Entrepreneurs and grantrepreneurs
Creating an entrepreneurial culture in Singapore
University of Amsterdam Name: Bart de Groot Student number: 6103448 Date: 27-6-2016
First reader: Sikko Visscher
Second and third readers: Olga Sooudi and Gerben Nooteboom Words: ~20.000
1
Table of contents
Introduction ... 2
1. Business in Singapore, a history ... 5
2. Entrepreneurship theory ... 15
2.1 Creativity, innovation and entrepreneurship ... 15
2.2 Etymological backgrounds ... 16
2.3 A model for Singaporean businessmen ... 18
3. Analyzing the data, stories of entrepreneurial intention in Singaporean society ... 20
3.1 Traditional Businessmen ... 21
3.2 Entrepreneurs ... 30
3.3 Grantrepreneurs ... 39
Conclusion ... 47
2
Introduction
“To make the Smart Nation succeed, we need an entrepreneurial culture. You can import the latest technology, you can implement business-friendly schemes, but ultimately, you need a culture, that spunk, daring to dream, daring to fail, daring to take on big challenges. Many countries have tried to nurture this culture, only a few have succeeded. America is one of them, Israel is another, perhaps there will be one or two somewhere in Asia ... We are beginning to see such an entrepreneurial culture in Singapore. We have a startup district called the Launchpad that brings together the government, the start-ups, the venture capitalists and the talent.”1
The above words were spoken by Prime Minister Lee Hsien Loong during his 2015 presidential address. The initial message to Singaporeans is clear: we lack a creative entrepreneurial ecosystem, but we (the government) are working hard on creating one for you. The second message is that even though the government is doing its part by creating a business-friendly environment, it is up to the Singaporeans themselves to step up and take advantage of all of the eased regulations, the new infrastructure and subsidy schemes. The discourse here focuses on the innate psychological or cultural factors that influence them, claiming that for some reason Singaporeans are not (yet) entrepreneurial.2 The third statement had a more implicitly conveyed message. Singapore has to create an entrepreneurial culture following a Western model. His final statement is a telling example of how things are done in Singapore. The government is always involved, as a partner, funder or rival. It has to create the necessary conditions, but how do local businessmen react to its continuing encroachment?
When I arrived in Singapore, I planned on doing my research at Nanyang Technological University (NTU). I wanted to find out in what ways the government tries to stimulate innovation and creative thinking through its education system. I assumed that, as Singaporeans are from a young age thrown into an education system characterized by constant competition and rote learning, Singaporean students would lack the necessary qualities to be truly creative or innovative. Over the last twenty years however the government has tried to change this system, switching to stimulating creative thinking. Another thing I wanted to find out was in what ways creative, divergent, Singaporeans experience life in a society dominated by an authoritarian government that constantly emphasizes hard work, individual
1 Lee Hsien Loong, ‘Presidential speech at the Founder Forum Smart Nation Singapore Reception’ (2015), http://www.pmo.gov.sg/mediacentre/transcript-speech-prime-minister-lee-hsien-loong-founders-forum-smart-nation-singapore.
2 Kim Cheng Patrick Low, ‘Cultural obstacles in growing entrepreneurship, A study in Singapore’ in Journal of Management Development, 25 2 (2006) 172.
3 sacrifice, the common good and deference to authority. However, after several interviews with students at NTU, I realized that I wouldn’t find any answers by merely looking at education. Most students were quite satisfied with the current system and didn’t seem to be bothered by the lack of individuality, creative freedom and general independence that was accorded to them. I felt I had to change my approach. I had a phone conversation with Susan van Boxtel, innovation officer at the Dutch Embassy in Singapore, which opened up a new venue for my research. She told to me that in the last two years the Singaporean government had initiated a range of campaigns to positively influence public opinion on entrepreneurship. This was compounded by earlier stimulation packages to help future entrepreneurs start up their business in Singapore.
I decided to build my research around semi-structured stakeholder interviews with local businessmen. I chose informal locations, hoping I would succeed in catching their attention, arousing their interest, and through that to make them want to talk with me longer. I felt that by bringing too much structure into the interviews they might get bored, which would reduce the amount of time I could spend with them. I also in some sense wanted them to take charge of the interview, since that would show me what issues they themselves were struggling with, what they wanted to talk about. I was lucky to already have several entrepreneurs in my social network when I arrived in Singapore. I was able to use them for my first interviews. They were also able to provide me access to the my main gatekeepers, and making use of the snowball method, I was able to get more interviewees. My first gatekeeper was Martin Pasquier, a French innovation consultant who I knew through Arthur Bontemps, a French entrepreneur who shared office space with one of my first interviewees, Sebastian Sim. The second was William Hooi, who I was linked to by Martin. They had many contacts in the entrepreneurial scene, giving me access to many of the most interesting entrepreneurs in Singapore, such as Alvin Lee, Grace Sai and Seah Ying Cong.
I first intended to find out what motivates individuals in Singapore to start their own business. After gathering my data, I found that there were broadly speaking three motivations: money, freedom, achievement and experience. I noticed that these motivations were linked to the nature of people’s business. The group of more old-fashioned, or traditional, businessmen, was mostly motivated by money and being their own boss. The group of innovative entrepreneurs was mostly motivated by freedom, achievement and experience. The final group, the student-entrepreneurs whom I met at networking sessions for young entrepreneurs, mostly just wanted the experience, with a vague dream of future riches, to become the next Mark Zuckerberg. When I got home to analyze my data, my main
4 research question changed slightly. Rather than just analyzing their motivations, I wanted to find out in what ways these three groups dealt with the dominant nature of the state in Singapore, and how they would be able to assert their individuality within the suffocating economic and social climate in Singapore? I set myself to tracking down these three groups of businessmen through Singapore’s history, to then place them within the context of contemporary Singaporean society. I found I could make a solid argument from a historical perspective for their existence.
Through this we arrive at the main question of my thesis: how do different groups of businessmen deal with constant government interference in their dealings? I want to show in what ways these three groups differ from each other. Secondly, I want to look at what forms of stimulation they receive, and how they deal with the various control mechanisms that are attached to this stimulation, both political and economic. Finally, I want to look at how they go about creating their own economic and social space. I will start by tracking the history of entrepreneurship in post-independence Singapore. After that I will give a general overview of relevant literature on entrepreneurship and explain my own model. Having treated both the historical and theoretical underpinnings of entrepreneurship in Singapore, I will use the primary data I gathered there to give an in-depth analysis of the three aforementioned groups of businessmen.
The data I gathered during my fieldwork consists of 21 semi-structured interviews. Eight of them were with traditional businessmen, two with grantrepreneurs, six with Singaporean entrepreneurs and five with foreigners (three French, one English and one Dutch). The age range was from approximately twenty to fifty years old. I was also able to speak to various academics and professionals working in innovation-based industries in Singapore, and visited several events from NUS Enterprise, the Institute of Innovation and Enterprise at SMU and the Hub. I asked all of my participants whether they were fine with me using their real life names in my thesis. They all consented to this.
