A recurrent question in the region. Thank you for asking!
I've been based in Singapore since 2012 and have contributed to the expansion of the different startup ecosystems in Southeast Asia (more here: http://exitcoach.fyi.to/linkedin), including Malaysia. In 2014 I was part of MaGIC (Malaysian Global Innovation & Creativity Centre)'s Startup Academy Launch sharing about exit strategies for startups and have seen how both tech hubs have evolved over the years.
Both options have their pros and cons with perhaps a few more pros for Singapore as the preferred business hub in the region. However it would be necessary to better understand the specifics of your startup as this will greatly impact your choice. For example, perhaps your startup caters to the muslim markets. Does your expansion include hiring of local and overseas talent? And so forth.
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Having great expertise in competitive strategy and organizational frameworks, I'd have to say this strongly depends on the type of business you run and, furthermore, on various internal factors such as product design, corporate strategy, pricing, regulation and much more. I'd be happy to provide a deeper analysis of your situation in a call when provided with more information.
Given the Tax structure for corporate sector (Since 2010 Corporate Tax Rate is Fixed at 17%) and conducive growth opportunities in a business friendly but transparent regulated environment, Singapore is the best choice to establish branch for expansion. Other than all this you will be able to cultivate effective business relations there as 90% of technology companies in the Fortune 1000 have offices in Singapore. Accounting and Corporate Regulatory Authority (ACRA) is the national regulator and company registrar of business entities.
2017 Index of Economic Freedom has rated the Business Freedom Index of Singapore as 95.1, Labor Freedom Index as 90.8 and Monetary Freedom Index is as 84.3 while Trade Freedom Index is rated as 90.0, Investment Freedom Index as 85.0 and Financial Freedom or Financial Secrecy Index is rated as 80.0 while these indices are still growing.
According to the Corruption Perceptions Index, Singapore is consistently ranked as one of the least corrupt countries in the world.
According to World Bank report about doing business in Singapore "It takes an entrepreneur just over 6 working days to get a new business going in Singapore, with low start-up costs. Overall, taking into account other factors, including business licensing, taxes, credit legal rights and investor protection, Singapore has about the most business-friendly regulation in the world."
This is a great question as there are many moving pieces. The choice of jurisdiction for a tech startup should consider the tax, legal, networking, startup costs, customer base, and the local talent pool in the region. Both countries have growing populations with a lot of talented software developers, programmers, lawyers, accountants, and engineers, so if you're looking to base your operations and hire locally, you are in luck. Singapore generally offers better tax incentives and a lower effective corporate tax rate than Malaysia. Singapore offers reduced tax rates for qualifying startups that are tax resident of Singapore and meet certain shareholder ownership requirements. You'll also need to consider the tax residency of the shareholders of the company. Both Singapore and Malaysia have various double tax treaties with countries around the world, so you'll have to consider the potential withholding taxes on repatriating profits to your parent company in the form of a dividend distribution.