Singapore is the preferred business jurisdiction in the region for companies and investors from the United Kingdom. There are more than 2,900 British companies in Singapore; some of the big names include Rolls Royce, Standard Chartered, GlaxoSmithKline, Dyson, Shell Group, Barclays, BP, Royal Bank of Scotland and Diageo. The UK is the largest European Union investor in Singapore and the city-state is the largest trading partner in the region for the UK. There is a strong legacy for the economic and trade ties between the two countries. British companies, both large and small, have located their regional base in Singapore and moved some of the business operations to Singapore because of the distinct advantages that the island nation offers
Strategic decisions relating to business locations are based on an evaluation of multiple factors. Tax and business costs have long ceased to be the parameter for identifying an ideal business hub; investors are keen on evaluating other important factors such as the country’s trade and political relationship with the rest of the world besides other factors such as the workforce quality, living standards, infrastructure and regulatory framework. Singapore despite being a small city-state has consistently outperformed in several international surveys that measure the attractiveness and competitiveness of business jurisdictions. The following is a comparative evaluation of the competitiveness of Singapore vs the UK as business jurisdictions.
|Population||65 million||5.5 million|
|GDP||USD 2.8 trillion||USD 292.7 billion|
|GDP Per capita||USD 43,929||USD 52,888|
|FDI Inflow||USD 58.4 billion||USD 65.3 billion|
Source: 2015 World Bank Data
Singapore has a conducive business environment that is strongly underscored by the political stability resulting in a cohesive pro-business policy direction. The country has embraced liberalisation, particularly, for trade, finance and trade as a means for economic prosperity.
The UK is one of the best locations for doing business in Europe however the recent events have clouded the business environment. In a popular referendum in June 2016, the UK voted to exit the European Union economic bloc. The aftermath of the Brexit referendum has resulted in some uncertainty regarding its stand towards economic integration and globalisation. The scope of its economic and trading engagement as well the immigration policy remains to be seen.
The Economic Intelligence Unit’s, ‘Business Environment Ranking 2016’ placed Singapore on top of the 82 countries that it surveyed. The EIU forecasts Singapore to remain as the most investor-friendly location during 2017-2021. Singapore’s score, in terms of ‘institutional effectiveness’, remained unmatched by other countries. In contrast, the UK, which held the 14th rank during 2012-2016, is forecast to hold 18th place in the ranking; it slumped by four places in the forward-looking global ranking following the referendum.
Ease of setting Up Business
Singapore has one of the easiest regulatory frameworks to set up a business. It allows for 100% foreign ownership and the company incorporation can be completed in one day. The Singapore company incorporation process takes an average of 3 steps whereas the UK company incorporation process involves an average of 4 steps.
In the World Bank’s ‘Doing Business Report 2017’, for overall ease of doing business, Singapore ranked #2 globally and the UK ranked #7. For the ‘ease of starting business’ criterion, Singapore’s rank improved – from the seventh rank in the previous year it climbed up to the sixth rank; in contrast, the UK dropped from 13th rank in 2016 to 16th rank.
Rule of Law must be strongly embedded in the judicial system of a country to attract foreign investment and international business. Singapore has always emphasised on the rule of law and the country has a strong reputation for its corruption-free governance, fair, efficient and predictable legal system. The rule of law is emphasised in the British legal system as well; although the fundamentals of Singapore’s legal system was inherited from the British, several international surveys have rendered higher ratings for the city-state than the UK.
In the World Justice Project’s ‘Rule of Law Index 2016’, Singapore ranked #9 while the UK held the #10 spot. Singapore particularly scored over the UK in factors measuring regulatory enforcement, the absence of corruption, criminal and civil justice.
Singapore strives to uphold a harmonious society and peaceful coexistence amidst its multi-racial population. Singapore’s crime rate has always remained low compared to its neighbours. The peace within the country reflects well on the human development indicators such as education, health, employment and social support. The country also maintains a politically neutral stand in the international and regional space. It has a strong military and police force to ensure the national security and domestic order.
The United Kingdom has low internal conflicts however it’s international military engagements and expenditure and the potential terror threats that it faces the challenge the country’s peacefulness score.
In the ‘Global Peace Index 2016’, released by the Institute of Economics and Peace that examines the countries in terms of internal and external peace, militarisation, violence containment costs etc., Singapore ranked 20th. The UK ranked 47th on the list despite being located in the most peaceful region.
Singapore’s tax regime is one of the most competitive in the world. The UK’s tax rate is relatively higher.
|Headline Corporate Tax Rate||17%||20%|
|Tax-Free Personal Income||Up to S$ 20,000||Up to £11,000|
|Highest personal Income Tax Rate||22%||45%|
|Employer Social Security Contribution||17%||13.8%|
In the World Bank’s ‘Doing Business 2017’ report, Singapore ranked 8th globally in terms of ease of paying taxes but in contrast, the UK is ranked 10th in the world.
