Daring to Dream Big: Singapore's EDB

Today, we went to the National Museum of Singapore where we were given a guided tour of the Economic Development Board (EDB) exhibit (“50 years of economic development”) by the team that put on the exhibit. I would like to share some of the insightful stories that helped me better understand Singapore as a nation.

EDB is the strategy arm of the government. The first surprising point is that EDB is 50 years old whereas Singapore is only 46 years old so the EDB is older than the nation.

Embracing a nonconventional approach in the 1960’s, Singapore decided to work with the colonialists. Instead of tearing all ties after their independence, Singapore understood that their success lay in working with the colonists, selling to them. Singapore had the choice like many young nations of whether they produce what they need, or produce what creates economic activity. Influenced by the economic founder of modern Singapore Dr. Goh Keng Swee, they chose the latter, focusing on generating economic activities to create jobs, with some of their first products on exhibit at the museum such as the mosquito coils, hair wigs etc.

Despite Singapore’s humble roots (and the challenging early years that seems so far from reality today), Singapore happened to be located in one of the busiest locations of the world, and their open trading approach had immediate implications for the region. Singapore set upon a strategy to bring in investors and capital, developing Pioneer certificates to help facilitate the creation of foreign companies in Singapore.

Development Lesson #1: Singapore focused on the development of people, which is a lesson that can be applied to both advanced and developing economies.

Singapore continually asked, “How can we be relevant to the rest of the world?” This is a question central in development, one that must be re-visited frequently in long term planning.

Development Lesson #2: A question every country must continually ask is “How can we be relevant to the rest of the world?”

In the 1970’s, Singapore became relevant to the rest of the world by focusing on engineering and developing a workforce of skilled craftsmen.

“Daring to dream” beyond its humble roots and building an economy to generates jobs for its people, Singapore began building an electronics industry, serving as the manufacturer for Silicon Valley firms like Hewlett Packard. Many of the early graphing calculators were manufactured in Singapore, as were the Hewlett Packard printers. We learned the story of Renato Sirtori, Italian CEO of STMicroelectronics, who set up his company’s operations in Singapore 40 years ago. His story emblematic of the many foreigners who have made Singapore their home, as well as how the decision to do business in Singapore has transformed the nature of his company, now employing 40,000 staff in Singapore. We are reminded that today, unless a company exists solely to serve a domestic market, their presence in Asia is no longer debatable; and establishing headquarters in Singapore to serve the broader Asia market is similar to establishing a tech firm in Silicon Valley. However, Renato Sirtori was ahead of the curve, and his story reminds us of how forward thinking pioneers have transformed the nature of global enterprise.

By the 1990s, the foundation of what exists in Singapore today was largely built. However, the 1985 recession was a reminder that crisis can make a nation stronger.

Development Lesson #3: As Jack Welch (former CEO of GE) has said, sometimes you need to fix something that isn’t broken.

From a systems point of view, crises enable a country (or company) to renew and rewire to better adapt. Singapore’s response to the 1985 recession reveals lessons for many developing countries. It was a time where there was no financing for entrepreneurs; the manufacturing industry experienced a downward trend, and the Singapore workface was no longer cost competitive. HK, Taiwan and Korea were emerging threats.

Development Lesson #4: Beware of an overpaid workforce. Many countries strive for a highly paid labor force, equating quality of workforce with compensation. This can lead to an uncompetitive workforce.

Singapore embarked upon a wage constraint to make the workers competitive again, influenced by Philip Yeo, Chairman of EDB. Singapore embraced the twin engines of growth: manufacturing and electronics.

Development Lesson #5: The often misunderstood nature of the interconnected link between services and manufacturing leads many nations to shift out of manufacturing into services industry, resulting in disastrous results for the economy. Services require some manufacturing capacity, and this link must be better understood.

Singapore continued to ask, “How can we be relevant to the rest of the world,” this time shifting their definition of ROW from US/Europe/Japan to include the rest of Asia. Now, the rest of Asia had something that Singapore actually wanted. This change in strategy to be relevant to the rest of Asia has led to Singapore’s positioning today, where of the 38,000 businesses based in Singapore, 4,400 are Indian companies and 3,600 are Chinese.

