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Singapore’s Economic Development: Economic Development Board

INSEAD Policy Seminar

20 June 2011

710.3 km2, 63 offshore islands

Singapore area is1.05% of Abu Dhabi

New York City 786 km2

Abu Dhabi 67,340 km2

Singapore location: http://www.gov.sg

• Southern tip of Malaysia

• Was in Malaysia 1963-1965

• One-degree north of equator (one-north science parks, like twofour54)

• 710.3 sq km, offshore islands including

–Jurong joined up of 7 islands

–Sentosa for tourism like Saadiyat

5-point introduction

1 Chewing gum story

• Ban 1992, revised 2004 & 2010

• Only therapeutic liquorice-nicotine oral & dental chewing gum

• Singapore “fine” city

• Precision city-state, notoriety price

2 Casinos: Integrated resorts

Marina Bay Resort

Another integrated resort on

3 Water scarcity to 4 national taps

• Imported Malaysian water

• NeWater

• Desalination

• Marina Barrage & reservoirs (two-thirds of total land area as 712.4km2)

10,000 hectares, or one-sixth size of Singapore

4 Land scarcity to Jurong Rock Caverns

• Underground oil storage (60 hectares)

• Subterranean below seabed

• Liquid hydrocarbons, crude, condensate & naphtha

• Safety & security

5 Population policy

• Stop at 2, have 3 or more, if you can afford it

• Fertility rate 1.16% 2011 vs 2.1 replacement

• Singapore residents

• Permanent residents

• P Q R criteria

• Racial equation 77:14:8:1

Basic statistics, 2009 & 2010

Land area (sq km) 710.3 712.4Total population (‘000) 4,987.6 5,076.7Singapore residents (‘000) 3,733.9 3,771.7Population density (per sq km) 7,022 7,126Median age (years) 37 37Literacy rate (%) 96 96Mean years of schooling 9.7 10.1Home ownership (%) 88.8 87.2Doctors per 10,000 population 17 17Crime rate 665 650(per 100,000 population)

Trinity of basic needs

EDB for jobs

CPF for social

security

HDB for housing

Central Provident FundHousing a Healthy,Educated & WealthyNation

Housing &Development Board

Basic statistics, 2009 & 2010

GDP (S$ billion) 266.7 303.7

Per capita gross

national income (S$) 52177 57603

Real GDP growth (%) -0.8 14.5

Productivity growth (%) -3.4 10.7

Inflation rate (%) 0.6 2.8

Source: http://www.singstat.gov

EDB proactive origins 1960

Investment promotion

Industrial financing

Industrial estates

Contrarian to fear colonial imperialism

Not just real estate play

Long gestation for profitability

EDB for jobs

• S$100 million seed capital

• Tasked for job creation

• Population growth

• Postwar baby boom

• Migration from China, India, Malaya

• Unemployment

EDB incentives

• Pioneer status, tax holidays

• Expansion tax incentives

• Export tax incentives

• Accelerated depreciation for technology

• 100% ownership for land & companies

• Joint-government training centres

• Skills Development Fund

EDB industries

Labour-intensive

• Textiles & garments

• Food & beverages

• Printing & publishing

• Other consumer products

High capital, technology

• Basic iron & steel

• Petrochemicals

• Metal, machinery

• Precision equipment

Industrial policy

• Picking winners

• Direct foreign investment DFI

• Multinational corporations MNCs

• Promising local enterprises PLEs

Singapore Inc

Govt linked companies

Promising local companies

SMEs

Government

Statutory boards

EDB spin-off 1968

EDB

Development Bank of

Singapore

Jurong Town Corporation

DBS Group

Next stage of industrialisation

• High value-added

• Skill-, capital-, technology-intensive

• Export-oriented industries (post-1965)

• Petrochemical to specialty chemicals

• Precision to electronics (consumer to industrial semiconductors)

Regionalisation policy

• Second wing• SIJORI: Singapore-Johor-Riau Island (Batam)• Other ASEAN growth triangle• Cross-border production networks• Industrial parks

–Batam– Suzhou–Bangalore–Vietnam

Uniquely Singapore

• Proactive whole-of-government

• Multi-tasking ministers, chairmen, PS21

• Cross-, joint-directorships

• Ministry of Trade & Industry, MTI family

• #1 in World Bank Doing Business

• #1 in World Competitiveness Yearbook until 2011

Jurong Town Corporation

International EnterpriseFormer Trade Development Board

Agency for Science, Technology& Research A*STAR

Singapore ProductivityInnovation & GrowthEnergy Market Authority

Singapore Tourism Board

Vision A Global Leader

A Great CityA Home in Asia

For Business, Innovation and TalentMission: We create for Singapore, sustainable

economic growth with vibrant business and good job opportunities

Values: Care, integrity, team, imagination, courage, excellence and nation

EDB Organisational Structure

EDB now

• EDB Advisory Council

• EDB Investments: EDBI 1991 as equity investment arm in 270 firms in Biomedical Sciences, Clean Technologies, Digital Media, etc

• EDB Alumni

EDB Alumni

• Training ground• Externalising EDB culture• EDB spin-offs• Ex-EDB staff in new entities • International Enterprise (former Trade

Development Board)• Singapore Productivity for Growth &

Innovation (SRING)

Home for Business

• Global business centre

• Sustainable growth

• Business, job opportunities

• Sharpens strategies to position for future

• Value proposition to business is improve bottom line, grow top line in strategic activities

