Setting Up a Company in Singapore? Don't Overlook Employment Costs

Registering a company is one part of entering Singapore. Building a workforce is another.

For foreign investors planning to establish a business in Singapore, the cost of setting up the company is only one part of the financial picture. Once the business begins hiring, other employment-related costs and requirements may also become part of the operating budget.

The recent adjustment to Singapore's Foreign Worker Levy is one example.

Company Setup Costs Are Only One Part of Market Entry

When entering a new market, companies naturally look at the costs involved in establishing a local presence.

This may include incorporation, professional services, administrative expenses, and other costs associated with setting up the business.

But establishing the entity is different from preparing it to operate.

Once a company needs employees, the financial planning becomes broader. Salary is one component, but depending on the workforce and employment arrangement, there may also be other employment-related costs and regulatory requirements to consider.

For a foreign investor, this means that company setup costs and workforce costs are better viewed as separate parts of the market-entry picture.

What Changes Once You Start Hiring?

The considerations can become more specific once a business starts planning its workforce.

For example, foreign employees working in Singapore must hold an appropriate work pass. Singapore's Ministry of Manpower (MOM) provides different work pass frameworks depending on the type of employee and role.

For Work Permit holders, employers are also subject to sector-specific quota and Foreign Worker Levy requirements. The number of Work Permit holders a company can employ is limited by its applicable quota, while a monthly levy applies to each Work Permit holder employed.

This means that workforce planning is not simply a question of:

“How many people do we need?”

It can also involve questions such as:

1. What type of employees does the business need?
2. Which employment or work pass requirements apply?
3. Does the business have a quota for the intended workforce?
4. What ongoing employment-related costs should be included in the budget?

The answers can vary depending on the business and the type of workforce involved.

Business Activity Can Matter Too

Employment requirements are not necessarily the same across all businesses.

Singapore has sector-specific rules for Work Permit holders. For example, the quota and levy framework can differ between sectors such as services, construction, manufacturing, marine shipyard and process.

This is an important consideration for foreign investors.

Two companies may both be incorporated in Singapore, but their workforce planning may look very different because their business activities and workforce requirements are different.

In other words:

The company you register and the workforce you build are connected — but they are not the same planning exercise.

Understanding the nature of the business can therefore be an important starting point when considering future hiring needs.

The 2026 Foreign Worker Levy Adjustment as an Example

Singapore's Foreign Worker Levy provides a practical example of how employment-related costs can change.

From 1 June 2026, the levy rates for specified Work Permit holder categories in the marine shipyard sector were adjusted. The current MOM framework lists a monthly levy of SGD 350 for higher-skilled workers and SGD 500 for basic-skilled workers in that sector.

The change does not mean that every foreign employee in Singapore is subject to the same levy.

Rather, it illustrates a broader point: employment costs can depend on factors such as the employee category and the sector in which the business operates.

For an investor planning a new operation, these details can become relevant when estimating the resources required to build and maintain a local workforce.

What Should Foreign Investors Consider?

There is no single employment-cost structure that applies to every company entering Singapore.

Instead, investors may find it useful to consider a few basic questions as part of their market-entry planning:

1. What will the Singapore business actually do? The nature of the business can affect which employment rules and sector requirements are relevant.
2. What kind of workforce will be needed? The balance between local and foreign employees, as well as the roles involved, can affect the applicable employment framework.
3. Which requirements apply to the intended workforce? Different types of employees may fall under different work pass and employment requirements.
4. What ongoing costs should be included? Beyond salaries, businesses may need to account for applicable levies, statutory requirements and other employment-related operating costs.
5. How might the workforce develop over time? A business testing the Singapore market with a small initial team may have different planning considerations from one preparing to build a larger long-term operation.

These questions do not point to one universal answer. They simply help create a more complete picture before hiring begins.

A More Complete View of Market Entry

For foreign investors, registering a company may establish the legal presence needed to operate in Singapore.

But the cost of establishing that presence is only part of the picture.

Once the business starts building a team, employment requirements and ongoing workforce costs can become another part of the operating plan.

The 2026 Foreign Worker Levy adjustment is one example of why these considerations can be worth looking at early — particularly when the planned workforce includes foreign employees.

Market entry is not only about setting up the company. It is also about understanding what it will take to operate it.

The appropriate approach will depend on the company's business activity, workforce needs and stage of expansion.