Speech by Mr Heng Swee Keat, Deputy Prime Minister and Coordinating Minister for Economic Policies, at the Singapore FinTech Festival x Singapore Week of Innovation and Technology on 8 November 2021
A very warm welcome to the Singapore Fintech Festival and the Singapore Week of Innovation and Technology!
Impact X Innovation
Much of our world today is powered by science and technology. In recent decades, humanity has experienced change at a pace that few would have thought possible. Innovation, and the advancement of technology, have brought about great economic and societal progress.
a. COVID-19 has further accelerated the pace of change. The pandemic has speeded the adoption of digital technology by several years, and most of these changes would be here for the long haul. Effective vaccines were developed in record time, and a previously unproven idea – mRNA vaccines – became a gamechanger.
b. The format of SFF and SWITCH has also evolved as we enter an exciting era of rapid innovation. Beyond an annual sojourn for changemakers around the world, we have also introduced year-round programming – where you can keep on learning, networking, and exploring new areas of collaboration.
Science, technology, and innovation will be even more essential tomorrow. We must rebuild a better world in the wake of the devastation caused by COVID-19. We must decisively tackle global challenges such as climate change.
a. Many of you here are global innovators and changemakers. A big part of the uplift that innovation brings can be left to the market. There is a thriving global eco-system for innovation. But the market is far from perfect.
b. There is much more we can and must do as we recover from COVID-19. Where we stand now, several forces are converging – embracing an era of greater innovation, the determination to build back stronger in a post-crisis world, and the urgency to deal with global threats.
c. Our efforts in the next few years will determine the trajectory of humanity for decades to come. We can collectively do much more to amplify the impact of innovation, and channel the momentum of change to build a better world.
Let me put forth three ways that we can maximise the impact of innovation in this time of rapid change.
a. First, by building momentum around technologies that can yield a step-change.
b. Second, by creating the right market factors, so that innovation can scale.
c. Third, by doubling down on wielding innovation to improve lives.
d. I will cover each in turn.
Build momentum around step-change technology
The first way to maximise the impact of innovation is to build momentum around technologies that can yield a step-change and to apply them widely.
a. Let me first put this point in context. Innovation needs to be pervasive for an economy to thrive and for a society to remain vibrant. And we must do all that we can to encourage and enable our companies, government agencies, and people sector to create new value.
b. But there are a few technologies that can yield a step-change. These are often deep tech solutions – which are not easily accessible to users, and where expertise is not widely available.
c. Left on its own, such innovation may not percolate as readily to the areas where it can make a lasting difference. We need a concerted effort to compress the development cycles, build new capabilities, and accelerate transformation.
d. Artificial Intelligence – or AI – is one such technology that can generate new solutions by harnessing data well. But AI is not easily understood or applied. Many countries have developed national AI strategies to develop the eco-system and deploy the technology more widely.
I launched Singapore’s National AI Strategy at the 2019 edition of this event.
a. We identified five national AI programmes, where we could deliver strong social and economic impact for our nation. These programmes have made good progress.
b. One project under our healthcare programme is SELENA+ – an AI system that detects major eye conditions from retinal scans. SELENA+ managed to achieve a similar diagnostic accuracy as experienced human graders. We have since rolled this project out nationwide, to screen seniors and diabetic patients for eye diseases more efficiently. This has allowed us to provide early intervention more quickly and accurately.
c. Building on this momentum, I am pleased to launch two national AI programmes today – in finance and in government.
The National AI Programme in Finance includes NovA! – an industry-wide AI platform for financial risk insights generation.
a. NovA! is a collaboration between Singapore-based banks and local FinTech firms. In the initial phase, NovA! will focus on helping financial institutions better assess companies’ environmental impact and identify emerging environmental risks.
b. Over the next three decades, an estimated US$100 trillion of climate-aligned funding will be needed to achieve the Paris Agreement targets. NovA! will better enable financial institutions to assess these investments and their associated risks, and check against greenwashing.
The National AI Programme in Government aims to improve public sector service delivery in several ways.
a. One area is in the use of AI text analytics for better sensemaking of the large number of feedback that our frontline agencies receive each year. This will allow us to better understand the pain points and serve citizens better.
b. Another area is the use of AI for better job-matching on our national jobs portal. This is particularly salient during the pandemic, where many have been displaced and are looking to switch to other industries. We are using AI to develop more personalised jobs and skills recommendations. Based on our pilot, this new tool has improved total job placements by 20%.
