The parent company of PhonePe, Flipkart, kept its headquarters on the island nation in Southeast Asia.
The Indian payments service provider PhonePe, which is supported by Flipkart, declared earlier this month that it had finished moving its headquarters from Singapore to India. American grocery giant Walmart, which owns a 77% share in the company, is a subsidiary of the Indian e-commerce powerhouse Flipkart. This is a fairly remarkable move considering how many firms in India are choosing to have their headquarters in Singapore for a variety of reasons.
Market rumour has it that PhonePe is getting ready to float on an Indian stock exchange, which would explain the movement. The parent company of PhonePe, Flipkart, kept its headquarters on the island nation in Southeast Asia.
Flipkart incorporated its holding company in Singapore in the early part of last year and sought foreign investments so that it could grow faster. This was because it had problems with the Indian bureaucracy which had then imposed various rules on certain industry sectors which made funding in its home country difficult. It, therefore, conceived a corporate structure to site the main company in Singapore so that it could receive funding more easily and made the Indian companies subsidiaries of the Singapore entity.
Singapore is well-known for being an easy place to do business.Singapore is number one in the world on the Heritage Foundation's index of economic freedom, number one in the World Economic Forum global competitiveness report last published in 2019 and number two in the World Bank ease of doing business ranking (2020). (Also Read: LIC Saral Pension Plan: Get up to Rs 50,000 annual pension on investing Rs 10 lakh)
The Property Rights Alliance's 2022 international index of property rights places it second overall. In addition, its tax rates are lower than those in India for both corporate taxes and the goods and services tax, and there is no capital gains tax or dividend tax for shareholders. Due to Singapore's broad network of tax treaties, businesses based there that transact business internationally can prevent double taxation.
Singapore is now a major financial and investment hub for many Indian enterprises as a result of the immigration of many astute Indian business people as well as the development of strong economic relations with the nation. The business-friendly atmosphere, infrastructure, connectivity, and sizable Indian population in Singapore all contribute to this.
Based on a report by India Briefing, over 8,000 Indian companies have registered in Singapore since 2000. Many of them register their businesses online in Singapore without even coming to the country. Most follow the Flipkart company structure to enjoy the key benefits of incorporating a company in Singapore and yet be able to access the Indian market and its wide talent pool.
In recent years, Singapore has emerged as the "Silicon Valley of Asia". It has a flourishing startup ecosystem where many venture capital firms are based. Other factors which have worked to create this are the ready availability of government funding, favourable tax schemes for startups, and abundant people with the requisite skills that tech firms need.
It is simple to get government funding to import talent if a business cannot find it locally. There are numerous businesses that promote cooperation and knowledge sharing. The Global Startup Ecosystem Index 2022 published by Startup Blink places Singapore first in Asia and eighth overall.
Singapore`s startup ecosystem has a value of USD 25 billion, far exceeding the global average of USD5 billion, and early-stage funding per startup totalling USD202,000. The startup Output Growth Index of Singapore scores 8 out of 10, which indicates significant growth in startup creation.Based on figures from Enterprise Singapore, Singapore logged 517 funding deals in the first nine months of this year, amounting to USD 8 billion in total. Last year, 11 Singapore-based startups achieved unicorn status (USD 1 billion in valuation), bringing the total number to 22.
There is also strong trust in Singapore`s investment framework. Another appeal Singapore has is its strategic location at the heart of ASEAN which not only has a youthful middle-class population of 660 million but as an economy, it is the fifth largest in the world after the US, EU, China and Japan.Indeed, Southeast Asia with its interesting dynamic of a young and digitally savvy population has tremendous potential for startups and is a lucrative market for them to tap.
Many startups that have established themselves in Singapore are looking to serve this market which is in Singapore`s backyard.Ms Grace Sai, the co-founder of the sustainability-focused startup, Unravel Carbon, said to Singapore online newspaper TODAY, "The market size of Southeast Asia or Asia alone is big enough to create category-winning companies. So, for some companies, it's never their strategy to be global."
However, regional nations are starting to notice Singapore's success and are attempting to imitate it. A World Bank report from the previous year observed that the competitiveness within the region has increased as a result of the neighbouring nations of Singapore developing their own startup ecosystems.
Some of Singapore's advantages as a startup hub may start to erode if investors begin investing directly in the nations where the businesses are located. India also seems to be doing anything to stop the flight of startups from the nation. Nirmala Sitharaman, the finance minister, stated two weeks ago that the government is prepared to work with entrepreneurs to address problems plaguing the ecosystem.
“So, I would think continuous engagement with the startups is what is going to help them to, one, remain and, second, do better within India. But, if there are temptations for which they would want to go outside, we need to understand how much we can entertain and serve on those courses. Not all of them are possible but equally, we can try," said Sitharaman.
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 "Why Indian startups are setting base in Singapore but Flipkart-owned PhonePe isn’t")
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