creole of words and slangs from such languages as English, Malay, Hokkien, Teochew, Cantonese, Tamil and British grammar. Singlish adopted a lot of Chinese interjections, which are usually used to show the attitude of person to what he/she’s saying, for example, ‘lah’, ‘la’, ‘hah’ and other.

The Government of Singapore, as well as High Society Groups, does not support the use of that creole and tends to praise British English to the public. It happens in order to safeguard Asian cultural identity and traditional values against Western influence.

f. Religions

Singapore could be described as the country with the incredible diverse ethnic combination of people originating from different countries. There is no official religion and the constitution of Singapore that entitles every person to practice his or her religion in accordance with personal beliefs. So religious tolerance and respect are promoted by the government of Singapore.Despite its tiny territory Singaporeans have more than five big groups of religions. Main features are represented in the figure. As you can see on the pie chart, about 42,5% of Singaporeans are Buddhist; most of the Malays are the adherents of Islam and its percentage reachers almost 13,9%.Christians (Catholics, Orthodox and others) classify themselves as 14,6% of the population. Hinduism, Taoism and other religions are also widespread. A significant part of population of Singapore, especially among the well-educated people, are atheists.

It is interesting to meet Chinese and Indian temples, Malay mosques, and Christian churches on the same street, There are also different "street festivals" according to the ritual calendars of the different ethnic groups of Singapore.

Ethnic and religious diversity of Singapore led to the fact that all religious occasions, regardless of roots of nationality and traditions of own religion, are celebrated in unison by all Singaporeans. For business and business travelers it is vital to be keenly aware of national days in Singapore for planning activities on these days.

g. Important days in Singapore

It is very important for the multinational companies working with Singaporeans to know the timetable of public holidays of the country, where they have business. This knowledge will give companies the opportunity to understand the Singaporeans better.Besides, it will help managers in the planning process of important events or meetings for companies of Singapore. It will eliminate the situation when the  meetings or events will be arranged on the same day with the public holiday. In 2015 there are ten major public holidays. This list is officially approved by the government of Singapore, so it is a vivid proof of

the government's balanced approach to religious and ethnic composition of the population.

'''h.  Facts and features about current business situations 

Since 1960 Singapore’s economy has been experiencing a constant growth, which belongs to the original economy group call Asian Tigers also known as the Asian Dragons. In Southeast Asia, Singapore’s economy is the most advanced. Nowadays, the name of Singapore comes out when people talk about industrialized growing countries in Asia like South Korea and Taiwan.

The government has privatized almost all the companies in Singapore, as a result of this action, the government has not much intervention in the economy; therefore, the country’s economy is sustained by the foreign investors, and domestic private firms. In the other hand, the role of the government nowadays is to improve the image of the country, in order to be more attractive to new investors, researchers, and worldwide companies, since they will offer new opportunities and advantages for further developing in Singapore.

To achieve these goals, Singapore’s government has to implement a whole strategy in different sectors, mainly consisting of following actions: to investors and business; for example, better intellectual property regulation. is part of achieving the main goal, due to this the country has a qualified labor market. for example:  public insurance that government takes into consideration when considering the benefits of its economy, offering very competitive tax rates, this mean; that the taxes comparing to other countries are lower, an as a result companies prefer to invest in a lower taxation country like Singapore. In addition, Singapore also has a variety of strong economic sectors; one of them is the financial sector. Singapore is the fourth leader as a financial center, since it owns the Asian Dollar Market where other currencies besides Singapore´s one are trade. Other important sectors are the Oil Refining and Trade because they have one of the five busiest ports in the world in terms of shipping tonnage. They also have turned Singapore into one of the most important oil refining countries in the world,
 * Analysis of the needs in the markets
 * Development of protection provided
 * Providing a good educational system
 * Taking care of the whole population
 * Regulation of taxes is another topic

Two of the most valuables activities in Singapore´s economy are the exports and imports of refining products (inputs and outputs).

