Twitter, Tencent, Zoom, Snap, Rakuten Mobile. What do these top tech companies have in common? They have expanded or are in the process of expanding to Singapore in the middle of a global pandemic. Singapore is no stranger to investments from tech companies as the city-state houses 80 of the world’s top 100 tech companies. Let’s look at why and how tech companies continue to chart the next stage of their growth in Singapore.
Singapore is at the heart of the world’s growth engine
Most would be acquainted with the fact that Southeast Asia (SEA) is home to 650 million people, more than half of which are younger than 30.
However, what many may not know is the rapid rate at which SEA is digitalising. By the end of 2020, there will be 310 million digital consumers in SEA, a number that was initially forecasted to be attained only in 2025.The burgeoning middle class, rapid urbanisation and industrialisation, and the effects of COVID-19 are driving demand for solutions in areas such as e-commerce, robotics and Internet-of-things.
A 2019 Bain & Co survey revealed that 77 per cent of 40 global business leaders said that SEA’s middle-class consumers will help them significantly grow their business. Yet, only 15 per cent of them were fully prepared to capture this opportunity. Companies face a multitude of political systems, cultures, languages across the 11 countries in SEA, many of which are at different stages of economic development.
Therefore, it is imperative for companies to find a hub within SEA, that is close to market, easy to do business in, and contains a dense ecosystem of customers, suppliers and partners. Snap Inc, which created multimedia messaging app Snapchat, is opening a Singapore office as part of Snap’s strategy to strengthen its presence in Asia. Teams in its Singapore office will oversee Snap’s growth strategy and expand company operations in key global markets, build its community with local partnerships, and support Snap’s multinational brand advertising partners based in the region.
Even companies that are already headquartered in Asia have chosen to establish a presence in Singapore to lead their SEA operations. Chinese tech behemoth, Tencent Holdings, announced in September 2020 that it has selected Singapore as its beachhead to support its expansion in SEA. Tencent’s new office in Singapore will house roles across tech and business development functions such as cross-border commerce, cloud computing and e-sports.
To find out more about Singapore’s Tech Ecosystem and how it supports companies, download this guide here.
Singapore continues to strengthen its international network with new Digital Economy Agreements (DEAs)
Amidst its many benefits, digitalisation has facilitated trade and improved coordination of global value chains. According to the OECD, a 10 per cent increase in bilateral digital connectivity raises goods trade by nearly two per cent and services trade by more than three per cent. Growth in digital services and digital trade is already core to the global economy and will be even more important as the world seeks recovery from COVID-19. However, many challenges such as divergent regulatory standards, protectionist measures and localised requirements may hinder the expansion of digital businesses.
Singapore strives to remove these barriers for companies operating in Singapore. In June 2020, Singapore, Chile and New Zealand signed the first of its kind Digital Economy Partnership Agreement (DEPA). The DEPA is tailored for growing economic engagement and trade in the digital era. It will facilitate seamless end-to-end digital trade, enable trusted data flows across borders, and build trust in digital systems.
Two months later, the Singapore-Australia Digital Economy Agreement (SADEA) was signed. SADEA also includes seven Memoranda of Understanding to operationalise some modules in the DEA by identifying or mapping collaboration projects in the areas such as artificial intelligence, data innovation, digital identifies and personal information protection.
Singapore’s Minister for Trade and Industry Chan Chun Sing, New Zealand’s Minister for Trade and Export Growth David Parker and Chile’s Minister of Foreign Affairs Teodoro Ribera Neumann signed the Digital Economy Partnership Agreement electronically via videoconference on 12 June 2020. Photo Credit: MTI, MCI and IMDA
Tech companies deepen their innovation capabilities in Singapore
The Digital Riser Report 2020, published by the European Centre for Digital Competitiveness, looked at how governments have managed and navigated the transition by digital technologies between 2017 and 2019.
The study analysed how much progress countries had made relative to their global peers and found that France, Saudi Arabia and the Philippines are among the top “Digital Risers” worldwide. The study pronounced that incumbent digital champions like the United States, Sweden and Singapore face challenges from the aforementioned Digital Riser competitors. Among the United States, Sweden and Singapore, only Singapore improved its relative position in the last three years.
Singapore’s sustained global leadership in the field of digital is a product of deliberate and proactive initiatives by the tech industry and supported by the government.
For example, Google launched a new initiative in July 2020, called Skills Ignition SG, which will prepare participants for jobs related to digital marketing and cloud technology. The participants’ training programmes fees and monthly salary during the place-and-train programme are covered by the Singapore government.
By supporting the tech industry to create such programmes, Singapore helps to ensure that companies like Twitter, which is building its first Asia Pacific engineering centre in Singapore, has access to a ready pool of talent to support their innovation needs.
The Reception area at Twitter Singapore’s Office. (Image Credit: Twitter)
Even as more tech companies establish their hubs in Singapore, other industries in Singapore are also seeing a fresh wave of investments. BASF, DB Schenker, Kajima and Johnson Controls are some of the companies that have announced investments in Singapore in 2020. As companies across industries double down on digital transformation, tech companies in Singapore may just find their next big customer right next door.