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1. Business in Singapore, a history
In this chapter I will discuss the political, social, cultural and economic history of Singapore with an emphasis on the decline and recent resurgence of business ownership and entrepreneurship. During Singapore’s early history until independence, it received most of its population through migration, and functioned as a hub for trade in South-East Asia. During this period Singapore developed most of its ethnic and cultural characteristics. After that from 1965 until 1985, Singapore experienced rapid economic growth, the de-politicization of society and the breaking up of old business networks. During this period the current political system of Singapore was shaped. From 1985 to 1998, Singapore responded to its first recession by reforming itself economically, putting more emphasis on the diversification of the economy through stimulating Small and Medium Enterprises (SMEs) and setting up organizations to foment innovation. Finally, from 1998 until now, responding to the Asian Crisis in 1998, the government planned for the creation of a Knowledge-Based Economy driven by an entrepreneurial society and the commercialization of academic knowledge.3 Innovation at universities was promoted, and a series of government policies to stimulate entrepreneurship were initiated.4
Singapore was founded in 1819 by Sir Arthur Raffles. He chose the location for its strategic place between the South China Sea and the Indian Ocean. Under the British Empire Singapore functioned as a hub for transit trade and developed a strong mercantile economy. During this period it attracted many migrants, mostly from Southern China, but also from India and South-East-Asia. Most were economic migrants, fleeing deteriorating local conditions, who sought employment as day laborers. Some set up their own businesses, their activities ranging from selling food and groceries to trading and transporting goods. Their primary objective was to earn as much money as they could and then go back home. Most businessmen then were opportunists. They had to be flexible in order to take advantage of the opportunities that British colonial rule offered them through their laissez-faire approach to economic growth.5 Singapore developed a thriving community of family-owned businesses, some of which still exist until today. Some formed organizations centered around kinship groups or their region of origin.6 An example of this is the Singapore Chinese Chamber of Commerce.7 While the British were in control of
3 Henry Etzkowitz, ‘The norms of entrepreneurial science, Cognitive effects of the new university-industry linkages’ in Research Policy 27 (1998) 825.
4 Jan Youtie and Philip Shapira, ‘Building an innovation hub, A case study of the transformation of university roles in regional technological and economic development’ in Research Policy 37 (2008) 1190-1192.
5 Jean Lee and Javinh Chan, ‘Chinese entrepreneurship, A study in Singapore’ in Journal of Management Development 135.
6 Daniel P.S. Goh, ‘Singapore, the state and decolonial spatiality’ in Cultural Dynamics 27 2 (2015) 217. 7 Lee, ‘Chinese entrepreneurship’ 137.
6 formal politics, these organizations performed important social and cultural functions and maintained a strong grip on most the informal economy.
During the Second World War, Singapore was captured and used by the Japanese as a naval base. The Japanese fiercely repressed pro-Chinese dissenters, leading to the deaths of thousands during the Sook Ching massacre. This event left deep scars in society and shook local faith in British colonial government. After the Second World War, with European colonial empires crumbling everywhere, Singapore also made its bid for independence. In 1959, after an early attempt in 1956 by David Saul Marshall had failed, Lim Yew Hok secured self-government for Singapore.8 The general election was won by the People’s Action Party (PAP), with Lee Kuan Yew becoming Singapore’s Prime Minister. He pressed for a union with Malaysia which took place in 1963. However, due to Malaysian preferential treatment for Malayans, Singapore left the union to become an independent country in 1965.9
The PAP’s English-educated elite knew that it had to obtain quick results in order to stabilize the country.10 Their first task was to combat rampant unemployment. Since Singapore lacked local industry, opportunities for lowly skilled laborers to earn a decent living were scarce. The unemployed flocked to the communist organizations, which led to frequent social unrest.11 To combat this the PAP had to create job. They decided that the best way to do this was by attracting capital to increase local industrial production. One possible source, the local Chinese community of wealthy traders and businessmen, was however overlooked.12 Lee Kuan Yew himself later claimed that Singapore simply “did not have enough entrepreneurs, and those we had, lacked the capital or interest, so government ministers undertook the task of starting new ventures”.13 However, these investors most certainly did have the capital, but were hesitant to invest due to the uncertain political situation.14 After one or two years local businessmen had more confidence in the PAP, but by that time it had already decided that it did not want to depend on local businessmen.15 The English-educated politicians were suspicious of the Chinese-educated elite, and feared their considerable influence over the Chinese community. They were afraid of nativist and
8 C.M. Turnbull, A history of modern Singapore (Singapore 2005) 265. 9 Turnbull, A history of 299.
10 Chua Beng Huat, ‘The cultural logic of a capitalist single-party state, Singapore’ in Postcolonial Studies 13 4 (2010) 336.
11 Anthony Shome, ‘Singapore’s state-guided entrepreneurship, A model for transitional economies?’ in New Zealand Journal of Asian Studies 11 1 (2009) 323.
12 Jean Lee and Javinh Chan, ‘Chinese entrepreneurship, A study in Singapore’ in Journal of Management Development 17 2 (1998) 135.
13 Shome, ‘Singapore’s state-guided entrepreneurship’ 324.
14 W.G. Huff, ‘Turning the corner in Singapore’s developmental state’ in Asian Survey 39 2 (1999) 221. 15 Huff, ‘Turning the corner’ 223.
7 anti-elitist sentiments, which could be mobilized by the Chinese-educated elite through their trade organizations to win public support. Furthermore, they feared that by depending on their money, they would have to give in to private demands.16
The PAP was loath to share power with anyone, least of all a group they felt they had no direct control over as of yet, so it found a way to circumvent the influence of local entrepreneurs. Singapore would rely on a mixture of Multinational Companies (MNCs)17 and Government Linked Companies (GLCs) to create rapid economic growth.18 The GLCs were mostly led by the technocratic elite, people close to the political establishment who were therefore deemed capable, loyal and incorruptible. The introduction of MNCs to Singapore was used to launch its industry, while simultaneously establishing a services sector and creating opportunities for knowledge transfer.19 However, to be able to attract the MNCs, Singapore had to create a new image of itself in the world while also offering favorable conditions for international business to settle. Above all, the PAP had to show it was building a stable country run by a reliable government.
To show this, and to maintain order, they first had to improve local conditions. The government started by buying up nearly all land at below-market prices, after which it was possible to demolish the cramped kampongs, or ethnicity based neighborhoods, which were replaced by concrete flats built by the Housing Development Board (HDB).20 In this way the government could provide better housing while at the same time breaking up the traditional communities based on familial or cultural identities. In its stead came a new identity, a Singaporean. They also created the Central Providence Fund (CPF), a system of social security paid for by the employers, whose savings citizens could use to apply for housing.21 It created a means by which each Singaporean citizen could live in relative comfort. It also made them more responsible to maintain social order, for disorder might lead to the depreciation of their property.22 The government could also use the CPF funds to borrow money at below market rates
16 Shome, ‘Singapore’s state-guided entrepreneurship’ 332.
17 Balbir B. Bhasin, ‘Fostering entrepreneurship, Developing a risk-taking culture in Singapore’ in New England Journal of Entrepreneurship 10 2 (2007) 40.
