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Build up capabilities to ride the waves of changes ahead: Heng Swee Keat
THE best chance for Singapore to roll with the waves of changes up ahead lies in building strong corporate and human capabilities, Finance Minister Heng Swee Keat said on Wednesday.
The full impact of the ageing population, technological progress and the rise of emerging economies tomorrow would not be felt - and no one can predict the future - but the country can still prepare for it, he said.
Speaking at the annual dinner of the Economic Society of Singapore at Mandarin Orchard hotel, he said: "What we need is a certain shift in orientation - a readiness for change and a willingness to try, learn and try again."
Mr Heng stressed the need to maintain macroeconomic stability and a smoothly-functioning financial system to channel savings to productive use; he also highlighted the need for strong microeconomic foundations so that resources are allocated efficiently, equitably and sustainably.
"We have and must continue to make our regulations more pro-business, tweaking them to encourage innovation and risk-taking, while protecting the interests of our people," he said.
But the focus of his speech, which lasted nearly an hour, was on capabilities: "We must encourage our individuals, firms and industries to build deep capabilities so that they can achieve a sustainable competitive advantage, to adapt and thrive in their fields."
Firms must develop two main capabilities - firm-specific capabilities to differentiate themselves from competitors, and industry-wide capabilities that benefit all firms within a sector.
A key corporate capability is innovation, the ability to come up with new products, services, processes or business models that create new value and thus build a competitive edge.
Mr Heng pointed out that innovation is not only the province of start-ups; large companies need to do as much, if not more.
Beyond in-house R&D, they could also set up corporate venture funds and incubators to discover, work with and invest in promising start-ups.
"Another way to innovate is to use technology," Mr Heng said. "Firms can adopt existing technology to improve productivity, or adapt to change their business models and disrupt industries. Others may invent technology and create intellectual property."
The ability to internationalise is another key corporate capability that needs to be developed, he said.
And firms can leverage technology and government support to go global.
Mr Heng said industry-wide capabilities, which require companies to cooperate among themselves, also matter.
"There is great potential for collective gain through collaboration among partners along the value chain and even among erstwhile rivals, if we look for the right opportunities."
He said "we need to think about multiplying effectiveness, because it is not a zero-sum game".
Industry leaders and trade associations and chambers are already taking encouraging steps in this direction, underscored by the implementation of the Industry Transformation Maps (ITMs).
"Some industry leaders have asked me if our economic agencies can also improve our coordination to provide more integrated support in areas such as helping companies to build capabilities and to internationalise," he said. "We are studying these."
But corporate capabilities must go hand-in-hand with human capabilities, growing in tandem to drive Singapore's industry transformation - which is why jobs and skills are key pillars of every ITM.
What we learn should help us realise our potential and build foundations for future learning, he said, and part of this entails picking up skills that are relevant to society and the economy.
Mr Heng said learning must keep up with fast-changing skills requirements, so the concept of learning should be expanded to include learning from all sources and in different settings.
"Learning does not have to happen in a classroom; it can also happen via new technologies, like online platforms or new modalities, like on-the-job training or overseas attachments, which can help integrate theoretical understanding with practical application."
And this learning should be life-long, he added.