Singapore's New Business Formation Numbers Rise
According to the latest quarterly Singapore Business Formation Statistics Report released by Janus Corporate Solutions, 16,027 new businesses were formed in Singapore during the second quarter of 2013. This marks a 13.22% increase from Q1 2013 and a 10.68% increase when compared to Q2 2012, coinciding with an overall improvement in Singapore's economy.
Based on the report, private limited companies continued to be the most common business entity type with 9,145 formations. Of these, more than 85% were incorporated as exempt private limited companies (EPC). EPCs, which are made up of 20 or fewer individual shareholders, have simplified compliance requirements and may be eligible for certain tax incentives. Of all the new businesses formed in this quarter, EPCs alone made up nearly half.
Janus Corporate Solutions' analysis shows that around two-thirds of the business formations had Singapore-based shareholders. This result may have been boosted by the government's initiatives to increase local entrepreneurship, which make funding and mentorship available to those with a viable business plan. The government has also introduced programs to promote entrepreneurial spirit amongst youths.
In line with Singapore's reputation as a trade and financial hub in the region, the largest number of business formations occurred in the wholesale trade and financial services sectors.
Singapore's strategic location, efficient infrastructure and simplified formalities for establishing a business make the country an attractive location for trading companies.
The strength of Singapore's financial sector is evident through the high rankings of 3 Singapore-based banks in Bloomberg's 2013 list of the world's strongest banks.
Furthermore, Pricewaterhouse Coopers predicts that Singapore will take the place of Switzerland as the top international finance centre for private client assets by 2015.
"The healthy rise in business formations in Singapore during the second quarter may be an indicator of the positive sentiments about the country's economic outlook. This trend is in-line with the year-on-year growth figure of 3.8% released by the Ministry of Trade and Industry recently," says Jacqueline Low, Chief Operating Officer of Janus Corporate Solutions.
Low observed that, in order to pull out of the global economic downturn, many other countries are now trying to emulate Singapore’s model by reducing corporate tax rates and rethinking the cap on foreign investments.
Vietnam and Thailand have lowered their corporate tax rates in a bid to attract more foreign entrepreneurs. Brazil has also been trying to rationalize its tax system lately, while India is reviewing its cap on foreign direct investments.
"For a long time Singapore has had a low tax regime and liberal investment policy that allows 100% foreign ownership of companies. What sets Singapore apart, however, are its advantages of a stable government, pro-business policies, strategic location and a robust infrastructure," adds Low.
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