- The Straits Times, Jul 10 , 2004

Five years since the Government launched its technopreneurship drive, how far has the country come? At a gala dinner for entrepreneurs last night, Deputy Prime Minister TONY TAN gave his assessment and suggestions on what to do next. In 1999, the Government initiated a major effort to encourage entrepreneurship in Singapore by launching the Technopreneurship 21 (T21) programme. In the past five years, we have followed up with many other initiatives. The latest is the Action Community for Entrepreneurship (ACE), a private-sector-led movement that is supported by the Government, which again emphasises the importance which the Government attaches to encouraging entrepreneurship. Why is the Government so concerned about this issue?

There are compelling reasons:

First, economies with higher entrepreneurial activity levels experience higher growth rates. This correlation has been established by international studies. For instance, the Global Entrepreneurship Monitor found that entrepreneurship accounts for up to half the difference in growth levels between nations. The Indiana University Institute for Development Strategies has also found that high economic growth and entrepreneurship sustain each other in a virtuous circle.

Second, entrepreneurial activities lead to job creation. This is because when new products and services are developed, new positions will be created to produce, sell and deliver them. Typically, small and medium enterprises (SMEs) generate the bulk of employment opportunities in both developed and developing countries. In Singapore, SMEs employ half of our workforce. They also accounted for 57 per cent of the net jobs created between 1990 and 2000.

Third, an economy with a high level of entrepreneurship is more able to cope with changes and is more resilient to the ups and downs in the business cycle. The United States is a prime example of an entrepreneurial economy, characterised by a high churn of new companies. Many of the most successful companies in the US, such as Microsoft and Dell, were created within the past 30 years. These relatively new companies are more adaptive to changes in the global markets and help the US to recover more swiftly from economic downturns. In comparison, the Japanese and European economies are less entrepreneurial. Their economies have also been slower to rebound from slumps.

ACE, together with the Government, has sought to build on the four main prongs identified by the T21 Ministerial Committee as critical for entrepreneurship to flourish:

* Education
* Financing
* Regulations
* Facilities.

CULTURE OF INNOVATION

THROUGH education, we wanted to bring about a change of mindset. We wanted to infuse Singaporeans with a culture of innovation and enterprise. In recent years, our schools have revamped their curriculum and teaching approach. There is now more flexibility and variety. Students are challenged not to accept established ideas at face value but to think about issues critically and creatively. There are also many opportunities for students to get exposure to business and entrepreneurship. For instance, students can choose to join the BizWorld programme sponsored by Draper Fisher Jurvetson, or participate in business plan competitions such as Startup@Singapore. Students can also seek attachments to start-ups in entrepreneurial hot-beds such as Silicon Valley.
Good business ideas cannot blossom without financing.

 

Under T21, we established the US$1.3 billion (S$2.2 billion) Technopreneurship Investment Fund (TIF) to draw more venture capital activity to Singapore. Today, about $16 billion in venture capital funds are managed out of Singapore by more than 150 VC firms. The Economic Development Board Start-up Enterprise Development Scheme (Seeds) has also co-invested in more than 100 innovative and high-tech start-ups. Later this year, we will launch a loan securitisation programme to help SMEs tap funds from the capital markets. The Government is now in the final stages of appointing a financial institution to structure and manage the programme.

REMOVING RED TAPE

FOR entrepreneurial activities to thrive, we must ensure that government regulations do not hinder businesses unnecessarily. We started a review of rules and regulations in 1999 to remove obstacles and red tape. Today, this process has been institutionalised with the establishment of the Pro-Enterprise Panel (PEP), which is chaired by the head of the civil service. Since its formation in August 2000, the PEP has reviewed over 1,200 suggestions from businesses and has accepted about half of these. I encourage the private sector to continue channelling suggestions for rule changes to the PEP.

To reinforce an enlightened regulatory mindset in government agencies, we will introduce two new initiatives. First, an annual survey of regulatory agencies' pro-enterprise orientation. Businesses which deal with regulatory agencies will be polled on the agencies' performance in five areas:

* Compliance costs
* Review of rules
* Transparency
* Customer responsiveness
* Overall pro-enterprise orientation.

