

Singapore Still the Best Place for Entrepreneurs  - SuperChihuahua
http://www.penn-olson.com/2012/02/16/singapore-doing-business/

======
einhverfr
I know I will probably be down-modded for this, but I will add my $0.02 here.

The more I travel and live overseas, the more I think the US is a lousy place
for startups.

Why? The regulatory climate in the US is fairly anti-small-business. Taxes are
high but worse, they are complicated. The tax system is designed around the
idea that people get paid fixed amounts. Those with variable incomes or the
self-employed have a horrible time with estimated quarterly taxes esp if
income fluctuates significantly.

Compare this with Singapore: For the wealthiest, the taxes approach 30% of
income and instead of a tax bracket system, you have a series of compounding
taxes (something like 5% of income over 40k + 5 % of income over 50k etc).
Every additional dollar you make puts something in your pocket. No nasty "I
moved up a tax bracket and so I took home less this year!" surprises.
Additionally the taxes aren't owed in the year assessed. They are owed the
following year, and the government accepts monthly payments on those. Your
income has to fluctuate terribly before that can be the end of it.

Most other countries outside the US and Western Europe have much simpler tax
codes, and the codes are more friendly towards small businesses (and even
Western Europe is more friendly towards small businesses). In the US, however,
multinational corporations can use the complexity to avoid paying taxes at
all, and small businesses are heavily burdened.

When you add new laws like PPACA, things just get worse. PPACA is based on the
idea that employers are the primary means of supplying health insurance, so
when you are trying to hire your first few employees, you are going to have to
get an expensive plan since you can't likely get into the larger pools, but
more to the point, this is the case even if you don't have to offer the
insurance by law, since if you don't offer it, your employee has to buy it
him/herself. Since health care in the US is phenominally expensive, this is a
dramatic drag on startups (compare the cost of having a baby in the US to
anywhere else in the world and explain why it costs so much to me here. It's
not just the standard of care. It's because our system is broken and geared
towards an ecosystem of big businesses making a ton of money off it, and the
PPACA makes this worse, not better).

Add to this the fact that the economic downturn has not created a major glut
of high tech workers (in fact, quite the opposite), and it's just not the
place I would say to work with right now.

So my list of countries to startup businesses in right now include:

Singapore

Colombia

Malaysia

Indonesia

Ecuador

Chile

Ghana

These countries all have issues of their own but aside from Singapore, one
thing they all have in common is a surplus of educated people, good education
systems, and sufficient infrastructure. They also have some semblance of
stability (even Colombia is slowly getting there).

I don't think one is going to see superstars like Facebook coming from any of
these countries. However I do think one will see a lot of good, solid
businesses that will grow well, and prosper.

~~~
nirvana
Regarding insurance in the USA, I saw a paper by Milton Friedman in the 1970s
who was evaluating the impact of government involvement in the healthcare
industry. Prior to 1901, healthcare in the USA was completely private
(charities are considered private as well, since they aren't controlled by
government.) Between 1901 and the 1970s the US government at all levels
started to take over health care, by funding hospitals, and by regulating
everything.

He found that, as of the mid 1970s, this intervention had driven up costs
26fold, and had reduced availability, by an amount I can't remember.

Since then I'm sure the impact is even worse. But if you just use that
number-- a $100,000 operation that might bankrupt you would have cost
$3,846.15 if government hadn't gotten involved. So the impact of government is
going from a cost you could afford to put on a credit card to bankruptcy.

