Sharp spike in foreign-held companies setting up shop in Singapore

THE share of wholly foreign-held companies in Singapore jumped to 37 per cent in January through March 2016 from 24 per cent in October through December 2015, according to a report by corporate services provider Hawksford Singapore released on Thursday.

Although the share of companies that are 100 per cent local-owned has "conventionally . . . hovered around 65 per cent", that share dropped to 50 per cent in the first three months of this year, it added.

The percentage of mixed-holding companies "usually hovers slightly above 10 per cent but in Q1 2016 it increased to 13 per cent", Hawksford said.

Noting that the Singapore government typically releases the annual Budget in February but this year it was released in late March, it said: "Businesses usually watch out for what is contained in the budget before planning their structuring and new businesses initiatives. The delayed rollout may have prompted local entrepreneurs and investors to adopt a cautionary approach before incorporating the company."

Another factor was potentially "the assurance by the Fed to hold rates steady in order to prevent volatility", it said. "This lifted the confidence of foreign entrepreneurs and investors. The central banks of the regional economies have also slashed rates or have maintained aggressively accommodative rates, thus enhancing liquidity in the market. This has primarily contributed to a spike in the share of foreign held companies."

In total, there were 15,910 new business formations in Q1 2016, down 4.2 per cent from the 16,612 businesses formed in Q4 2015 but up 8.7 per cent from the 14,641 new businesses formed in Q1 2015, Hawksford said.

Companies from British Virgin Islands, Australia, Hong Kong, the United States, China, Japan and India were among the most to set up subsidiaries in Singapore, and entrepreneurs and investors from India, China, Malaysia and Indonesia accounted for the leading investors in Singapore, it added.