Singapore as a global talent hub

Singapore, a bustling metropolis known for its impressive skyline and multicultural heritage, has emerged as a global talent hub in recent years. This island nation has made strategic investments in talent development, education quality, and tax incentives for foreign firms, all contributing to its remarkable economic growth and evolving business trends. In this article, we will delve into the various facets that make Singapore an attractive destination for talent and businesses alike.

Talent pool landscape in Singapore

Skills and education quality

Singapore’s commitment to education is evident through its world-class institutions and a robust curriculum. The country consistently ranks high in global education indices. It is, in fact, an ideal place for nurturing talent. Whether it’s in the fields of science, technology, engineering, or mathematics (STEM), Singapore encourages its students to excel. In the 2018 Program for International Student Assessment (PISA), while waiting for 2022 results, Singapore’s students ranked second (after China) in math, reading, and science, outperforming 78 other countries. This reflects the high-quality education system that provides a strong foundation for future talent.

Singapore’s talent landscape is characterized by a growing demand for specific skills. The information technology sector, for example, seeks professionals proficient in data analytics, artificial intelligence, and cybersecurity. In the financial services sector, skills in fintech, blockchain, and risk management are highly valued.

According to the “ManpowerGroup Talent Shortage Survey 2023,” the top three skills in demand in Singapore are IT & data skills (44%), critical thinking & analysis (41%), and creativity & originality (38%). This reflects the country’s shift towards a digital economy. And there is also the need for talent to navigate complex challenges.

Government initiatives in the talent landscape

The SkillsFuture program, initiated by the government, provides opportunities for individuals to develop skills and competencies needed for the future economy. In fact, in 2021, the government committed $1.2 billion to this program to promote lifelong learning and equip its workforce with in-demand skills. These investments translate into courses and programs covering fields including digital marketing, data analytics, and advanced manufacturing, aligning with the evolving demands of the job market.

Furthermore, the TechSkills Accelerator (TeSA) program focuses on developing tech-related skills. TeSA has trained over 120,000 tech professionals since 2016 and aims to position Singapore as a global tech hub.

Talent pool limitations

While Singapore’s talent pool is enviable, it faces limitations, such as a relatively small population. In fact, as of June 2023, the country had a population of approximately 5.92 million people. This limitation indeed necessitates the attraction of foreign talent to fill skill gaps and fuel economic growth.

Singapore’s aging population is another concern. In 2023, 19.1% of the population is aged 65 and above, a figure projected to increase to 24.1% by 2030. This demographic challenge underscores the importance of talent development and immigration policies.

Tax exemptions and incentives for foreign firms

Singapore’s tax-friendly policies significantly increase its appeal as a global business hub. In fact, they have successfully attracted foreign firms and investors seeking a favorable environment for growth and expansion.

Reduced corporate tax rates

Firstly, the country boasts one of the lowest corporate tax rates globally, at 17%. Furthermore, it provides substantial tax exemptions for foreign companies. For instance, qualifying foreign startups can enjoy tax exemptions on the first SGD 100,000 of chargeable income for each of their first three consecutive years of assessment (YAs), potentially saving them up to SGD 75,000 annually.

What sets Singapore apart is its policy of not imposing capital gains tax or dividend tax. This means that profits earned and dividends distributed by companies are typically not subject to additional taxation, making Singapore an attractive location for profit repatriation and investment.

Tax exemptions and incentives

Notably, the city-state offers the Partial Tax Exemption (PTE) scheme, which grants qualifying companies a partial exemption of:

• 75% exemption on the first $10,000 of normal chargeable income; and
• A further 50% exemption on the next $190,000 of normal chargeable income.

So, this translates into significant savings for smaller and growing enterprises.

For startups, Singapore offers the Start-up Tax Exemption (SUTE) scheme. Under this program, qualifying startups can enjoy on their first 3 consecutive YAs:

• 75% exemption on the first $100,000 of normal chargeable income; and
• A further 50% exemption on the next $100,000 of normal chargeable income.

