Singapore Still the Best Place for Entrepreneurs

http://www.penn-olson.com/2012/02/16/singapore-doing-business/

by SuperChihuahua • 14 years ago

46 67 14 years ago

ccarnino2• 14 years ago

I thought that Chile with its StartupChile was somewhere on the chart. As StartupChile alumn I can say that it is getting better doing business in Chile. For real!

latch3• 14 years ago

Maybe I shouldn't base my opinion on a single story, but this is pretty much everything I know about Startup Chile (and it isn't good): http://hervalicio.us/post/14915671294/on-startup-chile

einhverfr12• 14 years ago

One thing to keep in mind here is never trust the governments in most countries. Find the rules, play by them, but if you are getting money from the government, don't do that as a foreigner. It's asking for trouble.

Edit: I can't think of any government in the world where I would ask for money as a foreigner. That just strikes me as asking for serious trouble.

ccarnino2• 14 years ago

Herval is one of the few entrepreneurs who had a wrong approach (IMHO) to StartupChile. So expecations and what he got where not aligned.

From my personal experience and the 99% of the SUP entrepreneurs I can say that it's a good program

nirvana10• 14 years ago

Chile is pretty well ranked, coming in at #7 in the Heritage Foundation index, and #1 for Latin America.[1]

We were accepted to Startup Chile, and will be flying to Chile next week. I can't report on the state of Chile now, but I did visit the country in 2001 and remember being impressed at the time at how capitalist it was, compared to the USA. (culturally capitalist, which is not the same as having an entrepreneurial culture, which Startup Chile is working to improve.)

When you think about it, Startup Chile is a pretty audacious program. They put in twice the money of most bootstrapping programs, covering twice the period, and give you a 1 year visa for living and working in Chile. Can you imagine how hard it would be to get free one year visas for entrepreneurs coming to the USA? Even with a merit based contest like SU Chile?

There's a distinct possibility that we may remain in Chile for several years after the program, provided that continuing the Visa doesn't turn out to be a problem (and the reports I've read indicate that its generally not a problem at all.)

[1] http://www.heritage.org/index/default

wyclif3• 14 years ago

There is definitely something wrong with the "Georgia" flag.

SuperChihuahua• 14 years ago

Yeah - it looks like they took the flag from the state of Georgia in the US, not the country Georgia

http://en.wikipedia.org/wiki/Flag_of_Georgia_(U.S._state)

Like that guy in the state of Georgia in the US who got scared when Russia "invaded" the country Georgia

einhverfr12• 14 years ago

I know I will probably be down-modded for this, but I will add my $0.02 here.

The more I travel and live overseas, the more I think the US is a lousy place for startups.

Why? The regulatory climate in the US is fairly anti-small-business. Taxes are high but worse, they are complicated. The tax system is designed around the idea that people get paid fixed amounts. Those with variable incomes or the self-employed have a horrible time with estimated quarterly taxes esp if income fluctuates significantly.

Compare this with Singapore: For the wealthiest, the taxes approach 30% of income and instead of a tax bracket system, you have a series of compounding taxes (something like 5% of income over 40k + 5 % of income over 50k etc). Every additional dollar you make puts something in your pocket. No nasty "I moved up a tax bracket and so I took home less this year!" surprises. Additionally the taxes aren't owed in the year assessed. They are owed the following year, and the government accepts monthly payments on those. Your income has to fluctuate terribly before that can be the end of it.

Most other countries outside the US and Western Europe have much simpler tax codes, and the codes are more friendly towards small businesses (and even Western Europe is more friendly towards small businesses). In the US, however, multinational corporations can use the complexity to avoid paying taxes at all, and small businesses are heavily burdened.

When you add new laws like PPACA, things just get worse. PPACA is based on the idea that employers are the primary means of supplying health insurance, so when you are trying to hire your first few employees, you are going to have to get an expensive plan since you can't likely get into the larger pools, but more to the point, this is the case even if you don't have to offer the insurance by law, since if you don't offer it, your employee has to buy it him/herself. Since health care in the US is phenominally expensive, this is a dramatic drag on startups (compare the cost of having a baby in the US to anywhere else in the world and explain why it costs so much to me here. It's not just the standard of care. It's because our system is broken and geared towards an ecosystem of big businesses making a ton of money off it, and the PPACA makes this worse, not better).

