- Newsletter, Singapore
- July 12, 2021
The cultural and business relations of India with Singapore dates back to the 9th century Chola dynasty and most Indian business entrepreneurs feel at home while anchoring their business vehicles on Singaporean soil. More than 10% of Singapore’s citizens have Indian ethnicity with Tamil as an official language. The name Singapore has also been derived from Sanskrit.
In a growing trend over the last few years, many Indian businesses, especially startups are choosing South East Asia for their business expansion and company registration in Singapore is becoming the most favoured choice. Indian companies looking for capital can have easier access to several fundraising opportunities to set up their business establishments in Singapore.
India and Singapore have long been enjoying very good bilateral trade and investment relationships and the Comprehensive Economic Cooperation Agreement (CECA) reached in 2005 further boosted the partnership.
Several MOUs were also signed between the two countries during the visit of the Indian Prime Minister in 2018 to foster collaboration between Indian and Singapore startups and pave the way for the Indian companies in Singapore to better explore the Asian markets.
Singapore contributed to more than 29% of FDI received by India during 2020 with its export close to 9 billion USD. The country is also home to over 8,000 Indian companies.
Why Indian Companies are confident of doing business in Singapore?
Singapore is known as the gateway of Asia and has a robust and resilient economy, skilled and educated workforce, excellent infrastructure facilities and a high standard of living with a per capita GDP close to 60,000 USD in 2020 offering Indian startups an ideal business climate for making investments with greater confidence. A high level of digital infrastructure and the adoption of innovative technologies have also played a crucial role in advancing the business competitiveness of Singapore. Indian FDI to Singapore touched more than USD 60 billion in 2018.
IIT- Kanpur in a joint effort with the Singapore Indian Chamber of Commerce and Industry (SICCI) launched a Start-Up Incubation and Innovation Centre (SIIC) that would act as a springboard for technology-based startup businesses.
Why Indian investors are more attracted to Singapore?
Innovative policies of the Singapore government are at the core of the country’s booming startup ecosystem. Besides cultural compatibility, many other reasons drive Indian investors to this foreign country.
1. Ease of doing business
Innovative policies of the Singapore government are at the core of the country’s booming startup ecosystem. Besides cultural compatibility, many other reasons drive Indian investors to this foreign country.
2. Strategic location in the heart of Asian flourishing market
Presently the Asian economy is the fastest growing in the world and with a GDP of almost 3 trillion USD backed by a large population of 650 million, this continent is all set to fly in a high growth trajectory.
3. Multiple bilateral treaties and agreements with India
Besides CECA with India in 2005, Singapore has also entered into Double Taxation Avoidance Agreement (DTAA), Bilateral Air Services Agreement, Defence Cooperation Agreement, MOU on Foreign Office Consultations, Mutual Legal Assistance Treaty, Mutual Recognition Agreement on Nursing as well as cooperation in fintech. DTAA substantially reduces the tax burden of Singapore based Indian holding companies.
4. Favourable Tax Climate
Singapore’s tax system is one of the top attractions for Indian investors. The country imposes a moderate corporate tax of 17% and doesn’t levy any capital gain tax. Significant tax incentives are offered by the government and especially during the first three years of incorporation of businesses. Income from businesses up to 74,570 USD are tax exempt. GST is imposed at a flat rate of 7% which is lower compared to many other countries.
5. World Class Infrastructure
Singapore provides world-class land, port and aviation facilities including a robust digital infrastructure.
6. Transparent Governance
The regulatory bodies in Singapore follow a high level of transparency with minimum bureaucracy. As most of the business activities are carried out online and free of any corruption.
7. Easy Access to Funding and Capital
Easy access to affordable financing is another reason that lots of Indian investors are being drawn to Singapore. The country has witnessed a meteoric rise in venture capital funding in recent years and is considered the top startup funding hub in Asia. Financing for new entrepreneurs or startups for business expansion is available through loans, equity funding, government grants and angel investing. The Singapore government has also initiated many grants and business accelerators for specific sectors.
8. Conducive import-export tax regime
Singapore only imposes customs duty on certain categories of imports including tobacco, liquor, automobiles and petroleum products with no export duty.
9. Liberal Immigration policies
Singapore offers EntrePass to overseas investors willing to start and operate a business in Singapore that can be obtained easily and transparently.
10. Strong Intellectual property (IP) Regulatory Framework
The Ministry of Law observes a strong IP policy to safeguard the interest of high technology companies
11. Fast and Effective dispute resolution
Singapore authorities provide quick and cost-effective resolutions of business disputes to Indian investors through the Singapore International Arbitration Centre (SIAC).
12. Partnership opportunity with a Singapore Company
Partnering with a Singapore company can be rewarding for Indian investors willing to set up a business in Singapore as it eliminates customer and business development from scratch reducing business establishment cost greatly. However, the process of checking registered companies in Singapore must be carefully verified through an online information retrieval system of ACRA.
Which company types of Indian investors can establish in Singapore?
Indian entrepreneurs desirous to start a business in Singapore can choose the following business structures
- Private companies limited by shares
- A Branch office
- A representative office (RO)
- A Variable Capital Company (VCC)
Conclusion
Singapore has come into prominence as one of the most attractive businesses and investment destinations in the world primarily due to government policies, free and transparent investment landscape, ease of doing business, skilled human capital, conducive start-up environment, smart technology adoption and sound technological infrastructure.
If you are in the lookout for setting up a company in this business friendly country, there are experienced and reputed corporate service providers with a local base who can help you on how to start a business in Singapore as a foreigner.
- Bahrain, Kuwait, Newsletter, U.A.E
- July 11, 2021
In a historic and broad-based consensus on the needed reforms for the international tax system to address the digitalisation of the global economy, the Organisation for Economic Co-operation and Development (OECD) / G20 through the Inclusive Framework (IF) on Base Erosion and Profit Shifting (BEPS) set out a Statement on the two pillar solution for global tax challenges that was approved by 130 of the member jurisdictions and countries as of 5th July 2021.
The agreement was reached after carrying out lots of technical work and holding a series of discussions by the 139 member countries of the Inclusive Framework. A ” two-pillar” approach developed jointly, proposes the allocation of profit to countries in which a multinational entity (MNE) engages itself in selling activities to derive value and imposition of a global minimum rate of tax.
Pillar One is a significant shift from the century-old international tax system where only an entity with a physical presence in a country can only be taxed.
There are many countries announcing consensus with the proposals and include China, India, Switzerland, Singapore, the United Arab Emirates (UAE), Bermuda, Jersey, Guernsey and the Isle of Man. Inclusive Framework (IF) member countries that have not yet approved the proposals are European Union (EU), Ireland and Hungary.
