“Rebuilding to Emerge Stronger and More Competitive"

Introduction

1. Mr Chairman, I thank the Members for their excellent questions and useful suggestions. I also thank the Members for their kind words on the work that MTI has done.

2. Over the past week, much has been discussed about

a. how we should or should not use our reserves; and

b. how we can and should do more for various groups in our society.

3. However, we must not lose sight that, first and foremost, we need to earn our keep – for this and future generations, under the shadow of the COVID-19 pandemic. 

a. We are still trying to get out of the most serious recession since independence.  

4. We are not returning to a pre-COVID world.

a. Even if our GDP returns to pre-COVID levels quantitatively, we will have a qualitatively different economy then.

i. The share of sectors and industries will be different.

ii. The types of products and services we produce and trade with the world will be different.

iii. The skillsets our people require to make a living will be different.

b. We must start now to build this new economy.

5. I will be frank: There are many challenges and downside risks.

a. Geopolitical tensions remain a concern.

b. Technological disruptions are accelerating.

c. The COVID-19 virus is mutating. The pace of vaccine rollouts across the world is uneven. This will complicate countries’ recovery from the pandemic.

d. All countries have spent enormous amounts to stabilise their economies. They will contest for fiscal revenue, possibly leading to tax policies that distort investment, production and trade decisions.

e. The rules-based global trading order, underpinned by the proper functioning of the WTO, is also under strain.

f. Global supply chains are being reordered and reconfigured, not always for economic reasons.

6. Mr Liang Eng Hwa and Mr Desmond Choo asked how we can remain competitive and relevant amidst these disruptions.

7. The short answer? We must turn these challenges into opportunities. We must

a. Be a safe harbour for capital, talent and ideas in an uncertain world.

b. Be a connected, trusted and resilient node, both physically and virtually, in order to serve different markets in a bifurcating and fragmenting world.

c. Embrace new technologies, especially digital technologies, to be the disruptor, rather than be the disrupted.

d. Master digitalisation to transcend the constraints of our size and geographical location.

i. Where mastery of data can provide increasing returns to scale.

e. Leverage our small size to pivot faster and respond more nimbly than our competitors.

8. Over the last 6 months, MTI has visited our companies every week to see how we can work with them to overcome the immediate challenges and more importantly, seize the longer-term opportunities going forward.

9. These plans have been widely reported in the media, so I will not repeat them today.

a. Instead, I will draw together the 3 broad strategies that we must execute well, consistently and coherently.

10. First, strengthen our position as a global hub for business and technology.

11. Second, entrench ourselves as a critical node in global value chains that make us hard to displace.

12. Third, build real and unique capabilities in our enterprises and workers so they can compete in a more globalised world.

Strategy 1 - Global Business Hub

13. Mr Liang Eng Hwa and Ms Foo Mee Har asked how Singapore performed as a business hub amidst COVID-19.

14. We have done credibly so far.

a. In 2020, we attracted investment commitments amounting to S$17.2 billion in Fixed Asset Investments and S$6.8 billion in Total Business Expenditure. 

b. These are votes of confidence and faith in Singapore.

15. We should be proud of how we have responded, but we must press on.

16. The ease of digital connection, collaboration, supervision and even execution will redefine the role of hubs for businesses.

a. Lower value-added activities will increasingly be offshored to remote working sites, as they are no longer constrained by geographical boundaries. 

i. Work from home means work from anywhere - in the world.

ii. Competition will never be local but always global.

17. However, the world will still need high quality business hubs for high value-add transactions and trusted collaborations that must be executed via physical interactions.

18. For Singapore to be in this global class of the few high-quality, high-trust business hubs, we will need to create an environment where we distinguish ourselves. And this is how we are going to do it:

a. First, with clear, transparent, consistent and coherent legal and policy frameworks to do business – to mobilise capital, aggregate talent and protect IP.

b. Second, with progressive rules to enable new business models to thrive.

c. Third, with superior networks that give us denser and more secure connections with the world, allowing global businesses to operate out of Singapore.

d. Next, with a mix of local and global talent to serve diverse global markets.

e. And finally, by entrenching critical parts of the R&D value chains, so businesses will include us as part of their global innovation networks, even in times of crisis.

19. These are the reasons why we are investing heavily in:

a. the development of our local talent,

b. the attraction of global talent to complement and reinforce our talent pool,

c. our physical trade and digital connectivity, including expanding our network of free trade agreements and a new generation of digital economy agreements and partnerships,

d. our R&D – from basic research to translational research for commercialisation, and

e. our IP regime – from assessment to valuation and even arbitration, so that we provide a complete ecosystem for businesses wanting to place their IP in Singapore.

