Singapore has consistently been rated as one of the world's most competitive economies. However, when it comes to entrepreneurship, it lags behind in global comparisons.

It is thus of little surprise that entrepreneurship is very much a buzzword in the past few years. The government promotes it, everybody talks about it, and there are plans to introduce it in schools.

In 2004, Singapore was ranked the second most competitive economy among 60 economies worldwide. Generally, Singapore's strengths in economic performance reflect largely the openness of the economy.

Some of the weaknesses are the relatively small size of the economy; relocation of services, production and research and development facilities to lower-cost countries; and the fact that entrepreneurship is not widespread in the economy.

By the measures of the Global Entrepreneurship Monitor (GEM), Singapore has made strides in entrepreneurship over the past few years, at enterprise and national levels.

In 2001, when Singapore was first included in the study, it ranked 19th out of 21 countries - with just two per cent of its adults engaged in start-ups and young firms.

The percentage has since grown to 5.4 percent, according to GEM's findings, which places Singapore 26th out of 40 countries on its Total Entrepreneurial Activity rankings.

Singapore emerges as an 'average' performer. Even at the firm level - where Singapore ranks a better 11th out of 40 - it is clear that local firms here are nowhere near as enterprising as the best in the world.

GEM considers as 'entrepreneurial firms' those that produce innovative changes in the market or add new jobs. According to its findings, such firms made up barely 19 per cent of all Singapore firms last year and accounted for nine percent of the workforce ( Business Times , Singapore, Jan 29, 2004).

Singapore is hampered by several constraints related to its historical, governmental, societal, psychological, financial and educational features.

1) Historical

Between the 1960s and the early 1990s, Singapore pursued an entrepreneurial substitute policy, with multinational companies and the government itself being the two substitutes for local (traditionally mostly Chinese-educated and China-oriented) entrepreneurship.

Dr Goh Keng Swee, Singapore's celebrated architect of post-Independence economic growth, put it succinctly: "we imported entrepreneurs in the form of multinational corporations and the government itself became an entrepreneur in a big way" (quoted in Huff 1994, The Economic Growth of Singapore , p 320).

While this era saw Singapore progressing from a third world to a first world nation, local entrepreneurship was undervalued by the government. Simultaneously, government-linked companies achieved a dominant status and maintain a certain competitive advantage by being 'in the loop'.

2) Governmental

Red tape, like in many economies, can be a challenge to entrepreneurs. One of the perennial poster boys of entrepreneurship, Creative Technology-founder Sim Wong Hoo, in his book, Chaotic Thoughts from the Old Millennium , came up with the acronym NUTS.

The acronym stands for No-U-Turn-Syndrome and points to another kind of problem. In the US, for instance, you can make U-turns anywhere, unless there is a sign barring it.

In Singapore however, the opposite applies. You can turn around only if there is a sign that allows you to do so. The NUTS culture promotes a life that is based on rules.

3) Societal

Until recently, there was inadequate recognition of entrepreneurs in Singapore, and arguably, there is still a stigma attached to failure.

In traditional social hierarchy, Chinese societies have valued first, the scholar, second, the farmer, third, the worker, and fourth and last, the merchant.

Remnants of this hierarchy still appear in popular culture. Entrepreneurs are still occasionally regarded as under-educated 'mavericks', though during the dot.com boom attitudes temporarily changed.

It is almost ingrained in Singaporeans' psyche to seek, to do well and to succeed. Thus, a stigma of failure is already evident early in life, as is instanced by the stigma attached to being in the monolingual stream of education.

Singapore has sometimes been unkindly described as a 'nanny state,' and rigid rules and regulations indeed work against an entrepreneurial culture.

4) Psychological

Psychological factors are closely intertwined with societal ones. The stigma of failure goes hand in hand with a lack of risk-taking.

The prevalent lack of risk-taking also has an economic rationale, as the macroeconomic success story in Singapore does not necessitate entrepreneurship.

Widespread prosperity and a largely stable environment create complacency, reduce uncertainty and thus, according to the followers of the Chicago School of Economics, actually reduce the possibility of entrepreneurship.

5) Financial

There is a lack of seed funding. Ever since the Asian crisis in 1997, finance institutions have taken a very cautious stance in lending money. In addition, Singapore has only a small business angel community.

6) Educational

The Global Entrepreneurship Monitor reports have consistently observed that there is a relative lack of entrepreneurship training and education in Singapore.

In 2003, the Economic Review Committee has highlighted entrepreneurship as a key driver in Singapore's effort to remake its economy, and the government has thus introduced numerous policies and schemes to boost entrepreneurship.

The government has set out to address many of the above constraints, with a lot of innovative efforts in reducing red tape and bureaucracy.

In 2003, the post of minister of entrepreneurship was created and the incumbent Raymond Lim has been at the forefront of many positive changes. Space only permits to go into seven of the more important initiatives.

1) There is a general pro-business environment in Singapore, with reduced corporate taxes and the employers' contribution to the CPF pension fund also having been lowered.

2) The Home Office Scheme allows fledgling entrepreneurs to conduct business from their homes.

3) The EntrePass Scheme liberalises visa and employment rules and allows foreigners to work in Singapore based on their business plan.

4) There are governmental financing schemes for start-ups, for instance the Start-up Enterprise Development Scheme (SEEDS), which matches every dollar raised by third-party investors.

5) Bankruptcy laws have been relaxed to address the stigma of failure.

6) There is a 'No Wrong Door Policy' ZIP (Zero in Process), which streamlines the process of resolving cross-agency issues, and Power (Public Officers Working to Eliminate Red tape), which brainstorms how to get rid of red tape. There is even a government website .

7) There has been much proactive encouragement of entrepreneurship. In line with government praise for entrepreneurship, more than a dozen awards celebrate successful entrepreneurs annually.

Education

These are laudable moves. At the same time, the PAP government is aware that it should avoid being involved in entrepreneurship as much as possible, the market being the best judge.

There is a 'Yellow Pages Rule', that advocates that whenever a particular product or service is in the yellow pages - that is, if it is produced by the private sector - the government should not produce it.

It is thus, that the relative lack of entrepreneurship education and training, is largely addressed by the private sector.

To mention but two examples, the Entrepreneurs' Resource Centre runs highly successful short courses for would-be-entrepreneurs, focusing on analysing opportunities, developing a business plan.

The Asian Centre for Professional Excellence offers Singapore's only MBA programme specialising in Entrepreneurial Management through the Entrepreneurship Institute Australia (EIA).

Designed for aspiring and existing entrepreneurs, the programme offers a broad spectrum of knowledge for starting and growing businesses.

Additionally, as 'know-who' is just as important as 'know-how', serial entrepreneurs support the MBA programme and venture funding opportunities are available for course participants who submit compelling business plans.

All in all, there is a good chance that within the 15-year time frame of the Economic Review Committee, an entrepreneurial culture will have matured by 2018 in Singapore. Freed from the 'NUTS nanny', the 'little red dot' may move on to even greater economic heights.

Tomorrow: Producing creativity? Minds restructuring in the era of globalisation

More articles in the 'A new Singapore?' series

Dr JUERGEN RUDOLF is managing director of the Asian Centre for Professional Excellence in Singapore and is a member of the academic board of the Entrepreneurship Institute Australia.

Malaysiakini is publishing a 12-part series by different writers on the challenges facing Singapore as new leader Lee Hsien Loong takes the helm. These articles are edited by James Gomez, coordinator of the Monash Asia Institute's Singapore Studies project on civil society. For more information about the project, visit www.jamesgomeznews.com .