Doing Business - Singapore vs New Zealand
The advent of globalization has significantly reduced barriers across the world. We have progressed to a world that is shrinking and the modes of conducting business have also undergone a transition. As an increasing number of entrepreneurs are looking at expanding their horizons and shifting bases, it is imperative that they consider certain crucial elements before venturing into a foreign business jurisdiction.
This article is a comparative analysis of conducting business in New Zealand vis-à-vis Singapore and evaluates the various parameters involved in the selection of a country. Singapore is a highly developed economy and enjoys an open and corrupt-free environment. Some of the impressive features of the economy include stable prices and a per capita GDP higher than that of most developed countries. In the long term, the government plans to implement a new growth path that focuses on raising productivity that will ultimately help establish Singapore as Southeast Asia’s financial and high-tech hub. The country is one of the world’s leading business centers and a major destination for foreign investment. It is backed by sound monetary stability; a stable legal and regulatory framework; a transparent and efficient government; and good anti-corruption laws.
New Zealand has transformed from an agrarian economy to an industrialized economy. This dynamic growth has boosted its income and broadened the technological capabilities of its industrial sector. The economy fell into recession before the start of the global financial crisis and although the government developed fiscal stimulus measures, its key trade sectors remain vulnerable to external demands.
The results of the comparative analysis of international rankings reveal the following significant differences between Singapore and New Zealand.
- The World Bank has ranks Singapore as the easiest place to do business in the world in its ‘2015 Ease of Doing Business Report’ while New Zealand was awarded the second spot. Singapore has held its #1 position for the past 9 years in a row, proving its competitive edge as a business-friendly jurisdiction. One of the exemplary features of Singapore company incorporation is that it involves two procedures that can be completed online within a record timeline of 24 hours. Despite New Zealand’s high position in the rankings, it is interesting to note that it lagged behind Singapore significantly in areas such as taxes (Singapore #5; New Zealand #22) and trading across borders (Singapore #1; New Zealand #27) that matter most to businesses.
- The Forbes’ ‘2014 Best Countries for Business’ also points to a differential gap between both the countries in terms of trade freedom, innovation, technology, and taxes. Singapore presented impressive results in its high degree of trade freedom (#1), light tax burden (#5), high degree of innovation (#9), and adoption of technology (#7. By contrast, New Zealand ranked #38 in terms of trade freedom, #23 with regards to innovation, #21 in terms of tax burden and #23 for technology.
- The ‘2011 Paying Taxes Survey’ published by PWC, IFC and the World Bank reveals that Singapore is the fourth easiest place in the world for paying taxes while New Zealand is in the 26th spot.
- Singapore’s #11 rank in the Forbes ‘2009 Tax Misery and Reform Index’ indicates that its tax burden is lower as compared to New Zealand’s #13 rank.
- According to a study conducted by KPMG last year, Singapore’s corporate tax rate of 17% is the third lowest among Asia-Pacific countries. By contrast, New Zealand’s corporate tax rate is 30%. Despite the revised rate of 28%, which is to come into effect in 2012, New Zealand’s tax burden on companies will still remain significantly higher than Singapore. Furthermore, New Zealand’s GST rate of 15% is more than double the rate of Singapore’s GST that currently stands at 7%.
- The contrast in the taxation policy of both the countries is also evident in the World Bank’s ‘2015 Ease of Doing Business Report’ where Singapore scores #5 for taxes while New Zealand ranks #22.
- Given that intellectual property is a revenue generating asset, IP protection has become an important factor for businesses. Singapore has positioned itself as a regional IP hub and has put in place practical and effective enforcement norms. Singapore ranks #2 for IP protection in the World Economic Forum’s ‘2014-2015 Global Competitiveness Report’ while New Zealand trails behind in the sixth spot.
- According to the World Economic Forum’s ‘2014-2015 Global Competitiveness Report’, Singapore is the second-most competitive economy among 144 economies while New Zealand’s competitiveness rank is #17. Inadequate supply of infrastructure, lack of access to financing, high tax rates, inefficient government bureaucracy, restrictive labor regulations, and political instability are cited as some of the problematic factors for doing business in New Zealand. By contrast, Singapore scores highly on account of its institutions, lack of corruption, goods and labor market efficiency, infrastructure, and financial market sophistication.
