There has been strong resistance against both bills not just from many technology entrepreneurs from the start-up space but also from multi-national companies such as Amazon, Google, Microsoft, Twitter and Facebook.

The aim of this post is to explain what SOPA and PIPA really means for us and why we are not supportive of such legislation for economic reasons if our Minister of Law decides to propose it as a bill in the very near future. It’s not just a Singapore problem but a Southeast Asia problem if it gets passed thru in Singapore.

To put it simply, here’s what SOPA and PIPA seek to do: the laws will be enacted “to minimize the dissemination of copyrighted material online by targeting sites that promote and enable the sharing of copyright-protected material, like The Pirate Bay.” If the act is enacted, a few steps will be taken to limit access to rogue sites:

(a) bypassing the “notice and takedown” method of copyright infringement on internet services (for example, the Pirate Bay) and require the Internet service providers, or ISPs in short (in Singapore: M1, Starhub and SingTel) to police content uploaded by users or prevent users from uploading copyrighted content,

(b) require ISPs to change their DNS servers and block resolution of domain names of websites that host these illegal content (i.e. movies or TV shows),

(c) require search engines to modify search results to exclude websites of such nature,

(d) order online (including mobile) advertising services (Google AdSense, InMobi) and digital payment services (Paypal, Square) to cease business with websites of such nature.

The reason why most major internet companies oppose to the act is simple. SOPA and PIPA changes the liability rules around copyright infringement. The Digital Millenium Copyright Act of 1998 in which Singapore has signed on a stronger version (during their free trade negotiations with the US) states that companies are protected from charges of “contributory infringement” on content uploaded by users as long as the company follows up with the process of removing the content which infringes copyright when an alert process is signalled.

Here’s how it works in real life: suppose a user of the ISP uploads a video that infringes copyright, the ISP will be alerted by the relevant authorities to remove the content. SOPA changes the former arrangement, and now user-generated content sites like YouTube or Twitter have to worry about copyright due to contributory infringement when a rogue user deliberately uploads content to these user generated content sites.

The burden of reviewing every blog post, tweet and video submission is impossible to manage for any company. This is similar to the situation in China, where video sites such as Tudou have to hire people to monitor content uploads 24-7 to ensure that no sensitive political content is uploaded.

SGE‘s opposition against SOPA/PIPA legislation is not focused on freedom of speech arguments which have been brought forward by many digital advocates. You can read about these elsewhere. Our concern is that such legislation has profound implications to our economy.

First, the legislation breaks the internet architecture and subjects our ISPs to undue stress of monitoring all forms of user-generated content. The current procedure that the ISPs use to remove illegal content is sufficient to protect copyright. However, if SOPA or PIPA legislation is enacted through the Singapore parliament, the ISPs would have to waste resources to monitor internet traffic.

Second, the Singapore government has devoted a lot of resources to nurture in our country the next Facebook and Google or sites that might create great impact like Wikipedia or any user-generated sites similar to YouTube and Twitter. By allowing such a legislation, innovation within the local tech and creative content industry will be reduced. Think of a young, talented pianist applying for a top music school and producing a YouTube performance of a song which is well known. The pianist can get sued for copyright infringement even if the content is being re-mixed.

Last but not least, Singapore is currently the digital hub for most of the large MNCs (Google, Facebook and Microsoft) for the whole Southeast Asia region. All these companies are mostly anti-SOPA, and by enacting such legislation, it may force these companies to relocate their companies’ SEA headquarters somewhere else. That will mean that our economy will slow down and lose the jobs created by these companies.

For all of you who want to help out, please go to the Facebook page of our Law Minister and register your objections in a respectful manner so that we will have not such a legislation knocking our doors. It may be good to check out this post by Xu Si Han who initiated the call to me and the rest of the tech community to step in and declare a resounding no to SOPA/PIPA like legislation.

Lastly, this is not just a Singapore problem but a Southeast Asia problem at large. If Singapore passes such a legislation, it’s very likely that everyone around the region (Indonesia, Malaysia, Thailand, Philippines and Brunei) might follow suit. Hence it might make the whole region less viable for the investment that will transform the region to be like China and India.

All in all, SGE does not support SOPA/PIPA.

References:

[1] ChannelNewsAsia, Healthy IP environment contributes to creative economy.
[2] K Shanmugam Sc Facebook Post
[3] Tim O’Reilly: Why I’m fighting SOPA
[4] Joi Ito: Why we need to stop SOPA and PIPA and Ethan Zuckerman, MIT Media Lab opposes SOPA, PIPA.
[5] Cato @ Liberty: SOPA: An Architecture for Censorship.

