SINGAPORE - Despite the slowing economy, new business registration activity in Singapore appears to be holding strong, with 14,243 businesses registered in the third quarter of this year, up from 13,934 in the corresponding quarter last year, according to a report.
When comparing to the second quarter of this year, the number of new business registrations slipped slightly from 14,481 in the previous quarter.
The report released by company registration services firm Janus Corporate Solutions also found that a private limited company remained the top choice for new Singapore businesses (55 per cent). At 35 per cent, sole proprietorships were the second most popular category. Meanwhile, public limited companies made up one per cent.
Of the companies registered in the third quarter, the wholesale trade sector accounted for the biggest piece of the pie with 21 per cent, followed by financial services (14 per cent) and head offices and management consultancies (10 per cent).
About two thirds of companies incorporated in the third quarter were completely locally owned while 24 per cent had 100 per cent foreign shareholding and 11 per cent had a combination of both local and foreign shareholders.
"With the global integration of economies, there is a race among nations to attract innovators, entrepreneurs and job creators. With its business friendly policies and low tax environment, Singapore continues to win that race. As an example, the government recently announced changes to the Singapore Companies Act that will result in lower costs and greater efficiency for businesses that operate here," said Jacqueline Low, chief operating officer of Janus.
Wong Poh Kam, director of the NUS Entrepreneurship Centre, noted that there were several possible reasons for the year-on- year increase in business registrations in Q3 even as Singapore sees GDP growth slowing.
For a start, there is a time delay effect between economic growth and the start up formation rate, he said, as people act on expectations and may not immediately respond to a slowing economy.
On the other hand, some start-ups are set up when the economy is doing badly precisely for this reason, he suggested. "(Some feel) this is the right time to start because in recession, costs are low, it is easier to hire people," he added.
At the same time, others could be looking at the long term and expect to need a lead time of a year or two before the product is ready to be pushed out to the market - just in time to ride the economic upswing.
It is also worth keeping in mind that just because companies are registered doesn't necessarily mean they will start doing business right away, pointed out Prof Wong.
According to the report, the top investing countries for Singapore included the British Virgin Islands, Australia, Japan, China, India and the United States.
"As Singapore adopts more business-friendly policies, entrepreneurs around the world see real opportunities in Singapore. We believe that the country will continue to weather the stormy global economy resiliently, and emerge through it to become the top Asian hub for doing business," added Ms Low.