Business committee urges Govt to help startups grow into unicorns

SINGAPORE — To help the Republic thrive in the digital economy, the Government needs to make the country more attractive to startups and help them grow into unicorns, said the Singapore Business Federation-led SME Committee (SMEC) on Wednesday (Jan 17) as it unveiled its recommendations for Budget 2018.

Unicorns are startups valued at above US$1 billion (S$1.3 billion) or more. Ride-hailing firm Grab is one example which has set up its headquarters here.

Referring to unicorns such as Grab, SMEC chairman Lawrence Leow said at a media briefing on Wednesday (Jan 17): “There has been a global emergence of potential unicorns with disruptive and transformative capabilities across several industries.”

Elaborating on the committee’s suggestion, Mr Leow said a scheme could be designed to benefit Singapore companies and residents. For example, a startup needs to have a minimum 30 per cent Singaporean equity stake and it needs to have its headquarters or key functions in Singapore. The Government can also spur companies to invest or co-invest in potential unicorns through grants and tax incentives, for instance. 

Former Minister of State Teo Ser Luck, who left political office and returned to the private sector in June last year, is an advisor to the SMEC.

He noted that many larger, well-funded startups which have established a base in Singapore will start looking for local startups for acquisition or mergers. “One of the reasons why it is good for some of the unicorns to be here is because Singapore just doesn’t have the volume for business. If you want to scale up, you need the global network,” Mr Teo said.

Nevertheless, Mr Leow stressed that it was important for successful startups to sink roots here, and “not to come and go”.

The suggestion to create a more attractive environment for startups was among a raft of recommendations that the SMEC has put up for this year’s Budget.

The committee highlighted the improved economic conditions, and greater optimism among businesses. However, challenges such as rising business costs and more intense competition remain.

Th SMEC reiterated the need for the Government to provide financial support to trade association and chambers to help companies connect with overseas markets. It also proposed enhancing support schemes for firms to spread their wings abroad, and increasing the number of source countries for foreign workers.

To help small and medium enterprises build a stronger foundation for the future economy, the committee recommended greater participation from these firms in government procurement.

On Tuesday, some among the business community urged the Government to impose a tax on e-commerce to “level the playing field”, instead of raising goods and services tax (GST) across the board.

Weighing in on the issue, Mr Teo noted the need for the Singapore government to look at what other countries are doing in the e-commerce sector, given that it involves cross-border trade. “The European (countries)… are implementing certain taxation when it comes to e-commerce, and (for) Singapore… there is a need to align in some ways,” he said.

Noting that e-commerce still makes up a small percentage of total retail market in Singapore, he added that online retailers would also be concerned about how taxation could affect the volume of transactions.

Mr Leow reiterated that a GST hike would affect consumer spending. “Obviously when the consumers don’t spend, businesses will have less business to do,” he said.