Speech by Mr Heng Swee Keat, Minister for Finance, at the Singapore Business Federation's Semi-Centennial Leadership Conference04 Nov 2015
Mr Teo Siong Seng, Chairman of the Singapore Business Federation (SBF),
Friends in the Business Community,
1. Good morning. I am pleased to be here at the Semi Centennial Leadership Conference. My heartiest congratulations to the companies who have won the Golden Jubilee Business Awards.
2. As a signature event of the business community’s SG50 celebrations, this conference provides an important opportunity for us to reflect on how business leadership can play a key role in value creation.
Continuing our Pioneering Spirit
3. When Singapore first became independent, there was a lot of uncertainty – uncertainty about how we can survive with no natural resources, uncertainty about our future.
- Businesses, both in the past and even today, similarly face many uncertainties – that is the nature of business. But what differentiated our Pioneer businesses from their peers was their ability to constantly adapt and change, to create a better future not only for their businesses but also for Singapore.
4. This Conference and the Golden Jubilee Business Awards are testament to how our companies have been innovative and resourceful in finding ways to deal with uncertainty and thrive.
- The recipients of this Award represent the diverse corporate landscape in Singapore. They come from a wide range of industries, covering lifestyle, retail, manufacturing, technology, real estate, finance and the list goes on.
- Although they come from different sectors, all 50 companies are good examples of how we have created value and reinvented businesses. These businesses stayed mindful of domestic and global changes, to ensure that their businesses remained relevant to the needs of their time. We need to continue embodying this pioneering spirit.
Creating Value for Our People and Businesses
5. Over the past 50 years, Singapore and our businesses have come a long way. In many domains, we have learnt fast and caught up with the advanced economies. Many of our companies are competing globally, and have to meet the challenges of the more intense competition. To stay ahead, we must think deeply about how we can better create value.
6. Singapore needs to shift from a value-adding economy to a value-creating economy.
- A value-adding economy looks at what is available or what products, services or ideas exist before proposing some improvements and competes largely on the basis of adding incremental value and keeping itself cost competitive.
- A value-creating economy focuses more on new possibilities and opportunities, and on innovation and differentiation. It competes on the basis of special capabilities. If we are simply producing what the rest of the world is producing, we will not be able to command a premium, or sustain our competitive edge. We have to produce what the rest of the world is not producing, or at least, not much of. To do so, we have to build deep capabilities and linkages, in our companies, in our industries and in our economy, to create new products and deliver better solutions, in cost-effective, innovative ways.
7. A value-creating economy is important for:
- Our People – to create opportunities and good jobs for our people to be at their best and to do their best.
- Our Businesses – to ensure that Singapore remains a home base to grow innovative entrepreneurial companies, and to provide a conducive environment for companies based here to succeed.
Business Leadership for the Future Economy
8. Companies are the building blocks of our economy – these are the basic units that organise the resources to produce goods and services. A value-creating economy is hence built on a network of innovative, entrepreneurial companies that can continually create value that exceeds the cost of its inputs. In turn, innovative companies are built by outstanding leaders who make the right strategic choices, execute rigorously and create opportunities for their people to be at their best.
9. I have earlier spoken about the 5 issues that will be critical for our future economy - companies, jobs, markets, technology and resources. Some outstanding corporate leaders have tackled these areas issues well and led the company to stay ahead.
10. There is no golden formula that spells out how leaders in companies can create value and stay successful. But there are useful learning points from those who have done so. Allow me to share some examples.
First – Building New Business Capabilities
11. We need to deepen corporate and innovative capabilities to prepare for the future of companies. Many businesses fail because they stick to the same business model and are unable to remain competitive when their peers develop similar or more superior competencies.
12. The best business leaders are able to learn and unlearn what they know, to create value by reinventing the company. Instead of staying in their comfort zone, these leaders are able to transform their business models to adapt to the evolving environment.
13. For instance, Boustead Singapore was a major distributor of brands like Procter & Gamble, Cadbury and Johnnie Walker in the 1960s. However, when many of these companies decided to set up their own offices in Singapore, Boustead realised that it was necessary to completely rethink its business model and moved into infrastructure-related engineering services. This is why Boustead is able to achieve its successes today.
Second – Inspire People
14. Companies create value when their people have the learning opportunities to develop deep skills and the space to innovate. I recently spoke to a corporate chief who led his team to create a major breakthrough product. He spoke passionately about how he went about not only recruiting some of the best minds, but creating the opportunities for them to learn from each other, so that their diverse skills, experience and perspectives could be fully harnessed to make the breakthrough. He did it so meticulously that he even decided on which team members would sit next to one another, to maximise the chances of learning.
