Titled Grant Thornton International Business Report 2010, the paper sought the perceptions of owners and directors of PHBs (privately held businesses) on the issue of tax in their respective country.

The global study, which covered 36 key economies worldwide, found entrepreneurs residing in Singapore and Hong Kong are among the most satisfied with their country’s tax system. Entrepreneurs interviewed from the remaining economies felt burdened by at least one category of taxation in their country.

Most burdensome taxes by economy

53 and 38 percent of entrepreneurs cited Hong Kong and Singapore respectively as having no burdensome taxes.

Source: Grant Thornton IBR 2010

Countries with the highest and lowest taxes

These perceptions are not unfounded. According to statistics provided by Worldwide Tax, Singapore and Hong Kong share one of the lowest company tax, personal income tax and value-added tax rates in the world.

Hong Kong in particular has a benign tax regime, with no VAT, sales tax, tax on investment income and no employment taxes paid by the employer. Corporate tax is only 16.5 percent.

Other countries in the low tax regime bracket include Bulgaria, Cyprus and Canada. Countries with a high rate of business tax include Germany, France, Belgium, Brazil, USA, India; while countries with marginal income tax rates above 40% include Australia, New Zealand, Belgium and Germany.

In previous decades, countries like the US and Japan cut effective tax rates to keep local business globally competitive. However, governments are unlikely to cut tax in 2012. They will instead seek to reduce national debts accumulated from the recession by increasing taxes.

This will incentivise entrepreneurs from Europe, the US and parts of Asia to incorporate their start-up companies in Singapore and Hong Kong.

In March 1999, Bob Perlman, then Vice President of Taxes for Intel Corporation, told the Senate Finance Committee that if he had known at Intel’s founding “what I know today about the international tax rules, I would have advised that the parent company be established outside the U.S. Our tax code competitively disadvantages multinationals simply because the parent is a U.S. corporation.”

Full table on tax rates in different countries here.

Starting a company in Asia

When making decisions to invest in Asia, entrepreneurs need to assess a country’s tax risk. Despite the growth potential of many Asian countries, their taxation systems can substantially reduce a company’s retained earnings.

China is a magnet for investment because of the nation’s growth potential. However, China’s tax system is one of the most complicated in the world, incorporating every conceivable type of taxation that exists including VAT, business tax on services, corporate and personal taxes, and worldwide taxes.

India’s business community reports a high burden of indirect taxes including VAT, GST, commodity taxes, real and personal property taxes and excise duties. Complying to the tax codes of these two countries is challenging. Many businesses are too small to afford the professional outsource fees required to comply properly.

In contrast, the tax systems of Hong Kong and Singapore are very simple. The only major difference is Singapore has a goods and services tax. Both countries have low business tax rates, many different kinds of tax incentives and have a high degree of tax stability.

Disclaimer

The information given is of a general nature and may not be applicable in a specific situation. Under the Terms of Use of this website, we disclaim liability for any act done or omission made on the information provided and any consequences for any such act or omission. For specific legal advice, you should seek professional legal assistance.

About the author

Anthony Coundouris is the founder of Futurebooks. Futurebooks offer affordable incorporation, bookkeeping, business planning and business brokering in Singapore and South East Asia. Anthony has helped corporate firms build subscription models, conduct industry analysis and develop brand positioning for new firms. He was founder of Firestarter, a digital marketing agency, acquired by Novus Media in 2010.

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How your start-up can expand overseas — quick tips from Socialwalk

The founders, Tham Keng Yew and Eileen Feng, recently shared in a press release some tips regarding how companies can expand regionally.

Bearing in mind the limited resources that SMEs and start-ups have, here are the four guiding principles:

1. First-priority region: Which target market could give you a strong competitive edge? Cost of expansion? Who are your competitors over there? Price point? Why should your potential buyers switch over to you?
2. Anchor buyers: Who do you need to get on your side in order to verify your business model in that country?
3. Relevant introductions: Let professional business matchmakers help you find potential buyers and introduce you to them. An introduction made by a trustworthy matchmaker could be the key to being on your buyer’s radar.
4. Meet your buyers to close the deal: In order to make your overseas trip worthwhile, you can participate in an international trade show with a business matching program. Invite your potential buyers to meet you there.

