This is why Singapore is such an economic powerhouse

By Karen Milde

Singapore is the second smallest country in Asia. However, this tiny city/state is ranked as the second most competitive country in the world according to the Global Competitiveness Report 2012-2013 done by the World Economic Forum.

What could make Singapore such an economic powerhouse despite of its small size?

The biggest factor that contributes to its success is the government’s business-friendly systems.

One of the systems is Singapore’s tax policies; Singapore has effective tax policies that allow companies to maximize their profits and attract more investors.

For instance, the government of Singapore has offered tax exemptions to start-up companies in order to encourage them to reinvest and expand.

In addition, there is no tax on capital gains in Singapore; for example, companies do not have to pay taxes for gains on sales of fixed assets or gains on foreign exchange on capital transactions.

Moreover, since an Avoidance of Double Taxation Agreement was signed by Singapore and other countries, the double taxation of income has been offset; so, companies in Singapore have been able to minimize tax barriers and engage in cross-border trade.

The other system that promotes businesses in Singapore is it’s education system; according to the Global Competitiveness Report 2012-2013, Singapore’s education system is rated as the second best in the world.

To become a competitive country, Singapore has improved its education and training systems; for example, Singapore offers a wide variety of post secondary institutions from local to International. Also, these post secondary institutions have offered joint programs with 29 high caliber international universities such as the Massachusetts institute of Technology and New York University School of Law.

This effort made Singapore be able to provide individuals with skills to businesses which require talented employees to compete in a rapidly changing global economy. In conclusion, Singapore’s business-friendly systems such as tax policies and heavy emphasis on education have contributed to its growth as a leader in global competitiveness.

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