Doing Business - Singapore vs Thailand
With Asia set to emerge as the next economic powerhouse in global economic order, an increasing number of foreign companies, entrepreneurs, and investors are either expanding their business operations or investing large sums of money in the Asian continent. Choosing a safe, stable, secure, low tax, and business-friendly jurisdiction to invest in has become a top priority for global minded businessmen and investors. As a result, economic surveys, business rankings, and international reports that rate various economies across several parameters are gaining prominence.
This article examines the suitability of Singapore as a business jurisdiction in Asia vis-a-vis Thailand. Encapsulated below is a comparison of both the jurisdictions taking into account their performance in various international business and economic surveys.
BUSINESS ENVIRONMENT
- According to the World Bank’s ‘2016 Ease of Doing Business Report’ Singapore is the best place for doing business in the world among 189 economies worldwide. Thailand was accorded the 49th position. Singapore ranked #10 for starting a business, #1 for protecting investors, #5 for taxes, and #1 for enforcing contracts. A stark contrast is noticeable in Thailand’s rankings, which were #96, #36, #70, and #57 on the same parameters. Singapore company incorporation takes only up to 24 hours (excluding compliance and due diligence) and be completed online with just two simple procedures whereas setting up a company in Thailand involves seven procedures and 32 days.
- Singapore is the eighth best country in the world for doing business according to ‘2015 Best Countries for Business‘ list released by Forbes whereas Thailand did not even feature among the top 50 countries and was instead relegated to the 75th spot. There were clear disparities in the areas of trade freedom (Singapore #1 vs Thailand #80), monetary freedom (Singapore #9 vs Thailand #103), property rights (Singapore #8 vs Thailand #57), innovation (Singapore #10 vs Thailand #46), technology (Singapore #6 vs Thailand #59), red tape (Singapore #4 vs Thailand #41), corruption (Singapore #3 vs Thailand #70), and tax burden (Singapore #4 vs Thailand #61).
TAXES
- The PWC, IFC, and World Bank’s ‘2016 Paying Taxes Report’ reveals that Singapore is the fifth easiest place in the world for paying taxes. Thailand on the other hand ranked only #70 among 189 economies.
- Singapore’s 11th position in the Forbes ‘2009 Tax Misery and Reform Index’ as against Thailand’s 14th position also reaffirms Singapore’s dominance over the Thai Kingdom in terms of taxation.
- Singapore is also ranked as having the third lowest corporate taxes in Asia-Pacific by KPMG.
- The difference in terms of taxes is also visible in Forbes’ ‘2015 Best Countries for Business’ list where Singapore was ranked #5 for tax burden while Thailand was ranked #58.
IP PROTECTION
- Singapore’s robust IP protection regime is a huge draw for companies that specialize in innovation and R&D operations. Last year, the World Intellectual Property Organization (WIPO) set up its Arbitration and Mediation Center (AMC) in Singapore; the first of its kind outside Geneva. The World Economic Forum’s (WEF) ‘2015-2016 Global Competitiveness Report‘ ranked Singapore #4 in the world for its IP protection regime while Thailand ranked #113 for protection of intellectual property.
- The Forbes ‘2015 Best Countries for Business‘ list ranks Singapore #5 for property rights while Thailand ranked #68.
GLOBAL COMPETITIVENESS
- Singapore is the second-most competitive economy in the world according to the World Economic Forum’s ‘2015-2016 Global Competitiveness Report‘. Singapore’s institutions were ranked as the second best. It also placed first for lack of corruption, government efficiency, efficiency of its goods markets and second for its financial market sophistication as well as labor market. Singapore also has world-class infrastructure (ranked 5th), with excellent roads, ports, and air transport facilities. By contrast, Thailand ranked #32 due to its deteriorating public institutions, political unrest, government instability, inefficient government bureaucracy, corruption, inadequately educated workforce, inadequate supply of infrastructure, and tax rates and regulations.
- Singapore ranked #2 in Heritage Foundation’s ‘2015 Index of Economic Freedom‘ while Thailand ranked #75 among 178 economies. Here is a quick look at Singapore’s and Thailand’s performance: Business freedom (96.9 vs 72.5), trade freedom (90 vs 75.4), investment freedom (85 vs 45), freedom from corruption (86 vs 35), and labor freedom (96.9 vs 63.5). According to the Heritage Foundation Report for Thailand, “Political unrest and conflict between rural and urban voters have led to increased perceptions of corruption and an unsteady investment climate. A growing foreign automobile manufacturing industry provides evidence of the benefits of increasing economic openness, but the business environment for small entrepreneurs remains difficult due to inefficient business and labor regulations.”
