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Singapore’s thriving tech sector is the product of a range of converging factors.
The country has a prime location at the crossroads of Asia’s biggest markets, low taxes on businesses, a well-developed IT infrastructure, strong investment opportunities, and robust regulatory regime.
Much of the credit for these strengths goes to the Singapore government.
The government approach is to combine business-friendly policies with heavy investment in the tech sector.
It has a continuous commitment to keep R&D spending at one per cent of GDP and recently pledged to invest S$19 billion into scientific and technological research as part of its Research Innovation and Enterprise (RI)E 2020 plan.
Funding is invested according to a clear digital strategy that Government CIO Chan Cheow Hoe helps devise.
Chan oversees the country’s central IT systems, infrastructure, and the innovative public services on offer for citizens and businesses, while the Government Technology Agency (GovTech) helps deploy public sector IT solutions and develop new talent and capabilities.
A number of government agencies have also been established to support new businesses, including the Economic Development Board (EDB) and the Standards, Productivity and Innovation Board.
Recent innovations include the National Digital Identity (NDI) project, which will provide a single digital identity for citizens and businesses, and the Singapore Government Technology Stack, a self-service platform to help agencies build better and more consistent digital applications.
It has also created a Digital Government Blueprint to focus government efforts on maximising the value from its data and on building digital technologies that are interoperable and secure.
The investment in internet connectivity, IoT technology, city apps combined with the government’s strong open data policy makes Singapore the smartest city in the world, according to Juniper Research.
Singapore’s tech ecosystem
The country is best known for its fintech landscape and the MAS (Monetary Authority of Singapore) has set aside $225 million to develop the sector over the next five years, but the government has also pushed to diversity the start-up ecosystem.
Over the past six years, 10 per cent of local VC funding has gone into local digital media start-ups, while 5.2 per cent has been invested into big data and analytics start-ups.
The government is particularly keen to create an AI hub in the country by developing a dedicated data science consortium and will invest S$150 million in industry research.
“Firstly, it’s about diversity … other Asian cities like Tokyo are also trying to be AI hubs, but they are more homogenous,” Joel Ko, co-founder and CEO of Marvelstone Ventures, explained to South China Morning Post. Singapore’s advantage is that it is welcoming to all, and there is strong government support."
Startup Genome's Global Start-up Ecosystem Report 2018 listed Singapore as one of the world’s ecosystems to watch for AI, blockchain, advanced manufacturing and robotics, and health and life sciences, as well as in its renowned fintech sector.
Regional changes
The government’s approach is not without its issues. Its allocation funding allocation has been criticised for imprudence and corruption and Singapore has earned a reputation as an easy place to start a business but a difficult one to scale it.
In 2017, the National University of Singapore Entrepreneurship Centre (NEC) completed a two-year study on high-tech startups in the country that revealed precious few businesses were generating fast and profitable growth, while 56.8 per cent of start-ups were struggling to scale and generate employment.
However, their five-year survival rate of 53 per cent was better than companies in the UK and the US, which suggests that they receive the support to keep going but aren’t taking the risk to make big breakthroughs.
NUS Enterprise director Dr Wong Poh Kam told Tech in Asia during a roundtable interview that some of the money spent on research should be redirected into building products.
“There’s a no man’s land where the work can’t be funded as research anymore but there’s no product ready for market,” he said. “We spend so much money in research but perhaps we should be thinking about diverting some of it into translation.”
Singapore also faces threats from international competitors. The country surpassed its arch-rival Hong Kong as the region’s most attractive business base after the territory returned to Chinese control in 1997 and had to compete with cities in the mainland while losing its international appeal to talent, but growing Chinese investment into Hong Kong is creating a new challenge.
There’s still room for optimism about the Singapore’s digital future. The government remains committed to the tech sector as evidenced by the policies and investment that it has recently announced.
"Government leaders have been outspoken digital champions," said Diaan-Yi Lin, senior partner and managing partner, Singapore at McKinsey & Company. "Few governments have had their leaders align themselves with digital efforts as closely and visibly as Singapore’s."
(Reporting by Thomas Macaulay, CIO-Asia)
