What makes Singapore the best country for businesses?

Before the glamorous high-rises, a world-class airline, and a plethora of business investments, Singapore was just another undeveloped tropical island in Southeast Asia. After gaining independence from British rule in 1965, Singapore’s prospects were grim as they faced low employment and had few natural resources to rely on for trade. Shortly after emerging under British rule Singapore’s GDP per capita rested at a $428 USD. Sixty years later, Singapore’s GDP per capita resulted in $66,176.39 USD in 2021, making them one of the most powerful countries per capita and one of the world leaders in trading and business investments from foreign countries.

So, how did years of political turmoil and economic instability lead Singapore to grow its GDP exponentially? Singapore’s success is attributed to three points:

1. Open-Market Policies
2. Premium Location
3. Flexible immigration system

First, a large position of Singapore’s success lies within its practice of a business friendly economy. With strong leadership from Singapore’s former prime minister, Lee Kwan Yew, Singapore’s market became transparent but tightly controlled by its government. They heavily focus on making clear trade rules that are greatly efficient and beneficial to many foriegn investors and potential business prospects. This economic model allows the country to enjoy a per capita GDP because of government intervention that made public investments in education, tech and finance. Due to the government’s dedication in creating a transparent and business friendly environment, it has enabled Singapore to have the typical time to start a business is 2.5 days.

This quick opportunity attracts businesses and investors to work in an environment where companies are given business opportunities to thrive. Singapore’s competitive economy makes them the fourth largest financial center globally and the third richest measured by the political stability, regulation, tax, human capital and skills in the world, competing with giant financial centers in New York and London. The biggest attraction for foreign investors and enterprises lies within the magic number of 17%. Businesses based in Singapore have a corporate income tax rate of 17%, compared to countries like China, where the tax rate is nearly 25%. These various tax incentives apply to big corporations that could save on their taxes while making billions in revenue.

Secondly, Singapore’s location in Southeast Asia makes it a premiere spot for maritime trading. Most of Singapore’s economy is highly dependent on exports, such as electronics, chemical products, pharmaceuticals, and petroleum. Located near the Strait of Malacca, ​​one of the world’s busiest canals, Singapore’s location gives them an immense amount of access to nearly 40% of trading routes in Asia. Access to these trading routes makes it easier for businesses to export products more efficiently and quickly, creating a substantial appeal for businesses to consider working with Singapore.

This strategic location also gives businesses proximity to a marketplace with nearly 2.8 billion people. Singapore’s access to the route only attracts foreign companies to pour money into Singapore and modernize the infrastructure to handle the large volume of exports and imports. According to the United Nations Conference on Trade and Development (UNCTAD) report, Singapore’s FDI was about 1.9 trillion USD. Singapore is the fourth largest recipient of FDI inflows in the world, after the US and also the tenth largest investor abroad.

Finally, Singapore’s immigration policy favors immigrants who fall under the category of low wage laborers. One is one of the key factors to its success. While the government is strict on intake of refugees or asylum seekers, they are flexible towards accepting inexpensive laborers. As mentioned in Grep Ip’s “The Little Book of Economics,” having a sustainable economy relies on capital, ideas, and people. A robust population source greatly quantifies the amount of innovation needed to stimulate the economy.

The Singaporean government has fostered environments where applying for permanent residency is fairly simple, with requirements like living in Singapore for two years. Simple requirements and speedy application processes have created an environment where foreigners benefit from starting a business. This is apparent in the 1.4 million foreigners living in Singapore, while the total population of Singapore is nearly six million, making Singapore one of the highest countries with foreigners.

With tax bargains, open immigration policies, and a premium trading location, it is the only fit for Singapore to take over as one of the world’s leading trading and business leaders.