Doing Business in Singapore or Malaysia – Know those 2 Country Advantages
As two of Asia’s most popular business destinations, Singapore and Malaysia are constantly pitted against each other in terms of which country makes the better business destination.
Among the traits that Singapore and Malaysia have in common include that both countries have been ranked in the top 25 by the World Bank as the best countries in the world to do business. They are also known for their friendly tax system and how easy the company incorporation process is.
Singapore and Malaysia – Ease of Doing Business
Singapore was ranked No. 2 by the World Bank when it came to ease of doing business back in 2016. In that same 2016 rank, Malaysia was placed in the 18th spot. The two countries were ranked based on business setup, ease of trading across borders, taxation and the procedure for employing foreign workers, monetary freedom, technology, tax burden, corruption, and innovation.
Singapore was also ranked as the 5th best country for doing business by Forbes, while Malaysia ranked number 17 in the same survey. In terms of bureaucracy, the Political and Economic Risk Consultancy ranked Singapore as the most efficient bureaucracy in Asia while Malaysia sat at the 7th position.
When it came to company incorporation, the Singapore company incorporation process can be completed in 1 to 2 days. By comparison, the Malaysia company incorporation process takes 3 to 9 business days.
Singapore and Malaysia – Taxation System
In the World Economic Forum’s 2016 World Competitiveness Report, Singapore was ranked in the 10th position while Malaysia came in at the 76th position. Malaysia follows a double tier tax system and all taxes must be made to the Inland Revenue Board.
Singapore has a lower corporate tax rate of 18% while Malaysia’s corporate tax rate sits at 19% for Small and Medium Enterprises.
Singapore and Malaysia – Company Incorporation Process
The company incorporation process in Singapore requires that you conduct a name search and approval for that name before you register your company. Company registration applications can be filed at the Company Registrar’s website. You will be issued with a notice of either approval or rejection within the same day. All company incorporation in Singapore documents must be filed within 90 days of the name approval, and this can be done online too. You will receive an email which serves as a Certificate of Incorporation. You will then be required to apply for the Goods and Services Tax number which will be issued by the Inland Revenue Authority of Singapore if your company is expected to exceed a turnover of SGD1 million annually.
The company incorporation process in Malaysia requires that you conduct a name search and approval be obtained before you can submit an application with the Companies Commission of Malaysia (SSM). The company incorporation process can be carried out online at the SSM’s MyCOID portal, and you will be issued with a notice informing you if your application has been approved or rejected within 1 business day.
In Malaysia, it is the Company Secretary who will submit the incorporation documents to the SSM on behalf of your company. This can be done either in person at the SSM office or online. A Certificate of Incorporation within a day if all your documents are in order. You will also be required to register with the Inland Revenue Board to obtain a tax file number, and register with the Employees Provident Fund and Social Security Fund for your company’s employees.
Singapore and Malaysia – Trade and Foreign Investments
In terms of ease of trade, Singapore was ranked number 1 out of 191 countries by the World Economic Forum’s Global Competitiveness Index. Malaysia came in the 18th spot, and both countries were assessed based on how easy it was to access the foreign markets, domestic trade, import and export, trade regulatory environment and customs administration.
One thing that Singapore and Malaysia both have in common is the ease of regulations when it comes to foreign investment. Both countries do not have visa restrictions on foreigners when it comes to incorporating companies. If a foreigner intends to hold more than 30% shareholding in certain businesses in Malaysia, they must acquire prior approval from the foreign investment committee. In Singapore, foreigners can acquire 100% ownership without prior approval needed.
Starting a Business in Singapore and Malaysia
Whether you intend to begin your business in Singapore or Malaysia, both countries hold promising opportunities, especially if you intend to expand into the South Asian markets moving forward.