18 Linda Low, ‘Entrepreneurship development in Ireland and Singapore’ in Journal of Asia Pacific Economy 10 1 (2005) 121.
19 Huff, ‘Turning the corner’ 232
20 Gavin Shatkin, ‘Reinterpreting the meaning of the ‘Singapore Model’, State capitalism and urban planning’ in International Journal of Urban and Regional Research 38 1 (2014) 124-125.
21 Eugene Dili Liow, ‘The neoliberal-developmental state, Singapore as case-study’ in Critical Sociology 38 2 (2011) 245.
22 Linda Low, ‘The Singapore Developmental state in the new economy and polity’ in The Pacific Review 14 3 (2001) 418.
8 to invest in things such as infrastructure and education, and to pay for the policies that were needed to attract MNCs.23
Education was nationalized and standardized, which put an end to the colonial practice whereby it was run by the various local ethnic groups.24 English became the main language of tuition, with each ethnic group also learning their respective mother language. The curriculum changed, putting more emphasis on the development of practical skills necessary for industrial production, such as engineering, rather than literature and cultural studies. The PAP used the education system to groom its future leaders and employees. The most talented students were to serve as administrators or take up a position in a GLC. This however did lead to the dilution of the talent pool available for local businessmen.25
The population’s acquiescence was achieved through a combination of nationalism, fear, suppression and increasing material well-being. The PAP constantly emphasized that Singapore was but a small country surrounded by larger enemies. Its own existence as an independent country was at stake, and the country would only be able to defend itself in the long term through economic growth. This in turn required self-sacrifice on the part of the population, which meant that citizens had to accept government interference into their personal lives in order to serve the public good.26 This line of thought allowed the PAP to claim that anyone who did not agree with their way of ruling, was in fact undermining progress. They employed the state media to argue that their policies were successful due to their expertise and their pragmatic and decisive way of governing. Opposition was deemed irrational or based on misguided ideologies and political debate was merely an obstacle which worked against rational decision-making.27
Even though the period between 1965 and 1985 was a great success from an economic point of view, many of the policies initiated by the PAP had disastrous consequences for local businessmen.28 The niches that entrepreneurs were able to fill during colonial times were now taken over by GLCs or
23 Huff, ‘Turning the corner’ 229.
24 K.C. Ho and Yun Ge, ‘Education and human capital management in a world city, The case of Singapore’ in Asia Pacific Journal of Education 31 3 (2011) 265.
25 Usha Haley and Linda Low, ‘Crafted culture, Governmental sculpting of modern Singapore and effects on business environments’ in Journal of Organizational Management 11 6 (1998) 547.
26 Haley, ‘Crafted culture’ 534, 540.
27 Eugene Dili Liow, ‘The neoliberal-developmental state, Singapore as case-study’ in Critical Sociology 38 2 (2011) 243.
9 MNCs.29 The influence of commercial organizations was curtailed by oft-times harsh government interference, the power of for instance the Singapore Chinese Chamber of Commerce gradually being undermined by the PAP through both co-optation and coercion.30
In 1985, Singapore experienced its first recession, which brought a great shock to the political establishment.31 In the preceding twenty years the government had put an emphasis on attracting MNCs and developing GLCs to sustain its economic growth. The GLCs mostly focused on areas such as manufacturing, shipping, air transport, international trade and defense-related industries. Although in theory they were mere participants in a free market, competition with the private sector was never on an equal footing. They profited from favorable loans and were able to secure lucrative contracts through the state agencies.32 The MNCs in turn profited from several tax incentives, which made it hard for the local private sector to compete. Due to the overwhelming economic success of this model, the legitimacy of the PAP had thus far remained relatively unchallenged33, which allowed them to ignore most of the complaints leveled against them by local businessmen.34 However, the Singaporean economy now faced some serious issues. Productivity had remained low while wages were rising steadily.35 Surrounding countries such as Malaysia, Indonesia and China started to develop and open up. Because the wages in these countries were now much lower than in Singapore, some MNCs had already initiated the process of moving their production to these cheaper places. The government tried to keep them on board through extensive subsidies, which however would not be sustainable in the long run.36
The PAP knew it had to act decisively to change the economic structure of the country. It wanted to promote itself more strongly as a regional hub for multinational companies, showing the world that Singapore could do more than just manufacturing.37 During this period they realized, or rather rediscovered, the importance of the SMEs, who now began to be seen as a possible vehicle for
29 Stephen Choo, ‘Developing an entrepreneurial culture in Singapore, Dream or reality’ in Asian Affairs 36 3 (2005) 361.
30 Sikko Visscher, The business of politics and ethnicity A history of the Singapore Chinese Chamber of Commerce and Industry (2007 Singapore) 129.
31 Alexius A. Pereira, ‘Attitudes towards entrepreneurship in Singapore, The role of the state in cultural transition’ in Asian Journal of Social Science 35 (2006) 328.
32 Boon Chye Lee and Wee Liang Tang, ‘Small and medium enterprises in Singapore and the new economy’ in The role of SMEs in National Economies in East Asia (2002) 5.
33 Joan C. Henderson, ‘Planning for success, Singapore, the model city-state’ in Journal of International Affairs 65 2 (2012) 70.
34 Low, ‘The Singapore Developmental state’ 413. 35 Huff, ‘Turning the corner’ 238.
36 Huff, ‘Turning the corner’ 44-45. 37 Ho, ‘Education and human capital’ 267.
10 innovation and economic diversification.38 However, the PAP felt that they could not expect much from its shopkeepers, merchants and hawkers. These were not the kind of businessmen the government was looking for. Singapore needed entrepreneurs who would be capable of dealing creatively with economic opportunities.39
In 1985 The Subcommittee on Entrepreneurship Development wrote a report under the aegis of Economic Committee, analyzing the problems faced by entrepreneurs establishing businesses in Singapore, which led to recommendations on how to improve the local business climate to stimulate the growth of SMEs.40 In 1986 the Small Business Bureau (SBB) was founded within the Economic Development Board (EDB). It helped entrepreneurs to set up their business by giving information about policies and possible business opportunities. Until then SMEs had to deal with a wide variety of agencies, but now they had just one, which made it easier for them to find their way. Having been renamed in 1988 to the Small and Medium Enterprise Division (SMED), in 1990 it reformed under the name of the Enterprise Development Division, which was to perform a broader set of functions, such as helping businesses to venture abroad.41
During the same period there were also initiatives from SMEs themselves. For instance, in 1986 the government approved of the founding of the Association of Small and Medium Enterprises (ASME) by a group of local entrepreneurs. One of its principal tasks was to strengthen the bonds between the government and local SMEs. In 1989 the Enterprise Promotion Centre (EPC) was founded, which was a joint effort by various entrepreneurship organizations such as the Chinese, Indian and Malay chambers of commerce. Its main aim was to stimulate entrepreneurship through the sharing of knowledge and the creation of denser networks of exchange.