Countries that do not currently levy corporate income tax or have effective tax rates below the proposed global minimum tax rate of 15% such as the UAE and Bahrain, will be subject to some key decisions.
The draft ‘Blueprints’ of the technical aspects of the proposals under these two pillars were issued by OECD on 12th October 2020. However, discussions on the design of measures continued and got refined over time by some concerned jurisdictions and included regulations for addressing profit allocation issues, Pillar One and the global minimum tax rate, Pillar Two.
Afterwards, the Biden Administration in the USA simplified the proposals in April 2021 and updated them to facilitate the political agreement reached by the G7 countries in June 2021.
October 2021 has been set as a target to finalize the detailed implementation plan including resolution of any pending issue.
The OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting based on a two-pillar solution has some key components for each Pillar as outlined below.
PILLAR ONE
Pillar One has been designed to reallocate profits for large companies to market countries.
‘Amount A’ of Pillar One would provide a new right of taxation to market jurisdictions on residual profit. The statement stipulates important developments regarding the scope and computation of Amount A. The statement states that Amount B is meant for streamlining the application of the arm’s length standard to routine marketing and distribution activities, but does not substantiate Amount B.
Scope
Multinational enterprises (MNEs) with global turnover exceeding 20 billion euros and profitability of more than 10% measured as ‘profits before tax divided by revenue’, come under the purview of Pillar One. This turnover limit would be reduced to 10 billion euros 7 years after Pillar One comes into force contingent on successful implementation.
Extractives and Regulated Financial Services are not included in Pillar One.
New Taxing Right Calculation
The statement sets forth a new special-purpose nexus rule allowing allocation of Amount A to a market jurisdiction when the qualifying or in-scope MNE derives a minimum of 1 million euros in revenue from that jurisdiction. For Jurisdictions with a GDP of fewer than 40 billion euros, the nexus will be set at 250 000 euros.
The special-purpose nexus rule applies solely for assessing if a jurisdiction qualifies for the Amount A allocation.
The statement specifies that for qualifying businesses, 20 to 30% of their residual profits, more than 10% profit level needs to be reallocated to market countries using an allocation key based on revenue.
Revenue Sourcing
Revenue sourcing will be done to the end market jurisdictions where goods or services are consumed. Detailed sourcing rules will be developed for specific categories of transactions to facilitate the underlying principle. In applying the sourcing rules, an MNE must use a reliable method depending on specific facts and circumstances of the business.
Determining Tax Base
Profit or loss of the in-scope businesses will be based on financial accounting income, as relevant with minimum adjustments and carry forward of losses will be done.
Segmentation
The statement specifies that segmentation would only be needed in exceptional cases in which, depending on the segments figured in financial accounts, a segment would meet the scope limit.
Marketing and Distribution Profits Safe Harbour
Where the residual profits of an in-scope business are already taxed in a market jurisdiction, a marketing and distribution profits safe harbour will limit the residual profits allocated to the market jurisdiction through Amount A. For outlining a more comprehensive scope, future work will be undertaken on designing a safe harbour.
Elimination of Double Taxation
Reliefs on double taxation of profit allocated to market jurisdictions will be either through exemption or credit method.
The entities that will be subjected to taxation would be compensated from those that earn residual profit.
Tax Certainty
The statement provides a commitment that MNEs will benefit from dispute prevention and resolution mechanisms including avoidance of double taxation for Amount A and all issues related to Amount A such as transfer pricing and business profits disputes in mandatory binding dispute prevention and resolution mechanism. Disputes on whether issues may relate to Amount A will be resolved in a mandatory and binding manner.
The statement says that consideration will be given for an elective binding dispute resolution mechanism for issues related to Amount A for certain developing countries with few and no mutual agreement procedures and who are eligible for deferral of their BEPS Action 14 peer review.
The statement commits simplification and streamlining of ‘Amount B’ for application of the arm’s length principle to in-country baseline marketing and distribution activities particularly focused on the needs of low capacity countries and completion by the end of 2022.
Administration
The statement provides a commitment to streamlining tax compliance and filing by allowing MNEs to manage the process through a single entity.
Digital Service Tax (DST) Removal
The statement assures appropriate and unilateral measures on the application of newly introduced international tax rules and the removal of all Digital Service Taxes and other relevant similar measures on all companies.
Implementation
The statement offers that ‘Amount A’ will be implemented through a multilateral instrument which will be developed and made available for signature in 2022 and the ‘Amount A’ will come into force during 2023.
PILLAR TWO
Pillar Two deals with the Global Minimum Tax rate and will ensure that in-scope businesses pay a minimum effective tax rate of at least 15% on profits in all jurisdictions.
Overall design
The statement describes Pillar Two as consisting of two interlocking domestic rules, Income Inclusion Rules (IIR) and Undertaxed Payment Rule (UTPR) together called the Global anti-Base Erosion Rules or GloBE rules and the Subject to Tax Rules (STTR).
Income Inclusion Rule (IIR), will impose a top-up tax being payable by a parent entity to the tax authorities in respect of the low taxed income of a constituent entity.
Undertaxed Payment Rule (UTPR) will be applied as a secondary rule that denies deductions or requires an equivalent adjustment to the extent the low tax income of a constituent entity is not subject to tax under an IIR.
The Subject to Tax Rule (STTR)), a treaty-based rule incorporated in bilateral treaties by countries will allow source countries to enact limited source taxation on certain related payments including interest, royalties and other payments to the parties subject to tax below a minimum rate. The STTR will be creditable as a covered tax under the GloBE rules.
Status of Rules
The statement specifies the GloBE rules as a ‘ common approach’ implying that IF member countries are not needed to adopt the GloBE rules however must accept their application by other IF members. If the member countries that adopt the application of the GloBE rules would agree to implement and administer the rules consistent with the agreement reached on Pillar Two.
Scope
The statement notes that GloBE rules will apply to MNEs with revenues exceeding 750 million euros and as determined under BEPS Action 13 country by country (CBC) reporting. The statement notes that countries can freely apply the IIR to MNEs headquartered in their country even if they are not in scope.
Exclusions are noted as GloBE rules will not apply to Government entities, international organisations, non-profit organisations, pension funds or investment funds that are Ultimate Parent Entities (UPE) of an MNE Group or any holding vehicles used by such entities, organisations or funds.
Design of Rules
The statement provides that the IIR allocates top-up tax based on a top-down approach wherein the application of IIR by the country at or near the top of the ownership chain of the MNE group is prioritized subject to a split-ownership rule for shareholdings below 80%.
The statement also notes that UTPR allocates top-up tax from low-tax constituent entities including those located in the UPE jurisdiction under a methodology to be agreed upon.
