Opening Remarks for Mr Lim Chuan Poh, Chairman of A*STAR, at the A*STAR Year In Review Media Briefing on 24 April 2017, at Fusionopolis Two

MANUFACTURING OPPORTUNITIES: A*STAR SETS THE PACE

Members of the media- good afternoon and thank you for joining us at A*STAR’s year in review briefing.

Last year- we closed the entire RIE 2015- so we were able to talk about what has happened over the whole five years.

This year- we have just completed the first year of RIE 2020- so we will talk about that.

More importantly- when RIE 2020 was launched last year by PM- it was underlined that it will be integral to our economic strategy.

In February- the Committee on the Future Economy presented their report. So- today- we will also update on what we have been doing to execute the broad directions of the CFE.

Global economic outlook and trends

First- some remarks on the backdrop.

The state of the global economy continues to be challenging.

In 2016- the advanced economies grew at a sluggish 1.6 per cent. The growth outlook for 2017 remains subdued and the advanced economies are only expected to do slightly better at about 1.9 per cent¹.

In February- the Ministry of Trade and Industry announced that for 2017- the GDP growth forecast is maintained at 1 to 3 per cent².

Notwithstanding the slower growth- many countries such as China- Germany- and Japan- among others are intensifying their push to leverage on research- innovation- and enterprise- to remain relevant and competitive.

In particular- those that are heavily dependent on manufacturing are increasingly investing in strategies that position their industries for future growth.

One example is the European Commission’s Factories of the Future programme. The Eurozone is committing an investment of over one billion euros³ in a public-private partnership that involves research on advanced manufacturing- digital- virtual and resource-efficient factories.

China is shifting to innovation-led growth and has rolled out its 10-year Made in China 2025 masterplan that oversees the creation of 15 manufacturing innovation centres by 2020- and 40 by 2025⁴.

The Japan Revitalisation Strategy 2016 involves the establishment of a public-private council to promote smart factories- and the use of big data for improved productivity.

Meanwhile Germany is setting aside more than 200 million euros on the digitalisation of its manufacturing sector⁵.

The Singapore Context

Manufacturing remains a key pillar of Singapore’s economy- making up about 20 per cent of our GDP in 2016- which translates to approximately- S$80 billion.

Last year (2016)- the manufacturing sector comprising nearly 200 MNCs/LLEs and 9-000 SMEs also accounted for half a million jobs⁶- or 14 per cent of the total employment numbers⁷.

Based on the Economic Survey of Singapore 2016- the value-added per worker was above $180-000⁸.

Clearly- the manufacturing sector anchors high-value activities in Singapore- leading to growth and good jobs for Singaporeans.

In fact- the manufacturing sector is brightening⁹ the outlook for Singapore's economy.

In February- factory output expanded 12.6 per cent- and this has in turn boosted exports and the overall economic growth numbers.

Just prior to the budget debate- the Committee on the Future Economy (CFE) released its report.

It discussed the importance of manufacturing to the Singapore economy- and recommended that Singapore maintains a globally competitive high-value manufacturing industry at around 20 per cent of the GDP.

Investments in R&D- technology adoption especially by SMEs- as well as a highly-skilled workforce are imperative to the competitiveness of the local manufacturing sector.

To encourage MNCs to continue to pick Singapore as a choice location for their high-value manufacturing activities- we must be a first mover in growth sectors- and a location where they can pilot and test bed cutting-edge technologies.

A*STAR- EDB and SPRING launched the FoM Initiative in February 2013- for key industry partners- research institutes- and universities to test-bed new technologies and develop capabilities and applications that Singapore-based companies can tap on.

To take this further- and chart a strategic roadmap for Singapore’s manufacturing sector under the RIE2020 framework- in early 2016- Dr Raj Thampuran- MD A*STAR- spearheaded a deep dive study of what A*STAR should focus on.

To draw up the blueprint for A*STAR’s FoM Roadmap- we engaged key stakeholders such as Trade Association and Chambers- the Ministry of Trade and Industry- our sister economic agencies- and Institutes of Higher Learning.

We then validated our roadmap through discussions with nearly sixty companies from the eight Advanced Manufacturing and Engineering (AME) industry clusters.

The key thrusts of A*STAR’s FoM Roadmap are the Model Factories @SIMTech (Singapore Institute of Manufacturing Technology) and ARTC (Advanced Remanufacturing and Technology Centre)- Tech Access- and Tech Depot.

These initiatives were unveiled at the Committee of Supply Debates last month (March).

It is important that companies understand the crux of the Future of Manufacturing. This revolution is not just about adopting individual advanced technologies of robotics or industrial 3D-printing.

Rather- it is about the connection and integration of these various components into a synergistic and highly-efficient manufacturing process- so that it is responsive to the needs of the customers.

Increasingly- global demand is shifting from low-mix- high-volume; to mass customisation and eventually- to a single bespoke product.

In addition- manufacturing and its related services are also converging and no longer sharply delineated.

