What is a Multinational Corporation?
A Multinational Corporation/ company (MNC) is a large organisation that has operations in numbers of countries. They are large companies that are managed by professionals who do not own the company.
MNCs are very important as they have a lot of influence & can provide many advantages. The advantages that they provide includes the increasing numbers in a nation’s employment, their education.
By incorporating a company branch in a country, MNCs also increase the investment in the country which in return increase the development of industry in the country and the capital for the host country.
With its ever-growing economy, and being the financial hub for the Asia Pacific region, Singapore has positioned itself in a pivotal role as a business epicentre within the heart of Asia. That is one of the major reasons why MNCs’ continue to favor Singapore as a preferred business destination to incorporation a Singapore company. Most MNCs stand to benefit from Singapore’s open business and business friendly policies.
MNC companies from all over the world continue to uphold Singapore as an ideal location to establish and expand their businesses, and this overview continues to grow concurrently with Singapore’s internal and external advancement and progression. To encourage MNCs to come to Singapore and set up a base of operations Singapore’s Economic Development Board offers these companies International Headquarters Incentives (IHQ) and Regional Headquarters Incentives (RHQ).
Companies who successfully get conferred with the RHQ status will reap the benefits of a concessionary tax rate of 15% for up to 5-years for all qualifying income which is derived from activities and business operations conducted in Singapore. Whereas companies who obtain the IHQ status on the other hand, enjoy tax rates of 0 to 10%.
On top of that, Singapore has a tax system which is progressive. Designed with entrepreneurship growth in mind, its attractive and low corporate and personal tax rates are a big reason why MNCs continue to choose Singapore over any other country. Singapore also has an extensive network of free trade agreements and double taxation agreements, both of which help to facilitate and safeguard the interests of Singapore’s investors.
As Singapore continues to cement itself as one of the best places in Asia to incorporate a company, thanks to its strategic location, stable economy, tax relief, and equally stable political environment, and it’s top notch infrastructures, Paul Hype Page & Co can predict there will only be more coming in the near future.
MNCs have a big impact on economic, political, environmental, and cultural force that can’t be avoided in present globalization. To put it in perspective, MNCs have an impact on the lives of billions of people every day, often in complex and indiscernible ways.
These companies can provide developing countries with many benefits. However, these institutions may also bring with them the codes of ethical conduct that serve to exploit the needs of these nations, rather than providing them with the critical support for economic growth and social development.
When an MNC invests in any country, their scale of the investment is likely to be in a significant figure. In this case, governments will often offer incentives to firms in the form of grants, subsidies and tax breaks to attract investment to come in big. This foreign direct investment (FDI) will have advantages and disadvantages for the host country that will be explained below.
MNCs employ huge number of people around the world and so are crucial to the global economy. These companies play a larger than life figure that their political influence goes as far reach as deciding where they locate.
Advantage of Multinational Companies
- Creating job opportunities. Being a large corporation, they size of operation enables them to create more job for the lower income nation where the are situated in.
- R&D in areas of interest. Oil exploration is a risky and costly affair and it could only be undertaken by firms with huge profit and deep pockets
- Ensure standards kept. The success of a MNC is often due to consumers’ presences to buy goods and services where they can relate to. For instance, when you visit a foreign country, you know that having a meal at the local McDonald outlet will give something you are familiar with. This also is a practice done by many MNC around the world, where they keep a certain standard ay bay.
- Foreign investments. MNCs engage in foreign direct investment. This helps create capital flows to poorer, or also even developing nations.
- Business for SMEs. MNCs are usually new to a country, and by coming to the country, they tend to seek help from the locals. Since there are many SME companies, many MNCs rely on the expertise given by the SME. This creates business growth for the SME and economy growth for the country.
Disadvantage of Multinational Companies
- Like most corporations, MNCs are often interested in profit at the expense of the consumer regardless who they are.
- MNCs avoid tax through funnelling profit through the countries with lowest corporation tax rates.
- Cash reserves – All if not most MNCs has cash reserves which is in overseas accounts. This just bring deadweights welfare loss as It is not being used for investment in the right area.
- Their market dominance makes it extremely difficult for any local small firms to succeed, or even close some of them.
- MNCs often contribute to pollution in the pursuit of profit.
- Outsourcing at cheaper labour-cost economies has caused loss of jobs in the a more developed economy. This can be either good or bad, but it depends on how you look at a cup half full or half empty.
|3M||Ernst & Young||Kentucky Fried Chicken||SATS|
|AXA||Far East Organization||MapleTree Group||Seagate|
|Bank of America Merrill Lynch||Fraser & Neave||Marina Bay Sands||Sembcorp|
|BNP Paribas||General Electric||MayBank||Shell|
|Citibank||Hewlett-Packard||Micron Semiconductor Asia||Singtel|
|Continental Automotive||HSBC||Novartis||Standard Chartered Bank|
|Dairy Farm International||IBM||OCBC Bank||Starhub|
|DBS||InterContinental Hotels Group||Panasonic Asia Pacific||UOB|
|Deloitte||Johnson & Johnson||PricewaterhouseCoopers|
|Deutsche Bank||JP MorganChase||Procter & Gamble|
Categories: Business Opportunities in Singapore