Best Countries in Asia-Pacific for Startups

We analysed publicly available economic data to determine the best countries in Asia-Pacific for startups. We included general economic health, cost of doing business, business environment and labor force quality in our study of Asia's 12 leading nations. Below, we summarize our findings and describe the methodology behind our work.
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Table of Contents

Best Countries in Asia-Pacific for Startups

The top countries for startups in Asia-Pacific have strong economies, low costs of doing business, healthy business environments and well-educated people. We used publicly available data to score countries based on their rank across multiple categories. A lower score indicates a higher rank, or a better location for startups.

1. Singapore

The World Bank rates Singapore as the second best country in the world to conduct business. Singapore is a relatively wealthy country, with GDP per capita of $52,962, low unemployment (2.15%) and high internet accessibility (81%). The country has a high cost of living, but small businesses are offered tax incentives, and Singapore has highest rate of adults with post-secondary schooling (42%). Last, the World Economic Forum ranks Singapore's public institutions as #2 worldwide. Given these metrics, the country is an excellent place for individuals to start and grow businesses.

This table shows scores for Singapore.

2. Hong Kong (TIE)

Hong Kong, where startups will find strong public institutions and good access to financing, came in tied for #2 on our list. Similar to Singapore, Hong Kong has high GDP per capita ($43,741) and low unemployment (3.7%), but also has a high cost of living (2nd highest in the world). Finally, Hong Kong has relatively low interest rates and taxes, and the World Bank ranks it as the third best city in the world to start a business.

This table shows scores for Hong Kong.

2. Japan (TIE)

Tied with Hong Kong, Japan is an excellent option for tech startups, since greater than 93% of the population has access to the internet. Its other strong attributes include incredibly low interest rates and a very highly educated workforce (86% of people have at least a secondary school degree). The main drawbacks to Japan are the fact that it can be expensive to start a business given high corporate tax rates and salary expectations.

This table shows scores for Japan.

Where does India rank?

India came in 8th in our rankings, and we found its strongest attribute was Cost of Doing Business. India ranked 2nd overall in that category, driven by its excellent Cost of Living Rank. The top areas of improvement for India that could raise its ranking are GDP per capita, unemployment rate and ease of starting a business.

This table shows scores for India.

Summary of Top Countries for Startups in Asia-Pacific

Below is our list of the top 12 countries in Asia-Pacific for startups. Since every business has different strategic considerations, we expanded our the rankings to show scores by category. As mentioned above, a lower scores equates to a better rank.

This table shows scores for all countries.

Discussion of Categories

We utilized a wide range of data in an effort to characterise a country's business environment for the benefit of a startup. Our four main buckets comprise economic health, cost of doing business, business climate and quality of labor force. A country's composite score is based on its scores across those categories.

Economic Health

To provide a sense of the relative strength of a country's economy, Economic Health combines traditional economic indicators including GDP per capita, unemployment rate and the percentage of adults with a bank account.

This table shows economic health metrics for all countries.

Cost of Doing Business

Our Cost of Doing Business category considers business borrowing costs, tax rates and wages.

This table shows cost of doing business metrics for all countries.

Corporate tax rates are a crucial factor for all businesses. While India has a high statutory tax rate of 30%, it offers 0% for qualifying startups for the first 3 years and 25% for SMEs.

This table shows tax information for all countries.

Business Climate

Our Business Climate metric considers many different factors, such as business trust in public institutions, access to funding and technological development. These factors are intended to measure ease of doing business and general business environment.

This table shows business climate factors for all countries.

Labor Force Quality

A high-quality workforce is critical for the innovation and growth of a business. Workforce quality is dependent on many factors, but we used education rates as a proxy, specifically secondary and tertiary education completion rates. Singapore, Korea and Japan have very well-educated populations, making the countries great for hiring.

Educational attainment rates vary by country.

Startups require their employees to have a variety of skills. We considered both academic skills as well as the World Economic Forum's local availability of specialized training services. Training allows startups to develop their employees' skills and allow them to build new skills requisite for different jobs.

This table shows education metrics for all countries.

Methodology

To create our study, we focused our data collection efforts on general economic factors (i.e. GDP growth and unemployment rates), as well as startup-specific factors (i.e. access to and cost of financing). We acquired data from multiple reputable sources such as the Economist, World Bank, World Economic Forum, tax consultancies and governments. With the data, we ranked countries based on each metric and calculated an average ranking by category. The resultant composite score is an equal-weighted average of the respective category scores. A lower score equates to a better rank.

The Economic Health score was based on general indicators of an economy's strength. We considered GDP per capita, GDP growth, unemployment rates and proportion of adults with bank accounts. Collectively, these factors gave us a representation of the general health of each economy.

The Cost of Doing Business score comprised costs related to business operations, including corporate tax rates, 10-year government bond rates, cost of living scores, salary expectation scores and affordability of financial services scores.

The Business Climate score depended on ease of doing business and development status of each country. We used internet access, quantity of commercial banks per 100,000 people, and ranks for ease of starting a business, strength of public institutions and access to venture capital financing.

Last, primary and secondary education completion rates and rankings of local availability of training were used to represent the skill of countries' workforces.

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
Dan Grossman

Dan is a Senior Research Analyst at ValueChampion India, focusing on credit cards. He holds a B.S. in Mathematics & Economics from the University of Michigan, and previously worked in the financial services industry at Capital One and Moelis & Company.