20. We must get all these enablers right, to strengthen our position as a global business hub.

21. With all these enablers in place, we are confident that our reputation as a trusted and efficient place to do business will distinguish us from the competition.

a. But we are not complacent, and we must never be complacent.

b. We are ever aware of the stiff competition we are up against.

Strategy 2 – Entrenching Ourselves in the Global Value Chains

22. Let me now touch on our second strategy to entrench ourselves in global value chains.

23. Indeed, the basis for competition has changed.

a. While quality and cost competitiveness still matter, other more important factors have arisen, such as:

i. the speed to evolve new products

ii. the speed to serve new markets

iii. the resilience of supply chains

iv. and the quality of new ideas, since intellectual capital is fast overtaking physical and financial capital as the defining competitive yardstick.

24. Ms Jessica Tan and Mr Liang Eng Hwa asked about growth sectors, and how we can seize opportunities in the reorganisation of global supply chains.

a. We are looking out for emerging sectors such as agri-food tech, urban mobility and sustainable urban solutions as Professor Hoon Hian Teck has mentioned.

b. MOS Alvin Tan will elaborate on how we will help local businesses venture into the agri-food tech sector.

25. But instead of just pursuing new “sunrise” industries, we also need to pursue critical capabilities needed to anchor ourselves in every industry that we choose to compete in – be they “sunrise” or otherwise. And that is why our second strategy is to entrench ourselves in the critical niches of the global value chains.

a. Take the semiconductor industry for example.

i. How much we produce and how much global market share we currently command is not the most important, over the long term.

ii. Over the long term, what is most important is whether we have access to the IP to produce the chips, and to build the machines that produce those chips.

iii. Moving further upstream, do we have the talent and talent networks to continuously innovate, to improve our processes and quality control, so global companies will want to site their operations in Singapore, and create better jobs for our people?

b. These questions apply to high-tech industries like semiconductors, biomedical, and info-communications; just as much as they apply to precision engineering and even to the manufacturing of humble surgical masks.

26. Recently, I visited various enterprises and research institutes to better understand the new world of manufacturing, and to see how they are incorporating Industry 4.0 technologies – from data analytics to additive manufacturing.

a. A product that used to require multiple parts to assemble can now be produced as one simple part, with additive manufacturing enabling much higher precision and less waste.

b. A product that used to take years to evolve can now be designed and redesigned in days.

c. A production system that used to be put together only after the product design is finalised, is now being put together while the product design is being conceptualised.

d. The speed of product and production system evolution has just accelerated beyond imagination, and we need to understand these changes.

e. The ability to set standards for adoption in a fast-paced market has become critical to a product’s success.

i. The “good enough” and fastest, will beat the better but slower.

ii. There is much we need to learn and we must change our mindset in this new competitive environment.

27. Doing what others do at a cheaper price is a “Red Ocean Strategy”. In other words, these are shark-infested waters, best avoided.

a. Producing things that others cannot is a “Blue Ocean Strategy”. Here opportunities abound.

b. That’s where we want to be.

28. Similarly, we can no longer merely be a place of arbitrage.

a. In a globalised world, we will be easily dis-intermediated and displaced by cheaper competitors or digital platforms unless we can add something unique and of value to others.

b. We must become that exchange that adds value.

i. The value-add can be the provision of complementary services or adjacent services, from financing and legal to business syndication.

ii. It can also be in terms of verification and traceability, in a world that is increasingly conscious about sustainability.

29. Mr Liang Eng Hwa and Mr Hoon Hian Teck spoke about enhancing connectivity and taking advantage of our economic openness. Indeed, our superior connectivity will be a value-add factor in a world seeking greater resilience and diversity in their supply chains.

30. We have here a deep and wide collection of global and local companies.

a. This allows the companies located here to compete as an ecosystem. And I emphasise, we compete as an ecosystem.

b. In turn, our ecosystem attracts more companies to situate themselves here to take advantage of this superior network and dense ecosystem.

c. This is a virtuous cycle that was hard-fought, and hard-won. We must not lose this.

i. If we do the wrong things and damage this reputation and ecosystem, we can quickly lose it all.

ii. “Wrong things” include inconsistent policies on business, taxation, manpower and talent. They include sending the world the wrong signals that detract from our intent to enable companies to form globally competitive teams to compete with the world. We should be mindful.

Strategy 3 – Deepening Corporate Capabilities and Workers’ Skills

31. Our third strategy is to deepen our corporate capabilities and workers’ skills.

a. The IMD already ranks us as one of the world’s most competitive economy.

b. Our workers are among the world’s best.

c. But this is a journey without end, and we must continue to invest in our capabilities and skills.

d. That is why I agree with Ms Janet Ang about creating a new compact among businesses, employees and the government.

