We may no longer refer to the economies of Asia as ‘tigers’, but Singapore (literally ‘Lion City’) is roaring like never before. For Australian companies seduced by the idea of northward expansion, this outward-looking multicultural city-state has emerged as the region’s premier commercial hub and an obvious launch pad to Asia and beyond. By Paul D. Ryan
From the moment you step outside Changi airport one thing is obvious: you’re near the equator. The air temperature is warm and constant, an apt metaphor for Singaporean culture. Picture an endless summer of ideas and commercial opportunity. A place where entrepreneurs and investors congregate in what is effectively one big international business park.
“Foreigners are made to feel extremely welcome,” says Rob Turner, Managing Director of Distribution Alliance, an Australian company that outsources Singapore printing and mail services to international companies. “Australians are particularly well regarded, and our innovative spirit is widely acknowledged here”.
Many of Singapore’s leaders have been educated in Australia and so many more have profound respect for our creative energy and, as one local businessman put it, personalities “as big as the outback”.
NO TIE POLICY
On arrival, it became apparent rather quickly that I was overdressed in a jacket and tie. Members of Singapore’s government and business communities invariably move about the day in shirtsleeves and open collars, a visual guide to the informality of conducting business here. Ideas and networks are clearly more important than stuffy sartorial protocol.
“Singapore is a very entrepreneurial market,” says Riaz Mehta, General Manager of KAZ Computer Services, a subsidiary of Telstra and the largest Australian-owned IT company. “Virtually everyone I meet is preoccupied with brainstorming for their next business venture. I get calls out of the blue from people introducing themselves and their companies and suggesting that we work together.”
KAZ established an office in Singapore in 1999 to compete with outsourcing rivals. Today the company operates all of its major end-to-end IT services out of Singapore. Mehta relocated from Australia to Singapore three years ago and was surprised by how easy it was to settle down to business.
“I’ve found that there are significantly more opportunities in Singapore than in other parts of the region” he says. “For us, Singapore is a launch pad; a regional hub in South East Asia. It provides a very sound infrastructure for us to service major global multinationals. We found that most international companies set up their regional headquarters here.We are servicing the whole region and want to be assured that the infrastructure is stable and that there won’t be any disruptions due to political strife. In Singapore, we transact billions of dollars for our customers. That process needs to run efficiently and that is only possible because we are in a stable environment.”
PLUG AND PLAY NATION
Singapore embodies the modern world. It is comprised of a multitude of ethnic cultures, both Asian and western, united by a pro-business culture that nourishes the fertile entrepreneurial tendencies of its optimistic residents.
Commerce has been an elemental force shaping Singapore’s attitudes and infrastructure over the last 50 years. This has produced many practical advantages for international businesses.
Firstly, Singapore’s location in central South East Asia makes it a natural commercial hub, with immediate access to 500 million people and an Asian market of 2.8 billion consumers within seven hour’s flight.
This natural advantage is complimented by Singapore’s infrastructure, which is unrivalled in Asia. It has the busiest container port in the world, one of the best connected airports in Asia, it is the most wired nation in Asia and the third most wired nation in the world.
In fact, Singapore is often referred to as a ‘plug and play’ nation. It encourages investors and businesses of all sizes to plug their ideas and expertise into one of the most pro-enterprise and open economies in the world.
“Some people refer to Singapore as ‘Asia for beginners’. But I don’t see that,” says Cheryl Stanilewicz, Austrade’s Singapore-based Trade Commissioner and Counsellor. “Difficult doesn’t usually translate into sophisticated or lucrative. Doing business and living in Singapore is easy for Australians. That’s not something to scoff at. I call it smart.”
FROM BIG THINGS…GROW BIGGER THINGS!
To gauge a city’s economic vitality you need only count the number of cranes and construction sites shaping its skyline. If this is a reliable guide — and a glance around the world’s most vital cities seems to confirm that it is — Singapore is going places.
“Island cities like Singapore and Manhattan tend to share three characteristics: they are outward-looking, extremely focused and, by necessity, meticulous planners,” says Michael Gale, Managing Director of Gramercy Venture Advisors, an international capital raising service with offices in Singapore.
‘Connectivity’ is the buzz word in Singapore’s corridors of power. I lost count of the number of times I heard it — to characterise so many different facets of the economy and culture.
“Singapore views itself a bit like a transistor circuit to the region,” says Gale. “Circuits are powerful, but only while their ‘connectivity’ is preserved. If a circuit breaks at any one point, the whole thing ceases to work. To maintain momentum in the global economy it is not enough for everyone to be walking to the same tune; they have to be walking in the same direction. This is intuitively understood and actively cultivated throughout Singapore’s public sector.”
The Economic Development Board, the Singapore Tourism Board and many in the private sector refer to this joint promotional effort as, simply, “Singapore Inc.”
If Singapore is run like a business, then International Enterprise (IE) Singapore must operate as its business development arm.
“IE Singapore is the main government agency responsible for promoting international partnering and export opportunities for Singapore-based companies,” says Winston Ho, IE Singapore’s Regional Director for North Asia and Pacific, and Deputy Regional Director for South East Asia.
“We do everything we can to make international expansion for Singapore-based companies as easy as possible,” says Ho. “That includes assisting Australian companies that base their regional operations from here.”
Ho believes that most Singapore-based companies are naturally outward-looking, given that opportunities for business expansion are restricted domestically due to Singapore’s small population size. He says IE Singapore’s role is more about guiding them through the multilayered infrastructure to maximise their exposure to international opportunities.
