EDB to go into risk-sharing venture financing

Singapore

BEYOND its traditional task of attracting firms to set up here, the Singapore Economic Development Board (EDB) wants to help firms get involved in the start-up ecosystem - by supporting corporate venture capital.

"Risk-sharing financing" is one of the new areas that EDB managing director Chng Kai Fong is keen to explore in 2019, just over a year since he took on the role in October 2017.

Before joining the EDB, Mr Chng was principal private secretary to Prime Minister Lee Hsien Loong from Sept 1, 2014 to Sept 30, 2017. His previous roles in the public service included being director of the communications group in the Prime Minister's Office and director of resource industry at the Ministry of Trade and Industry, among others.

The EDB will work with big corporates to set up corporate venture arms and evaluate deals, while taking part in financing, he tells The Business Times. "We help them de-risk a little."

Of course, "there must be a Singapore link" in the intended investments. The aim is to complement Singapore's venture capital market and put additional resources into the start-up ecosystem.

Another theme for the EDB, looking ahead, is taking a fresh look at old industries as advances in technology change the business calculations.

"Suddenly the economics starts to make sense for stuff that didn't use to make sense," says Mr Chng. A key example is agriculture, once avoided due to its land-intensive nature.

"We never thought that agriculture would be viable in Singapore." But with intensive, high-rise farming that taps artificial intelligence to optimise growing conditions, going into agriculture "makes a lot more sense" now.

Mr Chng cites the further example of Dyson, which is set to start making electric cars here. "You never thought that car manufacturing would be viable here, because firstly it's land-intensive and we don't really have inherent capabilities."

Making electric cars, however, is quite different from traditional automotive manufacturing, and the electric motors required are already being made here by Dyson.

Playing host to cutting-edge manufacturing activities is part of the bigger role that Singapore wants to play as a platform for trying out new business models, adds Mr Chng.

"We are often the manufacturing reference site (for multinationals) - they try something new here, then they can scale that worldwide. So hopefully we can play that role also in business models and services."

This mirrors the EDB's shift from focusing on courting manufacturers to also looking at the importance of understanding consumers, he adds.

"Instead of just focusing on those who control supply alone, because the economics have changed, you have to look at also those who control demand." This involves not just branding and marketing, but also getting close to consumers and understanding their needs, and eventually creating new products or services.

Enabling all this is digitalisation, another focus for the EDB. Many firms have already set up their own digital centres of excellence in Singapore.

But the EDB is also aiming to attract "systems integrators" - firms that bring together solutions and systems - and help match them with local industry players.

To further push local firms in the digital direction, larger industry players must nudge their local suppliers to make the change, says Mr Chng.

For its part, the EDB is developing a way to help firms decide what technology to adopt based on their priorities - revenue versus margins, for instance - with details yet to come.

Yet one of the biggest challenges in the broader digital push is a lack of talent. Though there is a limit to how many engineers, say, Singapore can provide, what the country lacks is not so much entry-level talent, says Mr Chng. Instead, it is people who have worked with systems that have "hundreds of millions of users". The EDB therefore hopes to get Singaporeans who have worked for tech giants abroad to return home.

Meanwhile, capacity-building efforts continue: "The more data science teams I can set up here, the more engineering teams I can set up here, the better our chances of being like the digital hub in South-east Asia."

The flipside of a talent shortage is the continuing need to provide good jobs. Mr Chng acknowledges that advanced manufacturing is labour-light: "The manufacturing share of employment will come down."

Yet part of the difference can come out of foreign worker numbers, he notes, while Singapore skills up local workers for the new requirements of advanced manufacturing. The EDB is also conscious of the need for an accessible "ladder of different jobs", not only high-value ones at the top end.

In its annual year in review, the EDB forecast that 16,000 to 18,000 jobs would be created by secured investment commitments in 2018, down from 22,500 in 2017.

Might lower job growth be the new trend? "Probably," replies Mr Chng, unfazed. With local workforce growth having slowed, the pressure to generate sheer job numbers has lifted, he notes - if anything, the risk is of overheating if too many jobs are created.

"My economy or my workforce needs to be able to absorb those jobs. We deliberately focus a lot more on what kind of jobs, the value of the jobs that we bring in, rather than just the pure numbers." In this, as with other shifts in focus, Mr Chng shows no fear of breaking with tradition.

READ MORE: Getting Asean to do business with the world through Singapore