Post-Brexit, there has been some comparison between Singapore and the UK. Both are relatively small economies with large neighbours who are not oblivious to their geographical and, consequently, economic influence.
The fact that Singapore’s trailblazing economy has blossomed since its independence to be one of the more developed economies in Southeast Asia offers a very optimistic outlook for business owners in the UK considering their strategy post-Brexit.
Other than more obvious similarities, here are five reasons why post-Brexit UK companies should consider expanding their business in Singapore.
Soft landing into Asia
The World Economic Forum Global Competitiveness Report 2017-2018 ranked Singapore third overall ahead of the UK which ranked eighth in terms of their economies’ ability to sustain inclusive growth.
Singapore ranks first worldwide for public sector performance, transport infrastructure and higher education and training. This means that business owners can set up a company fairly easily with minimal red tape and strong labour market.
Even in financial market development and sophistication, Singapore – with its large and liquid stock market – takes the third spot globally while the UK ranks 13th.
These favourable factors coupled with a strong GDP per capita and lowest sovereign credit risk in Southeast Asia makes Singapore a prime staging post for companies looking to expand into the region.
According to Carol Wheatcroft, UK-based correspondent for a Singapore-based publishing firm: “Singapore has many factors that could appeal to UK-based businesses. The legal system is strong and based on common law. It’s easy to set up a business in Singapore (as it) is well-administered.”
Access a fast-growing economic zone
Wheatcroft also shared that UK businesses are now more likely to consider opportunities outside of the EU. “Brexit is causing the UK government to more overtly support exporting outside the EU in a way that it has not done for a long time. I suspect that Brexit itself, whatever the outcome, could make UK businesses more likely to consider non-EU markets as offering opportunity,” she said.
Singapore sits as a gateway to Southeast Asia, the world’s third-largest economy with 600 million people across 10 countries. Due to the ease of setting up a business in Singapore, companies usually set up operations in the city state as their base for the region. More than half of the 37,400 international companies with headquarters in Singapore, run their Asia Pacific operations from the island.
Singapore is economically intertwined with the rest of the region, not just because of its location but also its investment into neighbouring economies. It is the largest investor in Asia, with the region accounting for 40% of its global estate exposure in 2017
These strong economic links help ease trade with the region and will remain so as Singapore has long been a trade surplus economy.
Forefront of hot growth sectors
Access to quality talent, government schemes and support means that Singapore is at the forefront of hot economic growth sectors such as e-commerce and financial technology or fintech.
Recognising the inevitable penetration of fintech to financial services
, the country’s central bank, Monetary Authority of Singapore has set up a regulatory sandbox (to link to Hawksford’s fintech article) that allows fintech startups to experiment with innovative financial products or services with appropriate safeguards to contain consequences of failure.
It is also investing up to S$225 million by end-2020 to develop the fintech sector. Some of the investment dollars will be pumped into a 100,000 square feet fintech innovation hub for experiment and collaboration in this fast-growing sector.
The e-commerce market is also relatively underpenetrated in the region, accounting for less than 3% of total retail sales
. In a digitally-savvy region with 250 million smartphone users and 142 million broadband subscriptions, the potential for e-commerce is vast and Singapore can serve as a launchpad into the region.
Commercialise your ideas with strong government support
The government has been actively encouraging businesses in Singapore to invest in research and development (R&D) to solve real-life issues.
Under the Research, Innovation and Enterprise 2020 Plan, the government will invest S$19 billion from 2016 to 2020 to encourage research and partnership in areas such as advanced manufacturing and engineering, health and biomedical sciences, urban solutions and digital economy.
The Research Innovation Enterprise Council
is made up not only of government representatives including Prime Minister Lee Hsien Loong and various ministers but also business leaders from major organisations such as Volkswagen Foundation, General Electric and Huawei Technologies.
This strong private-public support for R&D has attracted research and innovation talent into Singapore and launched many cross-disciplinary businesses from precision agriculture using nanosensors and optical technologies
to 3D printing technology
for human bones.
Protect your ideas with strong intellectual property regulation
Running your business in Singapore can also safeguard the intellectual property (IP), brands and patents for innovative businesses. Singapore has a comprehensive and robust IP regulatory framework that is considered the best in Asia.
Singapore’s Intellectual Property Office (IPOS), a statutory body under the Ministry of Law, is ranked second only to the European Union in a study on the world’s most innovative IP office
Ipos is also one of only two IP offices in the world to support IP-based lending which unlocks capital opportunities for business owners with innovative ideas. While the practice of raising capital around intellectual property is still uncommon, innovation financing is gaining ground as knowledge-based capital drives economic growth.
Cost of doing business
However, Bruce Weatherill, chairman for UK-headquartered JDX consulting and a familiar face in Singapore’s financial district believes that only UK companies who know the market well should step foot on the island. “It is a big step due to the time zone difference and is not as easy to visit as Continental Europe,” he said.
“Currency is an issue as is the cost of doing business. It is not a natural market to service UK clients and is only useful if (you) want to expand into Southeast Asia.”
Singapore’s success story is unique to the city state. When it gained independence in 1965, Singapore’s GDP per capita
in 1965 was just a third of the UK’s at $516.29 in current US dollar terms compared to the latter’s $1,850.96. In 2017, Singapore’s GDP per capita was $57,722 compared to the UK’s $39,739.29.
UK companies looking to set up a business in Singapore are well-advised to seek local insight into the market before jumping in.