Best Countries in Asia-Pacific for Startups, Singapore top, Vietnam last

Best Countries in Asia-Pacific for Startups, Singapore top, Vietnam last

by March 19, 2018
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The best countries for startups in Asia-Pacific have strong economies, relatively low cost of conducting business, healthy business environments and highly educated populations. Our scoring system is based on available data and each country’s rank across several categories. Lower scores indicate higher ranks, or better locations for startups.

 

1.Singapore

Singapore is rated by the World Bank as the second best country to conduct business, globally. It is a wealthy country (GDP per capita of $52,962), with low unemployment (2.15%) and good internet accessibility (81%).

While the country has a high cost of living, there are tax incentives for small businesses and it has the highest education rates (42% of working adults have post-secondary educations) in Asia. Finally, Singapore’s public institutions are highly regarded; the World Economic Forum ranks Singapore’s institutions second globally. These factors make it a great place for startups to grow their businesses.

Singapore Score

 

2.Hong Kong 

Startups in Hong Kong will find strong public institutions and availability of financing. It is similar to Singapore, in that it has strong economic indicators, with high GDP per capita ($43,741) and low unemployment (3.7%), and a high cost of living (#2 globally). Hong Kong is widely considered a great location for startups. The World Bank lists Hong Kong as the third best city globally to start a business. Additionally, interest rates and taxes are relatively low.

Hong Kong score

 

3.Japan 

Japan is a great option for tech startups, as over 93% of its population has internet access. It also has extremely low interest rates and one of the most educated workforces globally (86% have at least a secondary degree). However, it can be an expensive place to start a business, with high corporate tax rates and salary expectations.

Japan Score

 

Summary of Top Countries for Startups in Asia-Pacific

Below are the top 12 countries in Asia-Pacific for startup businesses. Every startup has different circumstances and preferences, so we’ve expanded our data to show the top countries by each category. Lower scores indicate better ranks.

RankCountryComposite ScoreEconomic HealthCost of Doing BusinessBusiness ClimateLabor Force Quality
1Singapore4.15.26.53.21.7
2Hong Kong4.75.66.82.83.7
3Japan4.74.67.83.72.7
4Taiwan5.17.53.74.45.0
5Malaysia5.76.46.05.25.3
6South Korea6.05.67.56.74.3
7China6.64.06.86.79.0
8India7.17.24.77.59.0
9Indonesia7.38.05.08.08.3
10Thailand7.36.06.38.09.0
11Philippines7.88.67.010.75.0
12Vietnam8.58.05.810.010.3

 

Discussion of Categories

This study includes a wide variety of data in order to characterize each country’s business environment from the perspective of a startup. We categorize this data into four groups: economic health, cost of doing business, business climate, and labor force quality. Each score is based on the countries ranks across these categories.

 

Economic Health

The Economic Health category combines traditional economic indicators. These include GDP per capita, GDP per capita, unemployment rate and the proportion of adults with bank accounts. These measures give a picture of the relative strength of each country’s economy.

RankCountryTotal GDP(Billions)GDP GrowthUnemployment Rate% of Adults with a Bank AccountGDP per capitaComposite Score
1China$11,4396.8% 3.9%97.1%$8,1234.0
2Japan$4,8841.70% 2.4%96.6%$38,9014.6
3Singapore$3063.5%2.1%96.5%$52,9625.2
4Hong Kong$3343.7%2.9%83.6%$43,7415.6
5South Korea$1,5303.1%3.3%95.7%$27,5395.65
6Thailand$4383.7%1.0%82.3%$5,9106.0
7Malaysia$3105.8%3.3%84.1%$9,5086.4
8India$2,4397.2%6.1%58.6%$1,7107.2
9Taiwan$5712.8%3.7%Unknown$25,8937.5
10Indonesia$1,0115.1%5.5%45.3%$3,5708.0
11Vietnam$2166.5%2.3%39.5%$2,1718.0
12Philippines$3216.7%5.0%37.1%$2,9518.6

 

Cost of Doing Business

The cost of doing business category considers several costs associated with operating a business, including borrowing costs, tax rates and wage costs.