Add to this the fact that the economic downturn has not created a major glut of high tech workers (in fact, quite the opposite), and it's just not the place I would say to work with right now.

So my list of countries to startup businesses in right now include:

Singapore

Colombia

Malaysia

Indonesia

Ecuador

Chile

Ghana

These countries all have issues of their own but aside from Singapore, one thing they all have in common is a surplus of educated people, good education systems, and sufficient infrastructure. They also have some semblance of stability (even Colombia is slowly getting there).

I don't think one is going to see superstars like Facebook coming from any of these countries. However I do think one will see a lot of good, solid businesses that will grow well, and prosper.

wyclif3• 14 years ago

Regarding insurance: I'm an American who was laid off my job after the property market collapsed (I was in civil engineering) and I got married. My wife got pregnant a year later, and we had no insurance. Fortunately, my wife is from the Philippines and we had the baby there. I paid for her care out of pocket. She received good quality care and the baby is healthy and happy. Having the baby in the US would have bankrupted me at the time.

einhverfr12• 14 years ago

Two of my three kids were born in Indonesia for that same reason. The one that was born in the US, even with Insurance, left us with medical bills we were paying for years.

cynicalkane• 14 years ago

"For the wealthiest, the taxes approach 30% of income and instead of a tax bracket system, you have a series of compounding taxes (something like 5% of income over 40k + 5 % of income over 50k etc). Every additional dollar you make puts something in your pocket. No nasty "I moved up a tax bracket and so I took home less this year!" surprises"

Is this not precisely how the American tax system works? At no point will you ever lose money by making an extra dollar. Each tax bracket is marginal; taxing only the money in that bracket.

einhverfr12• 14 years ago

My error. You are correct. However, the total tax rate is less, and there are no income taxes that are not progressive (social security is non-progressive because of the tax cap in the US).

But more to the point the taxes are easier to fill out, and payment terms are a lot easier than in the US. If you have ever been self-employed and struggled with taxes because of sudden business increases partway through the year, you will know what I mean......

T-hawk• 14 years ago

You do make good points, but I'll counter that the US is the place for startups because that's where the customers are. The countries you list do not have 200 million internet-connected individuals with first-world levels of wealth. Western Europe is similar, with a bit more friction in crossing jurisdictional boundaries, most notably in accepting and processing payments.

That said, it's certainly possible for a startup company to exist in Singapore or somewhere but target and sell to US customers. The communication and regulatory hurdles will be higher, but not insurmountable.

einhverfr12• 14 years ago

Those are important advantages.

I would also say that my experience also suggests that US primacy in world banking contributes to it too. If someone wires money from Colombia to the US, the price is not expensive, but Colombia to Indonesia is ($100 USD per wire? WTF?).

Also wiring ringgits from Indonesia (national currency is the Rupiah) to Malaysia (Ringgit) requires conversion into dollars and then wiring through New York. Some work on local banking connections would go a long way. That's probably one thing the Eurozone was intended to do for Europe. I am not sure you need a multinational every day currency though so much as an international reserve currency for the region....

kingkawn• 14 years ago

I wonder what proportion of top-voted comments per article start with, "I know I will probably be down-modded..."

It's taking pains to point out that you don't care about public opinion, which is, at least here, a way of ingratiating yourself to public opinion.

nirvana10• 14 years ago

Regarding insurance in the USA, I saw a paper by Milton Friedman in the 1970s who was evaluating the impact of government involvement in the healthcare industry. Prior to 1901, healthcare in the USA was completely private (charities are considered private as well, since they aren't controlled by government.) Between 1901 and the 1970s the US government at all levels started to take over health care, by funding hospitals, and by regulating everything.

He found that, as of the mid 1970s, this intervention had driven up costs 26fold, and had reduced availability, by an amount I can't remember.

