It’s a top financial center. The most competitive economy with the lowest unemployment rate. But here’s the problem: People believe the Singapore hype too much. Here’s why.
Here’s a dirty secret: Singapore is really good at getting people to drink its kool-aid. As a tourist destination, it’s great at trumpeting itself to the press. The local media has made an art out of proclaiming that Singapore is number one, or near the top, in everything.
It’s a top financial center. The most competitive economy with the lowest unemployment rate. The list goes on. The Straits Times even proclaimed Singapore the number one place in Southeast Asia for startups. Nevermind that Southeast Asia is a low bar.
But here’s the problem: People believe the Singapore hype too much. The more times you repeat a lie, the higher the tendency for you to believe it. Fortunately, that bubble has burst in recent weeks.
Two startups announced massive funding rounds. Neither are from Singapore. GrabTaxi, which closed a round reportedly worth $65 million, hails from Malaysia. Indonesian e-commerce site Tokopedia topped that with a $100 million announcement.
One prominent startup has downsized in Singapore. Thailand’s aCommerce pulled out its logistics operations from the country, citing online retailer disinterest in serving the Singapore market (case in point: Rocket Internet’s Lazada entered Singapore last in Southeast Asia).
These developments have the following effects:
- It puts Malaysia and Indonesia back on top of public consciousness as a startup destination, never mind that most of the largest public-listed internet companies in the region already come from Malaysia.
- Investors will start to take more notice of the region as a whole, and Singapore’s neighbors as a startup destination, rather than Singapore itself. Think about it: Of all the bigger e-commerce companies located in Singapore, a big name like Sequoia has chosen instead to head directly to Indonesia to fund Tokopedia first.
It’s the second effect that could have a lasting impact on Singapore’s reputation as a startup hub. It exposes the country’s weaknesses:
- It’s a tiny market that’s at odds with the region. Asia’s growth story is occurring in places like Indonesia and Vietnam. Many Singapore-based entrepreneurs are not adaptable enough to thrive in these countries as they are culturally more in-tune with the West and other developed markets. Yes, Silicon Valley startups think global from day one, but they have the United States as a primary market and a foothold with which to shoot for world domination.
- Singapore isn’t like Israel. Its people are too comfortable. It doesn’t have neighboring countries threatening to wipe them off the face of the planet. It lacks deep links with countries like the United States.
- Doing business in Singapore is ridiculously expensive. Rents are high. Cost of labor is through the roof due to the higher standards of living. It’s very common even for Singapore companies to hire talent from elsewhere in the region if they can.
Given these factors, it’s very easy to discount Singapore as an overhyped startup hub. If we’re talking lifestyle, there’s beautiful Bali, which offers tranquility together with coworking spaces to get work done. If we’re talking blue ocean, it might make more sense to jump straight into a voluminous market like Indonesia or Vietnam and dominate there first rather than start from Singapore.
Don’t count Singapore out
Think what you will about Singapore, but you can’t blame its government for hyping up the country. It’s a necessary survival strategy, woven into the circumstances which birthed forth the nation. And it remains important today, given the odd environment it is situated in.
Depending on your viewpoint, you’ll believe one of two things: Either Singapore’s meritocratic ideology was at odds with Malaysia’s racial politics, resulting in an ouster that caused Lee Kuan Yew to famously weep on TV, or Singapore overplayed its hand by meddling too much in Malaysian politics and got shown to the door.
To see the famous moment, watch here:
The consequences, however, were undisputed. Singapore had to fend for itself without a hinterland. Its entire narrative, politics, and economic policy, up to today, revolve around that very fact. It’s forever a startup headed by a nimble, near opposition-less government that can react swiftly to changes.
As such, Singapore is very sensitive to how it is perceived internationally, especially when it affects the economy. It has to. With no domestic market to speak of, it has to rely on foreign investments to bring in the bacon.
Singapore’s governance, infrastructure, intellectual capital, and reputation are its competitive advantages. Lose them and market forces will rapidly swing the other way. In other words, if the government had not gotten the startup ball rolling, Singapore may have never taken the lead.
This is reflected in the startup scene here: It has made a huge publicity event out of its expanded Block 71 program, which houses the local startup ecosystem. It’s pumping money into startups through the TIS, ESVF, and a new medtech investment scheme.
The government demonstrates a lot of self-awareness with these programs. It’s the only government in Southeast Asia capable of enacting, implementing, and iterating a policy at such a scale and speed, and it’s taking full advantage of that ability. It’s also aware that its research and educational institutions are the best in the region, hence its tweaking of TIS to cater to intellectual property-heavy startups.
Critics who point out that Singapore’s government is meddling too much in the startup scene are simply ignorant about the country’s history.
Not just an oasis, but an aircraft carrier
There’s a hidden element of Singapore’s startup strategy that hasn’t been articulated much. On the surface, Singapore is marketing itself as an oasis. Its relatively corruption-free governance attracts investors into the region, creating the wide availability of venture capital funding you now see.
But what Singapore is, or is trying to be, is an aircraft carrier. It’s projecting influence beyond its tiny shores. It’s trying to achieve what Israel now has, but the reverse way. Instead of collecting a global diaspora, it’s letting people go out hoping they’ll maintain ties here, and bringing people in hoping they’ll develop roots in the country. The influx of talent adds to the local knowledge pool, creating a virtuous cycle of wealth and knowhow.
ACE, a Singapore entrepreneurial organization, has set up a Beijing chapter and is looking to establish more in other cities to help Singapore companies expand abroad. Meanwhile, government-linked VC Infocomm Investments has been busy finding ways to bring foreign startups to set up shop in Singapore.
This is a full-on, multi-agency, customer acquisition effort to turn Singapore into a brand name for innovative companies and entrepreneurs, both local and foreign. Singapore is not just a destination or a country. It is a signpost for the region and a platform for global expansion.
Singaporean startups themselves
There has been some nice stories that have come out of Singapore. We have brave Singaporeans who have succeeded abroad: names like Sim Wong Hoo (Creative), Min-Liang Tan (Razer), and Peng T. Ong (Interwoven) comes to mind.
We have the hot internet companies that have or are making a name for themselves, many of which are run by foreigners or naturalized citizens: Garena, Reebonz, RedMart, PropertyGuru, Viki, and Luxola are some examples belonging in this category.
But for Singapore to really reach its aims, what it needs more of are startups that use Singapore as a base but are global in nature. It needs companies wise enough to get the government or government-linked enterprises as customers, then scale from there. In other words, less SGCarMarts and more Razers, less HungryGoWheres and more Hope Techniks.
So before it gets there, expect to see Singapore market the heck out of itself. It’s fake-it-till-you-make it, state edition.
Because sometimes, the more you repeat a lie, the more it becomes true.
Editing by Paul Bischoff
This post was originally published on Tech in Asia.