Related Article: Complete Guide for Singapore Taxation
Singapore has a highly productive and skilled workforce that is multi-racial and multi-lingual. A significant majority of its workforce are English speaking. Although it is pursuing a stringent immigration policy following its economic restructuring measures, Singapore continues to welcome deserving foreign talent.
The United Kingdom has a vast labour pool but unlike Singapore it has minimum wages rules that drives up the business costs. Singapore lets the market forces determine the wages. Post Brexit, the end of the UK’s access to the EU may affect the mobility of skilled workforce and may impact the availability of labour.
In IMD’s ‘World Talent Report 2016’ Singapore ranked 15th and UK ranked 20th in the world. Singapore especially scores well in terms of readiness of the talent pool – the availability of skills and competencies in the talent pool – where it scores the first rank in the world. It also holds relatively better scores in apprenticeship and employee training.
In the World Economic Forum’s ‘Global Competitiveness Index 2016-2017’, Singapore ranked second in the world in terms of Labour Market Efficiency. In contrast the UK holds the fifth rank. Particularly, Singapore is far ahead of the UK in labour-employer relations and productivity where it held #3 rank globally, as against UK’s 15th rank.
Access to Financial Services
As one of the leading financial centre in the world, Singapore has a comprehensive network of financial market players in the form of national and international banks, finance companies, fund management companies, private equity firms and foreign exchange dealers.
In the World Economic Forum’s ‘Global Competitiveness Index 2016-2017’, Singapore ranked #2 while UK ranked 16th in terms of financial market development. As for ease of access to loans, Singapore ranked #3 as against 49th rank of the UK. Though London is the world’s leading offshore financial centre, Singapore is forecast to overtake London as the leading financial centre by 2020
Singapore, being a city-state without any natural resources, has always remained plugged into the global economy through its openness to trade and investments. Singapore continues to advocate and pursue economic integration with the regional and international economies; ASEAN Economic Community, Trans-Pacific Partnership Agreement, Regional Comprehensive Economic Partnership Agreements are examples of efforts towards its economic integration. The country has a vast network of FTAs and DTAs signed with partner countries globally to facilitate trade and investment. More than 99% of the goods enter the country’s domestic market duty-free.
The UK’s Brexit referendum is a clear indicator of the country’s shift towards protectionism and the impact of its decision to exit the unified market remains to be seen. It is not clear if the country will renegotiate its treaty arrangements with other trade and investment partners.
In the ‘Global Enabling Trade Report 2016’, published by World Economic Forum and the Global Alliance for Trade Facilitation, Singapore continued to hold on to its top spot for the fifth consecutive year. In contrast, the UK holds the eighth rank on the index. Particularly, Singapore’s border administration bagged the perfect score for its efficiency and transparency. The DHL’s ‘Global Connectedness Index 2016’, which ranks 140 countries on the basis of cross-border flows of trade, capital, information, and people, ranked Singapore as #2 in the world while the UK was ranked #8.
Likewise, the Heritage Organisation’s ‘2017 Index of Economic Freedom’, which ranks 180 economies around the world, rates Singapore as the world’s second freest economy while the UK is conferred the 12th rank on the list.
Singapore besides reviewing and revising its regulatory framework and improving on the transparency and efficiency of its institutions and governance, has continuously invested in infrastructure, education, healthcare, housing and talent development. This has contributed to its top-notch competitiveness and ability to attract talent, capital and companies. The economic prosperity that it has managed to achieve and the high standard of living that its people enjoy, despite being a young resource scarce nation, are a clear sign of its competitiveness.
In the World Economic Forum’s ‘ 2016-2017 Global Competitiveness Ranking’ that ranked 140 economies, Singapore ranked #2 while the UK held the 7th rank. The index measures 12 criteria such as institutions, infrastructure, health, education, labor market efficiency, financial market development, technological readiness, market size and business sophistication, and innovation. Singapore was ranked #9 in the world for innovation while the UK was ranked #13. The UK lagged in terms of macroeconomic environment, financial market development, higher education and training and Singapore lost scores in the areas such as market size and business sophistication
Singapore has a strong national IP protection regime; the Intellectual Property Office of Singapore is championing the cause of affordability and ease of protecting IPs besides enabling businesses to commercially exploit and monetise IP. Though relatively a late entrant into the IP ecosystem Singapore has managed to excel among other countries of the world and supersedes other regional economies.
