Scaling up from Singapore

21 Jun 2017

Scaling up from Singapore

Singapore’s reputation as a launchpad for global innovation is evidenced by the leading global companies and universities based in the country. An estimated 37,400 international companies have their headquarters in the city state, including 7,000 multinational corporations (MNCs), while more than half run their Asia Pacific operations out of Singapore.

Strengthen enterprise capabilities through partnerships

New York-listed customer service software firm Zendesk expanded its Singapore operation in February this year, followed by the set up of its Asia Pacific commercial headquarters and Chat Development Centre in the country in 2015.

Zendesk’s establishment in Singapore was driven by its US$30 million acquisition of local chat start-up Zopim Technologies in 2014.

Attracted by the nation’s “highly skilled workforce that understands tech and embraces innovation”, Zendesk plans to further expand its Chat research and development (R&D) team by utilising talent available in local research institutes and universities.

Another tech company seeking to expand from its Singapore base is Israeli medtech incubator, The Trendlines Group. It also plans to invest in Singapore start-ups to speed up its development, having previously benefitted from an incubator grant from Spring Singapore.

Strengthening the capabilities of enterprises to innovate and scale up was a major theme of the recent Committee on the Future Economy (CFE) report, which will help shape the direction of Singapore’s economic development for the next decade.

Singapore’s Minister for Trade and Industry S Iswaran said that developing such capabilities for local firms is key to Singapore’s growth.

"These enterprises should broadly have a compound annual growth rate above the industry average, demonstrate a clear competitive advantage or value proposition, and have strong leadership with a desire to pursue growth and a clear growth strategy," he said.

Like Zendesk and Trendlines, Singapore aims to encourage partnerships between MNCs and smaller local companies.

Another example of such collaborations is the tie-up between US tech giant Intel and Singapore-based healthcare start-up ConnectedLife, to develop a smart home sensor system that remotely monitors elderly people in their homes.

ConnectedLife CEO David Ng said the partnership with Intel allows his company to tap into Intel’s technical expertise and benefit from its global networks to aid in its expansion.

“Through co-innovation, large companies like Intel can provide test beds for ConnectedLife's technologies and become our potential reference customers, allowing SMEs like ourselves to refine our products and build up a business track record for growth and expansion,” Ng said.

Leverage favourable policies and prime location

While tapping into the expertise of smaller, innovative start-ups, MNCs based in Singapore also point to its pro-business regulations and geographic position as a gateway to expand into ASEAN markets as well as China and India.

“Singapore is a technologically advanced regional hub, boasts an international pool of talent, and has a pro-business environment including a Smart Nation framework to support MNCs that are looking to invest in Asia,” said Maya Hari, managing director of India and Southeast Asia for US social media company Twitter.

For MNCs seeking to scale up their operations across Asia, Hari cited Singapore’s “unique regulations, culture and context”.

“There is great opportunity to lean on local talent and partners who can offer market insights on how to create relevance for their brands in the region. For example, in terms of localisation, Twitter is available in 40 languages, including Bahasa and Hindi,” Hari added.

Brand strategist Martin Roll, a 17-year resident of Singapore, said the country makes an excellent base for international companies set on regional expansion.

“Singapore is perfect for scaling up, due to the access to talent, government schemes and other support in reaching new markets overseas. You can also piggyback on the learnings of the thousands of regional headquarters here, taking advantage of these clusters of like-minded people,” Roll said.

Working out of Singapore can also take away the risks of operating in Asia’s emerging markets, which may lack the same level of transparency or IP protection, he noted.

Business support from the government

In the 2017 Singapore budget, the government set aside S$600 million for a new International Partnership Fund. The Fund will co-invest with Singapore-based businesses in scale-up and internationalisation opportunities, with a focus on Asian markets.

Other business incentives include the Research Incentive Scheme for Companies and the Training Grant for Company, as well as a range of tax incentives. For MNCs, Singapore’s low corporate and personal tax rates (up to 22 percent) and foreign tax credit pooling are also conducive to investment.

MNCs can also benefit from the city state’s S$19 billion investment in R&D over five years, as detailed in the city-state’s Research Innovation Enterprise 2020 Plan. The five-year plan is aimed at helping Singapore-based companies turn research into solutions to tackle real-life challenges and drive technology adoption within organisations.

For growth-minded MNCs, Singapore offers the perfect base for scaling up region-wide while tapping into the local knowledge and know-how of the tech-savvy city state.

Describing Singapore’s attractiveness to MNCs, IBM’s Glenn Dittrich, vice president Watson Talent, said: “Singapore has built the safety, economic stability, and ecosystem to keep multinationals coming in. MNCs can benefit from that ecosystem as it is easy to bring in employees who are the best thinkers and can help you expand your footprint.”