Home for Innovation

• EDB dreams, designs & delivers solutions

• Creative innovations

• Value chain

• Convergence of industries

• Manufacturing-cum-services

Industrial strategy & value chain

R&D Product development

Process engineering

Manufacturing & production

Marketing & distribution

Home for Talent

• Permanent residency

• Vibrant, dynamic lifestyle

• Attract global talents

• Schools (English 1st language)

• Hospitals

• Recreation & entertainment

3 key elements

1. 1-stop agency for foreign investment

2. Grow industry verticals, global leadership, new growth areas

3. Pro-business environment

EDB is compass to future

World•Singapore new growth formula

• Singapore-to-World, World –to-Singapore

• Trust, knowledge, connected & life as strongly competitive

• World-class business environment, viable long-term projects

EDB is compass to future

Future•Singapore• Future in

Singapore, Singapore in future

• New creations, innovations, products, services, technology

Own solutions as business growth in

Urban solutions

LifestyleAgeing,

healthcare & wellness

Today’s partner, tomorrow’s solutions

• Challenges of tomorrow, influence what business needs to do today

• Explore future business trends

• Partners some of world's leading companies finding ingenious solution

• Log on to Future Ready Today to see Who’s Who as partners

• A*STAR 14 biomedical sciences, physical sciences and engineering research institutes

• A*STAR 6 six consortia and centres in Biopolisand Fusionopolis

• A*STAR 3 types of capital, human, intellectual and industrial

• A*Star Graduate Academy

• A*Star Joint Council

• A*STAR: 3 subsidiaries for commercialisation

• one north world-class research hub

• Business shared facilities

• Great place to work, live & play

• Biopolis & Fusionpolis

• Great minds come together to do great science

Biopolis

• Biomedical

• Biotechnology

• Agrobiology

• Engineering

• Universities, technology corridor

• A*Star institutes

Fusionpolis

• Information communication technology

• Media

• Broadcasting

• Solutions for e-business, e-commerce

• Intelligent city

• ONE = One Network for Everyone

• Fibre optics, broadband access

Convergence in value chain

Infrastructure

Service TerminalContent

Enduser

Broadcasting

Telecommunication

IT & other media

Convergence

Convergence mania wirelessly

• Mobility

– Global, 24/7

• Nomadic

– Simple to enabled networks

– Open communication architecture forum

• Sensor

– ICT, telecom

Wireless is now the mainstream for access

• 1983 TDB to International Enterprise

• TDB-IE Society• Exporter Development Programme

(EDP) • Branding• Local Enterprise and Association

Development Programme (LEAD) • SME Market Access Programme

(SME MAP) • International Market Immersion

Programme (iMIP) • Internationalisation Capability

Development Programme (iCDP)

Connectivity

CapitalCompetency

Competitiveness Reports

• WEF since 1979

• Ranks 139 countries

• EDB as partner institute

• IMD WCY

• Ranks 59 countries

• MTI as partner institute

1. Switzerland 5.63 2. Sweden 5.56 3. Singapore 5.48 4. United States 5.43 5. Germany 5.39 6. Japan 5.37 7. Finland 5.37 8. Netherlands 5.33 9. Denmark 5.32 10. Canada 5.30 11. Hong Kong SAR 5.27 12. United Kingdom 5.25 13. Taiwan 5.21 14. Norway 5.14 15. France 5.13

16. Australia 5.11 17. Qatar 5.10 18. Austria 5.09 19. Belgium 5.07 20. Luxembourg 5.05 21. Saudi Arabia 4.95 22. South Korea 4.93 23. New Zealand 4.92 24. Israel 4.91 25. United Arab Emirates 4.89 26. Malaysia 4.88 27. China 4.84 28. Brunei 4.75 29. Ireland 4.74 30. Chile 4.69

• Consistently topped BERI

• Maintains top rank in BERI Labour Force Evaluation Measure

• Quality of Workforce Index

• Global talent policy

Other growth engines

• Financial centre

• Tourism gateway

• Education hub

• Medical services

• Global media city

• Urban Redevelopment

• EnterpriseOne

Why Singapore?

Financial hub by accident?

• Asian dollar market mimicked Euro-dollar

• London Astbury Marsden recruitment firm, 2011 Monster Employment Index for Singapore leads in creating financial jobs next 12 months, overtaking London

• Technocrats in Monetary Authority of Singapore read US Dodd-Frank financial-regulation act, for opportunities to create

Growth prospects

• GDP growth from -0.8% 2009 to 14.5% 2010

• Ministry of Trade & Industry MTI expects GDP growth of 5.0 to 7.0% in 2011

• Quarter1 2011 GDP 8.3% & CPI 4.5%

No paranoia of foreign ownership

• Convinced same in Batam Industrial Park

• Migrant society, Permanent Resident

• Qatari Diar bought Raffles Hotel from Kingdom Holding, Prince Alwaleed

bin Talal bin Abdulaziz Al Saud

• Chartered Semiconductors Industries now Globalfoundries

Whither KBE Singapore?• Small, open city-state, big problems

• Physical vulnerability

• Limits to growth

• Plan or proactive to scenarios, future

• Neighbourhood contagion, global crisis

• Economism first & last

• Government-knows-best, private sector-knows more

• Regulator to facilitator