Calculation of Effective Tax Rate (ETR)
The GloBE rules specify imposition of top-up tax by utilizing an effective tax rate test that will be calculated based on jurisdictions and using a common definition of covered taxes including the tax base determined by reference to financial accounting income with small and agreed on adjustments consistent with the tax policy objectives of Pillar Two and mechanisms to address timing differences.
Regarding the existing distribution tax systems, there will be no top-up tax liability if earnings are distributed within 3 to 4 years and taxed at or above the minimum level.
Minimum Rate
The statement notes that the minimum tax rate to be used for the IIR and UTPR will be at least 15%.
Carve-outs
The statement notes that GloBE rules will provide a formula based substance carve-out that will exclude an amount of income that is at least 5% and a minimum of 7. % during the transition period of 5 years of the carrying value of tangible assets and payroll.
The statement commits to a de minimis exclusion In the GloBE rules.
Additional Exclusions
International shipping income using the definition of such income under the OECD Model Tax Convention also finds an exclusion in the GloBE rules
Simplifications
To avoid compliance and administrative costs that are disproportionate to the policy objectives, the implementation framework will include safe harbours and/or other mechanisms to facilitate the administration of GloBE rules for the targeted jurisdictions.
Global Intangible Low Taxed Income (GILTI)
The statement notes that to ensure a level playing field the Pillar Two will apply a minimum rate on a jurisdictional with consideration given to the conditions under which the US GILTI regime would coexist with the GloBE rules.
STTR and Bilateral Treaties
The statement highlights that IF members recognise STTR as an integral part of achieving a consensus on Pillar Two for developing countries. IF members that apply nominal corporate income tax rates below the STTR minimum rate to interest, royalties and a defined set of other payments if requested will incorporate the STTR during bilateral treaties with developing IF members.
The statement provides that the difference between the minimum rate and the tax rate on the payment would limit taxing right and the STTR minimum rate will vary from 7.5% to 9%.
Implementation
The statement notes that on reaching an agreement the IF members will release an implementation plan contemplating that Pillar Two should be brought into law in 2022 and to be made effective during 2023.
The implementation plan will include:
- GloBE Model rules with proper mechanisms for facilitating GloBE rules coordination
- An STTR model provision for facilitating the adoption
- Transitional rules with a provision for a deferred implementation of the UTPR
Clarifications Requirements
Though the statement clarifies many issues and technical aspects, some key political and technical aspects remain unanswered including
- The definitive minimum rate to be applied
- ETR calculation mechanism
- Designing of the “de minimis exclusion” carve-out
- Designing of exclusion for MNEs during the initial phase of their international activity
- UTPR designing
- The scope of the simplification plan
- STTR minimum rate
Future Steps
The IF agreement on BEPS 2.0 highlights the hopes and desires of the member countries for a global minimum tax rate with limited impacts on MNEs performing real economic activities with substance. The two-pillar proposals will be again discussed amongst the G20 Finance Ministers on 9th and 10th July 2021.
The consensus amongst 130 member countries is a significant development and in all likelihood will be implemented and accepted internationally as planned.
- Article, Singapore
- July 9, 2021
Singapore- The New Silicon Valley of Asia
Recent global politics and trade wars between the US and China, made many tech experts believe that a new technological epicentre is readily emerging and Singapore in all likelihood will take that sweet spot due to its independent political status and unprecedented financial growth led by robust innovative technologies.
Singapore, soon after being independent in 1959 had become the manufacturing and financial centre due to its open and business-friendly policies and slowly became the most sought business destination to the global MNCs, SMEs, startups, and companies driven by technology over the years. More than 80% of the world’s top technology companies have their presence in this small island nation and many more are still rushing to doing business in Singapore.
Key Factors helping Singapore emerge as the New Silicon Valley of Asia
Government Policy Reforms
Government policy reforms which are insignificant play over the last two decades have started bearing fruits now promoting business and investment in the country due to lower taxes, fewer capital restrictions, and liberal immigration policies. In its commitment to sustainable economic development, the country is mobilizing all possible resources and rolling out policy reforms to build robust technical infrastructure and investment opportunities.
The Smart Nation initiative, launched in 2014, is focusing on increased technology penetration into every aspect of the country’s urban and rural population.
Many government establishments have also been incorporated to help new businesses e.g. Economic Development Board (EDB) and the Standards, Productivity and Innovation Board.
The Government has also prioritized studying and learning technology courses to fill the talent gap including the introduction of several tech-focused graduate programs to produce local tech talent. Many companies encouraged by the government are already having satellite engineering teams in Vietnam and India for practising engineers.
Singapore Visa Programme, TechPass Singapore has been launched recently to allow established tech entrepreneurs, leaders, or technical experts from around the world to enter Singapore and contribute to the various tech innovations.
In a visionary move, the National University of Singapore launched a startup-incubation space called Block 71 in a renovated industrial building way back in 2011 embracing an identical strategy introduced in Silicon Valley.
Singapore Blockchain Innovation Programme (SBIP) has also been initiated recently to help companies commercialize blockchain technology.
Intellectual Property Rights
Strategic Location
Investor friendly business climate
Technology Initiatives
The Singapore government is also promoting an AI hub and developing a dedicated data science consortium besides the SBIP and continuously striving to required technological amenities to technology startups.
Singapore also has a National Trade Platform that serves connecting businesses by establishing links between importers, exporters, banks, logistics firms, customs, shipping agents, and other stakeholders.
Technology Ecosystems-Presence of International Tech Firms
Singapore enjoys good diplomatic relations with both the USA and China and many big American technology companies are already there in Singapore for quite some time now including IBM, Google, Facebook Inc, Twitter, Microsoft and Salesforce.
Early this year, some other fast-growing technology companies have migrated into Singapore to expand their existing businesses in the USA and China and include Zoom, Twitter, PayPal, Tencent, Alibaba, and ByteDance, the artificial intelligence company.
The presence of high profile tech companies as well as other foreign companies wanting to relocate to Singapore equates to big investments flowing into the Republic amid the ongoing COVID-19 pandemic.
English speaking country
Access to Capital
As the angel investing ecosystem was behind the rapid progress of technology companies, especially the startups in Silicon Valley through the early years providing requisite capital and financial support, likewise the venture capitalists with more than 150 VC funds are becoming the money source for the Singapore tech companies for the last six years. As per a report published by Enterprise Singapore, venture funding has grown up more than 10 times in Singapore since 2018.
Singapore has a large network of technology startups that have attracted significant government subsidies lately. The government has assured 85% or a maximum of $0.5 million investment in approved start-ups in Singapore under Singapore’s Technology Incubation Scheme.
Conclusion
Everything is in favour of Singapore in its race for becoming the new Silicon Valley in Asia except the availability of tech talents that is in high demand. While large enterprises are capable of sourcing talents, smaller start-ups are finding it difficult to get talented employees. However, Government is strategizing and implementing measures to address this issue.
