SINGAPORE BUSINESS PARADISE.

INTRODUCTION:
Today, recession period has given market a down turn so many companies are in search of potential customers which arises a need for the parent company to expand his business in different countries. An investor must consider all the aspects whether economic or cultural, before investing into any country. These could be the government, economy, infrastructure, workforce and so on. This is where Singapore comes into picture holding number 1 position in a research done by IFC (International Finance Corporation) and World Bank stating ease of doing a business 2009. Singapore's FDI stock has more than tripled in the time period from 1995 to 2006.

Quick facts: (Source: ( http://www.canadiancontent.net/profiles/Singapore.html)

Singapore- Population: 4,608,167 Official name Republic of Singapore Official Languages English, Mandarin, Malay, Tamil Currency Singapore dollar (SGD) Capital city Singapore city Government type: parliamentary republic.

 Location: South-eastern Asia, islands between Malaysia and Indonesia Ethnic Make-up: Chinese 76.7%, Malay 14%, Indian 7.9%, other 1.4% Religions: Buddhist (Chinese), Muslim (Malays), Christian, Hindu, Sikh, Taoist, Confucianist. Calling Code:+65 Cell Phones: 3,521,800 Landlines:1,896,100 Internet: 2,310,000

Culture of Singapore
Singapore is a multi racial and multi cultural cosmopolitan city. . Since Singapore is a multi-culture society you need to bear some of the following points in mind:

- The Chinese always use their family names first followed by their personal names.

- Women often keep their own family name. Malays do not use a Family name.

- They use their personal name followed by bin (son of) or binti (daughter of) and their father's personal name.

- Indians use their personal name followed by S/O (son of) or D/O (daughter of) and their fathers' personal name.

As a rule of thumb never use personal names or nick names unless and until invited to do so or until a strong friendship has been established. While meeting your Singaporean contacts the higher ranked and elder's members should be addressed first.

Singaporeans are group dependent and rely on facial expression, tone of voice and posture to tell them what someone feels. They often trust non-verbal messages more than the spoken word. They hint at a point rather than making a direct statement, since that might cause the other

person to lose face. Silence is an important element of Singaporean communication. Pausing before responding to a question indicates that they have given the question appropriate thought and considered their response carefully.

Singaporeans generally shake their hands when they are first introduced to a person. Men and women usually greet each other with a handshake. When making introductions for the first time and in formal meetings you should always use the person's title and family or personal name. Though Singapore is a multilingual city. The Singaporean Government uses Mandarin Chinese, and English is used is widely in use for business purposes.

Business Meeting & Negotiation Etiquettes

In this part we would like to illustrate some important information while doing a business with a Singaporean like, You should not get offended if a Singaporean does not look into your eyes in a meeting. The eyes are cast down or away as a sign of respect and politeness especially if you are a senior or have a higher status. Business in Singapore is more formal than in many western countries. There are strict rules of protocol that must be observed. The group (company or department) is viewed as more important than the individual.

In order to keep others from losing face, much communication will be non-verbal and you must closely watch the facial expressions and body language of people you work with.

1. Elderly people are treated with great respect in Singapore.

2. Compliments are generally accepted with a modest denial.

3. Public display of too much affection is not appreciated.

4. Appointments are necessary and should be made at least 2 weeks in advance, whenever possible.

The most formal way to schedule a meeting is to write to the person concerned, although most Singaporeans will schedule an appointment by telephone, fax, or e-mail. Do not try to schedule meetings during Chinese New Year (late January/early February), since many businesses close for the entire week.

Presentations should be accompanied by backup material, including charts and figures. Never disagree or criticize someone who is senior to you in rank as it will cause both of you to lose face and may destroy the business relationship. Punctuality is a virtue. You should be always punctual to the business meetings.

Always send a list of people who will be attending the negotiations and their title well in advance. Singaporeans give a respectful pause of up to 15 seconds before answering a question. Does not start speaking too quickly or you will miss the answer?

Be prepared with a mental list of concessions you would be willing to make that would not injure your own business Singaporeans are tough negotiators on price and deadlines and also Avoid losing your temper or you will lose face and damage your relationship. If you are signing a contract with ethnic Chinese, the signing date may be determined by an astrologer or a geomancer (feng shui man).

(http://www.discoverabroad.com/singapore/LivingAbroad/Lifeand Culture/Etiquette.htm)

Taxation

Single-Tier Tax System: Since January 1, 2003, Singapore has adopted a single-tier corporate income tax system, which means there is no double-taxation for stakeholders.

