Singapore may be known as the bustling and thriving business hub of Southeast Asia, but other neighbouring countries are rapidly expanding their business environments to compete against the leading economic centres around the world. One of these nations growing their business profile is Vietnam.
In this comparative article, we’ll compare doing business in Vietnam, versus doing business in Singapore. We’ll see why entrepreneurs prefer setting up their start ups in one or the other, as well as the ease of incorporating, tax filing requirements, and doing business in each country.
The World Bank Doing Business Report in Vietnam vs Singapore
The World Bank reports on the ease of doing business in various countries, comparing the business economies in 190 countries, and ranking them based on a DB score The higher the DB score, the higher the rank. Singapore currently scores an 86.2, while Vietnam ranks 69.8.
The World Bank also ranks countries depending on certain factors, like the ease of Starting a Business, and Enforcing Contracts. The ranks span across multiple countries, where 1 is the highest rank a nation can achieve.
Doing Business: Vietnam vs Singapore
Economic Overview
Singapore is known for being one of the most business-friendly countries in the world, ranking 2nd overall in the Ease of Doing Business by the World Bank. Sure enough, Singapore’s Accounting and Corporate Regulatory Authority (ACRA) makes it simple for entrepreneurs to set up, and operate businesses in the country, with grants and tax benefits to entice businesses.
Vietnam, which is Singapore’s neighbouring country, and part of ASEAN, underwent economic reforms in 1986, boosting the country's GDP to over 3.6 times the GDP within one generation. While the country still has a middle-income economy, it has been proven to be resilient amidst economic crises, with significant aspirations to maintain its economy.
Business Environment
Singapore is the preferred destination to set up foreign businesses, especially as the country is open to the global economy. ACRA provides incentives to foreign investors looking to enter the Asian market, with tax benefits, ease of incorporation, government grants, and more.
Vietnam’s business environment makes it an attractive location for incorporating in Southeast Asia as the country provides entrepreneurs with incentives to set up businesses in the country, such as an openness to international companies, a ready workforce, and regulations set for foreign businesses.
Workforce
Singapore’s fast-paced environment attracts thousands of global entrepreneurs per year, with around 4.72 migrants per thousands in population coming into the country for business opportunities, most of which are under 35 years of age. As such, Singapore is the ideal spot for gathering young employees, with two-thirds of the population working white-collar jobs.
Vietnam has a relatively young population, with more than half of the population under 35 years of age. Around 57% of the population are within the working class group, and Vietnam has a large population compared to other countries, making it an ideal place to gather young, dynamic employees with 80% of the workforce being blue-collar workers.
Business Language
Singapore does business primarily in English, while Chinese, Malay, and Tamil are among the languages spoken in the country, which contributes to their popularity for foreign entrepreneurs to invest in. While English is spoken in Vietnam, most of the working class continue to do business in Vietnamese, which can make investors hesitant to enter the country.
Incorporation Process
The incorporation process of Singapore is fully-digitised, with most of the files and procedures available on BizFile+ for any entrepreneur to utilise. Most businesses in Singapore are incorporated in 1-3 business days. Vietnam, on the other hand, requires a long process of incorporation with multiple steps, which can take up to four months to incorporate a company.
Filing Requirements
All requirements filed in Singapore can be filed through BizFile+, and ACRA reviews the applications for approvals. Corporate services firms, like WealthBridge, can assist you in filing required documents to streamline the process.
The registration process for foreign businesses in Vietnam is complex, and contains multiple steps. Depending on the type of business registered, the company may require an Investment Registration Certificate, a Business Registration Certificate (BRC), and more.
Immigration Requirements
The Ministry of Manpower (MoM) in Singapore grants an Employment Pass, EntrePass, or Overseas Networks & Expertise Pass for foreign entrepreneurs and specialists entering the country. In Vietnam, the Ministry of Labour, Invalids and Social Affairs (MoLISA) requires foreigners to obtain a work permit and visa to stay within the country for more than 3 months.
Taxes
Singapore has the most competitive corporate tax rates in Asia, with a flat tax rate of 17%, as well as tax returns and benefits for corporations. Vietnam’s corporate tax rate is set at 20%, with the oil and gas industry tax rates ranging from 32% to 50%.
IP Protection
Singapore has some of the most robust regulations on intellectual property rights, with their Intellectual Property (IP) Hub Master Plan. Vietnam is a signatory to the Berne Convention, which states that all intellectual property are protected for at least 50 years after publication.
Bureaucracy
Singapore bureaucracy is generally efficient, with most processes, registrations, and applications processed within 3-7 business days. While there are some bottlenecks and delays in the country’s bureaucracy, Singapore is still recognised as one of the best in Asia, topping the ranks of 12 economies in the region.
Vietnam is moving towards a development to become a globalised economy, and as such, foreign investors may find the shift from traditional to contemporary bureaucracy hindering the business, particularly during registrations and business processes. Generally speaking, there is little transparency in the country’s bureaucracy, as well as overlapping government responsibilities between ministries and departments.
Openness to Trade
Both Singapore and Vietnam are very much open to foreign trade and investment as both countries aim to maintain a globalised outlook for their economic growth. The business landscape in both countries are relatively welcoming to foreigners, and their openness to trade makes them preferred ports of entry into Asia for foreign investors.
Global Competitiveness
Singapore is considered as the most globally-competitive country in the world, scoring 85 out of 100 in the Global Competitiveness Report of the World Economic Forum. The recognition stems from the country’s openness to foreign investment, strong economic performance, and balanced factors of global competitiveness.
Meanwhile, Vietnam scored a 61.5 out of 100 in the same study, ranking the country 67th out of the 141 countries observed by the World Economic Forum. The country did score 72 on market size, which is higher than the average for East Asia and the Pacific.
Location
Location-wise, both Singapore and Vietnam have fairly ideal locations in Asia and Southeast Asia. Vietnam is often considered a port into China, where foreign entrepreneurs can conduct business in Vietnam without the limitations of Chinese regulations. Singapore, on the other hand, is a popular location for entering the Asian market as it sits in the middle of Southeast Asia.
Why Do Business in Singapore?
According to the comparisons above, Singapore continues to rank on top as one of the friendliest countries to conduct business, and the same is true for foreign businesses. Singapore’s regulations and incentives entice foreigners into entering the country for business opportunities, with minimal language barriers, and minimal red tape.
When doing business in Singapore, reach out to us at WealthBridge for corporate services. We’ll assist you in incorporating your company into Singapore, and we’ll help you manage your company so you can focus on growing your business!