Business environment, Public Economics

There is no doubt that the environment surrounding business organizations play an important role in influencing the decisions of those organizations and their strategic plans. That the comparison between the business environment in Australia and the business environment in Singapore will help to understand the reasons behind the desire of the Australian airlines (Qantas) to migrate to Singapore. There are political factors, economic, social, technological, and legal environment constitute the basis of the variance and the compatibility of the business environment from one country to another.

Tax policy is one of political factors that may help to attract foreign investors, or may lead to local investors out of the market. Where we find that Singapore is seeking to reduce corporate taxes year after year, after tax rate was 25.5% in 2001, it stabilized at 17% since 2010. While in Australia , the tax rate for companies still at 30%, in other words, companies operating in Australia are paying 13% increase compared with companies in Singapore. So Qantas moving to the Singapore market will avoid the company paying 13% of annual profits in terms of paying tax.

As an economic factor, Interest rate has a very significant impact on the business environment. It should be noted that Australia's central bank lending interest rate is relatively high compared with their Singaporean counterpart. Even though Australia's central bank recently cut interest rates by 25 cents but it is still at $ 4.5 AUD, while in Singapore, interest rate is just $0.02 SGD . As low interest rate is a strong incentive for investors to borrow in order to expand their businesses or to create new business, the huge gap in interest rates between the two countries may be one of the reasons that prompted Qantas to try to enter the Singaporean market or move their operations services there. Also exchange rate is another economic factor which has significant effect on business environment . Singapore dollar exchange rate has continue dropping against USD while Australian Dollar is sharp contrast to Singapore dollar. While the Singapore dollar has fallen by 28 cents during the last three years, We find that the Australian dollar has risen by 40 cents during the same period. This rise reflects badly on Australia's exports in general and in particular on Qantas, In 2000 ( as a example ) Qantas has achieved cost savings amounted to $ 32 million because of the sharp fall in the Australian dollar against the U.S. dollar.

At the environmental level, Australian business organizations face the carbon tax issue as a governmental approach to face global warming. Which will lead to the reluctance of foreign investors from entering the Australian market ,and local investors look forward to alternative markets. Also it will lead to layoff some employees from their jobs.

In conclusion, Singapore's business environment more attractive work environment of Australia In terms of tax rate, interest rate and exchange rate issues and other factors as environmental issues, so it is natural to prefer the decision makers in the company Qantas to enter the Singaporean market.

Posted Date: 3/18/2013 6:21:10 AM | Location : United States







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