Both the United States and Singapore have fast-growing economies with substantial potential for foreign investment. They are known for their competitive business environment and ease of doing business. But they are, of course, quite different from each other.

The US offers a massive consumer market with a population of 328 million. Household spending in the US amounts to more than a quarter of worldwide household consumption. Moreover, the US has signed free trade agreements with many countries, giving businesses access to millions of more potential customers.

On the other hand, the Singapore economy is mostly based on the manufacturing and service sectors, which comprises one-fifth and two-thirds of the output respectively. Factors such as Singapore’s connectivity to neighboring markets, friendly tax regime, good employer-employee relations, and strict rule of law have allowed the economy to grow rapidly over the years.

The USA vs. Singapore: Entrepreneurship Comparison

There are several aspects to be analyzed when determining which country to choose for expanding your business. Here is a head-to-head comparison of the two:

Ease of Doing Business

According to the latest World Bank’s annual ratings, the US is in 6th place among 190 countries. Singapore ranks even higher, securing the 2nd position. The high ranking of both economies shows that they have a productive regulatory environment.

The lower ranking of the US as compared to Singapore signifies the higher number of challenges associated with starting a business in that country. Major objectives such as choosing the type of business entity and paying corporate taxes is more convenient in Singapore.

For instance, incorporating a company in Singapore takes 24 hours, while the same task could take up to 6 days and involves 6 procedures in the US. Singapore has sound business laws and a higher degree of transparency.

Every state in the US has separate court systems and laws. Nevertheless, federal law usually takes precedence over state rulings.

Moreover, the jury is considered a protective shield against any misuse of power. Therefore, the judge rules on law-related matters, and the jury determines the facts. In rare instances, a judge may overrule a jury.

On the other hand, the legal system in Singapore has its roots in English Common Law. In 1969, the system of trial by jury was put to an end. Singapore ranks 13th when it comes to rule of law, while the US stands in the 19th spot.

Taxation

In the paying taxes section of the World Bank’s Doing Business report, Singapore ranks 5th while the US ranks 64th. The index is based on the number of tax payments, time taken for preparing, filing, and paying taxes, and the ratio of profits paid in taxes.

For example, in Singapore, a medium-sized enterprise would make 5 tax payments and take 82 hours in a year for preparing, filing, and paying taxes. On the other hand, in the US, a business of the same size and type would make 11 payments and take 175 hours to prepare, file, and pay taxes.

In the US, the federal income tax is at a progressive rate of up to 39.6% of the taxable income. The taxes for federal social insurance programs are levied separately. On the other hand, the progressive tax rate for personal income in Singapore is only up to 22%.

In fact, the US has a reputation of having one of the most difficult tax regimes in the world, which becomes a hindrance for startups. On the contrary, Singapore’s tax system is rather favorable for business development.

Overall, Singapore is more attractive for entrepreneurs when it comes to taxation. It features a single-tier tax system, double tax relief, and no tax on dividends and capital gains.

Intellectual Property Protection

Other than the business environment and tax regimes, protection of Intellectual Property (IP) rights enhances investor confidence. IP pertains to any invention, design, or brand over which a businessman has legal rights. Common kinds of IP include patents, copyright, trademarks, and design right.

As per the Global Competitiveness Report (GCR), Singapore stands at 2nd place while the US ranks 25th. The US has ratified international IP agreements such as the Berne Convention, the Paris Convention, the Madrid Protocol, and the Patent Cooperation Treaty. However, the US has not signed the Hague Agreement, which protects designs in different countries via a single filing.

Likewise, Singapore is a signatory to the Paris Convention, the Patent Cooperation Treaty, the Madrid Protocol, and the Berne Convention. Moreover, the Hague Agreement is also ratified by Singapore.

In Singapore, the expense of acquiring and in-licensing IP rights can be paid via cash or corporate tax rebates. This has been facilitated through the Productivity and Innovation Credit (PIC) scheme, which focuses on helping Singapore businesses invest in more value-added ventures.

Singapore is in the first spot for IP rights protection in Asia, which boosts confidence among entrepreneurs to help them grow, deploy, and manage their intangible assets throughout the region and beyond.

