Many analysts and pundits would argue that it was a long time coming – Uber’s exit from the Southeast Asian scene almost mirrored what occurred in China with Didi Chuxing in 2016.
In the wake of the giant’s exit, there were almost immediate reactions in the form of both Indonesian giant Go-Jek and car-pooling company Ryde joining the Singapore private ride-hailing industry to give Grab a run for its money. Grab’s monopoly will evidently be short-lived.
It can be somewhat bewildering how startups never seem to cease to flock to a relatively small island with a low audience base of 5 Million odd inhabitants and comparatively high startup costs. What’s in it for them?
A sanctuary for startups
It is well known in the startup scene that Singapore has one of the friendliest business environments in the world, due largely to a favourable tax regime and efficient registration processes. Corporate tax in the country stands at a comparatively low 17 percent, with regional competitor Malaysia hovering around the 25 percent mark. The safe environment, lack of language barriers for English speaking entrepreneurs and overall political stability, strengthens the business scene in Singapore even further.
A Launchpad to access the rest of Asia
Businesses are fully aware that the city-state is where much of the regional action is. Support from government as well as private enterprises in the form of mentorships, accelerators and the likes provide a springboard for them to expand regionally, leveraging Singapore as a base.
The regional scene has gone from strength-to-strength over the span of the last few years, with South East Asia total funding raking up an astounding USD 6.5 Billion by the third quarter of last year. Couple this with a total population of ¾ Billion in the region and what businesses are left with is a possible target audience that is unignorable.
Our country also has free trade agreements with many countries such as North America, Japan and Australia to name a few – reducing barriers to businesses considerably. All this is sweetened by the fact that the city has no controlled foreign company rules, no capital gains tax, and one of the lowest corporate tax rates globally. Not a bad value proposition for any startup looking for a base to start operations with maximum exposure for growth.
Unprecedented funding levels
One of the apparent reasons why such companies are willing to enter a potentially saturated market with a comparatively paltry audience is due to the fact that Singapore has been long regarded as a funding hub, providing access to capital from both the governmental and private fronts. While the government has spearheaded schemes such as StartupSG, private venture capital funding reached USD 1.2 Billion in 2017.
Grab exhibited this potential for funding better than most of its competition, with the news of the company being the highest venture capital funded business in the first quarter of this year, raising a more than impressive USD 2.5 Billion.
A rich source of networks and unrivalled talent pool
The city-state provides unrivalled access to networks, through symbiotic relationships between government bodies and private enterprise. Singapore boasts 80 of the top 100 global tech firms having presence on the island, attracted by such factors as the country’s favourable geographical location, rigorous intellectual property laws and modern infrastructure.
Singapore is also home to a startup talent pool that has been ranked number one in the world. This is due largely to a highly educated workforce as well as government support in nurturing tech talent to educate the likes of software engineers.
All things considered, Go-Jek’s latest announcement of intent to scale the Southeast Asian arena – with Singapore as a major market – would make their foray a well-strategised and astute one.