Trade – Singapore vs. Indonesia

What you need to know about Singapore

 

Singapore, or often referred to as the Lion City, is a finance, transport, and commerce hub that is known globally. Although small in terms of landmass, Singapore is recognized and has been acknowledged as the easiest place to do business in.

 

With an economy labelled as free, dynamic, innovative, and business-friendly, there is no wonder that Singapore economy and trade have been growing significantly each year, resulting to a higher GDP per annum and consequently, improving the lives of its people. Like many Asian countries, Singapore depends highly on external trades with other foreign countries like China, Hong Kong, United States, Japan, and Indonesia.

 

This city-state is known for trading commodity products in key clusters such as energy and chemicals, metals and minerals, and agri-commodities. It is known to be the largest oil trading and base metals hub in Asia while being able to compete as well in producing and trading primary commodities such as grains and sugar. By being competitive in these clusters, Singapore is able to continuously grow economically through the years.

 

What you need to know about Indonesia

 

On the other hand, another Southeast Asian country, Indonesia, is said to be one of the emerging economies of the world. Indonesia, bigger in terms of landmass and population than Singapore, is also one of the big traders in the trading community. They are highly dependent on exporting raw materials – mineral fuels, machinery and mechanical appliance parts, and animal and vegetable fats – which also makes them an essential partner in society.

 

Aside from being a big raw material exporter, Indonesia, currently, is also working on boosting their manufacturing industry, hence, helping their country to gain more investors and traders.

 

Despite being affected by the falling of commodity prices due to dithering economic growth of China after 2011, Indonesia has also been strengthening their micro, small, and medium-sized enterprises to help their economy grow and go back on track, which has been beneficial also to their people, as this has created jobs to millions, further growing their GDP per annum. By creating jobs for its people and supporting industries, big and small, Indonesia is able to support not only its economy but also improve the lives of its citizens.

 

Putting up businesses in Singapore and Indonesia: The Pros and Cons

 

  • Ease in doing business with Singapore is one of the key reasons as to why more investors and traders prefer Singapore to Indonesia. Ranked as the highest place to do business with by the World Bank’s 2016 report, Singapore has been the preferred for several reasons such as, easiness in incorporating a company, easiness in paying taxes, and better protection for companies in terms of IP rights. Incorporating a company in Singapore takes shorter time than in Indonesia, attracting more investors in the city-state. The Singapore taxation is also an advantage for the businesses because of its low tax rates, and exemptions and incentives to industry-specific taxes. Being a city-state that tolerates no corruption, investors are also more confident to put up a business and trade with Singapore than Indonesia.
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  • Indonesia, with its demographic advantage compared to Singapore, can offer awork force that is relatively cheaper than Singapore. This can be advantageous to companies who wish to cut down on labour expenses. On the other hand, Indonesia is currently strengthening its manufacturing industry as well and is helping the micro businesses that are set up in the country. This particular move can also be beneficial to those investors who want to start small primarily.
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  • Singapore is more open to business and trade than Indonesia. Due to Singapore’s open trade policy, 99% of their imports are duty-free. Importing and exporting goods in the city-state require less procedures, are relatively more inexpensive, and their infrastructure and transportation services are more advanced than Indonesia’s. The advancement in technology and infrastructure of Singapore has been beneficial not only for its people but also for it economic growth.
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  • Rich in resources is one of the key advantages of Indonesia. As a country that relies highly on exporting goods, Indonesia can trade cheaper raw materials than Singapore. This is particularly advantageous to businesses and traders who are dependent on primary commodity products.
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  • The modernized and advancements in technology and in the quality of the living environment of Singapore attract more traders and foreigners in the city-state. Several surveys have already been carried out to find out which of the two is providing an easier life experience for the foreigners. According to HSBC’s 2010 Expat Experience Report, most prefer to migrate in Singapore, hence attracting more traders and business investments in the city-state.
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Singapore and Indonesia are important economic hubs in the world that can be both beneficial to the trading community and business. One can be relied on when it comes to raw materials and resources, while the other can be more advantageous when it comes to easiness of putting up a business or a company. Evidently, however, it can be deduced from the list that Singapore has the advantage more when it comes to attracting trade and businesses. Their urbanization is more appealing to investors, and their advancement in technology and infrastructure further promotes their city-state to the world. Their stricter rule of law, in terms of taxation and transparency in legal framework as well, enables the foreign investors and traders to feel at ease when starting up a business in the Lion City. On the other hand though, leniency in the rule of law and problems with corruption in Indonesia can be a hindrance for investors in choosing the country for their business and trade.

 

It can be said then that modernization, stability of the government, and the abundant culture play an important role in Singapore’s economic growth. Since they are able to provide a safer ground for industries, it is no doubt that they have been favoured by the companies and by the people for years. The stable and significant economic growth of Singapore not only helped the city-state to be an economic giant, but has further improved the quality of living of its citizens.