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Keynote Address by Mr Heng Swee Keat, Deputy Prime Minister and Minister for Finance, at Singapore Corporate Awards 2019 Gala Dinner, on Tuesday, 23 July 2019, at Resorts World Convention Centre

23 Jul 2019
Mr Ng Yat Chung, CEO, Singapore Press Holdings,

Mr Tham Sai Choy, Chairman, Singapore Institute of Directors,

Mr Kon Yin Tong, President, Institute of Singapore Chartered Accountants,

Mr Patrick Lee, CEO Singapore, Standard Chartered Bank,

Mr Alex Newbigging, Group Managing Director, Jardine Cycle & Carriage Ltd,

Ladies and Gentlemen,  

Good evening. 


Introduction

1. I am delighted to join you this evening for the Singapore Corporate Awards. Let me begin by conveying my warmest congratulations to the awardees who will be honoured tonight. You are role models for corporate governance in Singapore. 

2. Corporate governance is important in anchoring confidence in our companies. The Board of Directors of a company plays a key stewardship role, ensuring that the resources that stakeholders have entrusted the company or institution are optimally deployed, to achieve the results that stakeholders expect. 

3. We are now at a time of swift and major changes – both structural and cyclical, in the global economy. Political, economic, social and technological changes are creating new challenges, but also new opportunities. Let me therefore share three ideas companies can work on, and work with one another, to build competitive strengths. 

a. First, businesses need to stay focused on strengthening their fundamentals and maintaining good corporate governance.

b. Second, we must press on with innovation and transformation to seize the opportunities ahead.

c. Third, the Government and our corporate sector must work more closely, to build our future economy together.

Strengthening our Fundamentals and Corporate Governance

4. Our companies today are facing greater economic uncertainties and faster technological advancements. 

a. The IMF downgraded its global growth forecast three times in the last one year.  

b. Singapore’s economic growth slowed to 0.1 per cent on a year-on-year basis 
and contracted on a quarter-on-quarter basis in the second quarter.

c. Uncertainties in the global economy have grown, with the US-China trade tensions and Brexit. All economies are affected, but as we are more open than most, we are feeling the effects more sharply. 

d. IMF is expected to release a further update on the world economic outlook shortly[1].  

5. While we are adjusting to these risks, we should not be pessimistic. There are bright spots in our economy, and our strong fundamentals put us in good stead. 

a. Just last week, IMF reaffirmed Singapore’s financial sector oversight to be “among the best globally”. 

b. IMF also observed that our economic fundamentals are “strong”, economic policies are “sound”, and our overall system “appears resilient even under adverse scenarios”[2]

6. In this climate of uncertainty, good corporate governance is even more critical. Businesses need to stay focused on strengthening their fundamentals. 

a. Strong board leadership plays a key role in navigating market challenges and identifying new growth areas.

i. The complexity of the external environment calls for a strong and high quality board to set the right direction and tone from the top. To navigate greater complexity, a high quality board with diverse perspectives is important. Diversity guards against groupthink, brings in fresh perspectives and fosters robust discussions. These are important in today’s complex and volatile environment. 

ii. The winners of the Best Managed Boards category that I am presenting this evening are diverse in composition, and far-sighted in thinking. They are diverse not only in terms of gender, but also feature an appropriate balance of expertise, skills, and age.  This is important – we must not judge diversity only in form, with set parameters like gender, age or background. Rather, what matters is diversity in substance – whether the Board has enough members with the range of expertise, experience and judgement.

iii. A good Board also puts in place good risk management systems and capabilities in the company. They understand that risks and returns are two sides of the same coin. Apart from operational and reputational risks, good Boards prepare for strategic risks that could disrupt their businesses. 

iv. A major strategic risk, and a strategic opportunity, is the Fourth Industrial Revolution. Rapid advancements in technology can very quickly disrupt a business that has otherwise been efficient and profitable. Nokia and Kodak are examples of how highly successful businesses were unable to respond fast enough to the disruption.   

v. The more pervasive use of digital technology, while driving efficiency, has also created greater complexity. Data protection and cybersecurity have become more critical. 

vi. Risk management helps firms better identify and anticipate risks, mitigate them ahead of time, and get back on track should an unanticipated event occur. This in turn ensures that companies remain resilient over the long term. 

vii. It is therefore timely that the Singapore Corporate Awards decided to introduce a new award category for “Best Risk Management”. 

b. I am also happy to hear that you are awarding the Special Recognition Award this year to recognise good human capital practices. Ultimately, a company can only be ever as good as its employees and workers.

i. Good corporate governance entails having a strong corporate culture, which emphasises the development of an adaptable and future-ready workforce. The success of companies and the success of workers are closely intertwined. Stronger companies provide better jobs and pay for workers, and highly skilled workers make companies more competitive. 

ii. As our businesses grapple with transformation and market challenges, we must continue to invest in our workers by reskilling and upskilling them to develop industry-relevant skills, ensuring that they are ready for the future. Companies should work together with the Government, and with NTUC, to ensure that ‘every worker matters’.   

