Digital Transformation in Southeast Asia

February 24, 2020

Companies looking to capitalise on the opportunities that digital transformation presents should be looking at Singapore. The concept of digital transformation is bandied about often but the full potential has yet to be understood and unleashed. Earlier in 2019, Singapore ranked first in the Asian Digital Transformation Index, ahead of South Korea, Japan, Hong Kong, Taiwan, Malaysia, China, Thailand, India and the Philippines.

Singapore also topped the rankings as a top hub for AI and robotics investment, according to fDi Intelligence, a data division of the Financial Times. The policies implemented by the Singapore Government and demographic trends have created favourable tailwinds for the development of technologies that can help streamline everyday life.

Research, Innovation, and enterprise form the basis for Singapore’s strategy of developing a knowledge-based economy. Singapore’s 2020 Research, Innovation and Enterprise plan has called for S$19bn to be invested in four deep tech domains. This means that any company that is seriously looking at building businesses that enable digital transformation should be seriously considering Singapore.

Digital transformation defined

Parsing the lexicon is difficult because “digital transformation” means different things to different people. A simple definition quoted in academic papers states that it’s the “application of digital technology in all aspects of human society.” But what does this mean when a majority of the processes that we’re interacting with daily are on electronic screens? A more comprehensive definition would talk about the use of digital systems to minimise human interaction, increasing the speed of processes, reducing the risk of errors, and opening up more time for value-added activities.

Eight out of ten companies that McKinsey surveyed stated that they have undertaken digital transformation efforts over the past five years. However, fewer than one-third of the companies that have implemented digital strategies have been successful. Digital transformation is not a salve, when implemented effectively it allows humans to focus their efforts higher on the value chain.

It’s difficult to beat a human and a machine, Steve Jobs noted this after reading an article in Scientific American which compared the calorie consumption to distance travelled of different animals. At the bottom of the chart, the most efficient method was a man on a bike. Man plus machine, can be a powerful combination. This is the efficiency that digital transformation should be unlocking.

Further, McKinsey has estimated that in ASEAN alone, technology can automate about half of the work performed in the four biggest economies, which currently generate US$900m in wages annually.

Avoiding manual physical processes can reduce costs and leave employees with more time to focus on higher value-add activities. Singapore will become a hub for digital transformation and the surrounding countries could benefit. This will lead to a step change in the standard of living in Southeast Asia as more employees focus on higher value-added services opposed to being relegated to simple manual tasks.

Singapore’s ICT Policies

Singapore has made it a priority to make doing business simple. This has been the most visible in how aggressively the country has been pursuing advanced technologies. Alibaba was able to obtain an AI patent in under three months in Singapore under the Accelerated Initiative for Artificial Intelligence. Typically, the application-to-grant process can take up to four years. Further, the Government is spending S$150m over the next five years to make the priority a reality.

Beyond that, there are a number of initiatives that the Government has launched that will allow Singapore to become a city in a garden of digital transformation, such as; opening up government data with the use of APIs, implementing strategic projects across the nation, using data to solve urban planning and transportation issues, providing services digitally, as well as encouraging an environment where technology businesses are created.

Government APIs

Developers are able to get access to publicly available datasets from 70 public agencies through the portal. Further, developers can access APIs that empower businesses to optimise their tax management capabilities through the IRAS API portal. The Land Transit Authority, Urban Redevelopment Authority, and Monetary Authority of Singapore as well as other entities have dedicated portals, in an attempt to make data easier to access.

Strategic projects

  • Singapore is rolling out a number of strategic projects that will make more lives digitally enabled. To give a sample of the initiatives that are being implemented, there’s the:
  • Core Operations Development Environment and eXchange (CODEX) that provides an architecture for common data standards and formats to enable data sharing,
  • E-payments developments which have seen the implementation of PayNow enabling instant payments across banks in Singapore, and
  • National Digital Identity system that allows Singapore residents to transact digitally in a convenient and secure manner with the Government and private sector.

Combined, these initiatives mean that it’s less necessary for businesses to implement paper-based Know Your Client (KYC) processes or rely on antiquated payment solutions, which can be expensive as well as slow to process.

Urban living and transport

From mobile applications that give residents direct access to the municipal agencies to dynamic three dimensional models that can be used for collaborative planning, the Government is leveraging technology to make living better for everyone. Further, the relatively homogenous driving conditions and near perfect condition of the road markings make it an ideal place for testing self-driving cars. The ability to leverage the open APIs for urban transportation allow people to develop digital solutions to everyday problems.

When it was implemented in 1998, the Electronic Road Pricing (ERP) system was able to solve some of the congestion issues. However, as new transportation issues are identified, data scientists will be able to use the available resources to come up with innovative solutions that might not be inherently intuitive because of the access to existing data.

Urban living and transport

For everything that a citizen could need, the Government is building digital pipelines. A Centre of Excellence will house specialist government engineering expertise. The specialists will be able to give guidance on Data Science, ICT Infrastructure, Application Development, Sensors and IoT, Cybersecurity, and Geospatial developments.

The Business Grants portal, will allow businesses to use the same information when applying for grants with multiple different Government entities. While the LicenceOne portal will allow businesses to apply for, amend, renew, or terminate licences from multiple agencies at the same time.

One of the more forward-thinking approaches that the government has adopted is the use of a block-chain based platform, OpenCerts, to issue and validate academic certificates. There are over 3,000 diploma mills worldwide and it has become difficult to validate the authenticity of applicants credentials. This is one of the few places where the application of Blockchain can easily improve current processes.

Creating a technology hub

Over the last decade, Singapore has evidently been trying to reinvent itself as a tech-hub. Increasing the amount of infrastructure that is available to young businesses and aspiring entrepreneurs. The introduction of the Entrepreneur First ideation program as well as founding grants and matching financing for start-ups. For example, under the Startup SG Equity investment scheme the government will provide up to 70% of the funding in the initial round of an investment. When combined, these initiatives are creating a thriving ICT ecosystem, where entrepreneurs are given the ability to test out their ideas and create the future.

Why build a Digital Transformation business in Singapore?

The high level of technological literacy in the general population means that people are willing to take a chance on digital strategies. A recent study by Reuters Institute for the Study of Journalism found that adult smartphone penetration is over 90% in Singapore. If new digital process are able to provide a measurably better service, the general population stand ready to adopt them.

Forward thinking policies combined with the creation of an infrastructure that allows businesses to easily access public data is encouraging data science innovations. What separates Singapore from other countries is the willingness to take action when it comes to ICT policies. The Government isn’t creating policies and waiting for the private sector to innovate and fill in the gaps. The policies are followed up with immediate changes to the way that business is done, allowing digital transformation to occur top-down and bottom-up.

The Government currently has the 2025 goals of; 1) Capitalising on data, and in doing so advancing communication and computational technologies, 2) Creating an IT eco-system that encourages risk-taking; and 3) Creating more meaningful connections through technology.

As I’ve outlined above, meaningful steps have already been taken to make this a reality. Policies and infrastructure that has been created mean that there are few places that could be better to build a Digital Transformation business than in Singapore.