During the Smart Nation Innovations Week held in Singapore in June, Minister for Communications and Information, S Iswaran, announced that the Government has set aside S$40 million (US$29.3 million) to support 5G research and innovation and develop the country as a 5G innovation hub.
Singapore’s thriving tech sector is the product of a range of converging factors. The city-state has a prime location at the crossroads of Asia’s biggest markets, low taxes on businesses, a well-developed IT infrastructure, strong investment opportunities, and robust regulatory regime. Much of the credit for these strengths goes to the Singapore government.
The government approach is to combine business-friendly policies with heavy investment in the tech sector.
It has a continuous commitment to keep research and development (R&D) spending at 1% of GDP and recently pledged to invest S$19 billion (almost US$14 billion) into scientific and technological research as part of its Research Innovation and Enterprise (RIE 2020) plan.
Funding is invested according to a clear digital strategy that Government Chief Digital Technology Officer Chan Cheow Hoe helps devise. Before being appointed into the role in November 2018, Chan was the Government Chief Information Officer (CIO).
Chan leads the development of the Government’s digital infrastructure, and capability and talent development in information and communication technology and smart systems. Concurrently, the Government Technology Agency (GovTech) helps deploy public sector IT solutions and develop new talent and capabilities.
A number of government agencies have also been established to support new businesses, including the Economic Development Board (EDB) and the Standards, Productivity and Innovation Board.
Recent innovations include the National Digital Identity (NDI) project, which has already been trialled is meant to be completed by 2020. The NDI will adopt a centralised biometrics identification system and will hold biometric information from Singaporean citizens, including fingerprints, iris and facial and voice records.
Under the centralised NDI system, citizens will only need to register their biometric information once, thus avoiding multiple enrolments for different services.
Other government initiatives include the launch of an unified QR code payment system or implementing legislation and infrastructure for autonomous vehicles (AVs), placing it at the forefront of countries developing the AVs industry.
Singapore’s tech ecosystem
The country is best known for its fintech landscape and the MAS (Monetary Authority of Singapore) has set aside $225 million (US$165 million) to develop the sector over the next five years, but the government has also pushed to diversity the startup ecosystem.
The government is particularly keen to create an artificial intelligence (AI) hub in the country by developing a dedicated data science consortium and will invest S$150 million (US$110 million) in industry research.
“Firstly, it’s about diversity … other Asian cities like Tokyo are also trying to be AI hubs, but they are more homogenous,” Joel Ko, co-founder and chief executive of Marvelstone Ventures, explained to South China Morning Post. Singapore’s advantage is that it is welcoming to all, and there is strong government support,”
Startup Genome’s Global Startup Ecosystem Report 2018 listed Singapore as one of the world’s ecosystems to watch for AI, blockchain, advanced manufacturing and robotics, and health and life sciences, as well as in its renowned fintech sector.
The government’s approach is not without its issues. Its allocation funding allocation has been criticised for imprudence and corruption and Singapore has earned a reputation as an easy place to start a business but a difficult one to scale it.
In 2017, the National University of Singapore Entrepreneurship Centre (NEC) completed a two-year study on high-tech startups in the country that revealed precious few businesses were generating fast and profitable growth, while 56.8 percent of startups were struggling to scale and generate employment.
However, their five-year survival rate of 53 percent was better than companies in the UK and the US, which suggests that they receive the support to keep going but aren’t taking the risk to make big breakthroughs.
NUS Enterprise director Dr Wong Poh Kam told Tech in Asia during a roundtable interview that some of the money spent on research should be redirected into building products.
“There’s a no man’s land where the work can’t be funded as research anymore but there’s no product ready for market,” he said. “We spend so much money in research but perhaps we should be thinking about diverting some of it into translation.”
Singapore also faces threats from international competitors. The country surpassed its arch-rival Hong Kong as the region’s most attractive business base after the territory returned to Chinese control in 1997 and had to compete with cities in the mainland while losing its international appeal to talent, but growing Chinese investment into Hong Kong is creating a new challenge.
There’s still room for optimism about the Singapore’s digital future. The government remains committed to the tech sector as evidenced by the policies and investment that it has recently announced.
“Government leaders have been outspoken digital champions,” said Diaan-Yi Lin, senior partner and managing partner, Singapore at McKinsey & Company. “Few governments have had their leaders align themselves with digital efforts as closely and visibly as Singapore’s.”
Additional reporting by Cristina Lago