Interview: Singapore - a partner for new business in Asia
The EDB not only attracts investments, but helps companies transform
SINGAPORE -- Since its founding in 1961, the Singapore Economic Development Board has spearheaded the city-state's industrialization with one critical mission: creating jobs. As Singapore's economy matures, the board's task has changed. Instead of just seeking to attract investments from large foreign companies, the chairman of EDB, Beh Swan Gin, says Singapore can work with companies to build new businesses or to expand market share in Asia. Beh joined the EDB in 1992 and has held various leadership roles, including developing Singapore's biomedical industry, before becoming managing director in 2008, and then chairman in 2014. He spoke with the Nikkei Asian Review. Edited excerpts:
Q: As the EDB led the industrialization of Singapore, industries in focus shifted from chemical to semiconductor to bio-pharmaceutical. What is the next focus?
A: The shift in our thinking is, firstly, we don't think of the next big thing. Instead, we ask ourselves what are the areas of our strength, then we build on that. Because we were strong in semiconductors, it was a lot easier to go into the solar manufacturing sector. Because we were strong in building industrial machinery, it is now possible for us to go into semiconductor equipment, automation and robotics. The more important shift is thinking about how we address the demand-side opportunities. In the past, the global trend Singapore was riding on was the whole idea of offshoring and outsourcing manufacturing activities by companies, and these were primarily for developed economies. Today, market opportunity is in Asia. So the relevance of Singapore has changed. For the international companies, it is how they can successfully win the market share in Asia through Singapore.
Q: What are the challenges?
A: Ultimately, we are a small country. Resource is limited, and the size of our market is limited. But you can make this limitation into strength. Companies here have to think internationally from Day 1. One executive of an American company said, "the reason why we put Asian headquarters in Singapore, not in China, which is big and important, is that if I am in China I will wake up thinking about China and go to bed thinking of China. Whereas, I am in Singapore, I would think of the whole of Asia, what India needs, what Indonesia needs, what China needs." Being small also allows us to be very focused. It allows us to be clear about what we can do and what we cannot do. This allows us a speed. This is something investors appreciate.
Q: Can Singapore be an innovation hub, where startups in the areas of AI or robotics gather?
A: This is the transition [Singapore is] going through now. I have high confidence that the conditions are right now, because, one, a lot of successful startups in Singapore are addressing needs of markets around us, Southeast Asia. The demand is there. Two, because the technological advancement has run so far ahead, applying these technologies to different market verticals by itself is a huge opportunity. These are the external drivers. As for Singapore domestic factors, we now have a strong scientific base. This is important not just for the knowledge but also because the scientists are connected to the global scientific community. Probably the most critical factor is now the availability of venture capital.
Q: What is needed to transform the economy?
A: When we think of innovation-led economy, we always think of just startups. My view is, especially in an economy like Singapore, you cannot just depend on startups to drive your transition into innovation-led economy. You need large corporations to be involved in starting new businesses. That is why one of EDB's new works is to partner these large companies, multinationals as well as locals, to create new businesses. EDB can be helpful to the big companies that are interested to start new businesses.
Q: Is the growing protectionism in the world changing the way how companies make decisions? Does it affect Singapore?
A: If we are involved in attracting manufacturing here to ship products back to the U.S. as the end-market, we would be in danger -- not for just protectionistic instincts in different parts of the world today but also because of logistic cost and so on. A lot more end-product manufacturing will go back to where the large markets are. That is why in the U.S. you see [Hon Hai Precision Industry spending] $10 billion to do LCD manufacturing. 3-D printing will enable manufacturing even at the city level. But the profile of manufacturing in Singapore has changed a lot in the past 20 years, so we are a lot less worried about it. If a company is in wafer fabrication, it would only build one or two plants in the world. For those, the company would choose [the location] based on reasons like access to engineers, technology, predictability of the operating environment, good quality electricity and things like that, rather than the market reasons.
Interviewed by Nikkei staff writer Mayuko Tani