Since then I'm sure the impact is even worse. But if you just use that number-- a $100,000 operation that might bankrupt you would have cost $3,846.15 if government hadn't gotten involved. So the impact of government is going from a cost you could afford to put on a credit card to bankruptcy.

gcv• 14 years ago

Do you happen to have a link to that Friedman paper?

vondur• 14 years ago

Prior to 1901, healthcare was not very advanced. I'm guessing the rise of technology, doctor credentialing, and the development of most modern drugs may have something to do with the price increase.

wtvanhest• 14 years ago

The tax system in the US works exactly as you describe the Indonesian tax system.

Moving up a tax bracket only taxes the additional income at a higher rate. This is the definition of a progressive tax.

latch3• 14 years ago

Looking at this without looking at the quantity and quality of available talent is the most absurd thing I've ever seen. It's easily the most important thing to measure, it's easily what would push the US near the top, but it's hard to measure, so..hey, let's just leave it out.

einhverfr12• 14 years ago

What has saved the US so far is really a combination of a few things:

The first is available talent but the advantage is not as great as you might think there.

The second is the way our ivy league schools have functioned as networking hubs for folks starting businesses. But that then just is helpful if you already have money.

The third has been the investor climate and the US financial strength. This is the factor that has traditionally tipped things heavily in the favor of the US.

The problem with this assessment though is that it shows that if you are in the capital class in the US, you have a relatively easy time but if you are not, then you are more or less shut out. The only way to get a decent-sized business started for such people is to do it overseas.

latch3• 14 years ago

I live in Hong Kong, which this report ranked 2nd. In my opinion, the advantage is staggeringly MONUMENTAL.

cdf5• 14 years ago

As a Singaporean, I have to agree Singapore is an excellent place for business, ON PAPER. Most of the pro-business comes from the fact that the government does not protect workers.

Female employee pregnant? Feel free to pre-emptively fire her, as long as it is not 6 months before the baby is due. (Even the 6 months is a relatively new ruling, used to be ok till the baby pops).

Found a cheaper employee? Feel free to fire the existing one. No reasons need to be given. Employment at will, they call it.

As you may imagine, the employees reciprocates this regime by displaying little loyalty. You only need the smallest pay rise to prise away a rival's employee.

So good luck starting a business here. There is a reason why Singapore is dominated by MNCs and government owned conglomerates while small enterprises have unnaturally high failure rate, despite being so startup friendly, on paper.

einhverfr12• 14 years ago

One of the big reasons I am looking at expanding into Singapore is it is a major regional commercial hub. This may off-set some of this in some ways.

However, I find your points very valuable and will certainly keep them in mind as I proceed (obviously it would only happen when partnering with a Singaporean who is already in the field so to speak).

saturn2• 14 years ago

What kind of business are you talking about? Your comment sounds very "labour vs. capital", is it relevant to the kind of start-up commonly discussed here?

If I started a business in Singapore (and I have been considering it) I would be hiring employees that I liked and respected, and I'd pay them fairly. I can't imagine that I'd fire them "at will" because I found someone a few bucks cheaper, or that they'd abandon me for a few bucks more. I can't imagine high-value knowledge workers playing these kind of games. Maybe discount supermarkets poach each other's check-out workers but rails programmers?

And even if you were hiring relatively blue collar workers, eg if you were setting up a factory, it seems to me that the fact of being in a hands-off regulatory environment would make employees respond even better to being treated well.

Just because in theory you can get away with acting like an asshole, doesn't mean you have to, or it is wise for you to do so.

einhverfr12• 14 years ago

I think you are right that the key is to get away from the labor vs capital direction.

It means ensuring that your early employees have a stake in the business. I would think that the stock options approach would be fairly similar.

The issue is that if there is a serious labor vs capital division, the struggle is going to hurt everyone.

cdf5• 14 years ago

You will find that sticking to your principles of paying fairly will be difficult, because Singapore is quickly becoming one of the most expensive cities to live in.

What you save in taxes, you will pay back many folds in rental and transportation costs. If you have never been to Singapore, you will not be able to imagine how much it costs to own a car in Singapore. Most expensive in the world, by far.

