Drop in S’pore entrepreneurial rate downplayed

February 11, 2007
Singapore Democrats

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Tamara Mohanan Kuppusamy
Business Times
10 Feb 07

Two Singapore organisations have downplayed an international report which suggests that Singaporeans lack entrepreneurial drive.

Action Community for Entrepreneurship (ACE) and the National University of Singapore’s Entrepreneurship Centre (NEC) were quick to say that there was no cause for worry when they presented the report to the press yesterday.

The report was published last month by the Global Entrepreneurship Monitor, a research organisation founded by the London Business School and Babson College in Massachusetts, based on a 42-country survey.

The report shows that Singaporeans were less inclined to embark on entrepreneurial ventures in 2005-06 than in the previous year.

Singapore’s entrepreneurship level ranked 16th out of 22 OECD (Organisation for Economic Co-operation and Development) countries that were surveyed.

‘At first glance, we were a bit concerned,’ said ACE deputy chairman Inderjit Singh at the press conference.

‘But upon further analysis, we understand that the fluctuations are within the normal band of economies like Finland, Denmark and Netherlands.

‘The decrease was seen for all similar economies, so I think there is nothing to worry about.’

Similarly, NEC director Wong Poh Kam was not perturbed. ‘I would not make too much of this,’ he said.

The study tracks levels of entrepreneurial activity in the world’s leading economies by using its yardstick called total entrepreneurial activity (TEA).

TEA is calculated by tallying the number of recent entrepreneurs within a sample group, and dividing it by the total size of the sample group itself.

In the case of Singapore, 4,011 adults were surveyed in June 2006, and those of working age (18-64 years old) were asked if they were actively engaged in starting a new business, or were currently running a business that was less than 42 months old.

The study found that the proportion of adults starting or running new businesses had dropped by 2.3 percentage points in 2006 to 4.9 per cent from 7.2 per cent in 2005.

However, the study also found that 43,000 new companies were established in 2005, an ‘all-time high’, according to Mr Singh.

ACE and NEC stressed that Singapore’s results were not startling.

‘The observed fall in Singapore’s entrepreneurship rate is not surprising, given that the economy in 2006 was robust, with the number of jobs created at a record-high. Therefore, fewer people pursued self-employment,’ Mr Wong said. ‘Singapore’s challenge may be coping with the paradox of success.’

Both he and Mr Singh pointed out that the 22 OECD countries in general had seen their TEA drop an average of 0.9 of a percentage point in 2006.

Additionally, Hong Kong and Taiwan, which did not participate in the 2006 survey, had also previously registered low TEAs of 3-4 per cent, showing the trend was not isolated to Singapore.

Mr Wong stated that fear of failure is ‘not a key deterrent’ to people considering new business schemes.

He said that NUS is exploring the possibility of setting up a new mentoring scheme with Spring Singapore, to pair start-ups with more experienced entrepreneurs, as part of government efforts to help new businesses.

Mr Singh conceded that more things needed to be done to promote entrepreneurship and technology start-ups in Singapore.

‘We have to find a way to facilitate, to make it so easy to find overseas markets,’ he said