A representative office (RO) might be a good option for you if you want to explore the business opportunities in Singapore without setting up a full-fledged operation. A RO is a temporary arrangement that allows foreign companies to conduct market research, feasibility studies, and liaison activities in Singapore. However, a RO is not a legal entity and cannot engage in any profit-making activities, such as sales, invoicing, or signing contracts. Therefore, it is important to understand the benefits and limitations of a RO before deciding to establish one.
Benefits of a RO
One of the main benefits of a RO is that it allows you to test the waters in Singapore before making a larger investment. A RO can help you assess the market potential, customer preferences, competitors, and regulatory requirements in Singapore. You can also use a RO to build relationships with potential partners, suppliers, and customers, and to establish your brand presence and reputation in the local market.
Another benefit of a RO is that it is relatively easy and quick to set up.
Limitations of a RO
While a RO can offer many advantages, it also comes with some restrictions that you need to be aware of. As mentioned earlier, a RO cannot engage in any business activities that generate income or incur expenses. This means that you cannot use a RO to sell your products or services, issue invoices or receipts, enter into contracts or agreements, or open bank accounts in Singapore. A RO can only perform non-commercial activities that are related to its parent company’s business, such as market research, feasibility studies, and liaison activities.
Another limitation of a RO is that it cannot employ more than five staff members, who must be either relocated from the parent company or hired locally as support staff. The staff members must also report directly to the parent company and not to any local agents or representatives. Additionally, a RO must use its parent company’s name and indicate that it is a representative office in Singapore on its business cards, stationery, and signage.
Transitioning from a RO to a permanent entity
If you decide to expand your business operations in Singapore after conducting your market research and feasibility studies through a RO, you will need to register your business entity with ACRA and comply with the relevant laws and regulations in Singapore. Depending on your business objectives and structure, you can choose from different types of business entities, such as a subsidiary company, a branch office, or a partnership. Each type of entity has its own advantages and disadvantages, so you should consult with a professional advisor before making your decision.
A representative office in Singapore can be a useful tool for foreign companies that want to explore the business opportunities in Singapore without committing to a full-fledged operation. However, a RO is not a legal entity and cannot engage in any profit-making activities. Therefore, it is important to understand the benefits and limitations of a RO before setting one up. If you need more information or assistance on setting up a representative office in Singapore, you can WhatsApp us at +65 8822 XERO (9376) and we will be happy to help you.