There are several notable developments such as Singapore becoming the “Global Schoolhouse,” where many of the best international universities set up campuses in Singapore (such as INSEAD). Singapore invested heavily in IT, and this was particularly interesting because of the role government played in deploying cutting edge technology whereby the government offices were the first offices to pilot email. Singapore also developed R&D to further stimulate human capital. Singapore quickly realized that to be relevant it must build a Biomedical industry and pharmaceutical space, quite a task considering how capital intensive these industries tend to be. One key player mentioned in the exhibit was Ms. Yong Hwee Yee and her role in this development.

Some of the high value products developed in Singapore were Heart Valves from EarthSciences USA, non-reusable syringes, and Avastin anticancer drugs. The heart valves are quite interesting as they are manufactured by hand, exemplary of how an industry can offer a high paying alternative to a workforce with sowing capabilities. The non-reusable syringes concept developed by PATH USA, and supported by Gates Foundation, had extraordinary potential but limited market penetration, until they were commercialized for impact in Singapore. This concept of “commercializing for impact” and the role Singapore can play is a promising avenue for technologies developed for the developing world, many of which lack the commercial scale and distribution channels. A partnership between PATH, Gates Foundation, and EDB is just one example of the role Singapore can play going forward to serve as this engine for impact.

While many cite the tax regime, IP, and transparency as the reasons businesses set up Singapore, the recent surveys suggest that the most important factors have to do with Singapore being a desirable place to live. In fact, the most important criteria as to why foreigners come in flocks are that Singapore is a city where their children are safe and their spouses can find work. Singapore has one of the largest clusters of international schools in Asia. Singapore has invested in developing career opportunities for dual career marriages – one avenue of which has been to develop the non-profit sector employment opportunities. In general, EDB has developed a strategy to make Singapore a city that attracts talent, once again emphasizing their focus on PEOPLE, PEOPLE, and PEOPLE.

What is so striking about EDB’s strategy, certainly from an American perspective, is how similar it is to a company’s strategy, perhaps why Singapore is often referred to as Singapore Inc. In fact, its surprising how many of the lessons highlighted in this exhibit are straight takeaways from HBS cases: (i) People, People, and People; (ii) printers are not what make money, ink cartridges are the real profit.

80% of Singapore’s investors are repeat customers. EDB has expertly marketed its value proposition to investors and professionals all over the world, setting up a global sales force in 28 locations. These Global Ops teams develop expertly marketed messaging to bring in talent and business from all over the globe selling the product “Singapore” like the best of the Fortune 500 companies.

Development Lesson #6: It’s about selling, selling, selling (with a focus on developing a value proposition that attracts repeat customers)

Unlike Dilbert’s cartoon where the sales force must lie to get business, Singapore’s sale force has been able to “sell” the truth, of course expertly marketed and packaged, and because the product is good, they benefit from repeat customers.

For instance, we heard stories from the EDB team of how their sales force would pitch to international non-profits, selling Singapore as a transparent financial capital and ideal headquarters for non-profits seeking transparent capital markets. Singapore has quite adeptly marketed itself as the Asian capital for aid organizations, and if not headquarters for staff, a market for capital flows.

One may ask why Singapore aims to attract non-profits when Singapore is known more broadly as a moneymaking epicenter. Singapore hopes to attract capital, but it also seeks to diversify the employment opportunities available. Singapore understands that not everyone wants to be a banker or a lawyer, and that it must also offer opportunities for professionals to engage with philanthropy at different intervals of their career. What was not stated was how well this ties into one of the key selling point for foreign professionals, that their spouses can find work here. Perhaps international non-profits also offer the opportunity for dual career families to pursue their professional pursuits, as non-profits tend to provide job opportunities for child-rearing parents who seek balance in career in family and second careers for former executives and bankers seeking to leverage their private sector experience to give back. Non-profits also help build committed and engaged citizens for a more cohesive society: a social goal of Singapore.

Welcoming entities like IIX to Singapore certainly does just that – attracting talented professionals who have embarked upon their second career of “meaning,” the new generation of engaged professionals who seek to “do well and do good,” as well as the highly trained financial professionals (HNWIs, hedge funders, and bankers) influenced by the financial crisis to do more than focus on the bottom line or their own personal bank accounts.

