Subba’s Serendipitous moments

June 9, 2009

Singapore’s research and development needs a major rethink

Amongst the few Singapore civil servants I hold in great esteem for their clarity, sense of purpose, courage to stand up for what is right, one of them is Ngiam Tong Dow. He was the Perm Sec of the Ministry of Finance and the PMO . During the last few years, he has written some excellent pieces on the Singapore policy making process, governance, current quality of civil servants and other topics.

I have always found his writings thought provoking as he judiciously blends the philosophical with the pragmatic. There is always some clear takeaways from his writings. I wish I could chat with him and pick his erudite mind for some of the public policy dilemma that I have not been able to understand or reconcile with.

Mr. Ngiam in his usual characteristic style hints that Singapore’s R&D sector needs a rethink. He doesn’t dwell much on it neither does he make any specific suggestions.

But as I see a lot ails the R&D sector, especially in the IT area which I understand well. Here’s the record: Despite having a IT R&D sector for close to 20 years, and having spent hundreds of millions of dollars, the R&D sector has produced nothing to be even remotely proud of. There was the ITI, the ISS, JSAIC, CWC, just to name a few. They all had grandiose visions, programs, and ample funding. Then they were merged, combined, they took on new names and yet after 20 years, not a single technology, product, process, framework or anything worthwhile which the industry could use has come out of the labs. It was always a small “r” and a big “D”, and even there, the results have been dismal.

It may be ironical that the 2 best private sector firms that Singapore produced — Creative and Hyflux did their own R&D outside Singapore — the former in the U.S. and the latter in China as Mr. Ngiam points out. I met the CTO of Creative a few years back and he smiled indulgently when the talk about Singapore R&D sector came up.

Yet the Government focuses on R&D and each year their budgets have gone up. It is sad that the metrics of R&D performance is still predominantly input driven and no one is accountable for the outputs.

The only thing that I would like to ask Mr. Ngiam is how long will the Ministry of Finance continue to be satisfied with input metrics in the R&D category and when will it look for active output metrics. If companies like 3M, Microsoft, DuPont, P&G as well as some of the university labs are moving towards zero based budgeting, output driven metrics and clear directions for R&D effort, why is Singapore Inc not emulating them?

For those interested, Mr. Ngiam’s entire article is reproduced below. It makes very interesting reading.

June 6, 2009

FINANCE MINISTRY’S 50TH YEAR

Building more world-class S’pore firms

By Ngiam Tong Dow

THE year 1959 was a fateful one for Singapore. It was granted self-government by the British after 140 years of colonial rule. Other than foreign affairs and defence, the new Singapore Government led by Mr Lee Kuan Yew was free to pursue its own social and economic policies.

Mr Lee chose Dr Goh Keng Swee, the only economist in his team, to be our first finance minister. The Ministry of Finance (MOF) was housed in Fullerton Building. The General Post Office occupied the ground floor; MOF occupied the second to fifth floors.

As MOF alumni, we can be proud of belonging to the pioneering team, led by the inspiring Dr Goh, our minister, and by the late Mr Hon Sui Sen, our permanent secretary. We worked our guts out to pull the economy out of stagnation.

The Finance Ministry that Dr Goh established was not your traditional Treasury. Together with Mr Hon, he created the Economic Development Division to spearhead our economic development. The Economic Development Board (EDB) was set up as the operating arm of this division, tasked with finding jobs for the thousands of young students pouring out of our schools each year.

The EDB was given a grant of $100 million to get going. In return for the freedom to operate, its performance was continuously assessed. It was rated on outcomes more than outputs. The EDB chairman had to report annually the dollar value of the foreign direct investments committed to Singapore. He still does.

MOF’s fiscal policy has always been to stimulate growth through investment. As Permanent Secretary (Budget), I accorded higher priority to the development over the recurrent budget. The development budget invests for the future. In the early stages, the development budget was spent mainly on building infrastructure.

Over the last 50 years, we have seen Singapore’s budget priorities move from physical infrastructure to defence capability and now, education and training.

