Doing Business - Singapore vs Ireland
In an era of globalization, it is becoming increasingly important to identify the diverse tools of international trade policy that support the development efforts of an economy. Countries are finding ways and means to address issues related to competition, development and diversification of economies. Investors are not only constantly looking at managing price fluctuations but are also involved in tackling and responding to economic challenges. In this context, the degree of business-friendliness of an economy has taken center stage. Countries that sport a pro-business climate maintain a competitive edge and attract foreign entrepreneurs, companies and investors.
In this article, we compare Singapore and Ireland based on certain key criteria that determine an ideal environment for growth of a business. The comparison is supplemented by rankings in various international surveys and business indices. Ireland has transformed from a predominantly agricultural economy to that of a knowledge-based one. It fell prey to a high level of inflation that was accentuated during the 2008 financial crisis. These issues still affect the Irish economy. On the contrary, Singapore remains a much favored business destination in terms of openness to foreigners, excellent infrastructure, low level of corruption, efficient business regulations and competitive tax rates. Detailed below is a comparative analysis of the two countries.
BUSINESS ENVIRONMENT
- Singapore ranked #1 in the ‘2016 Ease of Doing Business Report’ by the World Bank. This ranking reaffirms its high degree of business affability. Ireland’s 17th position proves that its environment is less conducive to the starting and operation of businesses. Singapore’s high ranking comes as no surprise as it takes just two procedures and less than 24 hours to incorporate company in Singapore. By contrast, incorporating a company in Ireland can take up to four procedures and 13 days time. The World Bank ranked Singapore #10 for starting a business, #1 for investor protection, #5 for taxes and #1 for enforcing contracts. Ireland was ranked #25, #8, #6, and #93 on the same parameters.
- As a preferred business destination, Singapore ranked fifth in the Forbes’ ‘2010 Best Countries for Business’ survey, while Ireland trailed behind in the 6th spot. The most noticeable differences were in the areas of trade freedom and lack of corruption. Singapore’s trade freedom score is #1 while Ireland’s is #12. Ireland’s corruption score of #14 is nearly five times higher than Singapore’s score of #3. Singapore edged Ireland in the areas of red tape (Singapore #4 vs Ireland’s #8), investor protection (#2 vs Ireland’s #5), and tax burden (#4 vs Ireland’s #5).
TAXES
- Singapore is the fifth easiest place in the world for paying taxes according to the ‘2016 Paying Taxes Survey’ that was jointly released by PWC, IFC and the World Bank, while Ireland is the sixth easiest place to pay taxes worldwide.
- Although Ireland outperforms Singapore with a score of #5 vs. #11 in the Forbes’ ‘2009 Tax Misery and Reform Index’ , it must be noted that Singapore’s effective corporate tax rates are much lower than that of Ireland’s. Singapore’s corporate income tax rate on profits below S$300,000 is 8.5% while profits above S$300,000 are taxed at a flat rate of 17%. Ireland’s corporate income tax rate on trading income is 12.5%. Ireland’s VAT rate of 21% is way higher than Singapore’s GST rate of 7%. Even if one were to consider Ireland’s reduced VAT rate of 13.5% it still is nearly double the rate of Singapore’s GST. Tax and accounting firm KPMG has declared Singapore’s corporate income tax rate as the third lowest in the Asia-Pacific region. Singapore’s top personal income tax rate is 20% while Ireland’s marginal income tax rate is 41%.
- Singapore’s tax burden rank is #4 in Forbes’ ‘2010 Best Countries for Business’ list and #5 on the World Bank’s ‘2016 Ease of Doing Business Report ‘ while Ireland’s rank is #5 and #6 respectively.
IP PROTECTION
- Singapore has gained recognition as a destination that values and protects intellectual efforts. It offers an excellent platform, infrastructure and environment for the creation and protection of intellectual property. According to the World Economic Forum’s ‘2015-2016 Global Competitiveness Report’ Singapore has the fourth best Intellectual Property protection regime in the world. On the other hand, Ireland’s IP regime that is ranked as #10 isn’t as robust as Singapore’s.
- Singapore’s rank in the area of property rights is #8 in the Forbes’ ‘2010 Best Countries for Business’ list while Ireland was relegated to the 12th position.
GLOBAL COMPETITIVENESS
- Singapore is the second most competitive economy in the world as per the World Economic Forum’s ‘2015-2016 Global Competitiveness Report‘. It ranked #1 for higher education and training and goods market efficiency; #2 for institutions, infrastructure, health and primary education, labour market efficiency, and financial market development. In the 2015-2016 figures, Ireland ranked #24 in the overall index score. In terms of institutions, Ireland ranked #12, #61 with regard to financial market development and #19 in terms of innovation and sophistication factors. The report also ranked Ireland #7 for goods market efficiency and #13 for labor market efficiency.