Keng Yew, CEO of Singapore-based Socialwalk, emphasized again the importance of professional matchmakers, which allows entrepreneurs to “jump the queue” when seeking buyers. Socialwalk can play such a role.

A senior sales executive from Clean Air & Fluid System in Malaysia, one “Mr Akram”, used Socialwalk when he were in Jakerta. He was able to get more partners and clients that way.

Socialwalk is also in talks with key Chinese trade show organizers and export-ready companies to provide their buyer-seller matching services.

From Valentine’s Day to 28th February 2012, Socialwalk is offering export-ready companies with an introduction to a relevant buyer. If you’re interested, send your contact details to eileen@socialwalk.com, with “Subject : I am ready to expand overseas”.

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Malaysia's digital economy is similar to Singapore and Brunei.

Recently, I was invited to speak on entrepreneurship and consumer Internet trends in a private event hosted by Penn Olson during Startups in Asia, which happened from 2nd to 4th February.

In this article, I will highlight additional perspectives to shed greater light on the ideas presented during my talk, which gave the audience a better grasp on the consumer internet space in Southeast Asia.

Two clusters of economies in Southeast Asia, based on mobile and Internet penetration rates

Glancing at the mobile and internet penetration rates in ASEAN countries, we see two prevailing trends (see slide 4 of the presentation provided below).

But before that, it’s important to note that the internet penetration rate is constructed based on the number of broadband internet subscribers divided by the total population, while the mobile penetration rate is calculated using the number of mobile subscribers (mobile phones are not distinguished as either featured/WAP phones or smartphones). As a result, mobile penetration rates are usually more than 100 percent, which just means that most users own more than one phone.

Taking into consideration the ratio of mobile and internet penetration rates, we see two clusters forming: The digital economies of Singapore, Brunei and Malaysia share very similar behaviour where smartphone ownership is becoming significant in the cities, while the Philippines, Indonesia, Thailand and Vietnam represent emerging digital economies where smartphone penetration are relatively low but the consumers uses social media with low mobile rates without knowing that they are accessing the Internet.

Looking at Cambodia, which may represent a potential digital economy of 53 million people, one can conjecture that it is heading in a similar direction as Vietnam or Thailand. As for Myanmar, the infrastructure must be built first before a digital economy can arise.

Missing elements in the Southeast Asia Ecosystem

I have indicated in my talk that there are at least three missing elements (and they may be more). Let’s start from the first issue: the lack of series A funding in the region of US$0.5M to US$2M. The reason why most investors avoid this funding range is because it’s a risky stage where a company can grow into a proper and sustainable entity or go south if they cannot find sustainable revenue streams.

As a result, most companies which can potentially grow will not be considered by investors. However, seed funding is readily available because the quantum of investment is low. To get a better chance of obtaining funding in this range I talked about, the company has to leapfrog and generate significant revenues quickly, otherwise it is very tough to move forward.

The second issue is the dearth of talent to scale the company. If we match founders from Southeast Asia to Silicon Valley, the difference is not that wide apart. The real difference is in the management team with people who are formerly from big companies that can help to scale the company. We read often from tech blogs about the movement of people from one big tech company to another, but this phenomenon is very rare in Southeast Asia. The reason is that most start-ups cannot afford the lifestyle of these executives and the opportunity of exits are very minimal.

The last issue relates to most VCs in Southeast Asia: A lot of them are former financiers and not really business operators by experience. We cannot fault them for their backgrounds, but it does have an impact on how they assess companies.

To be blunt, a former banker constructs a company’s valuation by profit and loss. If Facebook was started in Southeast Asia, they can never survive. The reason is that they did not generate any revenue or profit until their pre-IPO investment round. Of course, Facebook was a bit bet and the odds of finding companies like it are really small.

But I am seeing good signs in Singapore where we have people like Meng Weng Wong (co-founder of JFDI Asia) and Batara Eto from East Ventures who are former entrepreneurs running venture incubators and are investors as well.

Photo: WhizKris

The founder, Sebastien Eckersley-Maslin, a former Navy officer, said: “Southeast Asia is close to our door and has lots of support from the Singapore Government and other governments, and larger corporates. We want to be part of that.”