Image: Andréia

Professor Dr. Wong Poh Kam here provides an overview of role of Venture Capital and Angel Investors in teh-startups scene in Singapore. It has been republished here with permission. A more detailed version of this will be published in the Annual SVCA Directory 2011/12

High-technology entrepreneurship has been identified as an important driver of Singapore’s knowledge-based economy, and increased policy attention has been given to encouraging the formation and nurturing of high-tech start-ups, especially those with significant intellectual property (IP). To this end, in 2010 the National Research Foundation (NRF) engaged me, as director of the NUS Entrepreneurship Centre, to conduct a study of high-tech start-ups in Singapore. While the survey covers many aspects of the high tech start-up dynamics, including characteristics of the founders, their sources of technology and funding, growth strategies, performance and challenges, this blog highlights some salient findings on only one aspect of the survey: the performance of start-ups that have received funding from venture capitalists or angel investors versus those that did not.

The survey focused on young ventures that started-up or began operations no earlier than 2004 (i.e. companies that were at most five years old in 2009), and that fall within sectors classified as high-technology using a definition adopted by the United States Bureau of Labour Statistics (BLS), which includes all sectors with proportion of employment in R&D exceeding the average for all sectors. Based on this definition, nine manufacturing sectors and three service sectors categorized at the 2-digit Singapore Standard Industry Classification (SSIC) level are included as high-tech sectors in Singapore.

Based on over 300 responding firms covered by the survey, we estimated that less than 10% of high-tech start-ups in Singapore have received investment from VCs or business angel investors (VCA). The majority of high tech start-ups that did not receive VCA funding reported that they faced two hurdles when attempting to raise funding from VCA. Firstly, they reported that VCA investors tend to impose harsh terms or offer valuations that are too low. Secondly, they reported difficulties in attracting the interest of such investors.

While firms receiving VC/Angel (VCA) investment represent only a small share of tech start-ups in Singapore, the survey results show that VCA-funded firms outperform other start-ups on a number of key indicators.

a) High-tech start-ups that have received VCA investment tend to be more innovative and IP-intensive

Start-ups that have received VCA investment are more likely to conduct in-house R&D (83.3% vs 51.7% for other firms). Correspondingly, they have a higher propensity to develop their own core technologies (88.9% vs 70.5%). They are also more likely to have introduced significant product or process innovations over the preceding three years[1] (76.5% vs 62.5%) and have a greater tendency to possess Intellectual Property (IP) assets (52.9% own/have applied for IP assets vs 11.5% for other firms).

b) High-tech start-ups that have received VCA investment have higher employment growth…

Start-ups that have received VCA investment experienced much higher employment growth rates since their first year of founding (329.8% p.a.) as compared to other start-ups (175.0% p.a.).

c) High-tech start-ups that have received VCA investment had greater growth ambitions

High-tech start-ups receiving VCA investment have a higher propensity to expand their operations to overseas locations (52.9% have overseas-based operations, as compared to 27% of other firms). They also have more ambitious growth targets for the future. Almost three-quarters of VCA-funded firms project growth rates in excess of 20% per annum over the next three years (versus 61.3% of other start-ups).

In summary, our survey of young high tech firms in Singapore show that while less than one in ten of them received VCA investment, those that did get funded by VCA showed higher average employment growth, greater growth ambitions, and tend to be more innovative and IP-intensive. This difference is likely to be due to a combination of the selectivity of VCA investors who chose to invest in more scalable ventures, as well as possibly the value add provided by the VCA investors to the start-ups, enabling them to invest more in technological innovation and to accelerate their path to growth.

About the Author
Dr. Wong Poh Kam [LinkedIn] is a professor, angel investor and consultant. He holds positions at the NUS Business School, (by courtesy) at the NUS Engineering School and LKY School of Public Policy. He is also the Director of the NUS Entrepreneurship Centre. As an angel investor, Dr. Wong has invested in many high-tech firms and sits on the boards of many. His portfolio companies include Invantest, iWow and GlobalRoam. He has consulted widely for international agencies such as the World Bank and ADB, various government agencies in Singapore such as EDB, IDA and A*STAR, as well as many high tech firms in Asia.

Dr. Wong Poh Kam blogs at Connect The Dots@Singapore.

Image credit: visualpanic

While Hong Kong is always cited as a viable place for this purpose, Singapore should also be seriously considered, argued Chris Devonshire-Ellis, principal and founder of Dezan Shira & Associates, in an article on China Briefing.

Setting up companies in offshore jurisdictions to manage another country’s operations is a common corporate practice.

There are three reasons for this: Firstly, offshore jurisdictions often provide tax benefits and cost savings. Secondly, many offshore jurisdictions keep the identities of shareholders and directors secret. Lastly, should things go wrong in China, keeping a holding company in between China and investor limits any financial damage.

While there are many reasons to pick Hong Kong for this, and Chris’ article does a good job of summarizing them, Singapore should be the ideal location for investors in certain cases.

