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The Changing Roles of Government in the Age of Convergence

Yong Ying-I, Chief Executive Officer, IDA Singapore - Speech "Building Wealth in a Knowledge-Based Economy" Conference, Shangri-La Hotel

Yong Ying-I, Chief Executive Officer, IDA Singapore - Speech
"Building Wealth in a Knowledge-Based Economy" Conference, Shangri-La Hotel

Singapore, 20 March 2000

Panel - New Rules for Governments & Societies

1. We are in the midst of major revolution that will bring total change to the world as we know it. The Net age is not about technology. Catalysed by the convergence of computing and communications, the Net age is creating a monumental nexus where businesses, institutions, consumers and citizens are networking together on a global scale.

2. I would like to offer some thoughts on how Government might change in this new age. Some of the changes are obvious: governments used to compete for investments based on tax structures; we are now competing on the basis of our network readiness. But I believe it goes far deeper: that at its core, this revolution is about the urgent search for new models - new models of commerce, marketing, distribution; but also new models of governance, of new ways of approaching public sector service delivery in areas like healthcare and education.
Government's Room for Manoeuvre Reduced

3. Governments will not be able to control international flow of information and capital. This will reduce their range of manoeuvres. An example which will stick in my memory is President Suharto's actions at the onset of the Asian economic crisis that led to the collapse of the rupiah. The Indonesian economy was basically sound, and could have possibly weathered the initial loss of confidence in Asia. But Suharto did not comprehend the implications of instant global communications and global capital markets. He did not quite understand that every word, every action was instantaneously transmitted by CNN and Reuters to analysts across Asia, in the city of London and in Wall Street.

Relationship with Electorate will change

4. Government's relationship with the electorate and the people will also change. We are seeing the convergence of institutions and businesses with consumers and citizens on a global scale, where ideas and conversations, goods and services flow globally. Governments will find it hard to get people's attention for government's messages because people will be distracted by information overload and noise. Government will have to fight for eyeballs against foreign competitors. For instance, note that many countries do not allow the free sale of other countries' newspapers nor the broadcast of TV programmes from regional countries. There are strong strategic and political reasons for this. But global communications technology and the globalisation of the media industry makes it harder to keep the eyeballs of their people. ZaoBao Online has some 900,000 page views a day, and is the top chinese language news site worldwide attracting chinese readers from around the world. While some governments may try delaying actions, they ultimately cannot stop or control the internet in their country. Nation-building becomes tougher.

5. Government may also be less able to protect its citizens from foreign pressures and dangers, even when we want it. For instance, traditional barriers limiting the entry of goods and services at the border will be less effective. Government will be less able to protect local businesses from international competition. There is now a lot of discussion in the US and Europe about how to protect people from the dark side of the Internet. The phrase "nanny state" usually has a derogatory meaning, but people may be concerned when the umbrella is removed. For instance, children in Singapore will all be online. They will learn how to in school, with government providing one PC to every 2 students. Children who take being connected online as a way of life will develop a view of the world and of community very differently from the adults of today. This can be good or bad, creative or dangerous. Indeed, they may develop an entirely different language that the older generation cannot understand. One of my colleagues told me that his daughter was participating in an online chat group. When he appeared, she typed in "PAW". When he finally asked her what "PAW" stood for, she reluctantly explained, "parents are watching".

Government's Role in Business

6. The Knowledge-based economy will also impact the role of Government in business. This has been a hot topic in the press lately, with other countries expressing concern about investments by companies perceived to be linked to the Singapore government.

a. First, Singapore Government has said for some time that the public sector should not be in businesses that private sector can do. Public sector has been corporatising and privatising activities that can be commercially run. We have been calling for tenders by private sector to undertake projects that Government used to do in-house.

We should go further in future. The pressures of the Net age are forcing companies to restructure faster and more aggressively, to specialise on what they do well and outsource whole functions that are peripheral to their core activities. Government may also privatise whole functions e.g. data centres? Some of our admin and finance functions? This implies that Government can be smaller going forward.

b. Second, there is already a clear push for GLCs to be fully arms-length and run entirely as commercially driven operations. The GLCs have been aggressively restructuring in the last few years, with the clear objective of business performance. Management is being hired from a world-class pool. Public comments have been made about selling down Government's financial stakes in these companies. I believe that selling-down of the government's stake would provide us opportunities to build strategic alliances that will help the GLCs to become more competitive in the global arena.

c. While it should not be in business, Government can more actively consider how to leverage the commercial value of its assets, e.g. the IPR of its technology systems. A visitor to Silicon Valley commented to me that some companies there are selling capabilities that SinGov has already developed for in-house use. These companies are worth $bn. Should Govt be proactive in selling our IPR? For now, Singapore is going the route of urging government agencies to allow vendors to co-own the IPR (unless there are security considerations), so that vendors can use government contract experience to sell their next project and government gets project at lower cost: win-win. This change has come at the request of the industry.

7. Government agencies, as organisations, will face the same pressures as private sector organisations. We have to be connected to the world, we have to be organisations that know how to leverage their knowledge workers and we have to be able to move at speed and adapt to rapidly changing circumstances. Governments worldwide are known as "bureaucracies", another pejorative term. Going forward, Governments will have to become entrepreneurial and enterprising if we are to be effective in knowledge age.

a. The pressures facing IDA is a good example of the challenges faced. One of our aims is to put all companies in Singapore online. We therefore have promotional programmes. But we believe that virtually every company will be online in 5 years' time. Imagine the growth path during this period. Thus, developmental efforts and schemes designed to meet the needs this year will need to be totally revised to be relevant for 2001 when the needs will already be different from today.

Challenge For Government is Speed of Thinking and Adaptation

8. In the Net economy, it is often said that strategies and business models can last a mere 3 months. If so, our competitiveness in a Net age will be the speed at which we can think and adapt. If business models change every 3-6 months, then our ability to strategise and adapt individually and organisationally has to happen at the same pace. As with companies, the government also has to adapt at that pace. This is worrying to many - let's face it, most of us find comfort in stability. To adapt is a challenge, as it requires total change from what we have taken for granted. But by choosing to adapt, we can turn the situation to our advantage and help Singapore stay relevant. I think that the Singapore Government can and will adapt.