Making vast investments in sectors ranging from transport to education, Singapore imports £5.6 billion in goods and services from the UK each year. Viewed as a trade gateway to South East Asia – and, by some, a model for post-Brexit Britain – it offers food for thought for entrepreneurs and economists alike. Here, leaders offer guidance on setting up successfully in this influential city state
Two centuries ago this year, Sir Stamford Raffles claimed the tropical island settlement of Singapura as a trading post for the British East India Company on the maritime route to China. As recently as 60 years ago, it was still only a crown colony, offering few natural resources other than a strategically located harbour. Today, Singapore is a sovereign city state, the second-richest nation by gross national income per head (more than £70,000, according to the World Bank) and a global leader in education, technology and sustainability.
If anyone sinking Singapore slings at the ivory-fronted hotel named after Raffles were to look towards the opulent Marina Bay Sands resort – three skyscrapers topped by what appears to be an ocean liner – another symbol of this nation’s dizzying ascent may spring to mind: Crazy Rich Asians. The hit 2018 romcom has taken nearly $240 million (£184 million) at box offices worldwide on a budget of $30 million. Focusing on the Gucci-clad, gimlet-eyed ambition of Singapore’s “chuppies” (Chinese yuppies) and “henwees” (high-net-worth individuals), it features socialites who wouldn’t bat an eyelash at spending $30,000 on plastic surgery for their pet fish.
“Every time I visit Singapore I’m struck by how cutting-edge it is. No one worries about the past,” says Joan Braca, president of food and beverage solutions for Tate & Lyle, which established its Asia Pacific hub here in 2013. “As a small island, it has to look both outward and forward, which makes it a great centre for innovation. In both government and business, things happen quickly here.”
Singapore’s astuteness and dynamism haven’t been lost on Jeremy Hunt, either. “There could be few better instructions for us as we make our post-Brexit future,” the foreign secretary wrote in the Mail on Sunday during his visit in January, impressed by the state’s far-sighted investments in education and infrastructure. Other prominent Brexiters – for instance, Tory backbencher Owen Paterson and Leave.EU donor Peter Hargreaves, co-founder of Hargreaves Lansdown – have also argued that the UK should follow Singapore’s lead in wooing foreign investors with a hi-tech, low-tax economy.
“When people claim that this model can be replicated by the UK, they are showing some naivety,” argues Dario Acconci, MD of the South East Asian operation of Hawksford, a company that helps foreign firms to set up in Singapore. “This nation is almost a sociological and genetic experiment conducted by Lee Kuan Yew,” he says, referring to the pragmatic authoritarian who, as Singapore’s first prime minister, led its meteoric rise between 1959 and 1990. “It’s a young, small republic. You can’t apply his approach to a country with the UK’s history, size and political diversity.”
While economic advancement has not been matched by sociocultural progression – there are restrictions on press freedom and LGBT+ rights, for instance – Singapore holds many attractions for British firms. The standard corporate tax rate is 17 per cent, compared with 19 per cent in the UK, but a temporary rate of five per cent is available to foreign firms establishing bases here. The talent pool in this hi-tech gateway to China is well educated too. Not for nothing has Sir James Dyson – a vocal Brexiter – chosen to “future-proof” his company by moving its HQ here from the UK.
Singapore is terrific for tech-heads. Robots clean the carpets at Changi Airport; the world’s first driverless taxis entered operation here; and 110,000 lampposts are soon to join the internet of things. They will feature equipment that could enable them to work as weather stations, speed traps, navigation aids for autonomous vehicles, facial-recognition cameras and even noise sensors capable of detecting car crashes. Such advances have led the World Economic Forum to rank Singapore as the “most digital-savvy country” in its latest Global Information Technology Report.
This is all part of Singapore’s long-term strategy, according to Acconci. “In the past, the government wanted to attract firms such as Rolls-Royce, which then set up maintenance and production facilities here. Today, it’s focusing on everything tech-related instead,” he says.
