Doing Business - Singapore vs Germany

Every entrepreneur who starts up a company envisions growth for his business. In order to bring that dream to fruition, it is vital to choose the right environment with the right conditions to set up a business. As the saying goes, the grass is greener on the other side. Hence, entrepreneurs must consider the various challenges before venturing into a new country to set up their business. A careful analysis of strengths, weaknesses, opportunities and risks associated with setting up a business in a given market is crucial. In this regard, country guides on business environments are useful tools that help entrepreneurs compare business locations and make an informed decision.

This report is a comprehensive comparative analysis of doing business in Singapore and Germany and compares the two countries across several criteria such as business environment, taxes, IP protection, openness to trade, bureaucracy, labor force and living environment for expatriates.

Business Environment

  • The World Bank has ranked Singapore in second place as the world’s easiest place to do business in its 2017 'Doing Business Report'. Its ability to stay at the top of the list proves that it has the necessary elements that make it a great place to start and run a business. Germany was ranked #20. Singapore’s strengths lie in the areas of trading enforcing contracts (ranked #2), protecting minority investors (ranked #4), starting a business (ranked #6) and paying taxes (ranked #7). Germany, on the other hand, ranked #22 in enforcing contracts, #63 for protecting minority investors, #113 for starting a business and #41 for paying taxes. When it comes to setting up a business in Germany, it takes nine procedures and 15 days to do so. To incorporate a company in Singapore, it takes 24 hours and two procedures.
  • According to Forbes ‘2017 Best Countries for Business Index‘, Singapore ranks as the ninth country in the world for business while Germany comes in at #13.

Taxes

  • The PWC, IFC, World Bank’s ‘2016 Paying Taxes Report‘ ranked Singapore #4 for ease of paying taxes while Germany came in #88.
  • The World Bank ‘2017 Doing Business Report‘ also ranked Singapore #7 for paying taxes while Germany came in #41.
  • When it comes to tax burdens, personal income tax rates in Germany range from 0% to 47.5%, while personal income taxation starts at 0% and ends at 20% for income above S$320,000 in Singapore. Germany’s federal corporate tax rate is 15.8% while the municipal trade tax ranges between 14%-17%. The effective corporate tax rate is between 30%-33%. Singapore’s corporate income tax rate is 8.5% for profits up to S$300,000 and a flat 17% for profits above S$300,000. With 16 tax payments, Germany imposes more than three times the number of tax payments than in Singapore.

IP Protection

  • Countries that have in a strong intellectual property system in place have been proven to flourish the most. According to the World Economic Forum’s ‘2017 - 2018 Global Competitiveness Report‘, Singapore has the fourth-best IP protection regime in the world while Germany is ranked 20th.

Global Competitiveness

  • In the World Economic Forum’s ‘2017 – 2018 Global Competitiveness Report’, Singapore is the third most competitive economy among 137 economies while Germany’s competitiveness ranks at #5. Although Germany is just two positions away from Singapore, its has many problematic factors including high tax rates, tax regulations, restrictive labor regulations, inefficient government bureaucracy and inadequately educated workforce while Singapore’s strong suit is precisely in these areas. Singapore has low corporate and income taxation, liberal labor laws, an abundance of funding, efficient and stable government and a talented workforce.
  • In the Heritage Foundation’s ‘2018 Index of Economic Freedom’ Singapore emerged as the second freest economy among 174 countries while Germany came in at #25. Singapore scored high points on areas such business freedom, trade freedom, government spending, property rights, labor freedom and government integrity. Singapore superseded Germany in terms of judicial effectiveness (Singapore’s 90.9 vs. Germany’s 78points), labor freedom (Singapore’s 92.6 vs. Germany’s 53.3 points) and government spending (Singapore’s 90.6 vs. Germany’s 41.3 points).
  • In the IMD ‘2018 World Competitiveness Yearbook’ Singapore has performed better than Germany and clinched the #3 spot while Germany’s was ranked in the 13th position.

Openness to Trade

  • Data from the World Economic Forum’s ‘2016 Global Enabling Trade Report’ shows that when it comes to openness to trade, Singapore takes the number one spot out of 136 countries while Germany takes the 9th place. Singapore emerged number one due to its open trade policy, stable regulatory environment, low trade barriers, low tariff structure, efficient border administration, sophisticated transport and port infrastructure, logistics efficiency, and affordability of shipments.

Bureaucracy

  • According to the ‘2017 Corruptions Perceptions Index‘ released by Transparency International, a global coalition against corruption, Singapore was perceived as a “very clean” and non-corrupt country and was ranked #6. Germany was ranked #12.
  • The WEF’s ‘2017 – 2018 Global Competitiveness Report’ also reveals that Singapore has the highest public trust of politicians and the least burden of government regulation. In comparison, Germany ranks #13 and #7 respectively.

Labor Force

  • Singapore’s top position in BERI’s ‘2015 Labour Force Evaluation Measure‘ for more than 30 years is testament to its ability to attract and retain the world’s best labor force. On the other hand, Germany came in at #10.
  • Aon Consulting’s ‘2013 People Risk Index‘ reveals that Singapore is the second-lowest risk city in the world for employing people while Berlin (Germany) was placed at the 40th position.
  • The WEF ‘2017 – 2018 Global Competitiveness Report’ ranks Singapore #2 in terms of labor/employee relations while Germany ranks #21.
  • INSEAD's 2017 'Global Talent Competitiveness Index' ranked Singapore at #2 on its ability to grow, attract and retain talent.

Living Environment

  • The ‘2017 HSBC Expat Explorer Global Report‘ shows that Singapore is considered a top wealth hot-spot, where the propensity to earn disposable income and enjoy luxury is high. This puts the city state in the 4th position under its 'Economics' category and 1st place in its overall results. Germany ranks #3 for its 'Economics' category and #4 in the overall results.

RANKINGS AT A GLANCE: SINGAPORE VS. GERMANY

Year  Category  Singapore's rank  Germany's rank Source 
2017 Ease of Doing Business 2 20 World Bank, 2017 Ease of Doing Business Report
2017-2018 World's Most Competitive Economy 3 World Economic Forum, Global Competitiveness Report
2017 World's Best Country for Business 9 13 Forbes' Best Countries for Business Index 
2018 World's Freest Economy 2 25  Heritage Foundation's Index of Economic Freedom
2016 Country Most Open to Trade 1 World Economic Forum, Global Enabling Trade Report
2016 Ease of Paying Taxes 5 72 PWC, IFC, World Bank's 2016 Paying Taxes Survey
2017 Country with Least Corruption Perception 6 12  Transparency International, Corruptions Perception Index
2017-2018 World's Best IP Protection 4 20 World Economic Forum, Global Competitiveness Report
2017  Global Talent Competitiveness 2 17 INSEAD, Global Talent Competitiveness Index
2013 World's Lowest Risk City for Employing and Relocating Employees 2 40 (Berlin) AON Consulting's People Risk Index
2017 World's Best Financial Quality of Life for Expats 4 24 HSBC's Expat Explorer Global Report
 
 
 
 
 
 
 
 


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