~~~
vondur
Prior to 1901, healthcare was not very advanced. I'm guessing the rise of
technology, doctor credentialing, and the development of most modern drugs may
have something to do with the price increase.

~~~
einhverfr
That can only account for half the increase, since the countries with the next
highest cost for health care spend roughly 50% per capita compared to the
US......

I would instead say the problem is:

1: Monopolies and oligopolies (patents, letting the AMA control medical school
accredation, etc). Solution is to charter mini-AMA's to provide competition,
and to enact compulsatory licensing of patents in medical fields.

2: The fact that the health care and health insurance markets are both
entirely consumer opaque. Consumers don't have any control over their money in
these markets and the common-sense protections are missing. For example, when
I go to get my car worked on, I have a right to a written estimate before
repairs are begun. Why don't I have a right to a written estimate before non-
emergency medical care is provided?

The first thing you have to recognize is that when Democrats and Republicans
both talk about reforming our medical system to address these, they believe
that more corporate power, and less consumer power will correct this problem.
Unfortunately, pricing is a coercive negotiation, and so that will only
accelerate the problem.

Empower consumers. Disempower corporations. Bring prices down.

------
cdf
As a Singaporean, I have to agree Singapore is an excellent place for
business, ON PAPER. Most of the pro-business comes from the fact that the
government does not protect workers.

Female employee pregnant? Feel free to pre-emptively fire her, as long as it
is not 6 months before the baby is due. (Even the 6 months is a relatively new
ruling, used to be ok till the baby pops).

Found a cheaper employee? Feel free to fire the existing one. No reasons need
to be given. Employment at will, they call it.

As you may imagine, the employees reciprocates this regime by displaying
little loyalty. You only need the smallest pay rise to prise away a rival's
employee.

So good luck starting a business here. There is a reason why Singapore is
dominated by MNCs and government owned conglomerates while small enterprises
have unnaturally high failure rate, despite being so startup friendly, on
paper.

~~~
saturn
What kind of business are you talking about? Your comment sounds very "labour
vs. capital", is it relevant to the kind of start-up commonly discussed here?

If I started a business in Singapore (and I have been considering it) I would
be hiring employees that I liked and respected, and I'd pay them fairly. I
can't imagine that I'd fire them "at will" because I found someone a few bucks
cheaper, or that they'd abandon me for a few bucks more. I can't imagine high-
value knowledge workers playing these kind of games. Maybe discount
supermarkets poach each other's check-out workers but rails programmers?

And even if you were hiring relatively blue collar workers, eg if you were
setting up a factory, it seems to me that the fact of being in a hands-off
regulatory environment would make employees respond even better to being
treated well.

Just because in theory you can get away with acting like an asshole, doesn't
mean you have to, or it is wise for you to do so.

~~~
cdf
You will find that sticking to your principles of paying fairly will be
difficult, because Singapore is quickly becoming one of the most expensive
cities to live in.

What you save in taxes, you will pay back many folds in rental and
transportation costs. If you have never been to Singapore, you will not be
able to imagine how much it costs to own a car in Singapore. Most expensive in
the world, by far.

And because of the ease of hiring foreigners, you will find that there will be
plenty of cheap rails programmers available... may not be the type you want,
but you will find pressure from elsewhere questioning why you overpay your
staff when cheaper ones are available.

And for a population conditioned to ill treatment, you will find that you will
not be able to change the cynical culture overnight.

Lastly, if your competition is also based in Singapore, then you will be
competiting with assholes with asshole level productivity and cost structures.
Over the long term, you will win. But over the short term, you will be choked
to death by the assholes who can promise more and cost less.

~~~
saturn
Thanks for your response. I didn't see it earlier, I try not to look at HN too
often..

I've been to Singapore many times, and am fully aware of how much it costs to
own a car. I live in Sydney, which if anything is more expensive than SG
except for the car taxes. I do not consider Singapore to be expensive compared
to Australia.

You refer often to appearances to others - investors, perhaps, comparing your
costs of labour to other companies? What other oversight would you be
experiencing?

Honestly I hadn't really thought about hiring cheap natives. Singapore is
something of a hub for expats and I was thinking I would just invite anyone I
needed.

If you have exeperience with running a startup style business in singapore I
would love to hear about it.

------
kylemaxwell
There are other considerations regarding Singapore, like what many of us
consider civil rights so basic that they should be human rights (freedom of
speech and expression, for example), not to mention caning and hanging.

