Information Technology and Singapore's Future

George Yeo

At EMASIA '98 in Los Angeles

June 4, 1998

Not Choice But Necessity

For my luncheon talk today, I would like to give you a social and historical perspective of Singapore's efforts in information technology. For us, information technology is not a choice but a necessity. It is an integral part of our strategy to survive and, hopefully, to prosper in a complicated world. Singapore as a city-state is a little experiment in human society, of 3 million people struggling to make a living by being of use to others in a new age of uncertainty.

A Web World

2 The revolution in information technology has wreaked havoc with human society. By the next century, information technology would have altered the course of world history and transformed human civilisation. The current economic crisis in Asia is part of this process of destruction and renewal. Information technology undercut central planning and brought about the collapse of the Soviet Union. It ended the Cold War and forced China into the global economy. Everywhere in the world, information technology has weakened national governments and their ability to tax and influence the behaviour of their citizens. The welfare state, whether of the communist-socialist variety or the Fabian-Keynesian variety, is in crisis.

3 The economic crisis in Asia is still on-going. In many ways, it is an institutional crisis. The old institutions are unable to cope with the needs of the international financial market, wider political participation and rapid urbanisation. It will be years before new structures are created which can accommodate the economic and political forces unleashed by information technology. The Asian crisis is an unfolding drama with many plots and sub-plots, and with repercussions on the rest of the world.

4 The world in the next century will be a messy world. The certitudes of the Cold War are gone. Government monopolies are being undermined everywhere. The result is a profound devolution of power to regions, to cities and to individuals. The old hierachical world is giving way to a web world. National governments will still play an important role in the web world but other players will grow in importance - MNCs, NGOs, international organisations and, of course, the international financial markets which are now beyond the control of any particular authority.

5 However, despite the messiness, there will be an explosion of human knowledge and creativity. In many ways, the next century will see another renaissance brought about by information technology, in the same way that paper and the printing press helped to bring about the European Renaissance in an earlier period.

Singapore - A 21st Century Venice?

6 In that new age, Singapore will perform the role of past city-states like Venice, Milan and Florence. City-states are ephemeral and tend not to last very long. There are a few exceptions like Venice which endured a long time. Singapore was not conceived as a city-state. It was established by the British East India Company in 1819 as a trading post for the Far East trade. It prospered and eventually became the regional headquarters of the British Empire in Southeast Asia. Located at the southern-most point of the Eurasian landmass, Singapore's geographical position is excellent,. All ships sailing between east and west must round the corner of Singapore.

7 The lifeblood of Singapore has always been information, both public information available in the market place and private information jealously held by particular tribes and trading groups. Singapore quickly became a multi-ethnic community with links to all parts of Southeast Asia, to China, to India and to the rest of the world.

8 After the Second World War, in the period of de-colonisation, Singapore sought independence through merger with Malaysia in 1963. Unfortunately, the ethnic conflict between Malay-dominated Malaysia and majority-Chinese Singapore proved irreconcilable, and Singapore was unceremoniously evicted from Malaysia in 1965. In an age of nation-states, we were severely handicapped without a hinterland. The pundits then rated us poorly. We had to import everything including the water we drank. We still do. However, it was this sense of being in dire straits that forged a Singapore identity and a fierce determination to surmount the many dangers that we faced. Fortunately, the historical tide gradually turned in our favour. When Suharto took over the leadership of Indonesia in 1966 and formed the New Order Government, it was a positive development supported by the United States and applauded in the region. The war in Vietnam which so bitterly divided American society bought precious time for the region during the Cold War. After the Communist victory in the south in 1975, Vietnam sought hegemony in all of Indo-China. China intervened and, in Cambodia, Vietnam found its own Vietnam. The rest of Southeast Asia rallied together under the Association of Southeast Asian Nations (ASEAN). Singapore was able to concentrate on economic development and built up strong links to North America, Japan and Europe. Until the recent economic crisis, Singapore progressed and prospered almost without interruption for 30 years.

9 Our strategy has always been to identify the larger trends early and stay ahead of the game. Information is everything. In Singapore, you buy cheapest and sell dearest. We do not grow coffee in Singapore, yet we are a major supplier of coffee beans in the world. We produce no spices, but we are a centre of the Southeast Asia spice trade. We are also the biggest exporter of Swiss watches in the region. We have no oil but we refine a lot of it, and we are a trading centre for oil and other related products. Singapore's trade is more than 2½ times its GNP. Few Americans realise that US trade with Singapore is greater than US trade with France or US trade with Italy.

