Parliamentary Speech by Mr Henry Kwek on 26th Jan 2016
Video of full speech
Madam Speaker, I stand in support of the motion.
President Tan said that it is important for us to upgrade our economy to sustain growth. I cannot agree more. Inclusive growth is important. Of late, it is fashionable to focus more on the inclusive part of it, rather than the growth. In fact, just now in the House, there was talk about social justice.
But really, if you think about it, growth is a critical element and ingredient for inclusiveness. Without growth, our society’s wealth will be more commonly inherited, and less commonly created. Without opportunity, our society will be one of permanent class and stifling glass ceiling. And without success, we will not be able to pay for an inclusive society, for generations to come.
Our future generations need a world full of opportunity.
So, in this fast-changing world, how can we make sure that Singapore remains relevant? I would like to talk about three points today. One, how we can grow our future economy by creating more businesses, especially those with disruptive innovation and models. Two, how we can refresh our education system for the new economy. Three, how we must retain our fighting spirit.
Current Global Economy
Before we talk about the “what” to do, it is important to understand where the global economy is at today. For the last few decades, we have had unsustainable borrowings that have fuelled excessive consumption. But after the Global Financial Crisis (GFC), this unsustainable borrowing has stopped. We still have a lot of surplus production capacity. So, basically, we have a supply challenge.
To keep the world afloat, the central banks have flooded the world with money and businesses and individuals fearing deflation and disinflation, are afraid to spend or expand. Even China today, is cutting back, and is entering a low-demand period. So, on top of the supply challenge, we also have a demand challenge.
The other emerging economies are also getting more competitive. SIA has to fight “”tooth and nail”” against Middle Eastern airlines, which are well-funded. Our shipyards have to contest against capable Korean counterparts. Even our role in the region is also less certain moving forward.
In the Western-dominated economic order, we have a distinct role in Singapore – as a finance and business hub in Asia. But think about it, when China builds its One-Belt-One-Road initiative, a new world economic world order, it is unclear how central our role will be in Asia. And then, there is a disruptive effect of technology.
MNCs that Singapore traditionally relied on are being disrupted by start-ups, and start-ups have much less to do with Singapore. A case in point – HP employs around 10,000 people in Singapore, while Google just have a few mere hundreds.
A recent World Economic Foreign Report said that the 15 major economies in the world in the next five years will lose around 7 million jobs to technology; 7 million jobs. So, what is the underlying theme to all these? The underlying theme is actually that our mainstream export-based economy that has fuelled Singapore’s success for the last few decades is now under siege from excessive competition and from disruptive technology and business models. And let us not forget that Singapore is mainly designed to support this mainstream economy.
Our mainstream economy is important, and will continue to be so, and I will share some of my thoughts about it in the Budget speech. But for today, I would like to talk about how we can urgently grow the economy.
Encouraging Businesses with Disruptive Technology and Business Models
Let us ask ourselves. How many significant companies with disruptive models and disruptive technology has Singapore created in the last decade? Honestly, very few. If we do not have a frank conversation about this today, and do not adjust, we will be in for a tough ride in the future.
How can we grow this new economy? The Government’s role is primarily to create a conducive environment for the new economy. But in specific areas such as finance, smart-nation, urban planning, where Singapore is boldly inventing the future, we should give ample opportunities for Singapore-based businesses and start-ups to grow together with Singapore, and they can be global giants one day.
We usually equate the new economy with cutting edge technology. But it is not always true. Case in point – Facebook, Instagram and Uber — these are combinations of existing technology, but not necessarily leading-edge ones. So, what matters is the combination and the recombination of ideas and technology and the ability to test and scale the innovations quickly in the global markets in weeks rather than months.
Our role as a Government is to build this environment for the new economy. I have a few suggestions.
One, our research efforts must be aggressively translated first into innovations, and then into enterprises. Our research labs should get the ideas out quickly in an affordable and simple manner, preferably to Singapore-based companies. Let us not forget that the circulation of the ideas is just as important as the ideas themselves.
Two, we have to build a world-class funding environment. We already have a good base of venture capitalists today, but because of the recent uptick in number of start-ups, and a lack of high-profile market exits, there is a pressing gap in seed, Series A, mezzanine funding. We also do not have a real venture-focused bank like a famous Silicon Valley bank that looks at start-ups’ viability beyond their balance sheet.
Three, crowd-sourcing platforms like Kickstarter are fast becoming the preferred way to test and scale innovations globally. So, we should entrench these players in Singapore and as our start-ups secure commitments from such crowd-sourcing platforms, we can help them scale up their ideas in weeks, instead of months, by giving them access to capital by also connecting them with local manufacturers, contract manufacturers and partners.
Four, we should provide opportunity for start-ups to demonstrate their ideas. The finance industry is at the verge of being disrupted by financial technology companies. Barclay’s President recently said that in the next 10 years, 20%-50% of finance jobs will be replaced by technology; 20%-50% in just 10 years.
I am confident that Singapore can to invent the future, and set the gold standard on how financial hubs should operate in the digital world. Now, the important thing is this. While we invent the future, let us make sure that we bring our start-ups along to ride this wave. For example, we can create regulatory sandboxes to test out new ideas on a small scale. After all, UK is doing the same already for the finance industry.
