Singapore is considered the most likely country to produce the next ‘unicorn’ defined as a technology start-up company valued at more than a billion dollars after China and US according to a PricewaterhouseCoopers (PwC) study.
The results of the study indicate that 64 per cent of Singapore CEOs feel that their economy is well-poised with the right conditions for unicorns to thrive compared with 31 per cent of CEOs across the Asia Pacific Economic Cooperation (APEC) economies.
It appears from the results that business leaders across the APEC economies are looking at largest markets for future investment targets.
The ongoing trade dispute between the US and China is also causing uncertainty in the market and is another reason for investors to look elsewhere.
“This is a nod to the recent efforts by the local authorities and government agencies to increase support for innovation and talent development,” said Yeoh Oon Jin, executive chairman at PwC Singapore.
“Indeed, having the right environment and ecosystem can make a big difference in the success or failure to innovate, and businesses can do more themselves to create the right conditions for innovation.
"We took a leaf out of this book when we moved earlier this year to our new digitally enabled office at Marina One."
A total of 1,189 business leaders across the 21 APEC economies were surveyed as part of the ninth edition of the professional services firm’s APEC CEO Survey, which seen Singapore top the list followed by Japan.
Optimistic on growth
Furthermore, the survey also found that macroeconomic strength and stability were key considerations as well as having an attractive talent pool and pipeline were the most frequently cited factors for start-up success beyond US and China.
Despite the ongoing trade tensions the survey found that APAC business leaders remain confident that their companies’ revenues will grow over the next 12 months despite increasing trade frictions.
Specifically, 41 per cent of Singapore business leaders surveyed were very confident of revenue growth, higher than the APEC average of 35 per cent.
Meanwhile a net 65 per cent of Singapore business leaders plan to increase investments over the next year compared with 51 per cent across APEC.
Furthermore, survey respondents in the US and Thailand were among the most confident with 57 per cent and 56 per cent ‘very confident’ of revenue growth while respondents in China and Mexico showed below average confidence at 31 per cent and 21 per cent, respectively.
Finding the right people
The top APEC countries for foreign investment include Vietnam, China, the US, Australia and Thailand, with Australia entering the top five investment destinations as a new entry among respondents, and Indonesia dropping out of the top five this year.
Furthermore, the survey results reveal that 39 per cent of Singapore business leaders are creating more jobs compared to 56 per cent across APEC and a lower 19 per cent compared to nine per cent across APEC are actively reducing headcount as a direct impact of technology on their workforce.
Despite this however, 29 per cent of survey respondents in Singapore reported struggling to find the people that they need with the right skills and experience compared 34 per cent across APEC.
Finding the right people is a global issue particularly when we speak of science, technology, engineering and maths (STEM) skills.
The survey found that 58 per cent of business leaders compared with 65 per cent across APEC believed that their governments needed to do more to train STEM professionals while only 24 per cent felt their government was going enough in this area, compared with 14 per cent across APEC.
The top investment priority for business leaders is digital customer interactions closely followed by digital skills for their workforce indicating that business leaders across APEC are well aware of the need to invest more in digital user experience.
Specifically, Singapore business leaders are prioritising investment into digital customer interactions (25 per cent in Singapore versus 20 per cent across APEC), developing digital products (17 per cent in Singapore versus 13 per cent across APEC), closely followed by improving operations with technology such as automation and data (16 per cent in Singapore versus 14 per cent across APEC).
In Singapore, only eight per cent of companies view themselves as highly competitive in the use of artificial intelligence (AI).
A high 44 per cent of companies in Singapore are not making use of AI at all, with 30 per cent saying investing in using AI is among their top three priorities over the next two years.
Across APEC, only 15 per cent of business leaders describe their use of AI as highly competitive while 33 per cent are not making use of AI at all.
Those companies that describe themselves as highly competitive at AI are clear what they need to do to build on their perceived lead: increase investments, build more capability in AI and invest in local start-ups.
But while technology can provide part of the answer to sustainable growth, it is also presenting challenges in the new trade environment with moving data across borders identified as the area where APEC businesses have experienced the biggest increase in new barriers in the last year -- 20 per cent -- up from 15 per cent in 2017 across APEC.
“While business leaders do not like uncertainty in any aspect of their business, let alone trade flows, they are learning to adapt to the new reality of trade restrictions and are finding ways to grow and thrive,” said Yeoh.
“While around a fifth of the business leaders across APEC had experienced new barriers to trade this year, the number of CEOs who are seeing new opportunities coming out of the new trade arrangements has doubled over last year,” added Yeoh.
“As companies in Singapore look to both digitalise and expand into markets outside Singapore, data flows will increasingly drive growth.
"Dealing with concerns about increased barriers to the free flow of data, goods and services will remain a key priority for business for some time."