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Speech at Singapore Business Awards (SBA) 2014

Mr Tan Chuan-Jin, Acting Minister for Manpower, Resorts World Sentosa

Skills, training and development
Mr Patrick Daniel, Editor-in-Chief, English and Malay Newspapers Division, Singapore Press Holdings

Mr Herbert Vongpusanachai, Managing Director, DHL Express Singapore

Mr Stephen Lee, Chairman, Singapore Business Awards

Judging Panel

Distinguished guests,

Ladies and gentlemen,

Introduction

  1. I am very pleased to join you this evening for the 29th Singapore Business Awards (SBA). Allow me to first extend my congratulations to the four winners – I am sure your achievements will inspire the business leaders of tomorrow, just as prior generations laid the foundations for your successes.
  2. We are also here today to recognise the business community’s contributions to Singapore and Singaporeans. Your success has generated jobs and opportunities for our people, both directly and indirectly. It is therefore clear that even as we re-balance our priorities, economic growth and business success remain important, as it enables our ability to do more on the social front.

    Building Tomorrow’s Economy, Together
  3. However, we cannot assume that what we have established today will remain relevant tomorrow. I don’t know if the world is indeed changing at a faster rate than ever before, but change is the constant. We do need to prepare for tomorrow. And while it is unclear what the economy of the future will look like, we do know that it must be driven by higher productivity and leaner manpower use.
  4. We are on track on this difficult, but necessary journey. But I would also like to encourage us to look from the perspective that it is an exciting journey because if we are able to ride the waves of change, there will be much good that we can do for our people. We can also position Singapore as a good place for us to continue trends that have developed in the Asia Pacific region Building on a base that is strong puts us in a good position, relative to many other countries that face financial crisis. We have a good base, and we should capitalise on that and transform. Suffice to say, the Government, businesses and workers need to be together in this endeavour.
  5. Let me illustrate with the Singapore’s electronics industry. We began in the 1960s with labour-intensive packaging and assembly of semiconductors. In the 1970s, we began to lose competitiveness in these areas. Instead of trying to place them on artificial life-support, the Government allowed them to be phased out. Businesses had to move up the technology ladder to manufacture hard-disk drives, in which we became one of the world’s leaders. In turn, when the hard-disk drive industry came under competitive pressure in the 1980s and 1990s, we moved up the value chain towards computer manufacturers and wafer fabrication of microchips. At each point, we upgraded the skills of our workforce for them to transit from one stage to the other. Through the ups and downs, the Government, businesses and workers worked closely together for the betterment of our people.
  6. As a result, the capabilities we built in electronics have positioned Singapore well for the industrial clusters of tomorrow, such as in clean technology and medical devices. The manufacturing of solar wafers, cells, and modules draws on skills developed in semiconductor wafer fabrication. Likewise, engineering capabilities from making precision electronics devices are relevant to building the sophisticated medical devices of tomorrow.
  7. Just as S. Rajaratnam talks of a democracy of deeds and not words, we are also an economy of outcomes and not just theories. Our practical experience has shown that market forces and Government action can work together to foster growth and create good jobs. Market forces are best suited to setting prices throughout the economy, albeit within the regulatory environment provided by effective Government. Both benefit from good co-ordination, flexibility, and hard-nosed pragmatism.

    Manpower is a precious resource – use it efficiently
  8. Our nation’s prosperity was certainly created, not inherited – and businesses like you are co-creators of that prosperity. This requires a clear-eyed understanding of available resources. Last month, Singapore experienced our version of autumn, with the grass and leaves turning brown due to the lack of rainfall. Many of us were almost delirious with delight when when the rain came pelting down again.
  9. During the dry spell, we managed to avoid drastic measures like water rationing, although there were calls for Singaporeans to remain vigilant and conserve water. Everyone knows Singapore’s water story: we have no hinterland to provide a constant and assured supply of water, and our only long term solution to reach self-sufficiency is to moderate demand and augment supply. To be sustainable, individuals and industry alike must make their consumption more efficient.
  10. Manpower, like water, is a precious resource. It is also Singapore’s only ‘natural resource’. Regardless whether the manpower is foreign or local, we all have to play our part to efficiently and effectively deploy these limited manpower resources. It is not a resource to be maximised, but one to be nurtured and developed to their fullest potential. This is something useful for us to think about. In order to fulfil the full potential of our workforce, it is not only about training our employees, but also about how we teach and train them. Because ultimately without their hearts and minds, it will at best functional. This is capacity building at its most fundamental.

