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First stop, Singapore

First stop, Singapore

Brian Chen, CTO of the Infocomm Development Authority (IDA), the government's own IT shop, offers a more practical description: 'Singapore is Asia 101,' he says.

FRAMINGHAM (07/09/2002) - "The Gateway to Asia" is how the marketing brochures promote Singapore. But Brian Chen, CTO of the Infocomm Development Authority (IDA), the government's own IT shop, offers a more practical description: "Singapore is Asia 101," he says. Or Asia Lite. Or Asia for Beginners. As opposed to countries such as China and India, where large labor forces are at least partially compromised by creaky IT infrastructures or cranky governments, Singapore is the plug-and-play marketplace a super-wired country where, as the Singaporeans would have Westerners believe, the e-business is brisk and the living is easy.

"This is the place you go to get your feet wet in Asia," says Chen, who was born in Fujian Province in China, was educated as an engineer in the United States, and worked for Motorola Inc. in China just prior to joining the IDA in early 2000. And as Chen sits in IDA's spacious, elegant lounge in the Suntec City Tower Three in Singapore's Marina district (where pop rocker Christopher Cross had performed two days before), Singapore certainly seems to offer Westerners a home away from home. "It's an easy adjustment," Chen concludes.

Singapore has attracted Western interests since 1819, when Sir Thomas Stamford Raffles of the British East India Co. stumbled upon the tiny island (246 square miles) and quickly established it as a trading post for the British Empire. With its central location (a short swim south from Malaysia) and its deep harbor, Singapore by 1869 had become a thriving port for Western coal merchants, ship builders and traders.

Fast-forward to the 1990s. Not only had the port become the biggest, busiest, most IT-savvy in the world, but the city-state was now home to thousands of multinational companies, including Citibank, Microsoft Corp. and Sun Microsystems Inc. the East India Companies of the late 20th century, looking to take advantage of the following:

-- A stable, business-friendly government offering huge tax incentives (10 years 100 percent tax free if a business establishes a regional headquarters) and local partnerships.

-- A largely English-speaking, Westernized environment complete with shopping malls and U.S. restaurant chains.

-- A sophisticated telecommunications infrastructure, including a state-of-the-art broadband network reaching 99 percent of the population.

-- A heterogeneous community of 4 million that's 78 percent Chinese, 13 percent Malay and 7 percent Indian, making Singapore an ideal test market for a good slice of Asia.

"For a U.S. company coming into this marketplace, Singapore is very cosmopolitan, a melting pot of cultures," says Vincent Sim, senior marketing manager for Microsoft's MSN business unit, which opened its Internet portal to Singapore in 2000. In two years, MSN was able to attract 800,000 local e-mail subscribers, and in 2001 it used Singapore as a laboratory to launch a successful series of live concert webcasts. "We find we can test new services in Singapore and then cross-share the learnings across Asia," Sim says.

Of course, along with Singapore's business opportunities come a unique set of challenges, including the following:

-- Skilled labor and available housing are both scarce and expensive.

-- The government is heavily involved in everything from recruitment to regulation that is, it's your business partner, like it or not.

-- The business-friendly government is not so friendly in other ways; it restricts expression, entertainment and political dissent to a degree that feels oppressive to most Westerners.

But despite those problems, Singapore today is host to about 6,000 multinational companies, all seeking the seemingly unlimited opportunities presented by the legendarily promising Asian market. What experienced global players have learned is that the key to getting good grades in Asia 101 is to know the rules of engagement with Singapore's government and culture, to develop local partnerships, and to work around the island's challenges.

Who You Know Tells How Far You'll Go

Business partnerships are valuable anywhere, but in Asia, where long-term relationships are revered, who you know very much affects how far you'll go. Singapore's IDA has developed a partnership model designed to help multinational companies gain a toehold in Asia and give homegrown companies an entry into the global marketplace.

The Infocomm Local Industry Upgrading Pro- gramme (iLIUP, pronounced like eye loop) is the cumbersome name of this program, an initiative that tries to pair local entrepreneurs in joint ventures with multinational companies. The objective: to blend the technology, know-how, and sales and global marketing power of the multinational companies with the man power, entrepreneurial energy and local market knowledge of the homegrown enterprises. Since iLIUP started in 1995, roughly 160 Singaporean companies have been assisted by 20 multinational mentors (17 of them from the United States) including Apple, Compaq, IBM and Oracle.

