Source : Straits Times - 20 Nov 2008
Republic pips rival HK in KPMG’s survey of 260 leading global firms
THE global economy may be slowing, but Singapore has been rated as one of the top four places in the world to invest in during these turbulent times.
A survey by accounting giant KPMG of 260 leading global companies, conducted in September and October across 12 economies, has placed Singapore behind mainland China, the United States and India next year as well as in five years’ time.
The Republic edged out Hong Kong, a long-standing rival for investments.
Among the key factors attracting prospective investors to Singapore are the political stability, the impartial rule of law, a friendly tax regime as well as access to new customers.
Mr Owi Kek Hean, KPMG’s head of tax services in Singapore, said: ‘We wanted to compare and contrast what businesses would like to see from the countries when deciding where to locate their operations.’
This is the first survey by KPMG on the importance of tax and demographics in influencing corporate decisions on location. It also tracked investment intentions of firms over the next five years.
The survey included responses from 20 multinational corporations based in Singapore, each with a turnover of US$1 billion (S$1.5 billion).
Mr Phillip Overmyer, the chief executive of the Singapore International Chamber of Commerce, said of the results: ‘That people are saying this is not earth-shattering, but the importance is in the timing of it.’
He said what is important is that MNCs indicated their intention to invest in the middle of the financial crisis, over the next few years, and also the places they are most inclined to invest in.
‘It confirms that people think Asia is the market of the future, that it will recover very early and it reinforces very strongly that Singapore will play a critical role in this development in Asia as the crisis starts to resolve itself.’
Mr Overmyer said that compared to the three top-rated nations in the survey, Singapore’s standing at No.4 is impressive, given the Republic is not a large market in itself but because of its ‘tremendous capability to support activities on a wide regional basis of MNCs in Asia’.
Mr Owi, who was speaking to The Straits Times on the sidelines of KPMG’s Asia-Pacific Tax Summit at the Ritz-Carlton, Millenia Singapore, said the survey reinforced a few things about what companies want.
‘Businesses would like to see more tax incentives from the government and they also want the government to attract more foreign talent to these shores.’
He said that this is no surprise as Singapore moves from a manufacturing-based economy to a high value-added service- based economy that needs more and more skilled workers.
He added that compared to Hong Kong, Singapore’s headline corporate tax rate is higher, but because the government has targeted tax incentives for various sectors, the effective corporate tax rate for a company could actually be lower than Hong Kong’s.
The survey found that 70 per cent of respondents said the tax regime is an important factor in choosing where to locate their business. Also, half of all respondents indicated that the tax policy of a country is more important than an educated workforce in deciding where to locate their business operations.
The survey also found that 65 per cent of respondents here look to the government to work with them to attract foreign talent. This is unlike in Europe, where companies feel attracting foreign talent is their own responsibility.
Mr Owi said: ‘This shows that the expectation here is for a partnership between the government and companies to bring in foreign talent.’
Bayer Schering Pharma’s Asia-Pacific regional head Chris Lee said: ‘Lower taxes and immigration barriers are only part of a number of factors that make people decide on one place or another.’
He added: ‘Many cities are vying now for talent and offering attractive incentives, so it is important for Singapore to distinguish itself.’
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