    What does Productivity Actually Mean?
  11. A key part of our economic restructuring effort is to improve productivity. This occurs when firms produce goods and services of the same or higher value with less labour. The productivity accelerator can be activated by the use of technology, or simply by adopting more manpower efficient processes. Following the successful roll-out of self-checkout counters at its supermarkets, NTUC Fairprice has gone one step further and is piloting a handheld device – Scan2Go – for shoppers to scan items as they make their way around the supermarket. Purchases are tallied up well before shoppers even arrive at the dedicated checkout counters, resulting in time savings and productivity gains all around.
  12. The Government is committed to helping those who are willing and able to be more productive, regardless of size. My earlier example of the evolution of our electronics industry illustrates that at every step of the way, we moved up the value chain, and improved the sector’s productivity and more importantly, to set the stage, that we are able to make that transition. Throughout that journey, our workforce stayed competitive in an ever-evolving industry by developing newly relevant skills. Inevitably, some businesses fell away at each step of the way – it was not easy at the time, nor indeed popular, but it has proved to be the right thing for Singapore.
  13. We have observed our SMEs moving, slowly but surely, towards relying less on workers and taking measures to raise productivity. We have reached a stage that this is inevitable. It is about coming to terms with it. I have seen companies from similar sectors, which are similar in profile, accepting this change as the way to go, while others continue to appeal in hope for more manpower. The latter ultimately realise that they have to move on as well, but they have lost a couple of years in the process. Certainly SMEs are beginning to realise this, and rely less on workers where they can and improve their productivity. For many SMEs, especially the micro-SMEs, these are unchartered waters. For some, they may be used to operating in a certain way for a long period of time, and it is not easy to transform.
  14. But if you are in the same boat, why not paddle in the same direction? Mr William Tan of Hock Lian Huat Foodstuff Industry and Mr Michael Tan of Peng Wang Fish Product decided to take a plunge together. Their respective ngoh hiang (five-spiced prawn and meat roll) and fish cake businesses have factories in the same Bedok North building, with deliveries island-wide. Faced with rising costs and a tight labour market, the two Mr Tans worked with Republic Polytechnic’s Centre of Innovation to arrange for just one lorry – instead of two – to deliver goods from both their factories. The collaboration has already lowered costs, with the potential for even greater savings if more companies decide to come aboard. So you see, it can be as simple as just sharing one mode of transport and it goes a long way. The challenge is about how to share the simple ideas and it is always not easy, but this is something the businesses and associations can do to share best practices.
  15. We hope that bigger companies and MNCs can help guide the way to higher productivity. City Developments Limited (CDL) was a platinum winner in the 2013 Construction Productivity Awards1 for adopting prefabricated bathroom units in its residential developments, which improved CDL’s productivity by a whopping 77%. In the same vein, we hope that MNCs will draw on the innovations and practices from your operations overseas, and grow the productivity of your Singapore operations to the level of your most productive global units.

    The tight labour market ahead
  16. Among the feedback we have received is that businesses value clarity about your operating environment. Here is what I can tell you with certainty: the Singapore labour market will remain tight in 2014, and is expected to tighten even further as previously announced foreign workforce policy measures come into effect. This will place upward pressure on wages.
  17. To ensure that these wage increases are sustainable, firms must continue to improve productivity. A function of the tight labour market is that unemployment is likely to remain low; local employment has also increased. But, economic restructuring is not about replacing lots of foreign workers with local workers. It is about producing the same or more value with fewer workers, period. The current high rate of local workforce growth will be difficult to sustain in the long run, and we know that there are limits to our demographic constraints.
  18. While we continue to moderate growth in our labour force, we remain mindful of maintaining Singapore’s competitiveness. We will monitor the impact of previously announced foreign workforce policy measures on employment, productivity, and incomes, and continue to take progressive steps to moderate foreign workforce growth to sustainable levels.

