Reasons Singapore is Better than Vietnam for Company Formation
Singapore is known as the lively and successful business center of Southeast Asia, but other nearby countries are quickly growing their business settings to compete with the world’s most important economic hubs. Vietnam is one of these countries that is becoming more known in business.
In this article, we will look at how doing business in Vietnam is different from doing business in Singapore. Let’s look at why entrepreneurs choose one country over the other for setting up their new businesses. We’ll also look at how easy it is to incorporate, what paperwork is needed, and how to do business in each country.
Business Environment
Singapore is a top choice for international businesses looking to establish a presence, given its welcoming stance towards the global market. ACRA offers various perks to overseas investors keen on tapping into the Asian sector, including tax advantages, straightforward company registration, and governmental subsidies, among others.
On the other hand, Vietnam presents a compelling case for business incorporation in Southeast Asia. The nation extends several benefits to entrepreneurs, such as a favorable attitude towards global corporations, a prepared labor force, and tailored regulations for overseas enterprises.
Business Language
In Singapore, the primary language for business is English. However, the presence of other languages like Chinese, Malay, and Tamil also makes it an attractive destination for international entrepreneurs. On the other hand, while there is some use of English in Vietnam, the majority of the workforce conducts business in Vietnamese, potentially causing some reservations for potential investors.
Company Formation Process
Singapore’s company registration process is entirely digital, with the majority of documents and steps accessible on BizFile+ for aspiring business owners. Typically, companies in Singapore are set up within 1 to 3 working days. Conversely, Vietnam has a more extended and multi-stage incorporation procedure, often taking as long as four months to establish a business.
Immigration Requirements
In Singapore, the Ministry of Manpower (MoM) issues the Employment Pass, EntrePass, and Overseas Networks & Expertise Pass to international entrepreneurs and experts coming to the nation. Meanwhile, in Vietnam, foreigners wishing to stay longer than three months must secure a work permit and visa, as mandated by the Ministry of Labour, Invalids and Social Affairs (MoLISA).
Administration
Singapore’s administrative system is notably efficient, typically completing most registrations and applications within a week. Although there are occasional hiccups and setbacks, Singapore stands out as a leader in Asia, outperforming 12 other regional economies.
On the other hand, Vietnam is on a journey towards global economic integration. Foreign investors might encounter challenges transitioning from conventional administrative practices to modern ones, especially during business registrations and operations. Broadly, Vietnam’s administrative system lacks clarity, and there’s often a mix-up of roles among various government agencies and departments.
Economic Overview
Singapore stands out as a top destination for businesses, clinching the 2nd spot in the World Bank’s Ease of Doing Business rankings. The nation’s Accounting and Corporate Regulatory Authority (ACRA) streamlines the process for business enthusiasts to establish and run their ventures, offering enticing tax incentives and grants.
Adjacent to Singapore is Vietnam, a member of ASEAN. The nation embarked on economic transformations in 1986, which led to a staggering increase in its GDP, multiplying it by over 3.6 times in just a generation’s span. Despite being categorized as a middle-income nation, Vietnam showcases robustness during economic downturns and harbors a strong ambition to uphold its economic stature.
WorkForce
Every year, Singapore’s dynamic setting draws in numerous international business enthusiasts. The country sees an influx of approximately 4.72 migrants for every thousand residents, predominantly those below the age of 35, seeking business ventures. This makes Singapore a prime location for recruiting youthful talent, especially considering that a significant two-thirds of its inhabitants are engaged in professional roles.
On the other hand, Vietnam boasts a youthful demographic, with over half of its citizens being under the age of 35. A significant 57% of its people belong to the working class. Given its vast population in comparison to other nations, Vietnam emerges as a preferred destination to onboard vibrant young professionals. Notably, a whopping 80% of its active workforce is involved in manual labor roles.
Taxation
In Asia, Singapore stands out with its highly competitive corporate tax rate of 17%, complemented by various tax incentives and rebates for businesses. On the other hand, Vietnam has established its corporate tax at 20%, but companies in the oil and gas sector face rates between 32% and 50%.
Location-Wise
Geographically, both Singapore and Vietnam hold strategic positions in Asia and Southeast Asia respectively. Vietnam is frequently viewed as a gateway to China, allowing international businesspeople to operate there without the constraints of Chinese rules. Conversely, Singapore serves as a prime hub for penetrating the Southeast Asian market due to its central location.
Why choose Singapore for business formation?
Incorporating a business in Singapore offers a myriad of advantages for entrepreneurs and investors alike. Firstly, Singapore boasts a robust and transparent legal framework, ensuring that businesses operate in a secure and trustworthy environment. The nation’s strategic geographical location serves as a gateway to the vast Asian market, making it an ideal hub for trade and commerce. Additionally, Singapore’s competitive tax regime, coupled with its well-established financial infrastructure, attracts global investors and facilitates ease of doing business. Furthermore, the government’s proactive approach to fostering innovation and offering various incentives makes it a conducive ecosystem for startups and established enterprises. In essence, Singapore’s reputation as a global business hub is underpinned by its commitment to stability, growth, and a business-friendly environment.
Conclusion
Singapore stands out as a premier destination for company formation, primarily due to its powerful economic infrastructure, transparent regulatory environment, and strategic geographical location. The city-state’s pro-business policies, coupled with a highly skilled workforce and a reputation for stability, make it an attractive hub for global investors and entrepreneurs. While Vietnam has its own set of advantages, the ease of doing business in Singapore, combined with its advanced financial systems and international connectivity, positions it a notch above when it comes to establishing a company with a global vision.
FAQ’s
Singapore offers one of the most competitive tax regimes in the world. With a headline corporate tax rate capped at 17%, numerous tax incentives, and no capital gains tax, it often proves more favorable for businesses compared to Vietnam’s varying tax rates and structures.
Singapore is renowned for its stringent intellectual property (IP) laws and efficient IP rights enforcement. This ensures that businesses can safeguard their innovations and brands with confidence, a feature that might be more challenging in Vietnam.
While both countries have a skilled workforce, Singapore’s emphasis on education and continuous learning has cultivated a pool of world-class professionals across various sectors. Moreover, its cosmopolitan nature attracts global talent, providing a diverse and skilled labor market.
Absolutely! Singapore’s state-of-the-art infrastructure, including its world-class airport and port, facilitates seamless business operations and global connectivity. While Vietnam is rapidly developing its infrastructure, Singapore’s established systems often give it an edge.
Singapore is often lauded for its political stability, transparent governance, and low corruption levels. This stable environment is conducive to long-term business planning and investments, whereas Vietnam, though improving, still has some way to go in matching Singapore’s reputation in these areas.
