Singapore seeks investments for high-tech development

The country is attracting new attention from U.S. companies and investors looking for a stable Asian foothold.

John Borland Staff Writer, CNET News.com
John Borland
covers the intersection of digital entertainment and broadband.
John Borland
4 min read
SAN FRANCISCO--Singapore is finding it isn't easy to recreate Silicon Valley from scratch.

Long one of the most technologically sophisticated countries in Asia, Singapore entered the Internet era trying to keep the Web's "clash of ideas" at arm's length, according to the country's former prime minister Lee Kwan Yew. That's now changing dramatically as the government attempts to open itself to an entrepreneurial economy that can rival Silicon Valley's growth.

Singapore is breaking decades of cultural constraints in an attempt to jump-start an entrepreneurial spirit, as evidenced this week by a large contingent from the country laying out its Net ambitions here. Though previously skeptical about the Web, a chief proponent of the country's turnaround is Lee, a huge regional political force.

"For us, changing our market means abandoning a pattern of policies that has served us well for 40 years," Lee said in a speech to Silicon Valley investors and companies yesterday. "But this revolution is real. If you miss it, or just pretend you can pass it by, then the world will pass you by."

The small country is attracting new attention from U.S. companies and investors looking for a stable Asian foothold. Singapore is a predominantly English-speaking country, which makes it a natural target for the English-dominated Internet, and it shares strong cultural and financial ties with China and the rest of Asia, one of the fastest growing markets.

The most recent convert is Silicon Valley venture capital firm Draper Fisher Jurvetson, which yesterday announced a $1 billion venture fund aimed at Singapore-based and other East Asian start-ups, with the Singapore government adding its own $100 million contribution.

Nine months ago, the country launched a drive to cultivate what it calls the "Technopreneur." Bankruptcy laws were liberalized so entrepreneurs wouldn't be badly penalized for inevitable failures; foreign ownership laws were loosened; and immigration laws changed so foreigners could stay in the country long enough to create their own businesses.

The education system--which already produced students who consistently scored at or near the top of world indices on science and math--refocused to encourage more "creative" and analytical thinking, according to Ming Kian Teo, chairman of the country's National Science and Technology Board.

All of this was launched on top of a national communications infrastructure that already rivaled the world's best. Nearly every home and business now has access to a high-speed Internet connection, although officials say consumer subscription rates to the broadband services lag well behind availability.

It's too early to know if the country's efforts are working. Silicon Valley financial interests say the "desire" is there, but the turnaround is still a work in progress.

"The issue is that the country is used to being driven by the government," said Dan Michener, a Far East National Bank consultant who advises the government on how to financially encourage smaller companies. "They have the financial infrastructure to do it. It's really (an issue of) finding people who know how to apply it, who know how to build a company from the ground up."

The start-up culture is taking root, according to entrepreneurs in the country. Already it has become a kind of regional hotbed for Internet telephony companies, hosting firms with names like MediaRing.com, InnoMedia and Pinnz.

"They have helped a lot of Singapore entrepreneurs to get on the ladder," says Jim James, chief executive of Go-Events.com, a site offering regional calendars of trade shows and other events. "The whole culture of taking risks is now government-endorsed. That's quite different from a few years ago."

The government is taking its own risks by opening the country to the Internet economy, too.

A Net content "filter" set up a few years ago that blocks residents from accessing some Internet sites is still in place, blocking people from viewing a list of 100 mostly pornographic Web sites. But the government has committed not to expand that list, officials say.

"It is more of a symbolic statement of the government's values," Singapore's top communications official, Yong Ying-I, said. "I think we recognize that the Internet is here to stay."

The country is also taking a gamble in opening its telecommunications market to competition from the outside world, a policy launching April 1. A major foreign-dominated company will kick off service competing with domestic Singapore Telecommunications.

While SingTel has been on its own international expansion hunt, making an unsuccessful bid to acquire Hong Kong Telecom late last month, officials say they are open to being acquired by one of the other international giants.

"Singaporeans have become too comfortable, and have become risk averse," Lee said. "We are not as successful as we should have been, because (we are) risk averse. And that's not the way to the future."