The impact of Singapore’s tech ecosystem on SME global reach

• Singapore ranks as the world’s most competitive economy in 2023 and third in global competitiveness for digital adoption, contributing to a substantial GDP of $673.3 billion and significant foreign direct investment inflows.

• Singapore’s digital and finance sectors have been key contributors to its economic expansion, supported by government initiatives and a skilled workforce, fostering a thriving environment for SMEs and start-ups.

• The UAE’s rapidly growing digital ecosystem presents vast opportunities for Singaporean SMBs to expand, leveraging the region’s supportive environment for tech-driven businesses.

In the recently released Management Development (IMD) World Competitiveness Ranking, Singapore claims the number one (1) position for the most competitive economy in 2023. The same research centre reveals that the country ranks third (3rd) in global competitiveness in terms of digital adoption for socio-economic transformation. These global economic data contribute to Singapore’s substantial $673.3 billion gross domestic product (GDP) in 2023.

According to the comprehensive record in the World Investment Report, Singapore attracted a total of $159.67 billion in foreign direct investment (FDI) inflows in 2023. Based on data from FDI Markets gathered by the Financial Times, the country ranked second globally in attracting greenfield FDI projects, with 442 projects valued at approximately $19 billion.

This article is authored based on the insights shared by Helen Wang, Regional Head – Singapore, USA, China at Seed Group, a company of The Private Office of Sheikh Saeed bin Ahmed Al Maktoum. During our interview with Wang, she emphasised the booming technology industry in Singapore and the drivers fueling such development. Wang also pointed out how the Middle East and North Africa (MENA) landscape has become a breeding ground for digital innovation. And, how this subsequently opens up excellent prospects for Singapore-founded businesses looking to expand their operations in the region.

It is worth noting that Seed Group is a Dubai-based corporate institution that fosters strategic partnerships with international firms looking to build their market presence in the UAE and the MENA region as a whole.

Global expansion: Impressive drive, diverse sectors, and overcoming challenges

As per the Singapore Digital Economy Report 2023, Singapore’s information and communication sector accounted for one-third of the economy’s growth between 2017 and 2022. The study noted that key contributors within this industry include e-commerce, telecommunication services, software, online gaming, virtual services, IT consultancy, hosting services, IT services, and more.

Singapore’s finance sector, on the other hand, plays a leading role in driving 13.8% of its total economy, with financial technology (fintech) among the main sub-sectors. Moreover, the Ministry of Trade’s 2023 Economic Survey of Singapore shows that the country’s robust digital economy is driven by the high enterprise demand for digital solutions and services. This has led to a substantial increase in the tech workforce, with an estimated 200,000 professionals in the industry. 

It’s also worth pointing out that a plethora of government-led projects, such as the Smart Nation Initiative, were rolled out to establish the nation’s robust fintech field. This strategic drive eventually propels the country to the frontlines of the global digital transformation era. Hence, it comes as no surprise that competition among the approximately 288,000-strong SME (small and medium-sized enterprise) sector has intensified.

With the range of developments outlined above, there’s no doubt that the country has developed a fertile ground for SMBs (small and medium-sized businesses) and start-ups to grow sustainably. By providing access to advanced digital infrastructure, government incentives, and a skilled workforce, SMBs are able to maximise these resources to scale their operations — even outside the country. 

In 2022, there were about 2,000 local firms that took their innovative expertise outside the shores of Singapore. These ventures led to the facilitation of over 300 global projects for Singaporean businesses.

The favourable tech ecosystem in the MENA region

The broader technology sector in the MENA region is experiencing substantial growth and transformation. According to MAGNiTT, an analytics platform for start-up investor funding, MENAP’s (including Pakistan) fintech industry has exhibited a strong overall increase.

In a comprehensive report by McKinsey & Company, MENAP’s fintech start-up investor funding has spiked from around $200 million in 2020 to $885 million in 2022, with the UAE, Saudi Arabia, and Egypt among the key hubs for innovation. As such, fintech companies — homegrown or international — have experienced significant growth in the region.

Conversely, various institutional news sites reveal that the MENA region is experiencing a rapid proliferation of next-generation networks and reliance on technology services. For this reason, several research platforms in the industry project a significant increase in funding and valuation for the entire industry.

MarkNtel Advisors, a data analytics and market research consulting firm, foresees a compound annual growth rate (CAGR) of roughly 25.7% in the GCC digital transformation market from 2024 to 2030. Additionally, the TechGPT Compendium report by Switzerland’s UBS Group AG indicates that the region’s digital economy is expected to grow from 4.1% in 2022 to 13.4% by 2030. The market size is projected to grow from $180 billion to $780 billion during the same period.

Building on this momentum, the UAE has emerged as a breeding ground for digital innovation as it’s known for nurturing several tech-agnostic unicorns that have established and thrived within its dynamic ecosystem. Successful native tech-driven businesses like Swvl, Noon, and Souq.com (one of the largest e-commerce platforms acquired by Amazon) are examples of the UAE’s capacity to foster globally impactful start-ups. It’s also essential to note that digital-based multinational unicorns like Apple, Binance, and Meta have physical offices in the country.

The potential of Singaporean SMBs to thrive in the Middle East

Singapore-founded SMBs have an incredible opportunity to expand into the UAE and the wider MENA area. While there are inherently challenging factors to cross-border expansion (e.g., legal and regulatory), the UAE’s diversified corporate field provides access to new markets and capital and opens up new avenues of growth.

In fact, start-ups and SMBs hailing from Singapore, like Wego, Nium, and StashAway, have succeeded in their operations in the country. Their successes can be attributed to meticulous market research, strategic collaborations, adaptation to local cultures and regulations, and a relentless commitment to innovation and quality.

Indeed, the UAE’s supportive environment for technological advancements, including fintech, makes it a prime choice for Singaporean SMBs looking to grow vertically and horizontally.

This article is part of the Seed Group Global Campaign, which looks into the innumerable potential for Singaporean SMBs that are eager to venture into the MENA market. Take a look at our other features covering various regions to get a comprehensive understanding of global expansion opportunities.