By David Lee, Dezan Shira & Associates
The requirements for establishing a local business presence in Singapore are minimal and, according to the World Bank, setting up a business takes only two and a half days on average.
Holding companies in Singapore are typically registered as private limited companies (or “subsidiaries”), and this company structure is by far the preferred business arrangement for small and medium-sized foreign companies operating in the city-state. While navigating business establishment procedures in Singapore is relatively simple, investors should seek the advice of a professional services firm to consider the legal and tax implications that inevitably accompany the establishment of a local business presence.
Since the mid-1990s, Singapore has earned a reputation for being the preeminent location for establishing a holding company in Asia. As a banking and financial services hub, Singapore is the Association of Southeast Asian Nations’ (ASEAN) de facto commercial capital, and has carefully forged its legal and tax regimes to be among the most business- and investor-friendly in the world.
Offering investor’s access to one of the world’s largest combined free trade zones via the ASEAN, ASEAN-China, and ASEAN-India Free Trade Agreements, the city-state of Singapore is the ideal headquarters location for pursuing investment holdings throughout the region.
SINGAPORE – A month after Tembusu Terminals installed Asia’s first bitcoin ATM in Singapore, Coin Republic launched the first cash-dispensing bitcoin ATM in the city-state on Monday. The machine is located at Bartini Kitchen at 29 Boon Tat Street, a restaurant that accepts bitcoin as payment and anticipates an increase in foot traffic from hosting the ATM.
So far, eight bitcoin ATMs have been launched in Singapore, with Tembusu stating that it plans to roll out at least 100 machines by the end of the year. Unlike the other seven existing machines, the latest bitcoin ATM by Coin Republic operates in two directions — users can both purchase bitcoins with cash, and withdraw Singaporean dollars from their bitcoin wallets. The other seven machines in Singapore to date only allow for a one-way exchange of cash into bitcoins.
The newest issue of Asia Briefing Magazine, titled The Gateway to ASEAN: Singapore Holding Companies, is out now and will be temporarily available as a complimentary PDF download on the Asia Briefing Bookstore during the months of March and April.
In a global economy dominated by industrial powers, the city-state of Singapore has carved out its competitive niche as a destination for regional headquarters, branch offices and holding companies. Featuring one of the most stable and business-friendly legal and tax regimes in the world, Singapore has long been the preferred location for foreign investors seeking to establish a holding company to pursue investments through the ASEAN region, China and India.
In this issue of Asia Briefing Magazine, we highlight and explore Singapore’s position as a holding company location for outbound investment, most notably for companies seeking to enter ASEAN and other emerging markets in Asia. We explore the numerous FTAs, DTAs and tax incentive programs that make Singapore the preeminent destination for holding companies in Southeast Asia, in addition to the requirements and procedures foreign investors must follow to establish and incorporate a holding company.
By Edward Barbour-Lacey
HANOI – Created in 2009, Bitcoins are a peer-to-peer virtual form of currency able to be bought or sold on online exchanges. Additionally, the coins can be “mined” using high-performance computers and complex algorithms. While the value of a single Bitcoin can be very volatile (the price often swings wildly), the total value of Bitcoins in the world is estimated to be around US$7.5-10 billion.
Bitcoin was originally seen as a low-cost way of sending money electronically. It essentially removed the need to use third parties, such as banks, in order to move funds. A key differentiator from other currencies for Bitcoin is that it is not regulated by a central bank.
Nov. 21 – The new issue of Asia Briefing Magazine, titled The 2014 Asia Tax Comparator, is out now and will be temporarily available as a complimentary PDF download on the Asia Briefing Bookstore throughout the months of November and December.
The opportunities to sell to the Asian consumer have never been more pronounced than they are today, and those opportunities will continue to expand and develop over the next three decades. Key to understanding and accessing this massive, dynamic new consumer market is the ability to understand the underlying tax treatments. To that end, we are pleased to present our third annual “Asia Tax Comparator” as Asia Briefing Magazine’s final issue of 2013.
