Speech by Minister S Iswaran at the Launch of Paypal Innovation Lab

KEYNOTE SPEECH BY MR S ISWARAN, MINISTER FOR TRADE AND INDUSTRY (INDUSTRY), AT THE LAUNCH OF PAYPAL INNOVATION LAB, WEDNESDAY, 17 AUGUST 2016, SUNTEC CONVENTION & EXHIBITION CENTRE

Your Excellency, Kirk Wagar, U.S. Ambassador to Singapore

Dr. Rohan Mahadevan, CEO of PayPal Pte Ltd and Senior Vice President for PayPal Asia Pacific,

Distinguished Guests,

Ladies and Gentlemen,

1.            Good morning. I am delighted to join you today to celebrate the launch of the PayPal Innovation Lab.  I want to also thank PayPal for their quintessentially American presentation on money.

Paypal and Singapore enjoy a strong partnership

2.            PayPal and Singapore share a strong partnership that spans a decade.  Since 2006, we have seen PayPal establish its international headquarters and four Centres of Excellence in Singapore, spanning risk management, consumer focused applications, payments including the development of new financial instruments on its platforms and info-security.

3.            Today, we celebrate yet another milestone in this important and fruitful partnership with the launch of the PayPal Innovation Lab.  The PayPal Innovation Lab will embark on new R&D initiatives in partnership with universities, research institutes, large corporates and start-ups.  The scope of its work will include projects to uncover, refine, build and scale new payment and FinTech solutions.  The Lab also hopes to work with SMEs on building and adopting payment solutions to enhance productivity.

4.            Innovation Labs like PayPal’s are an important aspect of Singapore’s drive to be at the heart of the global digital economy – a significant and growing part of the global economy that uses digital technologies as the main enabler to produce goods and services and to drive productivity and growth.  The global digital economy is already today’s reality, with cloud computing, social media, and the Internet of Things (IoT) playing, more than ever before, a significant role in our lives.

5.            The importance of the digital economy can be measured not just by its ubiquity but by its profound impact on all sectors of the economy - from taxi services to aerospace and from food services to healthcare.  McKinsey estimates that the adoption of disruptive technologies like mobile Internet, big data, the IoT, automation of knowledge work and cloud technology, the adoption of these technologies in Southeast Asia could have an annual economic impact of up to US$625 billion by 2030.  As digital adoption spreads across developed and developing countries alike, the digital economy’s share of total global output will grow even more rapidly in the decades to come.

The digital economy’s importance to Singapore

6.            It is precisely because of these trends that the Committee on the Future Economy (CFE) has paid particularly close attention to the digital economy and its growing importance to Singapore. 

7.            There are two reasons why we want and need to be at the centre of the global digital economy.  First, it will enable our companies to stay ahead of industry-transforming disruption and sustain their competitive advantage.  Second, it is also a means to seize new opportunities opened up by the digital economy to create value in our economy. 

8.            The payments space exemplifies the importance of the digital economy to Singapore.  Alternative payment systems like PayPal, Apple Pay and AliPay have given both consumers and businesses new and faster ways to manage payment transactions impossible.  With the mere wave of one’s smart phone, or the click of a mouse, consumers can conduct financial transactions that up to quite recent times would have been expensive and cumbersome, and in many cases thought to be.  By 2017, such alternative payments are expected to account for 59 per cent of global e-commerce transactions.

9.            The digital economy poses a disruptive threat to incumbent companies and industries, but we also see it as a unique opportunity to create economic value.  It will no longer suffice for any country to be at the confluence of trade routes and the accompanying flow of goods and services; Singapore must seek to play an active role in creating solutions for the digital world.

Innovation in the digital economy

10.         Given the centrality of the digital economy in our economic future, constant innovation is key to helping our companies stay relevant.  Innovation endows traditional companies with the dexterity to respond to new business opportunities brought about by digitisation, changing needs and new consumer trends.  And it is only by embracing digital technologies and being at the centre of the global digital economy that we can ensure that our companies are the disruptors and not the disrupted.

11.         One example of a Singapore company that has transformed itself from the disrupted to a value-creating disrupter is BeMyGuest.  The company started out as a traditional ticketing and hotel accommodation service provider, and transformed itself into an online booking platform for tours and activities in Asia by digitally connecting a network of small tour operators to its customers.  In October 2015, it signed a deal to integrate its offerings with China’s largest online travel site Ctrip.  As a result, BeMyGuest has been able to more than double its month-on-month growth. Innovation enabled BeMyGuest to stay ahead of disruption and keep itself relevant.

MNCs’ role in Singapore’s innovation ecosystem

12.         Companies thrive in a strong ecosystem that supports pervasive innovation.   We seek to foster such an ecosystem in Singapore, and it is an effort that requires deep collaboration. Innovation is a risky business, but if you do it well you will have significant payoffs.  Multinational corporations (MNCs) like PayPal play a key role in this effort, and are important partners for Singapore-based SMEs and start-ups.   We are therefore glad that PayPal is partnering the government to incubate the next generation of FinTech start-ups through it Innovation Lab.  PayPal recently launched its start-up incubation programme in Singapore with three FinTech start-ups, Prosecure, InvoiceInterchange, and ONEPAY.  This nine-month programme will offer the start-ups coaching and mentorship by PayPal executives and other experts, as well as networking opportunities.  It is not just about incubating start-ups, but also about the culture that it will foster and the inspiration it will create for students in university in the region and beyond.

13.         Singapore’s ecosystem of Large Local Enterprises (LLE’s) and MNCs are also increasingly looking to innovate via collaborations with other companies including start-ups.  For example, SAP established an arm specifically to pursue open innovation with the start-up community in Singapore.  Its co-innovation lab in Singapore works with start-ups to accelerate their product development process, through access to business and technical mentorship, as well as preferential access to cutting edge technology.  Nvidia is another example that pursues a similar model.  Alongside the proprietary R&D in the Nvidia Technology Centre Asia Pacific, the company has also been working with local technology firms such as XJERA Labs and Trakomatic to develop exportable products and technologies.

Fostering more private sector collaboration 

14.         These efforts are all consistent with our aim for MNCs to co-innovate with SMEs and start-ups, and create new solutions for regional and global markets.  We hope to catalyse many more of such collaborations and one way is to leverage the findings and capabilities of our Institutes of Higher Learning (IHLs) to develop applied solutions. 

15.         For example, Singapore Management University’s (SMU) LiveLabs is a city-scale research test bed for companies to run large-scale consumer behaviour trials and experiments in real environments.  LiveLabs collaborates with retailers to provide a living test bed to evaluate and validate experimental apps and services, and assess the response of consumers.

16.         I want to encourage all our corporate partners – those present here and beyond – to work with government agencies, and to seek out and create similar opportunities.  PayPal has taken the lead through its Innovation Lab and other initiatives, and we hope others will emulate them.

Closing

17.         Ultimately, I want to say that Singapore’s success in the digital economy depends critically on our ability to foster an environment that supports pervasive innovation to create value.  Innovation is not the domain of start-ups; indeed it should be an integral to the DNA of all enterprises from the smallest to the largest.  With the collective will and effort of our businesses, the government and other stakeholders that we are actively engaging, I am confident that we can build a vibrant economy to overcome the challenges and seize the opportunities that will certainly come our way. 

18.         Once again, my congratulations to PayPal and its management team on the successful launch of the PayPal Innovation Lab.  Thank you.

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