Debate on Budget 2016: Seeding Innovation for All Singaporeans – Speech by Daniel Goh

(Delivered in Parliament on 4 April 2016)

Madam Speaker, the emphasis on innovation as the third pillar in the Industry Transformation Programme is a right emphasis. This is more than just a good thing to do. As the Minister said in his Budget statement, it is critical to the Programme. If we fail at innovation, we will fail to transform our economy for the next stage of value creation for growth, and this will endanger our very existence as a global city and an independent nation.

Innovation is not an aspiration, it is a survival imperative. It is therefore important to get our innovation policy approach right. In this respect, I have three issues to raise.

Accounting for the Investments 

The first issue is accountability. Significant public monies are being invested by the Government in innovation. I believe most Singaporeans do not object to this necessary investment. However, this does not mean that the Government should not account to Singaporeans that their money is well spent and there are good results to show from the investment.

$19 billion has been set aside over the next five years for investment in science and technology research under the Research, Innovation and Enterprise (RIE) 2020 plan. Under the plan, $4 billion has been earmarked for industry-research collaboration. The Government is further topping up another $1.5 billion to the National Research Fund (NRF) in this Budget. It is crucial, as the Minister said, “to capture the economic and social value of R&D”.

But the public needs to know exactly how much of the value is being captured for the benefit of the Singapore economy and, I must emphasize, for the benefit of Singapore society, that is, Singaporeans ourselves.

The example of the Procter and Gamble Singapore Innovation Centre (SgIC), set up in collaboration with A*STAR and EDB, is well worn. The question is, as an “open innovation hub”, how many Singapore enterprises is the Innovation Centre helping to facilitate research and accelerate product development?

We shouldn’t begrudge P&G for obtaining a large benefit from the Innovation Centre for their own product development. After all, P&G is promising to share valuable expertise and experience. Nevertheless, Singapore enterprises should have a fair share of the R&D outcomes.

As it has been two years since the Innovation Centre was set up, the Minister should be able to give the public a sense of how much of the economic and social value of R&D at the Innovation Centre Singapore enterprises will be capturing.

For sure, returns on investment in R&D and also tech start-ups are long-term by nature. In this regard, Infocomm Investments Private Limited, the venture capital subsidiary of the IDA, has been around for 20 years now. Surely, the Government will be able to give us much more than a sense of the value Singapore enterprises are capturing through the funding from Infocomm Investments. The Government should be able to give us the actual return on investment, the ROI, in innovation for Infocomm Investments.

This is important because Infocomm Investments is the foundational model for SG-Innovate, which is a far more ambitious scheme to expand venture funding and accelerator and incubator support to new and emerging sectors. The success of Infocomm Investments should be detailed beyond a few anecdotal examples. On top of accounting for the investments to the public, explaining the ROI for Infocomm Investments would greatly inspire public confidence about the Government’s present efforts on innovation and allay general cynicism about Singaporeans’ ability to innovate.

A more fundamental question then is whether the Government has any framework to measure and evaluate the ROI in innovation and enterprise. Measuring ROI in innovation is fast becoming a norm internationally.

A recent report for the UK Government estimated the median private rates of return to R&D investments are around 20-25% in terms of economic output or productivity increases, and social returns are typically 2 to 3 times larger than private returns. In the UK, public R&D investments have yielded social returns of around 20%. This is a ready benchmark for us to adopt.

I emphasise that I am referring to the general ROI in innovation and enterprise for the whole R&D sector and for key vehicles like Infocomm Investments, Biopolis, and Fusionopolis. Investments in innovation and enterprise are inherently risky and fine-grained ROI with regards to individual investments and grants may stifle R&D instead.

If the Government has an internal framework to measure and evaluate the ROI in innovation and enterprise, then it should share this with the public and let Singaporeans know how we are faring vis-à-vis international competitors. If the Government does not have an existing framework, then now is the time to develop a framework to measure ROI in innovation and publicize it.

