PRESENTATION BY MINISTER OF STATE FOR TRADE & INDUSTRY AND MANPOWER, AND MINISTER IN CHARGE OF ENTREPRENEURSHIP, SINGAPORE, MR LEE YI SHYAN, AT THE WORLD ENTREPRENUERHSIP FORUM ON 20 NOVEMBER 2009, 8.30AM.
Mr. Patrick Molle, President of
EMLYONBusinessSchool
Mr. Jean-Luc Decornoy, President of
KPMG SA
Members of World Entrepreneurship
Forum Think-Tank
Ladies and
gentlemen
Good
morning
Introduction
It is my honour to be part of the
World Entrepreneurship Forum Think-Tank to learn from many
distinguished members and to share on Singapore’s experience in
entrepreneurship development.I would like to first thank and
congratulate EMLYONBusinessSchool and KPMG for putting this World
Entrepreneurship Forum together.This cannot be a more timely
initiative.As we emerge from the global economic doldrums, it
becomes more evident that entrepreneurship and innovation will
drive global recovery and the next wave of
growth.
Singapore believes in the importance of entrepreneurship in economic
growth, and we are building an eco-system that facilitates start
ups and SMEs.While we have achieved some milestones, we are not
there yet.I therefore, look forward to learn from our distinguished
counterparts at this forum, and also to forge collaboration and
partnerships to drive entrepreneurship to a higher level, both
locally and
globally.
Before I start to talk about
entrepreneurship development in Singapore, to put things in
context, allow me to first bring you through Singapore’s economic
history.Then I’ll go on to share about the genesis of our
entrepreneurship efforts, and the role that the government has
played, including some of the key focus of our
efforts.
Evolution Of The Singapore Economy
Singapore's economic growth thus far is phenomenal.At the end of the
1950s when we achieve self government, Singapore's per capita real
income was only 15% of United States.By 1983, its per capita income
of more than US$6,000 was halfway to the industrial market economy
countries’ average of US$12,000.By 1996, the percentage stood
beyond 90%, outpacing Japan and Hong Kong, in both the level and
the rate of growth.Singapore’s per capita Gross Domestic Product
(GDP), of US$36,000 in 2008 is above that of Japan, UK and
Germany.
Singapore’s economic success is intricately related to its political
evolution.She achieved self–government from British rule in 1959
and gained independence from the Federation of Malaya in 1965.The
template for economic growth was altered significantly when
Singapore gained independence in 1965.It became clear that the
small size of the Singapore market would constrain inward looking
growth strategies in the absence of a hinterland in Malaysia.Rapid
growth only followed economic re-structuring, which concentrated on
exports and foreign direct
investments.
Since the late 1970s, there has been
a wave of economic reform and liberalisation in Asia. China's
economic reform programme in 1978 led first to a boom in trade via
Hong Kong and then to an upsurge in foreign direct investments into
China.The transformation in ASEAN was no less dramatic. Indonesia
liberalised foreign investment in 1983, Malaysia and Thailand in
1986. India, after years of pursuing economic self-reliance, opened
up in 1991.
The liberalisation has made the
region as a whole, including Singapore, more attractive to foreign
investors.This formula worked well for us into the 70s and 80s.By
encouraging MNCs to locate here, Singapore took a short cut in
industrialisation – acquisition of know-how, management expertise
and market.We improved productivity and upgraded the industries, so
that higher-value jobs were created.From timber and textiles to
semiconductors and electronic, and now to nanotech and
biotech.
Then the Asian Financial Crisis hit
us in the late 90s, followed by the dot-com bubble burst in 2000,
then 9-11 in 2001, and SARS in 2003.We quickly moved to restructure
our economy to propel further growth.An Economic Review Committee
chaired by the then Deputy Prime Minister, now Prime Minister Lee
Hsien Loong, was formed, comprising political leaders, business
leaders, and academic leaders.Singapore understands it can no
longer compete on being an efficient place for business.
