April 24, 2024
MANILA – Malaysia leads its Southeast Asian neighbours in a study that ranks the best and most challenging locations to start a business.
The country claimed the 10th spot globally in the analysis of 52 countries by Business Name Generator. Kuala Lumpur has a relatively low GDP of US$11,947 per capita, which is half that of Bahrain’s that ranks 8th in the report, but it has a predicted economic GDP growth at 4.3 percent (which is more than the top 9 countries in the ranking) and the lowest monthly living cost at $473.84, according to the study. Malaysia also has the fourth best value for hotdesking at $105 per month, a great price for new businesses needing office space, it adds.
The research also considered metrics such as business tax rates, the average time it takes to set up a business legally, WiFi speeds and quality of life and happiness scores, for its assessment. The report was released in February.
Vietnam follows Malaysia at 11th spot, Hungary is global best
Ranking just a notch lower than Malaysia is Vietnam which, despite its low GDP of $3,857 per capita, has the highest estimated GDP growth in 2024 among the top 20 countries at an impressive 5.8 percent.
Rounding up the Southeast Asian countries on the top 20 are Thailand at number 13 and Singapore taking the 17th spot. Among the best countries for startups, the Lion City has the fewest number of days needed to set up a business legally at only two days.
In a study conducted by Enterprise Singapore and DealStreetAsia, Singapore emerged as the top start-up investment destination in Southeast Asia in 2023 despite a downturn in funding, according to an article by The Straits Times.
That study found that start-ups based in Singapore accounted for 63.7 percent of all equity deals in the Asean-6 group of nations, which also includes Indonesia, Malaysia, the Philippines, Thailand and Vietnam – in 2023. The report also stated that the recent surge in private funding for AI companies in the US is likely to inspire other investors, including those based in Singapore.
Business Name Generator study ranks India as the most affordable country on the list. The South Asian country and the world’s most populous nation has an average cost of living of $348, without rent. Rent in the nation averages at $221 for a one-bedroom city apartment, and with this number also considered, living costs are still reasonably low.
Business Name Generator’s top 20 countries for startups.
Source: Business Name Generator
On a global level, the study revealed Hungary as the best country to launch a startup in 2024, followed by the Netherlands and the United Arab Emirates (UAE).
Catapulting Hungary to the top of the list is its low business tax rate of 9 percent and low living costs that average $694 per month without rent. The Eastern European country has a relatively low GDP of $16,777 per capita, but its economic GDP figure is estimated to increase by 3.1 percent this year.
Not too far behind in second place is the Netherlands. It has the highest GDP among the top 10 countries at $51,052 per capita, the third highest happiness score (7.4), and comes second for the best quality of life (198.16 out of 240). These numbers suggest there is a favorable landscape for employees.
In the third spot is the UAE which is tied with Hungary with the second lowest corporate tax rate (9 percent) and a remarkable estimated 4 percent growth in economic GDP for 2024.
The Philippines takes the bottom spot
On the other end of the spectrum is the Philippines, which the study revealed as the most challenging country to launch a startup. Contributing to the archipelago’s dismal performance in the study are its high business tax rates (25 percent) and the second lowest quality of life score (85.72). It also takes as much as 33 days to legally set up a business.
Business Name Generator’s 10 least favorable countries for startups.
Source: Business Name Generator
Not all is dreary for startups looking to establish their business in the Philippines, however, as it has the second highest forecasted GDP growth in 2024 at 5.9 percent.
Italy and Brazil join the Philippines in the bottom rung as the least favourable countries in which to start a business in 2024, at second and third place respectively.
Italy has the third lowest economic GDP increase at just 0.7 percent in 2024, meaning the chances of its economy improving isn’t quite rosy. It also has a fairly high business tax rate at 27.8 percent.
Meanwhile, Brazil has the second highest business tax rate (34 percent) in the entire ranking. It also takes up to 17 days to complete the legal proceedings for starting a new business.
Linus Näslund, COO for Business Name Generator, said that the location of a business can have a significant impact on its success, access to resources, market demand, and competition. With this, it would do entrepreneurs well to meticulously consider the economic, demographic, and cultural factors of potential locations, he said.