Asia is the home of over 4.7 billion people speaking about 2,300 languages, making it the world’s largest and diverse continent.
Over the past few years, Asia has experienced a tremendous technological boom, with GDP growth across the continent’s economies surpassing growth seen in western markets, and thus making it a key target for businesses seeking to expand their global presence.
So why should startups consider entering markets in Asia?
- Asia has become the epicenter of innovation and competitive business as its economy has and continues to experience substantial economic growth.
- The vast population in Asia creates a large consumer market for foreign startups.
- They are business-friendly ecosystems, whether that includes benefits through free trade agreements, tax incentives, special economic zones, and more.
- The tech startup scene has been on the rise in Asia with many unicorn tech startups emerging in the region. In fact, Asia remains the second-largest tech ecosystem and has been rapidly growing, with 6,249 investment deals and $77bn invested in Asia.
Asia presents a plethora of opportunities for startups, providing them with rapid growth, large consumer markets, and youthful customers. However, before developing the best market entry strategy, entrepreneurs need to find the right markets within Asia for their startups.
Should you consider Singapore?
Looking to expand to Southeast Asia? We recommend Singapore.
Singapore is a developed and sophisticated market, with an ever-growing startup scene. With its ideal location, economic growth, and pro-business policies, it’s no surprise that many entrepreneurs chose Singapore as their base to expand their business to Southeast Asia. Let’s take a deeper dive into some of the compelling reasons why you should expand your startup to Singapore.
What makes Singapore an attractive place to grow your business?
There are many reasons why businesses expand globally to Singapore, one of them being its impressive economy. The gross domestic product (GDP) in 2020 was 340 billion USD. The Ministry of Trade and Industry (MTI) announced that the economy grew by 7.6% in 2021 and is forecasted to grow by 3% to 5% in 2022.
Additionally, Singapore’s largest industry is currently the manufacturing sector, which contributes approximately 20-25% to the nation’s annual GDP. Close behind is the financial sector, which is also seeing significant growth, due to the country’s stable political environment and pro-business policies. Other emerging industries are medical technology, clean energy, and aerospace engineering.
Ease of doing business
Due to Singapore’s government's pro-business policies, the nation was ranked second worldwide for ease of doing business. Not only does it take one day to incorporate a business, but a company can be set up by anyone, including foreigners, and it can be done all online!
Additionally, Singapore is one of the most politically stable countries in Asia, with many anti-corruption laws put in place, to provide investors and entrepreneurs a strong sense of security and comfort. As a result, many companies are confident that they can conduct their business without the fear of bureaucratic disturbance from corrupt officials.
Lastly, Singapore is known for its rigorous IP protection, ranking top in Asia, and second globally according to the 2019 World Economic Forum’s Global Competitiveness Report. The government’s dedication to its robust IP regulatory framework gives many companies the confidence that their R&D investments and business assets will be protected.
Favorable tax laws
Singapore has one of the most tax-friendly systems in Asia, where there are no taxes on dividends or capital gains from a business. Startups will find that the corporate taxes are capped at a flat rate of 17% for both corporate and personal taxes. Furthermore, Singapore also has an Avoidance of Double Taxation Agreement in place with more than 50 nations, giving businesses relief from double taxation if they were to operate in those countries as well.
Plethora of funding opportunities
Entrepreneurs looking to expand to Singapore will be able to find a plethora of government support and investors available, making the country extremely attractive and competitive. Whether startups need financial aid, incubation support, mentorship opportunities, or angel investors, they can be reassured that they will be able to find the aid they need. Below are just a few examples of the support available to startups in Singapore:
This is the largest accelerator in Singapore that not only provides its startups with an average of $520,000 in funding but also supports these startups with intensive mentorship opportunities for the first 100 days of funding.
Joyful Frog Digital Incubator
- Spring Seeds (Startup Enterprise Development Scheme)
This program is funded partially by the government. In order to qualify for this grant, companies must have at least $40,000 in capital, alongside an investment of $400,000. The Singaporean government will match that investment up to $800,000 in return for shares if the conditions are met.
- Bansea (Business Angel Network Southeast Asia)
This organization assists startups in finding investment and networking opportunities. They do this by introducing promising start-ups to angel groups, where investments could go up to $1,000,000.
Blooming startup ecosystem
Singapore has cultivated a robust start-up culture, which is currently home to thousands of startups, a growing population of investors, and 12 unicorns that were either founded in the country or opened up offices within it. In fact, currently, there are 3,990 startups, 948 investors, and over 200 incubators & accelerators in Singapore. Entrepreneurs that choose to globally expand to Singapore will find a thriving ecosystem that promotes connectivity between mentors, partnerships, investors, innovators, and other stakeholders. This is not only fueled by the many accelerators/incubators found in the nation that provide funding and non-financial support, but also through major events that occur to encourage innovation. A prime example is Singapore’s Annual Week of Innovation and Technology (SWITCH). The latter promotes connectivity and brings together global startups, investors, and other stakeholders in hopes that it could have a positive impact on the companies’ growth.
Beyond developing a supporting innovation and entrepreneurship ecosystem, Singapore understood the importance of making trade across borders simple and hassle-free. Therefore, to promote a beneficial cross-border entrepreneurial environment, the country has signed 27 free trade agreements with several nations, including but not limited to the US, EU, ASEAN, and China.
