Belgium and Singapore are attractive business hotspots in their own right. The Crossroads of Europe boasts a thriving open economy embracing foreign investment, research and development, and innovation.

Meanwhile, The Lion City is known for its highly-developed free market, business friendliness, and strong trade freedom promoting entrepreneurship and innovation.

But how do these two nations compare in terms of taxes, market share, legalities, and overall economic autonomy?

Is Belgium better for business, or does Singapore steal the spotlight? And how can you benefit from an innovation and global expansion standpoint?

Read on for answers to these questions and more.

Belgium vs. Singapore: A Snapshot

Here's a quick overview of each country before we get to the crux of this Belgium vs. Singapore comparison.

Belgium

Belgium is a culturally diverse federal state with three distinct legislative regions: Flanders, Wallonia, and Brussels. It's home to EU and NATO headquarters, numerous embassies and lobby groups, and thousands of international enterprises.

With access to 500 million consumers and open trading borders, Belgium is also the perfect testing ground for global business expansion. In fact, 80% of Europe's purchasing power falls within a 500-mile radius of Brussels, making Belgium's strategic influence particularly attractive to startups.

The country is also an R&D hotspot thanks to world-class research centers, government-funded innovation grants, and certain tax benefits. Foreign investors and entrepreneurs are welcome, with the Belgian Professional Card one popular avenue that could lead to citizenship.

Singapore

Singapore is one of the Four Asian Tigers—countries with developed economies, rapid industrialization, and stable long-term growth. It's known as the gateway of Southeast Asia, boasting a dynamic and digitally-driven economic ecosystem.

Despite civil liberty restrictions, Singapore remains an international trading hub and home to thousands of foreign tech startups. It's also a founding member of the Association of Southeast Asia Nations (ASEAN), operating in the ASEAN Free Trade Area (AFTA) and ASEAN Investment Area (AIA).

With favorable regulations, advanced infrastructure, and a zero-tolerance against corruption, Singapore boasts one of the world's most open economies. Foreign entrepreneurs and investors can apply for the EntrePass, while employees must get the Employment Pass.

Comparing Economies: The Numbers

How does Belgium's economy measure up against Singapore's? Here are the latest stats, facts, and trends in numbers.

Belgium's Economy

Belgium ranks 37th in the 2022 Index of Economic Freedom, above regional and worldwide averages. Score increases in judicial effectiveness and property rights contributed to increased economic freedom since 2017.

According to the European Commission's Spring 2022 Economic Forecast, household consumption is the dominant component of Belgium's $588.8 billion GDP (PPP), accounting for 48.7% of its use.

Government expenditure and gross fixed capital formation constitute 25% and 24.1%, respectively. Meanwhile, exports (85.4%) and imports (84%) make up the majority of Belgium's GDP.

Stats from the National Bank of Belgium indicate that:

  • GDP grew by 0.5% in the first three months of 2022—0.2% more than estimated.
  • An increase in services (0.8%) and construction (0.7%) sectors added value despite a 0.7% decrease in manufacturing.
  • Fixed investment (1%) and private consumption (0.5%) expenditure increased with a 2.5% decline in government spending.

Overall, net foreign demand impacted the economy positively, and year-on-year, the economy grew by 4.9%.

Singapore's Economy

In the 2022 Index of Economic Freedom, Singapore ranks first among 39 countries in the Asia-Pacific region. The country has maintained its economic freedom despite slowed economic growth over the past five years.

Property rights and judicial effectiveness scores remain high, although some limitations exist for foreign ownership. Judicial processes are effective in business matters, but Singapore tends to favor the government in politically-sensitive issues.

According to Singapore's Department of Statistics:

  • Services account for around 70% of the country's $560.2 billion GDP (PPP).
  • Goods-producing industries constitute about 35%.
  • Private consumption (31.5%), government consumption (11.8%), and net exports (31.9%) make up the majority of GDP expenditure.

Despite a sharp decline of 4.14% in 2020, GDP growth is forecast to increase by 3.90% by the end of 2022.

Main Economic Sectors

Both Belgium and Singapore rely heavily on the services sector, employing 78.2% and 84.4% of the domestic workforce, respectively. Let's take a closer look at the agriculture, industry, and services sectors, as well as the primary economic drivers of each nation.

Economic Activities in Belgium

Agriculture only contributes 0.6% to the national GDP, employing 1% of the working population. Main sub-sectors include vegetable, sugar beets, fruit, meat, and milk production, according to data compiled by Lloyds Bank.

The industrial sector employs 21% of the workforce, accounting for 19.5% of GDP. Flanders is export-driven, boasting the second-largest petrochemical industry worldwide. Its main exports include machines, vehicles, equipment, pharmaceuticals, and chemicals.

