Companies need to change while they are still in a position of strength

Singapore promotes an innovation-based growth model. Firms are provided targeted incentives to automate, expand internationally and raise productivity. Workers are encouraged to retrain and upgrade their skills through lifelong learning.

The Monetary Authority of Singapore is actively promoting its fintech ecosystem, while safeguarding financial stability. Social policies are aiming to make growth more inclusive and to mitigate disruption from technology and an aging population, according to the IMF staff’s conclusion after the last mission to the Asian country, which enjoys a 2.2% unemployment rate, is one of the most open nations in the world and is in the second spot of the 2019 index of Economic Freedom ranking produced by The Heritage Foundation.

Is it all rosy for Singapore then? Well, no. The government is on a constant mission to promote free trade, as the country is extremely dependent on it, and the US-China trade row threatens its economy.

BNamericas met with Singapore Senior Minister of State Chee Hong Tat this month in Lima at the Pacific Alliance leaders’ summit, where he spoke about how the private sector needs to embrace innovation and change before it is too late, making the workforce part of the process for real transformation

BNamericas: What’s the end goal of Singapore in Latin America?

Chee: If you look at the opportunities in Latin America, I think there are plenty. The key is how you link… the businesses that are commissioning that projects, governments that are commissioning such projects to Singaporean companies that can provide those services.

We have been actively promoting the capabilities of Singapore companies through our Enterprise Singapore office. One difficulty that we have is distance. Many Singapore companies are more familiar with Asia, that is where they operate, their comfort zone. But we know that we have a global interconnected economy, what we can do well in Indonesia, in Vietnam, in China or India, some of this can also be applied in Latin America. The key is how you link them up. So raising awareness is the first step.

The second is how you convince companies and governments in Latin America that these are good companies that they can work with. I think business leaders, many government officials in Latin America, are also not very familiar with Asia. It’s a two-way flow of people-to-people links, through trade, investment, greater awareness, and I think media can play a role in this regard.

BNamericas: Where are the real opportunities for Singaporean companies?

Chee: Going forward there is room to go even further into food technology, food research. Consumers around the world are not only interested about the food itself, they are also interested in health benefits, superfoods, functional foods, supplements. I think that is an area that can give higher value added. The fact that you have a strong agricultural base, gives the potential to go further, because you can build on that. In the end it is not about meeting your local demand, but exporting.

Singapore is at the center of Southeast Asia and a gateway to Asia. I hope having this link to Latin America through the Pacific Alliance will help connect the two regions. Because ultimately it is not about Singapore. Latin American countries are not interested only in Singapore, because its domestic market is not that big. They are interested in Southeast Asia.

BNamericas: What about infrastructure? The infra gap in Latin America is huge and it affects its ability to trade.

Chee: Peru is interested in growing production sectors by using industrial parks, development of infrastructure, transport connectivity, urban solutions, how to keep it green and sustainable and stewardship growth at the same time. These are areas where Singapore can play a role, because we are playing a role in Asia, developing such technologies: clean energy, waste management, water management, development of industrial parks, infrastructure development.

We are also into the financing of such infrastructure projects. We have Infrastructure Asia, which we set up to work with World Bank, the Asia Development Bank to provide the financing for such projects. The projects are there, they are good projects, but they need to be bankable, they need to be structured so that they can get financing. Singapore can play a role there, with financing, arbitration, professional services.

BNamericas: We hear many experts saying Latin American companies believe they are ready for digital transformation, when in fact they are still organizing their data. Are they moving fast enough?

Chee: The most fundamental thing is, what is the impetus for companies to want to transform? If you are too comfortable and you are within your comfort zone, change is not something that most people would naturally think of. But if you fail to change when you are in a position of strength, then you will not be in control. Because if you wait until you are in a position of weakness, you are in a crisis and change will be forced upon you.

To further enhance their competitiveness and to further support their approach in the future, they have to look to the global economy, they have to look to other regions, they can’t just stick within their current comfort zone. When you open up, there will be more competition, you will be faced with new challenges, and that will force you to think about how you can do better, how to embark in change.

Today I think there is a trend around the world, where the politics are driving societies to become inward-looking and create barriers to try to protect their domestic market and economies. While this may sound very attractive in the short term, it’s actually not a good move in the longer term. You can protect them for a short while, but you can’t protect them forever. It is a matter of time until they become less competitive, less productive, less efficient. And when the change comes, it will be painful. It is like trying to fight against the tide. You can try, but the tide will win.

BNamericas: Singapore uses sandboxes and other creative methods to spur innovation. What are the lessons for Latin America?

Chee: You do not have necessarily to do it through a sandbox, there are different ways of encouraging innovation. We do sandbox in some areas because we are testing, let’s say, fintech. There are old rules regulating financial institutions, we know we can’t use those rules because it is so different with fintech. But we are not sure what rules we will use for fintech, so before we can develop the rules, we think it is better to get started, and that is why we try in a sandbox. You try, if it does not work you adjust, and if it works, ok you can extend it. And this is something that is best in a sandbox because you do not want to affect the entire financial system.

For a technology that has yet to break through, instead of a sandbox, maybe what you need is stronger collaboration in research and development. How do you foster stronger collaboration between government, industry and academia? Because academia has a lot of good ideas, a lot of good research. But they may not know how to commercialize it. Industry can take some of these ideas and turn them into commercial products, but industry cannot do this alone.
Government can help develop some of these labs and have laws that encourage the protection of intellectual property, testing of a new technology. But government alone can’t do it. I think the partners must come together.

BNamericas: How are you dealing with the training of your workforce for the new skills they need?

Chee: That is another important piece that you must have if you want a successful transformation. You can’t do this by just transforming the processors or using new technology or having innovation. If your workers can’t keep up, your workers can’t apply the technology, they can’t operate in the new environment, the transformation will fail.

I think the workers must also be part of the solution. Economic transformation must go hand in hand with skills training and upgrading. If workers see transformation as a risk of losing their job, they will not be supportive. They will be resisting some of these changes. So I think you need to bring the workers as part of the solution and assure them that, ultimately, the changes will make the company stronger and they will benefit from that.