The pandemic may have slowed investor and business expansion momentum around the world, but global technology corporations have been booming in a time when digital interactions have replaced physical ones out of necessity.
Foreign company registration in Singapore is straightforward and particularly so if a well-reputed local PRO services company is hired.
- Article, Qatar
- July 2, 2021
Qatar National Vision 2030, a development plan launched in 2008 spearheaded the country’s economic diversification in non-oil sectors and brought in many changes in foreign investment policies and procedures over the years. Company formation in Qatar is mainly attractive to foreign investors due to the country’s rich economy, world-class infrastructure and one of the lowest corporate tax rates.
The Al Ula agreement reached on January 5 at the Gulf Cooperation Council (GCC)’s 41st summit removing economic and diplomatic blockade on Qatar by other GCC nations including Saudi Arabia, the United Arab Emirates (UAE), Bahrain and Egypt is also positive news for foreign investors.
Who can start a business in Qatar?
As a foreign investor, you can only start doing business in Qatar if you have a minimum authorized share capital of USD 55,000 and at least one local Qatari partner. Private LLC companies are the most common business setups with the foreign investor owning a maximum of 49 per cent shareholding while the rest 51 per cent is held by the Qatari partner, usually a professional passive Qatari shareholder. Though restricted, the Ministry of Business and Trade may approve 100 per cent foreign ownership on a case to case basis and in certain specific sectors e.g. agriculture, health, education, tourism, IT, entertainment etc.
What are the company structures available in Qatar?
The business structures available in Qatar are as under
- Sole Proprietorship Company
- General Partnership Company
- Shareholding Company
- International Engineering Consultancy Office(IECO)
- Simple Partnership Company
- Limited Liability Company
- Branch Office
- Representative Office
If you don’t want a Qatari shareholder or don’t want to make any big investment either, you can enter into an agency agreement with a professional agent or distributor.
How to set up an e-commerce business in Qatar?
Qatar being a rich country with a high level of disposable income of its citizens, e-commerce business having only 20 per cent penetration can provide huge business opportunities to foreign investors. The internet penetration is almost 100 per cent with high-speed internet availability.
Moreover, you don’t necessarily require a permanent residence to be a partner in an online business and can even start an online business while on a business visa. The first thing you need to do is getting your business registered with the Ministry of Commerce and Industry (MOCI), the Qatar Financial Centre (QFC) or Qatar Science and Technology Park (QSTP).
Why Qatar Free Zones (QFZ) and How to Register a Free Zone Company?
Qatar Free Zone Authority (QFZA), Qatar Science & Technology Park (QSTP) and Qatar Financial Center (QFC) are the three regulatory bodies entrusted with the overall administration, management and control of QFZ.
Free zone Company formation in Qatar is fast and straightforward and provides foreign investors with several benefits including 100 per cent foreign company ownership, zero corporate income tax, no personal income tax, 100 per cent import and export duties tax exemption, entire repatriation of capital and profits and no foreign currency restrictions.
What is the procedure to set up a Limited Liability Company (LLC) in Qatar?
The most common form of business structure, LLC set up in Qatar involves the following steps
- Acceptance of Proposal
- Name approval and documents submission e.g. AOA etc.
- Apply for Tax Card and issuance of company stamp
- Application for computer card on receipt of trade license
- Ministry of labour registration and visa quota requirement submission for employees
- Registration with Chamber of Commerce
- Notarization at the Ministry of Justice for commercial registration
- Application for Trade License and Municipality inspection
- Corporate bank account opening, making an initial deposit
- Providing documents for office space
How to set up a Branch Office in Qatar?
A branch office can have 100 per cent ownership and is not regarded as a separate legal entity and a permanent establishment. It is only permitted if you have a legal contract to perform a state project and needs to be authorised by the Ministry of Economy and Commerce and fully taxable. The process for setting up a branch office is almost similar to those required for LLC with an additional requirement of permanent tax card application within a month from the receipt of commercial registration.
How is the Taxation for businesses in Qatar?
Companies with 100 per cent foreign ownership including those with partial shareholding are levied with a flat rate of 10 per cent income tax on the profits generated through business activities. This corporate tax rate is lower than compared to many other countries in the world.
Payments made to non-resident entities without any permanent establishment in Qatar attract withholding tax for the companies at a 5 per cent unified rate and includes interest, royalties, technical fees, commissions, brokerage fees etc.
Companies owned by Qatari and GCC nationals are tax-exempt but need to file tax and audited financial statements if the capital exceeds QAR 2 million.
Private associations and foundations; non-profit organizations; salaries, wages, and allowances; gross income from legacies and inheritances are free of tax too.
How to Employ staff when setting up a business in Qatar?
The hiring of employees can start only after you set up your business and receive your computer card. Approval from the Ministry of Labor and Ministry of Interior is mandatory for foreign employees before signing local employment contracts. All such employees must provide an attested copy of their degree certificate to the Ministry of Labor.
Why engage Support Services when starting up a business in Qatar?
Many business consulting firms can offer you help in your journey as an investor in Qatar by providing legal support and even finding professional Qatari partners for your company.
A business consultant can also organize office spaces for you through real estate brokers and as there is an increasing trend for coworking spaces in Qatar, your consultant with a local base can help you find one for huge cost savings.
Accounting services in Qatar can also be a great source of help in automating and managing your accounts, eliminating the need for internal accountants and accounting infrastructure, preparing financial statements on time, providing cost-saving suggestions and ensuring timely compliance with the regulatory requirements.
Conclusion
Although highly rewarding, a new business set up in Qatar is often complex with lots of regulatory requirements and complications. As financial risks may not be completely overruled, it is advised that you outsource accounting and taxation services in Qatar. Engaging a professional PRO services company with a local presence and knowledge of the society, culture and economy of Qatar can go a long way to help you cross over the initial bumps and achieve a successful business enterprise.
- Article, Kuwait
- June 28, 2021
With 1.4 million citizens, 3.3 million expatriates and 6 per cent of global oil reserves, Kuwait is a rich country with a bounty of natural resources, a global top ten oil exporter. Though the economy is primarily oil-based, the national development plan, New Kuwait Vision 2035 stresses economic diversification and enacted many reforms that help the country improve from 97 to 83 among 190 countries in the World Bank’s 2020 Doing Business Report.
What are the business opportunities in Kuwait?
Company formation in Kuwait can be immensely beneficial to foreign investors promising innovation and growth and mainly due to the below-mentioned reasons
- Water, power, land and labour are cheap and some are highly subsidized up to a whopping 86 percent.
- Rich and business savvy Kuwaiti nationals.