What used to be sold as products may now be sold as a service- leveraging fully on the advanced technologies- thereby changing quite fundamentally the business model and the relationship between the supplier and customer.

All these illustrate the disruptions and opportunities of Industrie 4.0 that Singapore must be cognizant of.

They also highlight the unique role of A*STAR as Singapore embarks on this fourth industrial revolution.

Simply designing a Model Factory with a suite of complementary advanced technologies is one thing.

But what sets A*STAR’s FoM work apart is that we also bring ideas- people- and companies together across the entire innovation value chain from MNCs to SMEs to make Industrie 4.0 or aspects of it work for Singapore’s future economy.

Quite clearly- no single enterprise owns all the solutions.

Even the MNCs find the fourth industrial revolution challenging- notwithstanding their availability of resources and expertise; let alone the SMEs.

Synergy can only be created through complementary partnerships along the innovation value chain under open innovation.

This is why the Model Factories are excellent spaces for public-private partnerships to be formed in a meaningful and extensive way.

So- what we intend to share today is largely about the strategies we have adopted and are implementing to position Singapore as a globally competitive advanced manufacturing hub in line with the broad directions of CFE.

Setting the pace for RIE2020

I will now touch briefly on some of our achievements in the first year of RIE 2020.

A*STAR achieved stellar results in RIE2015.

This momentum has been maintained in FY2016- laying the foundation for us to set the pace on delivering more impactful outcomes for the RIE2020 framework- and Singapore’s future economy.

In 2016- we worked on more than 1-700 projects with industry- of which at least half were related to manufacturing.

We also deployed over 200 licenses to companies- 60 per cent of them in the manufacturing sector.

And we have seconded more than 60 Research Scientists and Engineers to local SMEs- about half to companies in the manufacturing sector.

MD Dr Raj Thampuran- will elaborate on these achievements in his presentation.

Key strategies to position Singapore for the Future Economy

The RIE 2020 plan is integral to the CFE recommendations that aim to keep Singapore’s economy competitive.

Among the various recommendations- innovation is seen as a key pillar for Singapore to navigate an uncertain economic climate.

To better align national economic and social goals- the Government announced the S$4.5 billion Industry Transformation Programme at Budget 2016.

The Industry Transformation Maps (ITMs) are targeted at promoting growth and competitiveness across 23 industries accounting for over 80 per cent of our GDP. These include Precision Engineering- Aerospace- Electronics- Energy & Chemicals- as well as Marine & Offshore.

A*STAR will further sharpen its R&D efforts for better economic outcomes to align with the Industry Transformation Maps (ITMs).

For example- the Precision Engineering Industry Transformation Map was the first industry-specific roadmap to be rolled out for the manufacturing sectors.

Its goal is to shift the industry into new growth areas and enhance manufacturing processes.

This will be done by nurturing complementary segments such as Additive Manufacturing- Robotics- Advanced Materials- Sensors- and Lasers & Optics.

A*STAR’s FoM roadmap will help operationalise the PE ITM strategy.

Therefore- one of the key initiatives under the PE ITM to encourage innovation is the Model Factory mentioned earlier.

A*STAR has set up Model Factories at two locations- SIMTech and ARTC.

These platforms allow companies to experience the latest manufacturing technologies first-hand in a learning environment- and collaborate with stakeholders to test-bed and jointly develop innovative solutions for their processes.

Several SMEs such as CKE Manufacturing- Feinmetall- and Sankei Eagle have come on board and we hope to work with 500 SMEs over the next five years.

Closely linked to the precision engineering industry is the aerospace sector- which an ITM has also been planned for.

Over the years- much has been done to keep the local aerospace sector vibrant and competitive.

Today- Singapore has the largest aviation hub in Asia.

The total output from the aerospace industry is worth over S$8 billion- 90 per cent of which comes from MRO (Maintenance- Repair and Overhaul) activities and the rest from manufacturing¹⁰.

The sector employs 20-000 highly-skilled talent- a majority of which are locals. There are around 2-600 Precision Engineering SMEs¹¹ that serve industries from the aerospace to electronics sector here.

Singapore is also host to one of the largest- most diverse concentrations of aerospace companies in Asia – more than 100 of them.

These include multi-nationals such as Airbus- Boeing- Bombardier and Rolls-Royce- and local enterprises like ST Aerospace- SIA Engineering Company- Wah Son Engineering- and Ka Shin Technologies.

Throughout the years- Rolls-Royce has had significant partnerships with A*STAR in collaborative research that kick-starts innovation for the industry.

In January this year- Rolls-Royce Chairman Ian Davis was in Singapore to witness the signing of an MoU between Rolls-Royce and A*STAR.

We announced that we would set up technology centres that will focus on Future of Manufacturing capabilities that include advanced technologies and processes for manufacturing- assembly and maintenance- repair and overhaul applications.

