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Doing Business in Singapore VS China


Fastest-growing Economy

With more than 1.35 billion residents, China is the world’s most populous nation, and also has the fastest-growing economy and the world’s second largest, having overtaken Japan in 2011. It’s economy has enjoyed 30 years of double-digit growth and its success was based on a command economy that drove growth through government spending. Economists believe the Chinese economy will continue to grow by between 7 per cent and 9 per cent a year for the medium term. Unlike Western nations, the Chinese national purse is in the black, with large foreign exchange reserves. China has also been a key buyer of gold, its investment and jewellery demand reaching 255.2 tonnes last year, up by 10pc on the previous year’s levels.


Risks Issues In China

Ten years ago China’s main contribution to the global economy was manufacturing, making it reliant on exports for growth. But thanks to the migration of rural inhabitants to towns and cities, increased consumerism and a growing middle class, the economy is increasingly driven by the spending of its own citizens. To move forward, China needs more innovative companies. These only come from entrepreneurship. State-owned companies make up 25 percent of total industrial output, down from 75 percent in 1970. There are other dangers. Many of the largest companies are state-owned enterprises, meaning that even though it is possible for foreign investors to own a stake, shareholders may find themselves relegated to second priority behind the government. Corporate governance is also a problem in China – company accounts are often incomplete or incorrect. There are also numerous political risks that can influence most of businesses there. Although the Chinese economy was opened up for the international investors, there are some cultural issues and human rights issues that turn away the international business from dealing with this country’s authorities.


Singapore Provides a Sound Investment Environment

In contrast, Singapore provides a sound investment environment with national reserves abundant enough to withstand 10 years of recession. The country also has one of the lowest corruption rates in the world and to continue attracting businesses ready to invest in Singapore, the government keeps its tax rates and tax laws competitive and takes a strategic, holistic approach towards stewardship of key pillars of the economy. The Singapore government has always adopted a pro-business policy, regardless of world economic situations or crisis. It has taken tough measures including reducing corporate tax rates, lowering employers’ Central Provident Fund (CPF) contribution rates and capping office rental rates. Singapore has been rated the world’s easiest place to do business (Doing Business 2015 Report, World Bank).


First in Asia For Having The Best IP Protection

Other than foreign investment friendliness, protection of Intellectual Property (IP) rights helps boost investor confidence. According to the Global Competitiveness Report (GCR), Singapore stands second in the world and first in Asia for having the best IP protection. The Political & Economic Risk Consultancy Report 2011 and the International Property Rights Index 2012 have formerly ranked Singapore top in Asia for IP protection. Additionally, Singapore has economic and tax treaties with over 70 countries, giving it a substantial advantage over other traditional choices. This, coupled with a low income tax and zero capital gain tax regime, has made the country attractive to fund managers by design. Singapore has also aligned and cooperates openly with global tax initiatives, while adapting to FATCA and AIFMD requirements. Fund managers can sleep soundly knowing that they aren’t worse off here in comparison with other tax jurisdictions.