- Significant expansion in the building, project and construction industry.
- $104 billion National Development Plan for the construction of major roadways, a new airport terminal, new hospitals, new residential complexes, a new Kuwait University campus.
- New oil refinery, oil exploration, new power projects, and a new railway and metro system.
- Private construction and project development.
- Several project opportunities e.g. a proposed $10 billion electricity generation projects.
- The automotive, oil and gas, computers/ICT, telecommunications equipment, and construction equipment sectors look promising with recent government initiatives.
- Government’s high priority for healthcare infrastructure.
- Politically strategic country.
- A young local population.
- High average income and high domestic consumption.
- A well-managed financial market and a strong banking sector.
- Good quality infrastructure.
- Strategically located close to three major markets including Iraq, Saudi Arabia and Iran.
Who can start a business in Kuwait?
The foreign direct investment law 2013 only allows 100 percent foreign ownership if approved by the Kuwait Direct Investment Promotion Authority (KDIPA). Either Kuwaitis or GCC nationals must own a minimum of 51 per cent of any business share.
Total foreign ownership is only considered if the business set up is perceived as capable of creating employment and diversifying the nation’s economy. Besides, the business establishment must also contribute to export promotion and gainfully utilise Kuwaiti services and natural resources.
As per the latest reports from KDIPA, 37 foreign firms have so far been approved for 100 per cent foreign ownership.
What business structures are available in Kuwait?
If you are looking for investment opportunities in Kuwait as a foreigner, the country offers you many business vehicles to choose from.
A Limited Liability Company (LLC) structure, known as WLL (With Limited Liability) is most common, easy and fast to incorporate with a minimum share capital of 1000 KD. An LLC however, is not permitted to take part in banking or insurance sectors, with a maximum of 49 per cent stakeholding.
A joint-stock company alias Kuwaiti Shareholding Company (KSC) also permits a maximum of 49 per cent foreign equity participation and can be publicly traded on a local stock exchange whereas a closed KSC doesn’t permit publicly trading of shares.
A limited liability partnership is a partnership structure with two categories of partners, one being general partners liable for the business’s debts and the other one limited liability partners and profits distributed proportionally based on shares held.
A branch doesn’t need any sponsor and is only permitted for GCC nationals. Other foreign business establishments can only set up a branch office if approved by KDIPA.
Agency involves an agreement with a local commercial agent/distributor if you as a foreign investor are not willing to set up a local company in Kuwait. A commercial agent is normally paid a fixed fee or a percentage of profits from your Kuwaiti business with all terms and conditions detailed in the agency agreement.
A joint venture company, a JV is formed by a venture of two or more legal and natural persons with no separate legal entity and without any need of getting registered with the Ministry of Commerce and Industry and usually used in construction projects and conducted under the trade license of the Kuwaiti partner.
How to set up a business in Kuwait?
Setting up a business in Kuwait is not cumbersome, costs you KD 323 (approx. 1000 USD) and takes around a month. The steps involved are almost similar irrespective of the company types and include
- Submitting an application with details of your company’s capital, shareholding and other information to the department of companies of the Ministry of Commerce and Industry (MOCI) for registration.
- A background check by the ministry of commerce through the local municipality and the ministry of interior.
- Reserving a unique company name and submitting it to the Company Registry for name approval.
- Retrieving the letter addressed to the bank by the department of companies.
- Depositing your company’s paid-up capital at the bank and collect the receipt.
- Scheduling inspection by the local municipality and obtaining NOC within two weeks.
- Submitting Memorandum of Association (MOA) to the department of companies and receiving approval.
- Notarizing the MOA before a public notary.
- Filing signed and notarized copy of MOA with the department of companies.
- Registering with the commercial registry and receiving a Certificate of Registration (CR).
- Obtaining Commercial License from the department of companies.
- Registering with Kuwait Chamber of Commerce and Industry.
- Registering with the Public Authority for Civil Information.
- Registering with the Department of Labour and Social Affairs.
How are businesses taxed in Kuwait?
Businesses owned by the Kuwaitis or GCC nationals are free from corporate income tax (CIT). GCC companies with foreign ownership are taxed based on the extent of foreign ownership. CIT is levied on the profits and capital gains of foreign corporations carrying out business or trade-in Kuwait either directly or through an agent.
Income earned from activities in Kuwait is only considered for CIT subject to tax in Kuwait and at a flat rate of 15 per cent.
The religious tax Zakat is imposed on all publicly traded and closed Kuwaiti shareholding companies at a rate of 1 per cent of net company profits.
The country’s tax law does not levy withholding tax but all public and private entities are mandated to retain a 5 per cent sum of contract amount till that time a tax clearance certificate is presented.
Even though tax treaties are with several countries for the avoidance of double taxation, the interpretation is not always consistent or in line with the guidelines giving rise to frequent disputes.
What is the labour law in Kuwait?
Every business registered in Kuwait must employ local Kuwaitis based on applicable sector-specific requirements that may vary from 3 to 60 per cent of the total headcount.
Social Security contributions are mandatory for all employees at a rate of 10.50 per cent while the employer has to contribute a sum equal to11.5 per cent of the monthly salary of employees, up to a maximum of 2,750 KD towards the Financial Remuneration Fund.
Conclusion
Careful selection of business partners is the single most important step to a foreign investor while doing business in Kuwait. Outsourcing taxation, accounting and legal services can protect your business from future liabilities.
- Article, Oman
- June 17, 2021
For centuries, Oman has been engaged in overseas trading with its marine business vessels navigating across African, European and Asian shores. It is the third-largest country in the Arabian Peninsula and used to be mainly an agriculture-based economy before the discovery of oil and gas in 1964.
Oman started focusing on industrialization and economic diversification into non-oil sectors during the early 70s of the last century under the able and visionary leadership of Sultan Qaboos Bin Said who had undertaken many economic and social reforms to attract foreign investors for doing business in Oman.
Why set up a Business in Oman?
Many present-day economists and financial analysts say across the globe consider Oman as an ideal country for long-term business and investment opportunities because of its
- Strategic location.
- Diversified Economy.
- 100% foreign ownership in free zones and 70% in most sectors .
- Low corporate tax rates for companies with double taxation avoidance agreements with many countries .
- Membership with international agencies e.g. WTO, GCC, GAFTA.
- Foreign Trade Agreements with USA, Singapore, Iceland, Norway, Switzerland.
- Political and economic stability.
- Low Tax with zero personal income tax rate.
- No restriction on capital or profit repatriation, currency exchanges or dividend transfers.
- Tax exemptions on import of plant and machinery as well as raw materials for 5 years from the commencement of operation.
- Modern infrastructure with good roads, airports, seaports and communications.
- Investor-friendly business regulations .
What Corporate structures are available in Oman?
