In the bustling economic landscape of Southeast Asia, most investors face a choice: the established force of Singapore, or an up-and-coming nation like Malaysia. Both countries offer unique prospects for investors, entrepreneurs, and businesses looking to expand their horizons.
This article aims to provide a comprehensive comparison between these two Asian business hubs, shedding light on their economic performance, business environment, taxation system, workforce, and more.
Whether you are a seasoned investor or a business looking to expand, this guide will help you navigate the investment landscape of Singapore and Malaysia.
Unveiling the Southeast Asian Market
The Association of Southeast Asian Nations (ASEAN) has a combined GDP of nearly US$4 trillion, making it one of the world’s fastest-growing markets.
In fact, if ASEAN’s ten member nations were a single country, it would be the fifth largest economy in the world. This region is a hotbed of opportunities, with Singapore being a traditional performer, and Malaysia being an enticing upstart.
Economic Landscape: Singapore vs Malaysia
Singapore’s Economic Landscape
Singapore, with its highly developed free-market economy, enjoys a business environment remarkably free of corruption. It has the world’s 30th-largest economy and boasts the fifth-highest per capita GDP in the world.
This economic prosperity and stability make it an attractive destination for investors looking for a secure and profitable business jurisdiction.
Malaysia’s Economic Landscape
On the other hand, Malaysia, with its diverse and newly industrialised market economy, is the world’s 38th largest economy and has a respectable average per capita GDP of US$55,000.
Its diverse economy and robust growth make it an attractive destination for investors looking for a dynamic and growing business landscape.
The Business Climate: Singapore vs Malaysia
Singapore’s Business Environment
Singapore shines in the global business scene, ranking 2nd in the world for ease of doing business according to The World Bank. This is largely due to its performance in trade freedom, technology, and a lightness of a tax burden. Its pro-business policies, advanced infrastructure, and strategic location make it an ideal Asian business hub.
Singapore Business Incorporation Time
Both Singapore and Malaysia offer the same types of legal entities for business incorporation. However, the process can be completed in just 15 minutes in Singapore, making it a more efficient choice for eager entrepreneurs.
Malaysia’s Business Environment
Malaysia falls behind at 24th globally in ease of doing business but shows strengths in investor protection, monetary freedom, and innovation. Its business-friendly policies and growing economy make it a viable option for investors looking for business opportunities in Southeast Asia.
Malaysia Business Incorporation Time
In Malaysia, the process of business incorporation takes a bit longer than in Singapore, typically 5-10 business days. However, the country offers a range of incentives and support for new businesses, making it an attractive option for entrepreneurs.
The Human Capital: Workforce — Singapore vs Malaysia
Singapore’s Workforce
Singapore shines in the global business scene, ranking 2nd in the world for ease of doing business according to The World Bank. This is largely due to its performance in trade freedom, technology, and a lightness of a tax burden. Its pro-business policies, advanced infrastructure, and strategic location make it an ideal Asian business hub.
Population: 5.5 million
Labour force participation rate (LFPR): 70%
Attended tertiary education: 93%
While Malaysia boasts a larger population of 33.5 million compared to Singapore’s 5.5 million, Singapore is working on a future economy that is uniquely leaner, aided by a quicker adoption of technology, a faster pace of innovation, and higher productivity.
This focus on a tech-driven economy and a skilled workforce makes it an attractive destination for businesses looking to leverage technology and innovation.
Malaysia’s Workforce
Population: 33.5 million
LFPR: 66%
Attended tertiary education: 43%
Malaysia, with its larger population, offers a diverse and skilled workforce. Its focus on education and skills development, particularly in the technology sector, makes it an attractive destination for businesses looking for a skilled and tech-savvy workforce.
At this stage, however, Malaysia falls behind Singapore by quite some margin in terms of tertiary educated populace.
The Fiscal Landscape: Taxation Systems — Singapore vs Malaysia
Singapore’s Taxation System
Singapore has a corporate income tax rate of 17% (less with a myriad of incentives), one of the lowest in the world. This enticing tax rate, combined with a range of tax incentives and exemptions, makes Singapore an attractive destination for businesses.
You can calculate your potential taxes with our free corporate tax calculator.
Related Read: How Does the EIS Create Tax Savings From IP and R&D Costs?
Malaysia’s Taxation System
In contrast, Malaysia’s corporate tax rate is 24% — however, the country offers a range of tax incentives for certain industries and regions, making it a viable option for businesses.