And because of the ease of hiring foreigners, you will find that there will be plenty of cheap rails programmers available... may not be the type you want, but you will find pressure from elsewhere questioning why you overpay your staff when cheaper ones are available.

And for a population conditioned to ill treatment, you will find that you will not be able to change the cynical culture overnight.

Lastly, if your competition is also based in Singapore, then you will be competiting with assholes with asshole level productivity and cost structures. Over the long term, you will win. But over the short term, you will be choked to death by the assholes who can promise more and cost less.

CervezaPorFavor• 14 years ago

Having worked in Singapore for many years, I believe the examples that you have given are the rare exception rather than the norm.

I don't think many companies would simply fire existing workers when cheaper ones are found.

Nor do I think anyone I know would make a job switch just because of a slight increase in salary.

hello_moto3• 14 years ago

What I learned so far is that Singaporean are well known to be "Kiasu".

I heard many stories from friends and parent friend's kids that working 10-12 hours a day is a norm and most business owners will squeeze the most out of them (them being mostly workers from abroad granted working visa).

Most business owners or locals know they got the upper hand.

ctek• 14 years ago

The should seem obvious to most, but the problem with countries that have laws that "protect" workers (as in Poland, where I've been working for the past several years) is that such laws dramatically suppress wages and job creation.

You can't get laid off for no reason (only so-called "mass" lay-offs where a minimum of 20% of staff has to go due to restructuring reasons - or, of course, disciplinary action) but the salary you employer pays you (much lower if such laws didn't exist) has to take into account that there can can be long periods of time where there is no work for you to do and they can't get rid of you legally.

alizaki• 14 years ago

This is way too generic. There can be no one best place for entrepreneurs because the natural ideal location is where your customers are (as a startup, you'll more often than not tend to have real customers in one specific geography first). That's your best place.

I think this should read: if you're customers are in South East Asia, you're amongst the luckiest entrepreneurs in the world.

kylemaxwell2• 14 years ago

There are other considerations regarding Singapore, like what many of us consider civil rights so basic that they should be human rights (freedom of speech and expression, for example), not to mention caning and hanging.

Low tax rates and business regulation should not be our only concerns in building the future.

nirvana10• 14 years ago

In the USA, your domain can be seized by the government at any time without any trial, and without any recourse. If you report abuse you received from a police officer, you risk being killed by that officer and it being made to look like you were in the commission of a crime at the time. I can't think of a single basic human right that is universally respected in the USA, and this goes from the right of self defense to the right of self determination or the freedom of association.

I'll take being caned over being killed any day.

There are always tradeoffs.

kylemaxwell2• 14 years ago

I certainly wasn't holding up the US as a great example of human rights, and I didn't mention it at all in my post. :)

fckin• 14 years ago

Awesome, HN is becoming reddit where every post that isn't bashing America has to be "BUT AMERICA"

cdf5• 14 years ago

Caning and hanging in Singapore is really nothing to worry about unless you cannot live without pot or vandalising cars. Criticising the government OTOH, can get you in loads of trouble.

Google "Chia Thye Poh" to find more about one of the longest held political prisoner in the world, without trial by the way. Or "Alan Shadrake" for Singapore's treatment of foreigners who dared to criticise the government.

Singapore in general has little respect for human decency, and the population is long conditioned to keep our mouths shut and focus on chasing money. You will not find Singaporeans protesting for rights or against injustice, because we dont dare and we cannot afford to.

If this contempt for human rights bother you, Singapore can be rather uncomfortable.

mhartl• 14 years ago

It's not obvious that the freedom to criticize the government in public is more important than being able to walk anywhere, anytime, day or night, without fear of being robbed. You have the former freedom in San Francisco, but not the latter; in Singapore, it's the reverse. It would be nice, of course, to have both, but when governance is of consistently high quality, the right to criticize the government isn't as important by definition. I can't think of any time it's not important not to be mugged.

As far as caning and hanging go, I'm pretty sure they do their best only to do those things to convicted criminals. Keep your nose clean and you'll be fine.

