A survey conducted by United Overseas Bank (UOB) in November 2019 illustrates that SMEs in Singapore are focusing on boosting productivity as they grapple with macro-economic and socio-political uncertainties this year. The UOB survey included 615 local SMEs with a revenue of less than S$100 million. Nearly half of the SMEs surveyed have a positive outlook for their business in 2020, while nearly a third are not so optimistic about it.
While cost reduction and new streams of revenue generation are top business priorities, more than half of the SMEs polled, mentioned increasing productivity as their top priority. Technology adoption has often been linked to an increase in productivity. SMEs in Singapore appear to be on the right track as currently 65% use digital solutions, mostly geared towards accounting, HR and customer relationship management. Digitalisation involves a widespread adoption of cloud and automation solutions. If we look at the key drivers of cloud adoption across all global organisations (Figure 2), we find that optimisation and productivity are key incentives.
Interestingly, the UOB survey also finds that more than half of SMEs in Singapore have sustainability goals. Resource optimisation and energy efficiency will also see higher adoption of technology in the future.
Government Initiatives Empowering SMEs
Government agencies and industry bodies have always been proactive in empowering SMEs with technological knowledge. There are various programs and initiatives to promote digitalisation, which have made Singapore SMEs competitive at a global level.
The Infocomm Media Development Authority (IMDA) is helping Singapore SMEs to scale and improve their digital capabilities, expand their network and go global through collaboration with multinational companies (MNCs). The SMEs Go Digital program launched in 2017, has seen an estimated 4,000 SMEs adopting pre-approved digital solutions.
Several organisations in Singapore – such as A*Star and Enterprise Singapore – have targeted programs for the SME community. One of the key challenges for SMEs that impacts their ability to invest in technology is a lack of internal IT skills. Initiatives such as the Technology Adoption Programme (TAP) recognise this and bring in multiple industry and technology stakeholders to translate new technologies into Ready-to-Go (RTG) solutions, aimed at SMEs.
Apart from technology, access to financing is a key factor that determines the success of an SME and remains a key focus of Singapore’s banking and financial sector. The digital wholesale licenses are also aimed at SME financing, especially targeting those that are unable to procure funds from traditional sources.
Technologies Enabling Digitalisation in Singapore SMEs
As mentioned earlier, cloud is the key enabler of digitalisation, giving organisations the ability to access solutions anywhere and anytime. Ecosystm research shows that 80% of SMEs in Singapore use an IaaS solution, while more than 75% use a SaaS solution.
There are programs that boost cloud adoption in Singapore SMEs as well. As an example, SMECEN, developed by the Association of Small & Medium Enterprises (ASME), and supported by Enterprise Singapore, Accounting and Corporate Regulatory Authority (ACRA) and Inland Revenue Authority of Singapore (IRAS) is a SaaS solution with accounting, HR and compliance modules – integration with other business tools is on the cards.
Digitalisation will eventually involve investments in Automation and AI. For Singapore, AI is a key technology as it continues to focus on IoT, smart buildings, smart electricity, autonomous electric vehicles and other smart city solutions. The Government is working to open up access to data and AI tools so everyone can experiment. It especially wants to encourage SMEs to adopt AI and work on government use cases.
Singapore SMEs are ramping up their AI investments, especially in IoT sensor analytics (27%), machine learning (21%) and robotic process automation (16%), according to the Ecosystm AI study. Their key short-term drivers are insights into the competition and enhanced internal process monitoring. However, in the longer term, they are looking at cost reduction and better profit margins.
According to an OCBC survey in 2018, which polled 200 such companies, two-thirds of SMEs in Singapore are likely to go cashless by 2023. It is estimated that over 75% of Fintech transactions in Singapore are digital payments and it receives over a quarter of Fintech funding. Government initiatives such as FAST and SGQR, have opened up digital payment options for consumer use as well as for SMEs.
