Dr Vivian Balakrishnan at the 19th Bluesky Exchange & Evening

CLOSING ADDRESS BY MINISTER VIVIAN BALAKRISHNAN, MINISTER FOR COMMUNITY DEVELOPMENT, YOUTH & SPORTS AND SECOND MINISTER FOR TRADE & INDUSTRY AT THE 19TH BLUESKY EXCHANGE & EVENING AT INSEAD, ASIA CAMPUS ON 3RD MARCH 2006 AT 8.30 PM

Professor Narayan Pant, Associate Dean of Executive Education, INSEAD Asia Campus 

INSEAD Students,

Ladies and Gentlemen.

Local Campus, Global Prospective

Good evening. Tonight, we are delighted to hold the ACE networking session at INSEAD, one of the world’s top tier graduate business school. In the global ranking of MBA schools by the Economist Intelligence Unit in 2005, INSEAD came in 11th, up from the 20th position in 2004.Let me congratulate the school on its achievements. 

INSEAD has a distinctively global perspective and multicultural diversity. This creates the ideal ground for fostering innovation and nurturing global leaders. I understand that INSEAD has a student body representing some 75 different countries and cultures. Hence, what clearly differentiates INSEAD from many other business schools is its unique global network, with thriving campuses at Fontainebleau France and Singapore. Its alliance with Wharton Business Schoolin the United States also involves joint research in many areas as well as student exchanges. This is the kind of global network that I hope our local enterprises can plug into to take their businesses beyond Singapore.

Enterprenurship And Innovation in Singapore

I would now like to share a piece of good news from the 2005 Global Entrepreneurship Monitor (GEM) report. The results showed that entrepreneurial activity in Singapore has increased by three-fold over the last five years, from 2.1% in 2000 to 7.2% in 2005, placing us 8th amongst the 24 OECD countries surveyed.

But the GEM study also highlighted our relatively weak areas. In particular, I would like to touch on two aspects. First, we are lagging behind in innovation. Only slightly above 35% of the businesses introduced offerings that were new to their customers. The second aspect is internationalization. More than half of the start-ups surveyed have adopted a local strategy and do not expect to export at all. Only one in five anticipates reliance on export sales in the future.

In today’s new economy, our local enterprises need both innovation and a strategy for internalization. There are two reasons why this is so. The first is simply globalization. Trade liberalization and rapid falling communication and transport costs mean that countries, including Singapore, have increasingly to compete against countries with significantly lower labor costs and reasonably well educated labor forces, countries such as China and India.

Secondly, fast changing technology with rapid developments in ICT, new materials, biotechnology and nanotechnology are unleashing new waves of innovation and creating many opportunities to create new industries and re-invent traditional ones. We must tap on this wave.

Internationalization is another key pillar that will drive the growth of local companies in Singapore. With Singapore’s external trade reaching a record level of S$716 billion in 2005 and projected to grow between 7 to 9% this year, our start-ups risk being marginalized if they do not adopt a global vision and strategy.

Promoting Innovation

In Singapore, to support innovation, we protect intellectual property rights assiduously. The World Economic Forum (WEF), the Institute for Management Development (IMD) and the Political Economic Risk Consultancy (PERC) have all ranked Singapore top in Asia for IP protection for 3 years in a row (from 2002 - 2004). This is very important for ideas to surface and be taken to market. Start ups and companies, local and foreign, are hence, able to leverage on Singapore's strong IP protection & legal infrastructure.

Besides a pro-IP infrastructure, we enhance the capacity of companies to innovate and protect their innovation. For instance, grants are available on a co-sharing basis for IP development and protection. Enterprises can tap on the Patent Application Fund Plus Scheme by EDB which co-funds patent application costs. Just September last year, EDB also launched the Innovation Commercialization Scheme (ICS) to encourage commercialization of innovations by supporting proof-of-concept activities. More than 10 applications have been received in the last three months.

Going forward, the recently established National Research Foundation (NRF) will identify new growth areas as well as offer grants to finance research projects, programmes and centers which advance science and technology in Singapore. Helmed by Dr Tony Tan, the Government has earmarked $12 Billion over the next five years to finance public sector R&D with S$5 Billion allocated to NRF for its activities. 

Supporting Internationalisation

In the area of internationalization, we aim to facilitate our company’s overseas expansion efforts. For example, the Enterprise Fund aims to help asset-light and non-technology SMEs internationalize. The Fund is worth S$100 million.IE Singapore and Hong Leong Finance have appointed Crest Capital Partners to manage the programme.

In addition, the S$5 million Internationalization Road mapping Programme (IRP) helps Singapore-based companies develop a long term internationalization strategy. With grants of up to 70% of project costs or up to S$300,000, companies can engage consultants to map out their internationalization strategies.

OTC

Besides financing for internationalization, ACE has looked at the feasibility of allowing SMEs to raise funds through the equity market in a relatively cost-effective and simple manner. The ACE Finance Action Crucible has been working with several private organizations and the relevant authorities to explore the establishment of an OTC trading platform in Singapore. The Securities & Futures Act has also been amended to facilitate SMEs raise funds through private placement or small offers without issuing prospectus. I pleased to note that Phillip Securities is working towards setting up the first OTC trading platform in Singapore. If all goes well, Phillip Securities is expecting to commence their trading operations within the next 2-3 months.

Bluesky Festival 2006

Internationalizing for start ups is always a challenge due to lack of knowledge of market, partners and skills. Recognizing the difficulties by entrepreneurs in assessing relevant information, contacts and opportunities when venturing abroad, we will be organizing the ACE Blue-sky Festival 2006 in July, themed “Singapore and Beyond”.

The theme reflects the vast opportunities available to entrepreneurs, including start-ups, seeking business opportunities and collaborations in the region. Together with our strategic partners, Ernst and Young and the Singapore Venture Capital & Private Equity Association, the event targets entrepreneurs from the ASEAN region, mainly Singapore, Malaysia, Indonesia, Thailand and Vietnam. I would like to encourage you to participate.

Conclusion

Even as entrepreneurship continues to flourish in Singapore, we need to work harder on innovation and helping our enterprises grow internationally. We need universities, both local and localized foreign institutions like INSEAD to be the seed-beds from which our young Singaporeans will develop their breakthrough ideas and create globally competitive products and services.

Thank you