The Omani government does not put any restrictions on foreign investment and company formation in Oman. However, businesses in certain sectors including banking and finance, insurance, tourism, telecommunication, industrial factories, mining, food and beverages, schools, hospitals and employment agencies need specific permits to operate.
The company structures that are available to the foreign investors in Oman include
- Limited Liability Company
- Partnership
- Closed Joint Stock Company
- Joint venture
- Public Joint Stock Company
- Branch of a foreign company
Foreigners are allowed a maximum of 70% ownership in a company registered in Oman. Citizens of countries enjoying free trade agreement (FTA) with Oman can have higher % age of ownership.
The minimum share capital requirement for a foreign-owned LLC is OMR 150,000 whereas an LLC with 100% ownership of Omanis or GCC or FTA nationals, the minimum capital requirement is much lower, OMR 20,000.
The minimum share capital requirements for public and closed joint-stock companies is OMR 500,000 and OMR 2 million respectively.
Minimum capital requirements are substantially higher for banks, insurance companies including lending and financial companies.
How to set up a fully Foreign Owned LLC Company in Oman?
The most common type of locally incorporated company in Oman is an LLC and its formation involves the following chronological process steps
- Reserving a company name.
- Registering with Oman Chamber of Commerce and Industry (OCCI).
- Applying for Municipal License.
- Registering with a local PRO.
- Leasing arrangement for office space and warehouse.
- Registering with the Ministry of Commerce and Industry (MOCI) for Commercial Registration (CR).
- Preparing the documents.
- Registering with the Ministry of Finance (MOF).
- Registering with Customs.
- Registering with the Ministry of Manpower (MOM).
- Designing a company seal.
What documents are needed for setting up a 100% foreign-owned LLC in Oman?
The following documents are needed for an LLC in Oman
- The board of resolution of foreign shareholders.
- Memorandum and Articles of Association of foreign shareholders.
- Duly audited accounts as proof of a minimum of three years of operation.
- Tax registration certificate.
- Copies of Passport / Identity card of shareholders and authorized signatories.
- Receipt of initial deposit.
What is a foreign branch and How to incorporate a branch Office in Oman?
A foreign-owned company once entered into a contract with the Omani government or quasi-government establishment gets entitled to register and operate in Oman as a foreign branch. It doesn’t have a separate legal entity and is not a permanent structure. A branch office in Oman needs a local agent as a sponsor for managing visas and licenses. A minimum of 12% tax is the rate applicable to a foreign branch office. The same process steps need to be followed as in an LLC for setting up a foreign branch except paying a bank guarantee for obtaining an operational license.
Why prefer Free Zones in Oman for setting up a company?
Oman has three free zones and two special economic zones that provide incentives including tax holidays, import duty waiver, exemption on initial share capital requirements and 100% foreign ownership.
How foreign business entities are taxed in Oman?
Oman follows a uniform income tax rate for all types of business establishments irrespective of being either a corporate entity or a registered entity or unregistered.
Apart from Sole proprietorship businesses, the income tax rate is 15% for all taxpayers and LLCs that fulfill the conditions of SMEs.
Omani proprietorships and LLCs that meet some specified requirements are taxed at 3 %.
Income generated from the sale of petroleum products comes under the purview of petroleum tax and at a 55% rate.
There are no regional or local income taxes in Oman.
VAT has recently been introduced in Oman during April 2021 at a flat 5% rate as per Oman VAT Executive Regulation.
Are there any tax incentives announced by Oman to counter the effect of the pandemic?
A five-year tax exemption was proposed as an economic stimulus plan on 9th March 2021 for new businesses in manufacturing, agriculture, fishing, mining, tourism, and logistics and services that can bring economic diversification to the country and the tax exemption would be effective from the date of registration in the commercial registration certificate.
Some other tax measures have also been announced including
- Exempting hotel establishments from tax during assessment years 2020 and 2021.
- Permitting tax payment in installment during 2021 without any penalty.
- Suspending withholding tax on dividends and interest for an additional period of five years, from the tax year 2020.
- Permitting unlimited carry forward of losses for tax losses incurred for the assessment year 2020.
- Reducing tax rate to 12% (from 15%) for small and medium-sized enterprises (SMEs) for the tax years 2020 and 2021.
- Exempting tourism businesses from both tourism and municipal tax levy until the end of 2021.
- A grant of a preliminary license for a certain type of business (subject to certain terms and conditions) sufficient to allow them to conduct commercial and investment activities without waiting for the issuance of the final license.
- Granting permit for ready hiring of three expatriates on the issuance of commercial registration.
Conclusion
Even though the e-commerce market in Oman is in infancy, it was valued at more than USD 2 billion in 2020 and projected to touch USD 6 billion by 2026 growing at a CAGR of more than 20%.
The construction and logistics sectors though severely impacted by the pandemic are expected to witness a K shaped recovery as the Sultanate is undertaking many new initiatives.
Oman also stood committed to the international business fraternity as it signed the OECD tax treaty to prevent Base Erosion and Profit Shifting (BEPS).
- Newsletter, U.A.E
- June 15, 2021
Shifting a company’s operations into foreign soil for business expansion is usually a complicated, time-taking and costly affair and due to these very reasons, only a few companies venture upon corporate migration without solid economic reasons such as favourable labour and market conditions spurring business growth.
Both large and small enterprises can benefit from relocating overseas and only when there is a real-time strategically assessed move considering all possible benefits and hurdles. Though in general, the main reasons driving a business to migrate to another country are taxes, regulations, market access and labour cost, the situation this time is entirely different compared to the past as the recent covid pandemic is constantly demanding the companies to be more agile and resilient for survival and growth.
Brexit has been a source of uncertainty for UK based business entities ever since the country’s electorate voted for this decision. As the consequences were unknown and unpredictable, many global establishments including Panasonic, Barclay’s, Honda, Sony, HSBC shifted their European headquarters out of the UK to mitigate risks and challenges.
The European Union (EU) has long been the UK’s biggest trading partner and accounted for more than 40% of all UK exports and almost half of all UK imports in 2019. In all probabilities, the effect of Brexit on the UK’s business and trade over the next couple of years could result in
- Higher inflation
- Increased import/export costs
- Higher taxes
- Supply chain disruptions and logistics issues
- Skilled labour shortages
- Subdued market due to lower demand from the EU
Persistent business challenges of every kind are apprehended besides the prevailing higher inheritance tax even after the last-minute trade deal with the EU and the resumption of vaccination programs.
Many UK businesses are mulling over relocating their businesses to the UAE fully or partially and this was also confirmed in a survey conducted in the recent past when more than 30% of SMEs expressed their desire for complete relocation or additional facilities setups in the business-friendly and no-tax desert nation.