However, the UOB survey notes some concerns that SMEs have over digital payments adoption, including customer/supplier acceptance and security. This is an encouraging sign, which indicates that SMEs are not just adopting technology because of the hype – but are evaluating the pros and cons of tech adoption before embarking on a digitalisation project.
By creating a free account on the Ecosystm platform SMEs can benchmark their tech priorities and investments against their country, industry and global peers.
Following the announcement, in August 2019, MAS invited applications for 2 digital full banks (DFBs) aimed primarily at retail banking, and 3 digital wholesale banks (DWBs) primarily for SMEs and other non-retail segments. While DFB licenses are restricted to Singapore based companies (including foreign joint ventures with a Singapore entity and headquarters), DWB licenses have no such restrictions, opening the market to overseas players.
Applicants for the New Digital Bank License
MAS announced on January 7, 2020, that it had received 21 applications (7 for DFB and 14 for DWB licenses). A list of applicants has not been made available, and confirmation of application has typically come from the applicants themselves. The licences will be issued in mid-2020 with the commencement of business expected about a year later.
The race for the digital bank license in Singapore has seen several non-banking contenders. MAS has mentioned that applicants will be selected based on their market reputation, a proven track record, financial strength, innovative business models, and a commitment to develop the skills of the Singaporean workforce. The contenders who have announced their applications cover a wide range – from the Sea Group (whose eCommerce site, Shoppee has a strong presence in Singapore) to the Enigma Group (a financial organisation based in the UK). Here are some organisations that may well be ahead of the race:
“From the nature of consortium of bidders for DFBs and DFWs in Singapore, we can safely anticipate that the financial ecosystems will be aligned very closely with certain consumer demographics that make up the core target segments. As an example, Razer will be in a position to meet the specific needs of the millennial consumer base,” adds Gupta. “In saying that, it will also be important to evaluate how digital banks deal with educating consumers on wealth creation offerings and financial literacy, which is currently being achieved through personal touchpoints by the traditional banks.”
Singapore has emerged as one of the global leaders in fintech due largely to the maturity of the technology infrastructure, the banking sector and data compliance laws, as well as the tech-savviness of its citizens. The buzz created in the market when MAS announced the initiative last year is partly because a successful implementation in Singapore carries weight globally, especially in the relatively untapped Southeast Asian market.
Singapore also collaborates with the countries in the region empowering them with talent development and co-creation of fintech solutions. Initiatives such as the ASEAN Financial Innovation Network (AFIN) further promote fintech adoption through its open-architecture platform. Several countries in the region will take inspiration from Singapore and evaluate digital banks as a means to better financial inclusion. Thailand’s central bank has already indicated its interest in digital banks, prompted by the Singapore and Hong Kong initiatives.
Talking specifically about the competition in the Singapore financial industry, Gupta says, “Unlike some of the other markets, traditional banks in Singapore will continue to offer competing digital offerings as local banks such as DBS have been very savvy in building their digital offerings over the years. If their digital innovation keeps evolving at the pace they have been setting in recent years, they will present very stiff competitive barriers to the new digital bank entrants, especially given their ability to continue offering personalised service and touchpoints, coupled with compelling digital offerings.”
Commenting on Singapore’s AI adoption and implementation strategies, Ecosystm Principal Advisor, Tim Sheedy said “being a smaller country, Singapore is one of the few around the globe that can make investments into AI at a ‘country level’. Singapore has the luxury of having a progressive public sector that operates at the same speed as the private sector, and has the opportunity to become one of the leading economies in the world for both the deployment of AI in everyday services AND in ensuring the economy has the required skills.”
To begin with, the SNDGO will be initially working on key high-value sectors:
Transport and Logistics: Intelligent Freight Planning
Smart Cities and Municipal Services: Infra management and smart services
Healthcare: Chronic Disease Prediction and Management
Education: Personalised Education
Safety and Security: Seamless border clearance operations
Speaking on AI strategies devised for transportation, smart cities, healthcare, education and safety and security in Singapore, Sheedy said “all of these investments are ones that you would make as an economy if you had the opportunity. They are all logical and will all benefit the lives of citizens and the success of the overall economy.”