Low tax rates and business regulation should not be our only concerns in
building the future.

~~~
nirvana
In the USA, your domain can be seized by the government at any time without
any trial, and without any recourse. If you report abuse you received from a
police officer, you risk being killed by that officer and it being made to
look like you were in the commission of a crime at the time. I can't think of
a single basic human right that is universally respected in the USA, and this
goes from the right of self defense to the right of self determination or the
freedom of association.

I'll take being caned over being killed any day.

There are always tradeoffs.

~~~
kylemaxwell
I certainly wasn't holding up the US as a great example of human rights, and I
didn't mention it at all in my post. :)

~~~
nirvana
I didn't mean to rebut you so directly, but was using your mention of these
things that were widely reported in the US media as an opportunity to compare.

------
alizaki
This is way too generic. There can be no one best place for entrepreneurs
because the natural ideal location is where your customers are (as a startup,
you'll more often than not tend to have real customers in one specific
geography first). That's your best place.

I think this should read: if you're customers are in South East Asia, you're
amongst the luckiest entrepreneurs in the world.

------
ccarnino
I thought that Chile with its StartupChile was somewhere on the chart. As
StartupChile alumn I can say that it is getting better doing business in
Chile. For real!

~~~
latch
Maybe I shouldn't base my opinion on a single story, but this is pretty much
everything I know about Startup Chile (and it isn't good):
<http://hervalicio.us/post/14915671294/on-startup-chile>

~~~
einhverfr
One thing to keep in mind here is never trust the governments in most
countries. Find the rules, play by them, but if you are getting money from the
government, don't do that as a foreigner. It's asking for trouble.

Edit: I can't think of any government in the world where I would ask for money
as a foreigner. That just strikes me as asking for serious trouble.

~~~
einhverfr
since my suggestion was downvoted, let me explain....

In every country, there is a fear of foreigners coming in to "take our jobs."
A foreign businessman needs to be careful because any grants will be subject
to the government having to deal with this fear. That doesn't mean don't take
government contracts. But it does mean that if you are going to apply for
government grants, you really want a national doing this for you.

A second thing to think about is the problem of crony capitalism (think of no-
bid Haliburton contracts in Iraq or former bank executives bailing out their
buddies--- this is not that different in the US but is often more obvious in
other countries). In general if you have good contacts, you can get good
grants and contracts. If you do not, you cannot. As a foreigner you probably
don't esp, if you are lured in with the hopes of government money.

This is really a matter of being risk adverse. Only go for government help
when you have the contacts to make it work effectively.

------
kschua
Arguments aside, this is just a starting point for those who wish to set up a
business in Singapore.

1) www.acra.gov.sg - Companies and businesses need to be registered with the
authority. There is information here on the type of companies you can set up
etc

2)
[http://www.edb.gov.sg/edb/sg/en_uk/index/why_singapore/Guide...](http://www.edb.gov.sg/edb/sg/en_uk/index/why_singapore/Guide_to_Investing_in_Singapore.html).
Another government site to get you started

3) Setting up offshore office. You can do a google search for "virtual office
singapore". These guys provide a basic address which you can use when you
register a business. If you are setting up a Private Limited company in
Singapore, you will need a company secretary, which most of these virtual
office will also provide for a price. Most also have a package where you can
get everything ie registering a business, company secretary, virtual address
for a year for less than SGD $1000

------
wyclif
There is definitely something wrong with the "Georgia" flag.

~~~
SuperChihuahua
Yeah - it looks like they took the flag from the state of Georgia in the US,
not the country Georgia

<http://en.wikipedia.org/wiki/Flag_of_Georgia_(U.S._state)>

Like that guy in the state of Georgia in the US who got scared when Russia
"invaded" the country Georgia

------
jwingy
Entrepreneur is one thing - a tech entrepreneur is another. I don't think you
can compare the labor pool and funding climate in SE Asia to the U.S. Plus the
large, homogeneous, wealthy market of the U.S. is really the key to all this
if you're looking to do a typical high growth tech startup.

Certainly Singapore has its advantages, but I think you'd be hard pressed to
value them more highly over the factors I mentioned.

