The Association of South East Asian Nations (ASEAN) makes up the bulk of the Southeast Asian market and is among the rapidly growing economic blocs to date. As the third largest economy in the Asian region, it comprises an aggregate consumer market reaching 628 million people and is driven by a rapidly growing middle class.
Moreover, the formation of the AEC or ASEAN Economic Community in 2015, integrating the economies of its ten member states into one production base and market, only furthers ASEAN's capacity to become a global economic powerhouse. As such, it is no surprise that ASEAN is seen as becoming a more lucrative market for SMEs and enterprises to tap into.
Singapore, one of ASEAN’s founding members, serves as a strategic gateway into this region as it has long been recognized for its business-friendly environment and high economic stability. Read on to learn more about what makes Singapore the ideal launching pad for businesses looking to set up or expand into the Southeast Asian market.
1. Large Connectivity
Singapore is the 2nd most globally connected country in the world, just behind The Netherlands. In addition, Singapore enjoys a strategic location at the tip of the Malay peninsula, where the world's main shipping and trading routes converge, and which allows for travelling to nearby ASEAN-member countries in only one to two-hour flight away.
Regarding ports, Singapore's world-renowned Changi Airport conducts more than 7,000 flights per week to over 100 countries worldwide and offers a dedicated 24-hour Free Trade Zone. Meanwhile, the Port of Singapore seaport is home to over 140 international shipping groups in the liquified natural gas, offshore, tanker, bulk, and container sectors.
2. Openness to Trade and Business
Singapore's commitment to free trade and open markets is reflected in its membership in numerous trade agreements and organizations, including the World Trade Organization, ASEAN, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). These agreements have opened up new markets for Singaporean businesses and facilitated the flow of goods and services across borders. Additionally, Singapore's low tax rates, stable political environment, and strong legal system have made it an attractive destination for foreign investment.
3. Leader in Innovation
Singapore's seeming disadvantage of limited land space and natural resources has prompted it to leverage automation and innovative solutions to make more from less. This has earned the nation-state its reputation as a regional hub for technological development and innovation.
Singapore's innovation-based focus has made it the hub of choice for global corporations like Google, which established a regional office in the nation-state back in 2007.
4. Attractive Tax System
The city-state's corporate tax rate is currently set at 17%, which is lower than many other developed countries. Singapore also offers a wide range of tax incentives, such as GST exemption from investment precious metals (IPMs). Overall, the country's tax system is transparent and efficient, with a clear and straightforward tax filing process and a low risk of corruption.
5. High Human Capital
Singapore is home to many skilled professionals ready to meet the world-class knowledge needs of various industries. It is also recognized as the Best Country for Developing Human Capital thanks to its renowned educational institutions and a literacy rate of 97%.
And while Singapore's workforce is small compared to their regional neighbors, they are rated among the most highly skilled in Asia, according to The World Economic Forum's annual Human Capital report. In addition, through the Smart Nation initiative, businesses can hire local employees with future-ready capabilities and always up-to-date skillsets to enhance their company’s productivity.
Conclusion
With its innovation-centric economy, openness to trade, and highly-skilled domestic workforce, Singapore is undoubtedly the best business hub in Southeast Asia and the optimal gateway for those interested in breaching the ASEAN market. Furthermore, its stable and secure economy makes for the right environment for safely storing alternative hard assets for the long term.
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