Low labour costs, strong investor interest drawing S’pore start-ups into Vietnam

SINGAPORE – The number of start-ups from Singapore venturing overseas through Enterprise Singapore’s Global Innovation Alliance (GIA) acceleration programmes has ballooned to more than 400 in less than five years.

One of the more popular destinations is Vietnam, with its large workforce, lower labour costs and sizeable market, say experts.

“The labour force in Vietnam is increasingly well educated and still relatively cheap compared to Singapore,” said Mr James Tan, managing partner of venture capital company Quest Ventures.

Vietnam has a tech-savvy population and a burgeoning middle class, making it a potential pool of customers as well, Mr Tan added.

The cost of operations is still low, in comparison with other markets in the region, said Ms Phi Van Nguyen, an adviser to Project 844, an office under Vietnam’s Ministry of Science and Technology, which aims to grow the country’s start-up ecosystem.

Ms Phi is also a board member of the Association of South-east Asian Nations (Asean) Business Angel Alliance and chairman of Vietnam Angel Network.

“It’s easier to find funding here (in Vietnam) because a lot of venture capitalists and investors are focusing on Vietnam at the moment. The cost of living is also low, it’s easy to move around and connect with people, so it’s easier for international founders to start start-ups here,” she noted.

The GIA was set up in 2017 by Enterprise Singapore. Its programmes help participants understand the innovation ecosystem in overseas markets and connect them to investors, start-ups, corporates or institutions looking for co-innovation partners.

Singapore has always been one of the strongest partners of Vietnam both before and during the pandemic, said Ms Phi.

Vietnamese sectors that venture capital firms are looking at include health technology, food processing and blockchain.

Singapore start-ups get a big headstart when venturing overseas, but it might not always be a good thing, Ms Phi added, noting: “(They) are spoiled. They get market entry support, they get their costs and expenses covered.

“That can be great, but sometimes it’s not – when you are so protected and supported, sometimes you might lose the zest to go out there and make things happen yourself as an entrepreneur.”