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Singapore Records Promising Growth in Business Formations

September 28, 2017 Business News No Comments Email Email

2Q 2017 sees continued interest by foreign investors from China, Malaysia, Indonesia, India & AustraliaInvestors and entrepreneurs from Malaysia, India, Australia, Indonesia and China continue to invest in Singapore in 2Q 2017, according to the Hawksford Singapore’s latest Singapore New Business Trends Report, with the British Virgin Islands, Cayman Islands and Hong Kong being among the top foreign source countries/regions of subsidiaries formed.

Totaling 15,855 in Q2 2017, the number of new businesses formed in Singapore signaled an upswing in business sentiments in spite of a slight 1.5% decline quarter-on-quarter (QoQ).

This positive outlook arose as the 10.1% decline in business formation year-on-year (YoY) was largely attributed to a fall in the formation of Sole Proprietorships and Partnerships. These categories typically hike in an underperforming economy.

(I) Business Formation by Entity Type

Backed by a global economic rebound, the number of business formations in the Non-Exempt Private Limited Company (Non-EPC) and Foreign Company categories registered a 19.1% and 64.3% increase QoQ in Q2 2017 respectively. Despite these categories accounting for 9.8% and 0.3% of total businesses registered in the quarter, this is reflective of an uptick in business optimism as Non-EPCs are typically larger companies. In addition, the rise in the number of Foreign Companies formed underpins Singapore’s reputation as the preferred launch pad for regional business operations.

(II) Business Formation by Share Capital

The share of businesses formed in each of the 4 capital tiers remained largely unchanged in Q2 2017, with the majority of companies formed being in the lowest share capital bracket (of less than S$10,000). Consistently ranked as one of the easiest places to do business in the world, Singapore is widely-recognised for its pro-enterprise, business-friendly environment that enables quick and easy set-up. Companies, for instance, are allowed to be incorporated with a nominal share capital of just one Singapore Dollar.

(III) Business Formation by Shareholding Structure

In Q2 2017, wholly locally-owned companies and companies with foreign ownership accounted for half of company formations each.

Within the share of companies with foreign ownership, the share of wholly-foreign held companies increased by 1% QoQ to 38%, while the share of companies with mixed shareholding dropped marginally to 12% against 13% in the preceding quarter.

The figures, which remain largely stable QoQ, hint at global recovery and a revival of regional business prospects influenced by accommodative monetary policies and increased government spending in Asia.

(IV) Business Formation by Shareholders’ Country

Singapore continued to attract investors and entrepreneurs from Malaysia, China, India, Australia and Indonesia in Q2 2017 on an individual level. The share of these source countries remains largely unchanged against the preceding quarter.

“Given the upswing in a global economy that is fast gathering momentum, we expect business formation in Singapore to register a spike in the second half of the year,” said Ms Jacqueline Low, COO, Hawksford Singapore.

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