~~~
nirvana
You touched on a number of points, and while I'm not an expert in Singapore, I
have been operating my startup outside the USA for the past 4 years.

Entrepreneur vs High Tech Entrepreneur: This is a reasonable distinction, so
I'm going to only talk about high tech. High tech, to me, means, the internet
plays a key part in the product, and in my case, it is where the entirety of
the product lives. So, software and virtual goods or information or services,
rather than a factory and manufacturing, etc.

Labor Pool: The labor pool for a high tech company is global. I don't care
where an employee is working, and the companies I admire are very globally
diverse. This is becoming increasingly common it seems- for instance one
engineer I know of is living on a beach in Thailand working for a US company
ostensibly based in Boston (but with employees in at least a dozen countries
and states.)

So, the labor pool is global, for high tech businesses (not so much when you
need a factory.)

Funding Climate- Yes, if your business is selling stock in your business, then
you want to be located within an easy board meeting commute of Sand Hill Road.
But one of the aspects of high tech business these days is that the funding
needed is vastly smaller than before... you can self fund if you're a highly
paid employee who lives frugally and puts away $40k a year for 5 years, for
instance.

There does seem to be a segment of the population that thinks "high tech
startup" is only that segment of companies that are trying to be the next
facebook-- that is, bets on really long odds that require large amounts of
outside capital. I think that's kinda silly when you can self fund and pursue
businesses with much better odds, and thus have risk adjusted returns vastly
higher. (would you rather have a %1 chance at being a billionaire, or a %75
chance at being deci-millionaire?)

The large, homogeneous, wealthy market of the USA: Can be addressed by
businesses anywhere. There's no need to locate in the USA to address the US
market. Further, in many business areas, the US market is less than half. For
instance, I'm currently earning around %35 of revenue from the USA, with the
majority coming from overseas, non-english speaking countries, because I
simply took the time to translate the product into those languages. I don't
even know the cultures, and haven't advertised to them, etc. But they are the
majority of my income.

I think the USA wins on venture capital, sure, but loses in just about every
other regard.

Plus, if your company has X amount in capital, would it be better to be
located in the Bay Area where your burn rate will be 6-10 times as much as it
might be in, say, Thailand?

I know americans think that America is number one in a large number of
areas... but once I left america, I started to see that the american
perspective on the world is pretty distorted.

~~~
jwingy
Yes, all good points. As I think we both seem to be aware of, it really
depends on the type of business you're doing. It could be high growth, or slow
growth day 1 revenue generating machine, or something in between. It could be
primarily virtual, or an older business model with a tech twist.

So, depending on your business model and your background, whether you're based
in the U.S. or outside of it, both come with their own sets of challenges. I
just think more business models have a higher probability of success if the
company is based in the U.S. than they would if they were based in SE Asia.

From what I've heard by talking to other tech startups in the area, if you're
looking to do a high growth type of startup, that can be difficult in this
region and the reason is primarily due to funding. There's a cultural
difference in the investors here that boils down to risk aversion. Asian
cultures are typically risk averse and this no doubt applies to Asian
investors as well. They expect you to already be making money or if you're not
making money, then they'll want a sizable stake of equity - sizable enough to
make the founders feel like employees rather than owners. One could get
investment from firms in the U.S., but I've not heard of many who have gone
that route, and I suspect many investment firms unfamiliarity with Asia could
make that a little difficult.

Now if you want to talk about bootstrapping, then anything is possible within
the limits of your abilities and tolerance.

If you're based in Asia but targeting the U.S. market, that's again not an
insurmountable obstacle, but you'll need to be able to talk to your customers,
and when your customers are based in the U.S., the time difference, distance,
and being culturally disconnected can make this difficult at times. Possible
yes, but at an extra cost.

So again, it really depends on what your business is doing. I think being in
the U.S. gives you more options though.

------
Too
Uhhh, based on what?? This is just a long list of countries on a top list
without any specific measures or anything. The only explanation is that it's
best in some other field but that position is equally unexplained.

I'm not doubting Singapore or the rest of the countries can be good for
entrepreneurs but this infographic is just fluff.

------
latch
Looking at this without looking at the quantity and quality of available
talent is the most absurd thing I've ever seen. It's easily the most important
thing to measure, it's easily what would push the US near the top, but it's
hard to measure, so..hey, let's just leave it out.

