Speech by Mr Chan Chun Sing, Minister for Trade and Industry, at SME Day 2019

Speech by Mr Chan Chun Sing- Minister for Trade and Industry- at SME Day

1. A very good morning to friends and colleagues. Good to see you all- almost exactly one year since I last saw many of you – that reminds me that I have been in MTI for almost a year. This is one of the first events that I attended as Minister for Trade and Industry last year.

2. Let me congratulate all the T-Up winners today on your awards and more importantly- for all the good things that you have been doing with the companies.

3. Last year- I briefly mentioned the following things: That in Singapore- we do not want to compete on size or price. We do not want to compete on the scale of our business or how low our prices can go. If we go down that route- it is quite inevitable that we will lose out to many bigger and better competitors. So if that is the case then the question is how do we compete?

4. Many of you here today come from SMEs. I am sure many of you will be very focused on the bottom line- how do you increase your top line- how do you reduce your costs in order to get the bottom line that you want. I am sure many of you will be working very hard to see how you can drive the efficiency of your production chains to squeeze out that little bit of efficiency so that you can get a better profit margin.

5. That in itself is necessary- but I would suggest that that in itself is not sufficient for today’s competition. What we are concerned about in driving the production efficiency of your operations is what we call the midstream process – you are only competing at the midstream. But in order for us to be really competitive- we have to look at both the upstream and the downstream processes- together with the midstream. The upstream is why we are here today – that has to do with research and development. How can we compete on the basis of better quality product development; how can we compete on the basis of our innovation and creativity. And downstream- in Singapore- how do we compete on the strength of our supply chains and distribution chains.

6. Why did Dyson come to Singapore? We do not have any bit of rubber or even the tyres of the wheel. Dyson came to Singapore to build the electric car not because of the superior cost advantage of our land or labour. Dyson came because it wants to do the upstream work here- on the product innovation- product development- R&D and because we give them the certainty of the intellectual property protection. Downstream- Dyson came here because it wants to have a secure supply chain and access to the market. Our superior connectivity in terms of port- airport- data- financial connectivity and even regulatory connectivity- all help to attract a company like Dyson to be here. Of course- Dyson is not the only story that we can share today.

7. Today we are not talking about the supply chain in terms of distribution chain- logistic chain and so forth. That will be for another occasion. Today- I want to focus on the upstream which is the R&D- the creativity and the innovation. My basic hypothesis is this: the combination of our research and innovation with enterprise cannot be left to chance. It is not something that may happen naturally. Many countries- just like Singapore- spend quite a lot of money on research and innovation. But very few countries are successful in linking their research and innovation with their enterprises. There are many countries that do very good research but very seldom do these get translated into enterprises. Because they cannot translate it into enterprises efficiently and effectively- the Research- Innovation and Enterprise (RIE) cycle is not complete. If the enterprises do not do well- we do not have the resources to continue that cycle. And that is why to me- the Research- Innovation and Enterprise cycle cannot be left to chance. This is the reason why I have been pushing A*STAR and ESG – the government agencies – to work very closely with our enterprises- big and small- to make sure we complete the RIE cycle.

8. Today we have four means to do that. Many of you would be familiar with the Tech Depot where we have pre-scoped solutions- what we call the plug and play solutions. I am happy to note that since we started the Tech Depot in 2017- as of January this year we have made more than 200 solutions available on the Tech Depot with over 4-000 adoptions of these solutions.

9. Second- we have the Operation and Technology Roadmapping- where we expend resources to help companies- big and small- to draw up their ops tech roadmap as a form of strategy. We started this in 2002 and as of January this year- we have helped more than 480 companies to perform the abridged high-level strategic planning- focused on transformation- innovation and technology adoption. This is not bad but we are not satisfied yet and I will tell you why in a while.

10. Third- we have the T-Up scheme. The T-Up scheme was started in 2003. We push our Scientists and our researchers to the companies so that the scientists can be at the frontline- working hand-in-hand with our companies- including many of the SMEs- to do product development- product innovation and make changes in their processes. Since 2003 till January this year- more than 800 researchers have been seconded to over 700 local companies. Of this- 53 researchers- scientists and engineers went on to be recruited by the 47 companies. This is one instance whereby I am quite proud that our scientists were being poached by the private sector.

11. Since 2006- we have also started what we call the Centres of Innovation (COIs). These are our IHLs and R&D labs which support our SMEs. We have eight and we added two more this year – in energy and aquaculture. These eight COIs have reached out to more than 4-200 companies and embarked on more than 1-600 projects.

12. All these four prongs have served us relatively well – the Tech Depot- the Operation and Technology Roadmapping- the T-Up scheme and the Centres of Innovation. So we are running on all cylinders to make sure that our research and innovation is well-connected with our enterprises. Then the question is: Should we be happy? This is my favourite question to A*STAR whenever they see me- until they are afraid of seeing me. Every time- they tell me- Minister- we have x number of collaboration with SMEs and my infamous question to them is always this – So you have achieved x number. Should I be happy or sad? Because I do not know whether the x number that they have achieved is the maximum potential that you can achieve. What is the universe out there? What is the demand out there from the SMEs and what is your supply? Today- do you have more scientists who want to go out but cannot find partners in the SMEs? Or today do we have more SMEs wanting to partner scientists but we do not have enough scientists? I am going to continue to monitor this set of numbers very closely because it is one of the indicators of how we are progressing in linking up our research and innovation part of the cycle with the enterprise.

