Embarking on a business venture poses common challenges for foreigners to register company in Singapore. Overcoming these obstacles is crucial for the prosperity and sustainability of any enterprise. This piece will delve into the prevalent challenges faced by foreigners in Singapore, equipping them with insights to effectively tackle these issues. Let’s explore some of them.
1. Local Resident Director
Every registered company in Singapore is mandated to consistently maintain at least one director. The appointment of a director is carried out by the directors or shareholders of a company, and the primary role and responsibility of this individual revolve around managing the company and steering it in a specific direction. Hence, a Singapore resident director cannot resign unless a new Singapore resident director is available to assume the position.
For a director’s resignation to be considered valid, specific conditions must be met:
- The resignation must align with the company’s constitution.
- The company must retain at least one remaining director who is a resident in Singapore.
- Within 14 days from the director’s resignation, the company must notify ACRA. Failure to comply is an offence and result in fines for every default officer of the company.
2. Understanding Business Regulations
Singapore boasts a well-established legal and regulatory framework renowned for its transparency, efficiency, and efficacy. Recognized for its business-friendly nature, the country’s legal system provides robust protection for intellectual property rights. Nevertheless, certain entrepreneurs in Singapore require assistance in adhering to the nation’s legal and regulatory obligations. This encompasses comprehending intricate and continually evolving regulations, acquiring licenses and permits, and meeting compliance deadlines.
Here are some approaches that might aid in overcoming your challenge as a foreigner to register company in Singapore:
- Engage professional advice and guidance.
- Stay abreast of and informed about the most recent regulatory updates.
- Institute efficient record-keeping systems to facilitate adherence to deadlines for submitting pertinent reports and documents.
- Prioritize compliance and integrate it into the core operations of your company.
3. Employment Pass
In order to be appointed as a local resident director, a foreigner would typically need to hold an Employment Pass in Singapore. This pass is subject to various eligibility criteria and requirements set by the Ministry of Manpower.
All holders of work passes are strictly required to work solely for their assigned employer. If your company shares a common ownership with the employer of the Employment Pass holder, the company director has the option to apply for a second directorship.
Besides the Employment Pass, there are various other types of working passes available in Singapore. The specific pass required will depend on the individual’s specific requirements. These alternatives include the EntrePass, Personalised Employment Pass, S Pass, Overseas Network & Expertise Pass, and more. The extensive selection can be overwhelming; thus, it is recommended for investors to seek expert guidance from a corporate service provider.
4. Employment Act in Singapore
The Employment Act refers to a legislative framework implemented by government to establish and regulate the rights and responsibilities of employers and employees in Singapore. All employees under a contract of service will be covered except seafarer, domestic worker, statutory board employee or civil servant. The employee includes full time, part timer, temporary and contract staff.
The Employment Act sets out basic employment terms and conditions. The Employment Act includes the following :-
- Written employment contract to employees
- Rest day and employee leave benefits such as annual leave, public holiday entitlements, medical leave, hospital leave, maternity leave, paternity leave.
- Monthly salary payments and statutory deductions such as CPF contribution, Self-Help Group (SHG), Skills Development Levy (“SDL”), foreign levy (if applicable).
- Issue itemised payslip to employees covered under Employment Act
5. Business licences or permits
Depending on the nature of the business, certain industry-specific licences or permits may be required to operate legally in Singapore. The process of obtaining these permits can sometimes be complex and time-consuming.
Few of business licences in Singapore :-
- Food and Beverages : food shop & supermarket licence, temporary fair permit, liquor licence
- Halal certification : MUIS
- Import licence : Customs Import Permit
- Health products : Health Science Authority
- Travel Agent licence : Singapore Tourism Board (STB)
- Capital Market licence : Monetary Authority of Singapore (MAS)
- Private School : The Ministry of Education (MOE)
6. Opening bank account
Opening bank account in Singapore involves several steps and considerations:
- Legal Entity: You need a registered legal entity in Singapore, such as a private limited company.
- Documents: Prepare necessary documents like company incorporation certificate, business profile, directors’ and shareholders’ identification documents, proof of address, business activities description, etc
- Directors and Signatories: Presence of directors or authorized signatories may be required for account opening.
