Best Countries in Asia-Pacific for Startups

We evaluated available economic data to determine the best countries in Asia-Pacific for startups. Our analysis covered the general economic health, cost of doing business, business environment and labor force quality in Asia's 12 leading nations. Below, we explain our findings and detail our methodology.

Table of Contents

Top Countries in Asia-Pacific for Startups

The best countries for startups in Asia-Pacific have strong economies, relatively low cost of conducting business, healthy business environments and highly educated populations. Our scoring system is based on available data and each country's rank across several categories. Lower scores indicate higher ranks, or better locations for startups.

1. Singapore

Singapore is rated by the World Bank as the second best country to conduct business, globally. It is a wealthy country (GDP per capita of $52,962), with low unemployment (2.15%) and good internet accessibility (81%). While the country has a high cost of living, there are tax incentives for small businesses and it has the highest education rates (42% of working adults have post-secondary educations) in Asia. Finally, Singapore's public institutions are highly regarded; the World Economic Forum ranks Singapore's institutions second globally. These factors make it a great place for startups to grow their businesses.

Score
Composite Score4.1
Economic Health5.2
Cost of Doing Business6.5
Business Climate3.2
Labor Force Quality1.7
Successful StartupGarena - online gaming platform

2. Hong Kong (TIE)

Startups in Hong Kong will find strong public institutions and availability of financing. It is similar to Singapore, in that it has strong economic indicators, with high GDP per capita ($43,741) and low unemployment (3.7%), and a high cost of living (#2 globally). Hong Kong is widely considered a great location for startups. The World Bank lists Hong Kong as the third best city globally to start a business. Additionally, interest rates and taxes are relatively low.

Score
Composite Score4.7
Economic Health5.6
Cost of Doing Business6.8
Business Climate2.8
Labor Force Quality3.7
Successful Startup9GAG - video sharing website

2. Japan (TIE)

Japan is a great option for tech startups, as over 93% of its population has internet access. It also has extremely low interest rates and one of the most educated workforces globally (86% have at least a secondary degree). However, it can be an expensive place to start a business, with high corporate tax rates and salary expectations.

Score
Composite Score4.7
Economic Health4.6
Cost of Doing Business7.8
Business Climate3.7
Labor Force Quality2.7
Successful StartupBASE - platform for building online stores

Summary of Top Countries for Startups in Asia-Pacific

Below are the top 12 countries in Asia-Pacific for startup businesses. Every startup has different circumstances and preferences, so we've expanded our data to show the top countries by each category. Lower scores indicate better ranks.

RankCountryComposite ScoreEconomic HealthCost of Doing BusinessBusiness ClimateLabor Force Quality
1Singapore4.15.26.53.21.7
2Hong Kong4.75.66.82.83.7
2Japan4.74.67.83.72.7
4Taiwan5.17.53.74.45.0
5Malaysia5.76.46.05.25.3
6South Korea6.05.67.56.74.3
7China6.64.06.86.79.0
8India7.17.24.77.59.0
9Indonesia7.38.05.08.08.3
9Thailand7.36.06.38.09.0
11Philippines7.88.67.010.75.0
12Vietnam8.58.05.810.010.3

Discussion of Categories

This study includes a wide variety of data in order to characterise each country's business environment from the perspective of a startup. We categorise this data into four groups: economic health, cost of doing business, business climate and labor force quality. Each score is based on the countries ranks across these categories.

Economic Health

The Economic Health category combines traditional economic indicators. These include GDP per capita, GDP per capita, unemployment rate and the proportion of adults with bank accounts. These measures give a picture of the relative strength of each country's economy.

RankCountryTotal GDP(Billions)GDP GrowthUnemployment Rate% of Adults with a Bank AccountGDP per capitaComposite Score
1China$11,4396.8%3.9%97.1%$8,1234.0
2Japan$4,8841.70%2.4%96.6%$38,9014.6
3Singapore$3063.5%2.1%96.5%$52,9625.2
4Hong Kong$3343.7%2.9%83.6%$43,7415.6
5South Korea$1,5303.1%3.3%95.7%$27,5395.65
6Thailand$4383.7%1.0%82.3%$5,9106.0
7Malaysia$3105.8%3.3%84.1%$9,5086.4
8India$2,4397.2%6.1%58.6%$1,7107.2
9Taiwan$5712.8%3.7%Unknown$25,8937.5
10Indonesia$1,0115.1%5.5%45.3%$3,5708.0
10Vietnam$2166.5%2.3%39.5%$2,1718.0
12Philippines$3216.7%5.0%37.1%$2,9518.6

Cost of Doing Business

The cost of doing business category considers several costs associated with operating a business, including borrowing costs, tax rates and wage costs.

RankCountry10-Year Government Bond RatesCost of Living RankSalary Expectation RankComposite Score
1Taiwan1.1%6Unknown3.7
2India7.7%1Unknown4.7
3Indonesia6.4%435.0
4Vietnam4.4%515.8
5Malaysia4.0%246.0
6Thailand2.5%756.3
7Singapore2.3%1286.5
8China3.7%866.8
8Hong Kong2.1%1176.8
10Philippines6.5%327.0
11South Korea2.8%9107.5
12Japan0.04%1097.8

Corporate tax rates are a crucial factor for all businesses. While Singapore is an expensive country to run a business, it offers tax incentives for startups. Exemptions for startups include 75% of the first S$100,000 earned and 50% of the next S$100,000. This exemption makes Singapore significantly less expensive for startups.