Singapore’s major trade partners are United States, Malaysia and Japan; furthermore, the country also has formalized joint venture contracts with Indonesia and Malaysia within different projects and in different sectors.

Tourism has become another important factor for Singapore’s economy, due to the central location that it offers in the Asia continent, the ease of reaching the country and the current recreations that Singapore offers; therefore, in 2013 Singapore received around 16 million tourists.

II. Singapore’s cultural particularities
'''a. What to do & not to do? 

Since Singapore holds a great diversity and combination of cultures (mainly from China, Malaysia and India), the expected etiquette can be confusing. Nevertheless, there is always a protocol that foreigners should follow while visiting Singapore. Below you find different categories that represent situations in Singapore’s daily life and how you might want to go about dealing with them.

Meeting and greeting
 * Do give a slight bow when shaking your hands, especially when it comes to older people. In Chinese culture doing this (especially with older people) is a sign of respect and politeness.


 * If you are a man, do wait for a woman to start the handshake greeting; otherwise the action can be interpreted as impolite.


 * Some Malays do not shake hands, especially Muslims to the opposite sex.

Body Language
 * You must shake hands firmly and sincerely with all people who are present in a business meeting or in a social event, at the beginning of it and before you leave.
 * Pay attention when dealing with people from different cultures not to touch their heads, because for some of them the head has a holy meaning.


 * Do cover the bottoms of your feet and never use them to point out something, due to feet are considered to be unclean.


 * Do not hit your hand with your fist, this is a obscene sign.


 * Do not use your index finger to point at someone.


 * Do not show affection in public.
 * When you want to cross your legs, only do so by putting one knee over the other.


 * Do not tap your foot or fidget your legs, these movements denote feebleness and lack of interest when in a business or social meeting.

Business Meeting
 * Do raise your hand when you want to get someone’s attention.
 * Business is conducted formally.
 * Spending time to build personal relationships is very important in this culture.


 * When you will not arrive on time to an appointment, make sure to call and notify the Singaporeans, even if you are just doing a casual visit.


 * Do make appointments with at least two weeks in advance.


 * Do not make appointments during Chinese New Year and neither on your host’s religion holidays.


 * Do not sit until you are told to do so by the person who is leading the meeting, usually the one who is older than the others.


 * Do not disagree with a person who has a higher rank in society than you, usually the one who is older than the others.


 * When you exchange business cards, do it with both hands and before you put it away, examine it carefully. This is a sign of respect in Singapore’s culture.

b. Business etiquette  
 * When you want to communicate, be direct while transmitting your ideas, but be careful not to make the other person lose its face. Thus, might be smart to communicate your idea by criticizing it respectfully or by saying how you disagree with it.

Dress Code
 * For business a conservative style should be followed. For men, a white shirt, a tie and pants are suitable. For women, blouses with sleeves and skirts or pantsuits are expected combinations. For both, jackets are not required.

Table Manners
 * Casual western dress style is totally accepted due to the different amount of ethnic groups that live in Singapore.
 * When you are invited for dinner,allow the host to order at a restaurant. This is a sign of respect and trust to your host.


 * When you are doing business in Singapore, normally your host will offer you a nice banquette, especially when he or she is Chinese descendent, thus it is expected that you reciprocate him or her with same action before you leave the country.


 * When you have been invited for dinner by Chinese descendent, it is important not to eat until host begins.


 * Do not use the cutlery with left hand when dining with Malay or Indian descendants.


 * It is really important that when you serve food in your plate do not let the serving spoon touches your plate and also, do not share leftovers. For this culture those actions might indicate a contamination of the food.


 * It is not appreciated to refuse first offer of food or beverages; when you are offered the second round, you can refuse it by placing your hand on top of your plate and telling: “No, thank you”

Gifts 
 * You should collocate together your spoon and fork on your plate to indicate that you have finished eating. If you are using chopsticks to eat, put them on your chopstick rest to show that you have finished; otherwise you will be offered more food.
 * Normally Singaporeans are not used to exchange business gifts.


