Looking Further to Indonesia Business Situation in Singapore.
Singapore and Indonesia have a close and friendly relationship. To advance mutual interests, Leaders and Ministers from both countries cooperate closely bilaterally, as well as at ASEAN and other international forums. They have frequent high-level meetings, such as the annual Leaders’ Retreat and the Ministerial Meeting of the Six Bilateral Economic Working Groups. These interactions deepen Singapore’s relations with Indonesia on both a national and international level.
Strong economic cooperation is the bedrock of their relationship. In 2019, bilateral trade reached USD 59 billion, and Singapore has been Indonesia’s biggest foreign investor since 2014. Both countries enjoy strong collaboration in a variety of areas, including education, culture, defense, and the environment. The strong cooperation between both countries will also make an impact on Indonesia’s business in Singapore. Thus, if you wanna take a look and enter Indonesia’s industries, this information will be important to know.
Overview of Singapore as a Place to Do Business
Singapore has ranked second of the easiest places to do business based on the World Bank’s Doing Business Report 2019. The reason behind this is the ease of doing business in the country, its tax jurisdiction, a pro-business attitude, flexible immigration policies, and the world’s best professional workforce, making prominent opportunities for access in the international market.
The ease of incorporating a business in Singapore can be seen from the procedure that takes only 24 hours. Singapore also deals with construction permits to enhance its risk-based approach. This is to improve public access and streamline the process to obtain a construction permit.
With the updated agreement on the elimination of double tax avoidance and prevention of tax evasion that was signed on February 4, 2020, Indonesian companies could enjoy lower withholding tax rates on royalties. The previous single tariff of 15% has been reduced to 8% for industrial, scientific, or commercial equipment, and 10% for copyrighted works of literature, arts, and film. In addition, the tax rate on branch profits has also been reduced from 15% to 10% (Asean Briefing, 2020).
Indonesia Business in Singapore
With the benefits of the business environment in Singapore, many countries have decided to expand their business to the country, Indonesia is one of them. Here are some success stories of Indonesia business in Singapore:
- Telin Singapore
Telin Singapore is a member of TELKOM Group. Telin Singapore provides ICT gateway from Indonesia and beyond. By 2016, Telin Singapore was the first and only data centre to receive Uptime Institute’s Tier-IV design certification. This certification has proved the company’s commitment to implement critical data centre infrastructure facilities that are concurrently maintainable and comply with the highest international standards.
Gojek is a multi-service tech platform based in Indonesia, that provides access to a wide range of services including transport, payments, food delivery, logistics, and many more.In 2019, one year since Gojek’s first launch in Singapore, the company has hit the major milestone of 10,000,000 trips. Gojek’s driver-partner has also completed 4,000 trips and counting — and the top customer’s record of 640 trips.
Rentfix is a digital platform to monetize available spaces and tenants to best match their flexible renting needs as well as buying and selling properties within one integrated platform. Rentfix had expanded its business to Singapore by march 2021 and already has 28 retails.
COVID-19 Impact for Business in Singapore
Singapore experienced a low base for the Gross Domestic Product (GDP) last year. As COVID-19 ripped through the Singapore economy, many firms had to return to the planning stage to figure out contingency plans to remain in business. The economy swiftly slipped into contraction, setting a grim record for the second quarter even with nearly S$100 billion in stimulus, and now set for its worst-ever recession (Channel News Asia, 2021).
However, the rising consumer confidence as vaccines are deployed and the release of pent-up demand will make sure that all economies rebound by varying degrees this year. Singapore’s GDP is projected to gradually recover and expand by 4.0 to 6.0% this year, although GDP is not likely to return to pre-COVID levels until the second half of the year at the earliest. The pace of recovery is also expected to be uneven across sectors.
The tourism and aviation sectors are predicted to remain below pre-pandemic levels even by the end of 2021, while outward-oriented sectors are likely to benefit from the increasing global economic activity. The economies of Singapore’s major trade partners also will rebound — China by 8.2%, the US by 3.9%, European zone by 5.2%, and therefore the ASEAN-5 (Indonesia, Malaysia, Philippines, Thailand, and Vietnam) by 6.2%, consistent with the International fund (IMF) in its latest (October) World Economic Outlook (The Strait Times, 2021).
What Makes Singapore A Good Market For Indonesia Business?
Singapore ranks the 10th most recent ecosystem in the world. The country is consistently ranked number one for doing business, by the World Bank. For Indonesia itself, Small and Medium Enterprises (SMEs) in Indonesia have a great opportunity to market their products in Asian countries, especially Singapore. According to the Chairman of the Indonesian Micro and Small Entrepreneurs Association (Hipmikindo) Syahnan Phalipi, many souvenir products sold in Singapore are actually produced in Indonesia (Business.com, 2019).