Source: Singapore National AI Strategy document (SNDGO) Graphic by: Ecosystm
Transport and Logistics: To optimise the freight and delivery services, a common data platform will be built. The aim is to bring in efficient transportation and logistics with intelligent AI systems in place by 2022 and further AI developments will scale deployment, enable optimised delivery processes and routing of services for freight planning.
Smart Cities and Estates: The country aims to launch AI powered chatbots by 2022 to record municipal issues and allocate them to the responsible authorities. AI powered services will be introduced to better serve the residents. By 2025, efforts will be established to optimise estate maintenance through AI and sensors and by the year 2030, data driven insights will be used to improve the infrastructure and living environment in Singapore.
Healthcare: An all-new AI system known as SELENA+ will be in place to screen and detect diabetic eye disease. SELENA+ is a first artificial intelligence algorithm which performs automated retinal photo analysis to detect retinopathy and systemic complications in diabetics. In addition to this, AI capabilities will also be used to predict cardiovascular diseases and create personalised chronic risk scores. All of these will help to detect diseases and take early preventive measures by the healthcare teams for the welfare of country and betterment of the economy.
“This could detect chronic issues early, and reduce the impact of them on individuals, families and the economy. Being able to make investments at a macro level – like this happening in Singapore – will make sure everyone benefits” said Sheedy.
Education: AI in education will bring the benefits of automated marking systems for English language in primary and secondary education. Further, AI-enabled learning systems will help students on learning and mastery of topics. The government has planned to expand automated AI and adaptive learning systems to more subjects at a later stage.
Sheedy said, “with the government being able to influence and change the syllabus in schools and universities, as well as the skills in the public and private sector, Singapore is uniquely positioned to drive real economic benefit from their investment into AI.”
Safety and Security: AI systems will help in border security and clearance procedures. AI will enhance travel experience with automated immigration clearance systems involving face and iris scans. The immigration processes will develop into seamless self-clearance systems and become faster.
“A few countries have the ability to drive this level of planning – most countries have many levels of government which make this planning – or execution of plans – difficult.” said Sheedy. “Many are also leaving the investment to the private sector, which means it will happen eventually, but may see many competing initiatives or different capabilities emerge that only benefit a single company, not an entire economy.”
According to Sheedy, there are many benefits of having deep investments in AI and AI capabilities in an economy.
It will make Singapore a more attractive investment location. If access to government and other services are seamless, then the barriers to entry to starting a new business or creating a new business capability will be much lower. It will mean that it is easier to build a business case for businesses to move to Singapore or start in Singapore – attracting investment funds and employment into the island state.
It will boost export capabilities – both for the skills that will be in demand through technology and business service providers and for the intelligent products and services that will likely emerge from the early AI investments. If Singapore can make more of the products and services that they produce “smart” – then these products and services will see increased demand – both locally and outside of Singapore.
It will make Singapore a better place to live and visit. With seamless government services, easier travel into and out of the country, and a government that anticipates the needs of its citizens, the quality of life for residents will increase.
The country can get ahead of the challenges and downsides of AI – and legislate or plan for these challenges, to ensure these challenges are understood and managed before they become problems.
In the escalating initiatives to become an AI superpower, Singapore has clearly indicated they are fully committed to leveraging AI to drive growth and citizen services.
An AI roadmap report was published by the Australian Government in November 2019, co-developed by CSIRO’s Data61 and the Department of Industry, Innovation and Science. The report identifies the opportunities and benefits of AI that Australia could capture.
The report classifies the strategies to help develop AI capabilities to boost the productivity of industry, generate jobs, bring economic growth, and enhance the quality of citizens’ life. To drive this, Australia has identified 3 key areas where it has the best opportunity to create new value-
Health, Ageing, and Disability – To develop AI to improve healthcare, aged care, and disability services while reducing healthcare costs.
Cities, Towns, and Infrastructure – To develop an AI system for the cities and infrastructure to provide better services, safety efficiency in a smart and cost-effective way.
