A New Decade For Asia's Tech Capital: Three Things That Will Define Singapore's Startup Scene in the 2020s
Singapore is the jewel in the startup-studded crown of Southeast Asia’s emerging tech world. The city-nation headquarters 80 out of the world’s top 100 tech firms, ranks as the globe’s second easiest place to do business, and registers first for human capital like citizen knowledge, skills, and health.
The ecosystem has given rise to five unicorns – including one decacorn worth at least US$14 billion – and the allure of strict intellectual property laws and favorable government regulation portends the creation of perhaps many more.
At the same time, the start of the new decade brings new challenges. The neutral nation finds itself caught in the middle of trade discussions that are impacting the global technology chain. On its tech scene’s homefront, meanwhile, recruitment battles for an ever-dwindling pool of talent are ramping up – all while the city-nation grapples with the task of diversifying its industries to reflect long-term societal goals.
With great power comes great responsibility; and as Singapore aims to keep attracting the world’s most elite tech firms, efforts in three key areas will prove crucial to preserving its place as the startup powerhouse of Southeast Asia.
For those eyeing a launch in Asia’s tech capital in the coming years, here are the three things which will define Singapore’s tech ecosystem in the 2020s.
Courting regional and international players
Singapore’s startup ecosystem is built upon globalization. Multinationals and startups alike feel at home thanks to the government’s active support of foreign investment and business. Singapore’s corporate tax policy is pro-market, new business registration is simple, and the protection of the intellectual property is a national standard.
In a recent survey of more than 100 international startup founders based in Singapore, participants ranked its business-friendly government policies as the top factor in their decision to relocate.
However, weakened global markets threaten the status quo. Singaporean trade and tourism are struggling in the fallout of coronavirus, as they are largely dependent on strong demand from China. The local market is bracing for impact as banks revise the growth rate to 0.3% from 1% in 2020. Recession looms, and that is without factoring in the larger geopolitical machinations at play.
Regional growth provides a buffer as Southeast Asia’s quickly digitising population demands better online services and spur new tech adoption across the industry. Furthering links with neighbors and staying out of trouble with the big players has worked well in the past for Singapore – and it will be interesting to see how this tactic works during the 2020s.
A turn towards deep tech
The government, meanwhile, is putting its money where its mouth is. Singapore is combating any business complacency with new budgets for new industries and long-term national goals.
Singapore Finance Minister Heng Swee Keat told The Straits Times during a visit to the United States last year fundamental transformation is necessary to maintain the competitiveness of the city-state’s economy in the years to come.
The minister wants Singapore to become the “Asian node of technology innovation and enterprise” - and one look at this year’s annual budget shows the government means what it says. The annual government budget, released in February, looks to support the growth of startups and small to medium-sized enterprises with US$6 billion in the coming three years.
Deep technology startups are the big budget winners with US$216 million announced for businesses in urban solutions and sustainability, health and medical biosciences, advanced manufacturing and agri-food. The country’s turn towards deep tech coincides with global industry growth of more than 20% per year.
Assuming a S$1 million co-investment per startup, this new budget is expected to create up to 300 potential startups in a field with major potential in each of the United Nations' sustainable development goals (SDG).
This initiative simultaneously supports deep tech business while feeding (literally) into long-term projects like “30 By 30” – a food security policy that aims for Singapore to produce 30 percent of its food by 2030. Watch this space.
The continual battle for talent
Singapore is a victim of its own success, most notably so in the battles among tech firms for finding and keeping talent. The downside of bringing the world’s biggest companies and brightest startups to an island city-state of about 5.5 million people means an inevitably tight labor market. With competition and rental costs only increasing, the battle for human capital shows no signs of slowing.
The talent crunch makes it hard to attract and retain good employees. This is only exacerbated by tighter hiring laws introduced in 2018 that make it more difficult to secure internationals on work visas.
However, startups can find the right workers with the right attitude. Founders are best advised to find the best fit for their given company instead of the best talent and provide better opportunities and clear progression to keep workers motivated.
Startups must cater to their point of difference and focus on that when competing against the globe’s biggest companies. It has been the only way to harness local talent in the past – and it looks to be the only way forward, too.
Where to from here
There is certainly more cause for optimism than anything else in the coming decade for Southeast Asia’s most important startup ecosystem – and this is thanks above all to the government’s relentless dedication to the business. Singapore has thrived due to its pro-business climate, and the government’s attitude is unlikely to waver in the face of international uncertainty.
Singapore is aware of the macro and micro threats to its startup empire, and the country is attempting to navigate troubled waters with new industry and regional growth.
The tech capital hopes its minimal bureaucracy and strong business support will continue to see startups flock to this corner of the Malay Peninsula, come what may. Regardless of what the world does throw at Singapore, its ability to court local, regional and international business should hold it in good stead.