th images menu user export search eye clock list list2 arrow-left untitled twitter facebook googleplus instagram cross photos entrep-logo-svg

Home to Grab and Zalora, What Can Malaysia and Singapore Teach PH in Helping Startups?

Apart from supportive policies, the gov't must also help develop tech and funding for startups
By Elyssa Christine Lopez |

 


 

 

Singapore and Malaysia are home to some of the biggest startups in the Association of Southeast Asian Nations (ASEAN) region.

 

According to research firm CB Insights, both countries have between them 10 startups that have raised at least $1 million in equity funding as of October 2016. The list includes ride-sharing company Grab and e-commerce platform Zalora in Singapore, and content streaming platform iFlix in Malaysia. These startups also have strong presence in most countries in the Asia-Pacific.

 

There’s a reason that the two countries figure prominently as the base for the region’s fast-growing startup companies: both Singapore and Malaysia have been resolute in creating friendly environments for tech startups. But they do much more than create a supportive climate.

 

During the ASEAN 2017 Micro Small and Medium Enterprises (MSME) Development Summit last month, key policy makers from both countries recounted some of the important steps their respective governments took support the rise of their startups.

 

 

Invest in technology research

More than a decade ago, the government of Singapore established the National Research Foundation (NRF) to engage in basic research in technologies that can later be commercialized by private enterprises, including startups. The NRF’s research output has helped several sectors to advance, from education to business.

 

Kurt Wee, the president of the Association of Small and Medium Enterprises in Singapore, shared in a panel discussion at the summit that the think tank has helped locals to create innovative enterprises. “It helps create the overall ecosystem to create higher-value jobs, taking an enabling approach,” Wee added.

 

NRF’s Research, Innovation and Enterprise (RIE) 2015 plan, funded by the government with SGD16.1 billion (about Php598.08 billion), resulted in strategic partnerships between private and public agencies. One of the vital chips developed by engineering solutions firm Applied Materials, now used in smartphones, was made possible through the extensive research done by Agency for Science, Technology and Research (A*STAR), which is backed by the NRF.

ADVERTISEMENT - CONTINUE READING BELOW

 

Aside from the RIE, the NRF also has several programs that provide funding to both startups and venture capitalists (VC). The Early Stage Venture Fund (ESVF) was established in 2008 to seed corporate VC funds that invest in Singapore-based early stage high-tech companies. In return, corporate VCs have the option to buy out NRF’s shares within five years. Meanwhile, the Central Gap Fund provides financial support to engineering and/or science projects that have the potential to be commercially viable.

 

Both projects aim to transform scientists, engineers and researchers into entrepreneurs.

 

“The government gives grants to startups in a qualified area of development,” Wee said. “The government helps when you want to help yourself.”

 

 

Build a funding ecosystem designed for startups

For Malaysia, the landmark measure that paved the way for the growth of the country’s startups was legislating a definitive regulatory framework for local equity crowdfunding (ECF) platforms. This made available huge amounts of financial resources to startups that otherwise could not get support from banks and other traditional financial institutions.

 

“We try to create a startup-friendly environment and I think Malaysia is the only country [in the region] which has structured crowdfunding to facilitate startups,” SME Corp. Malaysia CEO Datuk Hafsah Hashim told Entrepreneur Philippines. “Through crowdfunding, you can get funds in the fastest manner without collaterals but people gain equity in your startup.”

 

Hashim is talking about the amended Capital and Markets Service Bill 2015, which paved the way for the proliferation of ECFs, and the general acceptance of the platform as a means to raise capital. SMEs and startups may tap the option to raise as much as three million Malaysian rupiah or around Php34 million for a year.  Since its implementation in 2015, six ECF platforms have been introduced to the market, namely Alix Global, Ata Plus, Crowdonomic, Eureeca, PitchIN and Propellar Crowd+.