~~~
einhverfr
What has saved the US so far is really a combination of a few things:

The first is available talent but the advantage is not as great as you might
think there.

The second is the way our ivy league schools have functioned as networking
hubs for folks starting businesses. But that then just is helpful if you
already have money.

The third has been the investor climate and the US financial strength. This is
the factor that has traditionally tipped things heavily in the favor of the
US.

The problem with this assessment though is that it shows that if you are in
the capital class in the US, you have a relatively easy time but if you are
not, then you are more or less shut out. The only way to get a decent-sized
business started for such people is to do it overseas.

~~~
latch
I live in Hong Kong, which this report ranked 2nd. In my opinion, the
advantage is staggeringly MONUMENTAL.

------
mrschwabe
Singapore is an excellent example of how easy it is for governments to
encourage a vibrant economy. 40 years ago it was literally a third world
country. They changed strategy and it wasn't rocket science. Less taxes, less
interference = thriving business environment.

~~~
cdf
"Less interference"? The Singapore government left their fingerprints
everywhere here. If you want to hold Singapore up as an example, you are
really advocating the government poking their nose into everything.

How would you like to have all your telcos, transportation companies, media
companies, all owned or controlled by the government? Welcome to Singapore.

~~~
mrschwabe
True, true - my bad - the tax structure is pro-enterprise but you're exactly
right the government there is overreaching. And not setting a good example for
civil liberties either - a bag of weed can get you sent for execution!

------
rbanffy
I'd suggest using the ballot and the soap boxes first.

------
hogu
can anyone comment on tech scene? I might be moving there in a few years

------
wilfra
Singapore is one of the most expensive places in the world to live and do
business. If you are Eduardo Saverin, maybe Singapore looks great. If you are
looking to bootstrap, probably not the best location.

------
nirvana
I'm curious as one of the places Singapore highly ranked was the difficulty in
starting a business. Yet it seems from the company formation services online,
Singapore costs around $5,000 to open a business. (compared to $50 in Texas,
for instance). I would think if it is straightforward (and really starting a
business is nothing more than registering it with the government so they can
tax you-- essentially the creation of a database entry) -- why is it so
expensive?

Maybe it can be done online for cheap, and thus those who are charging all
that money are people who are giving a lot of advice. (I haven't looked into
it closely.)

~~~
zackyap
It costs $300 SGD to register a company in Singapore. $5000 probably includes
cost of other services such as legal and secretary fees.

~~~
nirvana
I think the issue is the requirement to have a registered director located in
Singapore.

Also, if you plan to apply for residency using the EntrePass it appears you
need to have $50k SGD in "paid up capital", which is about $40,000 USD. I'm
not sure what "paid up capital" means, though. (EG: is a business making
$4,000 a year in profit valued at $40,000 thus considered to have $40k in paid
up capital? Or does it mean you need to put $50k SGD in a local bank to sit
there as a form of a bond?)

~~~
czcar
Ah, you're referring to the $3000 deposit + $3000/year requirement that
professional nominated "Directors" require to setup the business. Yes, this
can be an issue if you do not have relationships with any locals.

I believe many countries have restrictions on foreigners incorporating without
a local director/shareholder?

But yes, it is a little bit annoying. What we ended up doing is getting a
mentor/investor to become a nominee director.

