San Francisco-based investor Paul Bragiel said he needed to be asked three or four times before he accepted an invitation from Singapore to check out its tech scene.
He made the trip in 2010, but said that back then, the city-state’s prospects of becoming a leading Asia tech hub were “bleak, to say the least”. He did see some promise, though, and like many other investors and tech companies since then, he was attracted by generous terms from government agencies.
“They gave us a very aggressive deal. Very few countries would have matched it,” added Mr Bragiel, who considered Hong Kong and Tokyo for an Asian expansion before co-founding venture capital firm Golden Gate Ventures in Singapore in 2011. He declined to say what the terms of his deal were.
Armed with lucrative grants and incentives, Singapore has been ramping up its efforts to lure tech firms and investors, including global players like Facebook, Alphabet’s Google and Dyson, companies and government officials say.
But now the focus is shifting toward attracting talent, and the Government says its work is not done.
Mr Chng Kai Fong, managing director of Singapore’s Economic Development Board (EDB) – the government agency tasked with negotiating some of those deals – said he is now gunning for “Jedi Masters” who he hopes can finally elevate Singapore into a global tech hub.
The secretive nature of the deals means it is unclear how much the country spends to attract such companies and whether it pays off.
Manufacturing, finance and insurance made up more than a third of Singapore’s US$356 billion (S$490 billion) economy last year. The information-communications sector, into which tech firms would largely fall, accounted for 4 per cent.
But it is growing faster than any other sector, data on Tuesday showed. Info-comm expanded at an annualised 6.6 per cent in the first quarter of this year, while the next fastest of the nine sectors Singapore tracks was finance and insurance, at 3.2 per cent.
Challenges remain: Some tech companies have expressed concern about a recently passed fake news law in Singapore, which critics say could hinder free speech. Google said it was worried the law would stifle innovation and the growth of the digital information ecosystem.
And Singapore has only one local “unicorn” – a start-up worth over US$1 billion – in ride-hailing firm Grab, according to research firm CB Insights.
Neighbouring Indonesia has four: taxi app Gojek, travel site Traveloka, and marketplaces Bukalapak and Tokopedia. Hong Kong has two, in online travel agency Klook and logistics firm Lalamove.
INCENTIVES FOR FIRMS
Details on the deals negotiated with the EDB are hard to come by because the Government makes firms sign non-disclosure agreements, companies and officials said.
Lengthy tax holidays, hefty grants for research and development, co-funding for investments and land and rental deals are among the incentives from different agencies, they added.
Such deals have attracted some of the world’s biggest tech companies. Google, for instance, 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 3,000 people, up from 10 employees in 2010, and unveiled a US$1 billion investment in its first Asian data centre.
With Britain’s departure from the European Union looming, 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 its ease of doing business and its links to the wider region,” said Britain’s trade commissioner for Asia-Pacific Natalie Black. “Many UK tech companies are already here and many more are exploring the opportunity.”
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 operations in Singapore.
Although multinational companies are attracted by low corporate tax rates, political stability, a robust legal system and strong infrastructure, software developers and data scientists often prefer the buzz of Silicon Valley or London.
“We have to be quite clear when we are chasing the Googles and Facebooks,” Mr Chng said. “We want engineering. We want to be a place where you’re creating new products and services for Asia.”
Mr Chng said he hopes attracting top talent will help nurture domestic start-ups, which has so far been difficult. “I need that generation of Jedi Masters to sort of come to train future young budding Jedis,” said Mr Chng.
He added that Singapore is also missing billion-dollar exits, which typically come when a tech start-up is acquired or publicly lists on a stock exchange. That would create a virtuous circle of private investment, allowing the government to step back.
An EDB event in San Francisco last month, to promote Singapore as a tech hub, drew so much interest that 400 people were turned away.
“There is a war for senior tech talent,” said recruitment firm Randstad’s Singapore-based director Daljit Sall. “We are seeing big demand for data scientists, full stack developers, cyber security experts and solution architects.”
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