In 2014, Singapore’s Prime Minister Lee Hsien Loong, urged small and medium enterprises (SMEs) to venture overseas, citing Iskandar Malaysia as a great option for firms to regionalize. Last December, President Tony Tan said that IE Singapore is devoting more resources to step up its presence in the Philippines to spur homegrown Singapore companies to access the market in the Philippines. Recently, amid the weak local market and more heated competition, conversations around internationalization and venturing overseas start to dominate; more so with Trump’s executive action to scrap the Trans-Pacific Partnership (TPP).
Apart from the intrinsic challenges of being a small country (market), the grim economic outlook and uncertain market conditions have become a loud clarion call for homegrown companies to venture overseas. Internationalization or regionalization is no longer a new phenomenon, nor is it a ‘mere’ option for Singaporean firms, especially those in tech. Besides the small domestic market, the thriving tech scene is largely dominated by large tech MNCs.
Despite the apparent challenges in regionalizing efforts—primarily due to cost—we strongly believe that it is important for local tech firms to look beyond Singapore for their business development. We are throwing our (hopefully significant) weight behind the regionalization drive by the Singapore government because, as PM Lee said, there will be opportunities for the ‘bold and enterprising’.
Opportunities in ASEAN
In our recent article, which looked at our activities in ASEAN, we saw a promising economic area with burgeoning individual economies. Myanmar, Laos, and Cambodia make the top 10 of IMF’s 2016 World Economic Outlook world’s fastest growing economy. The rest of ASEAN including Thailand, Indonesia, and Philippines, projects robust growth over the next 3 years, averaging at 5-6% growth.
With a population of over 600 million, ASEAN also offers Singaporean firms a market that is 120 times the size of the domestic market they are currently operating in. On the technological front, we have seen many tech companies, new and old, aggressively growing their ASEAN teams. Alibaba invested $1 billion into Rocket Internet’s Lazada, while Amazon Web Services recently opened offices in Philippines, Thailand, and Malaysia.
Most importantly, Singaporean tech firms and IoT solution providers can expect great demand in the region for smart technologies, surprisingly from smaller companies. The absence of legacy systems make SMEs in ASEAN nimbler and more aggressive in adopting IoT solutions. Case in point, 2016 State of the Cloud survey by Rightscale found that 32% of SMEs are ‘cloud-focused’, compared to 25% for large enterprises.
IE Singapore Grants
Cost is largely cited by home-grown companies as an issue in regionalizing. While this is a fact, it is not a valid enough point to not venture beyond Singapore for business development. The authorities in Singapore have long been a proponent of internationalization and regionalization. Thus, it is of no surprise that there is assistance in place to help Singaporean firms to venture abroad for the business development.
IE Singapore, a government agency promoting international trade and partnering with Singapore companies in going global, has grants in place to support local companies in venturing overseas. The Market Readiness Assistance (MRA) grant for instance, supports companies that are taking their first steps overseas by granting 70% support of eligible third-party costs. Similarly, the Global Company Partnership (GCP) grant will those that are looking to enhance their market presence overseas.
IE Singapore also cites trade shows, expos, and business missions as great ways for companies to reach overseas buyers, get feedback on products and services, make valuable contacts, and learn more about a market. For that reason, the agency introduced iMAP to support companies in participating in business missions and international trade fairs and exhibitions via Singapore Pavilions.
The different assistance schemes supporting local firms’ overseas endeavors underscore the importance of regionalization. While Singapore may be a hotbed for starting a business, the saturated and competitive business landscape is not sustainable for businesses, especially SMEs and startups. Overseas investments are therefore the natural way for Singapore companies to sustain their business. With the small domestic market, it is more important than ever for companies, especially tech firms, to gear their business development towards the region where investment, economic growth, and infrastructure developments are robust.
If you are interested in introducing your IoT solutions to your prospective customers and partners in the different markets in ASEAN, do reach out to us. Our Asia IoT Business Platform series will be returning to Bangkok, Kuala Lumpur, Manila, and Jakarta in 2017. We are also holding one in Yangon and Ho Chi Minh City. If you are interested in any of the markets, email me at firstname.lastname@example.org.