Building bridges between Malaysia and Singapore

By Gabey Goh June 18, 2013

Singapore startups think of a global marketplace from the get-go; Malaysia makes for a great regional testbed
They are no longer in competition, and each country’s success can collectively push the ecosystem up

Building bridges between Malaysia and Singapore A MONTH or two back, during a visit to Singapore, I had a fascinating discussion with Hugh Mason and Wong Meng Weng, co-founders of The Joyful Frog Digital Incubator Asia (JFDI.Asia).

The topic centred on the need to build more bridges between Malaysia and Singapore to collectively boost the startup ecosystems in both nations.

Having lived in various parts of Asia for close to 10 years, Mason – who considers himself an immigrant ‘new Asian’ and from the ‘outside looking in’ – pointed to a variety of ways the two ecosystems could establish a mutually beneficial relationship within the wider context of South-East Asia.

While Singapore has done a great job of attracting large multinationals to its shores, and remains a financial hub with easy access to venture funding, there are downsides.

The disadvantage, in Mason’s view, is that because Singapore is such an anomaly within the region, solutions dreamt up by local startups can potentially be something completely unrelated to the market or not applicable to the region.

“Many startups here are ignoring the bottom of the pyramid, the masses from which the next billion people getting connected will be from, and that’s a sizeable market that shouldn’t be ignored,” he said.

But the upside to beginning in such a small local market, though, is that it forces one to think about expansion very early and startups in Singapore automatically think global from day one.

In Malaysia, despite lower levels of funding available, there are many advantages for startups.

In Mason’s view, Malaysia with its bigger population and socio-economic makeup that is closer to the reality of the Asia Pacific region, makes for a great testbed for startups with regionally applicable offerings.

Of course, the deep and not always smooth relations between Singapore and Malaysia cannot be discounted from such musings, but Mason is convinced that exploiting the relative strength of each country would yield mutually positive returns. Building bridges between Malaysia and Singapore

“Both countries play host to profoundly different cultures and the tension created could be a positive one. There are a lot of conservative markets, so how do you create product that respects traditional values but can work on an international arena?” he said.

By working together to better represent the region, Mason argues that legal frameworks and expectations can be better managed and addressed.

“It’s still cheaper to buy a business in Silicon Valley than in Asia. For example, you’d rack up about US$30,000 in legal fees versus the US$100,000 in Asia. Nothing is standardised,” he said.

Increased bilateral cooperation can result in the establishment of a set of standards and expectations and serve as a way to collectively move up the funding chain, especially for post-seed-stage startups.

“Both countries could co-publish data with accurate metrics to provide confidence for investors and a rational basis for doing business in the region. I believe we’re still at a stage where both countries are not in competition with each other and that everyone’s success collectively pushes the ecosystem up,” he said.

The idea of fostering more cross-country collaborations on an individual basis seems doable enough, with many startups already boasting founders from both sides of the causeway.

From a national perspective, it all boils down to the role Malaysia wants to play in the regional startup ecosystem and whether we are ready to accept that the oft-stated goal of being ‘the place’ for startups should be amended to ‘the place to start first before moving on.’

The question must be asked: What role should Malaysia’s startup ecosystem play in the fabric of South-East Asia? As a breeding ground for new ideas, or a captive hub for all?

Should our market be the place to validate ideas before venturing forth to the massive economies of Indonesia or the Philippines? Or should we be trying to not only attract but keep rising startups in the country so as to not lose out on potential taxable revenue?

At the very least, one point raised by Wong had me thinking about the need for more ‘exchange programmes’ or better collaboration opportunities between the north and south of the Causeway.

He shared that in his observations, the younger generation seems disconnected and sheltered from many market realities, and this is reflected in the types of ideas they come up with.

“Entrepreneurship is driven almost entirely by immigrants who use both experiences from their home country and their residence to inform their ideas. You see this happening in Silicon Valley as well,” he said.

Singapore, with its high population density and high cost of housing, means that it is common for many young adults to not move out of their family homes until marriage.

“It’s so small and there’s no plausible excuse to move out. If there are deeper ties with Malaysia, Singaporeans could move up north, away from their parents, and discover for themselves how to operate in a different environment,” he added.

In Wong’s opinion, it is this international exposure, independence and cross-cultural exchanges that tend to result in stronger startups and better ideas.

I am sure Malaysian startups would also benefit from stints down south, with exposure to a more internationalised economy and sophisticated market for their ideas.

So what’s the message of today’s column? As a founder, you are best positioned to know where the best place for your startup to exist is and it may not always be your place of birth.

Don’t be afraid to pack that bag, jump on that plane and head to where you think you need to be. The experiences you pick up along the way will not be in vain and could ultimately beef up that seed of an idea you first had while chatting at a food stall with friends late one night.

This column originally appeared in the Metro Biz section of The Star and is reprinted here with its kind permission.