ADVERTISEMENT - CONTINUE READING BELOW

 

“We constantly try to improve the ecosystem for startups in Malaysia, still, I can see that some countries have already tried to emulate what we have started,” Hashim said.

 

 

Smart or targeted tax incentives

Both Singapore and Malaysia offer fiscal incentives to startups as a means to encourage their local entrepreneurs to constantly innovate but the tax breaks are highly targeted and time-bound. The Philippines also offers tax breaks but studies have shown that many of these are unnecessary or redundant as they go to companies that would have made the investments anyway.

 

“High tech related businesses” or those doing business with new technologies in Malaysia, have the option to apply for a 100 percent tax exemption for its first five years of operations. Likewise, startups based in Singapore may also enjoy tax exemption for the first SGD100,000 worth of income a startup gains for its first three years of operations.

 

These measures are part of the reason why Singapore and Malaysia are in the Top 5 best economies to do business in for the East Asia and the Pacific Region, according to the World Bank. Now, it’s up to the Philippines to learn from its neighbors.

 

 

*****

 

 

Elyssa Chritine Lopez is a staff writer of Entrepreneur PH. Follow her on Twitter @elyssalopz

Latest Articles

Which PH Blue-Chips Have Become More Affordable as the Stock Market Enters Bear Territory?

The PSE index’s fall to its lowest in 18 months may be worrisome for some but creates buying...

byPauline Macaraeg | June 22, 2018 09:00:00

Who Are the Top 50 Revenue-Generating Startups in the Philippines?

Entrepreneur Philippines releases a first-ever online ranking of the country’s leading startups...

byLorenzo Kyle Subido and Roel Landingin | June 22, 2018 07:00:00

4 Tasks Successful Leaders Should Delegate

As a business owner, you can't possibly do everything -- and you need to not only accept that fact...

byPeter Daisyme | June 22, 2018 06:00:00

The Secret Weapon 2 Famous Founders Deployed to Build Their Mega-Successful Companies

As Steve Jobs and Jeff Bezos found, success comes when you turn your business into a reflection of...

byNatasa Lekic | June 22, 2018 02:00:00

This Pinoy Air Travel Company Just Launched New Flights from Manila to Clark and Puerto Galera

AirTrav is now open for bookings

byKhatrina Bonagua for FHM.com.ph | June 22, 2018 00:00:00

Crazy Rich Asians of Davao? Ayala’s 70 Luxury Condos Priced Up to Php81-M Sold in Less Than 24 Hours

The president’s hometown is not just the nation’s new political capital but also a hot luxury...

byPauline Macaraeg | June 21, 2018 14:00:00

Unsolicited Proposal to Build 11-Km Makati Subway Acknowledged by City Gov’t

Costing $3.7 billion, the project still has to be negotiated by the LGU and proponent IRC Properties

byElyssa Christine Lopez | June 21, 2018 13:00:00

PH Platform Helps Firms Access Over 2K Online Courses To Upskill Workers

STORM Learning carries courses covering various industries and sourced from around the world

byLorenzo Kyle Subido | June 21, 2018 10:00:00

Apl.De.Ap Supports Scholarship Program to Teach Creative Artists to Become Savvy Entrepreneurs

The deadline for application for the initial batch of 40 scholars is on July 8

byElyssa Christine Lopez | June 21, 2018 09:00:00

6 Scientifically Proven Moves You Can Make to Boost Office Productivity

Who knew plants were anything more than a decorative touch?

byMoe Kittaneh | June 21, 2018 06:00:00

Does Your Team Love Coming to Work? Follow These 7 Strategies to Make Sure

A good product or service is wonderful, but great talent is your life force

byJaleh Bisharat | June 21, 2018 02:00:00

This Former Brand Marketer Now Sells "Demi-Fine" Jewelry in Online Shop

Modern Myth has delicate pieces in gold, sterling silver and semi-precious stones

bySteph Sison for Preview.ph | June 21, 2018 00:00:00
Close