Pulling the (virtual) world to Singapore

Apart from changing the way we create, connect, communicate and consume, the Internet has brought about dramatic shifts in how businesses compete, underpinning wave after wave of fast-growing companies that create a slew of intelligent software and networked machines.

These are displacing an increasing number of jobs in offices, factories and even on the road. Jobs are being polarised not just in Singapore but also in other advanced economies. To make matters worse, the network effects of the Internet encourage winner-takes-all outcomes, with a handful of companies making most of the profits. Today, we are faced with the Internet Condition — a new paradigm where such companies transcend geography and sovereignty, with some becoming more powerful than countries.

In 2015, Facebook’s 15,879 employees generated revenues of US$17.9 billion (S$25.7 billion) while Google’s 61,814 employees generated revenues of US$74.5 billion. Combined, the two behemoths have a “GDP per capita” exceeding 20 times that of Singapore. Eight of the biggest United States technology companies, accounting for more than a fifth of the US$2.1 trillion in profits that US companies hold overseas, added US$69 billion to their cash hoard in 2015.

In comparison, the Singapore Government had an operating revenue of S$64.16 billion and over 146,000 public servants.

Singapore’s economic restructuring has entered its next lap with the formation of a Committee on the Future Economy. But this in itself may not suffice in transforming Singapore’s economy as our world moves beyond the Internet to the Internet-of-Everything.

Singapore needs to nimbly refashion itself to benefit from this technology-accelerated paradigm shift. The Internet, an interplay between Capital and Data, is a stateless and potentially chaotic global commons where rule of law, equality, and general good sense do not always prevail. Some free software and services are not actually free, as they often result in the service providers obtaining and monetising the valuable personal information of users.

The cross-border distortions brought on by such witting and unwitting trades will not be accurately represented by a national statistic such as the Gini coefficient, which measures distortions between capital and labour.

Currently, governments can address income inequality arising from existing distortions through transfers. However, Internet-exacerbated gaps create natural monopolies in a virtual world. These do not require a physical presence in-country to generate revenues, and do not necessarily contribute meaningful tax revenue to their foreign markets.

Google made £6 billion (S$10.8 billion) in profits from the United Kingdom in the decade after 2005, but paid less than 3 per cent in taxes. Granted, Google had contributed non-tax value to the UK economy by investing £1 billion to build a 5,000-employee office in London, but not every country will be as fortunate.

The case for a more Internet-oriented dimension to Singapore’s restructuring efforts is clear when one considers the massive opportunities latent in the fact that two-thirds of the world’s 7.4 billion people remain disconnected from the Internet, and are more likely to get online through either closed platforms by Facebook or Google, or open-source initiatives by the likes of Mozilla Foundation.

Facebook launched Internet.org in 2013 alongside Samsung, Ericsson, MediaTek, Opera Software, Nokia and Qualcomm to provide affordable Internet access to all. That same year, Google announced Project Loon to provide Internet access to remote areas through high-altitude balloons. Despite declines in recent years, Mozilla’s Firefox browser remains the third most popular browser on desktops and mobiles in the world.

It is easy for governments to distrust the chaos of the Internet or seek to control it; it is intrinsically anarchic. Yet there is no reason Singapore cannot learn from these companies and organisations to embrace the principles of the Internet itself — collaboration, sharing, transparency, and empowerment — and augment our traditional twin economic “actors” of Capital and Labour with Data.

The Smart Nation effort is an important first step, but we can do more, quicker and better; and offer platforms that not only improve the lives of our people and spur commerce and innovation, but also strengthen Singapore’s thought leadership and international stature.

Citizens around the world rely on government-issued documents for proof of identity. Our Government could consider developing a framework for a nationwide digital identity and payments platform that compete with existing solutions by the likes of Apple, Google, Facebook and WeChat.

For instance, Singapore could update SingPass, the Government’s online tool for access to local e-services, to employ a combination of block-chain-based Public Key Infrastructure, user behaviour monitoring and multi-modal biometrics (such as voiceprints, facial and iris recognition) for more robust user authentication and fraud detection.

A more secure SingPass with the potential to substitute the need for in-person identity checks could serve as a robust gatekeeper to MyInfo, and catalyse the adoption of SingPass and MyInfo not just in public e-services, but also in banking and payments, both on our shores and beyond.

This can equip Singapore to not only serve its resident populace well, but also give our country the ability to reach out to overseas Singaporeans while inducting e-citizens — aspiring businessmen, foreign workers, emigrants, and individuals abroad — who want to invest, interact or associate with “virtual” Singapore.

Singapore can then build a national “operating system” around the SingPass-MyInfo core that manages, stores and permits appropriate access to data gleaned from the tens of millions of smart objects embedded throughout our homes, neighbourhoods and work places.

While working towards widespread adoption within Singapore, our Government can leverage upon the Smart Nation-inspired execution to drive international conversations around the ethics, regulations and standards for similar implementations in other countries; partially open-sourced, with the remainder rebuilt locally due to local conditions or data and security concerns.

Over time, this could create an online federation of e-national identities that, when linked to an individual’s e-identity and database, could permit quicker, easier and more transparent immigrations and customs activity.

An Applications Programming Interface — a set of protocols that allow apps to talk to one another across different services and technology platforms — could be provided for the same system.

From this, a national or regional online developer community could be fostered and encouraged to develop its own applications, thereby spurring innovation and lower cost.

Conceptually, this is no different from how Singapore courted multi-national corporations and their technology and investments during the industrialisation years of 1970s–90s. However, instead of attracting capital and offering labour, Singapore needs to offer a firehose of data to appeal to future value creators. We urgently need to skate away from our physical waterways of today, towards the digital river pucks of tomorrow.

Our past was built on intelligent and audacious risk-taking. We will need similar courage in the future. Our next phase of evolution will need us to exert a virtual “pull” on the world, rather than pushing ourselves onto and into it.

ABOUT THE AUTHOR: James Chan is founder and executive chairman at Silicon Straits, a technology-focused innovation firm with operations in Singapore, Vietnam and Indonesia. He has been involved in the technology, media and telecommunications industry in public and private sectors since 2006. This article was adapted from another piece which first appeared in The Birthday Book 2016, a book of essays by 51 different authors on Singapore’s Next Big Thing.