As one of the wealthiest economies in Southeast Asia, growth and development in Singapore have continued unabated for many years, and despite the impact of COVID-19, it currently ranks 36th globally for gross domestic product. It fares even better on the leaderboard when GDP per capita is accounted for, taking up the 9th position, 12 places above its nearest Asian rival, Israel. According to the Washington Post, there are more than 4000 tech startups in Singapore, along with 150 venture capitalist funds. The rise of Singapore as a tech hub has employed 22,000 people, giving the country an unemployment rate of only 2.8%.
In the years before the COVID-19 pandemic, the city-state had already seen a rise in digitalisation amongst many job sectors. This rise was due to government initiatives and sponsorships for up and coming tech incubators. The increase of social distancing and other circuit-breaker measures has only solidified the need for and growth of the technology sector.
How Singapore leads the way in digitalisation in the region.
Demand and growth
Over the course of the next few years, growth in sectors, such as Infocomm is expected to be exponential in the region. Foreign Minister Dr Balakrishnan stated that there would be a need to fill roughly 60,000 positions in the industry, but only 2,800 Infocomm students graduate each year. This gap between job openings and Singaporeans qualified to take them on creates an opportunity for those wanting to make a mid-career change to move towards the fastest growing industry in the region.
The hope is that as the economy recovers from the current pandemic-induced downturn, employers and citizens can come back into the workforce strong enough to bridge that gap, leading to even more growth in the long term.
Foreign giants making the switch to Singapore
For years, the most significant tech capital in the world has been Silicon Valley in California, United States. Big-name tech startups dipped their toes into the area’s pool of successful tech conglomerates. The tides have shifted though, and many are now opting out of California and into Singapore.
TikTok owner ByteDance has made huge investments into the Singapore market and expects that tech in the area will employ thousands over the next three years. According to Bloomberg, Chinese giants Tencent has also moved to the country following bans in India and the United States. The conglomerate, most notably known for gaming, sees the opening of their Singapore office as rounding off their presence in Asia, having other offices in Malaysia, Indonesia, and Thailand already. E-commerce giant Alibaba is also investing by buying up a 50% stake in a Singapore office tower in a $1.2 billion deal.
Factors behind the emerging trends
With government support and proximity to other Southeast Asian economies, Singapore is a favourable location for tech startups. The Financial Times reported that expansion into the region has been easy for big tech companies from China because of their similarities in business, language, and culture.
The tensions between China and the United States have also played a considerable role in the ever-increasing shift towards Singapore in the past couple of years. Because the region has good relations with both countries, the neutral zone bodes well for business on both sides. With recent bans of both TikTok and WeChat in the United States, Chinese companies have found that Singapore is a safer bet for opening new operations. It is also easier to invest in places like the Philippines, Indonesia, and Vietnam without appearing as Chinese investment, according to Nick Redfearn, the deputy chief executive at Rouse in the UK.
Although Singapore has been steadily building its reputation and becoming Southeast Asia’s Silicon Valley, its future is still unclear. If the country can’t produce the necessary numbers of skilled workers to fill the jobs in the tech sector, this skills gap could pose a huge problem for new companies.With the rise of new tech startups in Singapore, such as biotech food developers TurtleTree Labs and Life3 Biotech, new facets of the industry have begun to take hold to address contemporary issues. It’s no longer about being the next big thing in an already developed landscape. It’s about creating solutions to problems post-pandemic. The idea of Singapore as a tech hub isn’t a new one, but the area still has a ways to go before it can truly take the crown from Silicon Valley.