With a robust economy and a politically stable landscape, Singapore has built a reputation as having one of the most business-friendly environments in the world.
Many renowned global companies, including Google, Apple, Airbnb and Uber have built their Asia Pacific (APAC) headquarters in the sunny Republic of Singapore, and for good reason.
In a 2016 PwC Cities of Opportunity report
, Singapore was ranked 2nd -- behind London -- as the most business-friendly city in the world. Among the indicators it received top scores in the categories of ‘ease of doing business’ and ‘tax efficiency rates’.
The country’s market is small, so there is a stringent vetting process put in place to prevent fraudulent businesses entering the country.
These measures, while necessary, have inadvertently presented hurdles for legitimate entrepreneurs -- especially those coming from abroad.
reached out to several entrepreneurs — both local and foreign — to share their experiences dealing with the red tape and, more importantly, how they handled the challenges.
Incorporation and employment passes
Both local and foreign entrepreneurs said that incorporating the company locally was relatively simple; but for the latter, getting an employment pass so they could legally work in Singapore was a hurdle.
UK entrepreneur Alan — not his real name — said he had to jump through a few hoops to get his company off the ground in Singapore two years ago.
Alan enlisted the help of a corporate secretary, who told him that to incorporate a company in the country, he needed was to put up some capital. Alan put S$40,000 into his new company and it was successfully incorporated in Singapore.
Applying for an Employment Pass (EP), however, proved to be quite the challenge. He did not have a university degree and without an EP, he had difficulties renting an apartment.
What he did, instead, was lease the apartment under the new company.
"It was frustrating yet interesting at the same time," he said.
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On one hand, the internet was more costly because it was a corporate account, but he got lucky and the landlord was willing to lease the apartment at a discount. This helped Alan prove that he was entering Singapore with a serious intent to start a company, which helped him justify the EP application.
"Landlords sometimes make this arrangement because they think using a company to rent is more secure. A company is not just one person so they are less likely to suddenly leave," he said.
Applying for a corporate bank account
One hurdle during the EP application process is the chicken/egg process of getting a corporate bank account. It is essential for doing business in Singapore, but also requires that the entrepreneur prove they are setting down their roots in the city.
For Amit Saberwal, the Founder and CEO of RedDoorz, both of the company Directors were overseas, which means banks were reluctant to issue a banking account.
“[But] the bank we used was accommodating enough to allow our identities to be verified at a branch in New York, despite the fact that their branch does not provide retail services,” he said.
Saberwal said the key to overcoming this obstacle was a mix of good relations with the service provider, goodwill from the bank and good ol’ fashioned begging.
Once the bank account was approved, the process for getting foreign employees took a matter of weeks (a typical timeframe for any country).
For startups from abroad, or local companies looking to boost their foreign employee rate, before thinking about immigration laws and employment passes, it is also important to dedicate energy towards getting the bank account set up.
Once that is settled, it becomes easier to hire people from outside of Singapore to work in the city.
Hiring in Singapore
Singapore-based dating platform Paktor said its foreign hires sometimes had their EPs denied, with no clear explanations provided.
“One of the biggest problems faced by Singapore human resources teams is the ambiguity of the approval of work passes - especially for Employment Passes. Sometimes even when the candidate/potential employee fits the criteria set by MOM, there are still possibilities of the pass [applications] being rejected. And it is almost impossible to find out the reason for rejection as well. This is stressful when the candidate/potential employee has been offered a position in the company,” said Vanessa Goh, a human resource manager at Paktor.
To overcome this hurdle, Goh said it now offers remote working as an option for all foreign employees, in the event their EPs are denied.
Singapore’s Ministry of Manpower states that any company who wishes to hire foreign employees need to have a certain number of Singaporean hires first. This quota restriction can be a challenge for many entrepreneurs.
Alan had two foreign employees and a Singaporean hire, who quit shortly after joining the company. He struggled to find another Singaporean to replace him and because it was a technical job, the opening did not attract many Singaporeans. "I haven't overcome this issue … I’m still looking for good hires," he lamented.
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Alan is not alone in facing this problem. According to a study conducted by the National Trades Union Congress’ (NTUC) Future Jobs, Skills and Training unit, vacancies in the ICT sector, including up and coming segments such as AR, VR and data analytics are aplenty, but there are not enough local talents to fill these vacancies.
One strategy to pursue is to look into business advisory firms that are experts in navigating the Singapore immigration system. They may be able to help point entrepreneurs towards good local hires, or they may understand how a company can strengthen the applications, allowing them to hire the best person — regardless of nationality.
Oftentimes, these challenges just require consultation and advice. They may seem intimidating, but usually an expert can diagnose the problem and make the solutions seem fairly simple.
Advice for navigating the ‘getting going process’
A lot of the issues highlighted above are bureaucratic. They may have Singaporean characteristics, but every country has barriers, and it’s just about understanding the rules and complying with the paperwork.
This is the most important step for Founders trying to set up the legal framework for their startup. The solution, according to Saberwal,
“As a start-up founder you have other things on your mind and things can slip up. Finding the right, suitable and knowledgeable folks to help with getting all these little pieces in place is key to avoid future hassles,” He said.
“What you really need is someone to keep reminding you and pushing you to make sure the right filings are done on time.”
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There are two ways to solve this problem. Either dedicate someone within the company, which is time consuming for a startup that may only be two to three people. Or, outsource the management to a third-party company, an option that will, obviously, cost money.
Singapore remains an elite global city for setting up a business, but it isn’t as simple as getting off a plane and setting up a firm. There will be snags, but they just require attention to overcome, and once that knot is untied, the Lion City is a great place to do business.
“I'd still recommend anyone to set up in Singapore and I have a lot of praise for the system for its transparency, speed, and pragmatism,” said Alan.
Hawksford provides expert guidance for businesses starting up or expanding in Singapore. They have helped thousands of entrepreneurs, SMEs and businesses to understand and navigate Singapore’s legal, financial, tax and regulatory frameworks. To find out more, visit GuideMeSingapore.
Disclosure: This article is produced by the e27 content marketing team, sponsored by Hawksford
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