Competitiveness

In both 2019 and 2020, Singapore was recognized as the most competitive across the globe according to the Global Competitiveness Report by the World Economic Forum. Singapore is also known for its low corruption levels and government efficiency (albeit an authoritarian state).

The country also ranked 1st and 2nd for the efficiency of labor markets and financial market performance respectively. As far as infrastructure is concerned, Singapore secures the top spot in the world.

The United States follows Singapore at the second spot in the Global Competitiveness Report. Issues that weakened the US’s ranking include goods and market inefficiency and unwise government spending.

According to the Heritage Foundation’s 2020 Index of Economic Freedom, Singapore secured the first position, while the US stands at the 17th spot. Singapore proved to be more efficient than the US in most aspects, such as ease of starting a business, operating or shutting down a business, ease of international trade, and protection of property rights against corruption.

The World Competitiveness Yearbook is published by the Institute for Management Development (IMD) also places Singapore at the top spot as in global economic competitiveness. The US, on the other hand, declined to the 10th position from the 1st in 2018.

Foreign Investment Friendliness

In order to attract and maintain the foreign investment, it is important for countries to have laws and regulations in place to safeguard them. This is popularly measured by the Sense of Investor Protection Index in the Doing Business Report.

The index takes into account factors such as transparency of transactions and the power of the stakeholders to sue the directors in case of misconduct. Singapore has a score of 9.3 out of 10, while the US followed close by with a score of 8.3.

This establishes Singapore in the 2nd position and the US in the 6th position worldwide. Hence, both countries offer substantial protection to investors.

Workforce

In Singapore, you would be able to find a skilled and intelligent workforce that is trained to excel. Just like the US, there is no language barrier as the locals are fluent in English.

According to Business Environmental Risk Intelligence (BERI)’s Labor Force Evaluation Measure, Singapore houses the best human capital in the world. The US follows in the second position.

The WEF ranks Singapore as the 2nd best in labor-employee relations and the most productive labor force globally. On the other hand, the US sits at the 33rd and 6th on both these scales.

According to the Global Competitiveness Report, both the United States and Singapore have an efficient labor market. The US has a decent score when it comes to 4 sub-indicators, which are country capacity to retain talent, country capacity to attract talent, redundancy costs, and hiring and firing practices.

For other sub-indicators, the US had a fair performance as it ranked under 50 out of 148 for every sub-indicator. As far as women’s proportion in the workforce is concerned, the US scored better. Other than that, Singapore maintained a good score in most sub-indicators.

Benefits of Doing Business in the USA and Singapore

The United States and Singapore are both attractive venues for expanding your business. Here is an overview of some of the prime benefits of investing in the two countries.

Benefits of Investing in the US

A question that many foreign investors have on their minds is: Why invest in the United States? Here are the top 5 reasons to help you make up your mind:

Best Global Economy

The US is known for being the largest economy in the world. The country has an approximately 24% lead share in the world market. Moreover, it ranks 2nd on the Global Competitiveness Report, which evaluates the position of countries on the basis of factors like business dynamism, health, infrastructure, and market size.

Talented Workforce

The labor in the US is skilled, diverse, innovative, and mobile, making it highly versatile. The US has prioritized international collaboration with public and private sector companies so that the workforce is able to meet present century challenges.

Government Incentives

Several states in the US offer financial incentives to foreign business owners to help them set up their companies in a particular location. The commercial real estate taxes have dropped and tax credits are also given to investors.

Technological Advancements

Businesses in the US have ample access to advanced technology, which makes it more appealing for business activities. Many foreign companies choose to expand to the US just to take advantage of the advanced technological innovations to boost their productivity.

Protection of Intellectual Property

The US has a robust legal system for international investors to benefit from. The predictability and transparency of laws go a long way towards the protection of intellectual property rights. The legal system focuses on strict law enforcement to protect your business against infringement.

Benefits of Investing in Singapore

Singapore is an economic powerhouse, thanks to its business-friendly policies. Here are the significant benefits of expanding your business to Singapore:

Strong Economy

Singapore has a modern free-market economy that is based on finance, trade, and manufacturing. Services makeup 75% of the nation’s GDP and account for 80% of the labor force. Singapore has succeeded in achieving a low employment rate and a low inflation rate at the same time.

