Speech by Second Minister S Iswaran During the Committee of Supply Debate Under Head V

"Developing new capabilities and growing opportunities in R&D, energy and tourism”

Introduction

1.            Mr Chairperson, may I have your permission to display some slides on the LED screens.

2.            Mr Chairperson, I want to complement Minister Lim’s overarching picture of Singapore’s economic landscape by elaborating on the opportunities and initiatives specific to Research and Development (R&D), energy and tourism. 

R&D is an important enabler to catalyse new industry capabilities, and create good jobs

3.            R&D is an important enabler that can help to enhance the competitiveness and productivity of our economy.   

4.    It’s in recognition of this that the Government has committed $16.1 billion to the Research, Innovation and Enterprise 2015 (RIE2015) masterplan. Dr Lim Wee Kiak, Mr Ong Teng Koon and Mr Vikram Nair have asked how this has helped to promote innovation and boost productivity.

Promoting innovation in local companies

5.            Firstly, our companies have worked with public research institutions to create new products and services, and generate new revenue streams. 

6.            An example is Fong’s Engineering & Manufacturing, a precision engineering firm which has collaborated with the Singapore Institute of Manufacturing (SIMTech). They have successfully developed an endoscope. SIMTech played an important role during the clinical trials & evaluation phase, and helped the company commercialise its product. This collaboration has helped Fong’s Engineering to expand into the MedTech sector, and doubled the company’s average value-added (VA) per worker. This is an example of an SME that has benefitted by going into a new sector with a new product and has enhanced its top-line.

7.            Another example is SIMTech’s work in the aerospace cluster with SIA Engineering Company and several local SMEs.  As a result, these SMEs have diversified beyond their traditional precision engineering capabilities to design and manufacture aerospace components. And they too have consequently raised their revenues by up to 25%. This is an example of a cluster setting, where a large local company like SIA Engineering with a group of small SMEs working with them to raise capabilities and develop new revenue lines. 

8.            But innovation is not just about new or breakthrough products.  Companies can also benefit tremendously from innovative process improvements to their operations.  That is why A*STAR has been reaching out to companies through the Technology Adoption Programme (TAP).

9.            This $51 million programme was launched in 2013 to help SMEs in their efforts to transform their business models by making technology more accessible. We have a team of experienced individuals who act as the interface between SMEs and various sources of technology solutions, whether it is the public or private sector.

10.         In just over one year, more than 4,000 companies have been engaged under TAP, with 1,200 technology adoptions by companies, achieving at least a 20% productivity improvement. 

11.         One beneficiary is the Singapore Toy Club which rents out bouncy castles, toy cars and other party products for home parties and other functions.  SIMTech worked with the company to deploy an RFID-based inventory management system to track and account for its equipment, reducing the man-hours required for managing inventory by 75%.   

12.         Large local enterprises (LLEs) are also partnering A*STAR’s research institutes to develop innovative technologies.  Some examples include Sembawang, Keppel and Jurong Shipyards in the marine and offshore industry, Biosensors International in the MedTech sector, and SingTel in infocomm.  More recently, in the finance sector, DBS and the Institute for Infocomm Research (I2R) launched a Joint Lab to develop new products and solutions which focus on areas such as data analytics and voice and video technologies. EDB and A*STAR will engage more LLEs to explore other areas of collaboration.

13.         In some instances, companies are also unable to test certain technology applications in Singapore due to constraints such as climate conditions, or limited land and air space.  To help such firms, EDB will introduce a new Overseas Living Lab (OLL) programme to help Singapore-based companies with innovation centres to test and commercialise their technologies in overseas markets. This will help to maximise the value of local R&D and incentivise firms to deepen R&D activities in Singapore.  EDB will pilot this $15 million programme with water and energy solution providers over the next two years.

R&D creates good jobs for Singaporeans

14.         Mr Ong Teng Koon asked for the proportion of Singaporeans in R&D jobs and their career options. In 2013, there were about 32,000 research scientist and engineer (RSE) jobs.  70% of these RSE jobs went to locals[1]. 

15.         R&D creates high value jobs for Singaporeans.  Our scientific and research talent can pursue diverse opportunities and career pathways that suit their interests and strengths, be it in research, academia, administration, industry or entrepreneurship. 

16.         Dr Daniel Teo graduated from Ngee Ann Polytechnic, and then pursued an undergraduate degree and PhD in engineering.  After joining A*STAR, Daniel led the invention of FELA, or “Flexure-Based Electromagnetic Linear Actuator”, which provides high precision motion and force for driving high performance machines.  FELA is a breakthrough for the precision engineering industry, with wide-ranging applications such as in micro- and nano- metrology systems, machining systems, and biomedical instruments. FELA has won an international R&D award, and has been licensed to a local manufacturer of precision components for further product development.  

