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S’pore’s future rests on its evolving economy

Singapore is a curious sovereignty in that it and its economy can and perhaps should be treated as indivisible. It was founded in 1819 for economic reasons, and without its thriving economy today it would be hard to imagine that its heterogeneous and complex society can remain cohesive.

The new Robotic Bottle Dispensing system in the emergency pharmacy of KK Women’s and Children’s Hospital. Robotics, augmented reality systems and cognitive systems will be the game changers of the coming decade. TODAY FILE PHOTO

The new Robotic Bottle Dispensing system in the emergency pharmacy of KK Women’s and Children’s Hospital. Robotics, augmented reality systems and cognitive systems will be the game changers of the coming decade. TODAY FILE PHOTO

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Singapore is a curious sovereignty in that it and its economy can and perhaps should be treated as indivisible. It was founded in 1819 for economic reasons, and without its thriving economy today it would be hard to imagine that its heterogeneous and complex society can remain cohesive.

So, it is pertinent to look at the road ahead for Singapore’s economy to find answers for the future of the country. The long-running plan to move to a productivity-based growth economy has not made much, if any, progress. Yet that strategy is nevertheless the correct one — we just massively underestimated the time it would take.

Productivity improvements are a function of better ideas and processes. Local firms have shown to be capable of marginal improvements, but not so successful at big-jump advancements.

The focus has been on competitiveness, so grants and subsidies have been generous in this direction. What we need, however, is more competition — the best stimuli for productivity and innovation.

Robotics, augmented reality systems and cognitive systems will be the game changers of the coming decade. They will increase productivity, and, at the same time, substitute manpower with technology, so some classes of jobs will disappear.

The major impact on the labour force will come not in technological substitution of manual labour as has historically been the case in manufacturing, but in the substitution of cognitive labour: Professional functions being automated by adaptive, learning and decision-capable technology.

Occupations that are at risk of being made redundant include frontline staff, such as bank tellers and travel agents, as well as middlemen positions — insurance and property agents, supply chain managers and auditors.

Singaporeans need to be hungry in, not angry at, their circumstances. We are in a good place socially, economically and financially. However, these very comforts can discourage risk-taking, which is a necessary driver of innovation. Future cohorts of students entering the workforce need to move away from thinking of their career exclusively in terms of predictability, and embrace uncertainty.

But not all innovation is equal or consequential. For instance, opening a cafe with a different design or motif does not constitute innovation or even a meaningful economic value-add.

What we need is genuine innovation as well as scientific or technological breakthroughs in strategic and scalable areas such as in engineering, sciences, financial services and in software application.

Singapore cannot continue as a planned economy. The Government has to accept that the future will be characterised by less predictable, more chaotic and continually evolving ground-up economic restructuring. This needs more nimble Government responsiveness, less red-tape and fewer top-down agency interventions.

Singapore has to adapt to ensure its relevance to the global economy. Traditional industries such as maritime, logistics, tourism and manufacturing will continue to be evident in the economy, but much less so. To soak up the numerous graduates and have a large high value-added base for the economy, Singapore will become a services-configured economy, similar to the development of most advanced economies.

The Department of Statistics said the financial and business services already contribute over 20 per cent of our economy. This proportion will increase over time, but what is necessary is to ensure more of these services become even higher-value added.

We need to deepen and widen the human capital expertise in the legal and accounting sectors. This way, we will have the capability and capacity to undertake larger and more complex financial and business transactions.

We need a financial services sector that is geared more towards dealmaking than to wealth management. We also need to nurture homegrown brands in the knowledge-based sectors such as consulting, executive education and advisory services.

This means we need to have an open and mobile labour market so that Singapore has the best human capital to sustain its competitiveness.

 

FIGHT HARD TO GROW

 

Singapore is a contingent economy: We do better only if the global economy does better. However, this does not mean we should be passive. On the contrary, it means that we have to fight even harder to gain a share of what growth potential there remains in a weak global economy.

In addition to deepening skills and undertaking innovation, it means that we cannot wait for growth to come to us. Singaporeans and Singapore firms must be prepared to venture outwards to tap growth in other markets.

There are two important adjustments, both mindset-related, that Singaporeans and Singapore firms need to make. The first is to stop expecting the Government to find a solution for all our challenges. Such an expectation is not only unrealistic, it is also not helpful as it prevents individuals and firms from taking ownership of their own destiny. Second, we must become attuned to continual change as a norm and not fall into the expectation that we have reached a final goal or plateau.

Singapore has done well, but this can easily change. We are like a high-specification bicycle — advanced, efficient, sleek and fast — but if we stop pedalling, then, like all other bicycles, we will slow and eventually fall over.

So, let us keep pedalling, making furious changes of directions and cycling with the view ahead in mind and backwards with nostalgia. We ride the economy to our future.

 

ABOUT THE AUTHOR:

Devadas Krishnadas is chief executive of Future-Moves Group, an international strategic consultancy and executive education provider based in Singapore.

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