 * When you give someone a gift you should do it with both hands.


 * In Singapore a gift given to a guest or to a host is not opened in presence of the giver.


 * When you are invited to someone’s home you should bring a gift for the host; this is a common tradition followed in Singapore.

Visitors Etiquette
 * When you give a gift to someone be careful how you deliver it, since it can be misinterpreted as a bribe and Singaporeans will never appreciate this.
 * When eating at a Malaysian’s home, expect to be given a small bowl and a towel to wash your hands.


 * When you are invited for dining at a Malaysian’s home, always be on time. Singaporean’s do not serve appetizers beforehand.


 * When you are invited for dinner at Indian’s home, you should not stay longer than an hour after meal ends.


 * When you are invited for dinner at a Chinese’s home, do not bring any kind of food as a gift for your host, if you do so, this will be a disrespectful sign for your host. Chinese will imply that you do not think they are good hosts.


 * Whenever you are invited for dining at someone’s home, bring with you a gift to your host.

c. Cultural aspects affecting business
Since Singapore is influenced by many different cultures, always keep in mind that you possibly will be doing business in a multicultural environment. Although local people like to preserve their traditions, nowadays it is most common to do business in a western style and thus there are several aspects that each successful manager should take into consideration, some of then listed below.

Diversity

Depending on the size of the company you will be working in a different operational style. The multinationals and large companies have a western culture style whereas smaller, local firms and government organizations have a more traditional Asian style of operating. The Chinese modifies most of the cultural aspects when it comes to business, because they integrate the greatest part of the population in Singapore.

Hierarchy & collectivism

Singapore has a high-power distance culture, where lower level staff do not openly question or argue with senior management. The top manager nearly always makes decisions and there is generally little empowerment of juniors. Business decisions are usually reached by a consensus and the group’s interests are more important than the individual’s ones.

Workshops, conferences, and training events are important venues for building business network in Singapore.

Business & meetings

In Singapore it is always important to stick to the rules, plan and deadlines. Singaporeans are normally punctual for their appointments, so call them if you are unexpectedly late. Listen, speak slowly and be kind. Small informal meetings are common before the real business one.

Be patient during negotiations, because they can be quite slow, as Singaporeans like to bargain. When business done/deal is closed, it is common to be thankful to the Singaporean business partners by exchanging small-related business gifts.

When choosing a gift, do consider from which culture is the person to whom you will present it, because some gifts might have a negative connotation or might symbolise a conflict in their culture. For example, in Chinese culture anything in a set of four or when giving a clock represents the death.

When working with Malay business partner -who is Muslim- avoid conducting business on Fridays or during the Ramadan, otherwise, it will be a sign of disrespect to his or her culture. Do not serve alcohol or pork.

III. Economic attractions of Singapore
Why to choose Singapore?

Singapore has a strong economy and a suitable business environment to help companies to establish their presence quickly in the country, so that they can just concentrate on generating revenue activities. To invest in Singapore is a magnet attraction for foreign companies because of its low corporate tax rate, diverse business services, and the fact that there is almost no corruption. Due to economic challenges faced by Europe, US and Japan during last years, international investors are looking for alternative investing options that allow them to enter into growing markets and as consequence, to gain better returns.

Singapore has become an interest international country to do business with as a result of previous mentioned reasons and due to the following factors:

a. Strategic Location 

Singapore is situated in the heart of a quickly expanding Southeast Asia market, and only within a few hours flight people can have an access to a market of 3 billion people. In addition, due to its world-class infrastructure, it serves as the region’s economic and logistics center. The country is also known as a premier International Maritime Centre and Singapore’s Changi Airport provides companies with easy access to all Asian countries. Likewise, the international trade plays a huge role in the island’s economic growth.

b.  The World’s Best Labor Force

Singapore has built an attractive, first-class, and productive work force – a key for the success of any business. The country is primarily a knowledge-based economy, thus, as result it has developed one of the most competitive educational systems in the world and, therefore, it has excellent schools and universities to form its future professionals.

