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Art-of-the-State: Singapore as a Venture Policy Model

This is a guest post by Robyn Klingler Vidra, CIV senior research fellow, see team for more information.

Singapore Aims to Become Southeast Asia’s Silicon Valley, according to a recent Wall Street Journal article. Though there has been an increase in start-up activity in Singapore recently, the pragmatic and innovative Singaporean policymaking apparatus has been trying to turn its “engineers into entrepreneurs” to advance its start-up environment since (at least) the 1990s. To encourage risk-taking and to put Singapore on the map as a destination for global start-up activity, Singaporean policymakers at the Economic Development Board, the Media Development Authority, the Infocomm Development Authority and the National Research Foundation have conducted tireless research – examining what other countries have done well and then adapting it to the Singaporean context by taking the local economy, cultural practices and regulatory environment into account. Singaporean ministers have also, in the case of programs such as the recently annouced Accreditation@IDA program, innovated their own venture policy initiatives as part of coordinated government efforts to make Singapore a Smart Nation for ICT sector.

The City-State has gone from “third world to first” in one generation – as quipped by long-time Prime Minister and then Minister Mentor Lee Kuan Yew. The aptitude of its bureacracy has been one of the key drivers of its remarkable industrialization and positioning as a preeminent global financial center. A personal experience can attest, in a simple way, of the efficient and well-thought out “art of the Singaporean state”. I lived in Singapore for a few months in the fall of 2012 on a research exchange at the National University of Singapore’s Lee Kuan Yew School of Public Policy. Typically, the first days (or weeks or even months) in a new country can be repleat with government paperwork, time in government offices and with frustration.

This couldn’t be any further than my experience in arriving for my exchange in Singapore. In advance, I had access to all of the forms and online portals for the Immigration and Checkpoints Authority (ICA) of Singapore. Once I arrived in Singapore, I set a time for my appointment at the ICA later that week. I arrived for my appointment and was greated by a member of ICA staff who ensured that I had the necessary forms and appropriate visa photo before directing me to the appropriate office upstairs. What happened then still shocks me. My number was called within seconds of arriving to the appropriate floor and then, after my paperwork was checked, I was out of the ICA building – with my immigration card! – within an hour of arriving. Though anectodle, I share this story as it speaks to the customer service approach of the Singaporean public apparatus to new immigrants. The strong Singaporean state, said simply, ensures that its peronally easy to “start up” in Singapore.

Due to Singapore’s economic acheivements (consistently ranked one of the world’s most competitive economies) and the efficiency and competence of its public servants, Singapore has become a country to study when designing industrial policies. Singaporean policy is studied particularly when it comes to technological upgrading, industrialization and, increasingly, entrepreneurship. Singaporean ministers are active in proactively diffusing the Singaporean model through trips abroad to share their best practices and by formalizing international innovation and industrial partnerships. For example, Singapore now has four Vietnam-Singapore Industrial Parks across Vietnam.

What are the innovative programs, policies or other initiatives that Singapore has deployed to promote entrepreneurship? In this post I identify four of Singapore’s pubic approaches to supporting venture. Though each of the initiatives are not wholly innovative (e.g. other countries have done similar things), it is the efficiency and thoughtfulness of execution of the programs that catapults Singapore’s public venture policies to world class status:

1)      Blk71: Real estate is a scarce, and therefore expensive, commodity in the city-state. Ensuring that there is adequate (co-)working space for entrepreneurs in Singapore was an aim of the Media Development Authority, NUS Enterprise and SingTel when they created Plugin@Blk71 in 2011. A large building at Ayer Rajah industrial state was on the chopping block for demolition, likely in favor of a new all-glass skyscrapper. Rather than letting the industrial estate (Blk71) reach this fate, members of the government (MDA), university and private sector partnered to repurpose the building to host a colony of startup activity. More than just start-up offices or co-working space, Plugin@Blk71is an incubator operating out of the block and numerous investors’ offices are located in the block (including funds participating in the Early-Stage Venture Fund).

 

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2) Innovation & Capability Voucher (ICV): Through these vouchers the Singaporean government reimburses start-ups for expenses incurred in their capability development (e.g. consulting courses) and productivity solutions (e.g. equipment and hardware, technical solutions & training, and design & renovation). Each voucher is valued at $5,000 and startups can apply, through an online portal, for a maximum of eight vouchers. The ICV are restricted to start-ups (company must earn less than 100 million in revenue or have less than 200 employees), have a significant local ownership structure (minimum of Singaporean shareholding) and be a registered Singaporean company. The beauty of the Singaporean ICV is that it gives the government a means to reimburse real business expenses for early-stage firms who are trying to minimize their cash burn rates. Rather than giving grant money or equity-free capital, ICVs alleviate the capital expenditure pressure of business setup costs. I would be remiss if I did not mention, however, that while the program is still performing, as of 24 July ICVs have been restricted so that they can no longer be used for reimbursement for personal computers, tablets, phones, printers/copiers/fax machines, cameras, radios, and more. My expectation is that these relatively wide sweeping restrictions will, unfortunately, undermine the attractiveness of this helpful program.

3) Accreditation@IDA: Singapore’s IDA launched a program (in August 2014) that effectively certifies the legitimacy of startups. In doing so, Accreditation@IDA focuses on reducing the risk that would-be customers (particularly government entities) face when giving business to a startup; while government buyers want to leverage state procurement coffers as a means to promote startups, it is difficult for these civil servants to know if a startup is legitimate or not. To reduce the risk of awarding contracts to fly-by-night businesses, Accreditation@IDA evaluates the startup’s technical, financial and operational capabilities and claims – startups that pass the evluation are then accredited to do business (the Accreditation is intended to be valuable to corporations as well as the government). The IDA program is another step on the Singaporean government’s path to become (even more of a) Smart Nation.

These initiatives have, in different ways, either driven entrepreneurial activity in the Lion City or have pushed the envelope in how the State can be easy to work with when starting a business, immigrating or developing a new technology. Singapore’s well-considered and executed venture policies have not yet succeeded in transforming Singapore’s engineers into successful entrepreneurs on the scale of the Google and Facebook. Said another way, some Singaporean start-ups have succeeded in raising money from Silicon Valley VCs and in achieving sizeable exits, but Singapore has yet to produce a “unicorn” or a global tech giant. But, Singapore’s venture policies have contributed to Singapore being a Smart Nation, a leading venture capital centre in Asia and a destination that founders around the world consider when starting up.

 

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