Best places in Asia for a startup 2023

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Singapore's rank increased by one spot within the top 10 countries globally this year to reach sixth place.

Singapore has ranked the number one country in Asia with the most promising startup ecosystem. 

Per the Global Startup Ecosystem Index by StartupBlink, Singapore moved up one spot within the top 10 ecosystems globally this year, to reach sixth place. Across the Asia Pacific (APAC) region, Australia also made the top 10 globally, ranking ninth globally, despite losing one spot compared to last year. 

As a whole, the report evaluates and ranks the best markets and cities based on their respective startup ecosystems. To determine the rankings, each ecosystem has a total score, which is the sum of three subscores measuring three factors; quantity, quality, and business environment. For clarity, the report also defines a startup as any business that applies an innovative technology-enabled solution that has the potential to achieve scalability.

Among the markets studied, China also dropped in the rankings, losing its position in the top 10. Meanwhile, Japan's advancement of two spots from 20^th to 18^th positions it as the country with the biggest advancement among the global top 20 this year. Interestingly, South Korea (fifth in the region) and India (sixth), traded their regional ranking this year.

Full rankings

The full list of the 15 most promising startup ecosystems in the APAC region is as follows:

1. Singapore – 6^th globally 
2. Australia – 9^th globally
3. China – 12^th globally
4. Japan – 18^th globally
5. South Korea – 20^th globally
6. India – 21^st globally
7. Taiwan – 24^th globally
8. New Zealand – 31^st globally
9. Indonesia – 41^st globally
10. Malaysia – 43^rd globally
11. Thailand – 52^nd globally
12. Vietnam – 58^th globally
13. Philippines – 59^th globally
14. Kazakhstan – 73^rd globally
15. Pakistan – 76^th globally

Meanwhile, the list of top 10 markets globally is as follows:

1. United States 
2. United Kingdom 
3. Israel 
4. Canada 
5. Sweden 
6. Singapore
7. Germany 
8. France 
9. Australia 
10. The Netherlands

According to the report, the top five countries remained strong in their position from last year, maintaining their ranking. 

In first place, the US maintains "a massive lead", almost four times that of the UK despite only having a difference of one rank, it further noted. The US also maintains dominance in its total number of ranked cities: 252, compared to 257 last year; while the UK maintains its lead over the third-ranked country, Israel. However, the total score gap between these two countries narrowed from 16.6% in 2022 to 10% this year. 

As the study found, the global top three markets maintain a significant gap from the countries ranked below them, and are unlikely to be challenged in the rankings any time soon.

Market insights

Singapore

• Singapore further solidified its position as the highest-ranked country in the APAC region, increasing the gap from its closest contenders Australia and China.
• Singapore is ranked fourth in its business score, a two-point difference from its global rank, indicating a particularly startup-favourable regulatory environment.
• Singapore City ranks 10^th globally in fintech, 15^th in ecommerce & retail, 16^th in edtech, and 24^th in hardware & IoT.
• In total, Singapore is in the global top 25 for five of the 11 industries.

Singapore has been identified as a choice location for the incorporation of startups operating in Asia due to its financial stability, pro-business approach, and tax policies.

However, some challenges are still evident: high real estate prices make it harder to attract non-established foreign talent, and there is a general risk averseness in the local population.

India

• In South Asia, India ranks 1^st,  with a score that is 14.54 times the score of its closest contender, Pakistan.
• Indian cities hold the top eight positions in South Asia.
• As a whole, India boasts 38 cities in the global top 1,000. Five of these cities are among the global top 100, and nine of them are in the top 300.

India’s growth trajectory in the startup can be attributed mainly to its domestic market size and huge IT industry.

In terms of challenges, the scarcity of high-paying jobs, coupled with India’s infrastructural problems, are contributing to entrepreneurial talent relocating overseas. Apart from brain drain, India also faces challenges with its digital infrastructure.

Indonesia

• In terms of cities, Jakarta climbed three spots to rank 29^th globally, joining the world’s top 30 cities for the first time, after a growth trajectory spanning three consecutive years.
• In Southeast Asia, Jakarta ranks 2^nd, preceded only by Singapore, and maintains a big lead over Bangkok and Kuala Lumpur.
• Jakarta is the 10^th city in APAC after its one-spot advancement, bypassing Hangzhou, China.
• Jakarta stands in 19^th place worldwide for the ecommerce & retail industry.

Indonesia has the largest market size in Southeast Asia and has a young, talented, internet-savvy workforce. Growth in digital infrastructure, partly accelerated by the COVID-19 pandemic, can also be a huge gain for Indonesia's startup ecosystems.

Malaysia

• Malaysia is the eigth place in Asia.
• In terms of cities, the capital city and the main startup hub, Kuala Lumpur, improved by one position to 87^th in the world.
• In edtech, Kuala Lumpur ranks 27^th in the world.

On top of its strategic geographic location, Malaysia possesses the talent and positive mindset, along with government policies and public sector startup-related institutions which the report deems are overperforming compared to most of its Asian counterparts. 

Thailand

• After dropping three spots last year, Thailand has shown positive momentum this year by gaining one spot to rank 52^nd globally.
• For three consecutive years, Thailand has been the 11^th ecosystem in APAC and the fourth in Southeast Asia, still ahead of Vietnam.
• Bangkok has maintained its 43^rd position globally in the transportation industry.

Over the years, Thailand has seen multiple reforms and social innovations. Viewed as a tourist destination, the emergence of COVID-19 caused the public sector to prioritise the startup ecosystem development as an important step in securing Thailand’s future economic growth. Though more could be done on the linkage of foreign and local talent, the Thai public sector is innovative in terms of visa programmes and the deployment of other vehicles to allow expats to stay in Thailand long term.

Vietnam

• Vietnam maintains its position as the fifth-ranked city in Southeast Asia.
• The score gap between the only two Vietnamese cities narrowed this year. Ho Chi Minh lost three spots to rank 114^th, while Hanoi jumped 47 spots to rank 174^th.
• Ho Chi Minh outperforms in fintech, ranking 53^rd globally, while Hanoi is 72^nd in edtech.

The Vietnamese ecosystem has massive potential, mostly due to the substantial market size of the Vietnamese economy. However, to become a true regional and global Hub, the report sees that Vietnam will have to generate technological innovations and integrate them into the traditional manufacturing process, developing itself into an exporter of services and an exporter of manufactured goods.

Philippines

• The Philippines ranked sixth in Southeast Asia for another year, almost closing the gap with Vietnam in fifth place.
• The Philippines retains a total of five cities in the Index.
• Manila is by far the dominant city in the country, as its total score is 13 times greater than the following ecosystem, Cebu City.
• Manila ranks among the top 50 cities globally for fintech.

According to the report, the Philippines enjoys a talented English-speaking population, with many already working remotely for international startups. Adding on to the knowledge that local remote workers have gained while working in international startups, its attractiveness to foreign entrepreneurs and digital nomads allows for successful ecosystem growth.

Nevertheless, the Philippines faces several challenges that could delay the country’s development into a fully mature startup ecosystem. Particularly, the lack of infrastructure is a limiting factor to the country’s economic growth, and entrepreneurs struggle with slow regulatory support for their startups.

Lead image / Global Startup Ecosystem Index