Dubai, Singapore and the battle for tech startup supremacy

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With fast-growing technology ecosystems and sizeable populations of tech-savvy young people, the GCC countries and Southeast Asia are at similar stages of digital economy development. 

Startups in the two regions are tackling many of the same problems in sectors such as fintech; governments are pursuing equally ambitious digital economy strategies; and regulators are struggling with policy challenges such as data privacy, content policy and how to regulate Web3. 

These similarities are leading to more investment and expansion between the GCC and Southeast Asia. 

This convergence between the regions’ tech and startup ecosystems has been accelerated by a legacy of co-investment in late-stage startups by GCC sovereign wealth funds including Abu Dhabi Investment Authority, Qatar Investment Authority and Saudi Arabia’s Public Investment Fund, and by Southeast Asian state funds such as Singapore’s Temasek and GIC. Gulf nations are also contributing to emerging Southeast Asian funds – in July, the UAE pledged $10 billion to the Indonesia Investment Authority.

The interconnectivity is reinforced by bilateral trade and investment deals such as the Philippines-UAE investment promotion and protection agreement signed in June. Bilateral organisations including the Abu Dhabi-Singapore Joint Forum are playing their part too. 

From a trickle to a trend

The emerging GCC-Southeast Asia relationship is not all free trade agreements, memorandums of understanding, deal toys and unicorns, however. Southeast Asian startups opting to expand in the GCC – and particularly the UAE – began in 2013, grew to a trickle in 2018 and became a trend in 2020. Now this wave is entering a new phase of competition and co-operation. 

In new tech sectors such as Web3, Singaporean startups are opting to re-domicile in the UAE and tech startups that would have ordinarily formed Singapore-based holding companies are domiciling in Dubai instead. A complex new relationship status is unfolding as this competition grows.  

Since 2013, when Wego expanded into Dubai, more than 20 Southeast Asian startups have followed, with 75 percent moving into the GCC in the past two years. Dubai is the regional entry point for 95 percent of Southeast Asian startups and 90 percent of Southeast Asian startups making the move were founded in Singapore.

Dubai and Singapore have similar strengths in financial services and more than half (58 percent) of Southeast Asian startups that have expanded to the GCC are in the fintech sector. The remainder are split between logistics, ecommerce, agtech and edtech. Only 32 percent of Southeast Asian startups that have moved into the region have funding from a GCC investor.  

There is also a growing number of GCC startups expanding into Southeast Asia. Some 15 GCC tech startups have opened up in Southeast Asia or have stated an intention to do so. More than half of these expansions or proposed expansions have occurred in 2022, with Indonesia, Malaysia, Philippines and Singapore the most frequent landing points. All but one of these 15 startups were founded in the UAE. 

Balancing competition and cooperation

Singapore and the UAE have turned themselves into startup-friendly hubs for emerging tech by using a mix of regulatory competition and a sandbox approach to engaging with disruptive technologies. Both are attempting to leverage regulatory agility to become early Web3 leaders and are also jostling to be the domicile of choice for pandemic-spawned decentralised tech companies and digital nomads. 

Dubai’s launch in March of the world’s first regulatory authority for virtual assets, which led Singapore-linked Crypto.com, Bybit and Binance to establish regional outposts in the emirate, is a clear example of this new phase of Dubai-Singapore competition.

At the same time, India’s meandering policy approach to Web3 has led to an exodus of the country’s Web3 founders to Dubai and has started to influence India’s broader tech founder community to bypass Singapore as their preferred holding company domicile for Dubai. 

The Abu Dhabi-Singapore Joint Forum shows that UAE-Singapore ties are not entirely focused on competition. There remain clear areas of tech co-operation with Singapore in spacetech, 5G, semiconductors and artificial intelligence. With the growing interest of UAE startups in Indonesia, Malaysia, Philippines, and Singapore, a Southeast Asian regional startup bridge – similar to the India-UAE Startup Bridge, which will provide funding and market access support for more than 50 Indian and UAE startups – could further support convergence and cooperation.   

Wes Schwalje is co-founder of Tahseen Consulting, one of the MENA’s top tech policy firms. He has advised 10 unicorns and 11 US-listed public companies