Why Indonesian Startups Should Set Up a Holding Company in Singapore

Introduction

Indonesia has rapidly emerged as one of Southeast Asia’s most dynamic startup ecosystems. With a young, digital-savvy population, strong government support, and increasing venture capital activity, Indonesian startups are thriving in sectors such as fintech, e-commerce, edtech, healthtech, and logistics. Unicorns like Gojek, Tokopedia, and Traveloka have placed Indonesia firmly on the global startup map.

Yet, while Indonesia provides fertile ground for innovation, many startups face challenges when raising international capital, protecting intellectual property, and expanding across borders. To overcome these obstacles, many founders choose to establish a holding company in Singapore. This structure provides tax efficiency, credibility with investors, global reach, and legal protection—critical ingredients for startups that want to scale.

This article explores why Indonesian startups should consider setting up a holding company in Singapore and how it can fuel their growth journey.

1. Access to International Investors

Attracting foreign investment is often a major hurdle for Indonesian startups. While local investors are supportive, scaling globally requires access to venture capital funds, private equity firms, and institutional investors from the U.S., Europe, and Asia.

Many of these investors prefer Singapore entities because:

• They are familiar with Singapore’s corporate laws and governance standards.

• Investment instruments such as preference shares, convertible notes, and employee stock option plans (ESOPs) are easy to structure in Singapore.

• Exit opportunities—IPOs or acquisitions—are more feasible under Singapore law.

By setting up a holding company in Singapore, Indonesian startups become far more attractive to international investors, unlocking greater funding potential.

2. Protection of Intellectual Property (IP)

For startups, intellectual property is often the most valuable asset. Whether it is proprietary software, algorithms, or brand trademarks, protecting IP is vital for long-term success.

Singapore provides one of the strongest IP regimes in the world. For Indonesian startups, this means:

• Registering patents and trademarks under Singapore law for global recognition.

• Licensing IP back to the Indonesian operating entity.

• Enhancing company valuation, as investors view Singapore-registered IP as more secure.

For example, an Indonesian SaaS startup could hold its software code in Singapore while operating development teams in Jakarta—providing both cost efficiency and legal protection.

3. Tax Efficiency

Singapore’s tax system is another major advantage for startups. Key benefits include:

• Corporate tax capped at 17%, with partial exemptions reducing effective rates further.

• No capital gains tax, ideal for startups planning exits through acquisitions or share sales.

• No withholding tax on dividends, ensuring smooth profit distribution.

• Over 80 double taxation agreements (DTAs), reducing tax burdens on cross-border transactions.

This tax efficiency allows Indonesian startups to maximize reinvestment into growth while keeping investors satisfied.

4. Ease of Incorporation and Flexibility

Incorporating a holding company in Singapore is quick and straightforward. Requirements include:

• At least one shareholder (individual or corporate).

• At least one local director (which can be arranged via nominee services).

• A registered office address in Singapore.

• Paid-up capital of just SGD 1.

This simplicity allows Indonesian founders to set up their Singapore parent entity within days, without unnecessary red tape, enabling them to focus on building and scaling their businesses.

5. International Credibility

Startups often struggle to build credibility when dealing with global clients, suppliers, or partners. A Singapore-registered holding company enhances trust immediately.

Benefits include:

• Improved reputation in global markets.

• Stronger position in negotiations with multinational corporations.

• Greater confidence from partners who may hesitate to transact directly with Indonesian entities.

This credibility is especially valuable in industries like fintech or healthtech, where compliance and trust are critical.

6. Strategic Gateway to ASEAN and Beyond

ASEAN, with its 650 million people and USD 3 trillion GDP, represents a major growth opportunity. Singapore, at the heart of ASEAN, is the region’s business hub.

Indonesian startups can use a Singapore holding company to:

• Expand into ASEAN markets with centralized management.

• Leverage Singapore’s trade agreements to enter markets like the EU, U.S., and Japan.

• Partner with multinational companies headquartered in Singapore.