Singapore ranked fourth in the world for having the best IP protection in the World Economic Forum’s ‘Global Competitiveness Report 2016-2017’. In contrast, the UK ranked seventh. In Bloomberg’s ‘Global Innovation Index 2017’ the UK ranked 17th in contrast Singapore ranked sixth.
The U.S. Global Intellectual Property Center’s ‘International IP Index 2017’ ranked Singapore eighth in the world for our IP environment. The ‘Global Innovation Index 2016’, which ranks countries’ innovation performance, also ranked Singapore as the sixth most innovative nation in the world and top in Asia
Infrastructure and Connectivity
Singapore continues to sharpen its edge over the other economies by continuously investing in upgrading its infrastructure and digital connectivity. This is fundamental to drive technology adoption, business sophistication, business dynamism, collaboration, and innovation. Singapore has a high level of Internet and mobile penetration in the region and the adoption of smartphones and mobile Internet is growing at the fastest pace among the regional economies. Besides technological infrastructure, other physical infrastructure such as rail, road, airport and seaport is also top-notch in Singapore. It is well connected to most of the world’s major markets that could be reached in seven hours by air.
Singapore was ranked #2 in the world for having the best overall infrastructure in the World Economic Forum’s ‘Global Competitiveness Report 2016-2017’. In contrast, the UK was ranked #9. In terms of technological readiness, in Huawei’s ‘Global Connectivity Index 2016’ Singapore was ranked #2 globally while the UK was ranked #5. The study measures 50 nations’ digital progress using indicators covering the supply, demand, experience, and potential of five technology enablers – broadband, data centers, cloud, big data, and IoT.
Singapore is highly rated for its quality of living standards and is the most desired relocation destination for expatriates. The clean and green environment and the low crime rates along with cosmopolitan lifestyle amenities and choices make it a top draw among world-class talents. The racial harmony and colorful cultural tapestry set against pristine environs and outstanding working conditions together make Singapore a great place to live, work and play.
In Mercer’s ‘2017 Quality of Living Index’, Singapore ranked 25th in the world and UK’s highest ranked city, London, ranked 40th. In HSBC’s ‘Expat Explorer 2016’, which surveys the expatriates’ experience of living abroad in three aspects – economics, experience and family, Singapore topped the league of 45 countries while the UK was ranked 22nd on the list.
Related Article: Moving to Singapore as an Expat
Summary of Global Rankings Singapore Vs the UK
|The Economic Intelligence Unit/ Business Environment Ranking||Most Investor Friendly Business Location |
|World Bank/Ease of Doing Business||Ease of Doing Business||2017||2||7|
|World Bank/Ease of Doing Business||Ease of Setting up Business||2017||6||16|
|Transparency International /Corruption Perception Index||Least Corrupt Country||2016||7||10|
|World Justice Project / Rule of Law Index||Country with best Rule of Law||2016||9||10|
|The Institute of Economics and Peace/ Global Peace Index||Most Peaceful Countries in the World||2016||20||47|
|World Bank/Ease of Doing Business||Ease of Paying Taxes||2017||8||10|
|IMD/World Talent Report Singapore||Country with the Most Talent Competitiveness||2016||15||20|
|World Economic Forum/ Global Competitiveness Index||Labour Market Efficiency||2016-2017||2||5|
|World Economic Forum/ Global Competitiveness Index||Financial Market Development||2016-2017||2||16|
|World Economic Forum/ Global Competitiveness Index||Ease of Access to Loans||2016-2017||3||49|
|World Economic Forum and Global Alliance for Trade Facilitation/Global Enabling Trade Report||Country Most Open to Trade||2016||1||8|
|DHL/Global Connectedness Index||Country Most Connected||2016||2||8|
|Heritage Organisation/Index of Economic Freedom||World’s Freest Economy||2017||2||12|
|World Economic Forum/Global Competitiveness Ranking||Most Competitive Economy||2016-2017||2||7|
|World Economic Forum/Global Competitiveness Ranking||Innovation||2016-2017||9||13|
|World Economic Forum/Global Competitiveness Ranking||Intellectual Property Protection||2016-2017||4||7|
|World Economic Forum/Global Competitiveness Ranking||Best Overall Infrastructure||2016-2017||2||9|
|Huawei/Global Connectivity Index||Digital Connectivity||2016||2||5|
|Mercer/Quality of Living Index||Cities with Best Quality of Life||2017||25||40 |
|HSBC/Expat Explorer||Best Country to Live Work and Raise Family||2016||1||22|
Ready to start a company in Singapore?
We’ve got it all covered. With AsiaBiz, you get a dedicated one-stop solution for your company incorporation, immigration, offshore setup, accounting, taxation, and corporate compliance needs.