There are basically three types of major taxes in Singapore:

1. Corporate income tax 2. Individual tax 3. Property tax Corporate tax rate: Singapore's headline corporate tax rate is a flat 18% at present. However, effective 2010, corporate income tax rate will be further reduced from 18% to 17%. In order to make Singapore as an attractive investment destination, income tax rates in Singapore have been going down consistently as seen below.

1997-00 26%

2001 2002 2003-04 25.5% 24.5% 22%

2005-06 2007-09 2010 20% 18% 17%

General Tax Incentives are as follows, Effective Corporate Tax Rate: A typical Singapore resident company with S$400,000 annual taxable income will be taxed as below:

First Three Years of Income Tax Filings:

Taxable Income (S$) Tax Rate

0 - 100,000 100,001 - 300,000 300,000 - 400,000

0% 9% 18%

After First Three Years of Income Tax Filings

Taxable Income (S$) 0 - 300,000 300,000 - 400,000

Tax Rate 9% 18%

Individual income tax: Personal income tax rates in Singapore are one of the lowest in the world. Singapore follows a progressive tax rate starting at 0% and ending at 20% above S$320,000. There are no Capital gains or inheritance tax. (http://www.guidemesingapore.com/corporate-taxation/c323singapore-corporate-tax-incentives-exemptions.htm)

Property Tax: Property tax is levied on the registered owner of a property and is payable to the government. The tax rate for industrial and commercial properties is 10%. Owner-occupied residential properties are taxed at a concessionary rate of 4%.Property tax exemption for land under development may be granted in certain cases. (http://singapore.angloinfo.com/countries/singapore/proptax.asp)

Tax Incentives
There is 0% tax on S$100K taxable income. The corporate tax rate is 0% on the first S$100,000 taxable income for each of the first three tax filing years for a newly incorporated company that meets the following conditions: 1. The company should be incorporated in Singapore 2. The company should be tax resident in Singapore

3. The company should have no more than 20 shareholders of which at least one is an individual shareholder holding at least 10% of shares.

Tax Treaties
The Main benefit of tax treaties is to help businesses avoid double taxation of their income. Singapore has concluded tax treaties with more 50 countries and the list continues to grow. (http://www.guidemesingapore.com/corporate-taxation/c323singapore-corporate-tax-incentives-exemptions.htm)

Singapore Goods and Services Tax (GST)

Goods and Services Tax (GST) is similar to Valued Added Tax (VAT) in other countries and is a relatively new form of tax in Singapore. The current rate of GST is 7%.

GST registration is mandatory for business entities with an annual turnover of more than S$1 million. (http://www.guidemesingapore.com/business/c668-singaporegoods-and-services-tax-gst.htm)

Benefits of GST:

To the government

1. It is an efficient tax due to the comparatively lower cost of administration and collection. 2. It allows the Government to lower corporate and personal income taxes, which in turn encourages more foreign direct investment. This leads to overall economic growth.

To businesses and individuals 1. GST taxes apply only on consumption. Savings and investment are not taxed 2. Cost of doing business is reduced, thereby contributing to lower prices. Businesses do not suffer a tax cost due to the multi-stage credit mechanism since the real taxpayer is the end-user.

Drawbacks:

1. Being GST registered effectively increases your selling price by 7%. Your customers who are not GST registered would not be able to recover the GST you charge. So although your costs are reduced because you can recover GST, your customers might not be too pleased. 2. GST can be a burden to lower income groups, especially during times of high inflation when the 7% tax is paid on the increasing price of daily essentials.

What goods and services are subject to GST?

GST is charged on taxable supplies. A taxable supply, is a supply of goods or services made in Singapore, other than an exempt supply.

GST is not chargeable on exempt supplies, of which there are two categories - sale and lease of residential land; and financial services. (http://www.guidemesingapore.com/business/c668-singaporegoods-and-services-tax-gst.htm)

Setting up a business in Singapore

Singapore offers you 4 PS which are critical for any business success following are the 4 PS which are as follows 1) People 2) Price 3) Policy 4) Place

 People
Singapore is a multi-racial and multi-cultural cosmopolitan city Singapore is blessed with world class labour force in the world. Singapore has a population where more than one out of four persons is a foreigner

 Price
Singapore is the worlds most cost-competitive place for business Singapore has very low corporate and personal tax rates. Office rental in Singapore is relatively low Singapore offers skilled labour at competitive wages The costs of living in Singapore is also comparable low to other major cities in the world