13. A*STAR will continue to step up its efforts. I particularly like the ARTC model- whereby companies come together- even competitors- to put their money into R&D to develop new science to be shared. And this is the competitive advantage that we can create. The ARTC model may be aimed at larger scale projects but it can be similarly applied to smaller scale projects. And this is where I would like to encourage all the TACs present today- to help bring the smaller and medium sized companies together- so that you can come together- define the problems- and then approach A*STAR and the research institutes to look for solutions. It is very difficult for individual companies to go and look for solutions themselves. Many small companies are running from pillar to post- just trying to survive. To spend some time to think about the problem definition- the kind of technologies that can give you a leg up- which can help you avoid having to run from pillar to post is not easy. But if people from the same industry or the same sector can come together to brainstorm- then it will greatly help your work. A*STAR and the research institutes also like clear problem definitions. The clear problem definitions must come not just from the research community but also from the business community. So TACs- we need your help to muster everybody to come together to define those problems and to work with the research institutes.

14. Now having said that- it is still not enough. When I was in Boston at MIT- I found the culture rather invigorating. There is something that is quite different in the Boston MIT culture- compared to us. I learnt something in my one year there. Very often- we have this mental model- that we are looking for this entrepreneur- this scientist- and we expect all of them to be in the same person. That one person that can both be a good techie and a good entrepreneur- a good HR manager- a good company manager. We don’t have many such people around. Instead- what the Boston ecosystem shows is this – you need teams of people. You need to create opportunities for the techie to meet with the financier- VCs- the people who know how to run operations and build companies.

15. I would like to encourage all of us to see how we can encourage a culture whereby our technologies and researchers have regular opportunities to meet up with the businessmen. Stop thinking that we can find that one superman who can do anything – they are few and far between. The more common model is where we have different people with different skillsets coming together. And this is where I think we need to work much harder to create that system. It is okay for the techies to take a break at the pub and meet some other people. It is okay for the people at the pub to- once in a while- wander around the A*STAR lab and see what is available there. Today we are not doing enough of this. Maybe one of my KPIs next year- if I am here- is to ask all the techies how many non-techies do you know and to ask the non-techies – the bosses – how many scientists do you know. Because if you do not know too many people- that means it is not working.

16. The third thing that I would like to see us doing more is this – and this has to do with government agencies and even the big companies – that is we hope that every large agency in Singapore- including the government agencies- will have an ops tech roadmap- to see how we can compete or how we can transform. If we are in the government and using technology- we must not just be using technology available today but also imagining the kind of technology we need for tomorrow.

17. I used to grow up in the MINDEF ecosystem; this is part and parcel of the MINDEF DNA. That is because we know- in MINDEF- that we will never be able to outspend other people if we are to take care of our own defence. Instead- we need a quality SAF. A quality SAF that depends on technology and innovation to win- that depends on secret edge technology to win. Now that same philosophy must permeate all our government agencies and large companies; that to win- it is not just about being more efficient in the production processes or having a more secured supply chain downstream but it is also about having that technology-edge upstream. That is why I asked our Head of Civil Service to work with A*STAR and the rest to make sure that each and every of our large agencies hapus an ops tech roadmap. If we ask all the SMEs to do this- then we should similarly ask all the large companies and government agencies to do this.

18. So next year- when we meet again- how do we know that we are on the correct trajectory or that we have succeeded to some extent? Next year- I will be very happy if A*STAR comes up to me and say that the SMEs are asking for so many things from me and I am running out of scientists to entertain them. That is a good problem. It shows that all the SMEs are thinking very hard- posing problems either individually or as a group to demand solutions from our scientific community. I will also be very happy if A*STAR comes up and report to me that they need much more resources because the demand is so much more. We will be happy to spend more resources to help convert our scientific output- research outcomes- into enterprises.

19. The second indicator to me that we are moving in the correct direction will be this. The next time- whenever I visit any of the TACs- somewhere in the agenda- is an item on research and development. Today- most of the time when I visit the TACs- they talk to me about land costs- labour costs- competition- rules- which are all very important and I will definitely talk to you about all these. But today- I have yet to give a prize to the first TAC that invites me to coffee and have within their agenda a research and development item. Because if we reach that stage- it means that it has gotten into our DNA. That every TAC meeting- we don’t just talk about the here and now. We talk about what is the next thing that we can do in order to win from science and technology. So I encourage the TACs- even if you do not know what is R&D- put it into the agenda item and we will find something to talk about. Put into the agenda item- force yourself- to ask this question: What should we talk about? And then after a while it will be part of the DNA.

20. So these are my two simple wishes – that A*STAR and the research institutes run out of resources because the SMEs are demanding many more solutions; that the TACs- on the other hand- will always have it in their DNA. If we can truly do this together- between the research institutes and the SMEs- then truly one day- our SMEs in Singapore will never need to compete on the basis of the scale of our enterprise or how low our prices can go. Instead- our SMEs- collectively- will be known for their innovation- creativity and the research that they can apply to enterprise. And that will put Singapore on a much better trajectory than what we had in the past.

21. On that note- thank you all for your hard work. I know that we are all working very hard in the correct direction. As the Minister- I have to make sure that we move faster- and being a typical Singaporean- we always hope that we arrive yesterday rather than tomorrow. Thank you very much and have a good day.