SG60: Singapore SMEs and startups look overseas for growth
(Photo credit: AFP)
Source: The Straits Times
For Singaporean businesses, the drive to look beyond local shores has gone from an option to a necessity for long-term growth and competitiveness. With a limited domestic market and increasing global uncertainties, internationalisation is no longer the domain of large enterprises alone. Small and medium-sized enterprises (SMEs) and startups are now recognising that growth beyond Singapore’s borders is essential for resilience and scale.
Enterprise Singapore (EnterpriseSG), the national agency tasked with supporting Singapore companies’ growth, is at the forefront of this push. “Internationalisation – via accessing new markets, new production bases or new technologies and capabilities, remains key to helping companies grow,” says Yeoh Mei Ling, director of markets strategy and policy at EnterpriseSG.
Despite global uncertainties, she notes a steady interest among SMEs to venture abroad; the agency supported 2,600 internationalisation projects in 2024, up from 2,500 in 2023.
“For companies that have already internationalised, there is a pressing need to consider diversification strategies into new markets or reconfiguration of their supply chain (including the set-up of new production facilities) to build resilience,” Yeoh adds.
Differing paths
While the imperative is clear, the approach to internationalisation differs significantly between SMEs and startups. SMEs tend to tread more cautiously, often due to resource limitations, as well as differing market demands and risk appetite.
Ang Yuit, president of the Association of Small and Medium Enterprises (ASME), says local SMEs are “generally not actively planning for internationalisation”. “Many owners, being locally born and bred, view Singapore as their main market and do not build their businesses with multiple geographies in mind,” he explains.
“Singapore’s high-value, high-skill economy also makes regional expansion less attractive, as margins in neighbouring markets are typically lower while costs – including the SME owner’s time – remain high.”
In many cases, high operational costs in Singapore coupled with lower margins abroad diminish the appeal of overseas expansion, he notes.
Moreover, most SMEs lack the resources to adapt their business models to different markets, Ang adds. “You also have vastly differing regulatory environments and business practices; in some markets, rules may serve more as guidelines, creating unpredictability.” This ambiguity can deter smaller firms that are more risk-averse or less familiar with operating abroad.
However, he highlights that strategic and agile SMEs are already finding opportunities; at the same time, macroeconomic shifts such as geopolitics and digitalisation are opening valuable doors abroad.
Offshoring, for instance, is gaining traction and allows SMEs to tap lower-cost talent while keeping core operations in Singapore. “Malaysia and the Philippines are common choices, while the Philippines and India are preferred in specialised areas such as IT,” says Ang.
Startups break ground early
Startups, by contrast, tend to show a greater appetite for global scale from the get-go.
Patrick Lim, CEO of Action Community for Entrepreneurship (ACE.SG), has observed that startups are “increasingly looking at internationalisation earlier in their development and even in the seed stage”.
“We also find that most Singapore startups are seeking commercial opportunities as the first step of their market exploration, in comparison with fundraising or diversification of supply chain.”
Still, startups face their own hurdles.
Among the most common is their readiness for internationalisation, says Lim. Startups need to juggle limited resources while managing product development and early sales efforts, he adds. Having a local partner or team to support in-market expansion is also key, or they will struggle with managing operational demand across borders.
To help bridge that gap, ACE.SG curates outbound business missions and works with overseas government and ecosystem partners. In May, it led a delegation to Startup Terrace Kaohsiung, where participating startups connected with Taiwanese corporates and VCs while attending InnoVEX, an innovation platform.
ACE.SG is also collaborating with the government of Western Australia to help healthcare and medtech startups plug into Perth’s hospital and research ecosystem. The organisation has signed a memorandum of understanding with Hankyu Hanshin Properties, which enables Singapore startups to explore business and urban development opportunities across Japan’s Osaka and Tokyo regions.
Lim notes that this partnership also supports Japanese startups keen to enter the Singapore market.
Markets of opportunity
EnterpriseSG has observed interest across a spectrum of markets, each offering distinct advantages depending on the industry and business stage. “South-east Asia remains a key destination market for SMEs due to proximity and familiarity,” says Yeoh.
