SINGAPORE: Positioning Singapore as the “global Asia node of technology, innovation and enterprise” will be the next “critical” step in the country’s economic transformation plans, said Finance Minister Heng Swee Keat on Wednesday (Apr 18).
This will involve efforts to make innovation pervasive, deepen capabilities of local companies and workers, as well as strengthen cooperation in and outside of Singapore, he added.
Mr Heng, who is also the chairman of the Future Economy Council (FEC), was speaking to reporters at a briefing on the country’s economic transformation. Tasked with growing and transforming Singapore's economy for the future, the FEC oversees the implementation of the Committee on Future Economy’s recommendations, as well as the development and implementation of the Industry Transformation Maps (ITMs).
Elaborating, Mr Heng said he believes that the “globalisation trend will continue” even as the risk of US-China trade disputes linger. Given that Singapore has established “very good connections and linkages” globally over the past five decades, it “must maintain that advantage”, he added.
The emphasis on Asia, meanwhile, stems from the positive growth projections for Asian economies, such as China and Southeast Asia.
On being a “node” for technology, innovation and enterprise, Mr Heng explained: “The advances in tech will have a huge impact on many sectors and in turn, that is going to spur a lot of innovation.”
He added: “If we are able to develop our people to have the technological, innovation and enterprise (skills); to be able to partner with key centres around the world, we will be in an extremely good position to grow the economy and create good jobs for the people.”
To achieve that, Mr Heng highlighted “three big elements” that will need to put in place.
Firstly, innovation will need to be made pervasive, which Mr Heng stressed will be a “key aspect of transforming the economy”. Efforts to do so are underway, such as continued investments in research and development (R&D) and the rollout of the Maritime Transformation Programme.
Secondly, deep capabilities will need to be developed in homegrown firms and workers.
Lastly, strong partnerships will need to be forged within Singapore and around the world, said Mr Heng.
Raising the example of hawker centres, he explained: “In a hawker centre where everyone sells different food, they are competing in a way but they are also cooperating because people know they will get a good variety of food when (they) go to the hawker centre… This is what I hope Singapore companies can be – everyone is good in some ways, but together you have the whole reputation that this is the best hawker centre in town.”
He added: “The value chain of any economic activity is no longer (for) one company to deal from A to Z... Taking that integrated approach is going to be the key to our transformation.”
CLUSTER APPROACH FOR INDUSTRY TRANSFORMATION
As part of the next phase of economic transformation, Mr Heng also revealed that the Government has begun grouping the 23 key industries with ITMs into six clusters.
The six clusters – each chaired by a minister and at least representative from the private sector or union – are manufacturing, built environment, trade and connectivity, essential domestic services, and modern services and lifestyle.
The ITMs are sector-specific roadmaps that were first announced in Budget 2016 as part of a S$4.5 billion industry transformation programme. All 23 roadmaps have been rolled out by March.
“In the last two years, we have achieved good progress,” said Mr Heng. “Our enterprises and workers all understand the importance of economic transformation and appreciate the changes happening around us. (As well as) the rapid progress of technology and how it affects businesses across different industries.”
With that, Mr Heng said the clustering is a “logical” move as authorities move on to the next phase to “look at how we can maximise the synergy within the cluster and across the clusters”.
For instance, in the lifestyle cluster, there are opportunities for firms in hotel services and food services to explore working together to improve experiences.
“Each ITM is a building block (to get) all the related industries together. The cluster will look at the entire sector and what are some of the cross-cluster linkages that we can make for everyone to be more productive,” said Mr Heng.
In the coming months, more plans will be unveiled on how each cluster can “bring together the elements of innovation, deep capability, internationalisation and strong partnership”, he added.
GOOD PROGRESS, BUT UNEVEN
When asked for his assessment of the economic transformation efforts so far, Mr Heng noted that progress has been good though uneven.
For instance, productivity growth has risen over the past two years, from 1.4 per cent in 2016 to 3.8 per cent last year. Apart from the recovery in the global economy, it also showed that some of the transformation efforts “are paying off”, said Mr Heng.
However, the progress in the implementation of plans has been uneven across sectors, said Mr Heng, citing the retail sector as one that has seen slower progress.
This boils down to the numbers, sizes and the levels of sophistication across companies in the sectors.
Moving forward, Mr Heng said that economic transformation is an “ongoing journey” with “no end point”.
“We have gone through successive waves of changes because the global economy is changing by the day, technological advances are happening all the time… If internally, we can stay cohesive (and) build on the strong partnership that we’ve had over the years and continue to deepen that, then I think we can ride these waves of changes smoothly,” he said.