Though we are not totally free of ‘white elephant’ boo-boos, MOF’s track record in allocating scarce capital is good. Our current revenue was enough to pay for both operating as well as development expenditure. If the Government were a private corporation, we would have been able to finance all our capital expenditure without a cent of debt.

Was Singapore’s MOF more virtuous than our counterparts elsewhere? The fact of the matter is that we did what we did because we had no alternative. Without oil or other natural resources, budget surpluses and CPF savings were our only sources for accumulating reserves. Except in extremis, reserves are not intended to be spent on rainy days of the business cycle. The fundamental role of reserves is to serve as backing for our currency. A stable and convertible Singapore dollar is our lifeline to international trade on which our very survival depends.

In spite of the immense pressures exerted by the rest of Government on the MOF, I would be wary of dipping into our reserves to tide us over the troughs of business cycles. I remember the first global oil crisis of 1972. Mr Hon, by then Minister for Finance, refused to subsidise consumption. He thought it better for Singapore to swallow the medicine of inflation in one gulp. The cost of living index stabilised within 18 months.

MOF’s mission as guardian of the national budget will be more challenging in the future. For instance, before we can decide on how to allocate the research budget, we need to have some idea of the knowledge domains that Singapore has a more than even chance to compete in. Is it biotechnology, nano-engineering, solar energy or something else?

Spending on R&D in my view is too narrow a focus as a growth strategy. In any case, we do not have the breadth and depth of talent to compete successfully with the Americans, Europeans, Japanese, Russians, and in the near future, the Chinese and Indians.

We may be able to hire a few superstars to head our research institutions. But a Nobel laureate cannot work in isolation. He or she needs teams of young researchers to do the basic experiments. Young PhDs in China work for a fraction of the wages we pay our young dons at our two research universities. Ms Oliver Lum of Hyflux told me that the core membrane research work of her company was done at Hyflux laboratories in China.

Rather than pursuing high science whatever the cost, we may have to adopt a less lofty approach. We should ask ourselves: What are the knowledge domains we can excel in?

Singapore has a fair track record in building townships, industrial parks, container ports, submersible oil rigs, vocational and technical education and water treatment installations like Hyflux. As the example of Singapore Airlines shows, it is possible to build up a world-scale Singapore company on our own. SIA’s founding board had no foreign director or CEO.

The way forward for us is to have the guts to build another 25 world-scale ‘SIAs’ in the knowledge domains where we have a competitive advantage.

I learnt many lessons in economic policymaking from Dr Albert Winsemius, Singapore’s first Economic Adviser. The most valuable lesson he taught me was that you have to do the things that matter yourself.

After pulling ourselves up by our own bootstraps in the pioneering years, we now outsource the CEO jobs to foreign talent. The irony is that when trouble looms, the foreign CEO just dusts off the seat of his pants and walks away with his sign-off bonus negotiated when he first signed on.

I refuse to believe that the Singaporean has so lost confidence in himself.

The pyramids of Egypt were built by the Pharoahs’ Hebrew slaves. The Egyptian Pharoenic race is now lost in antiquity. The Jewish Hebrew nation continues to thrive.

Quo Vadis Singapore? The above is an excerpt of a speech Mr Ngiam, a former senior civil servant, delivered yesterday to mark the 50th anniversary of the Ministry of Finance.

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3 Comments »

  1. Thanks for an insightful article. If you must understand WHY singapore IT research never took off, you must examine how many US-trained local students (save those Astar scholars who have 0 choice) are willing to go back to Singapore. Just pose the same question in the context of Hong Kong & Korea.
    The problem with Singapore’s PAP government is it thinks it can go and buy talents overseas. What a dumb-ass mind they have!

    Comment by Kim JongLee Yew — June 10, 2009 @ 11:47 am | Reply

  2. I recommend that Singapore patent some inventions and then make billions.

    Comment by Stephen Swisher — July 7, 2009 @ 11:51 am | Reply

    • Who would buy those patents anyway

      Comment by Percival — September 24, 2009 @ 12:10 pm | Reply


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