Second Minister Iswaran at the Singapore Institute of Directors Conference 2015

​SPEECH BY MR S ISWARAN, MINISTER IN THE PRIME MINISTER’S OFFICE,  SECOND MINISTER FOR HOME AFFAIRS AND TRADE AND INDUSTRY, AT THE SINGAPORE INSTITUTE OF DIRECTORS’ CONFERENCE 2015 AT MARINA BAY SANDS ON 16 SEPTEMBER 2015, 9.00AM

Distinguished guests

Ladies and gentlemen 

Introduction

1. I am pleased to join you this morning at the sixth annual conference of the Singapore Institute of Directors. It is a valuable forum for directors to contemplate issues that are germane to the governance and future of the companies whose Boards you serve on. 

2. SID has selected an apposite theme for this year’s conference. Innovation is key to sustaining the growth of a country or a company. A country’s or company’s innovation capacity has a significant impact on its long term potential and its competitiveness, especially in an era of knowledge-based economic activity. Indeed, Singapore’s history and development of the past 50 years has been undergirded by our capacity to innovate, take calculated risks and an indomitable spirit to make the seemingly impossible possible, be it the development of the Marina Bay district or the F1 night race that takes place within it.

3. Innovation clearly can yield rewards. But it can be an arduous, risky process that requires perseverance and persistence. The cost of innovation is recurrently incurred in the short term, but the payoffs may only be realised in the medium to long term. And it is precisely because of this temporal disconnect, between its short term costs and long term benefits, that innovation must be on the agenda of a country’s and company’s leaders. It must command the attention of political leaders, top management and the Board because that is where the policy on innovation is set, a culture of innovation is nurtured, and the resources for innovation allocated and sustained. Unless there is that alignment and commitment at the leadership level, it is difficult to persist in this effort, especially when the going gets tough.

The importance of strategic innovation

4. Developing and sustaining innovative capacity is, therefore, an integral function of national and corporate leaders. For countries, it is key to ensuring the long term competitiveness of our economy, thereby creating good jobs and opportunities for our people and businesses. Companies too must deal with competition from new products, services and business models that emerge with new technologies. Unicorns like Airbnb and Uber come to mind when you talk about new business models that completely change the way businesses are conducted. Innovation is the only sustainable competitive advantage of the 21st century economy. 

5. The Singapore government takes a comprehensive and systematic approach to building strong research capabilities. It starts from quality education to create a highly-skilled workforce that thinks critically and acts creatively. We fund research, to create the hardware and software – from labs and institutes to scientists and the people networks – in order to nurture a vibrant research ecosystem. 

6. We have invested significantly and consistently in developing our R&D capabilities in the public sector. Since our first national technology plan in 1991, we have increased our public expenditure eightfold. Between 2011 and 2015, the government committed S$16.1 billion to support research, innovation, and enterprise activities. Importantly, even during economically challenging periods such the Global Financial crisis of 2008/2009, we maintained our public investment in R & D. This policy consistency is an important signal to scientists, researchers, companies and other stakeholders of our commitment to R & D and the long view that we adopt in pursuing our objectives in this space. 

7. Ultimately, we want our public R & D to result in commercialisation opportunities and value creation. Some of our efforts have generated commercially-viable private sector applications. For example, in 2004, the Public Utilities Board (PUB) approached A*STAR to test-bed and develop an automated, intelligent water quality monitoring system to ensure the safety of our reservoir waters. The result was ZWEEC Analytics, which developed a video and data technology for a smarter, faster, and more accurate way to keep our drinking waters safe. This solution has since been adopted by the Taiwan Water Corporation and the Yangtze River Water Resources Commission. Today, ZWEEC is expanding their technology into other commercial applications, from detecting distress in swimming pools, to ensuring safe drinking water in second-tier cities in Indonesia, Myanmar and China. This is just one example – A*STAR alone undertakes more than 1,500 projects a year, of which 35 percent are with SMEs. And such efforts have not gone unnoticed on the global stage. Last year, Singapore moved up one spot in the 2014 Global Innovation Index, to seventh place in the world, and number one in Asia.

Partnering for innovation 

8. We want to do more, to partner with companies to develop and adopt new technologies and processes so that they can become more productive and competitive. To this end, we have several public-private partnership programmes to support companies in their innovation efforts. A*STAR’s GET-Up (Growing Enterprises with Technology Upgrade) programme helps promising SMEs enhance their business competitiveness through the secondment of research scientists to upgrade their technology. Moveon Technologies Pte Ltd is one such company. It specialises in optical design, simulation, assemblies and illumination engineering, and took advantage of the GET-Up programme to enhance its capabilities in optical navigation (which is used in finger tracking devices like touchscreen phones) and LED-illumination. It has since attracted significant business partnerships with global MNCs, including Philips Lumileds and Blackberry. 

9. Some of you may also be familiar with Estetica Beauty, a homegrown, award-winning beauty salon that offers face and body treatments. The link between technology and beauty and lifestyle may not be immediately apparent. But, Estetica in fact leveraged A*STAR’s portfolio of cutting edge technologies to produce and market a successful line of beauty cosmetics. Also, supported by the Capability Development Grant (CDG) from SPRING Singapore, Estetica was able to formulate a successful range of anti-ageing products that have allowed the company to build a strong brand positioning. Estetica plans to expand market share in Singapore, and take their products to international markets. 

