Doing Business in Singapore & Australia: Carrot vs Stick

Michael Coomer | July 7, 2011

However there are many misconceptions about why this is so.

 

Recently when I was discussing this with colleagues in Australia one observed that Singapore was “friendlier” to entrepreneurs because “Singaporeans have a mercantilist economic model”. This is true but I don’t think it is necessarily a criticism, but rather an observation. 

 

I really do think that it starts with the way tax is collected and administered.

In Asia tax offices tend to be enablers for commerce, whereas here in Australia our tax office tends to take an adversarial stance in terms of tax collection and tax management.

 

As a result of that, and as a recent World Bank survey suggested, business people such as myself do find it much more attractive to go overseas to do business in ASEAN economies such as the Philippines, Malaysia and Singapore.  

It is a real shame that I see literally hundreds if not billions of Australian dollars relocated to Asian economies where we are welcomed with open arms to create new jobs and business opportunities because we are unable to do it at home in Australia. I have found Australia quite an adversarial environment in which to build business and to put it crudely – to build wealth.

 

Don’t misconstrue what I am saying to imply that the Singapore is any softer on business than Australia. They most certainly are not. The critical difference is that the Singaporean government begins from the assumption that good corporate citizens should be encouraged, not dissuaded.

When I entered Singapore as a businessman I had to apply for an employment pass, which is quite stringent and very controlled by the government. The requirements are based around skills, competency and track record rather than being monetary in nature.

I have found the Singapore government and tax authorities work very closely with other tax authorities in the region, and provided you are very transparent about what you are trying to do and how you move money around the regions, they do not apply double taxation. As a result I have moved there.

 

I have assets in Malaysia, trusts in Hong Kong and I have my business in Singapore. I do not pay tax on money that moves between any of those economies. The governments have figured out that there is a flaw in that strategy and providing I am quite transparent about that and I pay my fair amount of tax, which is 20% on my income, my company tax is much lower than it would be on a comparable business in Australia.

However, If you cross any of the regulators such as the Accounting and Corporate Regulatory Authority (ACRA), Monetary Authority of Singapore (MAS) and Hong Kong Monetary Authority they come down on you just like they do here in Australia.

They have the capacity to be very, very, ruthless in pursuing people who do not honour their obligations. It is not a tax haven by any means. 

It is a place I believe where I have been able to generate a lot more progress in a very short time-frame than I would have been able to do if I had deployed exactly the same amount of capital here in Australia. 

We need to find a way of demonstrating to Australian citizens who want to invest that we are welcome here at home and that we are prepared to share in both the risks and the upside.

I am a proud Australian and both my children have got their own businesses based in Australia and they are doing very well (I’m a proud Dad too).  I ‘d like to hope that when they are my age and feeling more comfortable about where their life is heading that they feel as good about Australia in terms of a place to work and create wealth for their next generation as I do in Singapore. I rub shoulders with a lot of expats in those regions and they do have very similar views.