Our national AI strategy also involves building a vibrant AI eco-system for sustained innovation, and a strong commitment to AI R&D.
a. We are seeing initial returns on our research efforts. Singapore has been ranked first for AI publication impact. This is partly the result of the close collaboration between our industry partners and researchers.
b. To further increase our impact, Singapore is setting aside an additional S$180 million to accelerate fundamental and translational AI research. This is on top of the S$500 million committed so far.
c. One of the areas where we will invest more funds is resource-efficient AI. As a small country, our datasets are also small. So we need to better train our machines to learn from small but high-quality datasets.
d. Our investment in AI R&D is not large relative to global investments in this field. But by focusing on where we can make the greatest impact, we can make every effort count.
Critical to any national strategy around step-change technology is the ability of all stakeholders to work together. This is a common thread that runs through our National AI Strategy, as we seek to apply AI widely and invest systematically.
a. A similar approach can be applied to other technologies that can potentially yield a step-change, including quantum computing, additive manufacturing, and synthetic biology, to name a few.
b. By taking a deliberate, coordinated approach to step-change technology, we can make the most of this window of convergence to create a better society and a more vibrant economy.
Create the right market factors for innovation to scale
This brings me to my second point. Innovation goes beyond encouraging new ideas and taking a coordinated approach for step-change technology. Often, the ability to scale depends on creating the right market factors for solutions to be viable. Only then can we maximise the impact of change.
Let me illustrate my point on market conditions with climate change, not least because COP26 is currently ongoing in Glasgow.
a. Climate change is probably the most severe threat to humanity. At our current trajectory, the 1.5℃ global warming threshold could be breached in the next 10 to 20 years. COVID-19 has been a stark reminder that global challenges, such as climate change, must be met with our collective action.
b. From EV eco-systems, to low-carbon hydrogen, to carbon capture and sequestration – countries around the world, including Singapore, are pushing the boundaries of sustainability tech research and experimentation. But there is much more to be done.
c. For solutions to go from pilot to scale, we need the right market conditions. And there are several moves that we can make.
The first move is to ensure that the externalities of carbon emissions are correctly priced. Carbon tax is one of the most economically efficient mechanisms to curb climate change. If we price the externalities correctly, this will also shape future investment decisions and spur decarbonisation efforts.
a. Singapore is the first country in Southeast Asia to introduce a carbon tax. There is headroom to increase the current rate. Earlier this year, I announced that we are reviewing our carbon tax rate for 2024 and beyond. The review is ongoing, and we will announce the decision early next year.
b. Raising carbon taxes is not easy. In the short-term, there will be upward cost pressure for households and companies. This will affect cost of living and our competitiveness, but we will mitigate the short-term consequences. Raising carbon taxes is necessary to spur bold moves that will create a much more sustainable future for everyone in the long term.
The second move is to introduce mechanisms to shape the flow of capital.
a. We will need more innovative financing structures to crowd in private capital for sustainable infrastructure. Currently, around 60% of infrastructure projects in the region are not bankable. Through blended finance – involving a combination of catalytic capital, first loss capital, guarantees or other instruments – these projects can be sufficiently de-risked to be acceptable to sponsors and lenders.
b. To catalyse investments in carbon sequestration projects and technologies, we will need to build carbon marketplaces with robust governance standards and an emphasis on trust. Southeast Asia is home to the largest blue carbon stock in the world, which can contribute to the removal of large amounts of carbon from our atmosphere. If properly structured, nature-based solutions can be a new asset class, no different from agriculture and crops.
c. Singapore is host to Climate Impact X – an Asia-based global exchange for high-quality carbon credits. This is a promising solution in a fragmented and opaque carbon credit markets landscape. A global auction of nature-based solutions involving 19 leading companies was recently conducted. I encourage you to take part in the exchange’s carbon marketplace when it is launched early next year.