Meanwhile, Brussels focuses on the telecommunications, automobile, pharmaceutical, and software development industries. Wallonia is known for its steel-making, metal construction, glassware, and heavy chemical sectors.

Services account for 69.4% of Belgium's GDP, with 42.69% of business services exported and 38.78% imported in 2018. According to Pervasives Investment Research, Belgium's top growing service industries include advertising and market research, consultancy, computer programming, and transportation support services.

In manufacturing, the production of rubber and plastic products, transport equipment, and non-metallic mineral products are among the top-growing sub-sectors.

Belgium's leading innovation industries include biopharmaceuticals, fintech, life sciences, sustainability, cleantech, medtech, aeronautics and aerospace, information technologies and communications, and nanotechnology.

Belgium's Open Market and Free Trade Agreements

Belgium's economy is largely open, with 159% of its GDP from foreign trade. As a leading global exporter, the country plays a central role as a transit and distribution center for other EU nations.

Primary exports include vehicles, blood, medicaments, and petroleum products. Main imports include oil and mineral fuels, blood, vehicles, and medicaments.

As an EU member state, Belgium is a party to 46 preferential trade agreements. The average trade-weighted tariff rate is 2.9%, with 640 non-tariff measures mandated by the EU.

Belgium is also a member of various economic organizations, including the OECD, ICC, IMF, WTO, and the Benelux Economic Union.

Belgium's Investment Landscape

Belgium is characterized by a high number of foreign direct investments (FDIs). According to UNCTAD's 2021 World Investment Report, FDI inflows reached $8.3 billion—a 192% increase in 2020 alone. FDI stocks also increased to $635 billion. Similarly, FDI outflows rose from $1.5 billion to $10 billion.

The country's primary investing countries include Japan, the US, Germany, the Netherlands, Switzerland, and Luxembourg. Investments are largely geared towards:

  • Manufacturing
  • Wholesale and retail trade
  • Private real estate
  • Financial and insurance activities
  • Electricity and gas
  • Transport and storage
  • Information technology and communications

Belgium remains a foreign investor's paradise thanks to its strategic location, diverse and educated workforce, and strong purchasing power. Its high-quality transport, logistics, and telecommunications infrastructures are also contributing factors.

Currently, no limits exist on foreign ownership or control, and both foreign and Belgian enterprises are treated equally under the law.

Economic Activities in Singapore

Agriculture is virtually non-existent in Singapore, barring the cultivation of orchids, vegetables, and aquarium fish. It contributes 0% to GDP, employing 0.7% of the labor force, according to data from Lloyds Bank.

The industrial sector employs 15.2% of the workforce and represents 24.4% of the nation's GDP. Dominant industries include electronics, petrochemicals, biomedical sciences, transport engineering, and logistics.

Services comprise 70.9% of Singapore's GDP, with 28.01% of business services exported and 30.98% imported in 2018. Business, computer and information, communications, transportation, and financial services make up the bulk, with growth in health, social, storage, and transport services, according to Pervasives Investment Research.

In manufacturing, the transport and precision engineering, biomedical, chemical, and electronics sectors dominate.

Singapore's leading innovation industries encompass various sectors, including cybersecurity, artificial intelligence, advanced manufacturing and engineering, economy digitization, biomedical sciences, and sustainability.

Singapore's Open Market and Free Trade Agreements

Singapore operates a free-enterprise economy where foreign trade made up 320.6% of its GDP in 2021. It also ranks second in transshipment traffic worldwide and remains a leading international exporter.

Main exports include electrical equipment and machinery, microassemblies, mineral fuels, chemicals, and medical equipment. Meanwhile, imports primarily include refined petroleum, turbo jets and propellers, integrated circuits, and electrical equipment.

Besides ASEAN, Singapore is also a member of the Asia-Pacific Economic Cooperation (APEC), ICC, IMF, WTO, Colombo Plan, the Commonwealth, and other economic organizations.

The country currently has 27 preferential trade agreements in effect, including the Regional Comprehensive Economic Partnership (RCEP). It's the largest trade deal in history, constituting 30% of the global economy. Singapore also has a 0% trade-weighted tariff rate with 182 non-tariff measures.

Singapore's Investment Landscape

Singapore is the fourth-largest recipient of foreign direct investment (FDI) inflows. Still, UNCTAD's World Investment Report 2021 showed a 21% decline to $91 billion in 2020. FDI stocks reached about $1.9 trillion in the same year, while FDI outflows stood at $32 billion.

