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4 things you need to know about doing business in Singapore

business-articles4 things you need to know about doing business in Singapore
While Singapore may only be half the size of greater London, the island city-state punches above its weight on the international stage and is the perfect gateway for any businesses seeking to tap into the Asian market.

Ranked as the second easiest place in the world to do business with in the World Bank’s 2019 ease of doing business index, Singapore’s strong economy, supported by one of the world’s most liberal trading systems, has seen it become the only Asian country to have been awarded an AAA credit rating by all of the three major credit agencies.

On top of this Singapore’s location on some of the world’s busiest shipping lanes and relative proximity to over half of the world’s population has helped transform the city-state into one of Asia’s premier trading hubs.

It’s understandable then that foreign businesses seeking to break into the region frequently begin by expanding their operations into Singapore.

However, doing business with a foreign market like Singapore can take some adjustments if you go in unprepared, so what do you need to know?

Singaporean business values

Singapore’s business environment is generally very formal, with an emphasis on co-operation in the workplace, which can lead to workers putting in long hours in order to achieve shared goals.

In addition, like many Asian societies, the idea of losing or saving ‘face’ is prominent in business dealings. Firms seeking to create local partnerships should strive to understand the needs of their Singaporean counterparts and work towards creating a balanced relationship that benefits both parties.

Expect to spend plenty of time attending lunches and dinners and exchange piles of business cards (making sure to treat them respectfully) as you seek to build business contacts and cement relationships.

Fortunately, closing deals tends to be a fairly straightforward affair and with most business in Singapore being conducted in English there are less barriers to surmount than in other foreign nations.

Limited opportunities in domestic market

Unsurprisingly given its size and with a population of less than six million, Singapore’s domestic market is quite small, providing businesses solely focused on the city state with only limited opportunities for growth.

This is not to say that the domestic market should be ignored entirely, but it does mean that for long-term sustainable growth, businesses should be prepared look outside their immediate surroundings.

Fortunately Singapore is ideally located and provides an ideal business environment for any firms seeking to expand into the region, offering ample opportunities for businesses to make incursions into China, India or South East Asia.

High cost of doing business

Firms seeking to expand into Singapore will also have to contend with a relatively high cost of doing businesses, with operating expenses likely to be notably higher than in neighbouring Indonesia and Malaysia.

These costs are exacerbated a rapidly aging population, which is prompting a labour shortage and inflating wages as businesses compete to attract and retain talent.

However, while costs may be high in exchange your business will have access to well-developed physical infrastructure, including state of the art telecommunications and world class port facilities.

On top of this, some of the costs can be counteracted thanks to the financial assistance available for small and medium-sized businesses and the relative ease of hiring labour from overseas.

Vulnerability to global markets

While Singapore’s open economy offers a great many advantages to businesses who wish to expand into the country, it also comes with drawbacks – namely its vulnerability to global economic movements.

This sees Singapore’s economic fortunes closely tied to its major trading partners, with a downturn in either the US or China likely to be magnified and (potentially) adversely impact the local economy.

Businesses should therefore be aware of how the cyclical nature of global trade can be extra influential in the city state and consider taking appropriate steps to help shield their operations. 

With its solid infrastructure, pro-business environment and close proximity to the rest of Asia, Singapore offers the ideal location for businesses to base their operations for expanding into the region.

So long as you’re aware of some of the potential hurdles of doing business in the country and are ready to adapt your business plans according, you will find that Singapore acts as the perfect gateway into Asia.
Currencies Direct

Currencies Direct

Currencies Direct is one of Europe's leading non-bank providers of currency exchange and international payment services. Since we were formed in 1996, we've maintained our focus on providing innovative foreign exchange and international currency transfer services to corporations of all sizes, online sellers and private individuals. We have also expanded our services to provide dynamic and pioneering "business to business" solutions to help companies, tier 2/3 banks and other non-bank financial institutions to process their international payments. Our headquarters are in the City of London (United Kingdom) and we have operations in continental Europe, Africa, Asia, and the United States. Currencies Direct is jointly owned by private equity firms Palamon Capital Partners and Corsair Capital.

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