 Place
Singapore has a world class transportation & logistics infrastructure It is well connected to Asia and almost every major city in the world. Singapore is well-connected to the world through internet

 Policy
Singapore is becoming an easy place to do business due to its pro-business policies. Singapore have good Consistency in Application of Local Laws Singapore have financially sound banking system

In Singapore, businesses mainly operate as companies, sole proprietorships and partnerships. Each of these is subject to different regulatory and tax regimes reflecting their organization and ownership:
y

Company. The most common form of incorporation in Singapore is a Private Limited Company. Also known as "Pte Ltd" company, a private limited company is the most flexible and advanced type of business form in Singapore. A Pte Ltd company protects its owners' personal assets from business liabilities of the company as well as enjoys special tax benefits in Singapore.

Sole Proprietorship. Meant for an individual owner with a small business that does not have any business risks. A sole proprietorship is an unincorporated type of business form and not a separate legal entity. It does not protect the owner's personal assets from business liabilities and therefore we normally do not recommend this type of entity to entrepreneurs.

Partnership. The most common form of a partnership is Limited Liability Partnership (LLP). A LLP may be suitable for accountants, lawyers, architects, etc. Foreign Company Office. Foreign companies interested in setting up an office in Singapore can register a branch office, subsidiary, or a representative office.

All business companies should with be register with acra

To setup foreign business in singapore

For a foreign entrepreneur who wishes to setup the foreign business in Singapore can open representative office (RO) which can explore the market for the investor before incorporating the company

A RO can conduct market research and liaison work for the parent company but CANNOT:
Engage in any trading or business activities, whether carried out directly or on behalf of its parent company Lease warehousing facilities Lease its office to other establishments for a fee Enter into business contracts Issue invoice/receipt Open/receive letters of credit Sign contract on behalf of its parent company Provide service for a fee.

Business Visas and Passes:

Singapore government offers easy visas procedures to foreign entrepreneurs who wish to do business in Singapore business visas and passes issued by the Singapore government are as follows

 Entre Pass
The Entre Pass is required for foreigners who wish to start a new business in Singapore. The Entre Pass allows registered entrepreneurs and their families to live in Singapore. You may leave and re-enter Singapore any time and it is renewable for as long as the business remains viable.

 Multiple Journey Visa

The Multiple Journey Visa is ideal for business executives who travel in and out of Singapore frequently either to attend to business matters and investments or to look for business opportunities in Singapore. The visa is valid for 1, 2 or 5 years.

 Passes For Foreign Employees

If your branch office, representative office or newly established business intends to hire employees from your home country, you will need to apply for Employment Passes and Work Permits.

Current Scenario of Singapore GDP:

In a further indication of the weakening Asian economy, Singapore GDP had declined by 12.5 percent in real terms in the fourth quarter of 2008 and revised downwards its growth estimates for 2009. Blaming the global economic crisis, Singapore's Ministry of Trade and Industry (MTI) warned that the island state's economy would grow no more than 1 percent and could shrink by up to 2 percent in 2009. In November it predicted growth of -1 percent to 2 percent. In 2008, Singapore's economy grew by an estimated 1.5 percent, falling short of forecasts of 2.5 percent and well down on 2007's 7.7 percent growth. The ministry said manufacturing would be weighed down by falling demand in developed economies and predicted a sharp slowdown in financial services caused by weak financial markets and credit growth. All sectors of Singapore's economy dependent on the movement of goods and services in the region would be affected it said.

INFLATION
Singapore inflation cools from a 26-year peak as food and transport costs eased, giving the central bank more room to loosen monetary policy as the economy slows.

Annual inflation stood at 6.4 percent in August, slightly higher than an expected 6.2 percent, but down from a 26-year high of 7.5 percent earlier in the year.

Given that inflation has probably peaked, some economists said the central bank might ease monetary policy later this year by letting the Singapore dollar rise at a slower pace. But they said the decision would be tricky because it is unclear how much the global economy would slow on the back of the financial crisis.

Recession time?: Singapore s central bank, the Monetary Authority of Singapore, sets policy by managing the Singapore dollar in a secret trading band against a basket of currencies, not by setting interest rates.

Singapore s Trade Minister Lim Hang Kiang was on Tuesday quoted as saying the economy may grow slower than the government s 4-5 percent forecast this year as the global credit crisis hurts demand for exports.

David Cohen, an economist at Action Economics, said the outlook was clouded by uncertainty because of the mayhem in the financial world.