Start a business in Singapore
When we talk about entrepreneurial hubs, locations such as Israel, Silicon Valley, or Berlin spring to mind. But Singapore is not far behind; thanks to intelligent government decisions and sound governance, the country has become an ideal starting place for new businesses.
Singapore's Block 71 was described by The Economist as “the world's most tightly packed entrepreneurial ecosystem”. It's home to hundreds of startups, only a few miles away from government-sponsored innovation hubs such as the Fusionopolis.
It might appear somewhat surprising that a country like Singapore (long known for its respect for traditional values and its appreciation of job security and structured career progression) should today be a hotbed of entrepreneurial innovation. However, a spate of government-led policies have pushed locals to try their hand at entrepreneurship and the Singaporean scene is now booming. The forward-looking government of Singapore has also sought to draw foreign entrepreneurs, and the most convenient pathway is the Singapore Entrepreneur Pass (EntrePass) scheme. Ranked as one of the best places in which to do business, and with a corporate tax rate of only 17%, Singapore truly presents the ideal conditions to set up a thriving business.
The EntrePass Scheme
Launched in 2004, the objective of the EntrePass is to attract foreign entrepreneurs to Singapore. It's targeted toward foreign entrepreneurs who want to relocate to Singapore. Alternatively, should a foreigner wish to start a company while remaining abroad, other incorporation procedures can be considered. The incorporation of a company only needs to happen after an EntrePass application is approved.
Eligibility
First of all, you need to have started or want to start a private limited company that's registered with ACRA. Not only that, but it needs to be venture-backed or has innovative technologies. If it's already registered, the business has to be under six months old on the date you submit your application for the EntrePass. If it's not, then you can register your business after you're approved.
In addition, you must meet the criteria as an entrepreneur, innovator, or investor.
As an entrepreneur, you need to have funding of at least $100,000 from a government vehicle, government-recognized venture capitalist, or business angel. You also must be an incubatee at a government-recognized incubator or accelerator, and you need a business network and entrepreneurial track record. What this means is you need to have founded and sold a tech company, raised significant funding from investors before, have been or are being incubated by an internationally-known incubator or accelerator, or you can show how you can contribute to the growth of your Singaporean business. This might be done by requesting letters of intent from prospective customers.
As an innovator, you need to hold an intellectual property (IP) that's registered with an approved national IP institution. This IP must not be easily replicated and should be significantly more advanced than current tech on the market. Also, one of the company's shareholders must be the owner of the IP. You should know that expired IP will be considered if one of the company's shareholders is the owner of it. You must also have an ongoing research collaboration with a research institution through the Agency for Science, Technology and Research (A*STAR). This collaboration needs to be related to your proposed business, and you need to be involved with the collaboration. In addition, you need to prove that you have outstanding achievements in your area of technical or domain expertise.
As an investor, you need to prove you have a good investment track record. To do this, you can provide plans you may have for investing in other local startups. You can also show at least 8 years of experience as a senior management professional or executive in a large corporation.
Following approval, entrepreneurs need to incorporate the company and satisfy capital requirements within 30 days. There are strict eligibility requirements for applicants of the EntrePass, including relocation to Singapore, the potential to create local employment, as well as the degree of innovation of the business idea. For example, businesses such as coffee shops, employment agencies, or bars wouldn't be eligible for the pass. More importantly, the business needs to be registered as a Singaporean private limited company and not as a sole proprietorship or partnership, with a minimum paid-in capital of S$50,000. Applicants will need to furnish a business plan, including details of the business idea, market analysis, a marketing and operating plan, as well as financial projections.
Depending on the nature of the company and the available budget, it might be relevant to seek the assistance of a professional firm to provide guidelines, support in the preparation of documents, and any guarantees that might be required by the authorities. For further details on the scheme, consult the EntrePass website of the Ministry of Manpower.
How to apply
Since you don't have an employer, you can apply directly for the EntrePass yourself. You'll need to gather several documents to do so. They include your passport, pass employment testimonials (in English), and resume. If your business is already registered with ACRA, then you'll need to also submit its latest business profile or instant information from Bizfile.
Also, you'll need to send in your business plan (in English). It can only be a maximum of 10 pages and you'll need to include what you're offering (product or service), an operation plan, market analysis, profile of your management team, and any other supporting documents, such as product certificates and licensing agreements. You might be asked to submit additional documents, so be prepared for that.
If any of your documents aren't originally in English, you must submit both a copy of the original and an official English translation.
You'll need to pay S$105 for the application. When you receive your EntrePass, you'll need to pay another S$225. If you need a Multiple Journey Visa, you'll need to pay an additional S$30.
Do note that it takes around eight weeks for your EntrePass application to be processed. If you're currently in Singapore on a Short-Term Visit Pass, you won't be able to extend it if it expires before your EntrePass is approved.
