Interview: Startups can write the next chapter of Singapore's growth
Use innovation to tap emerging markets, says entrepreneurship expert
SINGAPORE To keep its economy chugging along at a time when its traditional government-led growth model is losing its effectiveness, Singapore needs to promote itself as an innovation hub and hitch its fortunes to the emerging markets surrounding it, says Wong Poh Kam, a professor, entrepreneur and angel investor.
Wong teaches innovation strategy at National University of Singapore Business School and heads the NUS Entrepreneurship Center. There, he promotes entrepreneurship education and the commercialization of university research.
Singapore's prime location at the heart of Southeast Asia, says Wong, gives startups here a unique advantage in developing business models that can best tap growth markets.
With Singapore's traditional growth model being disrupted, the government aims to maintain economic momentum by making the country a hub for innovation. How can this goal be achieved? We need to establish close links with leading innovation hubs in the developed and emerging worlds. We also need to build a vibrant ecosystem to attract high-growth tech startups. Then startups from Silicon Valley will move to Singapore to use it as a hub to grow in Asia. Singapore can be used as a test market or as a venue for the initial proof of concept.
What unique strengths does Singapore possess that Silicon Valley, India and Shenzhen do not? Singapore does not have a sophisticated community of venture capital players and angel investors. Our universities still don't have depth in technology research. The number of patents coming from universities is increasing, but it is not as big as in Silicon Valley. We are still playing catch-up.
But we have a very different context -- sitting in the middle of ASEAN [the Association of Southeast Asian Nations], and being the most advanced country in the region. In principle, we should have a comparative advantage to innovate for the ASEAN market, and more broadly, for the emerging market in general. We are trying to push professors to change their mindsets and look at emerging markets. Then we have to think about new ways to innovate -- so-called frugal innovations, innovating to reduce costs, or how to innovate and design so you can work without elaborate maintenance. These are the focuses we are trying to develop.
Why are links with emerging markets so important? The next 10 to 20 years, the fast growth will come from emerging markets, such as China, India, ASEAN and Africa. How can we get our startups to grow with these higher-growth markets? We have established Block 71, our hub for startups in Singapore. We have also established a Block 71 in San Francisco; Suzhou, China; and, in July, in Jakarta. We are looking to establish more in ASEAN, including Bangkok and possibly Vietnam, so it is easy for our startups to grow, using their connectivity to venture capitalists, customers and markets in these places.
Can Singapore be a useful innovation hub for Chinese companies, too? In recent years, Southeast Asia has become an important market for Chinese companies because it is nearer and easier to enter. It is true that some of them use China as an innovation base and export their products to Southeast Asia directly. But they also need localization. That is when they need to look for local partners. Singapore can still play a role for some of them as a regional hub. Huawei has research and development activities in Singapore and has set up an internet of things accelerator in Block 71. [Chinese companies] are partnering with us to help find startups they can collaborate with.
In what areas do you see Singaporean entrepreneurs playing a big role? Urban mobility and urban living environments are areas where Singapore already has a strong base. In the U.S. and China, Uber and Didi Chuxing resulted in more private car ownership and increased congestion. I personally think, for the longer term, a better solution is to have a better mix of public transport and private cars, which is made more efficient by sharing. Singapore has placed a lot of emphasis on public transport, so we probably have a better mix of public and private [services]. That will give us some advantage.
Services like Amazon Prime could put small and midsize enterprises out of business. How will this affect Singapore's competitiveness, and will the government try to help these smaller players? Some retail shops will probably have to close. I don't think the government will try to stop Amazon from growing just to save these jobs. The government recognizes that you cannot save certain jobs, because technology will make them obsolete. We have to create new jobs that can't be easily replaced by robots. That is why Singapore is moving to emphasize vocational skills.
Asian parents put pressure on their children, even those who aren't good students, to go to university and get white-collar jobs. The government is trying to change that mindset by saying you can actually earn a high income if you work as a technician. A good example is physiotherapy. In Singapore it is in such strong demand.
Will the Singaporean economy continue to be led by companies owned by state investment company Temasek Holdings? Clearly, the government recognizes that this model is not sufficient. Government-linked companies are increasingly being disrupted by new startups. How to make state-linked companies more innovative is an area of active discussion. Many of them are listed on the stock exchange, so the market pressure will eventually force management to change.
Singapore may suffer a bit if some of those big companies do not respond fast enough, especially those that have a quasi-monopoly and are cushioned from the [market] pressure. I do think Singapore will have to go through a patch where some of them may see a decline in performance. Over time, the balance has to shift. We can no longer rely on government-linked companies but need to grow more indigenous startups.
Interviewed by Nikkei staff writer Mayuko Tani