For what it's worth, I still think SF is a better place to be an entrepreneur than Singapore. Among other things, Singaporeans are loath to take risks on small unproven startups, whereas SF/SV is startup Mecca. The 'ease of doing business' metric suggested by the article isn't the same as 'best place to be an entrepreneur'.

jwingy2• 14 years ago

Entrepreneur is one thing - a tech entrepreneur is another. I don't think you can compare the labor pool and funding climate in SE Asia to the U.S. Plus the large, homogeneous, wealthy market of the U.S. is really the key to all this if you're looking to do a typical high growth tech startup.

Certainly Singapore has its advantages, but I think you'd be hard pressed to value them more highly over the factors I mentioned.

nirvana10• 14 years ago

You touched on a number of points, and while I'm not an expert in Singapore, I have been operating my startup outside the USA for the past 4 years.

Entrepreneur vs High Tech Entrepreneur: This is a reasonable distinction, so I'm going to only talk about high tech. High tech, to me, means, the internet plays a key part in the product, and in my case, it is where the entirety of the product lives. So, software and virtual goods or information or services, rather than a factory and manufacturing, etc.

Labor Pool: The labor pool for a high tech company is global. I don't care where an employee is working, and the companies I admire are very globally diverse. This is becoming increasingly common it seems- for instance one engineer I know of is living on a beach in Thailand working for a US company ostensibly based in Boston (but with employees in at least a dozen countries and states.)

So, the labor pool is global, for high tech businesses (not so much when you need a factory.)

Funding Climate- Yes, if your business is selling stock in your business, then you want to be located within an easy board meeting commute of Sand Hill Road. But one of the aspects of high tech business these days is that the funding needed is vastly smaller than before... you can self fund if you're a highly paid employee who lives frugally and puts away $40k a year for 5 years, for instance.

There does seem to be a segment of the population that thinks "high tech startup" is only that segment of companies that are trying to be the next facebook-- that is, bets on really long odds that require large amounts of outside capital. I think that's kinda silly when you can self fund and pursue businesses with much better odds, and thus have risk adjusted returns vastly higher. (would you rather have a %1 chance at being a billionaire, or a %75 chance at being deci-millionaire?)

The large, homogeneous, wealthy market of the USA: Can be addressed by businesses anywhere. There's no need to locate in the USA to address the US market. Further, in many business areas, the US market is less than half. For instance, I'm currently earning around %35 of revenue from the USA, with the majority coming from overseas, non-english speaking countries, because I simply took the time to translate the product into those languages. I don't even know the cultures, and haven't advertised to them, etc. But they are the majority of my income.

I think the USA wins on venture capital, sure, but loses in just about every other regard.

Plus, if your company has X amount in capital, would it be better to be located in the Bay Area where your burn rate will be 6-10 times as much as it might be in, say, Thailand?

I know americans think that America is number one in a large number of areas... but once I left america, I started to see that the american perspective on the world is pretty distorted.

jwingy2• 14 years ago

Yes, all good points. As I think we both seem to be aware of, it really depends on the type of business you're doing. It could be high growth, or slow growth day 1 revenue generating machine, or something in between. It could be primarily virtual, or an older business model with a tech twist.

So, depending on your business model and your background, whether you're based in the U.S. or outside of it, both come with their own sets of challenges. I just think more business models have a higher probability of success if the company is based in the U.S. than they would if they were based in SE Asia.

From what I've heard by talking to other tech startups in the area, if you're looking to do a high growth type of startup, that can be difficult in this region and the reason is primarily due to funding. There's a cultural difference in the investors here that boils down to risk aversion. Asian cultures are typically risk averse and this no doubt applies to Asian investors as well. They expect you to already be making money or if you're not making money, then they'll want a sizable stake of equity - sizable enough to make the founders feel like employees rather than owners. One could get investment from firms in the U.S., but I've not heard of many who have gone that route, and I suspect many investment firms unfamiliarity with Asia could make that a little difficult.

Now if you want to talk about bootstrapping, then anything is possible within the limits of your abilities and tolerance.

