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 ASEAN ANALYSIS

                                                                                                                           Asean Affairs August 16, 2013  


Generating bright ideas in Singapore

Grace Chng
The Straits Times


A Singapore biomedical start-up, EndoMaster, has developed an endoscopic robot whose flexible arms can remove stomach and colorectal tumours without surgical cuts.

The device is said to be one of the first of its kind in the world.

Clinical trials conducted in India and Hong Kong have demonstrated that the instrument works. The process of commercialising it has started, the company said. The first finished product is set to be on the market in 2016 and will cost less than S$1 million (US$790,952).

The idea came to two Singapore academics, Associate Professor Louis Phee and Professor Lawrence Ho, in 2004 over a meal of chilli crab. They were inspired by the crab's pincers.

Since the device is at the cutting edge of its field, EndoMaster has the potential to be a S$100 million company or bigger, said Professor Low Teck Seng, chief executive officer of the National Research Foundation in a recent interview.

Venture capital firms seem to think so too, because they were lining up to fund EndoMaster to ready a system for production. The firm was swamped with offers from venture capitalists, said co-founder Phee.

In the end, Japanese optical component giant Hoya Group was chosen as it could help with developing a production system.

So far, the company has received under S$1 million from government agencies such as Spring Singapore for initial research.

Singapore boasts a handful of high-tech start-ups like EndoMaster, with the potential to become hundred-million-dollar firms driven by dazzling innovation efforts.

They include online luxe fashion store Reebonz and enterprise software company Deskera, which have been valued at S$250 million and US$100 million respectively.

More input than output

Innovation is high on the agenda as Singapore moves to become an ever smarter economy.

Many spectacular, lucrative inventions worldwide are launched by tiny start-ups. The noted business school Insead's report on the Global Innovation Index 2013, released last month, ranked Singapore the eighth most innovative country globally out of 142 countries surveyed, a drop of five spots from No. 3 last year.

Singapore was ranked in the top 10 for innovation input such as human capital, logistics and the ease of doing business.

But Singapore scored only 18th for innovation output, giving it an overall ranking for innovation efficiency of 121. This basically measures the bang a country gets for bucks spent on fostering innovation - and suggests Singapore is spending a lot, but not generating enough notable results.

Malaysia, ranked the 32nd most innovative nation, scored a better innovation efficiency ranking of 52.

Should policymakers here be concerned with the country's innovation inefficiency?

Singapore set aside S$16.1 billion over 2011 to 2015 on research, innovation and enterprise. Yet there seems little to show for it.

But first, how is innovation output measured? There are limits to measuring innovation efficiency, with many studies focusing on patents per dollar spent on research and development. The trouble is this method misses much innovation not associated with patents.

Other manifestations of innovation might include a new way of doing business.

Professor Ivan Png of the National University of Singapore feels Insead's innovation report "does much better by including a wide range of output measures and a wide range of input measures". But some of the measures are tilted against Singapore, he added. For instance, one measure of output is royalty and licence fee income as a percentage of service exports. "Singapore is a huge exporter of services like financial, trade and logistics. So, royalty and licence fee income would be a low percentage."

An easier way to measure output is to look at the number of innovation-oriented high-tech firms listed on the Singapore Exchange.

Creative Technology, which invented the sound card that dominated the personal audio industry for almost 10 years, is one innovation-centric, high-tech company on the local bourse. It is now on the wane, mainly because devices produced by Apple such as the iPod have cornered the market.

Then there is water treatment specialist Hyflux which grew its business from its expertise in membrane technology.

Apart from Creative and Hyflux, there are no other publicly listed, innovation-centric high-tech companies here, said Wong Meng Weng, entrepreneur and co-founder of a local centre for promoting innovation Joyful Frog Digital Incubator (JFDI).

Invisible innovation

Still, sad as that may be, some innovation output is "invisible" - the results are harder to track.

Over the years, Singapore's public research agency A*Star (Agency for Science, Technology and Research) has transferred technologies to local and foreign companies.

Under one scheme, T-Up (Technology for Enterprise Capability Upgrading), its researchers are seconded to local companies.

In the last 10 years, 417 of these researchers have been seconded to 244 firms. With the researchers' assistance, 79 per cent of the firms involved launched new products while 57 per cent created in-house intellectual property. This means revenue growth and added value to the firms.

Spin-offs from local research institutions have resulted in innovative output too. Local start-up Nanoveu developed a 3-D film with the Institute of Materials Research and Engineering. This has been commercialised into US$35 plastic screen protectors for the iPhone 5, which enable the phones to display 3-D images and video, with no glasses required.

Exploit Technologies, A*Star's technology transfer arm, has spun off companies too. LinkStar is a spin-off of the Institute of Microelectronics in the area of optical and wireless communications. In 2011, it licensed two institute technologies for use in its chips and other microelectronic systems.

In the start-up community, about 10 companies have been snapped up by bigger investors because of their technologies and/or their customer base. The deals have turned many founders and early employees into millionaires.

The best known deals are SingTel's S$12 million purchase of local food review site HungryGoWhere last year, and car portal sgCarMart, acquired by Singapore Press Holdings for US$48 million.

Of course, the ultimate goal is for Singapore to produce a billion-dollar Google-like company.

This may be a stretch, for the time being at least, but innovation-driven companies in the S$100 million to S$300 million range are within reach, as EndoMaster illustrates. Acquisitions or public listings of companies such as Reebonz could take place in the next year or two.

Low of the National Research Foundation believes the last 10 years have seeded the ground for big firms to emerge.

There is a lot of buzz around research, innovation and entrepreneurship. He is keen to fund local companies but with a strong emphasis on "managing their outcomes".

Says Low: "We're going to ask the academics we fund: What papers have you published, what disclosers and patents have you filed? Then see if they would become entrepreneurs to commercialise their research."

Placing bets

The government is also zooming in on four clusters with local expertise: speech and language, additive manufacturing, diagnostics and membrane technology.

Placing bets on likely winners is a good start. The Government could also play a role in creating demand for these technologies. Intellectual property lawyer Chee Chun Woei said the economics of innovation is a function of market forces and the economy.

A look at the Silicon Valley model is instructive. After World War II, the US Department of Defence invested billions of dollars in contracts for microelectronics.

This encouraged start-ups such as Fairchild, the grandparent of all semiconductor companies, to invest in R&D in microelectronics, confident of strong demand.

As a result, many types of semiconductors and chip designs emerged, such as silicon and gallium arsenide.

Some of the research ideas were shelved but many appeared in specialised devices, paving the way for the digital revolution.

JFDI's Wong said Singapore should follow this model. In terms of the domestic market, the government is the biggest customer of products - and its agencies should set the standard, he noted.

"It should start demanding true innovations and not products and services sold off the rack. The only way to supply that demand is through innovative start-ups."

One suggestion is for a government-led initiative, a "Grand Tech challenge", closely aligned to market needs to serve as a rallying cry - to galvanise researchers and entrepreneurs to generate new ideas - leading, hopefully, to exciting new products.

Only then, perhaps, might a corporate Facebook-like giant emerge from Singapore.



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