This gateway status enables startups to scale rapidly across borders.

7. Better Governance and Legal Framework

Global investors prioritize governance and legal certainty. Singapore provides both:

• Clear shareholder rights and transparent reporting standards.

• Minority shareholder protection, reassuring small investors.

• Efficient dispute resolution through international arbitration centers in Singapore.

This governance framework reduces risk for investors and boosts startup valuations.

8. Financial Infrastructure and Fundraising Options

Singapore is Asia’s leading financial hub, providing access to:

• International banks with multi-currency accounts.

• Venture capital funds and angel investor networks.

• Singapore Exchange (SGX) for potential IPOs.

• Trade finance and venture debt facilities.

For Indonesian startups, being incorporated in Singapore ensures smoother transactions and wider access to capital markets.

9. Talent and Workforce Mobility

While Indonesia has a large pool of engineers and young talent, Singapore offers global expertise in leadership, finance, and scaling businesses. A Singapore holding company enables startups to:

• Recruit experienced executives with international exposure.

• Attract advisors and board members more easily.

• Use Singapore’s employment pass system to bring in specialized foreign talent.

This mix of Indonesian operational teams and Singapore-based leadership provides a strong competitive edge.

10. Asset Protection and Risk Management

Startups face significant operational risks, from legal disputes to market volatility. Housing valuable assets under a Singapore holding company provides a safety net:

• Intellectual property, cash, and investments are insulated from risks in operating markets.

• If one subsidiary fails, the holding company structure protects the group.

• Investors are reassured by the asset protection framework.

This setup allows Indonesian founders to scale confidently without putting all assets at risk.

11. Succession Planning and Long-Term Continuity

While startups focus on growth, long-term succession is equally important. A Singapore holding company supports:

• Smooth ownership transfers during investor exits or generational handovers.

• Establishment of trusts and foundations for family wealth management.

• Clear legal mechanisms for leadership transitions.

This ensures business continuity and stability even as leadership changes over time.

12. Synergy Between Indonesia and Singapore

Indonesia and Singapore complement each other perfectly in the startup landscape:

• Indonesia provides scale, cost-efficient operations, and a vast consumer market.

• Singapore contributes global credibility, financial depth, and legal strength.

Examples include:

• Indonesian fintech startups incorporating in Singapore to raise global funds while keeping tech teams in Jakarta.

• E-commerce platforms serving Indonesian consumers but holding contracts and IP in Singapore.

• Healthtech startups piloting services in Indonesia but securing patents and licensing in Singapore.

This synergy creates resilience and global scalability.

13. Integration into Singapore’s Startup Ecosystem

Singapore’s government actively supports startups through accelerators, grants, and incubation programs. Indonesian startups with a Singapore holding company can tap into:

• Enterprise Singapore funding schemes.

• Access to startup incubators and accelerators.

• Networking with global entrepreneurs and investors.

This ecosystem provides additional momentum for growth and international expansion.

14. Long-Term Global Expansion

A Singapore holding company is not only about immediate advantages; it also sets the stage for long-term global growth. With this structure, Indonesian startups can:

• Acquire subsidiaries in new markets.

• Form partnerships and joint ventures with multinationals.

• Raise capital through global stock exchanges.

• Transition smoothly from local players to global brands.

This flexibility ensures they remain competitive in a fast-changing global market.

Conclusion

Indonesia’s startup scene is vibrant and full of promise. However, to move from local success to global recognition, startups must overcome barriers in fundraising, IP protection, and international credibility. Setting up a holding company in Singapore provides the solution.

For Indonesian startups, Singapore offers:

• Investor confidence and access to capital.

• Strong IP protection.

• Tax efficiency.

• Global credibility.

• Integration into ASEAN and international markets.

By combining Indonesia’s innovation and consumer base with Singapore’s financial and legal strengths, startups can secure a powerful platform for global growth. For ambitious Indonesian founders, establishing a Singapore holding company is not just an option—it is a vital step toward international success.