Mr David Lim, Minister of State for Defence and Chairman National Computer Board Speech - IT LIUP Conference & Exhibition '99
Mr David Lim, Minister of State for Defence and Chairman
National Computer Board
Speech - IT LIUP Conference & Exhibition '99
Singapore, 18 May 1999
Good morning, ladies and gentlemen.
1. I am happy to be here today at the first NCB IT LIUP conference. I hasten to add that it would not be the last. Yes, the name may not be the same the next time around, but the spirit of the program, and government's support for the upgrading of the local industry, will continue unabated, if not enhanced.
2. NCB launched the IT Local Industry Upgrading Programme, or IT LIUP, 3 years ago to accelerate the growth of Singapore's IT industry. But the concept of LIUP started much earlier in the manufacturing sector. It was first started by the EDB in 1986 to upgrade local manufacturers. Multinational companies (MNCs) participating in EDB's LIUP helped their suppliers upgrade their manufacturing operations through the transfer of technical and management know-how. Similarly under IT LIUP, each IT MNC helps to nurture a group of local IT firms, from product development to market expansion. NCB also chips in, providing guidance and funding for some of the LIUP initiatives where needed.
3. Today, at the first-ever IT LIUP Conference, we would like to share with you some of the successes in this program, and encourage more companies to participate in this scheme.
4. Currently, we have 8 IT MNCs collaborating with over 60 local companies. These 60 companies are not large, but are growing quickly. Collectively they employ more than 1,100 IT professionals and have combined revenues of an estimated S$150million. But they would have been even smaller without LIUP.
5. Five of the IT MNCs, namely Apple, BMC Software, Macromedia, Microsoft, and Oracle, have participated in IT LIUP since 1996. These 5 IT MNCs provided support to the local IT firms in 2 broad areas.
6. Firstly, they assisted local companies in product development, by providing access to their latest technologies. The local firms also benefited from focused technical support and a better understanding of product planning and positioning.
7. Secondly, the MNCs used their worldwide marketing and distribution channels to help local firms reach out to the global market. MNCs assisted their partners through joint marketing efforts such as product bundling and joint presentations. The local companies also gain additional advantage through better market intelligence from the MNCs.
8. With the support of the MNCs, our local companies have gained faster acceptance in the international marketplace, and in so doing they have raised Singapore's profile as a source of IT expertise.
9. But the benefits are not one way. The IT-LIUP MNCs have also benefited from an expanded market presence through the new range of products introduced by their local LIUP partners. These new products generate additional licensing revenues and enhance visibility for the MNCs products in Asia.
10. The IT LIUP has therefore produced a win-win partnership between the MNCs and local companies.
11 In fact, as testimony to the benefits of IT-LIUP, we welcome 3 more IT MNCs officially today to the programme. The 3 companies are: ILOG, Lotus, and Sun Microsystems. All three have already identified a long list of local companies which they will partner with.
12. Today, we are proud to say that IT LIUP has produced over 40 products in various stages of development. These products offer solutions to a wide spectrum of vertical industries, from healthcare and logistics to finance and education. Out of these, nine have penetrated into international markets such as China and even the US.
13. Two MNCs have done especially well, and have achieved tremendous success in assisting their LIUP partners in product development and international expansion. They are Oracle and Microsoft. To show our appreciation, the respective LIUP Managers today shall each be receiving the IT LIUP Managers Excellence Award.
14. But looking across the industry in Singapore, we believe there are many more potential IT LIUP MNCs and partners in Singapore. There are approximately over 800 local IT software companies in Singapore today. If only 20% of them are involved in LIUP, we would need to expand the LIUP program from the current tally of 8 companies to at least 20 companies.
15. This is NCB's target for the next 2 years. With each LIUP company working with 10 to 12 local partners, we aim to involve an additional 120 to 150 local companies.
16. The challenge is for the MNC LIUP companies to actively source for a pool of serious local partners with whom they can develop credible products and services. NCB sets a minimum of 10 local companies who are ready to develop products and services on the MNC technology platforms before admitting the LIUP company and its partners into the scheme. This is to ensure that there is a critical mass of companies which can effectively build up a cluster of capabilities, and that the investment we put into the LIUP program would not be wasted. With a large pool of enterprising local IT companies to tap, we do not expect MNC LIUP companies to find it difficult to meet this target. At the same time, we encourage local companies to actively seek out relevant MNCs in your fields of interest so that collectively you can pursue and benefit from this scheme.
17. IT LIUP is, of course, not the only mechanism by which local IT companies can develop and grow. Local IT companies must also actively seek out new opportunities on their own. New markets are constantly emerging in the IT industry, and in particular, for Internet based products and services. One research company, Forrester Inc, has projected that Internet-based business and trading in the US will grow by 30 times over the next 4 years, from about US$40 billion last year, to US$1.3 trillion in the year 2003. Local IT firms must therefore exploit this opportunity to develop Internet solutions for the global market.
18. Most of the products developed under LIUP today are not geared for the Internet. This means that there is an untapped market, and opportunities for local companies to expand their markets. Perhaps in so doing, they can also help their MNC partners extend their reach into new niches. This would be an even better outcome for the LIUP program, as local companies return the benefits which they have received under LIUP many times over to their MNC benefactors. I hope that local companies will seek out these avenues of growth.
19. The future ahead is an exciting one. As the Asian economies start to recover, IT will be a key enabler and accelerator of economic growth. We have invested heavily in IT infrastructure and IT training. This gives IT companies in Singapore a strong foundation on which to gain a headstart and build a dominant market position. We hope that many IT companies will take advantage of the benefits which Singapore has to offer. In particular, we hope that many more will, after today, be convinced of the benefits of the IT-LIUP scheme, and seek to actively qualify themselves for the scheme.
20. In conclusion, I would like to thank the 8 MNCs for their commitment in nurturing the local IT companies. I wish you, and your IT LIUP partners, every success, as you make us of your combined expertise and reach to capture new markets in the Asia- Pacific. With that, I wish all of you a fruitful day ahead. Thank you.