Among the current participants in iLIUP are Sun Microsystems and iGine, an up-and-coming Singapore-based vendor of e-commerce software. For more than a year, Sun and iGine have been united in a partnership that serves both companies' business needs. The first fruit of the relationship is WeB2Biz, a new e-business engine developed by iGine for Sun's partners and customers. According to Philips Lai, strategic business development director for Sun's global sales organization, WeB2Biz has helped cut Sun's order-processing time from 12 minutes to 15 seconds. And by leveraging Singapore's state-of-the-art telecom infrastructure, Sun has been able to test new Java and wireless products that can't yet be deployed in most of the world. "[This partnership] gives us access to new markets, new technologies and new offerings," Lai says.

But there's a bigger picture here. Clearly, for a company like iGine, a partnership with a brand name like Sun is a once-in-a-business-lifetime opportunity to take its show out of Singapore and mount it on the world stage. For Sun, iGine presents a red-carpeted chance to establish an intimate relationship with a homegrown Asian company that in turn can give Sun the credibility, experience and references it needs to penetrate the entire Asia-Pacific marketplace.

"Doing business in Asia is not easy," says Chang Huong Tan, CEO of iGine. "The opportunity is here, but if you don't get into the right relationships, [market penetration] can't work at all. And these relationships can take years to develop."

Sun's Lai agrees that the iLIUP partnership pays dividends throughout Asia. "Other countries look at what happens in Singapore," he says. "A strong reference from here does help. It's a door opener."

Please Come to Singapore

Suresh Prabhu, chairman of Apex Systems, an insurance industry software vendor with offices in India and Singapore, strongly encourages global leaders eyeing his marketplace. "Don't look at coming to Asia as a pain in the butt," he says. "Look at it as a way to expand your business."

Yes, the governments, cultures and customs impose barriers, he says, but not insurmountable ones, not when weighed against the benefits of entering the Asian marketplace and leveraging local resources.

"Look at what's possible in Asia that will help your bottom lines," Prabhu says. "Look at the skills available in places like Singapore and China."

All success requires, says Prabhu, is "a mind-set change."

Former Executive Editor for Community Development Tom Field is an old Asia hand who contributed to CIO's Dec. 1, 2000, Field Report on India.

Singapore Speed Bumps

Singapore poses some stiff challenges to global companies and their employees. Here are the issues to consider before setting up shop.

The government giveth...and taketh away. The voting privilege in Singapore is universal and compulsory. A citizen who fails to vote is stripped of the right to vote for five years.

In other words, Singapore gives people and businesses freedom to do what they're told. The financial services and high-tech industries are lightly regulated, and the telecommunications industry was completely privatized in 2000. But this is still a restrictive marketplace for media and entertainment companies. Journalists must be licensed in Singapore, Playboy and Cosmopolitan are banned, movies are censored, and the government maintains a list of banned websites that Internet service providers are required to block from Singaporean subscribers.

Labor is scarce. There are currently 116,000 IT jobs in Singapore, with only 106,000 qualified professionals to fill them, creating an enduring shortage of about 10,000 people. It's a seller's market, and IT workers are commanding top dollar $24,000 per year on average, which is almost five times what programmers in India earn. Companies increasingly are establishing management headquarters in Singapore and outsourcing the labor to China or India.

The living is easy...and expensive. Singapore has no natural resources, and its man-made ones are scarce too. Housing is particularly expensive. Residential space is so scarce, in fact, that about 86 percent of the population lives in government-built and financed high-rise apartments that cost anywhere from $1,500 to $3,000 per month. Because of the high cost of living, many multinational companies pay a housing allowance to their Singapore employees.

Office space is similarly scarce and expensive, but the government provides financial incentives and assistance to global businesses opening offices there.

As for transportation, it's relatively cheap if you don't mind taking a taxi or the subway. But the number of cars and drivers is strictly regulated. In fact, prospective drivers must win a lottery just for the privilege of paying up to $10,000 to obtain a driver's license. Foreigners with valid driver's licenses have an easier time of it; they can apply for a Singapore driver's license after one year of residency.

Of course, because of high tariffs aimed at discouraging private ownership, a midrange car can cost as much as $100,000. -T.F.

A Clean, Well-Lighted Place

Westerners may laugh about Singapore's draconian laws against chewing gum and petty crime (remember Michael Fay, the American teenager who was caned for vandalizing a car in 1994?), but perhaps not coincidentally Singapore's streets are clean and crime-free and kept that way by a stern criminal justice system that fines jaywalkers, canes petty thieves and executes drug dealers. Also, because the tiny island carefully regulates automobile traffic (cars and driver's licenses are prohibitively expensive), there is no street congestion or air-and-noise pollution, unlike in India or China.