If you're based in Asia but targeting the U.S. market, that's again not an insurmountable obstacle, but you'll need to be able to talk to your customers, and when your customers are based in the U.S., the time difference, distance, and being culturally disconnected can make this difficult at times. Possible yes, but at an extra cost.

So again, it really depends on what your business is doing. I think being in the U.S. gives you more options though.

wilfra• 14 years ago

Singapore is one of the most expensive places in the world to live and do business. If you are Eduardo Saverin, maybe Singapore looks great. If you are looking to bootstrap, probably not the best location.

nirvana10• 14 years ago

I'm curious as one of the places Singapore highly ranked was the difficulty in starting a business. Yet it seems from the company formation services online, Singapore costs around $5,000 to open a business. (compared to $50 in Texas, for instance). I would think if it is straightforward (and really starting a business is nothing more than registering it with the government so they can tax you-- essentially the creation of a database entry) -- why is it so expensive?

Maybe it can be done online for cheap, and thus those who are charging all that money are people who are giving a lot of advice. (I haven't looked into it closely.)

ArchD• 14 years ago

"$5,000 to open a business" -- citation?

zackyap• 14 years ago

It costs $300 SGD to register a company in Singapore. $5000 probably includes cost of other services such as legal and secretary fees.

nirvana10• 14 years ago

I think the issue is the requirement to have a registered director located in Singapore.

Also, if you plan to apply for residency using the EntrePass it appears you need to have $50k SGD in "paid up capital", which is about $40,000 USD. I'm not sure what "paid up capital" means, though. (EG: is a business making $4,000 a year in profit valued at $40,000 thus considered to have $40k in paid up capital? Or does it mean you need to put $50k SGD in a local bank to sit there as a form of a bond?)

czcar2• 14 years ago

I setup a business in Singapore last week.

We used a professional services firm - they cover all the Gov't requirements regarding minutes, company secretary etc.,

Was SGD$800

nirvana10• 14 years ago

Sounds great. Were you happy enough whit them to recommend them? Are you located in Singapore our outside of it? (one of the issues is we're located outside of Singapore)

mrschwabe2• 14 years ago

Singapore is an excellent example of how easy it is for governments to encourage a vibrant economy. 40 years ago it was literally a third world country. They changed strategy and it wasn't rocket science. Less taxes, less interference = thriving business environment.

cdf5• 14 years ago

"Less interference"? The Singapore government left their fingerprints everywhere here. If you want to hold Singapore up as an example, you are really advocating the government poking their nose into everything.

How would you like to have all your telcos, transportation companies, media companies, all owned or controlled by the government? Welcome to Singapore.

mrschwabe2• 14 years ago

True, true - my bad - the tax structure is pro-enterprise but you're exactly right the government there is overreaching. And not setting a good example for civil liberties either - a bag of weed can get you sent for execution!

kschua• 14 years ago

Arguments aside, this is just a starting point for those who wish to set up a business in Singapore.

1) www.acra.gov.sg - Companies and businesses need to be registered with the authority. There is information here on the type of companies you can set up etc

2) http://www.edb.gov.sg/edb/sg/en_uk/index/why_singapore/Guide.... Another government site to get you started

3) Setting up offshore office. You can do a google search for "virtual office singapore". These guys provide a basic address which you can use when you register a business. If you are setting up a Private Limited company in Singapore, you will need a company secretary, which most of these virtual office will also provide for a price. Most also have a package where you can get everything ie registering a business, company secretary, virtual address for a year for less than SGD $1000

rbanffy• 14 years ago

I'd suggest using the ballot and the soap boxes first.

Too• 14 years ago

Uhhh, based on what?? This is just a long list of countries on a top list without any specific measures or anything. The only explanation is that it's best in some other field but that position is equally unexplained.

I'm not doubting Singapore or the rest of the countries can be good for entrepreneurs but this infographic is just fluff.

hogu• 14 years ago

can anyone comment on tech scene? I might be moving there in a few years

Singapore Still the Best Place for Entrepreneurs

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