32. We will spare no effort to help our enterprises and workers acquire new capabilities to compete in a more globalised world.

a. We cannot shield ourselves from global competition.

b. But we can and must equip our enterprises and workers to compete globally.

i. Businesses must play their part, together with the government and unions, to develop local talent and grow Singaporeans to take on leadership positions.

ii. Singaporeans must also be prepared to venture overseas to seize new growth opportunities.

iii. This is the correct way forward for a small economy like ours.

33. Deepening our corporate capabilities requires an ecosystem approach.

a. We must leverage our existing strengths in traditional industries such as aerospace and manufacturing, even as we invest in emerging technologies like digital services.

b. We must continue to attract global companies and MNCs, with cutting-edge business concepts and technologies to be planted here, while we nurture our own SMEs to be future global champions.

c. I always tell our SMEs – stop calling yourselves small medium enterprises, aspire to be Singapore MNCs-Emerging

34. Mr Leon Perera asked about the grants given to MNCs versus SMEs and suggested to tie a conditional incentive for MNCs to work with local SMEs. I am glad he shares the same philosophy as us.

a. In the last 5 years, we gave around $13 billion to MNCs and $21 billion to SMEs.

b. But looking merely at relative grant amounts versus returns and value-adds overly simplifies the situation.

c. First, the relationship between MNCs and local companies is often symbiotic.

i. When MNCs here do well, they are more likely to work with local companies and buy from them, adding them as part of their value and supply chains.

ii. We also encourage MNCs to work with SMEs through the PACT programme, which supports knowledge transfer between larger companies and local SMEs or startups. We will do more where it makes sense to.

d. Second, our support for MNCs and SMEs serves to enhance their symbiotic relationship in various ways.

i. MNCs are already best-in-class in their industry. Our support helps them to bring in new business lines and technology that will uplift our ecosystem and create higher value-added jobs here.

ii. For SMEs, we provide support for more fundamental purposes: digitalising, penetrating new markets, and streamlining work processes. As smaller businesses level up, they will also grow to become an integral part of the local supplier ecosystem, for MNCs and beyond.

35. Ms Jessica Tan asked how we can enable the active participation of local businesses in emerging sectors.

36. We have different schemes to help companies big and small – because their needs are different.

37. For large enterprises, our goal is to help them compete globally by providing access to superior trade networks, R&D and talent networks.

a. We will help them become regional or global champions, by providing growth capital and support for the commercialisation of R&D.

38. For medium-sized enterprises, our goal is to have more of them and bulk them up to compete in niche areas beyond Singapore.

a. This why we embarked on the Scale-up SG and Enterprise Leadership Transformation programmes. To build deep capabilities for them to compete on a global scale.

b. We also aim to help them internationalise by bringing them together to compete overseas – with programmes such as GlobalConnect@SBF, and the SEA Manufacturing Alliance. Schemes like the Market Readiness Assistance grants help them to penetrate overseas markets.

39. 2M Tan See Leng will share more on the support available for large and medium-sized enterprises.

40. For small and micro-enterprises, our goal is to provide them with shared and digital platforms to improve their productivity and efficiencies by accessing shared capabilities – from design to sales to management.

a. MOS Low Yen Ling and Alvin Tan will share more.

41. Our schemes are constantly evolving. We are never shy to do away with old schemes that are no longer relevant or less relevant. We will constantly reinvest our finite resources into the schemes that do the best and the most for our enterprises.

Conclusion

42. Mr Chairman and Members of this House, let me reiterate that we are not returning to a pre-COVID world.

43. How we compete to make a living will change even faster in the days ahead.

44. Let us, and let us help our people, focus our minds on the new forms of competition that lie ahead, for it will be tougher, and more global.

a. Let us not focus on the wrong issues; or try to resist inevitable change; or try to protect what will be made irrelevant and displaced in time to come.

i. Ultimately, our ability to do the many good things we want for our people, comes from our ability to earn our own keep in this more globalised and competitive world. We must never forget that.

b. Let’s face up to the competition, do the right things, and help our enterprises and people acquire a competitive advantage to distinguish ourselves from the competition.

45. COVID is said to be the crisis of our generation.

a. But COVID can also be the opportunity of our generation to distinguish ourselves, and to lay the foundation for the next generation by winning new investments and creating better jobs for this generation and the next.

46. I have confidence that if anyone can get all these right, Singapore and Singaporeans must be amongst them.

a. Together, we will emerge stronger from this crisis.