Singapore versus Korea: Where should you register your company?
7 minute read
Establishing a business is always rife with decisions to make. From the company’s structure to day-to-day operations, there are many factors to take into account. Add local regulations, incentives, and tax regimes that vary by country to the equation – and it can be downright complicated.
As a Korean considering the relative merits of starting a business in Singapore versus Korea, there are several considerations to bear in mind. In this article, we highlight the key differences between both.
Overview:
Setting up a company: Singapore versus Korea
Setting up a company in Singapore is relatively straightforward:
- Prepare documents
- Reserve the company name
- File statutory documents with ACRA (Accounting and Corporate Regulatory Authority)
- Register for tax purposes
- Make a company seal
This process typically takes a maximum of 3 days and is considered one of the most efficient in the world.
Psst by the way! Using a third party like Sleek can really make the process even easier and is usually advisable for foreigners and first-timers.
In comparison, doing the same in Korea involves the following additional steps:
- Notarizing documents
- Opening a corporate bank account
All of these processes could take an average of 8 weeks.
Applying for Visas for employees in Singapore versus Korea
If you are a non-resident (ie. citizen or permanent resident) in Singapore, you can work in the island state as a foreigner by qualifying for some sort of employment pass.
However, budding entrepreneurs who are foreign citizens over the age of 20 can apply for the Singapore EntrePass as long as they meet a few qualifications:
- Have an innovative business proposal that will create jobs.
- Register the business in Singapore as a limited liability company (LLC).
- Have the necessary qualifications.
The company must also meet certain requirements related to share capital and ownership as well as either intellectual property or collaboration with a local university or participation in a local incubator.
As a Korean, there is naturally no need for any visa to work in Korea.
It should be noted that there are a few parts of Korean labour law that should be considered when establishing a business there.
- Firstly, all companies must provide retirement benefits to any employee who has worked for at least one year.
- Secondly, it is difficult to terminate someone’s employment and the courts often get involved. These, along with other generally pro-labour laws, add to the cost of doing business in Korea and reduce the amount of flexibility a startup has when adapting to market conditions.
The Startup Ecosystem in Korea and Singapore
Both countries are working hard to attract startups with incentives, grants, tax breaks, and such. The list of accelerators, incubators, and venture capital firms in both countries are constantly growing. You may refer to each country’s latest list of incubators and accelerators here:
One such Singapore-based incubator is the K-Startup Centre which was set up in Singapore by South Korea’s Ministry of SMEs and Startups (MSS) in conjunction with Enterprise Singapore and NUS Enterprise in mid-2022. Set up to focus primarily on fintech and cyber security, K-startup assisted 31 enterprises in its first eighteen months and is definitely worthwhile to consider when applying for a position if Singapore is the destination.
Costs of setting up a venture in Singapore versus Korea
The cost structure for each startup can vary significantly based on the type of business (e.g. SaaS vs manufacturing vs deep tech) so trying to compare relative costs between Singapore and Korea is not entirely relevant.
In both cases, however, there are employer contributions that need to be considered above the base salaries – 16-35% in Korea (national pension, national health insurance, employment insurance, long term care insurance, etc) and 17% in Singapore (Central Provident Fund).
One other key difference to note is that published corporate tax rates are lower in Singapore than Korea, but startups are likely to be exempted for the first few years through a combination of capital investments, operating losses, and/or tax breaks for early stage companies.
Factors to consider when comparing living in Singapore versus Korea
Starting a business in these respective countries would also mean living in them. Here are some key factors to consider about life in both countries.
Education and Literacy in Singapore
Singapore has one of the best education systems in the world, in part due to the fact that 29.7% of the population over the age of 15 has a tertiary education. As a result of its mandatory bilingual education system and ethnic diversity, the vast majority of the workforce (especially those under 55) can speak English.
On the other hand, given that less than 5% of Korea’s population is foreign, it is no surprise that general English fluency is relatively low compared to other developed countries.
Global competitiveness of Singapore and Korea
In the World Bank’s latest (2020) “Doing Business” report, Singapore and Korea were rated highly, with the former rated second and the latter rated fifth in the listings. On several of the most relevant factors for startups, Singapore rated higher than Korea:
- #4 vs #32 for starting a business
- #7 vs #21 for paying taxes
- #3 vs #25 for protection of minority interests.
Additionally, the IMD World Competitiveness Yearbook ranked Singapore #3 and Korea #27 in this year’s survey – with government efficiency (#4 vs #36) and business efficiency (#9 vs #33) being the two most significant variances.
Government Assistance for start-ups in Korea and Singapore
Given its position as a trading entrepôt and global financial center, Singapore highlights its efficiency, infrastructure, and regional connectivity as key attractions for MNCs and startups. Enterprise Singapore is the government agency supporting, among other things, the development of the country as a hub for startups. It is often one of the first points of call for an entrepreneur considering Singapore. In addition, Enterprise Singapore can provide a road map to other, potentially more industry-specific, agencies and entities for the budding entrepreneur.
On the other hand, Korea’s large domestic market, proximity to large North Asian markets, and world-class technology are key attractions for MNCs and tech-focused startups. Korea SMEs and Startups Agency (KOSME) is a non-profit, government-funded organization designed to implement government policies and programs for the development and growth of Korean SMEs, which can be of help to those looking to set up their business in Korea.
Wrap up
At the end of the day, much of the decision on where you, as an entrepreneur, decide to set up your business will be driven by personal preferences related to family, lifestyle, weather, and such. As mentioned above, the costs for a startup also vary tremendously based on the company focus (i.e. B2B, B2C, B2B2C), sector (i.e. FinTech, MedTech, EdTech), and target client base.
On many purely objective metrics, however, Singapore appears to be an attractive base for many Korean startups. With its vibrant ecosystem, skilled multi-lingual and educated workforce, access to capital, consistently pro-business government, hassle-free processes, and many incentives – it is a great option.
Thinking of registering your business in Singapore? Consider Sleek! Through our digital platform and automated processes, incorporating in Singapore has never been easier.