Increasingly, it has to be a knowledge-based,
differentiation-based, innovation-based economy. That’s a very
challenging transition.Specifically, we resolved to remake
Singapore into a creative and entrepreneurial nation willing to
take risks to create fresh businesses and blaze new paths to
success
The Drive For Entrepreneurship Development
Once our mind was set, we quickly
rolled up our sleeves and got down to work.What we had done could
broadly be grouped under two new areas.First, there was the need to
set up the structures and the environment for entrepreneurship to
thrive.Then there was the issue of raising entrepreneurs who would
tap on these structures and make use of the favourable environment
to create value to succeed.
Let me first touch on the perspective
of structure and environment.
Establishing A Pro-Enterprise Structure
A Minister in charge of
Entrepreneurship
and
An Agency to Drive
Entrepreneurship
First, in line with the
recommendation of the Economic Review Committee to appoint an
agency dedicated to entrepreneurship development in Singapore to be
headed by an individual who has both the support from the private
sector and the influence within the government to effect change,
the Prime Minister appointed a Minister in charge of
Entrepreneurship in 2003.This has been a standing position, and I
am currently third Minister appointed to be in charge of
Entrepreneurship.My role is to facilitate and to be a cheer leader
for entrepreneurship in
Singapore.
Furthermore, we do not have a
government agency dedicated to entrepreneurship prior to the
Economic Review Committee.We restructured and refocused one of the
existing government agency, the then Productivity and Standards
Board, to be the enterprise development agency; SPRING
Singapore.Its mission became to grow innovative companies to foster
a competitive SME sector.SPRING Singapore works with partners to
help local enterprises in financing, capabilities and management
development, technology and innovation, and access to
markets.
Public-Private Sector
Collaboration
My predecessor, the first Minister in
charge of Entrepreneurship, realised that having a Minister and a
group of public servants drive Entrepreneurship sounds like an
oxymoron.The private sector and the entrepreneurs themselves must
be involved.He therefore invited a group of entrepreneurs who were
passionate about entrepreneurship development to form an action
group to drive entrepreneurship development from the private sector
perspective.
Hence a public-private sector
collaborative movement known as the Action Community for
Entrepreneurship or ACE in short, was established. ACE is a group
of entrepreneurs working together with government officials to
enhance the entrepreneurship landscape in Singapore. I helm the
group as Minister in charge of Entrepreneurship, but the success of
a group like this really depends on the passion and the drive of
the entrepreneurs behind it. This birth of ACE marks the beginning
of a new era for entrepreneurship in
Singapore.
Creating A Pro-Enterprise Environment
In building our
entrepreneurship landscape, ACE structured itself into different
Action Crucibles.Notice the careful choice of words here.The Action
Crucibles or ACs were not structured to be Advisory Committees, as
what we in the government are fond of doing.The idea behind this
was that the entrepreneurs were not content with simply coming
together to talk shop and surface ideas.They wanted to drive
change.They expect these Action Crucibles to not only come up with
the ideas but also to work with the government officials to execute
these ideas so that entrepreneurs may benefit.For a start the
Action Crucibles focused on four
areas:
- Culture and
Education;
-
Rules;
- Financing;
and
-
Internationalisation.
Let me share on ACE’s work by
starting with Rules and Financing first, which are more tied to the
environment.
Reviewing Rules to Build a
Pro-Enterprise
Environment
Under this area, the ACE Rules Action
Crucible works with the government through the Pro-Enterprise Panel
to cut red tape to reduce regulatory burden on enterprises.The
Pro-Enterprise Panel is chaired by the Head of Civil Service to
seek and act on suggestions from the public, in particular from
entrepreneurs, on how government rules and regulations can be
updated and improved so that we do not overly burden them with
rules that could be unnecessary, unsuitable, or simply
outdated.
For example, we had a lady who wanted
to produce and sell wine by using a simple fermentation method
at our food centres in Singapore.She realised that she had to
fork out some S$28,000 in license fee. This might
have been an appropriate fee to set for large breweries or wineries
producing large quantity for export and distribution, but was
astronomical in the eyes of a small business owner.With the
intervention of the Pro-Enterprise Panel, the fees were subsequently lowered to S$5,000, a
mere fraction of the original fees.This example is but one
of almost one thousand rules changed since we began this
process.That is not a bad record, considering we have only received
about 1,800 suggestions from the public.We accepted and implemented
more than half the
suggestions.