He added that a US presence will be established in San Francisco. Both locations will be formally launched simultaneously, and all the incubators will eventually be linked via video-conferencing.

BlueChilli also plans to launch a new start-up every month. In the works is GiggedIN, a site that gives musicians a new way to book gigs, and RenterFixer, a tool for real estate managers to streamline the process of fixing broken appliances or utilities.

Sebastien said that his incubator’s approach is different from other tech businesses. It focuses on getting the business model right before looking at the technological solution, while many start-ups work the other way around.

(1) The Nomura Research Institute says that Japan’s social gaming market will likely be worth 393.5 billion yen (US$5.1 billion) in fiscal year 2016, roughly doubling in size when compared with 2011.

(2) Ad agency Hakuhodo’s Future Technology Works department has come up with a new app that controls your dreams. The Yumemiru (translated as ‘see the dream’) app lets users select different scenarios to dream about. It influences your dreams while you snooze by broadcasting sounds.

(3) Square Enix can be satisfied with the performance of Final Fantasy Brigade, the first social game based on the classic RPG series. The title has hit 500,000 registered players, 13 days after launch on Mobage on January 7th. In another news, Emblem Of The Gods, a social card battle game DeNA launched on Mobage last November, has racked up 500,000 users.

(4) A Social Game Academy will be launched this April, the beginning of the fiscal year for many Japanese companies. It will be located in Roppongi Hills in Tokyo’s Minato ward.

(5) Japan’s biggest real-identity social network Mixi and Mobage operator DeNA have announced an e-commerce partnership. The companies are in the process of setting up an online shopping service for Mixi members that’s scheduled to start in late March this year.

(6) Konami announced the launch of Star Wars Collection for GREE, a social game based on the movie.

(7) CyberAgent CEO Susumu Fujita said his company is ready to open the Ameba platform on smartphones for third-party developers in May this year.

(8) Shin Sengoku Buster, a “historic” social game developed by Tokyo-based social game maker Klab, has hit one million users. Klab started offering the game in March last year, first on Mobage for feature phones.

(9) DeNA is striking back in the ongoing lawsuit with GREE. To recap, in November 2011, GREE sued their rival, seeking damages of US$13 million.

(10) Sangokushi Kingdom, a social card battle game (again), racked up a total of two million registered users on GREE. The first-party game was launched on GREE for feature phones in September 2011, when the company was exhibiting at the Tokyo Game Show.

We thank nordicfactory for the flag image.

(1) PT Kompas CyberMedia, the company behind Kompas.com, announced an investment in city directory startup Urbanesia.com.

(2) Metro TV officially announced (via Twitter) that they have released a mobile application for Android platform and it is available for free on Android Market.

(3) Plasa CEO Iriana Muadz has officially resigned a few weeks ago. Iriana officially took the CEO hat since March 2011, together with COO Widi Nugroho.

(4) At the end of 2011, the Blaast mobile platform began to open access for general users, especially  low-end mobile users (Nokia, etc). Although Blaast only did a soft launch of their beta version, it has reportedly been downloaded more than 10,000 times, with the majority of them coming from Indonesia.

(5) Following their acquisition by LivingSocial  in June 2011, Dealkeren has rebranded itself as LivingSocial Indonesia. Their website has changed from DealKeren.com to LivingSocial.co.id.

(6) Despite the large number of generic Chinese phones flooding the Indonesian market, PT Industri Telekomunikasi Indonesia (INTI), a state-owned enterprise, will be forging ahead with plans to release its own brand of Android smartphones.

(7) Cabara.co.id is a local Internet service that offers a booking service for helper/assistant/informal workers (maids, baby sister, chauffeur, nanny, office boy, office girl, etc.). It is still in beta, and some features aren’t available yet.

(8) Go Indonesia, a local travel site, seems to be getting a lot of attention on the Internet. Its motto reads: “The real and The First Online Travel Agent in Indonesia”.

(9) Bhinneka has been the dominant e-commerce site for gadgets for a long time. Recently however, they’re finally getting a new competitor namely JuraganGadget, that just launched in Jakarta few weeks ago.