The Digital Frontier: Technology and Innovation — Singapore vs Malaysia
Singapore’s Approach to Technology and Innovation
Singapore is leading the way in technology and innovation, with a strong focus on creating a smart nation powered by digital innovation and technology-enabled solutions. While Malaysia is also making strides in this area, Singapore’s commitment to technology is truly world-class.
Related: Episode 1: IT Technology Industry in Singapore
Malaysia’s Approach to Technology and Innovation
Malaysia is also progressing in technology and innovation, with a focus on digital transformation and the development of a digital economy. While it may not be as advanced as Singapore in some areas, it offers its own unique opportunities for tech-focused businesses and investors.
Crossing Borders: Immigration Requirements in Singapore and Malaysia
Immigration Requirements in Singapore
Singapore’s immigration policies are designed to attract talent and businesses to its shores. The country offers various types of work passes and permits, such as the Employment Pass for professionals, managers, and executives, and the EntrePass for entrepreneurs.
The application process is straightforward, and the criteria are clear, focusing on the applicant’s skills, qualifications, and potential contributions to the Singaporean economy.
Immigration Requirements in Malaysia
Malaysia also offers various types of work permits and visas to foreign workers and entrepreneurs. The process, while slightly more complex than Singapore’s, is still manageable.
The Malaysian government has taken steps to streamline the application process and provide clear guidelines to attract foreign talent and investment.
Related Read: Comparing ONE Pass Singapore and Malaysia’s PViP Work Visas
Keeping Records: Filing Requirements in Singapore and Malaysia
Filing Requirements in Singapore
In Singapore, businesses are required to adhere to the following filing requirements:
- Companies are required to conduct an Annual General Meeting (AGM) every year. The inaugural AGM should take place within the first 18 months of the company’s incorporation.
- Companies must submit their Annual Returns and Audited Annual Accounts to the company registrar within a month following their AGM.
- Exempt Private Companies (EPCs) in Singapore, with an annual turnover of less than S$5 million, are not required to submit these annual documents.
- Companies are also required to file their Tax Returns and Audited Accounts with the Inland Revenue Authority of Singapore (IRAS) annually.
Filing Requirements in Malaysia
In Malaysia, companies are required to comply with the following filing requirements:
- Like Singapore, companies in Malaysia must hold an AGM each year. The first AGM should be held within 18 months of incorporation or within 6 months from the end of the financial year, whichever comes first.
- Companies are required to submit their Annual Returns and Audited Annual Accounts to the company registrar within a month of their AGM.
- EPCs in Malaysia, with no more than 20 shareholders and no corporate shareholding, are exempted from submitting these annual documents.
- Companies must also file their Tax Returns and Audited Accounts with The Inland Revenue Board of Malaysia (IRBM) annually.
The Language of Business: Communication in Singapore and Malaysia
Language Proficiency in Singapore
Official languages: English, Mandarin, Malay, Tamil
In terms of language and communication, Singapore stands out with its high level of English proficiency. English is one of the four official languages in Singapore and is the language of business, administration, and schools.
This widespread use of English makes it easier for international businesses to communicate and operate in Singapore, not to mention navigate everyday life.
Language Proficiency in Malaysia
Official language: Malay (Bahasa Malaysia), with English as a second language
Malaysia, on the other hand, presents a slightly different linguistic scenario. While Malay is the national language, English is also widely spoken and is a mandatory subject in schools, which ensures a good level of English proficiency in the workforce.
Conclusion: Singapore vs Malaysia
In the final analysis, both Singapore and Malaysia offer compelling business environments, each with its unique strengths.
However, Singapore’s robust economy, favourable business environment, and forward-thinking approach to technology and innovation make it an attractive investment destination.
At InCorp, we understand the intricacies of investing in Singapore and can provide expert guidance to help you navigate this promising landscape. Contact us today to explore the right investment strategies for your business in Singapore.
FAQs
- Singapore's robust economy, favourable business environment, and forward-thinking approach to technology and innovation make it an attractive investment destination.
- While Malaysia also offers a favourable business environment, Singapore generally ranks higher in terms of ease of doing business, economic freedom, and competitiveness.
- At InCorp, we provide expert guidance to help you navigate the promising business landscape of Singapore. We can assist you in understanding the business environment, complying with the regulations, and formulating the right investment strategies.
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