EDB Touts Singapore’s Attractions to Foreign Investors and It Works

Could you tell us about EDB and Singapore’s history?

The Economic Development Board was started in 1961, even before our country’s independence. Back then, the first phase was about rapid industrialization because the main problem was a lack of jobs. There were not enough jobs, unemployment was high, and people were not educated. EDB's job was to industrialize as much as possible, to go out and chase companies and investors. Singapore also made two key decisions that allowed us to climb up the ladder.

First, we decided that we will not do import substitution and instead be export oriented. That was quite against the prevailing ideology at that time. If you looked at all the countries around us, it was all import substitution. Because we did that, it differentiated us from others.

Second, it was about attracting foreign multinational corporations (MNCs) into the country to build capabilities. Again, this was not an easy decision to make because the British had just left in 1959, and here we were inviting foreign MNCs to come in. But those two decisions were key and as a result, the economy grew.

The second phase began in 1984, when there was a recession. One of the main causes was high wages, so we lowered them.  We also started developing a second growth engine in terms of modern services to complement manufacturing. That was when financial services became a little bit more liberalized along with the infocomms sector. That's the second engine of growth – modern services.

The third phase started just after the Global Financial Crisis and had to do with value creation, or innovation. How do we lead in innovation given that we are by no means a cheap place for manufacturing anymore? You need to create value through innovation, you have to expect a certain amount of cost for labor, you have to expect a certain amount of cost for land because we have limited land. We are running up to our constraints in that sense – land, manpower, and carbon fuels. That's the third phase. A lot of it has to be innovation-led. In a nutshell, that's the context that we have today.

Most of your economy is reliant on global trade, MNCs are a vital part of the economy here and Singapore acts as a bridge between the East and West in that sense. Why would MNCs consider setting up their headquarters or other operations in Singapore?

We have strong fundamentals in places. One, rule of law – which has always been the key differentiating factor. It's not just about being corruption free; it's the fact that if you sign a lease for 30 years, we're committed to honor it regardless of what happens. We are a trusted business hub with strong intellectual property protection. We are a natural place for talent around the region and also for Americans. We are able to attract many data science teams here – just look at some of the unicorns in ASEAN – because this is a place where we are friendly to data scientists.

We also have tremendous linkages with the research institutes and the universities, and that forms part of our value proposition for companies to come to Singapore and do research here. Alibaba, for example, has its Discovery, Adventure, Momentum and Outlook labs here. Google develops work for the next billion users out of here and Facebook is also looking at some of their advertising technology from Singapore. That’s the kind of work we want to do – not just research, but work that has deep capability.

Our innovation ecosystem is another one of our value propositions. Take advanced manufacturing for example - the Advanced Remanufacturing and Technology Centre and the Singapore Institute of Manufacturing Technology  are institutions where companies work together to innovate new processes.

How does digitalization figure into all of this?

Digital plays to our strengths because we cannot afford to have labor or land intensive industries here. But if it's digital, it's a game that we can play.

With digitalization, things that didn’t make sense in the past are starting to make sense. I'll give you two examples of what we are looking into. One, car manufacturing and autonomous vehicles. We used to have a car industry back in the 1950s and 1960s. We used to assemble cars for Ford, and there was a Ford factory which is now a museum. Because manufacturing cars is so land-intensive, it didn't make sense. We didn't have core capabilities. But if you look at the realm of autonomous vehicles today, there's a chance now because we have the semiconductors which power the cars. There are also a number of autonomous vehicle software companies now operating in Singapore.

Another example could be healthcare. The value of the healthcare system here is in that it is compact based. We have electronic medical records, which are of tremendous value to doctors. If you have enough records, doctors can use AI and data science. While every country has an AI strategy, you have to be very sharp and specific about what areas you think you have an advantage in. What you want is clean data. In specific areas like healthcare, we have clean data. Here you have a place where you can actually test AI models and the loop is closed very quickly. Take for example Discovery AI, the artificial intelligence healthcare system launched by the National University Health System in July this year. The system incorporates different AI tools to automate the extraction and collation of data to facilitate clinical decision making.

 What are your thoughts about the ASEAN Economic Community (AEC)?

It will take time. As much as we try to implement most of the AEC's recommendations, there will be some that'll be very difficult to implement because of domestic considerations. To be realistic, it is not so easy to achieve complete integration. Everyone has their own domestic issues to deal with, including us. But it's important to know that it continues to be on the agenda and that we make progress every year.