SINGAPORE (Reuters) – San Francisco-based investor Paul Bragiel said that he had to be asked three or four times before he accepted an invitation from Singapore to come check out the tech scene.
FILE PHOTO: Google’s communications manager Robin Moroney plays table soccer with a Google employee at a recreational area of their Singapore office, Singapore 8 July 2013. REUTERS/Edgar Su/Photo File
He made the 8000-mile journey, but said that when – in 2010 – the city-state’s prospects to become a leading Asia tech hub “bleak, to say the least.”
But he saw promise, and like many other investors, and tech companies since then was attracted by the generous terms of the government.
“They gave us a very aggressive deal. Very few countries have aligned,” said Bragiel, who had been considered, Hong Kong and Tokyo for an Asian expansion for the co-creation of venture capital firm Golden Gate Ventures in Singapore in 2011. He refused to say what the terms of his deal were.
Armed with lucrative grants and incentives, Singapore is boosting its efforts to lure tech companies and investors, including global players like Facebook, Alphabet, Google and Dyson, businesses and officials say.
But now the focus is shifting in the direction of attracting talent, and even the government says that the work is not done.
Chng Kai Fong, managing director of Singapore Economic Development Board (EDB), the government agency tasked with negotiating some of these deals, said he is now gunning for “the Jedi Masters” he hopes to finally lift Singapore into a global tech hub.
The secretive nature of the deals means that it is unclear how much the country spends to attract such companies and whether it is worth.
Manufacturing, finance and insurance made up more than a third of Singapore $356 billion economy in 2018. The information and communications sector, in which tech companies would largely fall, was about 4%.
But it grows faster than any other sector, data on Tuesday showed. Info-comm extended on an annual basis to 6.6% in the first quarter of this year, while the next-fastest of the nine sectors, Singapore tracks was finance and insurance at 3.2%.
Challenges remain: some tech companies have expressed their concern about a recent fake news right in Singapore, which critics say could hinder the freedom of expression. Google said that it was afraid that the law would stifle innovation and the growth of the digital information ecosystem.
And Singapore has only one local “unicorn” – a startup value of more than $1 billion in the ride-hailing firm Grasp, according to research firm CBInsights.
Neighbouring Indonesia has four: taxi app, Go-S, travel site Traveloka, and placing on the market Bukalapak and Tokopedia. Hong Kong has two, online travel agency, Clone and logistics company Lalamove.
Details of the offers negotiated with the EDB are hard to come by because the government makes companies sign nondisclosure agreements, companies, advisors and officials said.
Long-term tax holidays, hefty subsidies for research and development, co-financing for the investments and the land-and rental deals are among the incentives from different agencies, they will be added.
Such deals are by some of the world’s largest tech companies. Google, for example, now has more than 1,000 employees in the city-state. It started its Singapore operations in 2007 with 24 people.
Facebook last year opened an office in Singapore that can accommodate up to 3,000 people, from 10 employees in 2010, and unveiled a $1 billion to invest in the first Asian data center.
With Britain’s departure from the European Union (threatened), Dyson has moved its headquarters to Singapore and announced plans to build an electric car.
“Singapore is very successful; it has a great reputation for ease of doing business and the links with the rest of the region,” said the british commissioner for trade for the Asia-Pacific, Natalie Black. “Many UK tech companies are already here and many more to explore the opportunities.”
The EDB has six offices in the United States, six in Europe, and locations in China, India, Japan, South Korea and Indonesia. It says 80 of the world’s top 100 tech firms have offices in Singapore.
Although multinational companies are attracted by the low corporate taxes, political stability, a reliable legal system and strong infrastructure, software developers and data scientists often prefer the buzz of Silicon Valley and London.
“We have very clear when we are behind the Googles and Facebooks,” Chng said. “We want engineering. We want a place where you see the creation of new products and services for Asia.”
Chng said that he hopes attracting top talent will help feed domestic startups, which so far has been difficult.
“I need that generation of Jedi Masters to sort of come to train future young budding jedi’s,” said Chng, a former director of communications in the Prime Minister ‘ s Office.
He said Singapore is also missing billion-dollar-exits, which is usually as a tech start-up is acquired or disclosure of lists on a stock exchange. That would lead to a vicious circle of private investment, bringing the government a step back.
An EDB event in San Francisco last month to promote Singapore as a tech hub attracted so much interest that 400 people were turned away.
“There is a war for senior tech talent,” said Daljit Sall, Singapore-based managing director of recruitment firm Randstad. “We see a big demand for data scientists, full stack developers, cyber security experts and solution architects.”
In 2012, the co-founders of online marketplace Carousell has won the Singapore startup competition. The price was three months of free office space in a former factory.
“We landed there on day one and realized everyone got their office space for free,” said Quek Siu Rui, Carousell of the chief executive. “The government ran an experiment to push startups, ex-entrepreneurs, venture capitalists, incubators, all in one place.”
Now a value of more than $550 million, Carousell has Japanese e-commerce company Rakuten, the fund among the investors and has expanded abroad.
Lawyers said Singapore rules are attractive for tech companies.
“The approach in Singapore is very much to encourage data-intensive businesses to locate because they have the advantage of, among other things, a more relaxed standard of compliance in terms of data,” says Mark Parsons, a hong Kong-based Asia tech, media and telecom partner at law firm Hogan Lovells.
In a time of looming tension between the United States and China, Singapore is also seen as a neutral ground, while still enjoying free trade with both. Last year added a free trade agreement with the European Union.
Geographically, Singapore is located in the centre of the fast-growing, and internet-obsessed South-east Asian region.
Internet users in Thailand, Indonesia, Philippines and Malaysia spend four hours or more every day on mobile internet according to a 2018 study by the social media platform Hootsuite.
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Political ructions are also likely to attract rival in Hong Kong further in China’s influence, who is a banker in discussions with tech companies, said Singapore gives an advantage.
For Bragiel, reservations he had about Singapore almost a decade ago are long forgotten.
“Silicon Valley attracts the world; Singapore is catching up,” he said.
Reporting by Aradhana Aravindan, John Geddie and Anshuman Daga; Additional reporting by Joe Brock; Editing by Gerry Doyle