Beyond traditional sectors such as infrastructure and manufacturing, she also points to a growing emphasis on sustainability, which has created new demand in the green economy.
One example is Barghest Building Performance (bbp), a Singapore energy-efficiency solutions provider. After being connected by EnterpriseSG to Thai conglomerate WHA Group, bbp deployed its proprietary optimisation system across WHA’s industrial estates, enabling up to 40 per cent energy savings for tenants, besides also supporting WHA Group’s net-zero goals.
Meanwhile, SMEs and startups alike are exploring South Asia, the Middle East, and Africa for diversification and early-mover advantage. EnterpriseSG has facilitated projects in India’s semiconductor ecosystem, helping Cleantech Services and Specmax Technologies gain a foothold by connecting them with in-market partners.
For innovation-heavy sectors such as biomedical sciences and artificial intelligence, developed markets remain highly attractive.
“The US and UK continue to be key reference markets for companies in the technology and innovation space,” Yeoh says.
And in the biomedical space, EnterpriseSG partnered the Mayo Clinic Innovation Exchange to support Singaporean firms such as Lucence and Biobot in their US expansion. These companies are helping advance healthcare outcomes through precision medicine and robotics.
ACE.SG also sees robust interest in the US, particularly for startups targeting venture capital, corporate partnerships or innovation-driven growth. Lim shares that other markets gaining traction include Japan, Taiwan, Hong Kong and Australia, “owing to their proactive efforts in attracting foreign startups and the many similarities between our markets and consumer preferences”.
ASME, meanwhile, notes growing interest in Johor Bahru as a near-market base. Malaysia offers proximity and affordability, Ang says, while Vietnam is becoming a viable target in sectors such as education and property development.
“The US remains the most appealing buyer market in terms of margins, but as companies look to de-risk, interest is growing in Europe and Australia/New Zealand,” he adds.
Support ecosystem
Singapore’s internationally oriented SMEs and startups benefit from a robust, well-integrated support ecosystem.
EnterpriseSG provides end-to-end assistance through its GlobalConnect programme, which includes market advisory, business matching, immersion trips, and strategic partner introductions. SMEs looking to defray expansion costs can tap financial schemes such as the Enterprise Development Grant (EDG) and the Market Readiness Assistance (MRA) scheme.
To complement this, EnterpriseSG also collaborates with trade associations and chambers (TACs), including the Singapore Business Federation and Singapore Chinese Chamber of Commerce & Industry. With the former, EnterpriseSG launched the Centre for Future of Trade and Investment (CFOTI) to offer deeper advisory on free-trade agreements, as well as seminars that cover how to navigate evolving US tariffs.
ASME, meanwhile, supports internationalising SMEs through its involvement in the Local Enterprise and Association Development programme, which helps TACs strengthen capabilities to assist member companies.
“(We) also support internationalising SMEs by sharing success stories, encouraging collaboration, strengthening links with overseas counterparts, and exploring business matching and consortium-building,” says Ang.
He adds that the association also complements government agencies such as EnterpriseSG by offering ground-level feedback and working closely with them to support SME-focused initiatives.
ACE.SG’s role is highly tailored to startup needs. Besides outbound missions and ecosystem access, it provides support in partner matchmaking, market discovery and innovation funding.
Lim believes mindset remains a core success factor, and advises that startups must have patience and commitment. “Startups will need to do their homework to understand the cultural and business norms in each market and identify the relevant entry strategies and partners to support their plans,” he says.
“Ideally, startup founders should spend much time in their market of interest to engage with both partners and potential customers there... (They) need to follow up and build relationships to establish meaningful collaborations to expand.”
Road to global growth
Despite the robust ecosystem, successful internationalisation rarely happens overnight. It requires sustained effort, agility and a willingness to evolve.
To exemplify what SMEs can achieve with the right mix of adaptability, ambition and ecosystem support, Ang cites two examples: Kskin, an express facial chain that has expanded into more than 12 countries within just three years; and Epitex, a bedding and home accessories brand that has gone regional since 2020.
“To succeed internationally, SMEs need to build global exposure, form support structures with synergistic peers, remain open to restructuring their business models, and understand various approaches to internationalisation,” he stresses. “These capabilities are often key to long-term success.”