SINGAPORE is poised to draw in more unicorns - private companies valued over US$1 billion - as a launchpad for regional expansion with its favourable business climate and access to talent, say market watchers.
This sentiment was strengthened as US ride-hailing giant Uber became the latest unicorn to designate Singapore as its regional base. On Tuesday, Uber launched its Asia-Pacific (APAC) hub at its new premises at Frasers Tower, currently housing about 165 employees.
Despite having no immediate plans to relaunch its services in Southeast Asia, Uber is planning to hire both specialist and entry-level talent for its regional business teams and corporate functions in Singapore.
"This is an amazing talent hub for us, both in terms of people who are already part of the team, and our ability to attract and export talent across the region," said Amy Kunrojpanya, Asia-Pacific senior director of policy and communications at Uber, at a media briefing.
Singapore is also a good model for Uber to witness "how future smart cities think" as it experiments with new technologies, she added.
While it may seem unusual for Uber to double down on a non-operational market, industry watchers such as Jamus Lim, associate professor of economics at ESSEC Business School APAC, are not surprised.
"My guess is that they have already paid the large fixed costs of… operational infrastructure, and feel they can best attract global talent (here)," he said. "The local market would always have been small potatoes compared to larger regional prizes."
Like Uber, several other unicorns have picked Singapore as their launchpad into the Asia-Pacific. Payments infrastructure firm Stripe announced in September last year that Singapore will be the site of its APAC engineering hub, while Airbnb's Cecil Street office already serves as its APAC headquarters.
DBS senior economist Irvin Seah expects that more foreign unicorns will set up regional headquarters here. Singapore is a "natural destination" for tech-driven firms to scale regionally, given the country's reputation as a hub for multinational corporations, he told The Business Times.
"If you consider 10 years ago… Singapore was also perceived to be an attractive destination for big electronics companies. Now, because the drivers of the global economy have changed, it's all about digital technology. Naturally, Singapore becomes attractive as a regional headquarters for many unicorns," he said.
The country's attractiveness stems from a "confluence of factors" beyond talent, including good data infrastructure, a competitive tax regime, intellectual property protection and access to financial services, Mr Seah explained.
A "strong focus on research and development with an open-minded regulatory regime" is another key appeal, said Patrick Yeo, venture hub leader at PwC Singapore.
"Singapore is known to be pragmatic and consistent with its policies which gives certainty... Singapore being small also allows the tech companies to test out their innovations effectively on a smaller scale before full global rollout," he said.
There are however, some factors that Singapore will need to be mindful of to retain its edge in wooing unicorns. For one, there is a shortfall in domestic tech talent , said UOB senior economist Alvin Liew.
"In terms of talent pool, many of them may still rely on bringing in talent from overseas in order to carry out their business, even though this is an APAC hub," he said.
In addition, many other jurisdictions are coming up with competitive corporate tax regimes. Singapore will also have to compete with global cities like Hong Kong, which has the advantage of proximity to China, he said.
Assoc Prof Lim of ESSEC, however, thinks there may in fact be room for both countries to benefit. "Many no longer view the two as substitutes but as complementary hubs, one to serve North-east and the other, South-east Asian markets."