The country's dominant investors include the US, the Netherlands, the Cayman Islands, and the British Virgin Islands. The largest recipient sectors of foreign investment include:

  • Manufacturing
  • Wholesale and retail trade
  • Financial and insurance activities

Despite post-pandemic challenges, Singapore's financial sector remains robust, with FDI flows forecast to surpass pre-pandemic levels. The country remains an attractive investment hotspot with its corruption-free environment, simple regulatory system, advanced digital and logistical infrastructure, and various tax incentives.

Singapore's domestic and foreign businesses are viewed equally under the law, and most sectors allow full foreign ownership. The number of foreign banks has also increased steadily.

Business Friendliness and Tax Benefits

A country's business environment and tax regulations are two major components of any global expansion strategy. Let's see how Belgium and Singapore support foreign business with their regulatory and tax processes.

Doing Business in Belgium

Belgian business regulations are typically transparent and evenly enforced, although business administration is region dependent. The unemployment rate varies by region, too, as does the labor market.

Although property registration can be cumbersome, laws effectively protect and enforce property rights. The judiciary is legally and practically independent, and corruption-related offenses have severe penalties.

The federal government has implemented efforts to reduce the tax burden while increasing energy, healthcare, and transportation subsidies. Overall, government involvement doesn't impede business activities.

Although discontinued, the Ease of Doing Business Index ranked Belgium 46th out of 190 countries in 2020. The country scored well on topics like:

  • Starting a business
  • Trading across borders
  • Paying taxes
  • Enforcing contracts
  • Protecting minority investors
  • Resolving insolvency
  • Dealing with construction permits

Belgium's Tax Benefits

Belgium's Corporate Income Tax (CIT) rate is 25%, while personal tax rates range from 25% to 50% based on annual taxable income. That said, the country has various tax exemptions, deductions, credits, and incentives available, including:

  • Capital Gains Tax Exemptions
  • Corporate Tax Deductions
  • Goodwill Deductions
  • Tax-Deductible Interest Expenses
  • Notional Interest Deductions (NID)
  • Investment Deductions
  • R&D and Patent Tax Credits
  • Innovation Income Deductions (IID)
  • Foreign Tax Credits
  • Social Security Contributions (SSC) Deductions

With an optimized tax strategy, foreign investors and entrepreneurs can benefit from significant tax reductions. Learn more about Belgian taxes and incentives here.

Doing Business in Singapore

Singapore garners a positive commercial environment with its business-friendly regulations, tax system, regulatory processes, and advanced infrastructure.

Although the government implemented stricter limitations on foreign labor, it remains dedicated to supporting both domestic and foreign businesses. The International Monetary Fund (IMF) estimated government grants, subsidies, subventions, and capital injections make up 17% of Singapore's GDP.

Judicial processes are efficient, and corruption is virtually non-existent. According to the discontinued Ease of Doing Business Index, Singapore ranked second out of 190 nations in 2020. Topics with the best scores include:

  • Enforcing contracts
  • Protecting minority investors
  • Starting a business
  • Dealing with construction permits
  • Getting electricity
  • Registering property
  • Paying taxes

Singapore's Tax Benefits

Singapore's general Corporate Income Tax (CIT) rate is 17%, while individual tax rates range from 0% to 22%. The country boasts various tax benefits, including:

  • Capital Gains Tax Exemptions
  • Corporate Tax Deductions
  • Tax-Deductible Employment Expenses
  • Tax-Deductible Interest Expenses
  • Donation Tax Exemptions
  • Tax Deductions for Self-Employed Persons and Partnerships
  • Personal, Parenthood, and Family Tax Rebates
  • Tax Deductions on Rental Expenses

Other corporate tax benefits, including incentives for R&D, investment, and pioneer industries are set out in legislation like the Economic Expansion Incentives Act of 1967.

Belgium and Singapore: Two Innovation Hotspots

Despite their geographic distance and economic differences, Belgium and Singapore are more alike than they seem. Both countries are leading exporters, dominated by the services sector, and situated at the crossroads of their respective economic areas.

These two world-class nations are also attractive investment hubs for startups, pioneering industries, and a diverse range of multinational enterprises.

Belgium and Singapore both welcome future-forward innovation projects. They boast globally-recognized research and development facilities with government funding opportunities for startups, SMEs, and more.

Moreover, Belgium-based companies have a significant presence in Singapore, although the opposite isn't true for Singaporean businesses.

Whether you're a startup CEO, business visionary, or innovative investor in Singapore, it may be time to look further afield.

As you've seen, Belgium is the ideal testing ground and launchpad into the European Union economy and market.

If you want to scale up and achieve successful global expansion, you can't stay stagnant. Singaporean businesses have a unique advantage: It may just be easier for them to qualify for innovation grants in Belgium and set up shop.

With innovation grant partners situated in Singapore, Innovation Park can help bring your business to Belgium for long-term success. Learn more here.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.