With UAE’s foreign ownership laws outlined in the country’s 2015 commercial companies law being amended, onshore companies will no longer require 51% of local majority shareholding effectively lowering overhead costs and easier business set up for foreign investors in both mainland and free zones in the country including the most sought after DIFC company formation.
The UAE has always been considered an attractive business destination for UK companies with more than 5,000 British business setups and 120,000 British citizens and expats residing in the country. The UAE also provides powerful business solutions exclusively meant for UK citizens.
Apart from mainland and DIFC, other UAE free zones are also becoming vastly tempting to the UK companies due to diversified platforms and easy and low-cost business setups and include DMCC company formation and JAFZA company formation. UAE free zones, besides 100% foreign ownership offer a plethora of other opportunities to the business communities than the onshore ones.
The UK has also proven and very successful track records in the field of finance, technology, FMCG, renewable energy, healthcare and IT which are in great demand in the UAE and other gulf countries further validating business relocations. It is also worth noting that the UAE is the largest export market for the UK in the Middle East region. Additionally, the UK is also the biggest foreign direct investor in the UAE with a great reputation for ethical business conduct.
Migration to the UAE by a UK company is simple and straightforward involving only shifting to a new jurisdiction while maintaining the same legal identity without affecting the customer base and brand identity.
Relocating your business isn’t an easy decision though, no matter how much more cost-efficient it may appear. If you are considering moving your company to another country several other things need to be considered that can ensure you make the most of the opportunities presented including business rules and regulations, cost of removing the existing setup, language barrier, culture and future market challenges.
Even when the Brexit challenges are kept aside, setting up a business establishment in the UAE has always been a compelling proposition due to the world-class infrastructure built over the years with unmatched communication, transportation, education and healthcare facilities besides zero corporate tax environment, 100% repatriation benefits on profits, multiple corporate structures availability and double tax avoidance treaties with 115 countries.
- Newsletter, Singapore
- June 15, 2021
Cross border innovative collaboration has now become possible and easy for local business establishments with company registration in Singapore as the country joins 45 member countries across the globe as a member of the Eureka network. Local Singapore companies will benefit from multiple opportunities by collaborating with foreign partners on innovative value-added projects and grow.
Eureka was launched in 1985 as an Intergovernmental network to facilitate and support real-world market-based R&D projects propelled by innovative technologies from academic institutions, industries and research centres. There are more than 45 member states in Eureka presently including the European Union represented by European Commission, South Korea as a partner country and four associated states namely Singapore, Canada, Chile and South Africa. The other members are from different countries from Europe, North America, Asia and Africa representing almost all the major continents.
Singapore embraced the Eureka network concept, extending its support and officially joining this network of international cooperation in research and development as an associate country on Tuesday, May 18 2021.
Partner countries working as a consortium on an R&D project must focus either on a new product or a service or a new process with a maximum of 3 years duration. No individual country or organisation is allowed to claim more than 70% of the total cost of a project. For a Singapore local company, it must meet the eligibility criteria of Enterprise Development Grant (EDG) before applying.
The agreement was signed by Trade and Industry Minister Gan Kim Yong and Austrian minister for digital and economic affairs Dr Margarete Schrambock at the Global Innovation Summit 2021 convened virtually.
As per this agreement, Enterprise Singapore (ESG) will support the facilitation and funding of joint innovation projects between entities from Singapore and other Eureka member countries and explore further partnerships within the network.
Singapore’s association with the Eureka network will enable local firms greater access to other markets by participating in joint innovation projects and by exploring various initiatives including
- Eurostars calls given twice a year for joint innovation projects between entities from 36 member countries
- Eureka Clusters, Thematic calls announced by European industries under Eureka which are normally long term and strategically significant
- Eureka Network Projects Programme, a flexible vehicle that allows Eureka member countries to build a country specific product, process or service theme as short term projects
Before joining the network officially, ESG worked with Eureka on three co-innovation calls, through which more than 40 Singapore firms worked on joint innovation projects with overseas enterprises from more than 20 countries.
– The first Eureka Globalstars-Singapore call was introduced in 2019 and there were seven Eureka countries including Belgium, Czech Republic, Denmark, Netherlands, Spain, Turkey and the UK. This call received 36 joint applications along with 17 projects across the medtech and advanced manufacturing sectors chosen for funding.
– In 2020, the second Eureka Globalstars-Singapore call was even bigger and included 14 participating countries e.g. Austria, Belgium (Flanders), Canada, Estonia, Hungary, the Netherlands, Poland, South Africa, South Korea, Spain, Switzerland, Turkey, Ukraine and the UK from the Eureka network besides Singapore. It received the highest joint applications to date among all the Eureka Globalstars calls, 84 numbers in total. More than 20 new projects across the transport and logistics, medtech and space tech sectors were selected for granting funds.
– Singapore was among the 16 countries that participated in the first Eureka Clusters Artificial Intelligence (AI) Call last year. Two projects involving Singapore companies were funded.
EverComm, an energy start-up, was one of the firms that received funding from the second Eureka Globalstars-Singapore call last year with the partnership of British tech firm Ionate to develop a platform for equipment performance optimization and now looking for opportunities in Taiwan and Thailand as well.
Artificial intelligence cluster call in 2020 also witnessed two projects involving local firms getting selected for grants.
Enterprise Singapore’s director of global innovation network Jonathan Lim commented, “Even amid the challenging conditions of a Covid-19 environment, Singapore companies actively participated in these co-innovation calls. This shows their keen interest to engage in research and innovation to develop stronger offerings, as well as their desire to capture new overseas opportunities. We are excited to become an Associate Country of the Eureka network as this provides the opportunity for Singapore companies to participate in all Eureka initiatives and tap into the know-how of entities from over 45 countries. We also welcome Eureka member countries to work with us, and leverage Singapore as a launchpad to access the growth opportunities in Southeast Asia.”
Earlier, Singapore local companies had to partner with a minimum of two other entities represented by two Eureka member countries as an Associate member. However, Singapore companies can participate on a one to one basis.
To benefit from the enormous opportunities presented to the investors by Singapore, it is advised that foreign investors seek support from a professional and credible local firm and find out how to start a business in Singapore as a foreigner and comply with ESG and EDG eligibility requirements.
- Newsletter
- June 15, 2021
Now it is time to reinvent accounting and get rid of some repetitive manual accounting processes. Many accounting and financial operations tasks can be readily automated resulting in smoother time savings, smoother operation and increased profitability.
Several accounting tasks have already transformed by enabling them to be automated from manual.
Different tools are in use to automate different accounting tasks though all are designed to improve efficiency by reducing repetitive manual work. As manual work is lessened, the accountants can free themselves from manual data entry and bookkeeping and devote their time to providing value-added advice on corporate taxation and tax incentives.