Natural resource and environment management – Develop AI for better natural resource management and improve the productivity of agriculture, mining, fisheries, forestry, and environmental management.
Commenting on the rollout of 5G, Ecosystm Principal Advisor – Telecommunication, Peter Wise said “5G promises much faster, more reliable wireless connectivity that will bring applications such as augmented reality, higher quality video and eventually smart cars, to life. Moreover, IoT will also be enriched by the increased data carrying capacity that 5G enables.”
Singapore pushing for four 5G networks instead of two
Instead of the two initially planned networks for 5G, there are now four networks proposed to be rolled out. Two networks will be used for full-fledged 5G networks whereas the other two will be smaller ones that will provide limited coverage. The two smaller networks of 800MHz will leverage on Millimetre Airwaves and will be used in small ports and factories and be Singapore’s most immediate use of 5G technology. “More networks would likely bring more competition and deeper coverage. The designation of some spectrum for port usage appears to enable applications to get up and running quickly and not have to wait for a wider rollout” said Wise.
The IMDA has called for proposals from the interested operators rather than going for an airwave auction. Proposals will be assessed on telcos’ financial capability, as well as network security design.
The introduction of 5G will be a costly and time-consuming activity in order to set up the infrastructure and provide customers with sufficient coverage. “Some existing 4G cell sites will be able to be upgraded to 5G through software or card swap outs, which are comparatively cheaper than acquiring and building whole new cell sites. However, over time, 5G will require a denser network of smaller cell sites, and there may need to be infrastructure sharing arrangements between MNO’s for acquiring these new sites for practical and economic reasons,” said Wise.
Only half of Singapore will have 5G coverage initially
IMDA announced that at least 50% of Singapore will be covered with a standalone 5G network by the end of 2022 and full island-wide coverage by 2025. “Many users may not initially notice whether they are on 4G or 5G speeds. 4G is still more than adequate for most of today’s applications, including video” said Wise. “However, over time as heavy data applications are introduced or very high definition video becomes more mainstream the benefits of 5G will become more apparent.”
A standalone network will use 5G-specific technologies for developing newer applications around IoT, smart factories, and autonomous vehicles. “Another fascinating development will be whether any operators use 5G to compete with fibre” said Wise. “Singapore is well served by high-speed fibre broadband so while the Singapore population is high in density (making 5G economics better), it may be that having 5G as a competitor to fixed broadband is more successful in other countries where most fixed broadband is still provided over older, slower copper-based technology.”
To strengthen cybersecurity, the Cyber Security Agency of Singapore (CSA)and the National Cyber Policy Office (NCPO) of New Zealand inked an agreement on information sharing, cybersecurity and capacity building in the region. A new Cyber Security Arrangement will support greater information exchange, including through an annual cybersecurity dialogue between the two countries. The aim of the agreement is to increase information exchange, prevent incidents and threats and follow best practices on data, infrastructure, and systems protection.
Commenting on the announcement Ecosystm Principal Advisor, New Zealand-based Jannat Maqbool, said, “Engaging internationally on cybersecurity research and initiatives is fundamental given the trans-boundary nature of the cyberspace. As both nations become more digitised and connected, a collaboration will enable each to leverage strengths in key areas to develop a multi-pronged approach to cybersecurity. Both countries will also be in a better position to weigh in on the development of rules-based international order for cyberspace.”
Echoing these comments, Ecosystm Board Advisor, and former Global Head, Digital Development Unit at the World Bank, Randeep Sudanexplains how cybersecurity is critical to the growth and development of the digital economy. “Mitigating cyber risks will require coordinated action by multiple stakeholders, including governments, the private sector, academia, and non-governmental organisations,” Sudan says. These bilateral and multilateral G2G partnerships are, therefore, an essential piece in tackling cyber threats. “Given that Singapore and New Zealand are leading players in cyberspace, a G2G collaboration between them will offer learnings of immense value to other governments,” Sudan continues.
