Doing Business

How Can Vietnamese Firms Get Funding in Singapore?

Nora Setiawan

July 5, 2020

Doing Business

How Can Vietnamese Firms Get Funding in Singapore?

Nora Setiawan

July 5, 2020

Singapore has become an attractive market for Vietnamese companies that want to get funding or raise capital. The Vietnamese companies also want to enhance their corporate profile by listing abroad. Now, you may wonder why does Singapore attract so many foreign companies to set up businesses there and to get funding?

First of all, according to official data from the World Bank and projections from Trading Economics, the Gross Domestic Product (GDP) in Singapore was worth 382 billion US dollars in 2019. The GDP value of Singapore represents 0.32% of the world economy.

Other than that, Singapore may have more reasons to be chosen. The country has political stability and an excellent business environment, also Asian getaway of clusters and business opportunities. In addition, Singapore has access to institutional investors as it’s the most international stock exchange in Asia, whereby 40% of listed companies are foreign.

Bilateral trade between Singapore and Vietnam has grown steadily. It amounted to S$21.6 billion, which was an 8.0% increase year-on-year. Singapore is Vietnam’s largest investor too in Southeast Asia, and third-largest worldwide. In 2017, Singapore’s investment reached US$43.2 billion across 1.800 projects.

Numerous initiatives have driven greater collaboration across the sectors. For instance, the Singapore-Vietnam Connectivity Framework Agreement, launched in 2006, covered 6 sectors of cooperation, including: education and training, finance, information technology and telecommunications, investment, trade and services transportation.

Singapore’s research and innovation ecosystem have played a key role in its emergence as a global business hub. Its ecosystem brings together academia, government and the private sector to collaborate on solutions that are relevant to the needs of the global market.

Another reason to be added is the consumer in Singapore always enjoys a high standard of living and is a keen buyer of foreign products. Singaporeans are not only brand conscious, but are also very loyal and keen exploring alternatives, such as they like new products, but they will stay loyal to familiar brand names, and they also like to experiment with new products.

These are the reasons why Singapore is well known for foreign businesses to enter the market. After gathering information about why you should think of Singapore as your market, now it is time to learn how to raise money in Singapore for foreign firms, especially Vietnamese firms.

To Raise Funding From Venture Capital

The Singaporean government is aiming to bring in an additional S$200 million of additional funding in 2019 to add to the S$1.3 billion that has been made available to local small and medium enterprises. 

Furthermore, the Southeast Asian Venture Capital industry continues to develop strongly, and Singapore already has a majority of the market. It looks more attractive hotspot investments from 2019 onwards.

The country also provides tax exemptions for onshore funds and offshore funds. The existing legal framework there provides tax relief for Venture Capital funds.

There are some Vietnamese companies that raised funds using Venture Capital, such as VNPay, a financial services company that raised $300 million jointly from Softbank and GIC Singapore. Another company is Vibeji, a marketplace platform for bite-sized which raised $100.00 from Reapra Singapore.

There Are Steps To Raise Funds From Venture Capital

How to get funding in Singapore?

1. Evaluate How Much The Business is Worth. 

You can do some financial projections to show a realistic return on investment. Include any liabilities and equity you have already issued, such as your sales, marketing and business model, historic revenues, balance sheet and operating budget, and lastly your cost of customer acquisition and lifetime value.

2. Figure Out How Much The Business Needs to Raise.

Determine your total needed amount by considering how much capital you can use effectively, how far along your business is, and how much control you are willing to give up to new investors.

3. Get In Touch with a Venture Capital Firm

Attend a private equity conference or industry event to begin networking, because many investments from Venture Capital would come for building trust and personal relationships over time. Treat each meeting as an opportunity and don’t forget to bring a polished pitch with you.

4. Decide How Much Ownership You Can Give to Venture Capital

It all depends on the ownership structure and the number of rounds of funding business needs. Venture capital funding is often just the first round of investment in your business. In other ways, you might approach a different financial institution or need to merge with a competitor.

To Raise Funding From Issuing Corporate Bonds

The Singapore bond market has become one of the most developed open capital markets in Asia, with over US$221 billion in total local currency bonds outstanding with an additional US$53 billion of bonds outstanding.

The outlook for Singapore’s debt capital markets remains positive. Also, more foreign issuers are expected to tap the SGD bond market, and high-grade issuers will continue to enjoy strong interest from investors.

There are some Vietnamese companies that are issuing bonds in Singapore, such as Novaland Investment Corporation, a joint stock company specialized in real estate investment and development. Novaland issues $160 million convertible bonds on Singapore Stock Exchange. The other one is VPBank, which issues $300 million on the Singapore Stock Exchange in 2019.

The Steps To Issue Bonds in Singapore

  1. A Listing application, comprising the final form of the prospectus, offering memorandum, or introductory document and supporting documents. They are all to be submitted to the Listings Function of the SGX.
  2. Upon satisfaction of the listing requirements set out in the application. The SGX will issue an eligibility-to-list letter for listing, with or without conditions.
  3. The issuer will lodge the prospectus, offering memorandum, or introductory document with the MAS and other relevant authorities. The issuer also will submit a copy to the SGX.
  4. The prospectus, offering memorandum, or introductory document should be materially different from the eligibility-to-list letter was issued. The issuer must submit written confirmation to the SGX.
  5. The SGX will inform the issuer of any further information and it is required to be disclosed prior to commencement of trading. The issuer may include this information in its prospectus, offering memorandum, or introductory document, or to make a pre-quotation disclosure through an announcement to the SGX.
  6. The issuer’s debt security will be listed and quoted on the SGX, after the conditions expressed in the eligibility-to-list-letter are satisfied.

These are the ways for Vietnamese Firms to get funding or raise funds in Singapore. The most important above all things is the preparation for you to choose what company you should set up, then you can decide which way you should raise funds in the country. Lastly, keep it in mind that Singapore is always an attractive market in Southeast Asia, so investing there is a great choice after all. If you’re looking to expand your business to other country, we can always help you.

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