Pressing on with Innovation and Transformation

7. This brings me to my next point on innovation and transformation. In this challenging economic environment, companies are naturally more cautious. Earlier, Patrick spoke about how good governance takes perseverance, in setting a long-term course, and constantly innovating and adapting. Indeed, as companies tackle the immediate challenges, they must continue to focus on the long term, and maintain the momentum for innovation and transformation. What are some areas that businesses can focus on? I will elaborate on three of them. 

a. First, automation and robotics. The deployment of automation and robotics may affect jobs in sectors such as traditional manufacturing, but there are vast productivity gains to be made. 

i. McKinsey Global Institute recently published a study that found that 60 per cent of occupations have at least 30 per cent of work activities that could be automated. However, past industrial revolutions have shown that, in the long run, technology adoption results in greater demand for more new jobs, and raises productivity and living standards[3].

ii. Singapore is well-positioned to benefit from automation and robotics. The leaders and workers in our companies have been preparing for change. Over the years, Singapore has also put in place a strong investment environment, sound regulatory frameworks and good infrastructure[4]

b. The second area for companies to focus on is the digital economy. 

i. With digital technology, businesses can now easily reach consumers virtually anywhere and everywhere. Businesses should consider how digitalisation can capture opportunities beyond Singapore, especially in Asia. 

ii. An example is SeafoodXchange, Singapore’s first international and digital seafood B2B eMarketplace. Digital platforms such as SeafoodXchange can enable companies to digitalise and trade globally, to capture more opportunities overseas.   

c. The third area is to venture abroad, especially to Southeast Asia and other parts of Asia. Our immediate region remains a bright spot.

i. Today, ASEAN is collectively the fifth largest economy in the world[5], with a combined gross GDP of almost 2.8 trillion US dollars[6], and a collective market of some 67 million consuming households. This number could almost double to 125 million by 2025[7], making ASEAN an important consumer market. ASEAN is also forecast to become the world’s fourth largest economy by 2030. 

ii. A joint Google-Temasek report also estimated that the ASEAN digital economy had the potential to grow to 240 billion US dollars by 2025.[8]

iii. Beyond ASEAN, there are also long-term growth prospects in other parts of Asia, underpinned by Asia’s growing and increasingly affluent population. Asia accounts for about 60 per cent[9]of the world’s population. By 2030, Asia is projected to generate more than half of global middle-class spending[10]. By then, Southeast Asia, China and India’s combined GDP is also expected to reach 35% of the world’s GDP.[11]

8. Companies can work together, to seize these opportunities better. As the business environment becomes more complex and challenging, businesses that collaborate are likely to do better. 

a. Larger players can collaborate with SMEs to adopt the latest technologies, and build new capabilities. By partnering larger companies, SMEs can also better manage common challenges when venturing into new markets.

b. One important partner for collaboration is our trade associations and chambers (or TACs). Our TACs are in the best position to understand the needs of their industries, and to take the lead to form partnerships and strengthen the capabilities of our companies. 

i. Some TACs have been connecting enterprises of different sizes through their activities, including going on overseas business missions and spearheading industry-led initiatives.

ii. I attended the Singapore Business Federation’s inaugural strategic planning session for TACs last week. It was a fruitful session. Over 70 TAC leaders deep-dived into key issues such as internationalisation, innovation and digitalisation, as well as how TACs should transform to stay relevant for the future.

9. On that note, I urge all businesses to be bold, and press on with your innovation and transformation journeys. I am confident that with sustained efforts and greater collaboration, our companies can overcome the challenges and seize the opportunities ahead.

Building our Future Economy Together 

10. Third, the Government and our corporate sector must work more closely, to build our future economy together. The Government will continue to partner businesses in our efforts to transform the economy, and to promote forward-looking, pro-business regulations and policies.  