Research and Development (R&D) incentives

Singapore places a strong emphasis on innovation and research, making it an ideal destination for companies engaged in R&D activities. The country offers various R&D incentives, including the Research and Development Tax Deduction (RDD) scheme.

Under RDD, companies can claim tax deductions of up to 250% on qualifying R&D expenses, including staff costs, consumables, and software. Which will be enhanced to 400% for the first S$400,000 incurred for each YA from 2024 to 2028.

The tax reduction for qualifying IP registration costs has also been enhanced. The current 200% tax reduction for the first S$100,000 will be enhanced to 400% for the first S$400,000 per YA from 2024 to 2028.

Global Trader Program (GTP) and Development & Expansion Incentive (DEI)

The Global Trader Program (GTP) and the Development and Expansion Incentive (DEI) are examples of initiatives designed to attract businesses and talent from around the world. Under the GTP, qualifying trading companies can enjoy concessionary tax rates on their trading income, which can be as low as 5% and as high as 10% for specified income. These incentives create a favorable business environment, making it easier for foreign firms to set up operations in Singapore.

Under DEI, they aim to encourage companies to grow capabilities and conduct new or expanded economic activities in Singapore. Companies that carry out global or regional headquarters (HQ) activities of managing, coordinating and controlling business activities for a group of companies may also apply for DEI for the HQ activities.

Singapore’s economic growth

Singapore’s remarkable economic growth can be attributed to its strategic location, excellent infrastructure, and a highly skilled workforce. The nation has diversified its economy into sectors such as finance, technology, biotechnology, and logistics. Its openness to international trade and investment has led to a sustained period of growth.

In 2020, amid the global pandemic, Singapore’s GDP contracted by just 5.4%, a testament to its resilience. The country’s GDP per capita, which stood at approximately SGD 78,000 in 2020, positions it among the highest globally. The World Bank ranks Singapore as the second-easiest place to do business in the world, a testament to its business-friendly environment. By the end of 2023, the Ministry of Trade and Industry (MTI) has forecasted a growth of “0.5 to 1.5%” of Singapore’s GDP.

Furthermore, the government’s commitment to research and innovation has resulted in a thriving tech ecosystem, attracting startups and tech giants alike. The government has committed SGD 19 billion to research, innovation, and enterprise development as part of the Research, Innovation, and Enterprise (RIE) 2020 Plan for the next 5 years. This has led to significant breakthroughs and the establishment of numerous research institutes and innovation hubs. Singapore has positioned itself as a regional innovation hub, fostering creativity and entrepreneurship.

Business trends

Several noteworthy business trends are shaping Singapore’s economic landscape. The rise of sustainable and green businesses is gaining traction, with the government supporting initiatives that promote eco-friendly practices. Additionally, the COVID-19 pandemic accelerated the adoption of digital technologies, leading to a surge in e-commerce, fintech, and telemedicine. By 2023, the e-commerce market in Singapore is expected to reach US$8.3 billion. Plus, in the first six months of 2023, Singapore fintechs raised US$934 million across 84 deals in mergers & acquisitions (M&A), private equity (PE), and venture capital (VC), according to the KPMG Pulse of Fintech. In fact, there is a high emergence of fintech unicorns like Grab Financial Group.

Singapore’s push for innovation and Smart Nation initiatives has led to advancements in artificial intelligence, cybersecurity, and blockchain technology. As these trends continue to evolve, businesses can tap into the opportunities presented by these emerging sectors.

Conclusion

Singapore’s journey from a small trading port to a global talent hub and economic powerhouse is a testament to its visionary policies and unwavering commitment to excellence. With its focus on talent development, tax incentives, economic growth, and evolving business trends, Singapore remains an attractive destination for both individuals seeking opportunities and businesses looking to thrive in the heart of Asia. As Singapore continues to innovate and adapt to global challenges, it is poised to maintain its status as a dynamic and influential player on the world stage.

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