- The Heritage Foundation’s ‘2015 Index of Economic Freedom’ ranks Singapore as the second freest country among 178 economies while New Zealand is the third freest. Singapore scores highly on factors such trade freedom, investment freedom, business freedom, freedom from corruption, labor freedom and property rights. The most notable distinction between Singapore and New Zealand is in the area of fiscal freedom. Singapore scores 91.2 points on this parameter owing to its simple and low tax system whereas New Zealand scores only 70.4 points owing to its high rates of tax.
- Singapore’s economy features in the top slot in the IMD ‘2010 World Competitiveness Scoreboard’ while NZ ranks #20.
OPENNESS TO TRADE
- According to the ‘2010 Global Enabling Trade Report’, Singapore is the #1 economy in terms of openness to trade while New Zealand reigns in the sixth spot. Singapore ranks #1 owing to its open trade policy, low trade barriers, low tariff structure, excellent border administration, top-notch infrastructure, logistics efficiency, and affordability of shipments. New Zealand underperformed in certain areas such as the fees, number of documents, and time associated with exporting and importing goods as well as the availability and quality of its transport infrastructure. New Zealand ranks #37 for domestic and foreign market access while Singapore ranks # 1. New Zealand’s border administration score is #5 while Singapore scores #1. In terms of transport and communication infrastructure and business environment New Zealand is #26 and #11 while Singapore is #7 and #2.
- Singapore and New Zealand tie in the first spot as the least corrupt nations in the world as per Transparency International’s ‘2010 Corruptions Perceptions Index’.
- Singapore ranks #1 as the most transparent country in the world in IMD’s ‘2010 World Competitiveness Report’ while New Zealand ranks #8.
- According to the WEF’s ‘2014-2015 Global Competitiveness Report’ Singapore scores #1 for public trust of politicians and #2 for burden of government regulation while New Zealand scores #6 and #17 on the same parameters.
- According to Aon Consulting’s ‘2010 People Risk Index‘, Singapore ranks #3 in terms of risk associated with recruitment, employment, and relocation of employees while Auckland (New Zealand) ranks #36.
- Singapore ranks #1 in BERI’s ‘Labor Force Evaluation Measure‘ while New Zealand does not feature among the top 15 economies.
- Singapore has the seventh-most motivated workforce in the world according to IMD’s ‘2010 World Competitiveness Yearbook’.
- A 2010 INSEAD business school survey shows that Singapore has the sixth-best highly skilled workforce in the world.
- Singapore ranks #12 for expat life experience in HSBC’s ‘2010 Expat Experience Report’.
- Singapore is the world’s most favored immigration destination according to Gallup’s ‘2010 Potential Net Migration Index’.
- According to ECA International’s ‘2010 Location Ratings System’ Singapore is the best location in the world for Asian to live while Wellington is the tenth best. “Singapore’s high quality infrastructure and health facilities, combined with low health risks, air pollution, crime rates and a cosmopolitan population help make the city an easy place for Asian assignees to live in,” explains Lee Quane, Regional Director, Asia, ECA International.
- Singapore is ranked as the best country to work in Asia by foreign talent according to the IMD ‘2010 World Competitiveness Yearbook‘.
- According to HSBC’s ‘2010 Expat Economics Report‘, Singapore ranks #4 in the world for expats’ financial quality of life.
AT-A-GLANCE COUNTRY RANKINGS: SINGAPORE VS. NEW ZEALAND
|Year||Category||Singapore’s Rank||New Zealand’s Rank||Source|
|2015||Ease of Doing Business||1||2||World Bank, 2015 Ease of Doing Business Report|
|2015||World’s Freest Economy||2||3||Heritage Foundation’s Index of Economic Freedom|
|2014-2015||World’s Most Competitive Economy||2||17||World Economic Forum, Global Competitiveness Report|
|2011||Ease of Paying Taxes||4||26||PWC, IFC, World Bank’s 2011 Paying Taxes Survey|
|2010||Country Most Open to Trade||1||6||World Economic Forum, Global Enabling Trade Report|
|2010||World’s Most Competitive Economy||1||20||IMD, World Competitiveness Yearbook|
|2010||World’s Most Transparent Country||1||8||IMD’s World Competitiveness Report|
|2010||World’s Best IP Protection||3||7||World Economic Forum, Global Competitiveness Report|
|2010||World’s Best Laborforce||1||–||BERI’s Labor Force Evaluation Measure|
|2010||World’s Lowest Risk City for Employing, and Relocating Employees||3||36
|Aon Consulting’s People Risk Index|
|2010||Best Place for Asians to Live||1||10
|ECA International’s Location Ratings System|