(10) East Ventures officially announced two more startups that they’re working with. They are: Inapay and Jajalindo.

(11) Huawei Tech Investment was appointed as a partner of PT XL Axiata to manage its mobile network for the next seven years. The designation is based on Huawei’s experience in managing the network and the ability to provide assurance that the XL network services will remain reliable.

(12) idblogNetwork, a local ad program aimed at bloggers, will launch a new feature that allows advertisers the option to work on a pay-per-sale or pay-per-lead basis. Advertisers will only pay based on the number of items sold with a referral program that is owned by idBlogNetwork.

(13) Tiket.com is finally accepting payments via credit card. Tiket.com claims that their payment system uses the best technology to detect fraud.

(14) Location-based service, Yotomo, released the latest version of their service for BlackBerry and Android. Yotomo uses Foursquare’s location data to bolster its own service.

(15) Content filtering service Tandif has now officially entered beta stage. The startup offers a way for website owners to filter text-based user generated content such as forum posts, SMS, and emails. It is now available to the public.

(16) Hackerspace Bandung (HackerspaceBDG) has shifted their location.

(17) Several days ago, Telkomsel has formed a cooperation with PT Kereta Api Indonesia (KAI) to launch the Tap-Izy service, which facilitates the purchasing of Prambanan Express (Prameks) train tickets. Tap-Izy can be used in Jakarta, Yogyakarta and Solo.

(18) Three Indonesian developers have been selected as finalists in the global Create 4 Millions competition. There are four major categories in the competition and each has 10-11 finalists.

(19) Akamai — a company that deals with Internet content delivery to end-users — has confirmed that Indonesia has become the “champion” of Internet crime.

This has been brought to you by SGE and DailySocial. DailySocial is a blog that covers the Indonesian tech startup scene. They publish in both Indonesian and English.

Event Details

When: Monday, 13th February 2012
Time: 830am-1230pm
Where: Mapletree Business City, Mezzanine Floor, Seminar Room, 20 Pasir Panjang Road, Singapore 117439 (Map)
For more infomation, send an email to ida_ind_dev@ida.gov.sg.

It was not a happy year for big bookstores.

In August and September 2011, Borders closed both its outlets in Wheelock Place and Parkway Parade. In October, Computer Book Centre, at Funan IT Mall, followed suit, becoming an exclusively online business.

More bad news followed in December: Home-grown book retailer Page One announced that it will close its store in VivoCity on 19th February this year in VivoCity due to high rentals. The company has been incurring major losses since its opening in 2006.

The trend continued this year, when Harris Bookstore, which is owned by Popular Holdings, told the press that its Great World City outlet will cease operating, coincidentally, on 19th February. High rentals, again, was to blame.

Harris is now left with one outlet in 313@Somerset, after the company’s Jurong Point bookstore shuttered for good in 2011.

The rate of closure of bookstores recently has been startling. That’s six stores in seven months.

But while the stated reason has been the unforgiving rentals, I suspect it’s masking the true cause — their revenue just isn’t enough to cushion any spike in rentals. The profit margins, it seems, just isn’t what it used to be.

While it’s difficult to determine whether the Internet and the increasing popularity of e-books have directly resulted in the declining sales of physical books, I can safely say that the golden age for mass book retailers has long passed.

Why waste two hours making a trip down to a bookstore when I can easily find what I want on Amazon and get it shipped to my house? Why carry ten books around when I can store a hundred on my iPad?

Physical books will never go extinct, that’s for sure. Just like how radio stations are continuing to exist today in spite of the television and the Internet. Some people will always prefer the experience of flipping through a physical book. But this group is a diminishing breed.

Meanwhile, small, independent bookstores seem to be hanging on. What a turnaround from more than decade ago, when movies like You’ve Got Mail portrayed independent bookstores as being threatened by retail giants.

In Singapore, small book retailers like BooksActually, Woods in the Books, and The Pigeonhole continue to draw a cult following. BooksActually has even experienced a 30 percent sales increase since last year, the owner told The New Paper.

But as consumers continually warm to the idea of e-books, online retailers, and their obvious benefits, will independent bookstores eventually come under threat too?

How these small businesses innovate is key.