EntrePass renewal
When you're approved for your initial EntrePass, it's good for one year. You can then renew it again for one more year, so long as you meet the renewal criteria.
To be eligible for a renewal, your company must be a private limited company registered with ACRA, and you need to own at least 30% shareholding of it, have an individual profile and claimed your company profile on Startup SG Network (SSN).
You'll also need to prove there's been ongoing business activity and that it's venture-backed or has innovative technologies. You must also create a certain amount of local employment and business spending based on the years you've held your EntrePass.
After the initial renewal year, you can then renew afterward for two years each time, so long as you still meet the criteria for renewal.
Passes for your family members
Are you planning on moving your loved ones over with you? Then you might be concerned about whether you can do so on the EntrePass. The good news is, you can!
To bring over your spouse (legally married or common-law) and unmarried children under 21, your total annual spending must be at least $100,000 and you need to employ at least 3 full-time employees or 1 local professional, manager, or executive.
To bring over your parents, your total annual business spending must be at least $200,000, and you need to employ at least 6 full-time employees or 2 local professionals, managers, or executives.
If you meet all the criteria above, you'll need to either apply for a Dependant's Pass or a Long-Term Visit Pass. Find out more about which passes you'll need on MOM's page.
Setting up a business while securing Permanent Residency
Singapore also provides other schemes for individuals willing to set up businesses in the country. The Global Investor Programme (GIP) provides a pathway to permanent residency (PR) through the launch of a new business corresponding to an investment of S$2.5 million or more. Alternatively, foreigners can also invest similar amounts in existing businesses.
There are specific criteria to be met in order to be considered for the scheme, including having three years of business track record and the provision of audited financials. Specific industries are also targeted and include aerospace engineering, electronics, shipping, and pharmaceuticals, to name a few.
Setting up your business itself
What's great about Singapore is that anyone can set up a business, whether they're a native Singaporean or a foreigner, and you can own its 100% shareholding without any difficulties either. All that matters is that they're over the age of 18 and they have a clean record. This means you can't have a criminal background, and you must not have declared bankruptcy at any time.
Appointing a Local Director
One of the requirements for foreigners starting businesses in Singapore is they must appoint a local (or resident) director for their company. Whereas on the other hand, Singaporeans can be the resident director. They can also self-register their company on the BizFile portal, while foreigners must have a registered fling agent to do so.
To appoint a local director, you need to choose someone who is a Singaporean. They can also be a permanent resident or an EntraPass holder who's local. Or you can appoint a nominee director, or you can form a company by getting an EntrePass yourself first.
Registering your company
You're allowed to register a private limited company, sole proprietorship, or limited liability partnership. Most people opt for the first choice, as you can have up to 50 shareholders and at least 1 local director. It pays corporate tax, which is anywhere between 0% to 17%. If you need loans, then this is the best choice since banks and financial institutions consider it much more credible than the other two options.
A sole proprietorship is only favorable if your business is mainly risk-free. It's not a separate legal entity from you, which a private limited company is. This means that if there are debts and losses, you're responsible for them. Also, you pay a personal income tax that's between 0% and 22%.
Lastly, you and at least one other party can form a limited liability partnership. It has a separate legal existence from its owners, but you might be liable for its losses if you're found to be careless in your actions.
Registering your foreign company
Perhaps you've already established a business in your home country, but you'd like to register it in Singapore to take advantage of opportunities in that country. In that case, you can either form a subsidiary company, branch office, or representative office.
The best choice for foreign corporate companies is to incorporate a subsidiary company. Your parent company owns 100% of the subsidiary's shares, but they're still separate entities. This means the parent company's assets can't be used to pay the debts and losses of the subsidiary. If you choose this route, you need to send at least one employee to take charge in Singapore.
Branch offices are better choices for SMEs. The branch office is part of the parent company as an entity, which means if losses occur, the parent company is responsible for them. If you pick this option, you need to hire at least one Singaporean.
A representative office is meant for conducting research in Singapore. It's not a separate legal entity from the parent company and must have fewer than five employees. Because its purpose is research, it can't make a profit. Your parent company must be older than three years with an annual turnover of over S$250,000.
Seeking help from government agencies
There are numerous government entities working towards improving the ease of setting up businesses in Singapore. To start with, the Accounting and Corporate Regulatory Authority (ACRA) provides registration services and acts both as a regulator and facilitator. Other agencies such as the Monetary Authority of Singapore (MAS), the Economic Development Board (EDB), and Enterprise Singapore (merger of SPRING Singapore and International Enterprise Singapore) can provide useful information, especially in the case of companies wishing to expand into the country.
Singapore is a great place in which to set up a business, especially when it comes to high-end, innovative ideas. Whereas immigration laws are becoming increasingly stringent in other parts of the world, Singapore has set up multiple schemes to draw entrepreneurial talent. Make the most of it!
Useful links:
Accounting and Corporate Regulatory Authority