Jurong Island off of Singapore hosts 100 petrochemical companies, resulting from the investment of SG $7bn and a strategy of reclaiming land; a process of creating new land from sea or riverbeds. Imagine the trust required as a foreign business to set up operations in a location, which when sold to you, was not land, but a location in the sea. Thus was borne the petrochemical industry.

Jurong Island 2.0 is now in the works, as Singapore embarks upon developing the world’s greenest island, with close to SG$7mn invested in clean technology. The value proposition is not scale but the development of systems, demonstrating to the world how to do this at the systems level.

Development Lesson #7: The core of Singapore’s success lies in its thorough strategic planning of systems and processes, where Singapore has been careful not to become a “slave of the system”

What seems interesting in Singapore’s approach to Jurong 2.0 is the concept of making the most of the limited resources at hand. Instead of building Jurong Island Part 2, Singapore has focused on how to more efficiently manage this “jigsaw puzzle,” thereby developing opportunities for companies to share resources such as water to reduce cost.

Certainly, Singapore has benefited from being small. Singapore’s size helps it to overcoming the challenges of interagency conflicts that so often thwart development. Singapore’s size and EDB’s strategic planning help to facilitate the collaboration of the government, companies and unions.
Singapore demonstrates that sometimes overcoming challenges is not simply brute force. Singapore consistently turns weaknesses into strengths. Case in point is the city’s approach to water, a resource that until recently made Singapore dependent upon its neighbors. In the past 5 years, Singapore has become the global leader in water resource technology, recently hosting a pre-eminent World Water conference, where billion dollar deals were constructed among participants. Singapore will be self-sufficient in water resources by 2061, and Singapore has developed a world-class technology to recycle water, that has been copied by its neighbors, especially China. It is that long term planning that makes such a strong impression, leading many of us to consider whether we have such a master plan for sustainability in our home countries. And if so, is it as clearly stated as water self-sufficiency by 2061?

The EDB exhibit closes with two presentations: a suborbital travel space plane concept that can transport passengers from Singapore to New York in under 2 hours, and a display of dreams and hopes for Singapore by today’s Singaporean youth. What is interesting about the suborbital travel space plane is the paradigm of design required from current air travel. This requires a shift from the traditional focus on performance (thin walls, compact space, offering passengers “just good enough”) to a focus on longevity. To make this commercial, this technology must focus on the most critical feature in the airline industry: safety. Thus, the design focus becomes providing a transport service that a normal person can withstand (i.e. no need to particularly health constraints or extensive training). A second consideration will be cost, making this affordable to tourists, as the current cost point was listed at $200K per trip.

As we move from glimpses of future innovations and obvious feelings of hope, we consider the challenges that Singapore faces today. Certainly one issue that is top of mind is the aging population, as Singapore is one of the most rapidly ageing populations in the world. One cannot take an MRT (subway) without seeing images of the elderly on posters, and the city’s campaign to reduce the social exclusion facing the elderly as well as the limited long-term care available. Singapore has a plan involving multiple initiatives: (i) increasing the % citizens pay into CPF (“pay as you go” schemes) to increase the savings fund; (ii) moving elderly into units closer to their families; (iii) making the housing facilities (HDBs) elderly friendly, equipping the buildings with wheelchair ramps and toilet rails; and (iv) increasing opportunities to engage the elderly in the workforce and their community (such as reducing the cost for companies to employ the elderly so that their compensation schemes can more accurately match their productivity). Singapore’s strategy to reduce costs for the elderly is quite ground breaking, especially since it is often this cost to cover the vulnerable populations that debilitates nations.

As we reflect upon the learning from Singapore that can be applicable to other nations, we consider the role an institution like EDB could play in other countries. Certainly there is no comparison entity in the US, where most of planning is local at the city and state level. We could consider our own governing bodies and political structures to better understand how to swiftly address our priority social and environmental issues. This suggests the power of crises and short-term shocks to adjust the system. Certainly, Singapore’s experience has a lot to offer, both in its successes and its failures, but most importantly in its ability to turn weaknesses into strengths, never sitting idle at the top, and continually asking how do we make ourselves relevant to the rest of the world.