Favorable Tax System

Singapore has a simple and rational tax regime. It does not levy any tax on dividends or capital gains received from a company. This means that the shareholders can receive the dividends tax-free. Moreover, Singapore has one of the lowest value-added tax rates globally.

Reliable Legal Framework

Singapore’s legal system follows the pattern of the English common law. Singapore secures the first spot in Asia for the best intellectual property protection. With low levels of corruption and a robust dispute resolution mechanism, Singapore is the perfect place to gain entry into Asian markets.

Strong Government Support

The Singaporean government highly encourages innovation through incentives like FinTech sandboxes and SGInnovate. This makes it easier for small business owners to access communicate with mentors and venture capitalists. Small firms are given opportunities to innovate, scale-up, and globalize.

Quality Infrastructure

Singapore has a burgeoning economy due to its superior infrastructure. The country recently secured the top spot among 200 cities for the city infrastructure, which takes into account a variety of aspects such as healthcare, education, recreation, and transport.

Final Thoughts

The United States and Singapore are leading world economies that facilitate foreign businesses. The legal system in both these countries is robust and a highly skilled workforce is available. If you are eyeing the Asian market, Singapore is a great place to start. On the other hand, if your products or services are more geared towards a western or even global audience, then opt for the US as it has an efficient and conducive business environment.

For further insight about expanding to different markets around the globe, click here to explore our website.

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The Asia-Pacific region consists of countries located along the Western Pacific Ocean. It is an umbrella term that includes East Asia, Southeast Asia, South Asia, and Oceania. Countries in the region feature well-developed corporate infrastructures, densely populated markets, and world-class technology.

With rapid GDP growth, Asia-Pacific economies are quickly outstripping the growth of western markets. For instance, China is now a top source of international direct investment in the world, while New Zealand, Singapore, and Hong Kong have secured the top three spots in World Bank’s Doing Business 2020 index.

This article covers the top 10 Asia-Pacific countries that are worth it for expanding your business. It is intended to provide an overview of each country’s most common employment law concerns and significant aspects that need to be kept in mind from a business perspective.

As soon as your company is set up in a new country and hires the very first employee, it becomes crucial to maintain certain records, including:

  • Personal details such as name, passport number, identity card, marital status, and address
  • Nature of employment
  • Designation in your company
  • Remuneration details
  • Period of employment
  • Non-cash and fringe benefits employees are entitled to

1.   Hong Kong

Hong Kong’s economy is well-known for its low tax rates and minimum government intervention. As it is heavily dependent on international trade, the country has become an attractive option for entrepreneurs, businesspeople, and fresh graduates.

The Employment Ordinance of Hong Kong covers full-time, part-time, and temporary employees. Here are some key aspects:

  • The employment contract is required to satisfy the minimum clauses of the Ordinance such as statutory holidays, sick and maternity leaves, mandatory provident fund payments, and severance and long-service payments.
  • The Ordinance does not specify a legal probationary period limit. However, Hong Kong’s Labor Department suggests a maximum duration of three months.
  • When hiring a new worker, your firm must inform the Inland Revenue Department within six months.
  • Businesses need to report remuneration given to employees on an annual basis.

2.   New Zealand

Other than its breathtaking landscapes, New Zealand is also known for its high-income and progressive economy. The country has become rapidly industrialized in the past few years, within the information technology, banking, and other service sectors.

New Zealand has emerged as the very top of World Bank’s Doing Business 2020 rankings, which implies that the government regulations substantially facilitate operations for companies seeking to expand to New Zealand. Here are some key employment concerns you need to keep in mind:

  • It is mandatory to have employment contracts for each employee that clearly states the responsibilities of employers and employees.
  • A regular working week in New Zealand comprises 40 hours and is divided into five working days.
  • Income taxes are typically withheld by the company and paid to the Inland Revenue on a Pay-As-You-Earn (PAYE) basis.
  • Workers in New Zealand can avail themselves of a four-week paid leave every year. The leave period can be provided gradually throughout the year, or allocated annually on the anniversary of an employee joining your organization.

