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Can Singaporeans be the Jedi of the tech world?

City must overcome its small size, high costs and talent shortages to stand a chance

| Singapore

Singapore's long-running effort to reinvent its economy is getting help from an unlikely force: Donald Trump.

The economic downturn that the U.S. president's trade battles are imposing on the export-oriented city state has the government thinking on an inter-galactic scale.

Nothing less than the science-fiction film Star Wars has become the inspiration for Janil Puthucheary, senior minister of state for Transport, Communications and Information. He told the Nikkei Asian Review that as well as "Jedi masters" -- the movie's polymath philosopher warriors -- Singapore needs "paladins," the Jedis' faithful multi-tasking followers, who would be essential to implement the government's plans.

"When we look at what we want to do, the single biggest step is going to be the availability of that deep talent, a set of skills," says Puthucheary. "So, it is partly about creating an environment and an opportunity for those skills to come here. And the reality is that the pace that we want to move at will require people who already have the skills right now."

It falls to Puthucheary, 46, to ensure this effort takes on warp-speed dimensions. He oversees "GovTech," the Government Technology Agency. Created in 2016, it aims to raise Singapore's innovative game and ensure that vital institutions work toward that goal with minimal red tape and overlap.

In our recent chat in Singapore, it was hard not to sense a happy coincidence in the fact that the man at the center of Singapore's effort to reinvent itself is a trained physician. The skills Dr. Puthucheary honed practicing medicine in London, Belfast and Sydney come in handy diagnosing the city's ailments and developing innovative treatments.

"In medicine, you learn very quickly that while you do have to apply all your thinking in your duty of care to the challenge that is right in front of you, what ultimately improves the health are small steps taken in the background that accumulate over years," Puthucheary says

He has no time to lose. A new report suggests Singapore will be the biggest casualty of the U.S. president's trade war in Southeast Asia. Oxford Economics and the Institute of Chartered Accountants in England and Wales see Singapore growing 1.9% at best this year. That is a far cry from 2018's 3.1% or the average 4.8% rate of regional peers.

Over the last decade, Singapore found it is essentially the Japan of Southeast Asia: a highly successful export power that suddenly realizes high standards of living are both an asset and a liability. A liability because wealth and expensive labor costs make it a very expensive property in a cheap neighborhood.

Gone are the days Singapore can compete on price. That means moving the nation of 5.6 million people up market into niche high-value-added services -- encouraging greater entrepreneurship in software, biotechnology, energy, health care, logistics and other key areas.

Singapore, Puthucheary says, is trying its own hand at disruption. Take its "regulatory sandboxes" policy allowing companies to experiment. Examples include allowing startups to experiment in the fintech space, try out drones to deliver parcels, harness health care data to devise more personalized insurance policies and even roll out driverless busses (Volvo hopes to have a fleet of autonomous buses on Singapore's roads by 2022).

Puthucheary's team also is at the forefront of Southeast Asia's digital-economy ambitions. Singapore sees great potential as a regional safe zone for storing sensitive data. As China's Communist Party encroaches on Hong Kong's freedoms, Singapore stands to benefit. That means overcoming myriad obstacles closer to home. In Southeast Asia, he says, the preference for "data localism and data nationalism" remains strong.

Nanyang Technological University Singapore and Volvo Buses unveil their first full size autonomous electric bus in Singapore on Mar. 5.   © Reuters

Yet Singapore's GovTech ambitions are worthy of applause -- both in terms of scale and out-of-the-box thinking. The agency employs roughly 2,300 coders, engineers, hackers and systems and networks designers to, as Puthucheary put it, make Singapore "future ready."

Work to making Singapore the center of Asian innovation is paying dividends. Singapore just leapfrogged over Hong Kong and the U.S. to grab the top spot among the most competitive economies, according to Switzerland-based IMD Business School's latest rankings. It cited Singapore's information-technology infrastructure, ease of doing business, liberal immigration laws and supply of skilled labor.

Why, then, is Singapore lagging in "unicorns?" Ride-sharing Grab is Singapore's only startup worth over $1 billion. Hong Kong has produced two -- online travel outfit Klook and logistics company Lalamove. Indonesia, which is 32nd in IMD rankings, boasts four: taxi app Go-Jek, travel site Traveloka and e-commerce platforms Bukalapak and Tokopedia.

This disconnect speaks to the long road that lies ahead for Singapore's Silicon Valley East dreams. One problem: a local education system that prioritizes rote learning over risk-taking. Another: a low societal tolerance for failure. Some also worry a recently-passed "fake news law" might hinder free speech. Singapore is missing billion-dollar exits, the availability of which would be helpful to pull innovators its way, says Claudia Zeisberger, who lectures on entrepreneurship at INSEAD's local campus.

Along with attracting and cultivating talent, Zeisberger says, Singapore needs to hone its funding game. "We need a complete chain of smart investors -- from 'angels' to 'incubators' to venture capitalists, plus access to follow-on funding."

Singapore must act quickly, Zeisberger argues, as China develops it own ambitious tech ecosystem.

In any case the San Francisco Bay Area is so far ahead that it will be hard to convince tech experts to move. Overcoming data scientists' and software developers' affection for the buzz of Silicon Valley or London is a challenge Singapore has yet to meet.

Even so, Singapore is wisely enticing California's biggest names. Google has more than 1,000 employees there. Facebook is piling $1 billion into its first Asian data center in the city -- and opened an office big enough for 3,000 staffers. Dyson, the U.K. engineering group, moved its headquarters to Singapore.

Singapore is dabbling with generous tax holidays for foreign innovators, healthy research-and-development grants, attractive land and rental deals and even co-funding for investments. The city state also is working to create new opportunities in trade finance and logistics.

At the end of the day, Puthucheary says it is about creating "conditions for investments to scale, for business models to deploy outside our borders internationally and for opportunities to be created in environments that are not quite exactly like Singapore."

Whether this Jedi-like mind trick launches the startup boom Singapore craves is anyone's guess. But with China rising, Indonesia disrupting the neighborhood and Trumpism sowing chaos, the city's paladins are going to be busy.

William Pesek is an award-winning Tokyo-based journalist and author of "Japanization: What the World Can Learn from Japan's Lost Decades." He was given the 2018 prize for excellence in opinion writing by the Society of Publishers in Asia for his Nikkei Asian Review work.

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