Chiefly, Singapore holds the advantage if the company has businesses not just in China, but also in Southeast Asia and the rest of the region.

That’s because as a ASEAN member, Singapore has free trade access with the rest of the body, namely Indonesia, Malaysia, the Philippines, Thailand, Brunei, Burma, Cambodia, Laos, and Vietnam. While China (including Hong Kong) has a free trade agreement with ASEAN, the level of access they have does not quite reach Singapore’s.

ASEAN’s tax treaty with India also provides Singapore another advantage. While China does have an agreement on double taxation with India, it does not go much further than that.

SMEs have another reason to consider Singapore. While Hong Kong’s corporate tax rate is slightly lower than Singapore, the latter has a tax incentive whereby the first S$400,000 (US$312,000) is taxed at 6.375 percent, given all other criteria are met.

So, if your company is only interested to expand to China, perhaps Hong Kong remains the best choice to set up a holding company. Other than that, it’s probably time to give Singapore a serious look.

Photo: Kit Photos

With offices in Singapore, Tokyo, Bangalore, San Francisco, London, and Nairobi, InMobi claims a reach of 314 million consumers in over 165 countries, and more than 36.2 million mobile ad impressions monthly.

“Sprout’s technology solves a critical need for the industry by helping bring engaging mobile ad experiences to consumers all around the globe. The acquisition fits perfectly with our vision to enable the mobile ecosystem with best of breed technology and services. The entire industry will benefit from the combination of our technology and operational footprint on five continents and Sprout’s platform,” says Naveen Tewari, CEO of InMobi.

Previously, it has raised US$8 million in Series B funding from existing investors Kleiner Perkins Caufield & Byers (KPCB) and Sherpalo Ventures (also check out this podcast featuring Emmanuel Allix from InMobi).

Smaato offers clients access to over 60 ad networks and 30,000 developers and publishers in more than 220 countries, as well as mobile analytics and ad operation management tools. Publishers or developers that register with the company could earn between 70 to 90 percent of the net revenues generated on their website or app.

The company is headquartered in Redwood Shores, California and has offices in Singapore, Hamburg, and Germany. It is an active member of the  Singapore Infocomm Technology Federation (SITF), Mobile Marketing Association, and the German Federal Association of the Digital Economy (BVDW).

Among youths aged 15 to 19 years old, Internet penetration is at 97 percent, while only 33 percent of Singaporeans aged 50 and above access the Internet.

“‘While Singaporeans still largely access the Internet via PCs, the growing popularity of connected devices such as the iPhone and iPad and increasing availability of cheaper mobile Internet price plans is paving the way for growth in mobile and tablet Internet usage in the future,” says Rebecca Tan, managing director of Nielsen’s Media division in Singapore.

Photo: SarahDepper

Quarter-on-quarter growth for rental costs was 4.5 percent, ending at S$3.45 per square foot (psf) from April to June. Growth in the previous quarter was 3.1 percent.

“As office rents have increased at a faster pace, some office tenants who qualify to occupy industrial space due to the nature of their business operations are choosing to move over to business parks and high-tech industrial buildings,” says Cheng Siow Ying, DTZ executive director, to Channel NewsAsia.

The GII computes a score based on several elements, such as institutions, human capital and research, infrastructure, as well as creative and scientific output.

But while Singapore has done well in terms of input, scoring first overall, the country ranks only 17th when it comes to output.

What this means is that while the government has invested a lot of capital to create the most conducive environment for innovation, the dividends produced are below expectations. Output is measured in terms of the creation of knowledge and the production of creative goods and services.

In fact, in terms of matching input with output (Innovation Efficiency Index), Singapore only ranks 94th.

Here’s what the GII report says of the island-state:

Singapore shows its strongest performance in the Input Sub-Index, coming in at 1st place on the basis of its strengths in the Institutions (9th), Human capital and research (1st), Infrastructure (9th), Market sophistication (2nd), and Business sophistication (1st) pillars. However, Singapore’s Innovation Efficiency Index ranking is low (37th among high-income countries, 94th in the general rankings); this shows up in its relative weak performance in the Output Sub-Index, where it is ranked 17th overall (Scientific outputs at 17th place and Creative outputs at 33rd). Singapore is ranked 41st in patent applications at the national office, 82nd in national office trademark applications, and 82nd in creative services exports.

In terms of overall rankings, only five Asian countries have cracked the top 20. Below are the placings for South and East Asia:

1. Brand extension and customer engagement
2. Business models and partnerships
3. Apps and social media and social gaming
4. Creating beautiful apps
5. Multi-platform apps

1. Head of Developer Relations
2. Head of Strategy
3. Head of Marketing
4. Head of App Development
5. Head of Business Development/Sales
6. Head of Product Development
7. Head of Consumer Marketing
8. Head of Mobile
9. Head of Digital/New media

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