Singapore’s recent annual Budget 2022 made clear that the government is laser-focused on reinforcing the digital backbone of all local businesses. Yet it also warned that the time for twiddling thumbs to digital transformation is over; action is needed now, especially for traditional sectors.
With the pandemic lingering but the crisis thankfully receding in the rearview mirror, the need for innovation to chart a path forward is more urgent than ever.
Singapore’s Finance Minister, Lawrence Wong, believes the city-state and its businesses still have an opportunity to be leaders in key segments.
To support Singapore’s digital innovation agenda as much as possible, the government has rolled out a number of schemes that do just that, even as they keep the pedal to the metal on infrastructure spending to ensure businesses have access to world-class broadband and 5G services.
Strengthening the digital backbone of traditional industries
Singapore is a leader in fintech and digital banking, though the same cannot be said for some of our traditional sectors like construction, real estate, and maritime. These have not enjoyed the same pace of innovative change, and this isn’t just specific to Singapore.
That these sectors absolutely must now think about moving faster on their digital transformation projects and agendas. The strong economic recovery from the pandemic is no excuse to avoid this transition.
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The risk is that Singapore becomes a leader in narrow technologies and sectors, but in a way that is not evenly distributed across our economy. This could result in R&D spending on innovation being insufficient for the new era we are entering.
As Minister Wong illustrated, local firms represent 80 per cent of all businesses in the country but only spend contribute about 25 per cent of the spending on overall R&D seen in the economy. This imbalance, I believe, is likely even starker in some of the traditional sectors I’ve highlighted.
Championing the innovation agenda in every sector
The world’s supply chains continue to be squeezed by inflation and volatile markets, which now include geopolitical considerations and the energy crisis as we transition from fossil fuels to renewables. It’s clear that the challenges shipping and maritime face are evolving.
That’s why it’s all the more crucial that maritime companies, many of which operate regionally and even globally, get their innovation roadmaps in order, even if it’s starting with something as simple as moving more processes from paper to digital.
Then there are the construction and real estate sectors. These were on the sharp end of the fallout from COVID-19 as entire economies went into shutdown and workforces moved from the office to the home.
Shopping moved online as e-commerce players benefited while physical stores became ghost towns. Social distancing restrictions meant that most construction sites emptied as workers couldn’t access them.
Data compiled by McKinsey found broad agreement among construction companies that digital and innovation are vital to their long-term prosperity. Yet still, not enough is being spent on their transformation efforts.
I’ll be the first to admit that solutions like cloud technology aren’t a golden bullet to solve all the hurdles some of these industries are grappling with. However, they are better than the business-as-usual alternative we often saw pre-pandemic.
Prioritising digital to emerge stronger
The good news is that there are clear reasons for optimism about the future of business and Singapore’s competitiveness.
Also Read: COVID-19 and the wave of business digitalisation
We’re lucky to have a government’s ongoing fiscal and monetary support with innovation in its DNA while also being a champion of business and capital markets.
There are also positive signs emerging in the data that a recovery is well underway with the domestic real estate market; for example, bringing in over SG$26 billion in sales last year at an annualised growth rate of more than 10 per cent.
Meanwhile, the domestic construction industry is expected to grow at nearly 16 per cent in the year ahead, according to data from the Monetary Authority of Singapore (MAS), even as the Building and Construction Authority (BCA) recently urged more aggressive adoption of digital technologies.
My message to businesses in these sectors is simple: let’s not get lazy now as things are starting to look better. Where there are opportunities to start new digital transformation projects, take them, even if it’s within siloed teams or departments and not necessarily across the entire organisation.
An example of somewhere simple to start is moving the finance department’s invoice processing from paper to digital, cloud-based alternatives (let’s not forget an unhealthy reliance on paper was a key reason accounting staff had to go into the office in person at the height of the pandemic).
The final thing I’d say is that starting on a digital transformation journey is a bit like starting any other good habit in that it spills over to other areas and reinforces positive change.
We’ve seen that digital transformations reveal hidden benefits to areas like business resilience and continuity planning, work from home (WFH) capabilities, improved data governance, and even a lower carbon footprint that will make your organisation more ESG ready.
Let’s not wait for the next crisis to invest in the innovation we need today.
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