Here are six accounting tasks that you can immediately consider automating for time-saving with some basic understanding of automating accounting processes.
1. Bookkeeping
The most time consuming and repetitive task in accounting is undoubtedly data entry and perhaps the scariest amongst accountants during monthly and yearly closing time. Calculating returns and taxes are all about huge amounts of data and take hours and days for accountants to make manual entries and calculations with the associated risk of incorrect data entry inadvertently.
Data analytics software available in the market can save hours wasted on data entry with mostly 100% accuracy. Choose a software that can easily integrate into existing systems and tools including spreadsheets and CSV files enabling you to carry out calculations from multiple sources and secure it at a single location.
2. Invoicing
The process of sending and receiving invoices can also be easily automated with many benefits derived.
If you go for software designed for cloud accounting for small businesses that integrate invoicing software, you can create and edit invoices easily for emailing. Besides, the software will monitor if invoices have been paid or not and send automatic reminders making the process of invoicing faster, easier and more accurate. As data recognition and data upload are automatic, there is no need for manual data entry.
3. Tax Filing
For tax filing, accountants usually send clients a tax form for filling out tax details. Clients then take a printout of the tax form, fill and scan and then mail the filled-in form in a PDF format involving many embarrassing manual steps. Once the information reaches, the info is manually checked by the accountant for storing in a shared file.
We can easily avoid this manual and time-consuming task by replacing it with web forms and collecting information electronically. Templates from web forms can help you customize client information and allow clients to attach digital files that can be securely stored on an online platform. Easy integration with your emailing system is also possible with a web form software that can keep you posted on client’s tax information submission.
4. Expense Reporting
For many companies, much has changed over the last decade and a half about expense reporting for accountants. Previously these reports used to be handwritten or printed-out spreadsheets with receipts attached and submitted manually.
However, it is now possible for employees to automatically fill out and route expense reports without attaching supporting receipts as software is generally integrated with the payment platforms able to capture and store data.
Not only the accounting department but a great deal of administrative work is also taken away from the busy schedule of HRD.
5. Signature Authentication
Many accountants still demand tax paying clients to print the form, put signatures, scan and email it back to the accountants causing a huge discomfort and time wastage for the clients as they don’t have ready access to a printer or scanner most of the time.
Making use of eSignature technology in place of physical signatures with a pen and paper can be a much convenient and easy way to obtain customer signatures only needing the software provider to be compliant with the regulatory authority for eSignature.
6. Payroll services
Payroll can be time-consuming and a real nightmare for accounting professionals. Automated payroll software can take the burden off their shoulders by automatically calculating wages and applicable deductions such as TDS, PF, Gratuity, Bonus etc.
Even individual employees can securely access their payslips online, submit their attendance online and receive salary through electronic payments.
Automating accounting tasks will provide several advantages to the accounting and finance professionals however it also demands a careful selection with some advanced planning and research. Once the platform and software integrations are perfect, it would pave the way for a smooth accounting journey.
It is advised that you speak to somebody who is a qualified professional and has hands-on experience in accounting practice and automation. The best is to outsource accounting and finance services that can help you with necessary training besides an on-site demonstration.
- Newsletter, Singapore
- June 15, 2021
The Chinese corporates are eyeing the Association of Southeast Asian Nations (ASEAN) with increasing focus on Singapore and Malaysia as these two countries are all set to witness significant growth and opportunities in business and investment over the next year.
Approximately 43 per cent of companies surveyed echoed their confidence in Singapore company incorporation and company registration in Malaysia as leaders of future growth and expansion in the emerging ASEAN economy and a majority of Chinese corporates hopeful on ASEAN economic potential expect to see their businesses grow in near future.
The survey was conducted for the bank’s Borderless Business highlighting the China-Asean Corridor report and exploring prospects and opportunities for the future cross-border growth between both regions.
All the 43 China-based companies surveyed during last April considered Singapore and Malaysia as the most potential markets for growth and expansion opportunities of their businesses in the ASEAN.
While the highest number of China-based companies to the tune of 65% voted in favour of Malaysia, 60% of participants from the surveyed companies emphasized their future business focus on expanding in Singapore for increased market share by promoting sales and production opportunities. Thailand too figured in the list with 53% China-based companies expressing faith in the ability of this emerging ASEAN economy to do well during the post-covid period.
Singapore is being considered by the China-based corporations as a major regional procurement hub and 44% of these companies expressed their willingness to build a regional Research and Development (R&D) centre, an innovation centre basically in the country, as these companies plan to expand across ASEAN.
The survey observed that 56% of the companies have been focusing on the ever-increasing vast consumer market access as the most critical success factor while some 53% of similar companies considered government support and business incentives by the ASEAN as critical for business viability, stability and long term sustainability.
51% of the company participants mentioned that the availability of a reliable supplier base in the ASEAN is also one of the most significant rationales behind their business expansion in the ASEAN region while 47% of the companies were found in agreement with the fact that the presence of the Free Trade Agreements (FTA) network in the ASEAN is crucial for the world market access.
88% of companies noted that the Regional Comprehensive Economic Partnership (RCEP) in this region is one main reason for attracting foreign investments and even the China-based companies are seriously considering increasing their investments in the region by a minimum of 25% in the coming three to five years.
Chinese business houses were also seen to be aware of the risks and challenges within the ASEAN with 70% stressing upon the Covid-19 pandemic or other health issues. A good number of respondents, some 67%, considered ASEAN’s geopolitical instability and trade conflicts as business risks when another 67% of corporates raised concerns over the muted revival of the economies in this region along with a decrease in consumer spending.
One of the most important challenges cited was the way the Chinese business entities would align their business model to the existing ASEAN business environment and trade practices while initiating new business ventures in this region over the next six months and a year.
The survey revealed 56% of corporates strongly evaluating other business risks and challenges such as regional regulatory aspects, monetary transactions and payment methods and infrastructure besides relationship building with prospective suppliers. 56% of respondents have also been found strategizing on getting along with the regional supply chain and logistics.
During this survey, a sizable number of respondents comprising 58% of the China-based companies were found interested in executing digital transformation programmes and another 47% were seen looking for long term growth and sustainability driven by environmental, social and governmental (ESG) initiatives. Another 44% of the surveyed companies have been found eager in exploring new partnerships and joint ventures to enhance market share during business engagement in this ASEAN region.
Chinese companies have been seen seriously considering strategic support for business growth and expansion in the ASEAN. Approximately 60% of these Chinese companies were found desirable for suitable banking partners with a strong repute of finance and cash management potential and 56% of these companies also wanted to foray into trade financing services widely. Fundraising and corporate financing services projects are also being eyed upon by 56% of the corporates.
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