- According to the Heritage Foundation’s ‘2015 Index of Economic Freedom‘, Singapore is the second-freest economy in the world while Ireland ranked #9. Singapore scored highly on all parameters reaffirming the ease of starting a business, property rights and labour freedom.
- Singapore ranked #3 in the IMD ‘2015 World Competitiveness Scoreboard’ while Ireland ranked #15.
OPENNESS TO TRADE
- The World Economic Forum’s ‘2014 Global Enabling Trade Report’ ranked Singapore #1 for openness to trade among 138 economies while Ireland ranked #26. Singapore scored #2 for domestic and foreign market access and availability and quality of transport services, #1 for efficiency of customs administration and #3 for the efficiency of import/export procedures. By contrast, Ireland ranked #97 for domestic and foreign market access, #33 for the availability and quality of transport services, #12 for efficiency of customs administration and #12 for the efficiency of import/export procedures.
BUREAUCRACY
- According to the World Justice Project’s ‘2010 Rule of Law Index’, Singapore ranked #1 for the position of the Best Civil Justice System in the World. The index mentioned that Singapore ranks high in terms of absence of corruption, access to civil justice, and efficiency of criminal justice.
- The Political and Economic Risk Consultancy (PERC) ranked Singapore #1 for its efficient bureaucracy among 12 Asian economies in a 2010 survey.
- Singapore has the highest public trust of politicians and the least burden of government regulation according to the WEF’s ‘2015-2016 Global Competitiveness Report’, whereas Ireland ranked #18 for public trust of politicians and #13 for burden of government regulation.
LABOR FORCE
- BERI’s ‘Labor Force Evaluation Measure‘ ranked Singapore’s workforce as #1 in the world, not for one but for a whopping 31 consecutive years, while the Irish laborforce is only the seventh best according to the 2010 figures.
- Singapore’s highly skilled workforce was rated the sixth best in the world in a survey conducted by business school INSEAD last year.
- The ‘2015-2016 Global Competitiveness Report’ by the World Economic Forum ranked Singapore #3 and Ireland #15 in terms of best labor/employee relations.
- According to Aon Consulting’s ‘2010 People Risk Index‘, Singapore is the third-lowest risk city in the world for recruiting, employing, and relocating employees while Dublin’s rank was #20.
LIVING ENVIRONMENT
- According to HSBC’s ‘2015 Expat Experience Report’ Singapore is the first best country in the world for expat life experience.
- Gallup’s ‘2010 Potential Net Migration Index’ ranks Singapore as the world’s most favored immigration destination.
- Singapore is the best place in the world for Asians to live as per ECA International’s ‘2010 Location Ratings System’ while Dublin (Ireland) is the tenth best place to live for Asian expats.
- A ‘2010 Quality of Living Survey’ by Mercer Human Resource Consulting ranks Singapore as #1 for offering the best quality of life in Asia.
AT-A-GLANCE COUNTRY RANKINGS: SINGAPORE VS. IRELAND
| Year | Category | Singapore’s Rank | Ireland’s Rank | Source |
|---|---|---|---|---|
| 2016 | Ease of Doing Business | 1 | 17 | World Bank, 2016 Ease of Doing Business Report |
| 2015-2016 | World’s Most Competitive Economy | 2 | 24 | World Economic Forum, Global Competitiveness Report |
| 2015 | World’s Freest Economy | 2 | 9 | Heritage Foundation’s Index of Economic Freedom |
| 2015 | World’s Most Competitive Economy | 3 | 15 | IMD, World Competitiveness Yearbook |
| 2016 | Ease of Paying Taxes | 5 | 6 | PWC, IFC, World Bank’s 2016 Paying Taxes Survey |
| 2015 | Country with Least Corruption Perception | 8 | 18 | Transparency International’s Corruption Perceptions Index |
| 2015-2016 | World’s Best IP Protection | 4 | 10 | World Economic Forum, Global Competitiveness Report |
| 2014 | Country Most Open to Trade | 1 | 26 | World Economic Forum, Global Enabling Trade Report |
| 2010 | World’s Best Country for Business | 5 | 6 | Forbes’ Best Countries for Business Index |
| 2010 | Most Efficient Bureaucracy in Asia | 1 | – | Political and Economic Risk Consultancy Survey |
| 2010 | World’s Best Laborforce | 1 | 7 | BERI’s Labor Force Evaluation Measure |
| 2010 | World’s Lowest Risk City for Employing, and Relocating Employees | 3 | 20 | Aon Consulting’s 2010 People Risk Index |
| 2010 | Best Place for Asians to Live | 1 |
10 (Dublin) |
ECA International’s 2010 Location Ratings System |