17.         Some of our researchers have become entrepreneurs.  Dr Rosemary Tan was a scientist at our Institute of Molecular and Cell Biology (IMCB).  In 2003, she founded Veredus Laboratories Pte Ltd, a medical device company specialising in portable diagnostic tool kits, using A*STAR’s license in malaria primers.  She subsequently licensed A*STAR’s bird flu primers, and launched the company’s first products in 2005 – DNA- and RNA- based diagnostic kits for dengue, avian influenza and malaria.  Veredus also worked with ST Microelectronics to develop rapid diagnostic kits for influenza viruses which could produce test results within an hour using Lab-on-a-chip (LOC) technology.  Today, Veredus has grown from a small start-up to a company with about 30 employees and $10 million in revenue.

R&D activities contribute to the diversity and vibrancy of our economy by catalysing new growth areas

18.         R&D also catalyses new growth areas in our economy.  In that regard, the $500 million Future of Manufacturing (FoM) programme aims to encourage our manufacturing firms to embrace disruptive additive manufacturing (AM) technologies such as 3D printing and robotics.                                         

19.         To support this effort, A*STAR will launch the Additive Manufacturing Centre in 2015, to accelerate the adoption of AM technologies in Singapore.  It will house state-of-the-art industrial grade AM equipment to extend the application-centred work with industrial partners, such as Rolls-Royce.  It is expected to attract about $100 million of industry investments.

20.         To enhance Singapore’s long term R&D competencies in robotics, A*STAR, EDB and NRF will be launching the National Robotics Programme later this year.  It will manage and coordinate end-to-end development of robotics technologies and test-bedding initiatives across various industry sectors.  The Programme will pull together capabilities across our public research institutions, to develop robotics technologies for economic impact through collaborations with robotics companies and industrial end users.

21.         A*STAR’s efforts have also spawned the growth of a new Food and Nutrition innovation hub.   Leading nutrition companies such as Nestlé, Danone and Abbott have established facilities in Biopolis to conduct research into healthier and safer products.  The number of scientists and researchers employed by these companies has increased from less than 300 in 2010 to around 700 today.                                                               

22.         Let me now turn to energy which is critical to Singapore’s economic competitiveness.  Almost all our energy is imported and, hence, we are highly exposed to global price movements.  

23.         Global oil prices have dropped dramatically in recent months, from a peak of US$115 per barrel in June last year to about US$60 more recently. 

24.         However, movements in the global oil market are unpredictable, given the impact of geopolitical and technological developments.

25.         For now, lower oil prices have resulted in an easing of electricity tariffs and fuel costs for businesses and consumers in Singapore. But we cannot expect lower energy prices to persist indefinitely.  

26.         Hence, we must not relent in our efforts to ensure that Singapore continues to have access to secure and competitively priced energy supplies.  To achieve this, MTI will continue to (i) promote competitive markets; (ii) enhance our energy infrastructure; and (iii) nurture a strong core of energy professionals. Let me elaborate. 

Managing energy costs by fostering greater competition

27.         Firstly, we will continue to promote competition in our domestic energy market. 

28.         Last year, the Energy Market Authority, or EMA, put in place a competitive process to secure new LNG supplies for Singapore, and launched a two-stage Request-for-Proposal (RFP) to supply Singapore’s next tranche of Liquefied Natural Gas (LNG). 

29.         There was a strong response to Stage One of the RFP.  We have received nine competitive bids proposing a variety of LNG supply solutions and price indices.  They collectively proposed more than ten new source countries from which Singapore’s next tranche of LNG may be secured. This has gone significantly towards meeting our objective of diversifying our sources and giving us greater resilience in our energy supplies. Our agencies are evaluating the bids and will announce the results in due course. 

30.         We have also taken steps to increase competition in the electricity retail market. 

31.         Last year, the retail contestability threshold was lowered from 10,000 kWh to 4,000 kWh, allowing about 15,000 more commercial and industrial consumers to choose the electricity retailer and package that best suit their needs. 

32.         About 1,600 new customers have since applied to become contestable.  These include SMEs like Pet Lovers Centre, Evergreen Group, a stationery operation, and even not-for-profit organisations like the Alzheimer’s Disease Association. So the benefits are cascading to a much wider range of institutions.

33.         EMA will be further lowering the contestability threshold to 2,000kWh on 1 Jul 2015, which will benefit another 10,000 commercial and industrial consumers. This will include coffee shops, kindergartens, music schools, religious and community establishments. EMA is also studying the approach and implementation timeline for full retail contestability in consultation with industry stakeholders. 

