Speech by President S R Nathan at the Bluesky Festival Gala Dinner

Minister Vivian Balakrishnan
Minister of State and ACE Chairman, Lee Yi Shyan
Distinguished overseas delegates
Ladies and gentlemen

 
1.         It gives me great pleasure to welcome you to the BlueSky Festival Gala Dinner at the Istana this evening.  And to our friends from overseas, a warm welcome to Singapore.

ENTREPRENEURS AS GROWTH ENGINES

2.         In today’s innovation driven world, entrepreneurship is critical for economies to flourish.  Economic dynamism is no longer determined by the size of markets and the amount of physical factors of production, but by the innovative capacity of nations, from which valued products and services are created to meet global demands.

3.         Nokia is an excellent example.  With almost 35% share of the world’s mobile phone market, it represents the best in class in mobile telecommunication equipment.  Nokia originates from Finland, a country of just over five million people.  Probably lesser known, but equally world class, is Kone, also a Finnish company with a global presence.  It is a world-renowned manufacturer of elevators and escalators.  Small countries are not necessarily disadvantaged where innovation and technology exploitation is concerned.

4.         To enhance an economy’s innovative capacity, entrepreneurship needs to be a key feature in a country’s national agenda for growth and development.  Entrepreneurs are essential change agents who can accelerate the generation, application and spread of innovative ideas.  As they do so, they expand the boundaries of economic activities.  

5.         In many countries, entrepreneurs are also the source of valuable employment.  Singapore is no exception.  Small and medium enterprises (SMEs) account for more than 60% of jobs and about 47% of value-add in our manufacturing and services sectors.

6.         Historically, the initial base of entrepreneurs in most Southeast Asian countries was large, but probably less sophisticated.  To jumpstart industrialisation, countries had to quickly attract or nurture firms capable of generating a large number of jobs.  Hence, many Southeast Asian countries had in the past relied on MNCs to build up export and manufacturing capabilities.  In turn, this has over time created a good pool of local entrepreneurs supporting the larger companies and providing goods and services for the domestic markets.

7.         Today’s challenges are different.   We are in an era where competitive edge is achieved based on technology and knowledge as wealth creators.  Growth is driven by innovation and not merely efficiency.  Knowledge transcends national boundaries and talent is highly mobile.  Entrepreneurs of the future will need to create their own ideas, translate them into valued products and constantly innovate in order to establish a sustainable foothold in the global economy.

EXPLOITING OPPORTUNITIES TOGETHER

8.         The domestic marketplace today can no longer be insulated from external competition.  The World Economic and Social Survey by the United Nations in 2005 highlighted that since 1990, the number of free trade agreements has risen from 50 to almost 230, with some 60 more in various stages of formation.  Boundaries are opening up rapidly.  To compete in global markets, businesses have to co-operate and connect.  The rise of the mega-economies of China and India present a competitive challenge, but they also present huge potential opportunities for trade and business.  We need to find more ways to connect with them, by creating more linkages for our businesses.

9.         The collective strength of Southeast Asia should not be underestimated.  Together, the major Southeast Asian countries comprise some 450 million potential consumers.  Developing Asia remains the fastest growing region in the world, expanding by 8.6% in 2005 compared to global growth of 4.8%[1].  To harness the growth in Asia, ASEAN can play a pivotal role by opening their respective economies and eventually integrating them.

10.       This is the goal of the ASEAN Economic Community (AEC), targeted to be in place by the year 2020 or even earlier.  The AEC will be a single market and single production base, characterized by free flow of goods, services, investment and skilled labor, and freer flow of capital.  The establishment of an AEC is significant.  It will give ASEAN a bigger “voice” in the world stage.  For entrepreneurs in this region, it means opening up new markets and business opportunities.

IP PROTECTED ENVIRONMENT

11.       Besides networks, intellectual property (IP) is an important factor in fostering creativity and invention, which are the driving forces in a knowledge-based economy.  A business environment that stimulates exploitation and commercialization of ideas encourages ideas churning and greater commercial exploitation.

12.       The protection of intellectual property and IP rights is an integral part of such a business environment.  If there is no robust legal regime to protect inventions from being imitated freely, there is reduced incentive for businesses and institutions to engage in R&D to develop new technologies and products.  The risks of blatant copying undermines the incentives for investments in commercial R&D.  Entrepreneurs competing on innovation and design will shy away from investing in countries that do not respect IP.  From a national perspective, a country will find it hard to leap frog to the next stage of innovation-driven growth.

13.       As world markets become increasingly integrated, the demand for greater conformity among national IP laws will also continue to grow.  We need to put in serious efforts in this respect.  I am glad that ASEAN is also committed to developing a long-term policy to transform the region into a knowledge-based economy.  To this end, the European Commission – ASEAN Intellectual Property Rights Co-operation Programme[2], or ECAP II, specifically responds to the needs of improving IPR administration and enforcement to boost investor confidence.  This is done through a joint EU-ASEAN effort with 9 million Euros of total funding and more than 100 activities organized to date.

ACE AWARDS FOR PRO-ENTERPRISE AGENCIES

14.       Government policies have a huge impact on the growth and promotion of entrepreneurship.  Excessive regulations and rules stifle entrepreneurship and creativity.  Hence, an overriding challenge of government is to harmonize its policies and practices with its pro-entrepreneurship philosophy.

15.       To this end, I am happy to note that the private sector in Singapore is working actively with the government to improve the supporting environment for enterprise.  One important dimension of this work is to streamline rules and regulations for businesses.  The Action Community for Entrepreneurship, or ACE, a movement to promote entrepreneurship in Singapore, conducts an annual pro-enterprise ranking of government regulatory agencies.  This survey of businesses measures regulatory agencies in terms of compliance costs, regulatory obstacles, transparency, customer responsiveness, rules review and pro-enterprise orientation

16.       By conducting this survey, we are sending a signal for all our government agencies that the way you deal with the public, and the public’s reaction to you, is part of the assessment of your performance.  Secondly, we are telling the public that this is an open, sincere public service which is out to help you, and is not afraid to have its performance assessed by you.  I applaud the five top pro-enterprise government agencies who will be recognized tonight.  And to the other agencies which did not fare so well in the ranking, I would like to urge them to review and improve their rules and procedures of administrating them so as to better facilitate business development.

CONCLUSION

17.       For countries in the increasingly competitive and connected global world of today, sustained growth is only possible if stronger alliances and networks are forged; greater focus is placed on developing core competencies like innovation and technology; and a supportive business environment is fostered.

18.       I am very happy that ACE has been such an active driver of entrepreneurship in Singapore.  Such private sector – public sector engagement is critical to the continuing success of Singapore.  I also believe that in the years ahead we will continue to work even more closely together to grow and prosper as a region, and jointly secure a bright future for years to come.

Thank you.

[1]  Based on figures from the IMF World Economic Outlook (WEO) - Globalization and Inflation, April 2006.  Developing Asia comprises ASEAN-4, China and India.

[2]  From September 1993 to June 1997, ECAP I assisted ASEAN countries in strengthening their systems for the protection of industrial property rights. ECAP I was initially implemented with the six original ASEAN member states namely Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand.  Further to ECAP I’s success, the European Commission launched a new initiative in response to requests from ASEAN. With 9 million Euro of total funding, ECAP II is projected to run until end of 2006.