Fintech is thriving in particular. The sector’s expansion has been hugely beneficial for UK fintech recruitment specialist Nicoll Curtin since it opened offices in Singapore in 2011. “Many of our clients are new-growth companies that have chosen Singapore as a base from which to expand in the region,” reports its group CEO, James Johnson.
TRANSPORTS OF DELIGHT
Singapore spends 12.5 per cent of its income on transport infrastructure, compared with the UK’s 1.9 per cent. This presents significant opportunities for British firms offering architectural, engineering and construction services.
In 2013 the Land Transport Authority published plans to double the length of Singapore’s five-line Mass Rapid Transit (MRT) rail network by 2030, through both extensions and the construction of three new routes. The first stage of the Thomson-East Coast Line is on track to start operating this year. Meanwhile, a fifth terminal is being built at Changi Airport on a site exceeding 1,000ha, including reclaimed land. Scheduled for completion in 2030, it will be able to handle 50 million passengers a year. London-based architect Heatherwick Studio is part of the design consortium.
Singapore’s big investment in education, which began under the leadership of Lee Kuan Yew (LKY), has been key to the nation’s development. Consistently topping the OECD’s international rankings of 15-year-olds’ performance in literacy, maths and science, it offers an impressive array of graduate talent, particularly in Stem subjects.
What’s more, there’s ample public money for learning after university. “The government funds training for workers to refine their skills so that they remain relevant in the digital economy,” says Chris Frost, the founder of Cogs Agency, a London-based headhunting firm that opened a Singapore office five years ago.
But the city state is short of talent in one important area, according to Acconci. “Singapore’s schooling system is one of the world’s best, but it is lacking in aspects of creativity and thinking outside the box,” he says. “The whole region is thirsty for that expertise. If British companies can bring it here, they’ll be successful.”
Not content with its achievements in technology, infrastructure and education, Singapore wants to be a world leader in sustainable development too. It was the first city to introduce a congestion charge, for instance, pre-dating London’s system by nearly five years. More recent initiatives building on LKY’s 1967 vision of a garden city “with abundant, lush greenery and a clean environment” have involved reclaiming potable water from sewage and growing vegetables in skyscraper greenhouses.
Such environmental sensitivity is reflected in Singaporeans’ concern about the provenance of food. Ever since the 2003 outbreak of severe acute respiratory syndrome (Sars) cast doubts about the safety of meat originating in China, Singapore has increasingly imported food from Europe.
Wicks Manor Farm, near Maldon, Essex, has been meeting this demand since 2014, exporting pork sausages and bacon. “The expat community [Singapore is home to about 30,000 British citizens] and people with high incomes here don’t want meat from local wet markets; they want assurance that what they buy is safe,” says the farm’s MD, Fergus Howie. “They would rather pay more for a brand that they can trust.”
Receiving £5.6 billion in British goods and services a year, Singapore accounts for half of all British exports to the 10-member Association of Southeast Asian Nations (Asean). But, as Frost points out, most international businesses that set up shop here “do so to open doors elsewhere in the Asia Pacific region”.
Indeed, Singapore’s trade links are stellar. “Half of the world’s population is within six hours of here,” Braca notes. Dyson, GlaxoSmithKline and Rolls-Royce use Singapore manufacturing hubs to export around the region. For its part, Wicks Manor Farm has started exporting to Vietnam, which became a member of the Asean free-trade area in 1995.
But there’s one prize market beyond Asean that everyone wants to crack: China. “It will always be catalyst for any business looking at Asia,” Acconci says. “Singapore, which is positioning itself as the gateway to China with direct foreign investment, makes the perfect base for such firms.”
MIX AND MATCH
Singapore is a truly multicultural state. Although well over 70 per cent of its population would class their ethnicity as Chinese, there are substantial minorities of Malay and Indian origin. Such ethnic diversity makes it an ideal test market for new goods and services.
One of the keys to success for an incoming firm is to reflect this cultural mix in its workforce, according to Johnson. “Having a good blend of nationalities and languages opens up different commercial opportunities here,” he says. “By recruiting a more diverse group of employees at Nicoll Curtin, we started to be viewed in Singapore as a ‘local international business’. Many competitors of ours that used British expats instead of hiring locally went home after a few years.”