Singapore’s manpower is identified as highly educated, productive, technical proficient, work-hard and work-smart culture. The Singapore workforce is cosmopolitan, since the country is attracting professionals from all over the world to bring with them their extensive knowledge and business expertize.

c.  Outstanding Tax System

A Singapore’s distinctive advantage is its low personal and corporate tax rates. There are no capital gains taxes in Singapore, which follows a single-tier tax policy; for income that has been taxed at the corporate level, dividends can be distributed to its shareholders tax-free.

Government in order to decline a dependency on income taxes and to make the economy even more competitive adopted the goods and Services Tax (GST). Singapore maintains one of the world’s lowest GST rates (currently 7%), ranking below the global average VAT/GST rate of 16.4%.

The basis of taxation for a resident and non-resident company is generally the same. However, there are some benefits that a resident company can enjoy: Residents pay taxes only on income from sources in Singapore. After deduction from income the costs associated with the education of children, conduct professional activities, payment of insurance premiums, mandatory contributions to the local budget funds and other personal tax deductions, the remaining income is taxed at progressive rates ranging from 0% to 20% (the rate depends on the the amount of income).
 * the Avoidance of Double Taxation Agreements (DTA) that Singapore has drawn up with certain countries.
 * It can enjoy tax exemption on foreign-sourced dividends, foreign branch profits, and foreign-sourced service income under section 13(8) of the Income Tax Act.
 * It can enjoy the tax exemption scheme for new start-up companies for up to three years.

Listed below are general tax exemptions currently available to Singapore resident companies. Once it is applied to the taxable income, the effective income tax rate for small-to-middle size Singapore companies is reduced significantly.

The corporate income tax rate is 0% on the first S$100,000 taxable income for each of the 3 tax filing years for a just launched company that meets the following requirements: All Singapore resident companies are eligible for partial tax exemption which effectively translates to about 8.5% tax rate on taxable income of up to $300,000 per annum. The taxable income above $300,000 will be charged at 17%.
 * be incorporated in Singapore
 * be tax resident in Singapore
 * has no more than 20 shareholders of which at least one is an individual shareholder holding at least 10% of shares.

In Singapore, the tax residence status of a company depends on where the control and management of its business is exercised. For example, a Singapore branch of a foreign firm is usually not treated as a Singapore tax resident.

The Economic Development Board (EDB) in Singapore provided various stimuli to encourage greater investment into particular industries or activities. Singapore’s Free Trade Agreement (“FTA”) network – consisting of 18 FTAs– provides Singapore based exporters and investors a myriad of benefits like tariff concessions, preferential access to certain sectors and faster entry into markets.

d.  Government Friendly-Environment 

Pro-business approach is used by Singapore’s political system. It makes laws, decides priorities and sets regulations in favor of business. If you want to set up business in Singapore it will take up to 2 days with the government providing assistance along the way. Also foreign investors are can to enjoy 100% ownership of the businesses they launch.

Singapore’s open Immigration policy facilitates the relocation of foreign nationals who wish to start businesses here. Singapore’s loosen immigration policy helps foreigners to receive permanent residence (PR) status. The government has also a policy of welcoming qualified and skilled foreign workers.

Singapore has very strong copyrights laws; IP protection is taken very seriously here. Subsequently the country has become a main center for businesses seeking to manage their IP assets.

e.  A Higher Quality of Life

Singapore provides all of its residents with the best quality services. Excellent public and private transportation, efficient healthcare, a safe living environment, easy access to many other nations, top-level schools, an outstanding support system for all types of businesses, and an endless selection of cultural and educational opportunities.