After extensive discussions with the private sector, in 1989 the government produced the SME Master Plan42 With this plan the government aimed to promote entrepreneurship by improving the technological competitiveness of Singaporean SMEs through the active exchange of information, and by encouraging SMEs to venture abroad. It was to be a multi-agency approach coordinated by the EDB.43 In
38 Lee, ‘Small and medium enterprises in Singapore’ 4 39 Shome, ‘Singapore’s state-guided entrepreneurship’ 320.
40 Tan Chwee Huat and Kwam Kuen-Chor, Handbook of Singapore-Malaysian corporate finance (1998 Singapore) 143.
41 Tan Thiam Soon, ‘A pragmatic approach to SME development in Singapore’ in Journal of Small Business and Entrepreneurship (1985), (37-48) 40-41.
42 Low, ‘The Singapore Developmental state’ 419-420. 43 Soon, ‘A pragmatic approach’ 40.
11 1991 another initiative followed, the Strategic Economic Plan (SEP). Its aim was to make Singapore less dependent on MNCs by increasing the economic role played by SMEs. Singapore had to push local SMEs to go international, but to achieve this it first had to meet the entrepreneurial standards of developed countries. It wanted to meet them by becoming more internationally oriented and by creating a more attractive climate for start-ups.44 The government stipulated a list of actions that had to be undertaken to facilitate the growth and outward expansion of innovative SMEs.45 Their role was to guide and assist enterprises by setting the direction, improving the business environment and setting up a supportive infrastructure.46 From 1995 onwards the government identified and supported so-called Promising Local Enterprises (PLEs). These PLEs received extra government funding and expert consulting on how to make their products ready for the international market.47
Whether these policies really effectively increased SME success remains contested. Linda Low claims that the main aim was to appease the alienated Chinese-educated businessmen who struggled to find employment in the English-speaking MNCs or civil service.48 Even though the EDB initiated programs to assist SMEs, the relationship between the institution and local entrepreneurs were strained at best and mutual trust between local businessmen and the government was lacking.49 In fact, during this period the population’s share of self-employed actually dropped. An explanation for this might be offered by Tan Thiam Soon, a business professor at the University of Singapore who wrote on the government SME stimulation policies:
“Since the release of the SME Master Plan, the scope and extent of assistance given to local enterprises in the last five years far exceeded those in the preceding twenty years taken together … for the future, the government has identified that the key thrust in enterprise development is to provide assistance to local enterprises at every stage of business growth “from cradle to maturity” in order to accelerate their development … it will be a truly national effort.”50
44 Harold Siow Song Teng, Government policy and critical success factors of small businesses in Singapore (Cambridge 2011) 42
45 Siow, Government policy 12. 46 Soon, ‘A pragmatic approach’ 40. 47 Siow, Government policy 41.
48 Low, ‘Entrepreneurship development’ 122. 49 Huff, ‘Turning the corner’ 225.
12 Although well-meant, assisting a business from its inception to success is of course not the way to stimulate entrepreneurship. The state should let go, create the minimum requirements needed to set up a business and then let people take care of things themselves.
In the wake of the 1998 “Asian crisis”, a new element was added to Singapore’s economic strategy.51 Since it was perceived that they still lagged behind the West in the areas of innovation and the commercialization of knowledge. In 1997 the Singapore 21 Committee was created, which analyzed Singapore’s future economic needs and formulated new policies, with a strong emphasis on innovation. Singapore had to upgrade its educational infrastructure and create a vibrant nation that would be able compete in the global world as a Knowledge-Based-Economy.52 The PAP felt that Singapore lacked innovative and entrepreneurial citizens. They tried to combat this by attracting highly educated people from across the world to help them set up research institutes.53 In time, these institutes would be able to raise the general standards of knowledge production in Singapore.
Another plan to stimulate SMEs was written, called the technopreneurship 21 plan.54 Its primary focus lay in attracting foreign investors, technopreneurs and venture capitalists to establish their base in Singapore. Policy changes were made, such as relaxing bankruptcy laws, making angel investing easier and making it easier to start a business from home.55 In 2000 the Productivity Standards Board (PSB) published its SME 21’ plan. Developed in conjunction with representatives of SMEs, trade associations, chambers of commerce and the government, this 10-year plan intended to help develop a competitive entrepreneurial sector in the twenty-first century.56 Institutes such as the National Best Practice Center and Business Excellence Framework were founded to facilitate the exchange of information and aiming to offer entrepreneurs mentorship, learning partners, IT and e-business courses and help from professional managers57 The Technology Network program was launched to increase the connectivity between researchers and potential venture capitalists. Researchers could now be matched with SMEs or investors to create synergy, allowing them to commercialize academic knowledge.58 The second proposal under SME 21’ was business fusion, whereby a group of related companies would come
51 Karen P.Y. Lai and Henry Wai-chung Yeung, ‘Contesting the state, Discourses of the Asian economic crisis and mediating strategies of electronics firms in Singapore’ in Environment and Planning 35 (2003) 463.
52 Lee, ‘Small and medium enterprises in Singapore’ 1.
53 Ka Ho Mok, ‘Singapore’s global education hub ambitions’ in International Journal of Educational Management 22 6 (2008) 532.
54 Pereira, ‘Attitudes towards entrepreneurship in Singapore’ 321.
55 Poh-Kam Wong, ‘Entrepreneurial interest of university students in Singapore’ in Technovation 24 (2004) 170. 56 Lee, ‘Small and medium enterprises in Singapore’ 10.
57 Siow, Government policy 13.
13 together under the aegis of the PSB to share their knowledge, experience and ideas to create new innovative products and services. SMEs could ask for assistance to test their ideas and innovations and get funding from the Local Enterprise Technical Assistance Scheme (LETAS), an organ which provides subsidies to incentivize SMEs to modernize (automation, market development, franchise building). 59
In September 2002, the Subcommittee on Entrepreneurship and Internationalization of the Economic Restructuring Committee (ERC) reiterated many of the earlier plans to stimulate entrepreneurship such as creating awareness through education, attracting overseas talent, moving people between private and public sectors, reducing regulations, increasing start-up funding, and providing tax incentives to SMEs.60Singapore had to again focus more strongly on attracting foreign
talent and to increase its global connections.61 A final recommendation was to reduce regulations for SMEs and give them the same financial incentives that MNCs already received.