But ACE recognised that responding to
feedback is insufficient.It has to work with the government
agencies to permeate a pro-enterprise mindset among government
officials, particularly regulators.Hence ACE started the annual
Pro-Enterprise Ranking of Government Agencies, where through a
survey, enterprises provided honest feedback to agencies on their
pro-enterprise orientation, on how their rules are transparent, and
on how they fared in customer service.This survey has been useful
in driving a collaborative mindset between government regulators
and entrepreneurs.
Facilitating Financing for
Entrepreneurs
Another important area of ACE’s
achievements is in financing.Financing has been a perennial
challenge for entrepreneurs. ACE therefore saw it as its key
challenge to ease access to financing for
entrepreneurs.
Hence, over the years, ACE worked
with various partners to launch various initiatives to make it
easier for entrepreneurs to obtain financing.In particular, the
Local Enterprise Financing Scheme and the MicroLoan Programme helps
to alleviate the financial institutions’ risk averseness in lending
to small business by sharing the risk of default with them.The risk
that the government underwrites was increased from 50% to 80% or
even 90% in some cases over the past year due to the credit
crisis.This Special Risk-sharing Initiative, to help enterprises
tie over cashflow during the current crisis, has helped them raise
over $600m in loans.
Besides loan programmes, ACE also
worked with the public and private sectors to roll out various
equity schemes to benefit primarily startups.An example is the
Over-The-Counter (OTC) private equity trading platform which offers
companies with high growth potential, but who are not ready for
public listing, an avenue to access private equity
financing.
Through the various initiatives
rolled out over the past five years or so, financing has dropped
out of the top three issues face by entrepreneurs in running their
SMEs.
Creating Global Entrepreneurs
Let me now move on to talk
about what is arguably the toughest of the issues, the holy grail
of entrepreneurship development that we seek.Can we raise the next
big entrepreneur?How do we do
that?
Entrepreneurial Culture and
Education
The biggest challenge in fostering a
vibrant enterprise sector is changing the mindset of the people.
This means developing instincts to sense opportunities and take
calculated risks, coupled with a strong passion for adventure and
achievement. ACE has been working tirelessly over the years to
promote such a mindset. One of the flagship events is the BlueSky
Festival. The term BlueSky connotes freedom, openness, unlimited
possibilities and optimism, the exact characteristics we
endeavoured our entrepreneurs to possess. The BlueSky Festival
brings together entrepreneurs, financiers, government officers and
like-minded people to exchange ideas, share experiences and to
recognise the critical role entrepreneurs play in Singapore’s
economic development. Besides local entrepreneurs, we have also had
foreign entrepreneurs such as Tony Fernandez of Air Asia, Eric Xu
of Baidu.com, and Bo Fishback of the Kauffman Foundation as our
distinguished speakers. This event has reached out to some 25,000
participants over the last six years, and has helped to raise the
profile of
entrepreneurs.
But changing cultures needs to start
from young.More recently, we launched the Young Entrepreneurs
Scheme for Schools or YES! Schools to provide resources to help
schools develop and implement entrepreneurship learning programmes
inculcate entrepreneurial traits and skills. For example, through
this programme, two 14-year old boys, with mentorship from their
science teacher, developed a circular fridge. Inside the fridge, a
Lazy Susan spins around, making it easy to retrieve food items from
the back.They are looking forward to have a chance at
commercialising their invention.Since the programme was launched
last year, we have funded close to 10% of Singapore’s schools,
reaching out to some 6,000 students.
In addition to YES! Schools, we also
have YES! Startups which encourages our youths to hone their
entrepreneurship skills and set up viable business with a S$50,000
grant for first-time young entrepreneurs. Since its inception last
year, we have supported 38 start-ups and committed $1.8 million. An
interesting business idea that rose from this programme is FR3b
(pronounced as Freebie), Singapore first sampling concept stores
started by a twenty year-old girl. It provides a platform for its
clients to display their samples and for its members to personally
pick up the samples. In a short span of one year since it first
started, Freebie has secured more than 40,000 online and retail
membership.