The work of the proposed centres will also include the development of IOT sensors tapping on advances in microelectronics and nanotechnology- for harsh environments. A computational science lab could further refine the use of the sensors through analytics software and cyber security solutions.

These initiatives aim to bring the local aerospace - as well as related service sectors - to the next level.

To further enable local PE companies to accelerate and scale-up technology adoption for this fourth industrial revolution- A*STAR has signed MOUs with Trade Associations and Chambers (TACs)- such as the Singapore Precision Engineering and Technology Association (SPETA) and the Singapore Manufacturing Federation (SMF) to allow their members to benefit from A*STAR’s expertise in technology road-mapping- capabilities upgrading and manufacturing facilities.

We have also reached out to other trade associations such as the Singapore International Chamber of Commerce and the Institution of Engineers Singapore to engage them on A*STAR’s technologies for SMEs.

Cutting across industry verticals are other initiatives such as A*STAR's Operation and Technology Road-mapping (OTR) strategy.

A*STAR has worked with 240 companies over the last 14 years in identifying technologies to better innovate and compete.

We intend to significantly step up the reach and target to support another 400 companies over the next four years.

Tech Access and Tech Depot are another two new initiatives aimed at giving SMEs a leg up in the Industrie 4.0 technology adoption curve.

Tech Access will allow SMEs to tap into A*STAR’s advanced manufacturing equipment and expertise.

A*STAR will help companies build capabilities in the use of advanced machine tools- new processes- prototyping and testing- by providing user training and advice.

The available equipment ranges from inspection tools to more advanced equipment such as robotised 3D scanners and high-pressure cold spray for additive manufacturing.

If successful- companies could then go on to acquire their own equipment to scale-up and capture new business opportunities.

A*STAR will partner SPETA and SMF to promote the technologies to their network of members.

Tech Depot is a whole-of-government initiative that offers SMEs a suite of readily adoptable technologies that can help them digitalize their workflow and improve productivity.

It will improve SMEs’ access to digital solutions and technologies.

This new feature on SPRING Singapore’s SME Portal went live last week and it is targeted at enhancing enterprises’ operations such as inventory management and business process automation.

Last May- we also launched the A*STAR Collaborative Commerce Marketplace (ACCM)- known as our LinkedIn for SMEs.

This platform allows SMEs – especially those in manufacturing – to better showcase their capabilities- and links them to MNCs and other SMEs that are sourcing for prospective suppliers locally or seeking business partners with complementary capabilities and offerings.

It also enables companies to engage research institutes and IHLs to assist them in bridging gaps in their technology capabilities for innovative products and services. Since the launch- more than 250 members have come on board the ACCM- 80 per cent of which are SMEs.

MD Raj Thampuran will talk about how some SMEs have been early adopters and managed to set themselves apart from their competitors.

Our plans for the transformation of Singapore’s manufacturing industry will come to naught if we don’t have the talent with relevant capabilities.

For example- as automation in factories become more common- we anticipate a need for engineers with niche skillsets in operating robotic systems.

Across A*STAR’s science and engineering research institutes- our scientists and engineers are actively researching on everything from robots- additive manufacturing- artificial intelligence- data analytics- and the Internet of Things.

To further propagate these skills to industry- we have also been working closely with educational institutes- industry and TACs to train the future workforce.

ARTC is grooming talent for Future of Manufacturing technologies through workshops and on-the-job training.

ARTC will also be jointly conducting manpower training sessions with consulting firm McKinsey & Company for enterprises to understand the intricacies of Industrie 4.0. These sessions will leverage on the newly-launched McKinsey Digital Capability Centre (DCC) Singapore’s learning modules across themes such as predictive maintenance- digitised performance management- procurement and supply chain. The DCC will utilise part of ARTC’s Model Factory test-bed that will be launched in the later part of the year.

In due course- ARTC will also be conducting master classes for the local industry.

ARTC and Workforce Singapore (WSG) are collaborating to deliver masterclasses to allow SMEs to deepen their skills in advanced manufacturing.

We are also teaming up with the TACs to further deepen the industry’s capabilities. SIMTech and SPETA signed an MOU last year to allow the association’s members to accelerate and scale up their adoption of technology.

The combination of all these different initiatives will enable companies- especially local ones- to develop the necessary knowledge and skills to apply Industrie 4.0 solutions to their businesses- improve productivity- and very importantly- scale-up.

As Prime Minister Lee Hsien Loong had said in his response to the CFE recommendations- and I quote-

“We cannot be sure which industries will perish and which will flourish. What is certain is that Singapore must stay open to trade- people and ideas- and build deep capabilities so that our people and companies can seize the opportunities in the world.” Unquote.

A*STAR’s role in shaping the future

A*STAR will continue to deliver on our mission by harnessing our investments in research- innovation- talent- and enterprise to create greater value and meaningful outcomes for Singapore.

Going forward- we will focus on greater coordination and integration of research and innovation efforts that are vital for Singapore’s economic and societal growth.

Thank you and let me now invite MD Dr Raj Thampuran to speak.