3.   Singapore

Singapore has emerged as a rapidly progressing technological and financial hub in the Asia-Pacific region. Due to its free market economy and policies conducive for trade, the country has become one of the easiest places to operate a business, for both local and foreign companies.

Some of the largest industries in Singapore include finance, business, manufacturing, and tech exports. Here is what companies in Singapore need to know when hiring staff for the first time:

  • The Employment Act contains the basic rules about employment terms and the roles and responsibilities of the employers and employees.
  • Employees can work for a maximum of 44 hours a week (or 8 hours a day).
  • Salaries must be paid to employees at least once a month within seven days following the end of the salary period.
  • Employees are entitled to paid annual leave if they have worked with a company for a minimum of three months.
  • The legal age for employment in Singapore is 17 years and above. Children between 13 and 16 years can be employed, but there are limits on the type of work they are allowed to do.

4.   Australia

The presence of natural resources along with a favorable climate make Australia a great place to invest. It has the advantage of an open-market economy with bare minimum restrictions on the flow of goods and services.

Australia has a well-educated workforce benefiting any business. The education system in the country is internationally recognized and specialized training services are available for further skills development. Here are some employment law concerns that you need to know about when expanding to Australia:

  • The primary sources of employment law in the country are legislation, industrial instruments, and common law.
  • Full-time employees in Australia are allowed to work for a maximum of 38 hours per week.
  • The number of public holidays granted depends on the state where your company operates.
  • Both full-time and part-time employees are entitled to 4 weeks of paid annual leave, but it is common to avail six weeks.
  • Employees in Australia are eligible for up to 12 months of unpaid maternity leave for childbirth or adoption of a child under 16.

5.   Taiwan

Taiwan has witnessed rapid economic growth ever since the second half of the past century. Its main income is derived from the industrial manufacturing sector, especially by exports of machinery, electronics, and petrochemicals.

In the recent past, several government-owned banks and industrial businesses in Taiwan were privatized, which encouraged many businesses to relocate there. Here are general employment considerations to keep in mind when considering expansion to Taiwan:

  • Employment laws are generally contained in Taiwan’s Labor Standards Act (TSA) by the Ministry of Labor.
  • Working hours for employees in Taiwan are limited to 40 hours per week (8 hours per day).
  • Workers are entitled to two off days out of every seven. One rest day is mandatory, while the employees can choose to work overtime during the other.
  • Salaries to workers are usually paid monthly. Like in most Asian countries, workers are entitled to a 13th month bonus of a month’s wages, which is usually given out at the time of the Lunar New Year.
  • Notice periods for termination depend on the period of service. It begins from 10 days for those with a minimum of three months of service, increases to 20 days after a year, and rises up to 30 days after three years.

6.   South Korea

South Korea is known to have rapidly developed since the 20th century. It has emerged into a globally connected and technologically advanced country due to effective state-led urbanization projects.

A notable reason for South Korea’s success is heavy government investment towards education, which propelled the country as a technological hub with a skilled workforce. If South Korea is your dream destination for investment, consider the following aspects while planning your venture:

  • According to law, employees in businesses with 50 or more permanent workers are not permitted to work more than 52 hours a week.
  • A termination notice to a worker in South Korea must be served at least 30 days in advance.
  • It is mandatory for companies in South Korea to register their employees for payroll by the 15th day of the initial month of operations.
  • Employers are supposed to withhold income tax when giving out salaries to workers.
  • Paid leave is provided to employees based on the period of service. Employees get one day per month worked in their first year, which increases to 15 days per year from the second year. After that, one day of annual entitlement is added every two years of service.

7.   Japan

Japan is home to the third-largest economy in the world, after the US and China. It features an advanced marketplace and a robust work ethic across all sectors.