11. The Government is working towards smarter regulations, one that would enable innovation and reduce the cost of compliance, while ensuring that risks are effectively managed.

a. We have introduced regulatory sandboxes such as for FinTech and for autonomous vehicles. Firms can now testbed new solutions in real but contained environments.

b. On the digital front, we are working with the industry to enhance business processes and efficiency with new guidelines and norms. 

i. The Infocomm Media Development Authority is proposing changes to facilitate digital transactions, including the digitalisation of property transactions and cross-border trade documentation such as bills of lading. We announced a public consultation last month on the Electronic Transactions Act.  

ii. The Accounting and Corporate Regulatory Authority is also reviewing the Companies Act to expressly provide for the use of digital means for companies to conduct meetings and interact with stakeholders. 

iii. Singapore Customs is working with agencies and businesses on the next generation of trade processes – the Networked Trade Platform, that will enable electronic exchange of trade documents. This can facilitate border clearance, trade financing and insurance of shipments.

12. On the international trade front, while the support for globalisation has waned, we will continue to promote an open, rules-based, multi-lateral trading system.

a. Singapore is working with New Zealand and Chile to pioneer a Digital Economic Partnership Agreement. This is a new form of an international agreement that will cover areas such as data security, data standards, digital payments, digital identities and the use of Artificial Intelligence.

13. In our next phase of development, the 4G leadership will also strive to harness our diverse strengths, and partner Singaporeans to take Singapore forward. To this end, I call on businesses to continue to work with us to build our future economy together.   

a. We have already begun the journey, with the Future Economy Council, a tripartite committee that charts the direction of Singapore’s economy, and the ongoing implementation of our Industry Transformation Maps.

b. Our Government agencies will continue to partner businesses in your transformation efforts, and help workers upskill and reskill to meet the challenges of the future economy. 

c. As many of our challenges today do not have straightforward answers, we need Singaporeans to work together, if we are to succeed. This is certainly the case for economic transformation, which requires commitment and action not only from the Government, but also from companies, research institutions, workers, TACs and the labour movement.

Conclusion

14. To conclude, I hope that tonight’s winners can be champions of good corporate governance, and also leading examples of innovation and enterprise transformation, as we transform our economy. I am confident that our companies can rise up to the challenges, work together, and seize the opportunities ahead.

15. I would like to thank the Institute of Singapore Chartered Accountants, the Singapore Institute of Directors, and The Business Times for organising this year’s Awards. The annual Awards was first launched in 2005, and has continued to promote and raise Singapore’s corporate governance standards and business excellence. 

16. It is commendable that some of tonight’s winners are also past winners. They have not rested on their laurels. For the new winners, I hope that you will similarly continue to enhance your practices and corporate governance. I hope that all of you will share best practices and ideas, be champions of good corporate governance, and inspire other companies to do so. 

17. Once again, my heartiest congratulations to all award winners tonight, and I wish everyone a pleasant and fruitful dinner.

18. Thank you. 


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[1] Source: IMF’s website, ‘World Economic Outlook, July 2019’. IMF’s World Economic Outlook July 2019 update will be released on 23 July 2019, at 9am Eastern Time. Accessed at https://www.imf.org/en/Publications/WEO/Issues/2019/07/18/WEOupdateJuly2019.

[2] Source: Report by IMF titled ‘Singapore: Financial System Stability Assessment’, dated 15 July 2019.

[3] Source: Report by McKinsey Global Institute titled ‘Jobs Lost, Jobs Gained: Workforce Transitions in a Time of Automation’, dated December 2017.

[4] In an article by The Straits Times titled ‘Robots to wipe out 20m jobs by 2030: Study’, dated 27 June 2019, the lead author of an Oxford Economics study on the effects of robots and automation on jobs and productivity similarly remarked that Singapore is well positioned to benefit from the robotics revolution.

[5] Source: Report by ASEAN Secretariat titled ‘ASEAN Key Figures 2018’, dated December 2018.

[6] Source: Report by ASEAN Secretariat titled ‘ASEAN Statistical Yearbook 2018’, dated December 2018.

[7] Source: Article by McKinsey & Company titled ‘Understanding ASEAN: Seven things you need to know’, citing statistics analysed by the McKinsey Global Institute, dated May 2014.

[8] Source: Report by Temasek Holdings and Google titled ‘e-conomy SEA 2018: Southeast Asia’s internet economy hits an inflection point’, dated November 2018.

[9] Source: Oxford Economics database. Retrieved from www.oxfordeconomics.com.

[10] Source: Research by Brookings Institute.

[11] Source: Oxford Economics database. Retrieved from www.oxfordeconomics.com.