Smart Nation: Singapore is set to enter a brave new digital world

Singapore is rapidly entering the third iteration in its short history, evolving from a manufacturing-oriented economy and a financial hub into the high-tech epicenter of the ASEAN region.

AHEAD OF THE CURVE: Singapore is a favorable location for trade, low tax rates and attractive incentives for investors.

Singapore is a country that never sits still. Ever since it became a fully independent state in 1965, the country has been evolving, pushing at boundaries and applying the latest technologies – always staying ahead of the global curve. This is a city-state that has always done things its own way, rising up through the economic ranks while constantly reinventing itself to match the ever-changing times.

Today, the Republic of Singapore is a highly developed, free-market economy, one of the most vibrant in the world, with a GDP ranking 36th globally last year (nominal), one of the highest per capita GDPs and a mere 2.3% unemployment rate. The citystate’s single-party system virtually wiped out corruption and developed a relatively transparent legal system, providing a rare island of stability in the otherwise tumultuous seas of East Asia. This stability – combined with its favorable location for trade, low tax rates and attractive incentives for investors – has earned Singapore second-place rankings in both the Index of Economic Freedom and the World Bank’s Ease of Doing Business Report.

FACTORY SETTING: Manufacturing is being diverted from China into Singapore.

At the root of this success story is a governmental structure founded on a framework of political and social stability, coupled with extreme adaptability, allowing the country to rapidly ebb and flow with the changes in the global market, technology and regional geopolitical transitions. Even when times are good, Singapore is preparing, innovating and evolving for the future. This forward-looking mentality has allowed the country to economically reinvent itself multiple times within its relatively short lifetime, evolving from a manufacturing/trade hub and a global financial center into ground zero for high-tech innovation.

“What is interesting is that Singapore is really managed like a business,” explains Jerome Gillet, CEO, DHL Supply Chain, Singapore, Malaysia, Philippines. “They adjust to the market and to what is happening around the world to be more efficient.”

Many people are now asking what’s next for Singapore – and, true to its dynamic recent history, the country has an answer.

Forward-thinking turns disadvantage to positive effect

Singapore remains an economic giant in its region of the world, with leading shipping, aerospace, tech and chemicals industries along with a vibrant service sector that accounts for over 75% of GDP and 80% of employment.

This doesn’t mean, however, that the country is immune to the vagaries of the global economy. The U.S.-China trade war, though it is easing off somewhat at the time of writing, has taken a toll, with demand for re-export – which remains a substantial component of the city-state’s economy – dramatically declining. Singapore’s GDP has likewise been dropping, falling from its customary 5% growth rate to less than 1% in 2019 – out of step with the rest of the Southeast Asian region, which is growing around 4.8% on average.

“They will suffer short-term because of the trade war between the U.S. and China,” Gillet believes, “and that’s due to the fact that Hong Kong, China and the U.S. are representing most of their re-export from Singapore. So when something is happening with the trade between them, Singapore will feel it more than the rest of the region, because manufacturing here is quite small and it’s mainly re-export.”

HUMAN CAPITAL: Singapore‘s economic ambitions are being driven by its educated population.

In terms of its economic capacity, Singapore lacks the natural resources of its neighboring countries, such as Malaysia and Indonesia, which makes the city-state far more exposed to the winds of the global economy. It has no petroleum or minerals, and agriculture accounts for a robust 0% of yearly GDP.

But, in the information age, human capital is one of the world’s most highly sought-after assets. And Singapore has an educated population that can productively contribute to the country’s economic ambitions. The city-state tops the World Bank’s Human Capital Index and is in the top 10 on the Human Development Index, showing that there is a direct link between a well-off, skill-equipped population and international-level economic prowess. It is this human capital that Singapore is now doubling down on as the citystate evolves into its next iteration.

Singapore’s future is digital

“Digitalization is the new globalization. Today’s bandwidth is metaphorically the airspace and ship routes where information, goods, and services are traded, often in a matter of seconds,” explains Chan Cheow Hoe, Singapore’s Government Chief Digital Technology Officer. 

The country saw the writing on the wall and dived headfirst into digital technologies from the very beginning. The country computerized its public sector in the 1980s, and as early as 2010 was wiring the island to be fiber-ready for the Next Generation National Broadband Network (Next Gen NBN) rollout. Today, it is one of the leading countries in preparation for 5G.

Singapore is endeavoring to become the world’s first smart nation – a country where government, utilities, public security, transportation, education and industry are holistically integrated via a stateof-the-art IT network based on the internet of things (IoT) and cyber-physical systems (CPS). Sometimes summed up as the “digitalization of everything,” the Smart Nation program is the city-state’s attempt to improve the lives of its citizens, make itself more profitable for businesses and make its government and public services more efficient through a topdown program of digitalization.

DRIVING CHANGE: Autonomous public transportation is being actively developed in Singapore.

“Smart Nation is our response to, and preparation for, a ‘digital brave new world,’” Chan explains. “Fundamentally, it’s about transforming Singapore to take full advantage of technology to accomplish three things: Make our economy more productive; make our citizens’ lives more convenient; and make Singapore an outstanding city to live, work and play.”

