What’s new about the Economic Strategy Review update? A spirit of risk-taking

[SINGAPORE] At first glance, the initial recommendations under the Economic Strategy Review (ESR) may seem unsurprising. This is far from the first time that we have heard about the importance of being a global hub, innovating, using artificial intelligence, going abroad and lifelong learning.

Yet, several of the seven recommendations do suggest a shift in mindset – one that is required not least by the government itself, if it accepts these recommendations.

This same shift features in one of two objectives set forth by the ESR: to “work harder and smarter, take some risks, and explore innovative and bold solutions” for greater growth. Specifically, the need to “take some risks”.

Singapore’s stellar business reputation encompasses many attributes, but bold risk-taking is arguably not among the first that come to mind.

The country is better known for its stability and reliability. Its people, too, are accustomed to a government that makes prudent, cautious decisions and backs winning horses – not least when it comes to investing national funds.

It is notable, therefore, that risk-taking is highlighted in two of the four growth-related recommendations by the ESR.

Risks and failure

One of these recommendations is to “boldly pursue emerging opportunities to create new engines”.

Singapore needs new ways of identifying, attracting and supporting “emerging champions” that can become global leaders, said the ESR, noting that “many of these firms start small and will need to take greater risks”.

Similarly, the country needs an entrepreneurial culture “where people dare to dream big and take risks”.

But companies and founders are not the only ones who will bear the risks. The suggestion here is that Singapore should support such promising prospects more readily, which also entails recognising that not all these investments may eventually pay off.

At a press briefing to discuss the ESR’s recommendations on Friday (Jan 30), Deputy Prime Minister Gan Kim Yong put it bluntly when commenting on the need to support promising enterprises, saying: “Some will not succeed. So be it.”

A certain failure rate can be considered a worthy price to pay for those emerging companies that do eventually flourish and become the multinational corporations of the future.

Sharing the burden

Another recommendation is for Singapore to strengthen connectivity to global markets and “more aggressively support firms to internationalise”.

The ESR noted that Singapore’s firms “will need to take greater risks in a volatile global environment” and compete with established local players elsewhere.

It suggested that more can be done “to support them in pursuing significant overseas ventures that carry higher risks and capital outlay”. Here, too, the implication is of some risk-sharing by the government.

Such risk-sharing is not in itself new; the government already does as much under various enterprise loan schemes, for instance.

But the ESR’s repeated emphasis on the need for risk-taking – not least in its headline objective – does suggest a considered and deliberate emphasis on this stance.

If the government accepts the ESR’s recommendations, then it might well be the one that has to make the greatest change in its stance towards risk, given that risk-sharing will instead provide more assurance to companies and entrepreneurs.

Nor is the government the only one that has to change its appetite for risk. Singaporeans, too, may have to be prepared for a more mixed track record of companies that receive government backing – and perhaps less eager to criticise every instance in which an investment does not pan out.

Wider acceptance of failure

The last of the ESR’s midterm recommendations also hints at the need for greater openness towards what might seem like failure.

Rather than growth, this recommendation is about getting companies to understand when it might be time to call it a day in certain respects – or, as the official media release gently couches it, to “pivot to more viable opportunities as the economy restructures”.

A common cry of local businesses is for the government to aid in their survival. But sometimes, the way forward lies in recognising what needs to be given up. As the ESR recommendation notes, this could mean “rationalising or offshoring” parts of the business.

Perseverance and staying the course are rightly praised, but knowing when to call it quits is also important – particularly if that allows for a new and more productive direction.

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