FORMER Permanent Secretary, Ngiam Tong Dow, lamented recently that Singapore has produced an abundance of "wealth managers", and not enough "wealth creators". This is despite almost universal acclaim for the supportive business environment in Singapore: among others, the World Bank has rated Singapore top out of 183 economies in its "Ease of Doing Business" rankings, and fourth in the world for "Starting a Business" - anyone can get a business registered within just three days.
But just who is it that is benefiting from this? According to 2011 Gallup World Poll research, less than one in six Singapore residents (16 per cent) reported to have ever thought about starting a business. The number who has actually acted on such pipe-dreams is no doubt much smaller. Unless Singapore gets much better at understanding what drives entrepreneurs, and how to identify and nurture those precious few who exist in our midst, Singaporeans may continue to create the ideal capitalist society, but see most of the returns to capital flow to others.
Since the Economic Review Committee's suite of recommendations in 2003, Singapore has deployed substantial resources in pursuit of its goal to create "an entrepreneurial nation willing to take risks to create fresh businesses". In 2011, $320 million was pledged towards funding small and medium enterprises (SMEs) under the Technology Innovation Programme (Tip) over five years. In Q4 2011 alone, Spring granted $129.2 million in SME loans, and the 2012 Budget announced more generous funding under the Productivity and Innovation Credit scheme.
A plethora of tool-kits and development courses are available for budding entrepreneurs at a very affordable cost. Gallup data also shows that a whopping 89 per cent of Singapore residents believe that Singapore is a good place to live in for entrepreneurs forming new businesses, and 76 per cent of respondents trust that their property and assets would be safe if they started a business in Singapore.
In terms of supporting infrastructure, Singaporeans certainly are not facing the same challenges as Cambodia, for instance, where it takes 85 days on average to start a business, but a good 61 per cent of Cambodians have reported to have thought of doing so. It seems that further returns on government investment in building an entrepreneurial nation would have to be found beyond accessibility of funding and training.
Perhaps one area to investigate is whether the funding that is provided is correctly targeted. Technology and innovation seem to be synonymous with entrepreneurship: "cloud-based computing", "leveraging social networks", "crowdsourcing" and other trappings of the new economy are seen as rich sources to be mined for the next big idea that would be a "game-changer". Consequently, much of the funding available is contingent upon "technology innovation" - indeed this is the major criterion for receiving funding under the Tip.
Recently, funding from the Action Community for Entrepreneurship (ACE) bases its decision-making criteria on a more ethereal concept: "differentiation". Spending on research and development to generate innovation, and achieving successful market differentiation, are all important. However, each of these concepts, independently or collectively, is of little value to a start-up until they can create something a customer wants. The crucial piece that connects innovation, technology, and differentiated products or services on one end, and a customer who is willing and able to pay for that on the other, is the entrepreneur: a rare breed who is able to develop and execute a successful business model.
Take Facebook, for example, which started in a Harvard dorm room and was recently valued at over US$100 billion after its IPO. The idea of allowing individuals to post pictures, videos and commentary of their lives online, and sharing that with others, is not in itself the definition of innovation genius. It was not even a new idea: MySpace and Friendster were just among the more recognisable social networking portals that had sprung up in the early 2000s with large user bases, but they had not achieved the same degree of commercial success. The difference lies in Facebook's ability to convince advertisers to pay for access to its network of users: something that Reid Hoffman and Peter Thiel certainly couldn't have taken for granted during their contribution to Facebook's first financing round, but they must have seen in the young Mark Zuckerberg. No amount of business plan templates, "How to Start a Business" classes and "best practice" pollination would be able to replicate a similar success.
Another common refrain about the lack of entrepreneurial ambition in Singapore is our unforgiving education system and pressure to perform in a conventional way. Parents jostle to enrol their children into a myriad of child education classes from as early as when they are six months old. Throughout their childhood and adolescence, students are constantly benchmarked against one another in a race to get into the best schools and secure internships. When graduates enter the workforce, there is immense pressure to live the "Singapore Dream", an evolving alphabet soup of acronyms that in essence point towards more money and status.
While there might be some merit in that argument, and that this degree of societal pressure may be stifling for potential entrepreneurs in its emphasis on conformity for academic excellence, there is another piece to the puzzle.
Becoming more accommodating of everyone's experimental failures in school is one thing, but identifying and supporting the few successful individuals who emerge is another. Celebrating those successes would encourage more attempts and over time, spark a virtuous cycle of entrepreneurial energy. It is crucial to distinguish creating a nurturing environment for start-ups, from identifying and supporting talented entrepreneurs. It is the latter where Singapore should now focus its efforts.
Gallup research indicates that there are two attributes of successful entrepreneurs that emerge very strongly. They have an unrelenting demand for freedom, the freedom to do exactly what they want to do. Steve Jobs was not an inventor at Apple, that was Steve Wozniak's forte: what Jobs could do was imagine products that people would pay premium prices for, and he wanted complete independence to create them.
Entrepreneurs also have incredible optimism. To them, failing is merely a step on the road to success, but not in a linear way that others might perceive. They actually want a mess, and want to come to work and have an impossible thing to figure out.
Gallup chairman and CEO in his recent book, The Coming Jobs War, raised the example of Wayne Huizenga, who did not stop at building one Fortune-500 company, or two: in his lifetime, he founded three multi-billion-dollar companies. Huizenga grew Waste Management, Inc, Blockbuster Video, and AutoNation into three behemoths of American industry, without needing a much-coveted Ivy League education.
Funding in Singapore is currently given upon fulfilling criteria on technology innovation and differentiation, but perhaps it would be more prudent to divert some funding towards individuals with that extraordinary spark of an entrepreneur, almost regardless of how her idea sounds initially and what her educational background is.
Singapore's journey has been in the right direction. The rise in incorporation figures is a rough proxy for an increase in economic energy, and when we analyse our data more closely, we find that the youth (age 15-34) in Singapore are more likely to have thought about starting a business, with those in the age range 25-34 more than twice as likely (29 per cent) to have thought about becoming an entrepreneur than the older generation. That is slightly better than Thailand (28 per cent) and Malaysia (27 per cent), but still a far cry from more entrepreneurial nations like the US (55 per cent), Sweden (54 per cent), Australia (59 per cent), New Zealand (57 per cent), the Philippines (50 per cent) and Indonesia (39 per cent).
There are a multitude of complexities that are at play when betting on entrepreneurship, but in many cases, success begets success at the national level. For the next stage of Singapore's journey towards an "entrepreneurial nation", it seems that a wise bet would be to first gain a deeper understanding of entrepreneurs, especially Singaporean entrepreneurs; second, identify them early (our school system really only picks out the best learners but not the strongest challengers of the status quo); and third, support them with funding and the necessary infrastructure; and finally, get out of their way.
Hopefully in doing so, more of the wealth Singaporeans are so good at managing would also have been created at home.
Leong Chee Tung is a senior consultant and Jann Wong is a consultant at Gallup