Enhancing infrastructure to meet future energy needs

34.         Secondly, we will continue to enhance our energy infrastructure to meet our future energy needs. 

35.         Mr Ong Teng Koon had asked about the progress of the Government’s plans to expand Singapore’s LNG infrastructure.  The commencement of our terminal’s operations in May 2013 has allowed us to import LNG from all over the world.  When additional regasification facilities are completed in 2017, the terminal’s throughput capacity will be increased substantially from 6 Mtpa to 11 Mtpa.  That is a significant increase which will go a long way towards addressing Singapore’s long term energy needs. The completion of a fourth LNG storage tank by 2018 will further increase the terminal’s storage capacity from 540,000 cubic metres to 800,000 cubic metres. 

36.         We also plan to develop a second LNG terminal that will enhance our energy security by geographically diversifying our LNG import infrastructure.  It will support new industrial sites and power plantings, and we are currently studying potential sites in eastern Singapore. 

Boosting efforts to build a strong Singaporean core of professionals

37.         We must also ensure that we have a strong pipeline of talent to meet our energy sector’s growing needs. This was a point raised by Mr Ong Teng Koon.

38.         In particular, we will boost efforts to build a strong Singaporean core of energy professionals.

39.         To this end, EMA has established a $20 million Energy Training Fund to support the development of new power-related training programmes, and co-fund course fees for local workers in the Power sector. 

40.         Those who choose to join the Power sector will have the opportunity to pursue a rewarding career in a sector that is a critical part of Singapore’s economy.   Let me give you some examples.

41.         Mr Tan Yi Mian, who joined YTL PowerSeraya seven years ago, has been involved in challenging assignments - from the initial operation and optimization of the company’s 10,000-cubic metre desalination plant, to commissioning work on their co-generation combined cycle plant on Jurong Island.  Today, he is the gas plant manager, and ensures that his plant supplies power seamlessly to Singapore’s electricity network grid. 

42.         It is also good to see young students who are excited about a career in the energy sector. 

43.         Last year, I met Ms Noor Nashriyah Binte Jalil, a second year student in Singapore Poly pursuing a Diploma in Electrical and Electronic Engineering.  She is keen to dispel the misconception that engineering is a ‘man’s field’, and prove that women can do just as good a job, if not better.  And she will have ample opportunity to do just that in about a year’s time when she joins the power sector.

44. We hope that her enthusiasm will be infectious and more Singaporeans will choose careers in the Power sector.

45.         Mr Chairperson, let me now turn to the tourism sector.  

46.         Last year, we welcomed 15.1 million tourists, a dip of 3% from 2013.  Performance was mixed across our key source markets.  Arrivals from China fell 24% following various airline incidents and due to the introduction of stricter laws that clamped down on “zero-dollar” tours.  On the other hand, there were some bright spots with visitor arrivals from markets such as Hong Kong, South Korea and Vietnam, recording double digit growth. 

47.         Also, the tourists who came to Singapore stayed longer and spent more on average.  As a result, tourism spending held steady, despite the tourism arrival decline, at $23.5 billion in 2014, similar to 2013.  

48.         We expect the challenges to remain in the near term, and competition from regional destinations to intensify.  Further, the impact of the tight labour market has been keenly felt by our hospitality sector.  On a positive note, outbound travel to Asia Pacific is expected to continue to grow.

49.         For 2015, STB has forecast visitor arrivals to be in the range of 15.1 to 15.5 million, a change of 0% to 3% from last year. Tourism receipts are expected to be in the range of $23.5 to $24.0 billion, a year-on-year change of 0% to 2%. 

50. Mr Gan Thiam Poh has asked how we intend to remain a vibrant tourist destination and retain our competitiveness.  This is a key challenge and STB aims to do so by pursuing quality tourism growth, and working closely with industry to innovate, enhance our tourism hardware and software, while improving our capabilities.  

Creating hardware and software

51.         To provide more leisure options for both tourists and Singaporeans, as part of our efforts to refresh our tourism assets, STB is working with Temasek Holdings to create a world-class nature-themed attraction in Mandai.  It will have recreation and education facilities, with green public spaces for Singaporeans and visitors to enjoy and appreciate nature. This is a project that is going to take several years to plan and execute, but ultimately, we have a very strong product that will add significantly to Singapore’s tourism landscape. 

52.         In the near term, we can look forward to the opening this year of the National Gallery Singapore and Singapore Pinacotheque de Paris, a fine art museum known for its critically acclaimed exhibitions.

53.         We will complement such tourism hardware developments with differentiated content and programming; this will help create a vibrant events calendar for both locals and tourists to enjoy.