According to Tania Gromenko, Founder of Singapore Guidebook (SGB), business people in Singapore are very open to business actors in Indonesia to establish strategic partnerships, be it exhibitions, cross-promotion or co-branding. As a marketing and advertising services company that often promotes Singapore to Indonesia, Tania mentioned that this is an opportunity for SMEs and corporations to partner with colleagues from neighboring countries. It is very positive to mutually support the real sector between the two countries (Kontan.co.id, 2019).
Register a Company in Singapore from Indonesia
Singapore is an awesome place to do business. A part of its business-friendly laws and flexible immigration policy, one big reason Singapore has dominated a long list of people who want to do business there with another excellence of doing business in Singapore is its simple method for filing taxes. The process is often summarized in three simple steps and also an additional process following the incorporation (Singapore Company Incorporation, 2020).
Choose your business entity
Although many options exist, new companies need to register with the Accounting & Corporate Regulatory Agency (ACRA) as “private limited companies” because of its scalability. On top of that, shareholders are not responsible for debts and losses beyond their share capital. Designated intrinsically, your company is recognized as a taxable entity.
Set up your company
The limited company private is governed by the Singapore Companies Act and must suit its laws under ACRA and, therefore, the Inland Revenue Authority of Singapore (IRAS).
The designations include:
- Name of the company — must be approved by the ACRA
- Shareholders — minimum of 1
- Directors — a minimum of one director must reside in Singapore
- Secretary of the company — also must be a Singapore resident
- Paid-up capital — a minimum of S$1
- The registered address of the company — a physical office address is required
As a newly incorporated Singapore company, you will purchase and need to have a business profile from ACRA. This will electronically report detailed information regarding your business, including your license number (UEN), registration date, shareholders. This profile information will be required to open a company checking account, apply for licenses and permits and check on potential business partners.
Open a bank account
After incorporating, you will be able to open a checking account in Singapore. You will choose between a spread of local or international banks.
Business processes that follow Incorporation
Additional post-registration activities include:
- Permits and licenses — Some business activities require approval or authorization from government authorities. Examples include travel agencies, private schools, video companies, liquor distributors, money lenders, banks, financial advisers, childcare centers, importers, wholesalers, and retailers of liquor.
- Registered office hours — you want to register your office address and hours (minimum of three hours per weekday).
- Registration number — the business license number issued by ACRA must get on all of your documents that will be used for official business communications.
- Customs registration — if your business involves importing or exporting, you need to register your company with Singapore customs.
- Registration of goods and services tax — Goods and Services Tax (GST) may be a tax on the availability of products and services in Singapore and importing products into Singapore. You need to register for GST if your annual taxable revenue exceeds S$1 million per annum.
- Registration with Singapore Central Provident Fund (CPF) — The Central Provident Fund or CPF may be a compulsory pension fund scheme during which the employer and Singapore citizen/permanent resident employee contribute a percentage of the monthly salary to the fund.
BRIGHT Indonesia as Your Perfect Local Partner
The partnership between Indonesia and Singapore is becoming more strengthened. Even the business between both countries is doing well. Wherever the business place is, Indonesia’s business keeps showing good progress and also many prospects. Many opportunities will show up in the future. So, this will be the right time to invest in Indonesian industries. However, despite the wonderful opportunities that Indonesia will offer in the future, it is crucial to have the right local partner to open a business or invest in Indonesian industries.
BRIGHT Indonesia is a perfect partner for your company. We will assist you on the ground, including virtual assistants during the mission, logistic arrangement, and communication of every detail. It can make your company focus on developing partnership cooperation without thinking further about the hassle during the business trip.
BRIGHT Indonesia provides several services such as Business Partnership Engagement, Management and Strategy Consulting, Foreign Direct Investment Promotion, Business Registration and Establishment, and Market Insight Research services that can help you in expanding and developing your business by identification of potential partners as well as obtain the work and stay permit in Indonesia (expatriates utilization plan (RPTKA), expatriates utilization permit (IMTA), limited stay permit (KITAS)) easier.
The domain of our strategy consulting services focuses on supporting private sector clients with the development of corporate/business unit strategies and helping public sector organizations with public policy, training, and assisting our clients entering FDI source countries to gather investment for our client’s local markets.
We also help your company registration by becoming a representative office with the rights to trade and by limited liability foreign-owned companies and also we will help your company with a full report of market insight research.
BRIGHT Indonesia always strives to give excellent services designed to fulfill your company’s needs with experiences in assisting multiple global clients in entering Indonesia and Southeast Asia Market. These collaborations are proof of our unrivaled service.
For more information, email firstname.lastname@example.org.
*This article is written by @Alifia Berizky @candy @debora