RankCountry10-Year Government Bond RatesCost of Living RankSalary Expectation RankComposite Score
1Taiwan1.1%6Unknown3.7
2India7.7%1Unknown4.7
3Indonesia6.4%435.0
4Vietnam4.4%515.8
5Malaysia4.0%246.0
6Thailand2.5%756.3
7Singapore2.3%1286.5
8China3.7%866.8
9Hong Kong2.1%1176.8
10Philippines6.5%327.0
11South Korea2.8%9107.5
12Japan0.04%1097.8

Corporate tax rates are a crucial factor for all businesses. While Singapore is an expensive country to run a business, it offers tax incentives for startups. Exemptions for startups include 75% of the first S$100,000 earned and 50% of the next S$100,000. This exemption makes Singapore significantly less expensive for startups.

CountryStatutory Tax RateTax Exemptions/Notes
Taiwan17%First TWD$120,000 is tax free
India30%0% for qualifying startups for first 3 years, 25% for SMEs
Indonesia25%12.5% for local company with revenue up to IDR 50 billion
Vietnam20%Unknown
Malaysia24%18% on first MYR500,000
Thailand20%Unknown
Singapore17%75% exemption for first S$100,000, 50% exempt for next S$100,000
China25%10 or 20% for SMEs
Hong Kong16.5%Unknown
Philippines30%Deduction for new, local companies
Japan23.4%Unknown
South Korea25% 10% on first KRW 200 million, 20% on KRW 200 million - KRW 20 billion

Business Climate

The business climate category encapsulates many factors, ranging from businesses’ trust of public institutions, technological development and availability of funding. The rating based on these data points is designed to evaluate the ease of doing business and general business environment in each country.

 CountryEase of Starting Business RankPublic Institutions RankInternet AccessVC Access RankMarket Dominance RankBanks per 100,000 AdultsComposite Score
1Hong Kong1287.5%4522.32.8
2Singapore2181.0%139.33.2
3Japan7393.2%9134.13.7
4Taiwan4579.7%62Unknown4.4
5Malaysia8478.8%2410.75.2
6China6753.2%368.46.7
7South Korea3992.8%111016.96.7
8India11629.6%5713.57.5
9Indonesia10825.4%7817.88.0
10Thailand51047.5%81012.68.0
11Vietnam91146.5%1093.810.0
12Philippines121255.5%12128.810.7

 

Labor Force Quality

Access to a high quality workforce is essential for startups that wish to innovate and grow. While this can be a subjective metric, education rates can provide a proxy for the strength of a workforce. In this study we considered secondary and tertiary education attainment rates. Singapore, Korea and Japan are have very well-educated adult populations, which bodes well for startups hiring in these countries.

Educational Attainment Rates

Because startups require a variety of skills, in addition to academic skills, we also considered the World Economic Forum’s local availability of specialized training services. Access to training allows startups to develop their employees skills and allows individuals to build skills in order to apply for new jobs.

 CountryAdults with Tertiary EducationAdults with at least Secondary EducationLocal Availability of Training RankComposite Score
1Singapore42.9%79.4%11.7
2Japan29.9%86.4%42.7
3Hong Kong21.7%78.4%23.7
4Korea35.3%82.9%94.3
5Philippines26.6%70.1%65.0
6TaiwanUnknownUnknown55.0
7Malaysia16.4%68.2%35.3
8Indonesia9.2%48.8%78.3
9China8.8%65.3%109.0
10India9.9%37.5%89.0
11Thailand19.0%44.8%119.0
12Vietnam6.7%65.0%12
10.3

 

This article first appeared on valuepenguin.sg Featured image via Freepik

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  4. David Henderson
    #4 David Henderson 23 May, 2018, 10:02

    Interesting article and no real surprises. Whilst I agree that Singapore is a great place to start a business it’s also a very tough place in terms of size of the market and cost. We looked at Singapore as an option and decided not to do it as it was just too expensive to bootstrap.
    Thailand was the option we settled on but on the negative side the government is not supportive of startups and access to funds is very difficult.

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