In terms of public services, the Smart Nation program will allow citizens to access an online portal through which they can accomplish a number of chores and actions – such as retrieving their health records, buying and registering a car, selling real estate, filing taxes and paying bills via a single National Digital Identity (NDI) – all without leaving the home or office. This is thnearly every administrative task via the convenience of their personal electronic device.

Singapore now envisions itself as the financial services and innovation hub of the ASEAN (Association of Southeast Asian Nations) region, and has a digital economy that is expected to exceed $200 billion annually by 2025 – a nearly fourfold increase from 2018.

Solving labor shortages with digital and automation technology

Smart technology and automation also seek to address one of the key barriers to economic growth in Singapore: the relatively high cost of labor and shockingly small labor pool. The city-state has nearly 1.4 million foreign workers, making up roughly 30% of the total workforce. Coupled with a rapidly aging populace and a population growth rate in the ballpark of 0.1%, finding available labor is a real challenge that will only intensify in the future. Therefore, automation is one of the key pillars of Singapore’s smart-nation future – with driverless buses and automated factories as well as self-reporting electricity and water meters being phased in.

A quintessential example of this movement toward automation is Singapore’s future Tuas Port. When completed in 2040, Tuas will become the largest fully automated and most technologically advanced port in the world. Equipped to handle 65 million TEUs (20-foot equivalent units) per year, it’s thought that the port will be able to double Singapore’s capacity, maintaining the city-state’s position as the world’s largest transshipment hub – an industry that contributes around 7% to Singapore’s GDP. Driverless public transportation is also being actively developed in Singapore. The government recently announced that more than 1,000 kilometers of road in three residential districts will become the testing ground for automated vehicles; and in August, the city-state began testing driverless buses. It’s thought that, as soon as 2022, passengers will be cruising up and down the streets of Singapore in driverless vehicles.

DHL Supply Chain meanwhile operates its 90,000-square-meter Advanced Regional Center (ARC), which boasts an automated multi-customer system featuring advanced robotics. “The automated sorting system uses 130 robotic shuttles to pick and store products from 72,000 locations spread across 26 levels,” comments Gillet.

Throwing their weight behind testing, innovation and development

Singapore has redoubled its Smart Nation efforts to create an entirely new district dedicated to testing and developing new technologies. Called Punggol Digital District (PDD), this business park and university cluster is designed to propel the nation into its ultra-digital future. According to Chan, PDD is expected to generate around 28,000 new job openings in sectors such as IoT and cybersecurity.

Moreover, Singapore’s startup scene has become one of the most vibrant in the world, boasting an ecosystem of more than 3,000 companies and upward of 100 incubators and accelerators. According to a report by Startup Genome, a company specializing in analyzing and supporting startup ecosystems, Singapore has in fact overtaken Silicon Valley as the place to find startup talent. This is largely due to the huge amount of government support that goes into startups, as well as the country’s superior education facilities and the broader tech sector. In the first three quarters of 2019, investment in Singapore’s startups topped $13.4 billion – a 36% year-on-year rise, according to Enterprise Singapore (ESG), and up from $1.37 billion in 2012. This landscape has already produced a clutch of major companies, including Grab, Lazada, Sea and Razer.

GOOD START: Singapore has produced major success stories including transportation business Grab.

Customs is another area where Singapore’s Smart Nation program is rapidly coming into play. While Singapore is already one of the easiest places in the world for imports and exports, with almost unheard of guaranteed lead times, its sheer efficiency is set to increase via advanced technology.

“Singapore customs is digitalized and never closes. So you can do trade 24/7 when other countries are still on the old-school customs approach – where you have to wait for the customs to adapt to your business instead of customs serving your business,” says Gillet. “That’s where Singapore is strong – everything is smooth and reliable.”

Internet speed is everything

Yet Singapore’s Smart Nation program would not be possible without ultra-fast internet. Up until 2018, it had the fastest internet in the world. Now ranking second, behind Taiwan, the city-state’s average internet speed clocks at 70.86 Mbps. For comparison, the average internet speed in Germany is 24.64 Mbps – about one third of Singapore’s rate.

A fast IT network is quickly becoming one of the most sought-after infrastructures of our times, and is one of Singapore’s key lures as it seeks to attract the world’s largest companies. And it’s working: Facebook set up a new headquarters in Singapore in 2018, as did Google in 2016.

With its Smart Nation program, Singapore is making a bold next move to bolster its stability, efficiency and economic success. “Singapore has to keep ahead of the curve,” says Chan, “and continue to be digitally plugged into the world.”  —  Wade Shepard

www.smartnation.sg

Published: January 2020


Images: Edgar Su/Reuters; Zheng Hui Ng/Alamy/mauritius images; Silk and Salt Images/Getty Images; Ore Huiying/Bloomberg/Getty Images; Adobe Stock; Edgar Su/Reuters/dpa