For years Singapore played the role of a quiet leader in the Association of Southeast Asian Nations (ASEAN), outwardly playing a key role in establishing the ASEAN Free Trade Area (AFTA) and ASEAN Regional Forum (ARF); and inwardly investing in becoming a smart city, digital transformation, and the development of the Smart Nation plan. According to a Rikvin analysis report, Singapore was ranked #1 in the top 20 smart cities of 2018. The advancement of key networking technology has also allowed Singapore to set a record by producing a total of 750 startup companies in 6 years, becoming a startup hub among ASEAN countries.
ASEAN represents a population of over 625 million, 70% of which are 40 years old or younger. The large youth and middle aged population understand and are willing to adopt digital modes of commercial consumption. Singapore has a population of 5.6 million, which makes up less than 1％ of the ASEAN population. Yet Singapore has attracted 27% of commercial startup businesses in the ASEAN region, 80% of which are startup companies worth over US$10 million, US$100 million, and US$1 billion.
Statistics from the World Band also show that “the average number of days for startup companies in Southeast Asia to successfully start their business is 24.5 days, and requires a corporate income tax system of nearly 20%.” Compared to other ASEAN countries, Singapore is renowned internationally for its low tax rate of 17%, high efficiency, and low rates of corruption. Its legal system allows contract disputes in Asia to be resolved in the shortest time possible; a startup company can enter the Singapore market in a matter of 1-2 days.
Data sources: Startup Decisions
In 2015 Southeast Asia received about US$1.1 billion in venture capital funds over a total of 355 transactions, of which 131 came from Singapore, with amounts totaling US$820 million. Furthermore, in 2016, the Chinese e-commerce company Alibaba invested US$1.38 billion in Singapore’s e-commerce platform Lazada. Lazada and Alibaba plan to establish Singapore as their first stop as they expand into new digital markets in Thailand, Malaysia, Indonesia, Vietnam, and the Philippines. In 2017, telecommunications company SEA Ltd. Singapore received funds of US$757 million to expand their investment in the online store Shoppee in Indonesia.
This data all shows that Singapore’s support of startup bases and advancement of key networking technology has made it a key hub in the ASEAN market. As Google & Temasek point out in their joint 2017 Q3 “e-Conomy SEA Spotlight”: “Southeast Asia will gain US$40-50 billion in investment in the next 10 years, and its internet economy will be worth US$200 billion by 2025. ”
“The best place to invest those funds in is Singapore” – Google & Temasek
Data sources: Google & Temasek
Singapore’s support as a startup base and advancements in key networking technologies have brought in new opportunities and challenges. With the development of ICT technology leading the industry, corporations are thinking about ways to integrate consumer demand to create cross-domain cooperation and concentrate resources to stabilize niche markets. Such a trend just so happens to explain Singapore’s reputation as the center of Southeast Asia’s rising commercial markets.
Data sources: Rikvin; World Bank; Startup Decisions; Google & Temasek