Fostering a better R&D environment in Singapore
Since the formation of A*STAR in 1991, Singapore has been working relentlessly to develop an economy backed by a robust research and development (R&D) environment. The objective is to develop, own and exploit new ideas and innovations, and to nurture the future generation of knowledge workers in an ecosystem conducive to R&D.
The gains so far are clear: By building up the needed infrastructure, committing billions of dollars to R&D over time, wooing overseas Singaporean scientists home and ensuring a strong intellectual property (IP) regime, Singapore has successfully attracted a number of multinational companies to set up their R&D laboratories here.
Many have entered into R&D partnerships with local researchers at public research institutes and universities, and work in wide-ranging areas such as value engineering and product development.
However, more can be done. There are currently several initiatives for start-ups to get funding, particularly at the early stages of business development. This is important because — with their lack of a track record and inherent risk — traditional avenues of funding, such as regular bank loans, are not open to them.
Even where successful R&D results in the creation of valuable IP, capital is required to exploit and commercialise such IP.
While the IP financing scheme — which allows smaller companies to use IP as collateral against bank loans — has been around since 2014, banks have been cautious in embracing the scheme with IP as the only available collateral.
If Singapore truly wants to be a global IP hub, changes in national policies to address the concerns of financial institutions are necessary, such as helping banks underwrite losses due to IP-backed loans.
Likewise, there is a need to align relevant tax policies to encourage the further development of the R&D environment in Singapore.
For example, the take-up rate for making a claim under R&D within the productivity and innovation credit (PIC) scheme, is comparatively low — less than 3 per cent of total PIC claims. (The PIC scheme is targeted at promoting productivity and innovation through support to businesses that make investments to improve productivity.)
Although the total number of active businesses in Singapore that made PIC claims increased over 2012-2013, the R&D category continues to have a low take-up-rate.