CountryStatutory Tax RateTax Exemptions/Notes
Taiwan17%First TWD$120,000 is tax free
India30%0% for qualifying startups for first 3 years, 25% for SMEs
Indonesia25%12.5% for local company with revenue up to IDR 50 billion
Vietnam20%Unknown
Malaysia24%18% on first MYR500,000
Thailand20%Unknown
Singapore17%75% exemption for first S$100,000, 50% exempt for next S$100,000
China25%10 or 20% for SMEs
Hong Kong16.5%Unknown
Philippines30%Deduction for new, local companies
Japan23.4%Unknown
South Korea25%10% on first KRW 200 million, 20% on KRW 200 million - KRW 20 billion

Business Climate

The business climate category encapsulates many factors, ranging from businesses' trust of public institutions, technological development and availability of funding. The rating based on these data points is designed to evaluate the ease of doing business and general business environment in each country.

CountryEase of Starting Business RankPublic Institutions RankInternet AccessVC Access RankMarket Dominance RankBanks per 100,000 AdultsComposite Score
1Hong Kong1287.5%4522.32.8
2Singapore2181.0%139.33.2
3Japan7393.2%9134.13.7
4Taiwan4579.7%62Unknown4.4
5Malaysia8478.8%2410.75.2
6China6753.2%368.46.7
6Korea3992.8%111016.96.7
8India11629.6%5713.57.5
9Indonesia10825.4%7817.88.0
9Thailand51047.5%81012.68.0
11Vietnam91146.5%1093.810.0
12Philippines121255.5%12128.810.7

Labor Force Quality

Access to a high quality workforce is essential for startups that wish to innovate and grow. While this can be a subjective metric, education rates can provide a proxy for the strength of a workforce. In this study we considered secondary and tertiary education attainment rates. Singapore, Korea and Japan are have very well-educated adult populations, which bodes well for startups hiring in these countries.

Because startups require a variety of skills, in addition to academic skills, we also considered the World Economic Forum's local availability of specialized training services. Access to training allows startups to develop their employees skills and allows individuals to build skills in order to apply for new jobs.

CountryAdults with Tertiary EducationAdults with at least Secondary EducationLocal Availability of Training RankComposite Score
1Singapore42.9%79.4%11.7
2Japan29.9%86.4%42.7
3Hong Kong21.7%78.4%23.7
4Korea35.3%82.9%94.3
5Philippines26.6%70.1%65.0
6TaiwanUnknownUnknown55.0
7Malaysia16.4%68.2%35.3
8Indonesia9.2%48.8%78.3
9China8.8%65.3%109.0
11India9.9%37.5%89.0
10Thailand19.0%44.8%119.0
12Vietnam6.7%65.0%1210.3

Methodology

We focused our data collection on general economic factors, such as growth rates and unemployment rates, and factors specific to startups, including financing availability and costs. We gathered the data from several reputable sources including the Economist, World Bank, World Economic Forum, tax consultancies and governments. Using these data sets, we ranked each country based on each metric and calculated an average ranking for each category. The composite score is an equally weighted average of each category's score. A lower score indicates a better rank.

For Economic Health we chose general indicators of an economy's strength. We included GDP per capita, GDP growth rates, unemployment rates and percentage of adults with bank accounts. Together, these factors give us a picture of the general status of each economy.

For the Cost of Doing Business, we included costs related to business operations including, corporate taxes, 10-year government bond rates, cost of living ranks, salary expectation ranks and affordability of financial services ranks.

Our Business Climate category relied on data related to the ease of doing business and development status of each country. We included internet access, number of commercial banks per 100,000 individuals, and ranks for ease of starting a business, strength of public institutions and availability of venture capital funding.

Finally, we used primary and secondary education attainment rates and ranks of local availability of training to estimate the skill of each country's workforce.

Sources

Economic Health

  • Asia Development Bank: Proportion of Adult Population with Bank Account
  • The Economist: GDP Growth, Unemployment Rate,
  • IMF: Total GDP (2017 USD)
  • World Bank: GDP per capita
  • Taiwan.gov.tw: GDP per capita

Cost of Doing Business

  • The Economist: Interest Rate (10 yr Govt), Cost of Living Ranks
  • Universumglobal:Salary Expectations of College Graduates 2016
  • TMF Group: 2017 Tax Rates ASEAN
  • Deloitte: Corporate Tax Rates 2018
  • PWC: Global Corporate Income Tax Rates, Taiwan Taxes on Corporate Income, Hong Kong Corporate Tax Rates
  • Inland Revenue Authority of Singapore: Corporate Income Tax
  • World Economic Forum Global Competitiveness Rankings: Affordability of Financial Services,

Business Climate

  • International Telecommunication Union: Percentage of Population with Internet Access,
  • World Bank: Starting a Business Rank
  • World Economic Forum: Global Competitiveness Rankings - Institutions, Venture Capital Availability, Access to Business Loans and Extent of Market Dominance

Labor Force Quality

  • UNESCO: Education Attainment Rates (Secondary, Tertiary)
  • World Economic Forum: Global Competitiveness Rankings - Local Availability of Specialized Training Services

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