The third area is to put in place not just financial infrastructure but also underlying physical infrastructure to enable markets to work across borders. Solar energy is a good example.
a. Many parts of Southeast Asia and Australia have an abundance of sunlight. To fully harness the potential of renewable energy, we need a robust regional energy grid for markets to fully work.
b. We hope our pilots to import electricity, and regional arrangements such as the Laos-Thailand-Malaysia-Singapore Power Integration Project, will serve as a pathfinder towards a broader ASEAN Power Grid. This vision will take time to realise, but is critical for low-carbon electricity to be traded freely between ASEAN countries.
Getting market conditions right will be a continued process of discovery. The ongoing global energy crisis is a reminder that transitions are not always seamless, and we need to pace our transition well. But if the fundamental market conditions are right, we will eventually arrive at our goal.
Double down on ensuring that innovation improve lives
The third way we must act to maximise the impact of change is to double down on ensuring that innovation improves lives.
a. Most innovations in fact set out to do so. But we also need guardrails to allow innovation and new ideas to flourish, while guarding against the downsides.
b. One example is social media. It is a great way for people to connect and stay in touch, especially during the pandemic. But as more of us consume information through social media, there has been growing concern over fake news, the rise of extreme behaviour, and the effect on mental wellbeing. We are now seeing greater debate on the regulation of social media, and introduction of powers to tackle fake news.
c. AI is another example of a technology with tremendous potential for change. But as the late Stephen Hawking reminded us – “AI will either be the best thing that’s ever happened to us, or it will be the worst thing. If we are not careful, it very well may be the last thing.” The potential for AI is huge, and it is critical to ensure that AI is ethically used.
d. Singapore is contributing to the ethical use of AI in various ways. One example is Veritas – a framework for financial institutions to ensure that their use of AI and data analytics is fair, ethical, accountable and transparent.
e. To accelerate innovative solutions in the responsible use of AI, Singapore launched the Global Veritas Challenge in July. The Challenge was open to FinTech firms, solution providers and financial institutions around the world. Over 80 submissions were received, and the winners will be announced tomorrow.
Beyond putting in place guardrails, we can also do more to realise the upside of innovation. We must make a deliberate effort to ensure that more people can benefit from the outcomes of innovation.
a. This involves bridging the digital divide – by supporting SMEs on their digitalisation journey, and helping workers and seniors to pick up digital skills. We must also improve access to digital innovation and services for the broad majority.
b. This involves making the most of the digital backbone in Singapore – with a national digital identity in the form of SingPass, a national payments system in PayNow, and strong broadband and mobile connectivity. We can constantly find new ways to serve our people better.
The latest initiative is e-GIRO, which we are launching today.
a. GIRO is a direct debit mechanism that allows an individual to set up a standing instruction for a billing organisation to make deductions from his or her bank account.
b. GIRO applications are needed to set up payments for bank loans, income tax, mobile phone bills, season parking, and school fees. Almost every resident will need to fill one up at some point. On average, there are around 1 million GIRO applications per year.
c. The current application process is manual. It takes on average three weeks to process the application, and up to six weeks if further clarifications are needed.
d. So participating banks and billing organisations have come together to digitalise the process – to significantly shorten processing times and improve user experience. I encourage more organisations here to be part of eGIRO.
I also hope to see more companies working together, building on our strong foundations and digital backbone, to improve the lives of our residents and people in the region.
I have just covered how we can maximise the impact of innovation in this time of rapid change. The areas which I have set out – building momentum around step-change technology, creating the right market factors for innovation to scale, and doubling down on improving lives – these apply globally.
Singapore is a key node in the global innovation eco-system. In Singapore, we have put innovation at the forefront of all that we do.
a. We have built up a thriving start-up eco-system, with more than 350 deals worth more than S$5 billion in the first half of this year alone.
b. We are building a culture of innovation throughout our economy, with close collaboration between companies, researchers, and government agencies.
c. We have a steadfast commitment to R&D over the decades, and have committed S$25 billion to research, innovation and enterprise in the coming five years.
d. As importantly, we are a Global-Asia node – a gateway for global firms into Asia, and for companies in the region to explore the world.
e. Singapore will be happy to partner you on your innovation journey, and we welcome you to set up and grow an innovation base here.
Many of you are joining us virtually today. As you explore the year-long programme that has been lined up, I also welcome you to visit Singapore when the situation permits.
a. I wish you a fruitful week and bountiful opportunities ahead. Thank you.