Singapore consistently ranks as one of the world’s most innovative nations. The World Bank calls Singapore the easiest place in the world to do business. Over its 50-year history as an independent city-state, Singapore has earned a reputation as an innovation hub at the cutting-edge of modern business.
Along with digital union EDIT we seek to answer the question what are the conditions that determine leadership of some countries in developing innovation - both in technology and in business.
What is the secret of the Lion City?
According to Damian Chan, international director for the Americas at the Singapore Economic Development Board there’s not one “secret ingredient” to success. Instead, Singapore’s track record of excellence is the result of a guiding philosophy that a welcoming approach to business should be the basis for everything Singapore does.
Today Singapore is the most developed economic country in Southeast Asia. When the development board was formed 50 years ago, it was mainly to create new jobs, attract multinational companies and stimulate the creation of export-oriented industries to help Singapore — a tiny nation-state with limited natural resources — get off its feet after becoming an independent nation. Over time, says Chan, as Singapore’s prosperity has increased, the mission of the development board has evolved to include more of a focus on innovation. That’s led to today’s tripartite “Home” strategy for Singapore: “Home for Business. Home for Innovation. Home for Talent.”
What are the prerequisites?
Natural handicaps=Push for innovation
Innovation hubs are alike. The common traits of places conducive to innovation can be found both in institutional framework, geographic location and their resource provision. Like Silicon Valley, Singapore has strong research institutions and limited enforcement of noncompete clauses, a condition that academics now suggest can be a major driver of innovation. Like Israel, Singapore is small, with limited natural resources, which means economic growth requires innovative macroeconomic approaches. Both Singapore and Israel have liberal immigration policies for skilled workers.
Singapore has developed a close linkage between education and economic development, studying where they want the economy to grow and then educating a rising workforce to be prepared accordingly. The Manpower Ministry works with the various economic agencies responsible for promoting specific industry groups to identify critical needs and project demands. The future skills requirements are then fed back both into pre-employment training and continuing education and training.
In other countries, labor and education markets make these adjustments slowly over time
In many places, workforce training is an afterthought, not a forward-looking plan. But the Singapore government believes that its approach helps students to move faster into growing sectors, reduces over supply in areas of declining demand more quickly, and targets public funds more efficiently for post-secondary education. The Ministry of Education and the institutions of higher and post-secondary education then use these skill projections to inform their own education planning, especially for universities, polytechnics and technical institutes. The outcome is that Singapore is ready to meet the demands of the fastest growing, most profitable industries.
But Singapore’s “Home for Business” strategy expands to every industry, not just the ones you’d expect from a modern innovation powerhouse. In other words, Singapore places as much emphasis on consumer goods, manufacturing, chemicals and energy as it does on IT, digital media or electronics. And to make it easy for multinationals to move operations to Singapore, the Singapore development board has become a “one-stop shop” that works to create the right conditions to attract talent and investment.
Hospitable environment is the key
Singapore is regularly ranked as one of the easiest countries in the world in which to do business. There are rules, for sure, but they are clearly laid out and easy to follow. New companies can be set up in hours, if not minutes. Intellectual property is respected, and the rule of law is transparent. Immigration is no less a hot topic in Singapore than other countries, but Singapore makes it easy to get highly educated workers into the country, and has a specific employment pass targeting would-be entrepreneurs.
There is a misbegotten notion that entrepreneurs take risks because they don’t have much to lose.
In fact, research shows that the number one factor predicting whether someone will become an entrepreneur is whether the person has received an inheritance or a gift. Singapore’s phenomenal development over the past 50 years means many of its citizens are sufficiently well off to take the entrepreneurial plunge without truly risking everything.
But doing something as uncertain as starting a business when you could go to work for a big bank or, even better, the government, was countercultural for the best and brightest a decade ago. So over the past few years political leaders have relentlessly talked up the importance of entrepreneurialism; state-sponsored universities have aggressively pushed innovation; and the state-owned television company MediaCorp has run television programs celebrating entrepreneurialism.
All these ingredients create a reinforcing cycle, as entrepreneurs who enjoy success find they want to do it again.
For example, Hian Goh, who in 2005 cofounded the Asian Food Channel, in 2011 invested in Chope, a regional restaurant booking portal that our investment arm backed. And after Scripps Networks Interactive acquired the Asian Food Channel in 2013, Goh launched his own venture capital firm to invest in regional start-ups.
Global investors are increasingly taking notice. Many of them view Singapore as a launching pad to regional emerging markets like Indonesia, the Philippines, and Vietnam. More broadly, of the 156 software companies founded since 2003 that are now worth more than $1 billion, close to a third are based in Asia.
There is beginning to be a critical mass of companies creating a self-sustaining innovation hub in Singapore. No local start-up has broken through as a major international player, but I’m quite convinced that will happen in the next five years.
In many ways, the history of modern Singapore – which celebrates its 51th anniversary this year as an independent nation-state – can be seen as a constantly evolving innovation trajectory, as Singapore constantly finds new ways to insert itself into the world’s economic growth cycles. In the mid-1960s and 1970s, it became a hub of low-cost manufacturing. Later, it moved up the value chain into electronics and semiconductors once other low-cost manufacturing centers in Asia began to emerge. And now, Singapore is moving into higher-margin, knowledge-intensive industries.
It remains to be seen if the state will be able to meet the future challenges of economic growth and competition in the region. But one thing is certain - the prerequisites next 50 years be as successful as the last 50, are available.