The Pigeonhole’s business model may possess some answers. It does much more than sell books — it bills itself as a multi-use space for holding events and dining in. It’s a place that provides a cosy environment for people to eat and network, thereby addressing a fundamental need. These activities can never be totally replaced by the Internet, not for the foreseeable future.

BooksActually is adopting a different strategy to stay afloat. Instead of just stocking books, it has positioned itself as an important facilitator for the growth of the Singapore literary scene. It provides a venue for events like writing workshops and also acts as a publisher of local works.

The company also stocks eclectic items and memorabilia which brings to consumers a sense of nolstagia. I remember visiting an outlet once and coming across vintage Pez dispensers and “country erasers”, which has doubled as a childhood game that is popular among boys.

The pleasant experience of browsing the store and discovering these little delights is an intangible element that online retailers can’t quite duplicate. In a country where important landmarks are frequently bulldozed over, BooksActually provides customers a sense of rootedness to an increasingly murky past.

What is clear is that physical bookstores that only serve the utilitarian function of selling books will not do well in the digital age. If browsing is all customers want to do, they’d might as well do it online with a web browser and the search button.

Therefore, modern book retailers must think harder about how to entice customers to their stores. Just “selling stuff” doesn’t quite cut it anymore.

Kinokuniya, Times, and MPH should consider themselves warned.

Photo: Chicago Geek

Imagine a world where all co-working spaces around the world are linked to a talent marketplace. That is the promise of Coworkify, an upcoming Facebook app from Japan which lets users find talent and like-minded people in co-working spaces outside of their own.

The team won the grand prize at Startup Weekend Kyoto 2011, and the founder, Kenshin Fujiwara, told SGE that they are actively partnering with co-working spaces globally. He’s also looking for beta testers to try the app, which is now still in development.

“Already, some space owners from Poland, Germany, Brazil, US, Korea, Australia and so on have agreed to join,” he said.

A major feature of the app is the talent marketplace, divided into “wills” and “wants”. It’s essentially an online classifieds.

Wills is a section for job seekers to publicize their skills and how much they are charging. Wants works the reverse way — allowing users to call for expertise.  Unclear at this point is whether there’s a notification feature to allow people to automatically receive inquiries.

Besides a jobs marketplace, the app would include other features like the ability to locate users in their co-working spaces, and tools for co-working space owners to manage their own members.

Co-working spaces is a global phenomena that has arisen as a result of changing work lifestyles. In Japan, for example, the massive tsunami that devastated the country in 2011 resulted in a shift of attitudes towards more work-life balance and flexible work arrangements.

Globally, this is happening too. With the increasingly ubiquity of smartphones, tablets, and cloud-based services, coupled with a greater desire for more flexible lifestyles, more workers now operate independently without being tied to a particular company.

The rise of these Internet entrepreneurs and freelancers has led to a demand for co-working spaces shared between many individuals, which eliminates the isolation they would otherwise face.

This phenomenon is also happening in Singapore. At last count, there are at least seven co-working spaces in the country, and probably more shared offices.

For more information, you can check out their Facebook Page, Twitter profile, or blog (which has an interesting series on co-working spaces around the world).

Buildings that are connected to the network includes: Suntec Office Towers, HarbourFront Centre, Shaw House and Shaw Centre. The announcement was made by the Infocomm Development Authority of Singapore (IDA) in a press release issued last week.

This initiative could eventually be a boon to tech startups, serving as a catalyst for research and development as well as innovation in the interactive digital media and creative industries.

To help occupants and the public identify which commercial buildings are connected to the Next Gen NBN, IDA will roll out the Fibre Ready! Mark for non-residential buildings.

Said IDA’s CEO Ronnie Tay: “Today, we have 12 service providers offering more than 40 fibre connection packages to cater for both residential and enterprise needs. However, not all enterprises are aware if their premises are fibre ready. With the Fibre Ready! Mark for buildings which have been connected to the Next Gen NBN, enterprises located in those buildings can be kept informed and therefore prepare their premises to be powered by Next Gen NBN.”

Residents too have been signing up for the program. IDA hopes that by mid-2012, 95 percent of homes and offices would be connected to the network.

Has your company been help or hindered in some way by the Next Gen NBN? Share your story with us!