In this comparative report, we look at the advantages as well as disadvantages between doing business in Singapore and the Philippines.
This report refers to data from World Bank’s 2014 ‘Ease of Doing Business’ report and World Economic Forum’s Global Competitiveness 2013 – 2014 as well as 2014 Global Enabling Trade reports. It measures five indicators, namely company incorporation, corporate tax rate, foreign investment friendliness, intellectual property protection and workforce.
The Philippines has recently hosted the 23rd World Economic Forum on East Asia. The country been implementing major structural reforms since 2010 and the result has been distinct in World Economic Forum’s Global Competitiveness Index and World Bank’s Doing Business Index. Furthermore, in spite of natural disasters, the country grew by 7.2% in 2013, making it the fastest growing in ASEAN.
|World Bank’s Doing Business (DB) 2014
Singapore vs. Philippines
|Starting a business||3||170|
|Dealing with construction permits||3||99|
|Trading across borders||1||42|
Singapore was ranked third in terms of ease of starting a business, whereas Philippines stands at the 170th position. According to the Doing Business report, starting a business in Singapore takes 2.5 business days, whereas in Philippines it takes approximately 35 business days. In addition, it takes 15 procedures to get a business started in the Philippines, compared to three in Singapore.
In addition, getting a construction permit is much easier and faster in Singapore. According to the Doing Business report, it takes only 26 days and 11 procedures to obtain a construction permit in Singapore. In the Philippines, this process would take 77 days and 25 procedures.
The corporate tax rate in Philippines is 30%, while it is capped at 17% in Singapore. In the Doing Business report, the World Bank ranked Singapore fifth worldwide for its attractive tax rates and efficient online tax filing procedures. The Philippines was ranked 131st for the same parameter.
The Doing Business report added that businesses in the Philippines make 36 tax payments a year and spend 193 hours a year filing, preparing and paying taxes. In contrast, Singapore businesses make five tax payments a year and spend 82 hours a year filing, preparing and paying taxes.
For more details on tax rates in Singapore, please visit our page on Singapore taxation.
Foreign investment friendliness
To entice investors to inject capital into Singapore businesses, Singapore supports an open trade policy and implements very few barriers to external trade transactions. The 2014 Global Enabling Trade report ranked Singapore at the top position due to its trade friendly regulations and a business enabling environment.
In addition, Singapore is moving forward with a greater focus on compliance and transparency. This is reflected in the higher financial reporting standards and compliance with FATCA and BASEL III. Altogether, these measures are expected to safeguard the interests of genuine investors and enable them to make longer term investments in Singapore.
In comparison, the Philippines stood at the 64th place. This is not a bad indicator, given that in terms of financial market development, the Global Competitiveness Index (GCI) scored the Philippines fairly well in 9 out of 10 indicators.
Intellectual property protection
Protection of Intellectual Property (IP) rights is an element that helps gain confidence of foreign investors. According to the World Economic Forum’s Global Competitiveness Report 2013-2014, Singapore stands as second best in the world and first in Asia for IP protection.
Prior to that, the Political & Economic Risk Consultancy Report 2011 and the International Property Rights Index 2012 have similarly ranked Singapore top in Asia for intellectual property protection. The Global Competitiveness Index (GCI) ranks Philippines at 78th position.
|WEF’s Global Competitiveness Index 2013 – 2014
Singapore vs. Philippines
|Basic Requirements (60%)||1||78|
|Health and primary education||2||96|
|Efficiency Enhancers (35%)||2||58|
|Higher education and training||2||67|
|Goods market efficiency||1||82|
|Labor market efficiency||1||100|
|Financial market development||2||48|
|Innovation and sophistication factors (5%)||13||58|
In spite of its increasingly stricter labour regulations, Singapore offers a highly educated and skilled workforce and has overall good labour market efficiency in the GCI, scoring high in 9 out of 10 indicators. The GCI ranked Philippines 100th for the same measure. The country ranked fairly well in 4 out of 10 indicators, but did not do as well in 4 other indicators.
In a Nutshell
The above analysis confirms that while the Philippines has been the fastest growing ASEAN economy in recent years, it still needs to improve its Ease of Doing Business ranking. In comparison, Singapore has consistently been the world’s easiest place to do business for seven years in a row. With no capital gains tax, one of the lowest corporate tax rates in the world, 75 comprehensive double taxation agreements and 8 limited treaties dealing with income from shipping and air transport enterprises, as well as no controlled foreign company rules, the city-state surpasses the Philippines as the most preferred destination for company incorporation in Asia.