Due to Ecosystm’s own close ties with New Zealand, and considering that we are headquartered in Singapore, we are ourselves actively engaged in promoting the dialogue between New Zealand and Singapore. Ecosystm CEO Amit Gupta and Chief Operating Officer, Ullrich Loeffler are in New Zealand this week to participate in Techweek New Zealand (an annual initiative to promote and build awareness for new technologies and innovation in New Zealand) to meet key stakeholders and attend industry events.
Commenting on the sidelines of Techweek, Amit Gupta gave his thoughts on the agreement, “Both New Zealand and Singapore are in hyper-innovation mode at the moment. With the advent of Blockchain and AI especially spurring the growth of the Fintech ecosystem in New Zealand, there is strong potential gains in engaging with the already thriving Singapore Fintech ecosystem.”
New Zealand and Singapore are not only model free markets, but also have been key proponents of data privacy over the years, an area that requires a serious look, as we start to apply new emerging technologies such as AI. “There is an opportunity for these two forward-looking nations to take it a step further to build an actionable Data Privacy Corridor to streamline the Fintech collaboration between them,” Gupta added. “With New Zealand being an export economy and Singapore, a strong services economy, this would enable a much more seamless collaboration between these two countries.”
The collaboration does not end at cybersecurity and Fintech. As part of the partnership, a joint work programme is being negotiated, starting with two flagship collaborations – an advanced data science research platform to build New Zealand’s data science capability; and a food and nutrition cooperative science programme with a focus on ‘future foods’. Both countries have different areas of expertise, and collaborative measures such as these, give them an opportunity to share best practices that will prove mutually beneficial.
Mr. Heng conveyed that more than S$500 million is set-aside to shape up the artificial intelligence systems and to fulfill the nation’s cyber-security requirements. The fund will also improve Singapore’s supercomputing capabilities and the deployment of automation and robotics.
A further $144 million will be allocated towards food research to increase sustainable urban food production, and another $80 million will be contributed to the cell-therapy research in the biopharmaceutical sector.
How Singapore will benefit in terms of technology from this announcement?
The Government has clearly spent a lot of time to determine how to get Singaporean companies to invest in research that can benefit the country, and identifying areas that the industries can benefit in return.
Investment in Digital Technology
The Government believes that it is important to invest in the areas of Artificial Intelligence, Supercomputing and Robotics and hope that there will be more success stories for these industries. The S$500 million set aside will aim to increase the funding already set back in the RIE 2020 for the Digital Intelligence.
Speaking on the subject,Mervyn Cheah, Principal Advisor ,Ecosystm, says that “The Government aims to entice more Industry to invest in R&D in Singapore. PM Lee has mentioned that the industry today is investing just 1.2 to 1.4 of Singapore’s GDP in R&D in Singapore, and he wants the Industry to do more. It is a bit like playing roulette you place your bets on many numbers and hope that one of them will blossom and give you the returns and success. It is not possible that all R&D will come to fruition practically.”
Scenario for Businesses
The RIE 2020 is an initiative taken by the Singapore Government to make the nation a hub for R&D. By setting aside funds for both local industries and MNCs the government hopes that the industries will be able to invest and grow.
“There are a number of new start-ups being created as Singaporeans start to recognise that the government is putting in more R&D funding. At the same time, existing businesses will expand to take advantage of this announcement” says Cheah.
What to Expect – RIE2020
Currently, the local Industries in Singapore do not have a large appetite for investing in R&D in Singapore although there is a 50% spike from 2016 to 2018. The government’s aim is to invest in the Science, Engineering, and Biomedical fields industries, with the intent that they can increase their revenue.
Cheah says “the Government is looking at getting Multi-national Corporations (MNCs) to invest in Singapore for their R&D and believes that the industry can do better. So, the Government (National Research Foundation under the Prime Minister’s Office) is pushing the Industry to do more, and on their pro-active part, they have announced setting aside another S$700 million R&D funding to A*STAR, to the Singapore Food Agency, and other R&D agencies, with the hope that the Industries will further spend R&D in Singapore.”