Speech by Mr Raymond Lim, Minister, Prime Minister's Office, Second Minister for Finance and Foreign Affairs at The Bluesky Evening, 15 July 2005

Minister Vivian Balakrishnan, ACE Chairman

Dr Loo Choon Yong, ACE Deputy Chairman

Friends

Ladies and Gentlemen

I am absolutely delighted to be here tonight. The annual Blue Sky Festival is a celebration of what we all passionately believe in ? an entrepreneurial and creative Singapore. I am heartened by how we have made good progress on this ambitious enterprise that we embarked on a few years ago. More start-ups are being formed - company formations are up 27% in 2004 against the previous year. More people are setting up their own businesses - the SME to population ratio has improved from one SME to 58 persons in 1997, to one to 32 today. We are closing the gap with developed economies like the US where the ratio is 1 SME to 20 people.

2. Tonight, in keeping with this being a "Blue Sky" event, I thought it would be appropriate to share with you, five unconventional thoughts on our common enterprise.

3. First, we often hear that in order for us to succeed, we need to have a business friendly climate ? cut down red tape, keep taxes low and build first class infrastructure and amenities. This is indeed important. But I think that going ahead, we need to pay equal if not more emphasis on getting the "People Climate" right. Let me explain why.

4. Talent is what will make the difference to a country's future. That is the name of the game. All major cities compete in this. Typically, we see this as a race to attract companies to Singapore and people will then come to Singapore to work in these companies. But going ahead, with strategic convergence on taxes and incentives, companies are going where the highly skilled people are, rather than the other way around. So the critical issue is whether we can attract creative, highly skilled people to Singapore.

5. Let's say you are a bright spark from China, India or Australia. You like Singapore because it is safe; the environment is clean and good for bringing up children. But that is not the end of it. You would also ask, what about the entertainment scene - the arts, music, and clubs? What is the intellectual environment like? How about the food? Can I get the excitement, energy and diversity of culture and ideas that I expect from a First World city? In other words, we need to compete on the full range of lifestyle choices that global cities like New York, London, Paris and Shanghai offer.

6. So this is our big challenge. Are we up to it? Yes. Step by step, bit by bit we are changing ? different types of music, different kinds of food and different people can be found in Singapore. So the buzz is getting louder. That we are becoming a "happening place" was brought home to me when the late Philippine Foreign Secretary Blas Ople visited Singapore a few years ago. He asked me to make sure that his schedule included a visit to our bookstores. His staff told me that when he last visited Singapore, he went back with bags full of books. He was a well-read man, a well-known columnist and he enjoyed the range of books that he could find in Singapore bookstores. The fact that a small country like ours can support big bookstores like Borders and Kinokuniya, tells us something of how our intellectual environment has changed. Similarly, when a British friend of mine had some relatives over, he took them to the Singapore Repertory Theatre to catch a play ? "ART". I had seen it in London years ago, and I honestly think that the Singapore production was better. So think about how things have changed. You come to Singapore not just to shop but also to catch a play, a musical, browse in bookstores and dine in a variety of fine restaurants.

7. The decision to go ahead with the Integrated Resorts is the latest in our efforts to ensure that Singapore will be among the top choices of international talent when they decide where to live and work; by offering them the full accoutrements of a unique, global, cosmopolitan lifestyle. A place where foreigners quickly feel like "insiders", an integral part of our community. If we fail to measure up, then we would surely lose in the competition for creative talent ? both to attract and to retain them in Singapore.

8. Second, let me turn to a related issue - the need to encourage and foster greater diversity. The conventional wisdom is that, if we want a creative society, it is critical to emphasise individuality, self-expression and openness over homogeneity, conformity and ?fitting-in?. But let me state what may seem a paradox - our capacity to accommodate diversity and differences is directly tied to the strength of our common values and beliefs. If we do not have these anchor points as a people, then diversity may well tear us apart. Then you don't get creativity but chaos.

9. Our challenge here is to build a consensus on our shared vision and goals that inspire, motivate and bind us as a people but yet are broad enough to allow you space to do your own thing, without which creativity cannot thrive in Singapore. In short, we must have "Unity in Diversity". A few weeks ago, I attended one of the largest community drumming festivals in Singapore, organized by the Youth Executive Committees of the South East CDC. More than a thousand students took part ? different drums were played, different beats were heard. But they were part of the same community drumming festival. "Many Beats, One Heart" ? that is what we should aim for.

10. My third point is that while our emphasis on efficiency has served us well, it can also be a limiting factor in our quest for a more creative society. Why? Our efficiency ethos may have caused us to have a tolerance for wastage that is too low to foster an environment of experimentation. Yet we need to encourage many people to come up with new ideas, to invest in research and development and to dare to be different. To achieve this, we need to accept that out of hundreds and thousands of such attempts; only a handful will be successful. Venture capitalists for instance expect only 10% of the projects they fund to be successful but that 10% is enough to make them rich. So, we must be willing to trade off efficiency for the hope of making it big.

11. Fourth, we need to be better not just at what others are doing but also be better at being different. This is what is called "blue ocean" strategy rather than

12. Fifth, we all agree that our companies need to internationalise in order to grow as the domestic market is small. Our traditional approach is to tie our internationalisation strategy to the domestic market. We do this by seeking to project our home advantages and know-how to a new market. So we are restricted by the talent and knowledge in our market. Yet in a global world, it makes sense for us to build our companies' competitive advantages by learning from the world - drawing on talent, competencies and knowledge from anywhere. Nokia for instance leveraged on R & D capabilities in the UK and consumer trends in Japan and in just 5 years overtook Motorola which mainly tried to rely on projecting its home-based knowledge. A local example would be Eu Yan Sang which developed a popular energy drink under its e?lix?r Tonics and Teas brand in the US by combining American branding with its know-how in traditional Chinese medicine. I am told that Britney Spears drinks it before her concerts!

13. In closing, let me say that as a country, we have been extraordinarily successful. Few countries have managed to go from Third World to First in a generation. Even fewer have achieved economic success with social harmony as we have done. But herein lays our biggest challenge - to avoid being the prisoner of our past successes. To do this, we must be perpetual worriers, never taking any advantage as permanent, and be constantly willing to change. As Mahatma Gandhi said "You must be the change you wish to see."

Thank you.