The E50 Awards: How Singapore’s private firms can look abroad to grow

By Chiu Wu Hong, Partner, Head of Private Enterprise, KPMG in Singapore and
Lee Bo Han, Partner, R&D and Incentives Advisory, KPMG in Singapore

Ambitious enterprises in Singapore have always sought to expand outside their relatively small home market – a goal that the Enterprise 50 Awards, which KPMG co-organises with The Business Times, has celebrated for three decades. 

In recent years, the urge to go international has only intensified, prompted by factors like the pandemic which compelled companies to sell to a wider range of markets. Yet although notable E50 winners have shown the potential rewards of internationalisation and deserve recognition for doing so, there are still concerns about moving beyond Singapore’s borders, especially to lesser-known markets.

There are understandable reasons for this reluctance. The prospect of expanding beyond Singapore – with its straightforward, structured and relatively low tax rate – into markets of far greater risk and uncertainty is not straightforward. Despite a plethora of government incentives, grants and assistance, expansion can be costly, and involves a multitude of tax, regulatory and compliance considerations. Lack of in-depth knowledge among enterprises in Singapore about overseas markets in ASEAN and the broader Asia region also adds to this hesitation. 

However, with the right factors and knowledge, there can be a smoother navigation through these challenges.

Success starts by making use of the help that is on offer – and there is no shortage of that in Singapore. The government is extremely pro-business and assists enterprises in different industries and at varied stages of growth to transform, innovate and expand overseas – such as through offering an array of grants and incentives. 

Less positively, the sums are limited: Qualifying firms can access a market-readiness grant worth $100,000 per new jurisdiction, with this amount divided into three categories for marketing, setup and secondment of staff. Additionally, vast markets in Asia and other regions qualify as single jurisdictions, even though they typically have numerous provinces or states. That makes it harder for the grants to offset the costs of investing and setting up. 

Funding aside, there is other assistance. Government agencies help aspiring Singapore enterprises by connecting them with larger enterprises that have expanded overseas. For instance, bringing together Singapore enterprises and parties from supply chains in other jurisdictions can be helpful – though some enterprises do encounter problems after this matchmaking process given that business practices and processes often differ outside Singapore. 

Beyond government support, there are associations in Singapore that can provide advice to firms aspiring to expand overseas – which is helpful when navigating unfamiliar jurisdictions. For instance, while some Southeast Asian markets have grants, incentives and credit schemes, these may not be as straightforward to access as those at home; additionally, awareness of these schemes may be less prevalent. Furthermore, requirements are becoming more substance-based, which means firms might have to invest in head count and fixed assets before qualifying. That makes the expertise available at associations extremely valuable; after all, some members will be familiar with these challenges and may have advice on how to overcome them. 

The risks associated with expanding overseas depend in part on the nature of the business. A company selling products, for instance, may be able to do so online rather than via a physical outlet. Any business must also consider the optimal legal entity: Is it preferable to set up a company in that market or establish an overseas branch? Or should it enter into a distribution agreement with a local partner?  

Each option has its pros and cons. Businesses also need to consider tax implications, such as how it can repatriate income in a tax efficient manner, or when it comes to transfer pricing, how will it ensure that intra-company charges are conducted at market pricing and at arms-length. Other considerations, such as hiring employees locally or from abroad also need to be thought through. 

While these challenges are numerous, they can be overcome – with many of the past E50 winners paving the way and pushing beyond Singapore.  

It is also the case that in this uncertain world, geopolitical tensions have made it harder for enterprises from some countries to enter new markets. However, Singapore’s neutral stance may be an advantage for this, along with its strong reputation, high levels of education and Singapore’s status as a global financial and trading hub. These advantages were built up over decades, and Singapore will carry them into the future. 

As the E50 Awards marks its 30th year and with three decades of winners to emulate, companies are encouraged to look abroad and draw encouragement from those that have done so successfully. Although there are challenges in expanding internationally, the rewards can be substantial – and there are plenty of assistances that can increase the chances of success.