The aim is to help regulatory agencies better understand their customers' needs and perceptions. It will also enable agencies to identify areas that need improvement. The inaugural survey was carried out in May. More than 1,000 businesses were polled on the performance of 25 government agencies. To recognise the best-performing agencies, ACE will give out awards to the five top scorers later this evening.

Second, a framework for government agencies to recognise 'first movers'. Currently, when an agency accepts an idea on innovative usage of a public asset, it will tender out the asset according to the proposed usage. All interested parties, including the entrepreneur who proposed the idea, have to tender on an equal basis. This is to ensure transparency and that the state receives good value for its assets.

While this approach is prudent, the entrepreneur's contribution is not recognised. The Government has reviewed its approach. We will introduce a new framework to give agencies the discretion of granting first movers an advantage in the allocation of physical assets. The advantage will vary, depending on the idea contributed and asset concerned. However, the underlying principles of open and market-based competition for public assets will remain. The Ministry of Finance aims to formalise this framework by October.

CONDUCIVE FACILITIES

ENTREPRENEURS also need easy access to conducive facilities where they can grow their businesses. We have facilitated the set-up of business incubators which provide 'plug and play' environments for start-ups. We are also developing One North at Buona Vista as a hub for entrepreneurs, innovators, researchers and venture capitalists to live, work and interact. In 1999, we introduced the Technopreneur Home Office Scheme to allow approved technology businesses to be run out of residential premises.

In June last year, the Urban Redevelopment Authority and HDB liberalised the scheme to permit a larger range of business activities. As at end 2003, they had approved more than 7,000 home office applications. All these initiatives are important and will continue. But we need to ask ourselves, what more can and should be done?

Based on my discussions with entrepreneurs, I suggest our future efforts should focus on three areas:

First, we need to develop a healthy mix of large and small enterprises in Singapore. Historically, Singapore's economic growth has been fuelled by investments from multinational companies (MNCs). The competition for investments has stepped up significantly in recent years, especially from low-cost countries with large domestic bases like China and India. This has made it more expensive to attract the multinationals. MNCs will remain important to our economy but, going forward, we need to diversify our economic strategy by developing Singapore-based start-ups and SMEs. To do this, we should ensure that conditions are conducive for start-ups and SMEs. We should level the playing field and remove system biases that work against smaller players. By having a vibrant and healthy SME sector, we will produce a pipeline of high-impact entrepreneurs and ultimately multinational companies grown out of Singapore.

Second, the Government should accelerate the development of commercialisable ideas by financing R&D on liberal terms. In the US, there are many state-funded initiatives, such as the Small Business Innovation Research programme, which fund intensive R&D by universities and SMEs.
The Singapore Government has also funded R&D at universities and research institutes. But the key difference is innovators in the US are allowed to hold the patents to any intellectual property that is developed. Many have started successful businesses based on state-funded research. These have contributed back to state wealth in terms of taxes and jobs created. Singapore can jump-start the emergence of high-impact entrepreneurs by replicating the US model and stepping up research activities, particularly at our universities.

Third, we need to grow a larger pool of entrepreneurial talent in Singapore. We must succeed in encouraging more Singaporeans to choose entrepreneurship as a desired career option on par with the traditional preference for a job in an MNC or the civil service. This depends on Singapore developing a societal culture that encourages entrepreneurs, not just celebrating the winners but also encouraging those who fail not to give up but to try again. The Government can help by providing incentives such as the recent tax incentives for start-ups, and by releasing more talent to the private sector.

 

We should also look to complement our domestic talent pool by attracting the best foreign entrepreneurial talent to set up business in Singapore. Last October, the Government introduced the Entrepass Scheme, which allows foreign entrepreneurs to enter on the basis of their business plan instead of salary and educational qualifications. This was a step in the right direction. We should consider how we can make conditions even more conducive for high-calibre foreign entrepreneurs to come to Singapore and sink roots - both financial and emotional. To create an entrepreneurial society is a long-term process. But if we continue with our efforts and constantly think of new ways to achieve our objective, I am confident we will succeed.

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