Updated: Jun 1
If you are looking for a business-friendly destination in Asia, you might want to consider Korea over Singapore. Here are some reasons why Korea has an edge over its rival city-state.
First, Korea has a lower cost of living than Singapore. According to a cost of living comparison by Numbeo, consumer prices in Korea are 24.7% lower than in Singapore, while rent prices are 81.8% lower. This means that you can save more money on your expenses and enjoy a higher standard of living in Korea.
Second, Korea has a larger and more diversified economy than Singapore. According to the World Bank, Korea is the 10th largest economy in the world by nominal GDP, while Singapore is the 36th. Korea has a strong manufacturing base, especially in electronics, automobiles, and shipbuilding, as well as a vibrant service sector, including finance, entertainment, and tourism. Singapore, on the other hand, relies heavily on trade, finance, and tourism, which makes it more vulnerable to external shocks and fluctuations.
Third, Korea has benefited from the fall of Hong Kong as a regional hub. Hong Kong used to be the gateway to China and a leading financial centre in Asia, but its status has been undermined by political unrest and a harsh security crackdown by Beijing. Many businesses and investors have moved out of Hong Kong or reduced their exposure there, and some of them have chosen Korea as an alternative destination. According to a Financial Times analysis, Korean dollar deposits rose by $50bn since mid-2021.
Fourth, Korea has a lower corporate tax rate than Singapore. According to PwC's tax summaries, the headline corporate income tax rate in Korea is 24% for 2023 (with the lowest bracket taxed only 9%), while the headline corporate income tax rate in Singapore is 17%. However, both countries have various tax incentives and exemptions that can lower the effective tax rate for eligible companies. For example, Korea offers tax credits for research and development (R&D), facility investment, job creation, and exports. Singapore offers partial tax exemptions for qualifying start-ups and SMEs, as well as tax incentives for certain industries such as financial services, maritime services, and biomedical sciences.
Fifth, Korea has a higher ease of doing business ranking than Singapore. According to the World Bank's Doing Business report, Korea ranked 5th out of 190 economies in 2020, while Singapore ranked 2nd. The report measures various aspects of business regulation and their implications for entrepreneurs. Korea scored higher than Singapore in areas such as starting a business, dealing with construction permits, getting electricity, protecting minority investors, paying taxes, trading across borders, enforcing contracts, and resolving insolvency.
In conclusion, Korea offers many advantages over Singapore for doing business in Asia. It has a lower cost of living, a larger and more diversified economy, a rising role as a regional hub, a lower corporate tax rate, and a higher ease of doing business ranking. If you are looking for a place to start or expand your business in Asia, you should give Korea a serious consideration.
BLT & Partners has the most extensive business network in Korea and a team of top-notch professionals, including IP attorneys, lawyers, financial experts, marketers, and more. If you’re looking to enter the Korean market, we have everything you need to succeed. Contact us today to learn more about how we can help you achieve your goals in Korea.