    Changing Mindsets
  19. In 2002, many felt squeamish when then PM Goh Chok Tong toasted the nation with a bottle of NEWater at the National Day Parade. Today, NEWater makes up a third of our water needs, and will increase to 55% by 2060. 35 million gallons of NEWater were pumped daily into our reservoirs during the recent dry spell to supplement falling water levels. It took time, but society’s mindset towards NEWater shifted. Similarly, a critical component of our economic restructuring journey is to change individual and societal mindsets. There are two that I will touch on.
  20. For a start, how do we regard our people? I am always concerned when I read surveys of how disengaged our people feel at the workplace. All of us here, as senior management and bosses, have a responsibility and it would be useful for us to reflect on this. People are not digits. They are not a resource to be maximised. People come up with innovative practices. People execute these practices. People are the ones to go the extra mile. People bother to do so only if they are engaged and empowered. Productivity depends on our people, and it depends on the culture that can only be implemented from the top. Seated in front of me are captains of industry and award-winning executives. You have been in teams where you feel that you were part of something invincible, that there is nothing you cannot overcome or no distance that is too far to go. You felt engaged, empowered and wanted to do it for your team. Do your colleagues and employees feel the same way? Build something special.
  21. Secondly, we must also stop thinking of manpower as the sole solution. This applies to the corporate sector, daily life, and even national security. Our Republic of Singapore Navy Formidable-class Frigates are operated by a crew that uses a third less manpower2 than equivalent warships from other Navies, at no trade-off to operational readiness. This is being manpower efficient, and doing the same or more with less manpower.
  22. In his round-up-speech following the Budget Debate, DPM Tharman called for a key shift in social norms, where self-service becomes the default. Let me close by talking about petrol stations, where two manpower inefficient and low productivity activities are currently the default.
  23. The first activity is pumping petrol. Those who drive have become accustomed to the usual protocol: pull up to one of the petrol pumps, ask the petrol station attendant to fill up the tank, and then join the queue to pay inside. That is neither productive nor manpower efficient. An average petrol station has numerous refuelling pumps – would it not be more efficient to pump your petrol yourself and pay at the pump’s credit card machine, which now lies unused?
  24. The second activity is the car wash, which is possibly the only industry in Singapore to have regressed on mechanisation over time. Some of you [like me], would sometimes wash your car yourself by hand. But, there are many who appreciate the convenience of a drive-through car wash when you visit the petrol station to refuel. However, drive-through bays that used to be fitted with automatic carwash systems have instead been hollowed out and replaced by a gauntlet of foreign labourers to manually soap, spray and dry your car. Many are concerned that automatic carwashes will leave ‘swirl’ marks on the paintwork – a quick look online reveals a spirited debate on both sides. This is another example of a deeply entrenched mindset. While automatic carwashes are the norm in many other countries, they are few and far between in Singapore. Even if there is available technology to provide a ‘swirl’ free automatic carwash, we must still shift our mindsets in order for the technology to gain traction in Singapore.

    Conclusion
  25. Thus, for us to successfully restructure our economy towards higher productivity and leaner manpower, we must concurrently change our mindsets and shift our societal norms. Higher productivity and leaner manpower-use need not be at the expense of business profitability and competitiveness.
  26. Our productivity message is not an empty slogan on a bumper sticker. But, we cannot simply conjure up productivity growth. Sustained restructuring of enterprises, jobs and mindsets will take time, though we must not lower our line of vision to focus only on the day in front us. Singapore has always been open for business; in order for Singapore to remain so, we must keep our eye-line high, and look to tomorrow, today. And when our economy works well, our people and our nation benefits.
  27. Once again, my heartiest congratulations again to the winners this evening. Thank you.
1 Organised by the Building and Construction Authority (BCA).

2 From Minister(Defence) Ng Eng Hen’s PQ reply in November 2012: “For the Navy, the Formidable-class frigates needs a full complement of about 70 men, a very lean crew compared to similar warships from other navies, which typically operate with about 100 men.”