Singapore stands out as a global tech hub amid U.S.-China tensions

Steven Okun serves as Chief Executive of ESG and sustainability consultancy APAC Advisors in Singapore and also as Chair of AmChams of Asia-Pacific.

Previously best known in international business as a hub for regional headquarters and investments by multinational companies, Singapore is now attracting global technology giants and startups.

A safe and stable environment, centered in one of the world's fastest-growing markets, coupled with a regulatory framework designed for tech companies and entrepreneurs, has created a global tech hub for the 21st century. Singapore's advantages have made it a location of choice for technology talent and capital.

 

Singapore's trio of advantages would be difficult to replicate elsewhere. This is bound to position the country as a global center for innovation for years to come, all while the city-state navigates the growing U.S.-China tech rivalry.

As a global home for digital and technology businesses, Singapore is attracting investment, talent and technology.

Geography is key to this. Singapore sits in a high-growth area. Economic forecasts for Southeast Asia predict it will remain one of the fastest-growing regions of the world for years to come.

No other country in the region can match Singapore in terms of its other key advantages.

Singapore offers businesses and the foreigners who live, work and invest here an environment that is both safe and stable. The World Intellectual Property Organization ranked Singapore first in the world in political and operational stability in its 2022 Global Innovation Index.

Over the past few years, Singapore has instituted policies to improve market access and grow the talent pool for businesses to flourish in the coming decade. Singapore has operationalized this through its Smart Nation program.

The government, while focusing on attracting global talent to facilitate the development of the local ecosystem, has underscored its commitment to its Singaporean core.

Last year, Singapore raised the minimum qualifying salary for highly skilled foreign professionals seeking an employment pass to align with the pay of the top one-third of local professional, managerial, executive and technical workers. The salary threshold increases progressively with the age of the candidate, advantaging Singaporeans who recently graduated from university.

In recent years, Singapore has also introduced three new employment initiatives to attract foreign talent and ensure that the nation remains an innovation hub.
 

The Tech Pass, launched in 2019, allows those with a background in technology, such as the founders of technology companies and chief financial officers, to stay for two or more years to support development of the country's startup ecosystem.

These passes, of which around 300 have been issued, are not linked to a specific employer, giving the holder flexibility to mentor startups, create a new company, sit on boards, or just ruminate while lounging by the pool.

The related Tech@SG program aims to draw digital and tech startups themselves to the city-state. This program gives fast-growing businesses access to the critical talent they need to grow and scale their business by guaranteeing up to 10 employment passes per company.

The Overseas Networks and Expertise Pass, introduced in January, is open to knowledgeable and creative foreign talent beyond the startup and tech sectors. By ensuring automatic approval, businesses can access senior and specialist executives as needed. Holders can remain in Singapore for five years and are not tied to a single employer. Their spouses are also permitted to work.

Still, Singapore faces geopolitical challenges. Last year, while the U.S. was Singapore's largest foreign investor, China came in first when it came to trade.

While the U.S. has been tightening restrictions on doing business with China, especially in the technology sector, Beijing has held onto industrial policies that favor its national champions and maintained unfair trade practices toward foreign companies. Recent actions in China portend trouble for even conducting due diligence on potential investments or trade partners in the country.

All the while, Singapore has maintained balance in its economic relations with the U.S. and China.
 

Singapore was an early and vigorous proponent of the Trans-Pacific Partnership, which would have more strongly integrated the U.S. into a region in which China has become almost everyone's most important trading partner.

When then - U.S. President Donald Trump abandoned the TPP in 2017, Singaporean Prime Minister Lee Hsien Loong helped lead the effort to create the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

Notably, in 2021, Singapore also became the first nation to ratify the Regional Comprehensive Economic Partnership, of which China is now the largest member.

Last year, Singapore joined as a founding member of the Indo-Pacific Economic Framework for Prosperity, U.S. President Joe Biden's flagship effort to enhance economic ties with the region.

Singapore's openness to doing business with both the U.S. and China has enabled it to become a regional base for both countries' technology champions, including Google and Alibaba Group Holding.

With relations between the two superpowers veering from competition toward containment, Singapore's challenge in navigating between the two is becoming more challenging. U.S.-China tensions are on track to undo decades of global economic integration and lead to a fragmentation of the world economic system.

Singapore continues to exhibit deftness in balancing competing geopolitical tensions. This high-wire act will not get easier, but I have confidence that Singapore will be able to pull it off.

With physical and digital connectivity, along with access to financing, expect Singapore to continue to attract tech talent and investment.
 

A version of this article was first published by Nikkei Asia on 14 July 2023.©️ 2023 Nikkei Inc.
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