SINGAPORE (Aug 12): One of the things my friend Manu Bhaskaran and I have been grappling with for a long time, even when I was working for the government, is how to have a new industrial policy that better supports the development of indigenous companies. The rate of technology disruption, [advances in] artificial intelligence and disintermediation of supply chains is only going to escalate from here on. The shrinkage of the global supply chain in manufacturing, for instance, means that foreign direct investment (FDI), which Singapore has relied on as a staple for growth, may no longer be such a good strategy for the future.

One way to think of it is, we do have big, successful businesses in Singapore today, but given the global disruptions that we are seeing, these business models may not be relevant 20 years from now. We are already seeing global companies pull back to their countries of origin. It would only make sense to start developing another model right now that is driven more by domestic firms. In other words, we need to grow indigenous companies and capabilities.

To be clear, there is still a role for FDI and MNCs in Singapore, but they should only be part of the story. For a long time, we have been too reliant on FDI in manufacturing and not spent enough efforts to grow our own small and medium-sized enterprises (SMEs). There are some homegrown successes such as BreadTalk Group and Creative Technology, but they are outliers.

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