Wired in Singapore

61 percent of homes have a personal computer. 75 percent of the country is served by cell phones. 99 percent of households are reached by Singapore One broadband network.

Island Net

How Singapore is leveraging a broadband network that connects 99 percent of its homes

E-services: Through its government-developed eCitizen Web portal, Singapore is migrating all its public services online. The goal is for citizens to have one-stop access to everything from birth registrations to retirement fund information. Singapore hopes to have 99 percent of those services consolidated online by 2004. Today, more than 500 e-services are available via the Internet and at eCitizen kiosks in community centers throughout the island.

E-business: Singapore is attempting to find an electronic means of cutting through red tape for businesses that want to set up shop, obtain permits or merely pay their taxes. The first hurdle, cleared in 2001, was creating a one-stop portal for new businesses to register in Singapore. Before, they had to spend weeks visiting offices and obtaining permits. Now they can register online and receive everything they need within three to five days. The fees for registering a new business have been cut from up to $1,700 to $150.

Through the Singapore One broadband network, subscribers can sign up for a movie-on-demand service that gives them access to a large video library. For roughly $2.50, viewers rent these films for 24 hours, and they can fast-forward, rewind or replay them several times over anything but legally record them.

Clearly, Singapore had some advantages before deploying e-services. This is a small island (246 square miles), after all, and the telecommunications infrastructure was already modern and sturdy. Few other countries, much less the United States, could hope to duplicate those initiatives today.

But a U.S. city, county or even state could. The keys to success are to have a strategy for scaling up before you launch and then to find a balance between supply and demand.

"You don't want to create 1,000 users and then have nothing for them to use," says Daneel Pang, the Infocomm Development Authority deputy director of content development.

THE PORT OF SINGAPORE

How does the world's busiest, most IT-intensive port retain its first-mover advantage? By being a second-mover too.

Robert Yap, executive vice president of IT for PSA Corp., the company that developed and operates the port of Singapore, holds the top IT job at the busiest and largest container port in the world a great job, but not without its worries.

Yap's port handles 250 shipping lines with connections to 600 ports in 123 countries, and daily sailings to every major port on the globe. Its calling card is efficiency; its backbone is IT. Because of the Computer Integrated Terminal Operations System (CITOS, a proprietary ERP application) and Portnet, an e-business system that provides paperless one-stop shipping for the port and its customers, PSA believes that technology is the basis of the port's competitive advantage. And it has been since 1984, when the first version of Portnet was introduced. Today, Singapore's port enjoys first-mover status as the world's IT leader in seaport logistics and operations.

But What About Tomorrow?

"I'm a firm believer in the second-mover advantage," says Yap, an Australian-educated business historian born in Malaysia who headed IT at Philips Electronics Asia-Pacific before joining PSA in 2000. "The first-mover is the one who creates the breakthrough," Yap says, quoting theory from his favorite professor, F. Warren McFarlan of the Harvard Business School. "But it's the second-mover who builds the business," he says. "We'd like to be both."

Has that ever been done? It can be argued that the Walt Disney Co. was a first-mover in animated films and theme parks, slipped and then rebounded to regain substantial margins in both markets. And Yap believes that Charles Schwab, which branded the online brokerage business and then awoke a sleeping giant in Merrill Lynch, ultimately will come back to own the marketspace. "But they've got to stay ahead of the curve," he says.

As does his port, which finds the edge of its technological advantage narrowing because of the ubiquity of IT applications in its industry. Accordingly, since 1996 PSA has focused not just on improving its own internal systems but in expanding its operations throughout the world buying shares of rival ports and turning them into franchises that grow the PSA brand. Today, PSA participates in joint ventures with 13 ports in eight countries throughout Europe and Asia, and it has established a subsidiary company, Portnet.com (of which Yap is CEO), to market and sell Portnet to other ports worldwide. The latest customer is the port of Seattle, PSA's first U.S. customer.

By constant expansion, PSA intends to ensure that its systems remain the industry standard. With a proprietary system in every port (figuratively speaking), what rival could hope to compete?

"I don't see any," Yap says. "But the challenge isn't building the application; it's who really has the innovative idea."

By spreading its technology globally, PSA has, for the time being, maintained its edge.

And that's Yap's plan.

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