Doing Business in Singapore VS Japan
Third Largest Economy In The World
Japan is the third largest economy in the world and this is aided by the nation’s economic sophistication and pro-business policies. The nation’s largest industries include automobiles, automotive parts manufacturing, electronic equipment, machine tools, chemicals, textiles, and processed foods. Japan’s top export destinations are the United States, China, South Korea, Thailand, and Hong Kong, giving the nation strong economic ties to its surrounding Asia-Pacific neighbors. Of the Fortune Global 500 companies, 51 are headquartered in Japan. The nation is also considered among the most politically stable in the world and is also globally noted for it’s internal stability. Apart from that, Japan is one of the safest destinations for travel while there is also strong emphasis by the government on research and development efforts. From as far back as the year 2000, Japan has maintained it’s stand as among the top three countries which are devoted to R&D. It was reported that for every 1,000 employees in Japan, 10 are research professionals engaged in the “conception or creation of new knowledge, products, processes, methods, and systems.”
Highest Educated Labour & Incentives Packages
Japan also has one of the highest educated labour forces in the world with nearly 59% of citizens between the age of 25 and 34 years of age having completed their tertiary education. Japan’s education levels are higher than any European nation and the second-highest in the world after South Korea.The Global Competitiveness Report for 2016-2017 ranks Japan ninth for quality of Mathematics and Science education and third for overall availability of scientists and engineers. Municipal governments in Japan offer various incentives packages to foreign companies who hire skilled domestic labor as part of expanding their business in Japan. The only downside of setting up business in Japan is the procedure can be rather draining, with several layers of bureaucracy to be navigated before a company can get off its feet. Organisations are required to communicate with the Ward office, the Legal Affairs Bureau of the Ministry of Justice, the District Tax Office, the local tax office, the Labor Standards Inspection Office, the Japan Pension Service and the Public Employment Security Office before other procedures can be considered. The Japanese tax system is a victim of the country’s love of bureaucracy. The World Bank and IFC rank Japan 123rd in the world for their corporate tax system, which can soak up 330 hours a year in management time, with 14 payments required annually. Corporate tax rates stand at 30%, with a line of other levies also requiring consideration.
Singapore As A Major Asian Financial Hub
Singapore, meanwhile, the Southeast Asian island city-state is one of Asia’s, if not the world’s, most modern cities, with a population of 5.5 million. It is also a major Asian financial hub, with a stock market worth $473 billion. Singapore is well known in the investment community for its trade and financial sectors. By 2025, CLSA forecasts that the country will overtake Switzerland and handle nearly a third of the world’s agri-commodity trade. The country’s robust financial markets have also become a key source of funding for a total market of 4 billion people within a seven-hour flight radius.The country’s success in global trade is largely due to its location and the fact that it has very little corruption, a skilled workforce, low tax rates, and advanced infrastructure.These attributes have attracted about 7,000 multinational corporations from the U.S., E.U. and Japan as well as an additional 3,000 companies from India and China. In order to continually grow Singapore’s asset management industry, the government has extended and refined tax incentive schemes for qualifying funds. 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.
Singapore boasts world-class infrastructure with top-notch transportation facilities. It is the leading network-ready environment in Asia, based on a 2014 report by the World Economic Forum. Applying the spoke-hub distribution paradigm, fund managers naturally view Singapore as the hub to connect with and expand into other parts of Asia efficiently. Singapore’s high level of connectivity and advanced infrastructure are key considerations for any serious player in this sector. Such factors cannot be ignored as they undeniably attract money and professional talent to the island state. Singapore is the easiest country in which to do business, according to the World Bank Doing Business 2016 report. Singapore has excellent telecommunications, as well as strong financial and transport infrastructure. In addition, its strategic location at the crossroads of maritime routes and its proximity to big markets are strategic advantages. The country offers tax concessions and easy loan conditions as part of its investment incentives.