During this period a change in approach and rhetoric was noticeable. In 2004, Lee Kuan Yew himself acknowledged that entrepreneurs were able to perform economic functions the government could not: “To be successful, economies need to foster more entrepreneurs … governments cannot run businesses as well as individuals can. Owners of businesses are profit-driven and they stay up at night worrying about their business. Successful economies need to foster more of such enterprises.” What we can conclude from this section is that since the mid-80ies Singapore has tried to stimulate entrepreneurship through a series of reports, plans and policies. Common themes were internationalization, innovation, entrepreneurship, the commercialization of knowledge and causing a cultural change.62
Since the period stretching the last ten years will be extensively treated in chapters two and three, I will here only briefly highlight some general themes. During this period policies to promote entrepreneurship were intensified, while the first cohorts of students who profited from the policy changes in education came of age and started their businesses. Although Singapore has had a few start-ups going global (Viki, Zoppim), its entrepreneurial climate remained has relatively barren. However, the government has over the last two years initiated a series of public campaigns, inspired by Lee Hsien
59 Lee, ‘Small and medium enterprises’ 11.
60 Yuen-Ping Ho, Annette Singh and Poh-Kam Wong, ‘The development of university-based entrepreneurship
eco-systems, 153.
61 Ng, Pak Tee, ‘Singapore’s response to the global war on talent, Politics and education’ in International Journal of Educational Development 31 (2011) 262-264.
62 David Wan, Chin Huat Ong and Francis Lee, ‘Determinants of firm innovation in Singapore’ in Technovation 25 (2005) 265.
14 Loong’s 2015 presidential speech, to increase awareness and stimulate young people to try their luck and to be daring.
15
2. Entrepreneurship theory
2.1 Creativity, innovation and entrepreneurship
There is a strong relationship between creativity, innovation and entrepreneurship. Creative thinking requires the combination of existing knowledge, or ideas from different sources or experiences, to create new knowledge.63 Creativity is primarily an individual cognitive effort which is moderated by contextual factors such as social interactions and a continuous confrontation with new facts.64 To fully understand creativity, one first needs to understand the differences between tacit knowledge and explicit knowledge. Explicit knowledge is systematic and structured knowledge, obtained through explicit means of communication. It is the knowledge most commonly associated with science. Tacit knowledge is subjective, personal and often subconscious knowledge derived from practice, and generally based on intuition or hunches. It can be associated with the eureka-moment of creative thinking. This knowledge cannot be easily communicated or shared.65
I will define innovation as a process through which creative thinking is made useful by changing or improving existing technologies, products or ideas to meet certain current or future needs. This could be a new or better product, or a new way to use something which already exists. It is a complicated process that requires many forms of creative thinking. For the purposes of this research I have created a 10-step model.
1. Observation: An individual observes the world and obtains knowledge.
2. Problem-finding: The individual finds a problem, inefficiency or contradiction which he or she can either challenge or accept.
3. Problem-selection: The individual has possibly found a lot ‘problems’, and now has to decide which is/are most worth pursuing and solving.
4. Solutions: Once the individual has decided which problem(s) to tackle, he or she will come up with a range of solutions, ideas and arguments to solve the problem(s).
63 Christina E. Shalley, Jing Zhou and Greg R. Oldham, ‘The effects of personal and contextual characteristics on creativity, Where should we go from here?’ in Journal of Management 30 6 (2004) 934-936.
64 Sundar Bharadwaj and Anil Menon, ‘Making innovation happen in organizations, Individual creativity
mechanisms, organizational creativity mechanisms or both?’ in Journal of Production and Innovation Management 17 (2000) 424-434.
65 A. Brennan and L. Dolley, ‘Networked creativity, A structured management framework for stimulating innovation’ in Technovation 25 12 (2005) 1390-1392.
16 5. Evaluating solutions: After this the individual will again evaluate, testing the solutions, ideas
and arguments on both quality and practical applicability.
6. Selecting workable solutions: The individual will choose a set of solutions which seem to work.
7. Testing solutions: The individual will test the solutions and improve them where possible. 8. Making practical: The solutions have to be made practical (turned into a product).
9. Communication: The solutions have to be communicated to others. 10. Commercialization: The solutions have to be sold.
In practice, the innovation process is more fuzzy than this model might suggest. People might move back and forth between the different steps. The model does however allows us to observe at which steps the businessmen and entrepreneurs in Singapore excel, and which steps they struggle with. Entrepreneurial behavior in the Schumpeterian sense is the practical application of creative thought whereby theoretical feasibility is tested and practical obstacles are removed: “Schumpeterian entrepreneurship is innovation, a novel way to combine existing recourses, a coincidence of a profit opportunity and an economic agent willing and able to exploit this opportunity in taking judgmental decisions about recourse coordination.”66 Not all business owners are entrepreneurs in the full sense. One might be very good at problem-finding and problem-solving, but if you cannot filter out the bad ideas, even good solutions might not be marketable if there is no demand for them.
2.2 Etymological backgrounds
Before speaking further about entrepreneurs and entrepreneurship, I would like to explain what the word means, or more precisely, how it is or has been used. The term is derived from French, and was subsequently adopted by Joseph Schumpeter in the 1930s. Whereas economists generally reserved the word for innovative businessmen willing to adopt new techniques and ideas, in colloquial language it has been used more or less interchangeably with businessman or small business owner.67 Most of the people I interviewed used businessman and entrepreneur as synonyms, or at least it seemed like that. I actually only discovered there was a difference between those two terms after I got home. When I asked some of my participants back home through an online chat how they would define the terms, I got some interesting results:
66 Low, ‘Entrepreneurship development’ 123.
67 James W. Carland, ‘Differentiating entrepreneurs from small business owners, A conceptualization’ in The Academy of Management Review 9 2 (1984) 355.
17 Bart: “Hey, is there any difference in Chinese language, between the English words businessman and entrepreneur if you translate it?”
Sebastian: “Oh surely
Entrepreneur 创业人 chuangyeren Businessman 生意人 shengyiren In layman language.”
Bart: “And how would you describe the difference between these two?” Sebastian: “Business 生意 Sheng Yi
Entre 创业 Chuang ye
I would always put entre as startups, businesses , as established, that's my understanding.” Bart: “Hmmm ok, tricky one.”
Sebastian: “Eventually entre become business.”
Bart: “That would put SG policies in better perspective, focusing on entrepreneurship rather than SME, and you can see the change in rhetoric used. 1989 SME Master Plan then from the ~2000s the terminology changes towards entrepreneurship.”
Sebastian: “Yea. How would you define entrepreneurship?”
Bart: “To be honest, I've seen most people use it nearly interchangeably”
Sebastian: “Is Mark Zuckerberg still an entrepreneur? To me he's not. Past tense already. Haha that's my perspective. Not sure if I'm right.”
And in another conversation:
Michael: “Entrepreneur can be a business owner... but business owner can only become entrepreneur if his business grows and goes for long term success. I think that’s the simple comparison.”
Bart: “Interesting. Funny thing is that when I did my research. anyone I spoke with used the words nearly interchangeably. It's funny because I spoke to some entrepreneurs and they did not even use the
18 distinction between businessman – entrepreneur but used "traditional entrepreneur" vs "real entrepreneur". Traditional entrepreneur is old-fashioned, no-nonsense etc.”
