After an unbroken 10-year streak, Singapore has lost its coveted status as the world’s easiest place to do business in, an annual World Bank study showed.
In the latest Doing Business report, Singapore was ranked second, behind New Zealand. The report tracks regulatory changes in 190 countries for businesses throughout their life cycle — from the ease of business start-up regulations and getting credit, to property rights.
The World Bank took new factors, including gender, into consideration for its latest report, and based on the new methodology, Singapore would have come in third instead of first in last year’s study.
While the report did not find significant differences between the genders when it comes to doing business in Singapore, the Republic’s scores were dragged down by factors such as cost and red tape.
The World Bank cited reductions in labour-related taxes and new regulations that make paying taxes easier as key reasons for moving New Zealand to the top spot from its previous runner-up position.
However, money-laundering experts warned that the honour masked the darker side of the Pacific nation’s vulnerability as a channel for illegal funds. “Anyone who wants to … hide dirty money, just needs a local director, a physical address and NZ$45 (S$45), and in a few minutes they’ve got just what they need to do it with,” said Mr Ron Pol, Wellington-based head of anti-money laundering firm AML Assurance.
On Singapore’s performance in the report, economists noted that the cost of acquiring space and doing business in land-scarce Singapore is invariably high. However, there is a trade-off between cost and Singapore’s edge in areas such as the legal system and governance, they pointed out.
Among other things, the World Bank report found that the cost required to complete procedures to build a warehouse — measured as a percentage of warehouse value — was more than three times higher in Singapore compared with other high-income nations in the Organisation for Economic Cooperation and Development (OECD).
Businesses also have to wade through more procedures when registering a property in Singapore, compared with other East Asia and Pacific economies. The cost associated with border compliance in exporting goods from Singapore — US$335 (S$465) — is more than double that in OECD high-income nations (US$150), while such costs to import goods into the country is nearly twice (US$220) that in other OECD high-income nations (US$115).
For imports into Singapore, border compliance (35 hours) and documentary compliance (three hours) also take longer than in New Zealand, where it takes 25 hours and one hour, respectively.
CIMB Private Bank economist Song Seng Wun said paying for space is always a premium in a tiny city-state like Singapore and businesses would consider other advantages when setting up shop here, such as the country’s legal system. On the more complex process to register a property here, compared with OECD high-income countries, he alluded to Singapore’s size and the authorities ensuring that they know who owns property and for what purpose.
OCBC Bank head of treasury research and strategy Selena Ling said this was probably the result of an “inadvertent” rise in bureaucratic processes, such as in building safety.
She felt that the longer time taken for border and documentary compliance on imports reflected the need to “balance safety and regulations with the ease of doing business”.
“Security is a very big concern, so … maybe that contributes to some slowdown in terms of time and (higher) cost,” she said.
Citing the high cost of labour in Singapore, Mr Song reiterated that the cost of doing business here would never be cheaper relative to other economies globally. “More important,” he said, “is whether that higher cost translates into higher value-added activities (for businesses).”
Ms Ling added: “You can think of places in the world where it’s very cheap, but maybe things don’t get done.”
Mr Inderjit Singh, who is the chief executive of consumer-electronics firm Solstar International, had frequently spoken about rising business costs when he was a Member of Parliament between 1996 and last year.
He told TODAY that he was “not that surprised” that Singapore’s edge as a place to do business was diminishing. Urging the Government to act on the issue, he said: “If you … talk to (businesses), everyone will tell you … cost is too high and basically there seems to be a huge economic slowdown, but the Government’s reaction does not show (this).” WITH AGENCIES
news source: todayonline.com