- The IMD ‘2015 World Competitiveness Scoreboard’ ranked Singapore as the most competitive economy in the world while Thailand ranked #30.
OPENNESS TO TRADE
- Singapore ranked #1 in the world for openness to trade in the World Economic Forum’s ‘2014 Global Enabling Trade Report’ whereas Thailand ‘s rank was #57 among 138 economies. Singapore fosters an open trade policy and there are very few barriers in its import/export market. Singapore was also recognized for the extreme simplicity of its tariff structure and ranked 3rd on this indicator. It aced the customs services index with it’s #1 rank. It was also highly ranked for the quality and availability of transport infrastructure On measures related to connectivity, as well as timeliness, ease and affordability of shipments, and logistics competence, Singapore placed at or near the top. Thailand on the other hand, ranked #51for domestic and foreign market access, #56 for border administration, #46 for transport and communications infrastructure and #75 for operating environment.
BUREAUCRACY
- According to the Political and Economic Risk Consultancy (PERC), Singapore has the most efficient bureaucracy in Asia with a score of 2.53 while Thailand was ranked #3 with a score of 5.53 among 12 economies.
- Transparency International’s ‘2015 Corruptions Perception Index‘ ranked Singapore #8 in the world while Thailand ranked #76.
- The World Economic Forum ranked Singapore as the ‘Country with Highest Public Trust of Politicians’ and the ‘Country with the Least Burden of Government Regulation’ in its ‘2010 Global Competitiveness Report‘ while Thailand ranked #118 and #81 on the same pillars.
LABOR FORCE
- Singapore has the best workforce in the world according to BERI’s, ‘2010 Labor Force Evaluation Measure’.
- IMD’s ‘2010 World Competitiveness Yearbook‘ ranked Singapore’s workforce as the seventh most motivated in the world.
- Aon Consulting’s ‘2010 People Risk Index‘ ranks Singapore as #3 in the world for low risk of recruiting, employing, and relocating employees while Thailand ranked #54.
- An INSEAD survey conducted in 2010 confirms that Singapore has the sixth best highly skilled workforce in the world.
LIVING ENVIRONMENT
- Gallup’s ‘2010 Potential Net Migration Index’ shows that Singapore is the most desirable immigration destination in the world
- ECA International’s ‘2010 Location Ratings System’ ranked Singapore as the best place to live for Asian expats while Bangkok ranked #62.
- Foreign talent rank Singapore as the best country to work in in Asia according to the IMD ‘2010 World Competitiveness Yearbook‘.
- Mercer ranks Singapore as offering the best quality of Asia in its ‘2010 Quality of Living Survey‘.
- According to HSBC’s ‘2015 Expat Economics Report‘, Singapore ranks #2 in the world for expats’ financial quality of life. while Thailand ranked #20.
AT-A-GLANCE COUNTRY RANKINGS: SINGAPORE VS. THAILAND
| Year | Category | Singapore’s Rank | Thailand’s Rank | Source |
|---|---|---|---|---|
| 2016 | Ease of Doing Business | 1 | 49 | World Bank, 2016 Ease of Doing Business Report |
| 2015-2016 | World’s Most Competitive Economy | 2 | 32 | World Economic Forum, Global Competitiveness Report |
| 2016 | Ease of Paying Taxes | 5 | 70 | PWC, IFC, World Bank’s 2016 Paying Taxes Survey |
| 2015 | World’s Freest Economy | 2 | 75 | Heritage Foundation’s Index of Economic Freedom |
| 2015 | World’s Best Country for Expat Financial Quality of Life | 2 | 20 | HSBC’s 2015 Expat Economics Report |
| 2015 | Country with Least Corruption Perception | 8 | 76 | Transparency International’s Corruption Perceptions Index |
| 2015 | World’s Best Country for Business | 8 | 75 | Forbes’ Best Countries for Business Index |
| 2015 | World’s Most Competitive Economy | 1 | 30 | IMD, World Competitiveness Yearbook |
| 2014 | Country Most Open to Trade | 1 | 57 | World Economic Forum, Global Enabling Trade Report |
| 2010 | Most Efficient Bureaucracy in Asia | 1 | 3 | Political and Economic Risk Consultancy Survey 2010 |
| 2010 | Best Place for Asians to Live | 1 | 62 (Bangkok) |
ECA International’s 2010 Location Ratings System |
| 2010 | World’s Lowest Risk City for Employers | 3 | 54 | Aon Consulting’s People Risk Index |
| 2009 | Country with Lowest Tax Misery | 11 | 14 | Forbes Tax Misery and Reform Index |