10 However, our position is never secure. No advantage is permanent. There is nothing we do in Singapore which others, more generously endowed, cannot try to copy and improve upon. This is why we have always pushed the use of information technology to maintain our information advantage in the region. Of course, this insecurity is also a spur to effort and creativity. Without a big hinterland, Singapore's Changi Airport has to compete for its share of international air traffic. Many airlines use Changi Airport by choice, not by necessity. Singapore Airlines has to work harder than most other airlines because it has no protected domestic routes. Much more than Hong Kong, the Port of Singapore is heavily dependent on trans-shipment. Information technology helps our port to stay ahead. The Port of Singapore has been paperless since the late 1980's. Port clearance, custom declarations and other administrative procedures are all on-line. Container cargoes are shipped from Calcutta and Madras to Singapore in order to be trans-shipped to Europe. Despite the additional sea voyage of hundreds of miles, the costs are lower because big container ships, which are very expensive, waste little time in Singapore. Using artificial intelligence computer programs, the loading sequence of containers onto a ship can be changed up to one hour before the ship arrives. If done manually, last orders have to be taken 10 hours before the ship comes in.

11 The greatest push for the use of information technology was in defence after Singapore became independent in 1965. As a vulnerable city-state, one of the first things we had to do was to arm ourselves. With the help of Israelis advisors, we created a system of National Service in Singapore. Up to the age of 45 or 50, every male Singaporean is a soldier. At the press of a button, we are able to field a fully armed defence force of a quarter million men. Information technology permeates every part of Singapore's defence organisation, from the call-up of reservists to the command and control of missiles and aeroplanes. The Singapore Armed Forces has the most advanced command and control system in all of Southeast Asia.

12 Today, we push the use of information technology across all sectors in Singapore even though we cannot anticipate many new developments like the growth of the Internet. Like in defence, information technology multiplies our overall effectiveness. We try to prepare every Singaporean for the IT world. In the 1980's, all Government ministries and departments were systematically computerised, often with the assistance of officers who had previously worked in the Defence Ministry. In 199-0, the BBC did a programme on information technology in Singapore and described us as an intelligent island. We were flattered and decided to use the name for ourselves, somewhat immodestly.

Singapore's IT Strategy

13 Singapore's information technology strategy rests on three major legs. The first leg is world-class infrastructure. Being a compact city-state, it is relatively easy to connect every home, office and hotel room. Our objective is to provide broad-band everywhere, either wired or wireless, and remove bandwidth as a constraint in Singapore. We will make bandwidth a readily available utility like water, gas, electricity and telephone connections. We are well on our way there. By the end of next year, every household in Singapore would have at least a coaxial connection to a national optical fibre network, which is in turn linked by satellites and undersea cables to all four corners of the world. We now require, by regulation, every new home to be equipped with broad-band in the same way as it is required to have water and electricity. Tip-top physical infrastructure is the first leg of our IT strategy.

14 The second leg is the education of our entire population in IT. Like reading, writing and arithmetic, computers are best learnt when we are young. Today's children can click the mouse faster than we can blink. In many countries, children of middle-class families have no difficulty with this new technology. But, without special effort, there is a danger that children of poorer families will miss out on the opportunity to learn IT. Once lost, this inability becomes a disability throughout life. Like the piano and violin, one can still learn the computer as an adult. But rarely does one acquire the same facility. Our strategy in Singapore is therefore to teach information technology to every child regardless of his family background. The Education Ministry now has a multi-billion dollar programme to provide one computer for every 2 school children in Singapore from first grade onwards. Every teacher will have a notebook. Every school will be on the Education Ministry's wide area network.

15 Most Singaporeans now understand the importance of IT, if not for themselves, at least for their children and grandchildren. Over 40% of households in Singapore now own PCs. Over one-third of households in Singapore already enjoy access to Internet. What we want is for every Singaporean to be computer literate so that he can function effectively in any bank, factory or restaurant, just as one would expect an employee to be able to read, write and count. An employer in Singapore in the next century should not have to worry that his employee does not know how to use a computer or the Internet.