- Choose a Bank: Singapore banks offering corporate accounts such as CIMB, ANEXT, UOB, DBS and many more.
- Application: Submit an application to the chosen bank. Some banks offer online applications while others might require physical presence.
- Documents Submission: Provide all necessary documents as per the bank’s requirements.
- Compliance Checks: The bank will conduct due diligence checks on your company and its directors/shareholders.
- Bank Account Opening: Upon approval, the bank will open the corporate account.
- Initial Deposit: Some banks may require an initial deposit to activate the account.
- Account Services: Consider the services offered with the account—online banking, multi-currency support, etc.
- Bank Charges and Fees: Be aware of transaction charges, maintenance fees, and other related costs.
- Engage corporate service provider can streamline the process of opening bank account in Singapore.
- Understand Singapore’s regulatory environment to ensure compliance with local laws and regulations.
- Different banks might have varying eligibility criteria and account opening procedures.
Given the regulatory and procedural nuances, you can make an appointment with us to navigate the corporate bank account opening process in Singapore.
7. Operational business costs
Operating a business in Singapore involves substantial day-to-day expenses, known as operational costs, crucial for maintaining seamless operations. Among the key cost factors in Singapore are rental charges, manpower expenses, marketing outlays, and more.
When launching a business in Singapore, securing sufficient capital becomes a significant challenge. Entrepreneurs often face limited financing options, stringent prerequisites, and high initial capital requirements when seeking funding for their ventures. Banks typically demand a considerable minimum annual revenue, while venture capital firms tend to invest primarily in well-established companies.
However, amidst these challenges, there are strategic solutions that businesses, especially SMEs and start-ups, can explore to mitigate high operational costs. Renting a virtual office in Singapore emerges as an attractive and practical alternative. This solution offers a spectrum of services enabling companies to establish a professional presence without the need for physical space.
In addition to this, outsourcing presents itself as a viable means of reducing labor costs. Outsourcing offers the advantage of accessing specialized skills while allowing businesses the flexibility to adjust outsourcing levels in accordance with their current needs and company growth.
By considering these strategic alternatives, businesses in Singapore can effectively manage their operational costs, paving the way for sustainable growth and success in the competitive market landscape.
8. Promotion and Brand Awareness
One of the primary obstacles for new companies lies in effectively promoting themselves in the early stages to reach potential clients. This challenge becomes even more pronounced in Singapore due to its highly competitive market. A well-crafted marketing strategy holds the potential to aid entrepreneurs in establishing brand recognition, drawing in new clientele, and boosting sales. However, entrepreneurs in Singapore often encounter difficulties in marketing their businesses, including limited financial resources, defining their target audience, and assessing the impact of their marketing endeavors.
In the fiercely competitive Singaporean market, businesses, including small enterprises, can deploy various approaches to enhance their marketing efforts. Here are some methods:
- Establish a compelling brand identity.
- Leverage social media platforms.
- Provide value-added services.
- Invest in content marketing.
9. Market Competitiveness
- Developing and solidifying a robust business plan.
- Exploring alternative funding avenues like crowdfunding and government grants.
- Cultivating relationships with potential lenders and investors.
- Collaborating with a financial advisor.
As previously noted, Singapore presents a fiercely competitive market where numerous industry participants have solidified their positions and garnered substantial followings. For an entrepreneur and foreigner, competing against these well-established entities within the industry can indeed appear intimidating. However, it’s crucial to recognize that competition fosters healthy dynamics, potentially fueling innovation and advancement.
Here are several strategies you can employ to address one of the common challenges for foreigners to register company in Singapore:
- Identify the unique aspects of your product or service that set you apart.
- Harness online marketing strategies effectively.
- Establish competitive pricing strategies in line with other businesses.
- Prioritize enhancing the customer experience.
Getting corporate service provider to reduce those challenges registering your company and hassle free to launch your business venture in Singapore. Our team is here to help you navigate through the specifics and address any queries you may have. Contact us and make an appointment with us today to explore how we can support your needs.