Global growth momentum spurs new business formations

Singapore continues to make for a compelling investment destination in Q3 2017, drawing interest from investors from Malaysia, India, Australia, Indonesia and China, according to Hawksford's latest Singapore New Business Trends Report. 

Hong Kong, the British Virgin Islands and Cayman Islands continue to be among the top foreign source countries of subsidiaries formed. 

In Q3 2017, the number of new businesses formed totaled 15,808. Despite this figure declining marginally by 0.3% quarter-on-quarter (QoQ) and 1.6% year-on-year (YoY), all business categories (except Sole Proprietorships) saw an increase in company registrations against the preceding quarter.

(I) Business Formation by Entity Type 

The following indicators in Q3 were reflective of Singapore’s strong business climate:
  • A sharp increase of 56.5% QoQ was observed in the number of Foreign Companies registered in Singapore, underscoring Singapore’s strategic position as a gateway to the Asia-Pacific region;
  • The increase in the Private Limited Company category was driven mainly by a 0.9% QoQ rise in the share of Non-Exempt Private Limited Companies, which are typically large-scale businesses;
  • The second largest share of total businesses formed, Sole Proprietorships, fell sharply by 3.6% QoQ, which typically signals a pickup in global economic conditions. 

(II) Business Formation by Share Capital 

76.4% of new companies registered in Q3 were entities with a share capital of S$10,000 or less, which increased from 75.8% QoQ. This suggests that Singapore’s nominal share capital requirement (of S$1) for incorporation remains a continuing draw for foreign investors, enterprises and entrepreneurs. Interestingly, the share of companies in higher share capital tiers increased QoQ, which reflects growing business confidence and enterprise activity in Singapore. 

(III) Business Formation by Shareholding Structure 

Similar to the preceding quarter, wholly locally-held companies formed a share of 50% in Q3, while wholly foreign-held companies held a share of 38.1%. Companies with mixed shareholding held the remaining share of 11.9%. Evidently, allowing for 100% foreign shareholding remains a key feature of Singapore as an investment location. 

(IV) Business Formation by Industry

The Wholesale Trade industry continued to dominate with the highest share of businesses formed, followed by Financial Services and Activities of Head Offices & Management Consultancy. 

Notably, the Computer Programming and Consultancy sector rose by one percentage point QoQ, with a share of 8.7% in Q3. This is indicative of business optimism, where capital commitments made towards IT capabilities are expected to cascade down the entire sector, thereby triggering new business formations, or the scaling up of service capabilities. 

(V) Business Formation by Shareholders’ Country 

42.2% of subsidiaries formed in Q3 were foreign-owned. Compared to the preceding quarter, the share of Hong Kong subsidiaries increased sharply from 4% to 5.2%, while the share of Malaysian, Chinese, Indian, Indonesian, and Australian subsidiaries continued to hold the highest share among foreign subsidiaries formed in the quarter. In addition, Singapore continued to attract subsidiaries from the UK, US, British Virgin Islands and Cayman Islands. 

On an individual level, Singapore continued to attract investors and entrepreneurs from Malaysia, China, India, Australia and Indonesia in Q3 2017. 

“As the easiest place to do business in the world, Singapore welcomes entrepreneurs and investors from all around the world with its business-friendly environment, comprehensive legal framework and excellent infrastructure,” said Ms Jacqueline Low, COO, Hawksford. “With the global economy picking up momentum in 2017, we trust that consumer and business sentiments will remain optimistic in the fourth quarter.” 

Hawksford Singapore New Business Trends Q3 2017 Infographics

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