10. As these examples illustrate, the scope for collaboration is considerable, and straddles a wide range of industries and opportunities. I therefore urge you to find out more from our A*STAR officers at their booth later, about how your company may benefit from partnering with our research institutes. 

Building capabilities 

11. Aside from enterprise-level support, the government is providing infrastructural and institutional support for companies, especially start-ups. We have been working together with the private sector to provide capital and connections, facilitate knowledge creation and sharing, to help start-ups bring their ideas to the market. Our Technology Transfer Offices and Centres of Innovation (COIs) provide laboratory facilities, technology consultancy and assistance for start-ups to test and develop prototypes as well as commercialise intellectual property. In addition, we are working with incubators, to provide a conducive environment for innovation and collaboration. There are currently 40 government-backed incubators, with the capacity to support 1,000 start-ups. JTC LaunchPad@one-north alone provides space for up to 500 start-ups and 35 incubators. 

12. But it is not just about getting the local environment right. These start-ups need to be plugged into international networks as well. For this reason we have been building links with entrepreneurs and incubators elsewhere, like Block 71 in San Francisco, or the Co-Foundry in the Philippines, to help companies connect with expertise there and gain a better understanding of those markets. It is equally important to link these start-ups with larger organisations, to create opportunities for co-innovation and test-bedding, so that their products can be commercialised quickly. In 2014, SPRING facilitated over 40 collaborations between start-ups and large organisations. SPRING has recently called for proposals to appoint accelerators to co-invest and incubate high-potential technology start-ups in emerging sectors like advanced manufacturing and clean technology. The response so far has been positive, with around 35 proposals received. With these initiatives, we hope to help Singapore companies harness innovation for growth. 

More innovation in the boardroom 

13. These public sector efforts must be complemented by private sector initiatives and partnerships if we are to be successful in creating value for our businesses and our economy. As directors of your companies, you play a key role beyond risk management and compliance to driving strategic innovation. We often talk about management and top management focusing on innovation. That is important, but a management that is backed by a board that has the conviction that innovation is central to the long term competitiveness of the business is a management that can go forward with greater confidence in dealing with the challenges which will inevitably come. That means embracing and nurturing a culture of innovation in order to create value and drive growth. To work there must be corporate buy-in, from top to bottom, that innovation is critical for the business to succeed. It must also be matched by action and resources – leadership and organisational structures that encourage and reward innovative behaviours from within, and attract innovative talent from without. Sembcorp Industries achieves this through its Technology Advisory Panel, which comprises board members and technology leaders who oversee the application of significant emerging and potentially disruptive technologies, to enhance Sembcorp’s position as a leading energy and water company. With the help of specialised expertise, Sembcorp’s board ensures that technology is appropriately harnessed to achieve results. This goes to the point of ensuring that at the Board level, it is important to have appropriate talent that can add to the discussion productively on a topic as important as innovation.

14. It is also essential that Board Directors familiarise themselves with trends in innovation and technology, and what is available and occurring in the larger innovation ecosystem, whether it is in Singapore or elsewhere. This might entail visiting centres of innovation, be it in Singapore, the region or globally, to gain a deeper understanding feel of current developments. It would also entail bringing in expertise and having opportunities for long term discussions about the role of innovation within the organisation. Singtel’s board members for instance, visited Silicon Valley, Boston, New York and Israel, where they gained greater insights into new technology that would be relevant to the company’s business. When they returned, the board worked together with management to drive innovation and make strategic investments to pursue growth. Today, Singtel is involved in video, cloud applications, and digital advertising services. It is also investing significantly into cyber security, with its recent US$800 million acquisition of Trustwave, a leading managed security services company in the US, and the establishment of the Singtel FireEye Advanced Security Operations Centre, a first of its kind facility to help detect and respond to cyber threats. Cyber security is indeed an area of growing attention and significant opportunities in the medium to long term.

Conclusion

15. As these and many other examples illustrate, innovation can be harnessed for growth by small companies and large, in whichever high tech or more traditional sectors, with conventional or emerging business models. The key is for the corporate leadership, in particular top management supported by an informed Board, to prioritise innovation, actively foster an enabling culture, and allocate resources on a sustainable basis for the effort to succeed. In Singapore, you will find ready partners in our public sector research institutes. 

16. I would like to commend SID on your efforts to drive innovation at the board level. This year’s conference theme is a timely reminder of the importance of innovation-driven growth. SID itself has taken the lead by helping to innovate and create new assessment metrics on corporate governance. In 2013, SID and the Centre for Governance, Institutions and Organisations (CGIO) were appointed by MAS to be the Domestic Ranking Body for the ASEAN Corporate Governance Scorecard, which quantitatively scores the top 100 listed companies in six ASEAN countries, based on their compliance with the OECD Code of Corporate Governance. Having this common measurement system to rank some of the top listed companies within a group of countries is no easy task, and in fact, is the world’s first attempt. Based on this success, SID, CGIO and CPA Australia are now developing a national index – the Singapore Governance Transparency Index – to assess corporate governance of all Singapore listed companies. We can look forward to the first listing in 2016. 

17. In a similar vein, I encourage all of you as Directors and corporate leaders to seize this opportunity to reflect on how you can become a champion for innovation within your organisations, to learn from and share with the many companies represented here today, and explore new ideas and potential partnerships to stay ahead in these challenging yet exciting times. Thank you.

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