For these experiments, what our agencies can do is to look beyond the established firms. May be perhaps through a double-envelope tender system, where first you can evaluate the innovativeness of the idea, and then evaluate the companies’ ability to see project through and not just on financial terms. If Singapore start-ups can do it, our Government should provide more support.
Five, we should remove unnecessary regulations. Many of our economic agencies are pro-business, but many regulations fall outside their purview. Let me share a light-hearted example from the traditional economy. Try putting a food truck on the side of any road in Singapore. Do you know that you would have to apply a separate permit for every location you put it at? But is this really necessary? After all, if NEA has certified the food truck for safety, is it still necessary to have a location-based licence for every location? After all, do we not have solid rules on traffic obstruction? So, that is just an example.
Regulations should protect the essential. But in most areas of the new economy, Singapore can strike a better balance between stability and opportunity, because it is hard to go against what the consumer wants. Once Internet banking is invented, it is hard to uninvent it. It is hard to protect our local banks by limiting the number of foreign banks’, branches or ATMs because you go to the Internet, you use your smartphones, you will get pass it. So, therefore, our regulations should go with the type of consumer preference, which usually embraces the new economy and not against it.
In fact, I think that we can go the extra mile by setting up an advisory centre for start-ups to assist them in regulatory and public sector matters.
My second part of the speech is about “”Education””. The future of science fiction is almost upon us. Fast forward 10 years, and we will live in a world of self-driving cars, computers detecting diseases, and robots doing routine tasks.
History has shown that technology creates winners especially in the long run, but in the short run, it can create many losers. In the last industrial revolution, it took 100 years before the steam engine was able to uplift somebody’s life in Europe. In today’s digital revolution, the effect is even more pronounced, because the winner can usually replicate their ideas digitally at virtually no cost and take most of the profit home.
Let me give you an anecdote. Two centuries ago, the world’s 10th best brick-layer was assured of a future. But today, an app developer working for the world’s 10th best, let us say, music streaming app company has a questionable future.
So, the question is, are we preparing Singapore to thrive for such a future? And this goes beyond SkillsFuture. We must prepare our children starting in their earliest years. Therefore, I urge the Ministry of Education and SkillsFuture to critically examine our basic and continuing education system in two ways.
Firstly, we should prepare our children to do what machines cannot do. It means we should teach them how to innovate, how to communicate complex ideas, how to recognise macro patterns, how to connect ideas across different fields, sense the ground and tap on intuition.
Secondly, we should also teach our children to be the masters of machines. By that, I mean letting them learn the basic principles of computer programming, artificial intelligence, and big data. We must prepare Singaporeans as if their future depends on it, because it does.
What I am saying is not for every kid, on top of their hefty curriculum, to be a top-notch programmer, an AI specialist, and a big-data analyst. What kind of childhood is that going to be, if it is all work and no fun? What I am saying is that we must teach them the broad principles through a general programme, so that when they graduate into a tertiary education and beyond, they are able to specialise in some of these areas.
Singapore is in an excellent position to refresh our education system because we are excellent and nimble and we can plan 10 to 15 years ahead, and we can adjust our curriculum quite quickly. We already have a tech-savvy population. Just look at the number of kids with iPads when you go out. But we must go beyond being just consumers of technology to being co-creators of technology.
We must go beyond being consumers of technology. (Photo: healthxchange.com.sg)
A Fighting Spirit
My first two points are about how the Government can help Singapore preserve our livelihoods. But no Government intervention is sufficient if our people are not hungry enough. So, the question is, how can we preserve our children’s will to fight and win? Education – be it history or social studies – is a key way we can pass down values from one generation to another.
To me, the real story of Singapore is in the first 20 years of our Independence. This is the Singapore exceptionalism Deputy Prime Minister Tharman spoke so eloquently about at the St Gallen Symposium. It is about how we turned our perpetual disadvantages into a determination to succeed and innovate. Out of nothing, we created a multi-racial society, a contrarian growth strategy, an inclusive housing programme, a thriving metropolis, well-defended by all.
So, the story is not just about the Government. It is also about our people, including the community and business leaders, how they rose up to the challenge. Therefore, I am calling for an increased emphasis of our history and social studies on the first two decades, with the focus on Singapore’s exceptionalism. It is critical that our children learn that they should continue to take risks, not take anything for granted, recognise the harsh realities of our surroundings. In short, we must make sure our children must learn about the spirit of 1965.
In conclusion, fellow Members of Parliament and fellow Singaporeans, our success in its first 50 years has been described as a vision of audacity. An audacity that was built on far-sighted and bold government policies; on the determination and spirit of Singaporeans; and Singapore’s survival and success in the future again depends on this spirit. Will our nation continue to defy the odds? I believe we will.
Recently, I came across a quote by Richard Branson, the founder of Virgin Atlantic. He has this line, “Train our people well enough so that they can leave, but treat them well enough so that they do not want to”.
Let me paraphrase him to encapsulate some of the points that I mentioned today – “We should prepare our people, so that they can go beyond Singapore, today or tomorrow, but build a home, and a sense of purpose, so that they will stay.”
Thank you, Madam Speaker.