5 Challenges of Doing Business in Singapore

Singapore is constantly named the best place in the world to do business, with its favourable location in Southeast Asia and its political stability. However, the benefits do not come without some challenges, especially for foreign startups and SMEs. 

Are you wondering what to expect when starting a business in Singapore? This guide outlines the 5 common hurdles you should watch out for. We will also provide practical solutions to help you navigate the Singaporean business landscape successfully.

Singapore’s rapidly growing economy and slow population growth significantly affect the country's labour market. If you plan to hire employees for your business in Singapore, you might be impacted by some workforce challenges, particularly talent shortages. 

According to a survey by ManpowerGroup, 79% of employers in Singapore report difficulty in finding skilled talent in 2024, especially in specialised sectors like finance, technology, and healthcare. Singapore's dynamic job market further complicates efforts to attract and retain workers, impacting overall operational productivity.

Because of this shortage, Singapore relies on foreign employees to fill the labour pool. Understanding work permit regulations, including foreign worker quotas and eligibility requirements, can be time-consuming but crucial for compliance and efficiency.

Falling only behind Hong Kong, Singapore ranks second as the costliest city for international workers. This means high operational costs for businesses, including:

• Office rental: Renting an office in a commercial building in Singapore costs between SGD 3.80 to 15.00/sqft monthly.
• Utility costs: Singapore relies heavily on imported energy sources, which can cause fluctuating utility prices. However, this can depend on factors like property size and usage. 
• Logistics Operation costs: Logistics costs, including warehousing, distribution, and transportation expenses, can be costly. Moreover, there may be fees for permits or licences for certain types of operations. 

These costs can significantly impact business profitability, limiting the company’s ability to invest in growth and innovation. 

Opening a business bank account is essential for separating personal and business finance to ensure accurate accounting. Transparent financial reporting is crucial for tax compliance, cash flow management, and overall business operations in Singapore. 

It usually takes around 1-4 weeks to open a corporate account with Singaporean banks and requires extensive paperwork, including business registration documents and certified true copies of director identification. Most banks will also ask you to physically visit a branch for identity verification or as a part of their Know Your Customer (KYC) assessment. 

The business bank account opening process can be time-consuming, especially for small businesses. Consider options like digital banks and fintech account providers that offer simplified online account openings to manage your finances seamlessly.

While Singapore offers a vibrant business environment, its small domestic market can pose challenges for companies seeking significant local growth. As a city-state with a population of around 6 million, Singapore’s limited customer base can restrict revenue potential and intensify competition within the local market across various industries, especially in the food and beverage sector.

On the bright side, Singapore’s strategic geographic location makes it a prime hub for business expansion into Southeast Asia and beyond. Companies can also benefit from the country’s free-trade agreements and logistical infrastructure to build a strong international presence.

All companies registered in Singapore, including foreign-owned businesses, must have at least one local company director and appoint a corporate secretary within six months of incorporation. These roles are crucial for maintaining corporate governance and complying with local regulations. 

• Local Company Director: At least one company director must be a Singaporean resident over 18, including a citizen, a permanent resident, or a long-term pass holder (such as Entrepreneur Pass).
• Corporate Secretary: The corporate secretary must be a Singapore citizen or resident with a good understanding of Singapore company law to ensure compliance to corporate governance regulations. 

Although doing business in Singapore has some challenges, the country’s robust infrastructure, strategic location, and pro-business environment position it as the premier hub for business growth and global expansion. 

Registering a company in Singapore is also relatively easy, with a streamlined process for foreign businesses as long as they meet the requirements. Moreover, company registration services like Statrys offer packages that can help you get started in Singapore smoothly, including incorporation and company secretary services, a nominee director, and a registered address in Singapore.