Regulations must allow innovation and opportunities to flourish

AS Singapore strives to achieve its vision of a Smart Nation, the government, industry and citizens need to work together to co-create a conducive regulatory environment to support new citizen-and-business-centric services.

People often think regulations stifle innovation, new businesses and services. They assume that regulators are there to control and curtail what they want to do. As we work towards becoming a Smart Nation, our regulators need to transform the way regulations are developed and updated.

In this dynamic and changing world, the future of regulations needs to be more agile. Singapore companies can better compete with and complement other countries in providing new services when regulations allow democratisation without compromising safety and equity.

The goal of regulations is to protect public interest and consumers, promote safety and enable fair markets. In addition, effective regulations are enforceable and adaptive to the current operating environment, without hampering innovation but letting businesses flourish.

Had ride-sharing firms been prevented from entering the Singapore market, we would not be enjoying a better ride experience today. Neither will we see the positive changes made by the incumbents in double-quick time.

Similarly, bike-sharing firms brought in thousands of bicycles to bring us closer to a multi-modal transportation system. Yes, we have bikes parked in places that cause inconvenience and are at times unsightly. Rules have now been imposed on where bikes should be parked and the bike-sharing firms are responsible for them.

Today, we have witnessed how technology and new business models have disrupted our traditional models and businesses. New opportunities and new jobs have been created. Some thorny issues, such as inability to get a taxi close to midnight, were previously unsolvable no matter what the regulator did. But with new entrants trying to solve such issues using their ingenious mix of technology and new business models, they have caused incumbent players to transform and provide comparable service to their customers.

Such disruptions introduced by new entrants by definition imply that regulators have no pre-existing model to help them understand the effects and implications of the rules to regulate them. For these new entrants, their goal is to enter the market as quickly as possible for competitive reasons, which means regulators have very little time to respond and at times are caught back-footed.

In this new world of speed and innovation, regulators need adaptive regulations - a shift from "regulate and forget" to a responsive, iterative approach. Traditionally, regulators conceptualise new rules and regulations in response to market developments or new legislation. Next, they spend months, or even years, drafting rules and then seeking and examining public feedback before releasing the rules and regulations. This runs counter to the rapid changes caused by disruptive new entrants that we experience today.

In this new era, all stakeholders, namely consumers, incumbents, new entrants and regulators, need to co-design rules and regulations that balance the needs of the constituents, with the ultimate goal of consumer protection, public safety and market fair play. We must bear in mind that in this mode, there is an element of trial-and-error. As long as the direction of travel is right, we should continue to fine-tune the rules. This may require a change of mind-set in Singapore because we have had a very effective government that often sets rules and regulations that are well considered and thought through.

In addition, for adaptive regulation to work more effectively there must be rapid feedback from the constituents. It means that regulators need to learn to engage the constituents quickly and effectively, helping them understand the needs of the sector and society. In this process, some may not agree with the rules, while others may work with the regulators to find the right solution.

More time needed

As consumers, we must give time and space for the regulators and firms to work out the best model. The firms will work towards a sustainable business model in providing the product and service, and the regulator will focus on protecting consumers. One example in the healthcare sector is the emergence of digital health. A key development in digital health technology is Software as a Medical Device (SaMD), which can diagnose medical conditions, suggest treatments and inform clinical management. SaMD allows patients to play a more active role in managing their own health. These devices are connected through applications in the cloud that reside in places patients may not know. The potential risks of unauthorised use of individuals' personal and health related information exist - a lesson we all have learned in the recent Cambridge Analytica saga, where elections were manipulated to achieve the ends of those who bought their services.

Learning from the recent and sudden decision of OBike to pull out from the bike-sharing market in Singapore, regulators must remember that safeguards should be put in place so that we are not held ransom, or a critical service is suddenly made unavailable when a private sector firm decides to change its stance.

As new emerging technologies, such as artificial intelligence, blockchain technology and Internet-of-Things, become more accessible and the cost of computing power decreases, we will see more new products and services being introduced that will give rise to more convenience and better service at a lower cost. The way we regulate must also change from the traditional way of being comprehensive and overly cautious to one that is responsive and effective. At the heart of it, innovation and opportunities should flourish.