Thoughts on PM’s Rally Speech 2006: Resurgence of Singapore Inc.

Last Sunday, our Prime Minister delivered his rally speech for the workyear of 2006. He discussed our current progress and a possible roadmap on the Singapore economy. While spending the last two days reading, listening and thinking over the main points of the speech, I realized that something that was amiss in his speech. The keywords “entrepreneurship”, “enterprise” and “entrepreneurs” did not appear anywhere at all in the speech. In this commentary, I shall deconstruct the portions regarding the economy from his speech and discuss the implications from the revival of the Singapore Inc to entrepreneurship.

In a short summary, the theme for the PM’s rally speech 2006 is the issues of long term growth and prosperity for Singapore. The five central issues from his speech revolve around (i) the economy, (ii) the region, i.e. the dynamics of things happening around other countries, (iii) the declining population and efforts to rejuvnerate it, (iv) the digital age and a revisit to his famous Harvard speech and finally, the heartware which we need to forge in order to sustain a strong Singaporean identity. Together with my colleague, Hui Chieh in Singapore Angle, we made some predictions by projecting the contents of the rally speech straight from the National Day message. This commentary will serve to do part of the post mortem (as I will write a second part in Singapore Angle that concentrates on the other aspects of the speech), but the key focus is on the economy and reading in-between the lines that the lack of mention for the word “entrepreneurship”.

What does that mean to us? All this lead to one message, that is, the resurgence of Singapore Inc. From the viewpoint of the government, the economy was undergoing a transition from one manufacturing industry into another. Traditional electronics and semi-conductor industry have left our shores. While keeping our core competency in the areas of shipping (for example, trans-shipping in PSA) and finance (with the relaxing of financial regulations and introduction of more complex financial instruments in the coming years), the government took a new direction in the knowledge-based economy and narrowly defined the three areas of innovation that they are going to concentrate: biomedical sciences with a slant towards translational healthcare, water technologies and digital media. On the sideline, our Integrated Resorts (IR) has brought in a foreign investment of US$5B from Las Vegas Sands. One must realize that there is also an interesting change in the government’s decision tree. They have given the tender to a bidder that did not work with any government linked companies. Is this a sign that they have decided to open up the Singapore market a bit more? We will have to see which group will win the second bid for the Sentosa IR project. The Marina Bay IR project has created 30,000 jobs. It is not a trivial number, if you factor in the demand of the transport services and other companies linking that will benefit from a new project. Of course, the IR has created a distortion in the land prices. We are experiencing an increase in the real estate price for the areas close to the development area. Together with new projects coming in, for example, Shell, Exxon Mobile and two unmentioned French and Korean-German venture in the electronics industry, the demand for workers will once again rise.

Here is an educated guess to why entrepreneurship is not mentioned. The government’s job is to ensure that the jobs will be taken up by the workers in these industry. With such a high demand, entrepreneurship can take second place. One interpretation is that entrepreneurship is the “Second Foundation” of the Singapore economy. The creation of enterprises will step in if outsourcing of jobs moves away from Singapore to somewhere else. That also means that there might be less funds injected towards startups from the various government organizations unless it falls within the three innovation categories that was mentioned in his speech. Starting up new enterprises has now transitioned from a necessity to an option with the resurgence of the Singapore Inc. In all fairness, the government has done a good job in making the transition. However, we must see beyond this coming boom phase of the business cycle.

Intrinsically, he mentioned entrepreneurship with a few passing examples. He stressed the need to be global, for example, the family business that sells curry puffs from Singapore to Shenyang, China and also how the government has helped companies to go global. It gives the warning message that in order for entrepreneurship to succeed, the Singaporean entrepreneur must make an early entrance into the global market. Yet, one will also ponder whether our youth will take the resurgence of Singapore Inc as a comfort zone and not make preparations to the future when the down cycle comes.

My worry is not on the older workers, as illustrated in his speech clearly,

We also want older and lower-skilled workers to have jobs. We are creating jobs generally in the economy, across the board, but specifically, we have to pay attention to older, lower-skilled workers, get them employed. I am very encouraged because with a growing economy, companies are hiring and maybe they have no choice, maybe they are getting the message, but they are hiring more older workers. And if you look at the employment rates, the percentage of older people working, the men, aged 55 and above, say 55-64 years old, the group who are most vulnerable and at risk of being retired early, their employment rate has gone up dramatically this year. A lot more of them are at work again, which is good. But we must not slacken, because, as [Lim] Swee Say reminds me, we’ve gone through this cycle several times. Each time there is a down-cycle people treat training, upgrading very seriously, then the economy recovers and they slacken off and they find jobs, then down-cycle they are scrambling again. I think that this time is an up-cycle, while there are good jobs let’s concentrate on the older workers, let’s get them retrained, because I fear when the next down-cycle comes it’s going to hit them harder, and we’re going to need all the lead time we have in order to be ready for it and be able to protect the older workers in the next recession. - PM Lee Hsien Loong, rally speech 2006

Since I am not the policy maker and I may not be able to champion issues, I would urge that there is an alternative track to develop and retrain the young generation of workers, particularly, those in the lower income gap. The entrepreneurship track must not seen to be just starting up new companies, but an attempt to help the Singaporeans to fend for themselves in times of economic recession. Here is how I will support my argument, by using an opportunity which we missed in the booming cycle in the 1990s with the electronics manufacturing. Singapore missed the chance of being able to innovate the semi-conductor by developing the manufacturing hub but not the innovation hub. That led to a bureaucrat from EDB to construct a biomedical research facility while attracting biologics manufacturing into Singapore. The rule is to being able to innovate, but not many people realize that it is a measure which has to be put in place to take our brand to MNC level. Now the trick is to manage the growth of innovation, and it is a different ball game. Innovation is a high risk game, but if being pushed in the right direction, it can generate opportunities that will create the first Google or Lenovo. Lenovo is a good example of a company that came from a government research institution and became a success story by being able to bend around the bureaucracy and chaotic times in China.

Personally I feel that it is not a bad thing to not mention entrepreneurship in the rally speech. After all, entrepreneurs want to shake off less government intervention as much as they can. With this new-found freedom due to the resurgence of the Singapore Inc, it is perhaps time for the entrepreneurs and facilitators of entrepreneurs to work out their roadmap and be ready for the next down cycle of the economy.

Editor’s Note: The opinions expressed are strictly of my own and do not represent the organizations which I work for.

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