What’s in this article
Businesses and new entrepreneurs were facing many uncertainties when Covid-19 hit. Despite the economic downturn globally, Singapore managed to hit a record high foreign direct investment (FDI) since 2008 of about S$17.2 billion in fixed asset investments.
This goes to show the strength and resilience of Singapore’s economy and foreign investors’ confidence in the city-state, with companies choosing to incorporate in Singapore.
Why Foreigners Should Invest in Singapore
There are many reasons that build up the foreigners’ confidence in Singapore, which include:
- Gateway to Asia
Singapore’s strategic location boasts high level of connectivity in Asia, including easier access to the largest consumer market in the world – China. As the business and financial hub in Southeast Asia, Singapore is the perfect place to kickstart your business before expanding into the rest of Asia.
- Simplicity of company incorporation
If you have prepared all the relevant documents for your company incorporation, the registration process can be done within the day – check out our incorporation checklist to get you started!
Low corporate tax rate
Another key reason why you should opt to invest in Singapore is because of its low corporate tax rate of just 17%. This rate is actually one of the lowest in the world!
Tax incentives
What’s more? Besides its low corporate tax rate, there are plenty of tax incentives for foreign and local business in Singapore, such as tax exemption of your first S$100,000 for the first three years, avoidance of double taxation, and more. You can find the list of incentives in our article here.
Resilient environment
The pandemic has brought a need to invest in economies that are resilient. The Singapore government has done a great job in maintaining and controlling the outbreak and is on track to recover from the downturn. Confidence from foreign investors is restored, and this is reflected in the record high FDI in Singapore since 2008.
- Trade agreements
If you didn’t know by now, Singapore is very pro-business. With many trade agreements in place to facilitate business activities, it makes it very promising for foreign businesses to expand their operations in Singapore or set up a company here.
Attractive personal income tax rates
Beyond just setting a company in Singapore, many business owners will choose to live and work here because of its low personal income tax rates at a maximum of 22%.
High level of security and safety
Known as one of the most politically stable countries in the world, it boosts a secure and comfortable environment for locals and foreign investors. The low crime rate is also a key factor in choosing to live and work in Singapore
Most Stable Investments in Singapore
If you are looking to invest in Singapore and be assured of financial returns, you can consider these six investment options to minimise your exposure to risks.
Singapore Government Treasury Bills
For investors who are looking at short-term investments of up to 1 year, the Singapore Government Treasury Bills offer such an investment with very low risks as it is one of the few AAA-rated economies in the world. The payments are on its 6-month or 1-year treasury bills.
- Singapore Government Bonds
Bonds between 2-30 years are also made available by the Singapore Government. In general, these bonds often garner a higher return than a 1-year treasury bill. However, the risk is higher as it has a longer maturity period.
- Singapore Savings Bonds
Singapore Savings Bonds are among the most common investments in which foreign investors invest. If investors do not redeem the bond, the rates will increase until the 10th year, recognising the fact that investors are holding for a longer term.
- CPF Top-Ups
The CPF Top-Ups provide opportunities for investors to earn interest on their funds. These funds are supplied by the government and offer return rates at a minimum of 4% per annum. There is also usually an additional 1% interest rate to be earned by the investor.
- Fixed Deposits
Fixed deposits serve as a way for investors to earn returns on their money after this money has been deposited in a savings account. Most banks in Singapore offer promotional rates that favor foreign investors.
- Unit Trusts
The advantage of investing in a unit trust can be seen in the reduced investment risk as well as the ability to have professionals managing all funds and personal finances. Investment in a unit trust may also help foreign investors to maximise their profits which they have made in Singapore.
What’s Next
Whether you’re investing through the various investment options or planning to start your foreign company in Singapore, we are here to help!
FAQs
The Singapore government wishes to invite foreign investments into Singapore, thus offering a competitive tax rate to attract foreigners to set up companies in Singapore.
The basic requirements are as follows:
- At least one local resident director who is a Singapore citizen, a Singapore permanent resident, or an EntrePass/Employment Pass/ Dependent’s Pass’s holder with LOC.
- At least one Shareholder
- S$1 paid-up capital
- A physical local address
- A company secretary
You will also need a visa to run your business in Singapore. You can find out more about incorporating a company as a foreigner here.
The corporate tax rate in Singapore is 17%.
A unit trust is a type of investment which is categorised as a collective investment. Unit trusts utilise just one fund which contains all involved investors’ money; this fund is overseen by one or more fund managers.
Singapore Government Securities bonds are valid from anywhere between two and 30 years. The reason for this large variance in validity periods stems from the fact that such bonds have multiple different purposes. Some investors may use these bonds to diversify their investment portfolio; others, for the purposes of holding a long-term investment; and still others, as a means of receiving a steady income.
According to the latest statistics, Singapore received approximately US$77.65 billion in FDI in 2018. This figure reflects an increase from the previous year, which saw the country receive approximately US$75.72 billion in FDI.