Advanced tech infrastructure
Startups that expand globally to Singapore, get instant access to one of the most technologically advanced IT in the world. In fact, Singapore prides itself on being Asia’s technology capital, as it can enhance its existing infrastructure and build new capabilities to ensure that businesses can operate in the most effective environment. A prime example is Singapore’s investment of US$29.3M to support 5G research and innovation, with the goal to have 5G coverage extend to at least half of the nation by the end of 2022.
In order to furthermore empower the nation through technology, the Government Technology Agency has put forth the following initiatives to inspire its citizens, businesses, and government agencies through technology:
- Strategic National Projects
In order to transform Singapore into a smart nation, the government has identified 8 projects that would help them achieve their goal. These projects range from developing a platform for all e-payment transactions to developing the town Punggol into a “smart district”. More information about each project can be found here.
- The National Artificial Intelligence Strategy
This strategy focuses on harnessing AI to enrich the nation's productivity and create new areas of growth. In fact, Singapore has identified 5 AI National projects:
- Intelligent Freight Planning
The goal is to leverage AI to optimize the movement of freight to improve productivity for business and traffic efficiency.
- Seamless and Efficient Municipal Services
AI will be used to make municipal services more responsive, reliable, and timely for its citizens.
- Chronic Disease Prediction & Management
This is a movement toward utilizing AI to prevent and better manage chronic diseases.
- Personalized Education Through Adaptive Learning & Assessment
This initiative is to assist teachers to create a better and improved learning experience for every student. By harnessing AI, students will have a learning experience tailored to their strengths and weaknesses, there would be an automated grading system, and each student would receive an AI learning companion
- Border Clearance Operations
AI will be used to improve border security through 100% automated immigration clearance and AI-assisted enhanced border security.
More information on the national artificial intelligence strategy can be found here.
Highly skilled workforce
Singapore is home to some of the world’s leading universities such as the National University of Singapore and Nanyang Technological University, ranking globally for its high scores in tertiary education enrollment and workforce capabilities in STEM, making it relatively easy for startups to find highly skilled employees. In fact, the government has been gearing the workforce to ensure that there is talent available for the tech industry.
There are 2 ways the government is achieving this:
- Grooming the next generation with tech skills
The government is doing this by training the younger generation, with high schools offering Python programming courses to develop computational skills early on. Furthermore, more universities have established specialized centers and certifications to train students in emerging skills that they would need to pursue a career in the tech industry.
- Upskilling the existing workforce
The government put forth the TechSkills Accelerator initiative, where agencies and industry partners collaborate to hire employees to give them the opportunity to further develop and fine-tune their tech skills. Many small to mid-sized companies that may not be able to compete with larger corporations, compensation-wise, take advantage of these apprenticeship and immersion programs so that they can cultivate talent for their business.
Easy market access
Despite Singapore’s limited market and population, the country has become a regional headquarters base for various tech giants, such as Google, Facebook, Microsoft, LinkedIn, Stripe, and many more. But what makes Singapore the mainstay country for many of these giants?
With Singapore being centrally located in Southeast Asia, companies are able to gain easy access to some of the largest economies in the region as well as their large consumer markets, such as China, India, Australia, Malaysia, Japan, Korea, Indonesia and so much more. In addition to its’ strategic location, there are many other reasons why businesses regard Singapore as the ideal location to further grow their business, such as its developed infrastructure, strong trade and investment opportunities, pro-business environment, and dedication to support start-ups scale through cross-border innovation and commercialization opportunities (Farrant, 2019).
What Singapore can't offer
Small domestic market
Yes, there is a highly skilled talent pool available in Singapore, however, given the country’s population size of 5.94M and a working population of 3.72M in 2021, many startups may face barriers when it comes to acquiring and retaining talent. This has caused many companies to compete with one another for the limited candidates available or find talent abroad. However, when it comes to bringing international talent to Singapore, startups may face regulations and bureaucratic barriers in the immigration process.
Singapore has made some changes to its immigration framework that might make it more difficult for foreigners to work in the country. One of those changes is that they have increased the minimum qualifying salary for EP and S Pass Applications:
- Employment Pass
The minimum salary for the Employment Pass will be raised to S$5,000 from S$4,500, however, for older candidates in their mid-40s, the qualifying salary is much more. The new minimum qualifying salary for older candidates will be increased from S$8,400 to S$10,500.
In the financial sector, the minimum qualifying salary will increase from S$5,000 to S$5,500, as for the older candidates, it will increase from S$9,300 to S$11,500. These changes will apply from September 2022 and will expand to the renewal applications starting from September 2023.
- S Pass
In September, the minimum qualifying salary for new applicants will also be raised from S$2,500 to S$3,000 and to S$4,500 for older candidates. However, for the financial sector, the minimum wage will be slightly more, at S$3,500 for younger candidates, and S$5,500 for candidates in their mid-40s.
In addition to the increase in qualifying salary requirements, Singapore will also introduce a Complementarity Assessment Framework (COMPASS), a new points-based immigration system for EP applicants. In order to pass COMPASS, applicants will need to earn at least 40 points based on a holistic range of individual and company attributes. This framework will apply to new EP applications starting September 2023 and to renewal EP applications starting the following year.
For more information on visa restrictions, visit here.
Don't forget to share this blog post!