How can Vietnam gain advantage by leveraging Singapore’s technology innovation?

Singapore now has one of the most developed and dynamic free-market economies in the world. Its GDP has climbed world rankings while its unemployment rate is impressively low. What has helped a small island city-state thrive into an economic giant in the region? The answer is the way the country always reinvents itself to match the ever-changing times with technology innovation. 

In this article, Viettonkin will dive into the factors contributing to Singapore’s technology development and discuss how other countries including Vietnam can leverage Singapore’s technology ecosystem. 

Singapore as the Asian capital of technology innovation

Global corporations have chosen Singapore as one priority destination to do business in. Their businesses are as diverse as the products and services they offer. However, they have one thing in common: They view Singapore as a global Asian node of technology innovation and entrepreneurship.

Specifically, today 80 out of the top 100 tech firms in the world have a presence in Singapore. Which makes Singapore the “miniature Silicon Valley”, as experts said. They believe Singapore has the ability to foster innovation and develop an advanced IT infrastructure ecosystem for all businesses to thrive.

Technology and the digital revolution play such an important role in the development of Singapore’s economy. In the first two decades of the 21^st century, the cost of computers, robots, and sensors in Singapore decreased significantly as Singapore decided to invest in robotic manufacturing plants. As a result, labor cost was no longer a significant element in the cost of manufacturing.

More notably, technology and innovation have benefited Singapore with a more stable economic ecosystem, a position along the global supply chain, a network with global suppliers, efficient logistics and transportation and so on. These are all contributors to Singapore’s strength.

In the IMD World Digital Competitiveness Ranking, Singapore has retained its position as the world’s second most digitally competitive country in both the year 2019 and 2020. The ranking evaluated the capacity to adopt and utilize digital technology innovations as a major force for economic transformation and societal development.

The reasons behind 

Having few natural advantages, Singapore becomes the finance and technology hub of Asia thanks to its human capital.  Investing in education to build a highly qualified and productive workforce is at the top of the Government’s agenda. According to the 2020 Singapore Population Census, over 58% of the population had post secondary qualifications or higher. The number of degree holders increases yearly.

Singapore sees the value in investing in education to further its digital economy ambitions. The goal is to build a strong human capital that will be a key driver of Singapore’s innovation. In the 2018 Bloomberg Innovation Index, Singapore ranked number 1 in the world for tertiary efficiency due to its emphasis on Science, Technology, Engineering, and Math (STEM) education.

Singapore technology policies and initiatives are highly conducive for technology’s growth. For example the Smart Nation Program aiming to make technology friendly provides online courses where anyone can log on and learn the basics of coding, video conferencing, and all the latest digital trends. The National Artificial Intelligence Strategy outlines the government's plans to deepen the use of AI technologies to transform the economy.

Singapore established the Government Technology Agency (Govtech) in 2016 with the aim of empowering the nation through technology. The Agency’s scope is wide, ranging from technology to inspire its citizens and businesses, to incentive domestic and foreign tech firms and to build strategic technology cooperations with other nations.

Singapore has allocated large investments into sectors such as advanced manufacturing & engineering, as well as emerging tech from fintech, to agritech, to artificial intelligence (AI).

To facilitate tech start-ups and those who want to expand into Asia, Singapore enables them to easily access funding via the traditional banking system, venture capitalism, foreign investors, and even government sponsorship. Local institutions are nurturing young talents, too. For example, the National University of Singapore is investing up to S$1.5 million to enable graduate students, post-doctoral fellows and research staff to establish startups in the deep tech sector.

According to DealStreetAsia, in 2021, easy access to funding has led to a surge in deep-tech startups raising capital in Singapore. Deep-tech start-ups in Singapore raised US 861 million across 131 deals in the first nine months of 2021, a 44% increase from the same period in 2020. It is such an impressive achievement, given that the Southeast Asian start-up ecosystem has not seen deep-tech businesses grow beyond US 100 million over the past ten years.

Vietnam to leverage Singapore’s technology ecosystem

Because of its great effort to cultivate tech businesses, the country has attracted talents from all over the world. Singapore’s government has been especially progressive in helping startups find connections to not just funding, but also with neighboring partners who form strategic cooperations with it.

In a speech at the 51st ASEAN Foreign Ministers Meeting, Prime Minister Lee Hsien Loong stressed that the Singapore Government always pledged to boost regional economic integration and tech. The aim is to narrow the development gap among ASEAN members and bridge ASEAN’s digital cooperation. Three Initiative for ASEAN Integration (IAI) centers in Vietnam, Cambodia, and Laos were upgraded to Singapore Cooperation Centers. The centers would receive an expanded range of technical assistance and new modalities for capacity building.

“Singapore hopes to share our experiences, and at the same time, learn from our neighbors and partners,” Prime Minister Lee added.

Despite its technology success, Singapore still faces land and human capital constraints. Therefore, Singapore can build a regional hub in selected Asian nations to help it become a global technology hub. Vietnam is one of the most potential partners.

Economic and technology partnerships are key pillars to promote and deepen the strategic partnership between Vietnam and Singapore.

In fact, Vietnam and Singapore have been expanding cooperation in technology innovation.  The two countries have developed several action plans to implement specific joint projects. Singapore tech companies continue to actively invest in Vietnam’s fintech, healthcare, logistics, education and real estate sectors.

To foster Vietnam’s start-up ecosystem, Singapore and Vietnam have launched several initiatives. Enterprise Singapore, a Government agency championing enterprise development, expanded the Global Innovation Alliance network to Ho Chi Minh City in mid-2019. It has connected Singapore’s start-ups and small businesses with the local innovation and business community in Vietnam.

Meanwhile, Vietnamese start-ups can also leverage Singapore’s established innovation ecosystem. They can connect with multinational corporations and other leading Asian firms based in Singapore to further their business development. Because technology and innovation are the key to accelerate economic development, the two countries will form more cooperation projects in the future.