One outstanding way for foreign businesses to expand their business potential is by setting up a Representative Office (RO) in Singapore. Not only is Singapore an excellent territory to invest a business in but it is also a good central point within which to reach out to other countries in Asia.

What is a representative office? A representative office is primarily an administrative extension of a foreign company, known as the parent or head company, and thus it is not a separate incorporated entity. Its name should be the same as the name used by the parent company. As a consequence, a representative office cannot engage in commercial revenue-generating activities, and therefore need not file corporate annual tax returns. Setting up a representative office in Singapore is considered to be a safe business scheme before making the decision to committing for a more permanent, long-term business in the country. This is because a representative office is allowed only to exist up to three years with a mandatory renewal every year. Through this short period, an investor is given more opportunities to assess the business situation in Singapore before finally deciding to set up a more stable and fixed company. The foreign company is given more time to do market research, promote brand identity, and more opportunity to work with local companies and agents.

A representative office is allowed to carry out only the following activities: market research, feasibility studies, and liaison work in behalf of the parent company. On the other hand, a representative office is not allowed to engage in the following activities, either directly or in behalf of the parent company: trade in goods/services (including import or export), lease warehousing facilities (though it is allowed to lease office space), lease office(s) to other establishments for a fee, enter into business contracts, issue invoices/receipts, open/receive letters of credit, and provide services for fees. Moreover, a representative office cannot ship, transfer or store goods to Singapore. For these activities, the parent company must appoint a local agent or distributor.

The requirements needed in setting up a representative office differ on the type of business that its foreign company is engaged in. For setting up a representative office for banking and insurance, you need to register with the Monetary Authority of Singapore (MAS). It is the MAS that lays down the requirements for the application for registration of a representative office. As for setting up a representative office for all other industries, applications for registration are to be made with the International Enterprise (IE) of Singapore, and the required documents are to be submitted to it, which lays down the guidelines to be complied with by the applicant.