IV.  Entrepreneurial Outlook in Singapore
When considering doing business in Singapore, there are many aspects of the country that must be taken into consideration. If looking to take an entrepreneurial route, the importance of considering these aspects grows enormously.

a. Pros

Let’s begin with the pros of entering the Singaporean market. The investment environment, the stability of the economy and the government are the factors that make Singapore such a promising location for entrepreneurs. Rich national reserve balances along with a fair and unbiased judicial system allow investors to feel comfortable about the risks of a potential economic downturn or recession. The government in Singapore also places a very strong emphasis on attracting foreign direct investment, as policies are consistently put in place to make it easier for outsiders to enter their markets. Along with attractive policy-making, it comes a surprising ease at which government funding can be acquired. Obtaining government reimbursements and grants for small businesses is as easy as finding the right statutory board and as filing out the necessary paperwork. Boards such as SPRING, IE SINGAPORE, IDA, AND IPOS all have multiple grants and funding opportunities for existing businesses and start-ups alike.

Low taxes, at a rate of 17% annually are another very influential factor in deciding to go into business in Singapore. Even better for entering firms, is the fact that they don’t have to pay taxes unless your yearly turnover is more than 30,000 USD. There is also a corporate income tax rebate of 30% up to $30,000 each year.

b. Cons

When considering the other edge of the sword, there are also a few cons to be aware of prior doing business in Singapore. The largest of these potential obstacles involve a restrictive labor pool. The reason for this has to do with the fact that Singapore has been recently pushing its local workforce towards occupations with higher value that require a stronger education. Needless to say, there has also been an increase in the amount of educated individuals in the country, leading them to expect higher wages and shy away from lower-tier positions in the service and retail industry. Associated with this problem, there is an increasing cost of employing low-skilled foreign laborers, as the government has increased levies and quotas on these unskilled workers entering the country. As the government attempts to protect its local workers and reduce a huge influx of lower-skilled laborers from surrounding nations, it has become a difficult task to find cheap labor, especially in the service and retail sector.

High overhead costs and limited national resources are also a problem that any new business will have to find a way to deal with. Renting and buying land can be incredibly expensive due to the country has a very small size. Renting an office or retail shop space can cost up to twice as much as it does in neighboring countries. Nearly all resources and building materials needed for a new business will need to be imported, as the small island country barely has any resources to offer.

V.     Negotiating in Singapore
Negotiating in Singapore can be quite an exhausting task, especially for those of the Western world. The most important thought to keep in mind is that of remaining calm and patient when dealing with a negotiation in Singapore.

a. Key Considerations    1.) Harmony and Trust  

The two most essential elements to consider when negotiating in Singapore are that of harmony and trust. As for in many other Southeast Asian countries, it is essential that you build rapport and a mutual understanding with your counterpart during any business dealing. If you are able to build these with those that you are negotiating with, your chances at getting what you want are much greater.  2.) Patience  

As mentioned earlier, patience is extremely important in this process. The majority of negotiations in this region of the world tend to extend over a much longer period than in other parts of the globe. Personal questions should not be shied away from, as the act of truly getting to know one another will go a long way in bettering your chances to come to a mutual agreement. It is also considered acceptable and more or less expected to give small gifts upon meeting the person with whom you are dealing. 3.) Remain Confident 

Although the other side may seem stern and very serious, it is very important to never become intimidated while negotiating in Singapore. Often this intimidation factor is used by the businessmen in Southeast Asia and it must not be taken lightly. By remaining confident and clearly defining your desired result in the negotiation from the start, you can avoid becoming taken advantage of.

b. Strategic Tactics

After reaching a certain degree of mutuality, you might want to consider a tactic such as stalling or mentioning competitors. Stalling is often overlooked as a strategic objective when negotiating. By acting as if you have another option in regards to the deal, you reverse roles and actually put the pressure on the counterpart to make a decision. If you hesitate to answer in a swift manner and stall on the finalization of the deal, you can potentially push the person you are negotiating with to lower their stance and give into your demands. Mentioning competitors and acting as if you have more than one option can also be a very useful strategy if wanting to achieve your desired result in a negotiation. If those who you are negotiating with are aware that you don't need them but instead believe that they need you, you will have a strong hold in determining the end result. 

VI.     References
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