This is not to embroil the Government agencies in the politics of blame and shame. This is to instill basic accountability for good governance as well as to mobilise Singaporeans for the innovation drive, which is a survival imperative.

The Singaporean Core in R&D

The second issue is the development of a Singaporean core in R&D. In order for the economic and social value of R&D to be captured in the long run, we need to make sure R&D funding for scientific research is benefitting Singaporeans directly. While we invest heavily in deepening R&D capabilities, the corresponding focus should be to make sure these capabilities are anchored by a Singaporean core in the R&D sector.

The NRF has been actively trumpeting the latest scientific advances. One such advance featured in the news in 2013, the invention of an invisibility cloak to make things disappear from view, quite literally caught my eye. This is the stuff that makes for the thrill of Harry Potter fantasies and Star Trek science fictions and captures the public imagination. But does it capture the economic and social value of R&D for Singapore and Singaporeans?

It was a good scientific advance, but industrial application of the cloak is still very far off, as the materials used were bulky and cloaking was effective only from six perspectives. This is understandable. Scientific progress takes time and the translation from science to marketplace is an undertaking that requires patience and commitment. Beyond the medium-term economic value of R&D for Singapore, another concern is the long-term social value of R&D for Singaporeans.

It was reported that the research team that invented the invisibility cloak was led by a Singaporean permanent resident, a young professor at the Nanyang Technological University. This is not quite accurate. The team comprised six other collaborators from Zhejiang University in China and the Marvell Technology Group Boston in the United States.

From the order of names listed as co-authors of the paper of the invention published in a prestigious scientific journal, the Singapore PR professor was listed last and appeared to be a junior member of the team. The team leader appears to be a Zhejiang University professor who conceived the original idea and led in the design of the cloaks and the experiments.

The global university field is characterised by the mobility of talents. Though probably just a junior member of the team, the Singapore PR professor involved in the invention of the invisibility cloak is a young researcher under the age of 35 and has many decades of breakthrough research work in him yet. We need to attract and retain foreign talents like him. Better still, we need to help him and his family sink roots in Singapore as a citizen, so that he will become a member of the Singaporean core in R&D.

We are making progress in deepening our R&D capabilities, as the invisibility cloak example shows. But the ideal would be that a cloak nearing industrial application be produced by a local industry-university team led by Singaporean scientists.

My point and my plea here is this: while the Government pumps generous funding into R&D to deepen innovation capabilities, that it does not ignore the social factor. It is not a matter of just plonking talents together and getting them to talk and work with each other. We need to focus on developing more Singaporean innovators, as well as retaining non-Singaporeans who would help Singaporeans innovate. We must strengthen and empower the Singaporean core in R&D. Only then will they continue to create value for the nation deep into the future.

Beyond the Innovation Enclave

The third issue is the risk of the innovation enclave. The industrial park model has been successful for us in the last 50 years. It is right we celebrate Jurong and how its success has benefited the country and countrymen.

Madam Speaker, this is what Jurong means for me. Not an industrial enclave, but a focal point for our successful industrialization, which was replicated in the many satellite industrial estates co-located with HDB towns such as in Toa Payoh and Hougang built in the 1970s and 1980s. The network of industrial parks merging into our heartland mobilised a generation of Singaporeans to become workers to transform the country and taught all of us the culture of hardwork and perseverance.

The Jurong Innovation District looks glamourous. The concept of getting researchers, entrepreneurs, industrialists and investors to live, work and play in the same mega-mall so that chance and choice encounters could produce new ideas, inventions and businesses is very plausible and attractive. But does it really work?

Research on science and technology parks and their influence on innovation have seen mixed results. Some studies show that science parks promote interaction between firms and research institutions, while others show that notwithstanding the increased interaction, geographical proximity does not seem to be an important factor for forging formal research links and innovativeness.