54.         We will build on our line-up of sports and leisure events, such as the Formula One night race and the Women’s Tennis Association Finals.  As part of SG50, an international showcase called “Singapore: Inside Out” will celebrate Singapore’s contemporary creative talents in the fields of architecture, design, fashion, film, F&B, music and the arts.  It will be shown in Beijing, London and New York before returning to Singapore in November.  “Singapore: Inside Out” will spark interest in Singapore’s creative talent and enhance Singapore’s image as a vibrant global city.  It will be an opportunity for Singaporeans and foreigners to appreciate the works of our artists like Farizwan Fajari, better known as Speak Cryptic. This is a mock-up of the art installation he will be presenting at Singapore: Inside Out, called “Kamar Kamillion”.  It is a re-creation of the artist’s bedroom, showcasing how his identity as a Malay Singaporean has been influenced by Singapore’s cultural and historical landscape, as well as alternative pop culture.

55.         Through the Kickstart Fund which STB has been implementing for some time now, STB will further extend its support for the test-bedding of innovative lifestyle events and concepts with strong tourism appeal and scalability.  To date, the $5 million Kickstart Fund has supported 13 such projects.  One example is Spot Art, a competition and exhibition for talented Southeast Asian artists under the age of 30. The second edition of the show was held in November last year, and featured more than 100 works by 48 artists from 12 countries.

56.         To encourage more of such projects, STB will double the maximum level of support from the current $75,000 to $150,000, and extend the maximum duration of support to 1 year.  

57.         The business sector and MICE sector is another key part of tourism industry in Singapore. We will also continue to build on our strengths.  Last year, Singapore was named Asia’s top convention city for the 12th consecutive year, as well as the top international meeting city for the 7th consecutive year. STB will continue to secure major exhibitions and conferences, and encourage more meetings and incentive travel. In 2015, there will be 5 flagship events for large incentive groups that will attract over 30,000 business attendees.

Creating vibrant and distinctive precincts

58.         We will continue to work with industry stakeholders to enliven and showcase our lifestyle and cultural precincts.  A key focus area will be the rejuvenation of the Orchard Road precinct. 

59.         Dr Lim Wee Kiak has asked how we will ensure that Singapore remains a competitive retail destination for tourists.  Last year, STB worked with the retail industry to testbed new initiatives to vitalise Orchard Road, such as KEEPERS: Singapore Designer Collective, a 5-month pop-up showcasing local designers.  KEEPERS helped foster long-term business opportunities for local designers. For example, local brand Aijek, by fashion designer Danelle Woo, was picked up by TANGS after being spotted at KEEPERS. STB intends to continue having KEEPERS.

60.         To take these efforts a step forward, STB is conducting an Envisioning Orchard Road exercise that is expected to be completed by end-2015. It will study consumer insights from key source markets, engage Orchard Road stakeholders to obtain insights and understand key challenges, and develop a vision and new ideas to reinvent Orchard Road.    

Creating good jobs and improving productivity

61.          We will continue to help our companies improve productivity, and create new, exciting and good jobs in the tourism sector.

62.         To help increase productivity, the Hotel Productivity Centre will be launched this month. This is a dedicated, one-stop centre for innovation and productivity solutions, which will look at areas such as applied research to prototype new technologies, services and solutions that can then be shared and applied industry wide. 

63.         STB is also working with the Singapore Hotel Association and the Singapore International Chamber of Commerce on a manpower study for the hotel industry. The study will provide insights on the future manpower landscape, skills gap, benchmarking against competing industries as well as recommendations to enable the hotel industry to attract its fair share of talent. 

64.         STB’s capability development incentive schemes have also helped to upskill workers, especially in the higher end and upper management levels in the hospitality sector.  One beneficiary is Ms Jennifer Chin from Mandarin Orchard Singapore, who started as an entry-level sales executive with a higher diploma in hotel management and has risen through the ranks to become senior director in business development. Supported by STB’s Training Industry Professionals in Tourism (TIP-IT) grant, she is currently in the Advanced Management Program (AMP) in Hospitality offered by NTU, in collaboration with Cornell University. This will position her well to take on higher responsibilities.

65.         Another example is Mr Yew Eng Tong, who is chef de cuisine at Ocean Restaurant by Cat Cora at Resorts World Sentosa. With the help of STB’s Association Development Fund and commercial sponsors, the Singapore Chefs’ Association has been able to send local chefs like him to prestigious overseas culinary competitions to gain experience and exposure on the international stage.

66. Mr Chairperson, I have given an overview of the various initiatives under R&D, energy and tourism, as well as the developments we can expect to see this year and how these have contributed to strengthening our economy and the competitiveness of our companies. These will help us continue on our path of promoting sustainable growth through innovation and productivity, and creating good jobs for Singaporeans. Thank you.

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Singapore citizens and PRs