16 All Government ministries and departments now have their own web sites on the Internet. Many applications and transactions are available on-line. The Post Office Bank has started home Internet banking. The widest application of information technology in Singapore is in electronic road pricing. For some time now, we have manually priced roads to minimise traffic jams in Singapore. From this year, the road pricing system has become electronic. Every car is now equipped with a little transponder. Depending on the type of vehicle one drives, the time of day, the day of the week and the road one uses, the system will electronically deduct a fee from the stored value card that is inserted into the transponder. The result is that most Singaporeans are now used to the idea of electronic cash which can also be used for public transportation and other transactions. Nevertheless, there are older Singaporeans who are still afraid of the technology and prefer to use cash and cheques. A few would never touch the automatic teller machine. But this is to be expected. It is a problem which time will solve.

17 The third major leg of our IT strategy is the development of Singapore as a hub for electronic commerce. This is the big payoff. For Singapore to remain a regional hub for commerce and finance, it must also be a hub for electronic commerce. To be a hub for electronic commerce, we need a facilitating system of law, regulation and supervision. For electronic commerce to take off, there must be a proper legal framework for contracts and enforcement. Property must be protected and there must be mechanisms for the resolution of disputes. Our courts and judges have to have a deep understanding of the technology. To be sure, cyberspace will create new challenges in the enactment of statutes and the development of the common law. For example, the identification of individuals in cyberspace have to be recognised in law. We also need to protect privacy. The issue of digital signatures will have to be closely regulated. Without such a system of trust, electronic commerce cannot flourish. Conversely, electronic commerce will concentrate in those hubs which have a reputation for trust. The first secure electronic transaction in the world was conducted in Singapore last year by Visa cards.

18 Eventually, there will be many such trusted hubs in the world. These hubs will become like cities in cyberspace. There will be international agreements linking them together so that electronic commerce can take place around the world with a minimum of fuss and uncertainty. Not everybody will want to be a part of such international networks. For example, there will be traders in dubious products who will prefer to operate in the dark alleys of cyberspace. Trusted hubs will operate in networks like the old Hanseatic league. Some networks will compete. Others will overlap. Singapore hopes to be a trusted electronic commerce hub working with other trusted hubs in the world.

New Problems

19 IT will bring many benefits to mankind. However, there will also be new problems. Let me identify three major ones for Singapore. First, there is a danger that Singaporeans may lose their sense of identity. Thus, even as we promote information technology, we are also working hard to strengthen our own sense of rootedness in Singapore. Singaporeans who romp the world like Marco Polo, either the real world or cyberspace, should have a strong sense of who they are and where they come from. Fortunately, it is in man's natural instinct to be parochial. We have to build on this instinct by the way we bring up our young at home and in school, and by the establishment of a strong civil society. For example, we are requiring all Internet service providers in Singapore to provide, as an option, a relatively sanitised Internet service called the Family Access Network for young children at home, for schools and for public libraries. Software like SurfWatch and NetNanny will be installed at the server level. This is more practical because many parents know less about computers than their children. Our objective is to make it easier for parents to make choices and exercise parental responsibility.

20 The second major problem is the use of information technology and the Internet by criminals and fanatics. Like fire, Internet is a force for both good and evil. Criminals and terrorists will also exploit the Web for their own purposes. For this reason, Singapore works closely with other countries and international agencies like Interpol to fight terrorism, drug money laundering and pedophiles on the Web. This is a cat and mouse game. The problems cannot be entirely solved. They can only be contained.

21 The third major problem is a more difficult one to tackle. Information technology will create new social and economic divisions in human society, both within nations and between nations. Individuals or groups who are slow to master the new technology will be left far behind. Those who are left behind will resent what they see to be an unjust distribution of wealth and income. There will be political repercussions. The recent demonisation of international financial markets, currency traders and arbitrageurs is part of this reaction. Because the US is the most advanced country in information technology, one result of the current economic crisis in Asia will be an anti-US backlash. Many other such problems will arise in the future. We need wise, creative and compassionate ways to solve these new problems. In the last century, the inequalities caused by the industrial revolution resulted in the ferocious response of socialism and communism. In the next century, the new inequalities will provoke similar responses.

22 Like an economic and political El Nino, the revolution in IT will shock and surprise us in the way it changes the world. The challenge before us in Singapore is how to adapt and remain useful in the new world. This is the Darwinian test of survival. Being a spry city-state is both an advantage and a disadvantage. We know we have no choice but to use information technology to maintain our position as a knowledge hub. Unfortunately, it is hard to see clearly what the future will bring forth. We are entering uncharted waters. Small city-states have to be particularly alert to new opportunities and dangers, which is why I describe Singapore as an experiment in human society.

George Yeo is Singapore's Minister for Information & the Arts and 2nd Minister for Trade & Industry.