British firms will find a familiar commercial environment that’s relatively free of both regulation and corruption. Until it was usurped by New Zealand in 2017, Singapore topped the World Bank’s “Ease of doing business” league table for a decade.
“If you accidentally overpay tax here, you’ll soon receive a refund and a letter from the government informing you of your mistake,” Acconci says.
Tempting as it may be to see Singapore as a business-friendly utopia, the state remains under the iron grip of the People’s Action Party, which has been in power here ever since LKY secured the first of his eight consecutive election wins in 1959. Its draconian approach to even the pettiest of crimes moved novelist William Gibson to describe it as “Disneyland with the death penalty”.
Vandalism and overstaying a visa are both punishable by caning, while offences such as feeding pigeons, failing to flush a public toilet and annoying people with a musical instrument will attract fines. In 2017, for instance, a 60-year-old “prankster” was fined £2,000 for sticking toothpicks into bus seats. The judge spared him the one-year jail term he could have served.
“These situations are very tempting for journalists to talk about,” Acconci says. “If you’re a civilised person in Singapore, you won’t have any problems. But, yes, it will be tough if you want to spray graffiti or litter the place with chewing gum.”
Howie warns that Singapore’s painstaking methods of maintaining public order can sometimes be reflected in its approach to business. Wicks Manor Farm ships its meat to Singapore in refrigerated containers, a voyage that takes about 25 days. “They’re very fastidious on paperwork,” he says. “If you make one small spelling mistake on a form, they will post it back to you. You could end up with your goods sitting on the docks for days while you wait to receive documents to sign and return. That can represent a huge cost for a small business.”
The eye-watering cost of living is another thing that’s likely to shock the unwary newcomer to Singapore. Last year the Economist Intelligence Unit ranked it as the world’s most expensive city. Yet Acconci believes that it’s a price worth paying when you compare Singapore against other potential bases for British firms in the Asean bloc.
“Setting up can be expensive for start-ups and SMEs, thanks to Singapore’s high wages and costly real estate, but the time you’d save by avoiding the day-long traffic jams that clog up cities such as Jakarta and Kuala Lumpur makes coming here worthwhile,” he says. “Yes, Bangkok may be cheaper, but it wouldn’t offer the same efficiency, stability or logistical advantages.”
Braca agrees, adding that not everything in Singapore is pricey. “Public transport is good and inexpensive. An MRT ride costs 80 pence, so you don’t need a car. And the food sold at the hawker centres [outdoor food courts] is great value. I’d eat it every night.” Indeed, a stall called Hong Kong Soya Sauce Chicken Rice and Noodle was awarded a Michelin star in 2016 for its £1.10 lunches.
Can the UK learn some salutary lessons, as Jeremy Hunt suggested, from Singapore’s singular approach to enterprise?
“Living here has taught me tons,” Braca says. “Singaporeans have such an indomitable spirit – a true never-give-up mentality. Their outward-looking nature is truly amazing. Singapore sees every country as a partner and a friend. For a nation with few natural resources, that’s essential.”
One of Raffles’ long-term goals for Singapore was for it to become an “emporium of the east”. Two centuries on, that vision is a reality, from its vibrant markets to the Louboutin-heeled materialism of its crazy rich. This probably wouldn’t have happened, however, without the decidedly non-populist policies of LKY (who died in 2015) and his successors.
In 1999, President Habibie of Indonesia referred to Singapore as a “little red dot” on the atlas. It’s telling that Singaporeans, proud of their nation’s ability to punch well above its weight, adopted it as a nickname when they could have taken umbrage. Today, the Little Red Dot is glowing like never before as a beacon for trade and inward investment.
For more local expert guides to setting up in business around the world, visit director.co.uk’s International section.
Become a member of the IoD
The IoD has a range of memberships for directors, founders and co-founders, providing all the resources and facilities needed to enhance your business. To find out more about membership offerings and to join today, visit iod.com/membership