By Yap Shi Wen
Empowering Foreign Entrepreneurs in Singapore
Singapore has always been considered as a global business hub. Consistently ranked as one of the most economically liberal, innovative, competitive and business-friendly nations by global bodies such as the World Bank and World Economic Forum, it also has the highest trade-to-GDP ratio in the world, at 407.9%, an indicator of the importance of trade to the Singapore economy.
Singapore is also the only Asian country to maintain AAA credit ratings from the 3 major credit rating companies – Standard & Poor's, Moody's & Fitch, as of 2011. Singapore is also ranked as the 4th leading financial centre globally and was rated in 2007 by the World Bank as the top logistics hub and amongst the easiest places to do business worldwide.
According to the GWCRN (Globalisation and World Cities Research Network), Singapore ranks comparably to Dubai, Shanghai, Hong Kong, Paris, Tokyo and Chicago as a an Alpha+ world city, serving advanced service niches in the global economy. It was also ranked by the journal Foreign Policy as 11th highest performing global city out of 66. The Institute for Urban Strategies at the Mori Memorial Foundation of Tokyo created a Global Power City Index that ranked Singapore at No.5 with a score of 255.3 and its strength being cultural interaction. In 2012, Singapore was ranked by the Economist Intelligence Unit of the Economist Group as the 3rd most competitive city globally, with a score of 70.0. By comparison, New York City and London scored 71.4 and 70.4, while Hong Kong scored 69.3 and placed 4th.
These details are stated to provide perspective on the issue of facilitating foreign entrepreneurship in perspective, not as a form of self-congratulation. In the long-term, it serves Singapore well to practice enlightened self-interest or rational selfishness in facilitating the entrepreneurship of foreign residents who have spent a period of residence within Singapore, whether for education, work or both.
It serves Singaporean interests as a nation and society, in order to enfranchise and provide a platform for young entrepreneurs from across the world to use Singapore as a platform to launch their businesses, as so many often do in the USA. A notable example being Eduardo Saverin, a Brazilian national studying at Harvard University and currently resident in Singapore, who co-founded Facebook with Mark Zuckerberg.
However, the recent changes to business and labour policy in 2012, especially with regard to foreign hires by Singapore-based enterprises, have made it harder for foreign workers, labourers and entrepreneurs to either find employment or operate businesses in Singapore, something that in the long-term may have more costs and deficits to Singapore than any benefits.
The nurturing of Foriegn Entrepreneurs
A simple definition of an entrepreneur is someone who creates a new organisation by generation and investing resources to take an idea to the market utilising the entrepreneurial process. Entrepreneurship is the process of doing something new and/or different for the intent of generating wealth for the individual(s) and adding value to society.
Lee Kuan Yew, the first Prime Minister of independent Singapore called the first generation of ministers in newly-independent Singapore “entrepreneurs”, for entrepreneurship is not restricted to the business world alone. The spirit of entrepreneurship can be summed up as a collection of the following attributes according to : creativity, wealth creation and ideas. Entrepreneurship as an activity creates new concepts and generates wealth for society through the spread of these ideas, the transfer of knowledge, skills and the creation of jobs. It encourages innovation and promotes the creation of wealth through investing capital in activities, tools and industries that carry with them a non-significant or greater level of risk.
While the extant Entrepass scheme does provide for foreign entrepreneurs with a platform to invest with a clear framework to legally register and operate their businesses within Singapore, it may serve Singaporean interests for there to be schemes with a lower threshold than the Entrepass, in order to facilitate younger,less-established entrepreneurs who may not have the same financial resources and backing as older entrepreneurs. A tight labour market restricts the talent and inhibits development of startups.
The advantage younger entrepreneurs have is a more open mindset and willingness to experiment compared to older entrepreneurs, as well as the ability and willingness to take greater risks. Older entrepreneurs, while certainly more experienced and established, may have greater liabilities than younger entrepreneurs.
Such facilitation also expands the options of business and leads to an increase in economic freedom and opportunity for both entrepreneurs and society. Younger entrepreneurs are more plastic in their thinking and willing to explore aspects of business in ways that older entrepreneurs and businesspeople cannot.
Facilitating younger entrepreneurs by lowering the threshold enhances our own status as an Asia-Pacific gateway and expands the spectrum of products and services available to local business. It enhances connectivity with the the world through the presence of young foreign entrepreneurs here – facilitating business connectivity to the world through the business operations and and relationships cultivated here.
It also increases the volume of entrepreneurship present locally, providing a greater concentration of knowledge and ideas in Singapore, with the accompany dividend of wealth creation based in Singapore. Providing a platform for young entrepreneurs from all over, whether the region, the Asia-Pacific or globally, to launch their businesses here takes advantage of their youthful energy, enterprising attitudes and transnational connectivity.
Allowing foreign entrepreneurs to operate a business based in Singapore may also transfer key knowledge, skills and abilities to Singaporeans, allowing for development of aptitudes and concepts that may otherwise not be present. It brings with it the creation of wealth, the spread of prospective business concepts, the generation of employment and provides the market competition necessary for Singaporean businesses to innovate and maintain their edge.
Facilitating foreign entrepreneurs with an ease of doing business empowers them economically and legitimises them, within the context of having a business base in one of the top-ranking global cities of the world. It grants an individual not just economic space opportunity, it grants them the possibility of emotional, cultural, social and personal links that bind a person to a place.
Benefits for nurturing foriegn entreprenuers
From the perspective of the local economy, allowing them to establish roots and growing within Singapore will lead to a stronger interest in Singapore's future, deeper ties to Singapore and a corresponding reluctance to relocate and a willingness to invest further in Singapore should the conditions merit it.