The question remains for researchers of science park innovation: are these parks “seedbeds” or “enclaves” of innovation? The difference is this. The science park as “seedbed” would see the science park as providing the right environment to nurture new technology start-ups benefitting from technology transfer, research spin-offs and the development of innovative products. But depending on the whole host of factors, the science park could very well end up as an innovation “enclave”, where enterprises are attracted to the science park due to the status and prestige of being located in the exclusive park. The science park becomes a high-tech island with innovation taking place separated from the rest of society.

We have had science park development in the Buona Vista area, including Biopolis and Fusionopolis, next to the National University of Singapore for two decades now. There is therefore a precedent for the Jurong Innovation District. It is worthwhile for the Government to make its case to the public that the Buona Vista science parks work as innovation seedbed and are not an innovation enclave detached from the rest of Singapore.

Are the Buona Vista science parks successful by measures of innovation? What is the ROI in innovation for the Buona Vista science parks? Have Singapore enterprises and Singaporean innovators that relocated into the science parks become more innovative?

How have Singapore enterprises benefitted from these science parks? Are the main beneficiaries vertically integrated foreign MNCs which have merely shifted their operations to Singapore? Are the benefits to Singaporeans mainly trickle down effects rather than improving Singaporeans’ innovativeness?

Have the science parks trained up a Singaporean core of R&D professionals? Is the R&D leadership in the science parks still dominated by foreign scientists? Are formal research links between NUS and firms located in the science parks significantly higher than those located outside the parks?

My concern is that the Jurong Innovation District is going to develop into an enclave enveloping NTU. Such an innovation enclave would mean foreign MNCs and venture capitalists congregating in the enclave with more foreign researchers and managers. They would live, work and play with an exclusive group of local elites selected to interact with them.

My concern is that the Jurong Innovation District, by virtue of its exclusive urban design would become a high-tech island detached from the rest of Singapore, from the heartland estates where Singaporeans and Singapore enterprises are supposed to be beneficiaries of innovation. Are we creating mega-ivory towers, one surrounding NUS and the other surrounding NTU? How would the science parks plug back into Singapore society to diffuse creativity and innovation into the rest of the city?

The Singapore Model 

Has the Government considered decentralising the industrial district-cum-science park concentration to seed a network of smaller science parks in the heartland estates, so that innovation can tap on the mass creativity of the Singaporean workforce?  The benefits of this alternative model are these.

Instead of focusing only on start-ups, the innovation drive will also plug into the large body of SMEs to enrich our enterprise base and spread innovation to our local companies. Instead of hoping only for foreign know-how to somehow spread to selected local entrepreneurs, the heartland science parks will multiply and synergise local entrepreneurship, so that innovation will take off from a Singaporean base to engage the world.

The network of heartland science parks will bring a beneficial diversity to our public housing towns, making them more cosmopolitan than they already are. Conversely, the rich heartland lifeworlds will expose otherwise isolated researchers to a grounded diversity that could generate interesting and relevant innovations. In time, the different science parks could evolve into diverse specialisations, creating experimental niches that will give local character to the towns. Bedok may well become a fintech powerhouse, while Bukit Batok becomes the cleantech town.

A positive side effect is urban renewal of our heartland estates. Our heartland town centres will stay economically vibrant as local businesses provide services to the science park crowd. It will also increase the number of local jobs available in the heartland for those who find it difficult to travel. Overall, it may help solve the problem of ageing estates as older townships continue to attract younger families to move into them due to the heartland science parks.

Most importantly, innovation will not be concentrated in two districts but will be everywhere in Singapore, turning the enclave city into the creative city where innovativeness becomes a cultural norm for everyone in every vocation, from the cleaner to the CEO, from the office clerk to the scientist.

This, I believe, is what Jurong was for Singapore in the 1970s. I hope the Jurong Innovation District is just the beginning to create a network of innovation estates all over the island, across the city, through the heartland.

We are now at the cusp of another industrial revolution. Let’s be brave for a brave new world. Seed innovation everywhere in Singapore and empower every Singaporean to pursue innovation. On this note, Madam Speaker, I support the Budget.