In some cases, it is better to conduct a market research first before engaging in a full business operation especially if a company will operate in a speculative, but still promising market.

For foreign companies wanting to explore the business opportunities in Singapore, the best way they can do is to register a representative office which is a setup designed for conducting market research and other non-commercial activities.

These are the activities a representative office can legally engage to:

• Conduct market research and feasible studies that will determine the likelihood of success of a certain product or service in Singapore.

• Provide liaison services on behalf of its foreign parent company as long as it will not enter into a legal agreement or contract.

• Provide customer care assistance as long as this will not involve anything related to repairs and services.

• Oversee the activities of the parent company’s local distributors and agents in the country.

It is important to note that a representative office is not allowed to engage in commercial and profit-generating activities, provide service in exchange of fees, enter in to any business contracts, issue invoices and receipts, trade goods and services, lease warehousing facilities, and lease offices to other establishments for a fee.

In addition, a representative office is not allowed to carry out activities that will involve shipping and storing goods in Singapore. And with this, a parent company should appoint a local distributor or agent who will perform such activities that are commercial in nature.

To register a representative office in Singapore, foreign companies should hire a professional registration firm that will process their application to the International Enterprise. But if the parent companies will operate in the banking and insurance sector, it is also a requirement to register their office to the Monetary Authority of Singapore.

In case that foreign companies wish to carry on their operations in the country after their representative office has expired, they are advised to register a branch office or subsidiary company which are the two business structures allowed to conduct commercial activities.

For most experts, a subsidiary company is better than the branch office since it enjoys local tax benefits and exemptions being incorporated in the country.