Singapore better than United States for hardware makers: Bunnie Huang

The next crop of great hardware startups could very well come from Asia. That thought hung in the air as Andrew “Bunnie” Huang, which Make Magazine calls the maker’s maker, gave a talk at Singapore’s Mini Maker Faire on why the country is a better place than the United States for hardware startups.

It’s not something he believes in theoretically: Bunnie moved to Singapore in 2010 and later brought in the team at Chumby, a startup he was then involved with. Recently, he has been building an open-source laptop called “Novena”, named after a Singapore subway station.

While Silicon Valley is perceived as a mecca of sorts for technologists and tinkerers, setting up there contains many hidden costs.

1) Poor locality of services

While in Silicon Valley, Bunnie had to source for certain components from other parts of the United States, and even as far as Tokyo and Singapore.

Working with manufacturers in Shezhen, China from the United States is much more difficult compared to Singapore due to time zone differences, geographic distance, and a trust deficit: Business relations between China and Singapore is much friendlier than China and US, which makes extracting better terms in deal-making far easier.

Flying from Singapore to Hong Kong or Shenzhen takes about three hours, which is equivalent to commuting between San Francisco and Austin or a train ride from New York to Boston.

2) Unfavorable tax structure

Small businesses in the States are taxed like individuals. That means a Federal tax of between 20 to 30 percent, a sales tax of 8 to 9 percent, not to mention employment tax, property tax, social security, and medisave.

Singapore, meanwhile, has a headline corporate tax of 17 percent, and that excludes the variety of grants, tax breaks, and incentives that the state has for small businesses. Even personal income tax rates are lower.

3) High cost of living

Healthcare is a mess in the US. While Americans pay more for heathcare than their peers in other developed countries, they have greater health inequalities and outcomes. Singapore ranks sixth in the world in healthcare outcomes, but spends four times less than the US as a percentage of GDP.

In Bunnie’s experience, 80 dollars’ worth of medical services could cost up to 200 dollars for an equivalent in the US, and the rest is covered by insurance.