Nov. 20 – Taiwan has signed a free trade pact with Singapore this month following three years of economic dialogues aimed at boosting cooperation between the two governments. The Agreement between Singapore and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu on Economic Partnership (ASTEP) will reduce the tariff on goods traded between Taiwan and Singapore, facilitating greater bilateral economic relations.
As Taiwan’s fifth largest trade partner, the ASTEP agreement with Singapore represents the largest of its kind signed by Taiwan, which has faced challenges establishing such agreements under the shadow of Chinese diplomatic power.
“We are seriously lagging relative to our trade competitors, including South Korea, Singapore, and Japan. We must act fast to catch up with the regional trend,” said Taiwan’s President Ma Ying-Jeou, referring to economic integration efforts in the region such as the Regional Comprehensive Economic Partnership (which allies the ASEAN bloc with other Asian neighbors, such as South Korea, China and Japan).
Nov. 18 – The International Monetary Fund (IMF) has concluded its annual Article IV Consultations with Singapore, Thailand, and the Republic of Korea. Conducted annually, Article IV Consultations attempt to assess each country’s economic health and forestall future financial problems.
The results of the three Consultations were inevitably mixed.
In its report on Singapore, the IMF called upon the country to narrow its current account surplus and embraced government plans to increase public spending on infrastructure and social services. It additionally characterized the country’s financial sector as well-regulated and highly developed. Its report on South Korea was similarly supportive and stated that “many of the [economic] reforms needed…are already in train or planned.”
Its report on Thailand, however, was slightly more contentious and even provoked a rebuke from the Thai government. Finance Minister Kittiratt Na-Ranong lashed out at the IMF on Wednesday saying that “the IMF should try to understand Thailand’s situation better before giving out suggestions. We listened to different points of view but the IMF needs to profoundly understand the situation before giving theoretical comments.”
The IMF’s report on Thailand advised the country to raise its value-added tax from 7 to 10 percent and suggested the Bank of Thailand increase its policy rate to reduce the impact of inflation, among other things.
Summaries of the IMF’s key findings and recommendations can be found below.
Nov. 8 – Vietnam’s Deputy Prime Minister Vu Van Ninh has concluded his four day visit to Singapore to discuss economic and strategic co-operation between the two countries. During his visit, Deputy PM Ninh expressed his desire for Singapore to assist Vietnam with long-term economic planning, and converting Phu Quoc Island into a special economic zone.
Discussing a broad range of issues including finance, trade and investment, transportation, defense, and education, both parties sought to bolster cooperation after elevating their bilateral ties to a strategic partnership. Singapore recently became the third ASEAN country to establish a strategic partnership with Vietnam during PM Lee Hsien Loong’s visit to the country this September.
During a working session on November 6, Singaporean Minister at the Prime Minister’s Office Grace Fu vocalized Singapore’s willingness to share its experiences with Vietnam regarding attracting, planning, and managing foreign investments in addition to developing trade. Citing the success of Singapore’s Economic Development Agency, she highlighted Singapore’s unparalleled provision of information, assistance, and incentives to foreign investors and domestic companies investing overseas.
Nov. 6 – Singapore’s economy has shown modest growth in the third quarter of 2013. As Asian’s most trade-dependent nation, however, this does not necessarily signify recovery – in September, Singapore’s non-oil domestic exports slipped 7.3 percent compared to the same time last year.
Looking forward, however, positive growth in the G3 economies (Europe, Japan and the U.S.) should lead to more demand for Singaporean exports – in particular for electronics, where production has increased 20 percent year-on-year, up from 5.3 percent in August. China leads Asia in regaining momentum as well, suggesting an overall modest recovery for Singapore into 2014.
Singapore’s manufacturing production has expanded for the eighth consecutive month. Its Purchasing Mangers’ Index (PMI) rose to 51.2 last month, up from 50.5 in September. A PMI index above 50 represents industry growth while a reading below 50 represents a contraction.