15. So I was pleased to learn that OCBC launched the S$60m OCBC Campus in 2013 to meet employees’ learning and development needs. The campus caters to employees’ varied learning needs through a wide range of learning platforms including classroom, e-learning, and virtual classrooms. It provides employees with opportunities to sharpen their skills and leadership capabilities to prepare them for bigger and different roles in the Group. Several years back, I was pleased to launch a special programme that UOB Group launched with SMU to develop private bankers. The programme covered a wide range of skills for financial advisory work.
16. Such investment in learning is a good start, and I hope that leaders can strive to create opportunities for every staff to learn, reflect and innovate, and to do so in creative ways. Inspiring success in your employees today will allow them to create more value for you in the future economy.
Third – Connect to New Markets
17. The future of markets is about businesses seizing opportunities to connect to regional and global markets. This will help companies transcend the size of our domestic market and build scale.
18. For example, Sing Lun is a one-stop apparel supplier that has acquired a strategic production network outside Singapore. Today, it is headquartered in Singapore, with manufacturing facilities located in 6 countries (Vietnam, Cambodia, Indonesia, Sri Lanka, China, and Malaysia). Sing Lun is also attuned to global trade issues that may affect its competitiveness.
19. Singapore is already an externally-oriented economy, but we need to delve further into strategies to help our companies expand into these markets amidst rising competition. Internationalisation is complex. This is why good business leadership is key to help organise ourselves to better connect to regional and global markets.
Fourth – Invest in Technology
20. I recently visited New York City and had several interesting conversations with several teams of business leaders and officials. Usually, when one talks about information technology and the economy, one thinks of Silicon Valley. But in fact, New York City has been investing a fair bit in R&D in science and technology, especially in ICT, as many business leaders and officials believe that technology and ICT in particular, will transform every business. And they are working hard at it. Several business leaders told me that with ICT, competition may come from places that one least expected. On the other hand, being able to make the full use of technology can allow one to create value in new areas and in new ways that one may not expect.
21. We have an interesting example in Singapore. It seems unimaginable that tropical Singapore builds ice-breakers for the freezing Arctic conditions. But that was what Keppel Singmarine (KSM) did, because it invested in technology to find new solutions for new frontiers. KSM was the first in the tropics of Asia to build ice-breakers for the Arctic. They also built the first ice-class Floating Storage and Offloading (FSO) vessel deployed in the Caspian region. KSM has differentiated itself through its comprehensive suite of proprietary designs and customised turnkey solutions. This has not only allowed them to stay relevant, but their designs have also become industry benchmarks.
Fifth – Optimise Resources by Collaboration
22. In the future economy, we will face even tighter resource constraints than before, in land and labour, as our workforce growth slows. As such, it is even more important to enhance value creation by optimising resources that we have. We need to aim to do more with less.
23. Many companies are turning increasingly to automation to reduce the need for manpower for routine, repetitive tasks. This is a common way to optimise scarce resource.
24. I would like to urge business leaders in Singapore to explore how to collaborate to achieve scale and to reduce overheads. A common technology platform for SMEs, common kitchens for the food industry and the sharing of infrastructure are ways to maximise the use of limited land and labour resources. I understand that SBF has been promoting the PACT scheme among its members, so that each company can maximise its value creation with the resources it has. These are creative ways, and I would urge SBF and other trade associations to consider how best this can be done.
25. These are the 5 areas of technology, businesses, resources, capabilities, jobs and people and I hope we can continue to explore these topics in some depth.
26. To reiterate what I said earlier, a value-creating economy has built on a network of innovative, entrepreneurial companies that can continually create value that exceeds the cost of its inputs. In turn, innovative companies are built by outstanding leaders who not only make the right strategic choices but execute rigorously and most importantly create opportunities for the people to be at their best for them to have their deep learning of skills and the space to innovate.
27. I have earlier spoken about how these issues will be critical and in this room, we have leaders in your respective organisations that together will have a vast amount of experiences running companies, competing, creating value and creating opportunities for your staff, your people to be really at their best. Indeed, leaders in your respective organisations are well-positioned to spark changes and to create value. I am confident that each and every one of you will be able to steer your companies to even greater heights.
28. Once again, I am pleased to play a part in celebrating your achievements so far. I look forward to working together with all of you towards our future economy. Thank you.