Each year the World Bank issues its Doing Business report which reviews the ease of starting up and conducting business in 185 economies globally. We locked a writer in an small office with the full report on East Asia and just a pad of paper and a pen for company, and refused them freedom until they produced this break down. Thanks to one slightly institutionalised member of the team, here’s EX’s guide to setting up a small-to-medium-sized company (procedures, time, cost and taxes), trading across borders and enforcing contracts in 14 countries in East Asia.
The total number of procedures required to register a firm. A procedure is defined as any interaction of the company founders with external parties (for example, government agencies, lawyers, auditors or notaries).
The shortest possible number of days to complete and submit an application to register a business, taking into account procedures that can be done simultaneously.
Taxes and cost
These are the official costs to file or complete the procedures associated with starting up a business. They don’t take into account incidentals or any “unofficial” donations. The taxes include corporate income, employee and others as a percentage of profit.
Setting up in Singapore
“The name ‘Consilium Law Corporation’ was confirmed within 24 hours. The actual corporate registration was also done online, using ACRA. I pressed ‘submit’ and I was incorporated. The process is as easy and transparent as it can get! All of it can be done from the comfort of your own home – as long as you have an functioning internet connection and a SingPass. The efficiency takes getting used to!” – Franca Ciambella, MD Consilium Law Corporation.
Fact: 33,952 new businesses were registered in Singapore in 2012
Setting up in Thailand
“Thailand has something called the Foreign Business Act, which prevents most foreign investors in most types of businesses from taking majority share ownership or exercising dominant control over a Thai company. Strictly adhering to the requirements of the Foreign Business Act means some potential foreign investors simply will not proceed.’” – Steve Sykes, MD Indo-Siam Technical Services Co.
Editor’s Tip: After speaking to several different businesses owners in Thailand, EX found that partnering with a local Thai can help meet the requirements of the Foreign Business Act.
Setting up in Indonesia
“I have set up companies in the UK, Thailand, Philippines, Malaysia, Singapore and Indonesia. For a non-national, Indonesia is by far the most difficult to set up in as very little of the regulations on doing business are available in any other language other than Indonesian. The reporting and filing of documents is about the same in Thailand, Indonesia and Philippines, with vast amounts of paper-based administration needed to accomplish the slightest changes.” – Jonathan Scolvers, consultant
Best and worst East Asian countries for start ups
Singapore and Hong Kong, rated fourth and sixth respectively, out of 185 economies globally ranked high for the ease of setting up a business in the World Bank’s Doing Business survey. Cambodia (175) and Indonesia (166) came in the bottom twenty economies and are considered two of the hardest nations in the world to try and set up a business in.
Trading across boarders
The amount of days and the cost of trading across national boarders
Unsurprisingly, Singapore, with its massive ports handling an annual 2.25 billion tonnage of vessels, is number one in the world for ease of trading across borders. Hong Kong comes in a close second in the global rankings. While Laos, sitting in 160th place is the worst in SoutheEast Asia for trading across its borders.
Enforcing a contract
Anyone with experience of working in East Asia will tell you contracts play second fiddle to relationships when enforcing business arrangements. Hence most Asian countries don’t register at the loftier end of the table when it comes to legally enforcing a business contract. In fact only seven of the East Asian countries reviewed by the World Bank fall in the top 100. Hong Kong is ranked 10 and Singapore 12 out of 185 economies. A little surprisingly China (19), Thailand (23) and Malaysia (35) are higher up the table than Japan (35). Right at the bottom of the table are Timor-Leste and Laos, officially the worst economies globally for enforcing a contract. Brunei Darussalam (158) and Indonesia (144) aren’t too far behind.