Infrastructure, connectivity keep S'pore ahead in Asian hub race

Singapore's business-focused fundamentals and geographic access are drawing global tech companies to its shores, but lack of talent and high costs may curb future takers.
Written by Kevin Kwang, Contributor

The Singapore government's long-standing ambition of encouraging global companies with regional aspirations to base their Asia headquarters in the country is bearing fruit, but the lack of skills and rising costs may deter more from following suit.

One of the government's most recent IT-related initiatives to draw companies here is the 10-year roadmap to position Singapore as the intellectual property (IP) hub in this region. The Ministry of Law in April last year outlined its plans to be a hub for IP transactions and management, quality IP filings, and IP dispute resolution, with the view that this would create high-value jobs for Singaporeans and generate benefits for the legal and IP service sectors. 

The country's Economic Development Board (EDB) is also actively dangling tax benefits and making it easy to set up shop here with its International (IHQ) and Regional Headquarters (RHQ) Programme. Companies that meet the RHQ criteria, for example, are eligible to enjoy a concessionary tax rate of 15 percent for 3 years on incremental qualifying income. Should they satisfy the scheme's minimum requirements by Year 3, they stand to enjoy the same tax rate for an additional 2 years on qualifying income, the EDB stated on its Web site.

Singapore, though, is not alone in the self-promotion. Competing cities in the region such as Hong Kong, Seoul, and Shanghai have all ramped up their efforts to entice businesses to their shores, in the hopes that investment dollars and jobs for their respective market would soon follow suit.

Given the competition within the region, ZDNet spoke with several IT companies to find out why they established operations in Singapore and how the city-state has helped achieve their business goals.

Robust infrastructure a boon

Datacenter operator Equinix, for one, is a strong proponent for doing business from here. Clement Goh, managing director of Equinix South Asia, revealed the company's regional support office is based here and supports its entire Asia-Pacific operations. There's also the Solution Validation Center, out of which customers can testbed business applications and measure the performance of the data center before full deployment, Goh added.

More significantly, its global development center is based here and the facility develops "most of the applications used by Equinix internally as well as customers across our datacenter sites globally", he noted.

Through these, Equinix's business in Asia-Pacific has grown 40 percent year-on-year in 2012 and its Singapore operations has the largest datacenter footprint in the region, the executive said.

Lack of skills and rising costs remain challenging for some companies.

"Singapore serves as a model for the region, and ranked the second-most network-ready country in the world and the first in Asia. As such, this allows our customers to expand their businesses--through us--with robust security, scalable and low-latency connectivity. This in turn boosts operational productivity and bottomline," Goh pointed out.

Another that benefited from Singapore's infrastructure is Accuity, a global financial services solutions provider and consultancy. CEO Hugh Jones shared that given its business requires the company to work closely with banks, non-banking financial institutions and corporations around the world, locating its headquarters here makes sense since most of these customers are located here.

Additionally, the country's strong connectivity within Asia and robust infrastructure is key to it penetrating other Asia markets, Jones added. "Accuity is able to provide localized support to key countries such as China, India, Hong Kong and Japan...[and] by working closely with established organizations in these and other Asian countries, we are able to better understand the current and future needs of these markets to help drive product development," he said.

Ex-VMware chief Paul Maritz's latest venture, Pivotal, was also attracted by the geographic advantages and pro-business environment on offer. Melissa Ries, vice president and general manager for Pivotal Asia-Pacific and Japan, said: "Singapore is the regional headquarters for Pivotal, and both the geographic location as well as the ease of doing business made it a preferred destination for us.

"in addition, the Singapore infocomm ecosystem encourages innovation and offers the right infrastructure and technology support needed to run the demanding requirements of a regional headquarters," she added.

Talent, cost challenges persist

It's not all rosy doing business in the city-state, however.

Goh pointed out that despite strong support from the government and availability of infrastructure, Equinix still sees a shortage of skilled data center specialists. He did point out the Infocomm Development Authority of Singapore (IDA) and the EDB are actively mitigating the talent shortage by introducing initiatives to provide industry training in partnership with vendors.

Local tertiary institutions are also doing their part in alleviating talent shortage. Singapore Polytechnic, for example, collaborated with Cisco Systems, Citrix Systems, and NetApp to open its SPE3C3 (Singapore Polytechnic Electrical and Electronic Engineering Cloud Computing Center) training facility to equip students with cloud computing and next-generation datacenter management skills.

Meanwhile, Japanese IT giant Toshiba cited competitive pricing as one of the challenges it faces when doing business out of Singapore. A company representative said in an e-mail: " A challenge would be the competitive pricing around the region [even as] Toshiba aims to deliver cost-effective and reliable solutions in Southeast Asia."

Regardless of the challenges, though, the companies ZDNet spoke with remain bullish of business growth in Singapore and the wider Asia-Pacific region.

Ries said Singapore's success in attracting the best in technology, such as in big data and platform-as-a-service (PaaS) arenas, enables Pivotal to capitalize on big data analytics initiatives in the region.

"Singapore's push toward being a big data hub and our close involvement with IDA to drive the momentum, and commitment in the iN2015 masterplan will be core in enabling the implementation of successful big data analytics initiatives in the region," she said.

Goh said emphasis on being a data hub for the region would help fuel growth locally and in the region. To back this up, he revealed that Equinix's third data center here is currently being built and response from existing and potential customers has been "very positive".

"2014 is poised to be another year of data-driven acceleration. The new data stimulants of cloud services, mobile content, personal content, social media and big data demands of sectors like financial services will take us to new consumption highs this year...[and] Singapore is uniquely placed to take advantage of the data surge," he pointed out. 

Kevin Kwang is a freelance IT writer based in Singapore. 

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