Through ACE and partners’ efforts,
Singapore has seen a tremendous improvement in our entrepreneurship
culture. Our start-up formation figures increased from only 15,000
in the 1980s to some 50,000 in 2009. Our entrepreneurs are getting
younger with two-third of them below 40 years old; and more
educated with three-quarters of them holding tertiary education. In
a survey done in 2008, on the start-up community in Singapore, we
found that 84% of them would not give up their business for better
job opportunities. That is a great testament and affirmation that
our hard works have not gone to waste.
Internationalisation and
Mentorship
Last but not least, while we work at
the softer aspects of mindsets and cultures, we realise that we
need success to inspire success.We need more enterprises that have
made it.Once there are enough of them to form a critical mass, a
virtuous circle would have
started.
So we have put in some effort to
groom winners.ACE has the Internationalisation Action Crucible,
which was set up to mentor a ready enterprises to
internationalise.The AC would help the company identify key
impediments that stand in the way of its business expansion and
give ideas and expert advice for business internationalisation.So
far eight companies have undergone this mentoring process in
expanding overseas.What is encouraging is that some of these
companies have decided to take over the baton and join the
programme to mentor a new cohort of Singapore
companies.
The Entrepreneurial landscape in
Singapore
The efforts of the Singapore
government working with ACE and other partners resulted in
Singapore receiving many prominent accolades including maintaining
First in World Bank’s “Ease of Doing Business” survey for the
fourth consecutive year, being the most innovative nation in the
world, according to a study jointly produced by The Boston
Consulting Group (BCG), the National Association of Manufacturers
(NAM), and The Manufacturing Institute (MI) and third in world
competitiveness ranking according to World Economic Forum Global
Competitiveness report.
This pro-enterprise environment can
also be seen in numbers.Currently, Singapore has some 161,000
enterprises which employs 62% of the workforce and contribute 48%
of the total value added. Our patent applications also increased by
45% in the last decade.A recent survey with our varsities showed
that 1 in 5 of the graduates would like to start a business and be
their own boss.More businesses are formed each, from 36,000 in 2002
to almost 50,000 in 2008.This translates to 103 businesses for
every 10,000 Singaporeans, which is double that for the United
Kingdom (53) and Finland (56), though only half of that in the
United States
(207).
Moving Ahead
Challenges caused by global financial
crisis
The global financial crisis has
affected our economy and entrepreneurs. More fundamentally, it has
changed the way things are done.While it is a tough period for many
of us, I remain confident that the global economy will turn around,
probably through innovation by entrepreneurs. What remains then is
how the landscape will change, and whether we would be prepared to
ride the waves.
Building Singapore as an
Entrepreneurial Hub
The government next focus is not only
to make Singapore more entrepreneurial, but also a hub where
entrepreneurs and innovators can connect to markets, capital and
talent via Singapore and Asia. We hope to create a nurturing
business environment and to develop a vibrant entrepreneurship
ecosystem that includes entrepreneurs, venture capitalists,
scientists and researchers.This would serve as a magnet to attract
top talent to
Singapore.
I would like to take this opportunity
to welcome you to connect to Asia via Singapore. My team and I will
gladly help facilitate the
process.
Conclusion
As a city-state, Singapore’s strategy
is to link up with other global players, big and small, in order to
strengthen our overall competitive position.MNCs will always play
an important role here. In fact, we must make Singapore their
command and control base for the entire region.At the same time,
however, we must build up entrepreneurship so that we are also
their partners, not just their
employees.
This is an important challenge for
Singapore in the next phase of our economic development.We need
more local entrepreneurship in all sectors, not just in traditional
areas like trading, real estate and banking, but also in new areas
like high-tech manufacturing, creative services, Internet and
e-commerce.The SME sector is our nursery to produce world-class
local entrepreneurs.Some will fail but others will
succeed.
We will continue publicizing the
success stories of young Singaporeans entrepreneurs so that they
become models for others to follow.The Government can play its role
in the end, we need individuals to take up the challenge, and I
believe that many will.
I hope that today’s peek into some of
Singapore’s efforts in promoting entrepreneurship will inspire all
of you.
Thank
you.