Michael: “Entrepreneur have wider perspective than just a business owner. Traditional entrepreneur exists and they are called business owners.”
It turns out that the definition really depends on who you ask. It is important to know that during my interviews I never encountered any problems whatsoever calling all of my participants entrepreneurs, regardless of them being innovative or the business they were in. They also seemed to use the words entrepreneur and businessman interchangeably and added adjectives to distinguish between different types of entrepreneurs, such as “real entrepreneurs” and “traditional entrepreneurs”. When I confronted some of my participants with this, they simply told me that a traditional entrepreneur isn’t an entrepreneur, but a businessman. The common view on entrepreneurship by entrepreneurs themselves is that they are creative, original, take bigger risks and try to make things that people can use, rather than making money. They need an internal drive to create and keep creating. Seeing as the Singaporean government is known for being very precise in its terminology and weighing each word, the change in rhetoric does say something about their change in approach. Thus, rather than a series of policies all geared towards fomenting “entrepreneurship” in the general sense, it started off by stimulating SMEs in general. During the 90ies they slowly changed this using terms such as technopreneur and eventually entrepreneur. For the purposes of this theses, I will use the word entrepreneur to refer to innovative business owners in the Schumpeterian sense. I will use (traditional) businessmen to refer to owners of regular SMEs.
2.3 A model for Singaporean businessmen
Because Singapore is governed by academically educated technocrats, the people that are in charge of writing policy see themselves as rational actors and base their judgment on proper research, preferably quantifiable. Entrepreneurs on the other hand rely for a large part on tacit knowledge, gut-feeling, trial and error. This type of knowledge has low status in Singapore, and is mostly misunderstood by the Singaporean political establishment. It is my contention that because of this it is hard for the English-educated bureaucratic elite to really understand how entrepreneurship really works. Entrepreneurship is messy and it should be messy. It is chaotic, unpredictable, full of failure. Singapore’s political culture however does not account for the unpredictable, relying on planning, foresight, and proven and tested methods.
19 Some of the entrepreneurs I interviewed were very outspoken about the deficiencies of other of business owners. Especially the innovative entrepreneurs looked down upon those that were not, and used terms such as “real” or “true” entrepreneurs to distinguish themselves from the others. For instance, Grace Sai, founder of the Hub Singapore, a high-end co-working and networking location for local and global entrepreneurs, said she was a “real entrepreneur” in the sense that she, and those that gather at the Hub, are not like the soft entrepreneurs that take government hand-outs, or the more traditional, conservative entrepreneurs who merely seek to make money. I will argue that these categories can be used to better explain what happens in Singapore concerning SMEs. I will use them to distinguish three types of SME-owners: traditional businessmen, entrepreneurs and grantrepreneurs.
Traditional businessmen are the economic descendants of the old entrepreneurial elite in Singapore that I tracked in my first chapter. Mostly Chinese, they make use of informal networking and rely on funds provided by family or acquaintances. Their primary motivations for going into business is to make money and to be their own boss. They do this by focusing their efforts on basic necessities such as food, construction or infrastructural projects. They are generally not perceived as being very innovative. They simply pick a trade that they are good at, mostly after having had some work experience of their own in said sector, and then make sure they do it better, faster and cheaper than their competitors. Innovation does take place among traditional entrepreneurs but it is not a primary objective and when it does happen usually in the form of copying best practice from others.
Entrepreneurs are those that are daring, ambitious and constantly looking to improve their products or ways of selling them. They are innovative, creative and try to adjust not only to current circumstances, but have a long-term vision for their enterprises. The government has tried for many years now to create citizens who exhibit entrepreneurial behavior, either by stimulating businessmen to be more innovative, or by giving students education and funding. However, entrepreneurs should also be the ones challenging boundaries and criticizing current practices. If anyone in society would be able to challenge the political status-quo it would be them. One would expect that this group has a tense relationship with the government.
Grantrepreneurs are the end-product of well-meant but (according to some) ill-advised government policies. The first time I heard the word grantrepreneur was during an interview with Martin Pasquier, a French-born consultant who helps local start-ups and gives workshops at the Hub. He used the word to refer to mostly young people such as students or fresh graduates, who rely mostly or even solely on government grants to keep themselves afloat financially. The grants are a government
20 initiative to increase the level of innovation and creativity among entrepreneurs, and the hopes are that after making use of the grants, these entrepreneurs will become the real deal. The government officials that hand out these grants pay attention to various characteristics of the business plan, but innovativeness is the most important aspect.
Although they are not directly a part of my model, foreigners do deserve some special mention because they are an important part of the Singaporean entrepreneurial ecosystem. They are lured to Singapore through tax incentives and the fact that Singapore provides the infrastructure to set up a business as a hub for South-East Asia or even East-Asia.68 Even today, most of the successful start-ups in Singapore are still run by foreigners. They play a big role in the Singaporean start-up scene by bringing in new ideas and practices. For this reason, Singapore needs foreign experience in their start-ups.69 The government therefore provides significant financial incentives to get foreigners to start a business in Singapore, so long as they employ local personnel.
3. Analyzing the data, stories of entrepreneurial intention in Singaporean
society
68Winston T.H. Koh, ‘Singapore’s transition to innovation-based economic growth, Infrastructure, institutions and government’s role’ in R&D Management 36 2 (2006) 143-148.
21 In this chapter I will analyze the primary data that I gathered during my fieldwork in Singapore. I will do this by linking the stories of my interviewees to the theory outlined above, and by placing them within Singaporean society. I will then explain the ways in which these individuals deal with an interventionist state constantly encroaching on their civil liberties, yet at the same time asking for entrepreneurialism on the part of its business-owning population. Through these individual stories I will be able to describe the three categories of business-owners I described and give a more clear image these group’s characteristics, to then nuance them on the individual level.
3.1 Traditional Businessmen
Pan Zhan Kun (Johny Puar) is an old-fashioned Chinese businessman. His father, Jimmy Puar, was a successful businessman during the 90s and early 2000s, which meant that Johny grew up in relative wealth. However, in 2006 his father went bankrupt, which meant they had to cut down on expenses. They moved to a smaller house, and were not able to afford any luxuries: “It was during this period that I learnt what a hard life is like. My father went from successful businessman to taxi driver. I also learnt that you can never take things for granted. You have to work hard each day to achieve what you want to achieve.” This period in life taught Johny the merits of working hard for yourself to not be dependent on others for your livelihood. It hardened him mentally, and prepared him for the trials ahead.
He did well at high school, which meant that he was able to get in at Nanyang Technical University (NTU), where he studied mechanical engineering. As is the case with many Singaporean youngsters, even though they might be studying engineering or an abstract science, they eventually want to get a job in the financial sector because they can earn more money there. The same was the case for Johny. However, due to the 2009 financial crisis he was not able to secure the job that he wanted. This meant that he took on another job instead, becoming a building manager. He didn’t like it all though, so after three months he quit the job and went on to search for a new one. This time he had more success: “I had an interview planned with a company that I really wanted to work for. It was finances! They asked me to come for an interview on Friday.”
