With rising inflation and business costs, there are concerns that Singapore may lose its competitiveness as a business hub.
But analysts said the city is still able to attract foreign companies to set up shop, citing the government's online framework as a key element in this debate. David Cohen, Asia Economic Forecasting Director, Action Economics, said: "Singapore's costs in financial services are still competitive to its key competitors such as Hong Kong and Tokyo. Singapore is still reasonably affordable compared to those two sectors. The costs are accompanied by the attractiveness of Singapore as a business centre.
"The ability to attract skilled workers of various varieties is an appeal of Singapore as a business centre, together with a reasonably efficient government with little corruption and an efficient transportation hub."
From January till August, 17,543 companies were set up in Singapore, out of which, 30 percent were foreign companies.
Foreign companies are defined as enterprises with over 50 percent capital share from foreign countries.
Over the past year, big global corporate names such as Shell, ExxonMobil and GlaxoSmithKline have expanded their footprint in Singapore.
And there are also new players like Renewable Energy Corporation setting up teams here.
Jimmy Koh, Head of Economics-Treasury Research, UOB, said: "I think what foreign investors really look for when they come is not how much they are paying per square foot... they'd be looking at ratings in particular to gauge whether Singapore is competitive or not."
For a second year in a row in 2007, Singapore topped the World Bank's Doing Business rankings as the easiest place to do business in, out of 178 economies worldwide.
The rankings were based on ten indicators which tracked time and cost to meet government regulations throughout the business process – from start-up to even closure.
World Bank said e-governance is the key element that makes Singapore stand out.
Sabine Hertveldt, Private Sector Development Specialist, The World Bank, said: "(One of the) factors that make Singapore top the rankings on the Doing Business rankings is e-governance - the fact that everything happens online, that businesses can comply with all regulatory requirements by using the internet. There is no waiting time and it's very cheap, very low cost to obtain a building permit, apply for registration and so forth.
"They can focus on their businesses rather than deal with requirements of a regulatory nature. That's the one factor that a lot of countries can still learn from Singapore. I think it's very likely Singapore can maintain its ranking if it continues to perform."
In a separate ranking on competitiveness by the World Economic Forum, Singapore came in 7th overall, but it topped the countries in Asia.- CNA/so
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