“This involves working hand-in-hand with companies to identify business opportunities in their markets of interest. We provide them with the necessary support on the ground through our extensive network of international offices. We also work with multipliers such as venture capitalists, banks and consultants to ensure that companies have the necessary capital and competencies to support their business expansion,” says Ho.
Singapore is the region’s undisputed financial centre, accounting for the world’s fourth largest volume in foreign exchange trading. It also holds an extensive portfolio of Free Trade Agreements, with countries and organisations including Australia, ASEAN, the European Free Trade Association, Japan, Jordan, New Zealand, & the US.
Singapore’s pro-enterprise ethos and supporting infrastructure has seen it consistently voted as one of the world’s best business locations. It was rated the world’s most globalised nation in 2005 by AT Kearney & US-based Foreign Policy magazine. It was also rated the second most competitive economy in the world in 2004 by Swiss business school, IMD.
Over three quarters of Singapore’s population is of Chinese origin, and there are large communities of Malays, Indians, Indonesians and just about every other Asian ethnicity.
The island was a British colony from 1819 until after the Second World War, so it is no surprise that English is spoken widely here. But you get the feeling that in the absence of a British colonial legacy, modern commercial considerations would still have seen English emerge as the official language in Singapore.
“The use of English certainly makes life significantly easier for business people unfamiliar with the many nuances of Asian culture,” says Keok Choon Seah, Head of Marketing Communications, Corporate Services Division of Singapore’s Economic Development Board (EDB). “But one of Singapore’s strongest selling points to the international business community is our business friendly regulatory environment, extensive trade links and excellent physical infrastructure. Singapore is recognised as a global business city and champion of free trade.”
According to the EDB, over 99 percent of goods imported into Singapore are duty free and its taxation system is designed to make international commerce as attractive as possible. The corporate tax rate is 20 percent (compared with 30 percent in Australia). Singapore also has full double tax treaties with more than 40 countries and investment guarantee agreements with 31 countries and regional groupings.
As an incentive it clearly works. Singapore is home to over 7,000 multi-national corporations and another 10,000 foreign enterprises. There are 111 commercial banks, five of which are locally incorporated and owned by three local banking groups. In addition, the most recent figures (mid-2003) indicate that nearly 150 fund management companies manage some S$16 billion in venture capital funds.
Samantha McArthur, a Melbourne-raised Senior Manager of Servcorp, believes that, “One of the keys to Singapore’s prosperity has been its ability to adapt to changing technology trends.”
Servcorp is an Australian-owned business that offers serviced offices and business solutions to growing companies in 10 countries, including Australia, Singapore, Japan, China, Malaysia and Dubai. It is a business that relies on robust domestic technology infrastructure.
“Singapore is a truly global city,” says McArthur. “Not just in its cosmopolitan composition, but in its embrace of technology. It’s so important for expanding companies to appear professional. Having a serviced office in a global hub like Singapore can allow a company to compete based on its potential rather than its size. Our clients generally feel a need to be here. Not only are there many advantages to having a presence in Singapore, it’s a disadvantage not to be here. So many of the world’s industry leaders run their regional operations out of Singapore that the level of networking and partnership opportunities is unrivalled.”
To regulate Singapore’s rapidly growing IT and telecommunications sector, the Infocomm Development Agency of Singapore (IDA) was formed in 1999 — through the merger of the National Computer Board and the Telecommunications Authority of Singapore.
“Singapore has been historically successful as a port, distributing goods from all over the world to Asia,” says Hwei Ling Ho, IDA’s Assistant Director, Corporate & Marketing Communication. “We want to serve the same role in the digital realm; but in place of the sea, ICT infrastructure is our connectivity. Using that infrastructure we hope to attract digital content producers, whose content (movies, games, animation) we can either process and manage or simply distribute to the region.”
For a technologically-advanced country like Australia, Singapore’s enthusiastic embrace of ICT makes it the logical first port of call for tech companies expanding into Asia.
Darron Passlow moved to Singapore in 2004 and set up the Sydney Innovation Technology Centre to assist Australian IT companies expanding into Singapore and the region.
“My goals are exactly aligned with those of the Singapore Tourism Board, particularly under their MICE (Meetings, Incentives, Conferencing and Exhibitions) program,” says Passlow. “We both aim to attract Australian businesses to Singapore and encourage them to stay for a longer period of time. I work with my clients to set up a Singapore base from which to operate in the Asia-Pacific region.”
Passlow mainly helps Australian companies break into the four main IT markets in ASEAN: Singapore, Malaysia, Thailand and Indonesia. He has contacts in Hong Kong, China, India and elsewhere, but believes the four ASEAN countries represent the regional sweet spot for Australian IT exporters.
“It’s too easy to become obsessed with China. I’m doing Singapore for the ASEAN markets, and maybe Hong Kong. If you have a product tailored specifically for the Chinese market, then I believe you are better off doing your due diligence and setting up in China directly. The same goes for India. You can launch successfully from Singapore into China and India. But as a hub, Singapore gives you options throughout the whole region. That’s the smart way to expand.”
SOMETHING IN THE AIR
Entrepreneurialism is infectious, and when commercially creative people from all over the globe congregate in one place, exciting things happen. The sum of Singapore is very much greater than its constituent parts. As technology and attitudes evolve, the tyranny of Australia’s geographic remoteness is waning. Some of the world’s most dynamic economies are located in our neighbourhood and plugging into them has to be done well. With this vibrant and international commercial hub literally on our doorstep, Australian companies are fast learning to roar with the lions of Singapore and be heard throughout Asia.