Current policy fosters a potential disconnect from Singapore for potential residents and business investors due to the increasing difficulty in finding employment and increasing recruitment difficulties by both SMEs and MNCs in a tight labour market caused by recent labour policy, losing us the opportunity to gain potential new residents and talents.
The nature of startups, especially those of the technological nature in the current work environment, demands that a concept be developed. Being a city with global links and economic liberties, we should aim to leverage upon these aptitudes and counter the cultural deficit in terms of the risk averse nature of culture here. Funding is also easily available. However given that startups have to vie for talent with large MNCs such as Google, Yahoo, Accenture and Microsoft, bringing in people from overseas while having offices based in Singapore is a more viable approach but has been made more difficult due to policy biased against foreign graduates.
Many of the most successful business dynasties and merchant families within Singapore, such as the Arab merchant families and the modern Chinese business dynasties, inherited their wealth from their entrepreneurial immigrant ancestors and continue their tradition of enterprise and economic contribution in Singapore to this day. They were empowered by the environment and policies of the time to engage in entrepreneurship, leading to them establishing roots in Singapore that endure to this day.
Empowering foreigners through meaningful employment in the workforce and undertaking entrepreneurship would reap dividends for Singapore. Its succeeded in the past, though socioeconomic conditions were different then as compared to now. Economic factors tie a business to a location, but its emotion, sentiment, the web of relationships and social-emotional factors that bind a person to a place and grants them a sense of home. Given the mobile nature of the global village, empowering people and ensuring they have a sense of place and belonging matters now more than ever. Its in Singapore's self-interest then to empower foreigners, for it leads back to our own economic prosperity.
Achieving this balance will be difficult, requiring collaboration and understanding between the public, policymakers and migrants. However it is a challenge that has to be met, given the opportunity that exists for Singapore. One possible approach could be returning to the open immigration policies of the past, with the corresponding measures of wage increases, balanced quotas and potential policies of basic income (negative income tax), collective bargaining by professional associations and corporate bodies with the Ministry of Manpower to set PMET (Professionals, Managers, Executives and Technicians) in order to protect Singaporean citizens.Though there might be possible abuses of the system, but that is a failure of governance more than anything else.
We are a city-state that exists on the periphery of Great Powers, in a time of global economic depression and societal change. Change is inevitable. It is how we embrace the opportunities brought about by change and develop as a society that will determine our future as a nation. We have an underlying infrastructure and connectivity that provides us the crucial underpinnings. Its simply how we go forward from here that matters.
Tan, W.L. (2007). Entrepreneurship as Wealth Creation and Value-Adding Process. Research Collection L ee Kong ChianSchool of Business. Paper 632. Retrieved from http://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=1631&context=lkcsb_research
Entrepreneurship: A pathway to wealth creation . 2013. Entrepreneurship: A pathway to wealth creation . [ONLINE] Available at: http://tribune.com.ng/index.php/opinion/50669-entrepreneurship-a-pathway-to-wealth-creation-.
Lessons in Entrepreneurship and Wealth Building from the Developing World - [email protected] 2013. Lessons in Entrepreneurship and Wealth Building from the Developing World - [email protected]. [ONLINE] Available at:http://knowledge.wharton.upenn.edu/article.cfm?articleid=2588.
Entrepreneurship, Small Firms and Wealth Creation: A Framework Using Real Options Reasoning by Rita McGrath :: SSRN. 2013. Entrepreneurship, Small Firms and Wealth Creation: A Framework Using Real Options Reasoning by Rita McGrath :: SSRN. [ONLINE] Available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1510586.
Birley, S., Wright, M. & Cooper,A. (2001). Creating and growing wealth: Sue Birley on entrepreneurship and wealth creation. The Academy of Management Executive, Vol. 15(1), 37-39. [Abstract]. Retrieved from http://www.jstor.org/discover/10.2307/4165708?uid=3738992&uid=2&uid=4&sid=21101490958311
Entrepreneurship Key to Wealth Creation. (2011). The Jakarta Globe, Editorial. Retrieved from http://www.thejakartaglobe.com/editorials/editorial-entrepreneurship-key-to-wealth-creation/472515
Binerer, A. (2012). TOW Issue Paper #1 Wealth Creation And Entrepreneurship. Center for Rural Entrepreneurship. Retrieved from http://www.energizingentrepreneurs.org/site/images/research/development%20resources/papers/TOW-issue-paper-1-entrepreneurship.pdf
Butler, J. (2009). Entrepreneurship and Wealth Creation Through Technology Transfer. DiversityMBA Magazine. Retrieved from http://diversitymbamagazine.com/entrepreneurship-and-wealth-creation-through-technology-transfer
Ketchen, D.J., Ireland, R.D. & Snow, C.C. (2007).Strategic entrepreneurship, collaborative innovation and wealth creation. Strategic Entrepreneurship Journal, 1(3-4), 371-385. [Abstract].Retrieved from http://onlinelibrary.wiley.com/doi/10.1002/sej.20/abstract
Quadrini, V. (1999). The Importance of Entrepreneurship for Wealth Concentration and Mobility. Review of Income and Wealth, Vol. 45(1), 1-19. [Abstract].Retrieved from http://onlinelibrary.wiley.com/doi/10.1111/j.1475-4991.1999.tb00309.x/abstract
Waldinger, R., Ward, R., Aldrich, H. E. & Stanfield, J. H. (1990). Ethnic Entrepreneurs: Immigrant Business in Industrial Societies (1990). University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship.[Abstract] .Retrieved from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1496219
Angelmar, H.(2009).Structural Market Deficiency or 'How Do I Scale My Team”. Retrieved from http://sgentrepreneurs.com/2009/11/21/a-foreign-entrepreneur-finds-it-hard-to-scale-a-team-in-singapore/