Then something happened that completely changed his life: “My father told me to not go there because he had a great opportunity he said. A friend of him had some government connections he said. So in the end I didn’t go.” His father’s friend, whom he refers to as Uncle Lay, had contacts at Singapore Telecommunications Limited (Singtel), a GLC and Singapore’s major telecommunications company and internet provider. The Infocom Development Authority (IDA) had initiated a new policy, called the Next
22 Generation National Broadband Network, which aimed to lay fiber in all of Singapore. Singtel won the bidding and in turn outsourced the physical implementation of the network to subcontractors. Through Uncle Lay’s contact, Johny and his father were able to secure some of these contracts and set to work. At the beginning they had to do everything on their own: “It was hard work, we had no start capital, just some loans from family. We had to work up slowly, work every day from morning until night. But we felt it was worth it. I knew that if I worked hard I could be successful.” But their hard work paid off. They expanded and after some time they were able to hire local Singaporeans workers. Later on these were replaced by cheaper Foreign Workers, which are laborers brought in from low-income countries. Because Singapore officially has no minimum wage, even for its own citizens, they can be paid a pittance for their efforts. Nowadays they employ about seventy people.70 When I asked Johny why he chose this path he told me: “You know, of course I could have a comfortable job at an MNC. But my father told me, you will always have a boss. There will always be a ceiling that you cannot break through. You will get stuck in lower management and no one will promote you. So, I thought by doing this I could earn more money and be more important. It worked out so far.” This showcases most clearly the dream of traditional businessmen. The money incentive is important, but has to go hand in hand with a certain extent of freedom.
Even though these types of SMEs are important to keep the economy going, the PAP has always had some distrust towards them. As I explained in my historical introduction, the government is fearful of any elements in society that can exist and get by without relying on governmental support in any way. In the case of SMEs, the main tool the government has used to control them are the GLCs. They were founded during the sixties to address a supposed lack efficiency among SMEs. Providing crucial services in areas such as infrastructure, transport (Singapore Airlines) and telecommunications (Singtel), GLCs were to be large-scale and therefore more capable of taking on large projects. The government could now also appoint its own English-educated technocrats to run the GLCs, thereby increasing its control over the Singaporean economy. Even now, many of the appointed directors of GLCs are associates or even relatives of government officials.71 Through its control over the GLCs, the PAP also had indirect
70 Youyenn Teo and Nicola Piper, ‘Foreigners in our homes, Linking migration and family policies in Singapore’ in Population, Space and Place 15 (2009) 150.
23 control over most of the sub-contracting to SMEs.72 This has served to solidify its hold on the political system by making the Chinese-educated businessmen dependent upon their goodwill.73
The GLCs area major impediment for local business and entrepreneurship in Singapore because their dominance has led to Singapore lacking a local capital-holding middle class.74 Businessmen feel there is little to no way to do any form of business in Singapore without the state or GLCs being involved, nor is it possible to effectively compete with GLCs on even terms. As said, although officially they are forced to compete in an open market, GLCs receive many benefits over regular private sector companies when it comes to getting loans, paying debts and getting government funding.75 For instance, when the government initiated policies to stimulate outward expansion of Singaporean business, most investment was channeled through GLC and went into real-estate projects and industrial parks abroad. There was very little investment in small-scale production by the private sector in low-wage countries.76
Having told me his personal story, I asked Johny about the government’s perceived preference for entrepreneurship over traditional business. He was rather skeptical: “You know, a country only need so many innovators. You need some idiots to dream, to be creative, think of new stuff. But do we really need 2 million? A country also needs basic necessities and people that can provide that. In the end hard work is the basis of the economy.” His attitude towards the government’s efforts to stimulate entrepreneurship seems quite cynical, as if he feels overlooked. Why would the government spend so much effort on a small group of entrepreneurs that they only need a few of anyways. In the following fragment, taken from an online conversation I had with him after returning to Holland, he further expands on this:
Bart: “From what I did on interviews and what I read, it seems 99% of start-ups and business still goes through old networks. And the government funding of start-ups, it’s small cakes. Just to pamper some students, or at least the start-up grants are like that, agreed?”
Johny: “Haha, I do. As a businessman, I will always choose to work with someone I know. So naturally it hard for a newcomer to break through without contacts.”
72 Bhasin, ‘Fostering entrepreneurship’ 41.
73 Linda Low, ‘Rethinking Singapore Inc. and GLCs’ in Southeast Asian Affairs (2002), 283. 74 Choo, ‘Developing an entrepreneurial culture’ 363.
75 Carlos D. Ramirez and Ling Hui Tan, ‘Singapore Inc. versus the private sector, Are government-linked companies different?’ in IMF Staff Papers 51 3 (2004) 510-528.
24 Bart: “Well, if you also look at the budget, between 2011-2015 sixteen billion into innovation, only a hunred million of that to entrepreneurship. I also read somewhere that still only 10% of funding of businesses is impersonal, 50% is familial, 40% is other social contacts. Don’t you sometimes feel a bit annoyed that the GVT pays so much attention to these tech start-ups. Always emphasize this innovation part, while actually, large majority is just people like you and Seb (a friend of Johny and also one of my participants). Some cheeky teens get a page in straits times because they build an app, but they don't publish your success for instance.”
Johny: “Hmm ... Well small and medium enterprises in Singapore counts for seventy percent or more of our GDP. Like I told you earlier on government spending, can’t blame them for investing. They are creating an environment of innovation and hope for the best. It’s like buying a lottery.”
Bart: “Yea true, but then I wonder, why they always act as if there is something wrong with Singapore or Singaporeans. Like, risk-averse, kiasu, not innovative, need more entrepreneurship. While if you look at the facts, Singapore has always had a thriving SME sector, from before PAP until now.”
Johny: “Innovation is like Google and Apple ... Boom / growth stocks. With unlimited potential. Some like me only have a steady low growth. Men are greedy, they no longer think low steady growth is enough. Hence they hunt for the next "Google" or Alibaba.”
Bart: “Yea, but do you think it’s realistic to think you will get such a company in such a small market? Of course you have good R&D at the moment in Singapore. But look at the Singaporean market, where these ideas are developed. Before you go to the big stage with a Singaporean company you already have to go abroad. by that time, others will already have done it. Also, the government grants, they take long to apply. I spoke to some private investor. He told me he never invests in people who take SPRING grants, it just takes too long. By the time they can start their business the idea is old already.”
Johny: “I would say we do have a good market , but Singapore people do not dare to dream. But you are right. After all it is public money, so they need to double check and consider, so it takes long to get the money.”