Some of the largest brands around the world, such as Honda, Toyota, Nissan, and Sony were founded in Japan, strengthening its place as a hub for those interested in a career in tech, business, or media. If you wish to expand to Japan, here are some of the important employment law concerns to consider:

  • Japan’s Labor Standards Laws contain the crux of the employment rules and regulations in the country.
  • Employment contracts are renewed yearly. However, fixed-term contracts of more than three years are not allowed.
  • Employees are legally permitted to work 40 hours a week.
  • Salaries are generally given out to employees near the 25th of each month. They can either be paid directly or transferred to the employee’s bank account.
  • Workers are entitled to paid leave after six months of service, with the leaves increasing every 12 months thereafter.

8.   Malaysia

Malaysia’s multi-cultural and multi-ethnic culture can be a big advantage if you are planning to expand your business to the country. The country initially had a state-oriented economic structure, which helped it become one of the most competitive markets in the world today.

Business, tourism, tech, manufacturing, and healthcare services are some of the most prosperous sectors in Malaysia. Starting out as an employer in Malaysia, here are some of the important aspects to take into account:

  • Employment and labor laws of Malaysia are enshrined in the Employment Act 1955.
  • Maximum working week in the country is 48-hours long and divided into six eight-hour days.
  • For employees with less than two years of service, the termination notice period must be four weeks, increasing to six weeks at two years and eight weeks at five years.
  • Businesses in Malaysia are required to withhold income tax payments from workers as per a Pay-As-You-Earn (PAYE) system.
  • Employees in Malaysia are entitled to 11 public holidays every year.

9.   Thailand

Thailand is known for its pristine beaches, scenic islands, and majestic temples. In recent years, the country’s economy has progressed rapidly, making it more than just a fancy tourist spot.

Thailand has a free-market system and pro-investment policies, which makes it easy for foreign companies to move there. Here are some of the common employment law concerns you must know about:

  • There is a legal requirement for drawing up written employment contracts in Thailand, but they are still highly recommended.
  • Employees are required to work 8 hours a day from Monday to Friday. However, some businesses also work half-days on Saturdays.
  • Thai workers are usually paid monthly, either directly in cash or by bank transfer.
  • While it is not mandatory, employees generally expect a 30-day notice period in case of termination.
  • Minimum leave entitlement in Thailand is six working days in a year after the initial year of service, but it is common for companies to offer 10-15 days.

10.                 Indonesia

Not only is Indonesia the world’s largest island country, it also has the largest economy in Southeast Asia. It is a mixed economy, with both, a government-led public sector and private businesses playing an important role in economic progress.

Indonesia has a large population, providing you with a big market for your products or services. If you want to relocate to Indonesia, here are some employment law concerns to keep in mind:

  • Workers are supposed to work no more than 40 hours each week.
  • There is no national minimum wage in Indonesia. Minimum wage requirements are different in every province.
  • Collective bargaining is becoming popular, so having discussions with trade unions is becoming important when it comes to wage discussions.
  • Employees who have worked with a company for a full year are usually entitled to a bonus (religious allowance). This is equal to a month’s salary and must be paid at least a week prior to the Eid-ul-Fitr public holiday.
  • Notice period in case of termination of an employee is usually 30 days.

Final Thoughts

The Asia-Pacific region presents a wide range of opportunities for startups, entrepreneurs, and established companies. It is popular for its fast-growing economies and technological advancements. Moreover, these countries are generally heavily populated, providing massive markets for your products and services. For further insight on expanding to different markets around the globe, click here to explore our website.

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The Republic of Singapore is a small city-state with a population of 5.8 million people. The diverse and multi-ethnic population of Singapore comprises 72.6% Chinese, 15% Malays, and 7.4% Indians. Amongst the other ethnic groups living in Singapore are Eurasians and laborers from South Asia, who make up a large part of the population.

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Singapore has a well-developed market, skilled workforce, and a robust corporate infrastructure that makes it an excellent place to expand your business. According to the World Bank, Singapore is the second easiest nation in which to conduct business (after New Zealand).

The business climate of Singapore has its foundation set in globalization, focusing on the principles of quality, reliability, productivity, and integrity. It is vital to gain basic knowledge of the local laws and regulations if you wish to form a company in Singapore. Here is a breakdown of the country’s corporate compliance requirements and the challenges associated with them:

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