Bart: “Well, I can tell you now then what my thesis is going to be about. Going to investigate the relationship between entrepreneurs and state policy. Because PAP likes to be in control. Yet entrepreneurs by default aren't easy to control because they have an independent financial base and are quite often stubborn/don't like authority. So I want to see from my interview data, how entrepreneurs on the one hand profit form the government, on the other hand are constantly brought into the fold of the
25 PAP-order. Back in the 50ies early 60ies, the SCCC as an organization was way more than just a business association. The SCCC had a lot of social/political and cultural functions. Then after the PAP came into power, they sidelined the organization.”
Johny: “Interesting thesis!! Although it might be difficult to prove in numbers and fact. I agree entirely with what u want to investigate. Most businessman are anti-PAP (not including those who have direct benefits from the government).”
Bart: “I see, so most businessmen still nowadays are anti-PAP?”
Johny: “I would say more n more. U r right in saying in the past ... Pap broke the domination of SCCC, creating a more level field for the public.”
Bart: “What u mean more level field?”
Johny: “Yes. Those were the pioneer ministers.”
Bart: “U mean the SCCC was very hierarchical? The PAP made politics more flat?”
Johny: “Of course ... you need connections to know the who's who. Yes .... In the 1960 to 1980 ... PAP did a very good job. They created a fair level field. Lee Kuan Yew believed in meritocracy. A hawker's son has the same chance of being a lawyer/ doctor if he is hardworking enough. School fee is the same / admission chances is the same. That was the Singapore that grew from a fishing village to first world. But after become first world , things changed. Changed back to connections mean very thing. At least this is what I feel.”
Bart: “Yea I get what you mean. The rich kids go to ivy league universities And well actually some people I spoke in SG. They say there is a big difference between the rich kids and the normal people nowadays.” Johny: “Haha ... Yes ... and going to ivy leagues is also all about knowing the who's who of the world. U know there are preschool in Singapore for kids under five. They cost two thousand dollars per month. All say it’s worth it ... Because your kids get to be friends with the rich and powerful from young age…”
Johny touches an interesting point here. He claims that before the PAP society was unequal, yet the PAP managed to level the playing field by limiting the influence of the Chinese business elite. The new system propagated by the PAP was fair in that it allowed equal opportunity to everyone. It seems however that he has concerns about Singapore reverting back to elitism with some doors remaining closed for a part of society. I was told a similar thing by Martin Pasquier: “I think there is a big gap
26 between the average local Singaporean and the privileged international Singaporeans. The privileged can go to top private colleges, travel during their youth, get good scholarships and go to international universities. The average local Singaporean simply won’t get that.”
There is a general feeling among many of the businessmen I spoke to that the majority of government support nowadays is given to only a small part of the population. To a certain extent this is true. Many grants are reserved for those who finish higher education and relatively few for small-scale traditional businessmen. The large majority of grants focuses on innovative entrepreneurship from techies or graduated engineers. This was the general perception among the traditional businessmen I spoke to. However, there are actually a significant amount of grants available to regular SMEs. Especially after the Asian financial crisis in 1998, when it became evident that many SMEs in Singapore were very old-fashioned or uncompetitive, the government increased many its subsidies and arrangements for them.77
There is for instance the Working Capital Matching Service, which is administered by the Singapore Productivity and Standards Board, which allows SMEs to obtain short-term loans in order to bridge difficult periods by paying for raw materials for companies to be able to fulfil their contracts. It also allowed SMEs to invest in factory upgrades, more skilled workers or extra commercial property.78 The scheme provides a fixed interest rate designed to encourage and assist local enterprises to upgrade, strengthen and expand their operations. It allows enterprises to borrow up to fifteen million dollars and is available to businesses that do not exceed a hundred million dollars in annual sales, or have more than 200 employees, and are at least 30% Singaporean owned.79
Another grant, the Product Innovation Credit (PIC) allows companies with at least three local employees reclaim 60% on productivity increasing physical investments such as machines or computers. Coming august the refund will be reduced to 40% reclaimable. All businesses, including sole proprietorships, partnerships, companies, registered branches and subsidiaries of a foreign parent or holding company, that carry out active business operations in Singapore, are eligible for the PIC. Some others include the early-stage Venture Funding Scheme of the National Research Foundation, the Local Enterprise Finance Scheme (LEFS), the Micro Loan Program (MLP), the Loan Insurance Scheme (LIS), the
77 Andrew L.S. Goh, ‘Promoting innovation in aid of industrial development, The Singaporean experience’ in International Journal of Public Sector Management 18 3 (2005) 218-220.
78 Lee, ‘Small and medium enterprises in Singapore’ 13 79 Lee, ‘Small and medium enterprises in Singapore’ 14
27 Local Enterprise Assistance Scheme (LETAS), the Overseas Enterprise Incentive (OEI), the Business Angel Scheme (BAS), the Home Office Scheme (HOS), the Enterprise Investment Incentive (EII).
The exact details of all these policies are beyond the scope of this research. It does however show that in fact the government does invest heavily in stimulation packages for SMEs. Most of these policies are aimed at making the SMEs more innovative, or in other words, turning businessmen into entrepreneurs. Apart from these grants, the case of Johny shows that the government tries to influence the small-scale private sector in a myriad of ways. For instance, even though Johny made no use of any government grants to start up his business, he was still dependent on government contracts since he subcontracted through Singtel, a GLC. This means that in the end he is to a certain extent dependent financially on the government’s goodwill. Coupled with some of his anti-PAP sentiments, it could put him in a tight spot should he choose to be more vocal about them. It has been shown time and time again that the government has the power to make and break local businessmen through its stranglehold over the entire economy.
Following this line of thought, one might ask whether the government really wants to help local businesses in Singapore, or simply wants entrepreneurial behavior? The data points towards a negative answer on the first question. Yes, there are various packages to help SMEs to modernize and to become more innovative and entrepreneurial. On the other hand, there is still very little personal space when it comes to business opportunities. In the end businessmen have to deal with a government that has little reason to compensate or take into account personal wishes, which it feels goes at the cost of long-term prosperity. The government also doesn’t really have a more abstract vision for the future. Creating an entrepreneurial society is for them not a goal in itself, but rather just a way to achieve economic growth by any means necessary. Whether something is a goal in itself or a means through which influences the way in which the issue is tackled and how it is perceived by the people that are targeted by the policies.
Two of my other interviewees, Sebastian Sim and his partner Zac Chia, run a recruitment agency. Their backgrounds are quite similar. Sebastian had a job doing sales at a company that builds large-scale measuring instruments. He earned a good salary, but he wanted to have something of his own so his efforts would be more directly reflected in his earnings: “It’s all about the money. The pay there was decent, but now I can choose to work harder and earn more.” Zac, who used to work as a mortgage agent, gives an argument along the same lines: “I used to work as a mortgage agent, the bonuses were good. But in 2013 the government introduced new rules for mortgages. Then sales dropped so my bonuses dropped too. So I wanted to earn more and started a business with Seb.” So they sat down
