PM Lee Hsien Loong at the Smart Nation Summit Closing Dialogue

Dominic Barton: Thank you, Prime Minister for the speech. As you were speaking, the questions were coming in, I think we have got about 50 questions through here. I think we want to make sure we save the time for that as we as we go through it. What I wanted to do is start by asking several questions myself, and then we will open it up to the audience out here. There are some microphones that are set up. If you could just say who you are, where you are from, and please make it a question, not a speech. We will then go through it. We have also got Sli.do, so if you can fire in any more questions, we will try and synthesise some of them, and then we will fire them off to you.

So Prime Minister, just a very clear, practical view about what smart nation means from Singapore – the first question I wanted to ask is thinking about opportunities, we have a lot of people in the audience from around the world and the region. So maybe thinking a bit about ASEAN, you mentioned in your speech – 240 billion increase because of the digital economy. You look at the ASEAN region and Jenny Lee, in a previous panel saying that this is the sort of the new area of opportunity after thinking about the US and China - what sectors or themes do you get the most excited about?

PM Lee Hsien Loong: First of all, ASEAN as a region is doing quite well economically. It is growing steadily, the governments are generally stable and focused on economic development, and with middle classes with purchasing power who want quality of life which can – in many cases, can be delivered by digital services. So you see there is considerable excitement, certainly in Indonesia, Vietnam and Thailand. We are trying to generate some buzz in Singapore. I think other ASEAN countries will also be on the same buzz before long, because the purchasing power is there, the opportunities are there and the tech players and the start-ups are coming in.

ASEAN as a group is working together to develop cooperation in these areas, because traditional economic cooperation – we have been doing for a long time, we talk about FTAs, we talk about investment agreements. We have plucked all the low hanging fruits. But if we are talking about new areas of cooperation in IT (Information Technology) for example, we are linking up all the cities which call themselves smart cities in ASEAN. We made a project of this last year, when we were ASEAN Chairman. We made an ASEAN Smart Cities Network. So you sign on to the network, and you can share projects together, you can link up with one another, you can link up with third parties in Japan, Australia, or US, and do projects with them. It has been a tremendous success. I think we have got about 30cities now. We said one per country, and that was not sustainable. There are 10 countries, so it means that people think it is worthwhile to join in to the network and to get on the tech buzz. So that is one thing which is happening.

The other thing which we are doing, which we hope will help not just Singapore but the region, is to work on what we call a Digital Economic Partnership Agreement (DEPA). It is a kind of new-age FTA to cover traditional IT issues like data security, data standards like privacy rules, and also new areas, like when you are talking about Artificial Intelligence, what rules should apply. We are talking about cybersecurity, how we can work together, and put all these together into a coherent agreement. That will enable us to work together across boundaries. We are pioneering this, we are starting – in this case – outside of ASEAN with New Zealand and Chile. They are far flung but in cyberspace, it does not matter where you are.

The Trans-Pacific Partnership (TPP) started like that. Exactly like that - we started from Singapore, New Zealand, Chile and Brunei. It was far flung, but we thought that this was the nucleus. And from that, we grew the TPP. One day, we lost one big participant, but we still have the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), so I hope this little thing will grow.

Mr Barton: Are there any sort of sectors or anything about education, health, or everything is going to get affected by this?

PM Lee: Well, I think retail is certainly already being affected. I judged by my family and I think many others - I see so many parcels arriving in the mail. Not big things, but little things like a connector, a cable, a little device. Instead of going down to the neighbourhood shop, you order it, and it will come to you from across the world.

I think to go with that, logistics will be affected too. Both the operation of the logistics and also the support of the e-commerce business. We have got logistics operations in Singapore, people have set up smart warehouses, where it is basically lights out and the boxes move around on their own, and you optimise which are the boxes which need to be near the front, and which ones can go to the back of the warehouse. We also have live things or fresh things being sold. For example, we have some of our restaurants trading seafood online – B2B. I do not know how you deliver the prawns and the crabs. But anyway, you have some standards, you can do the business online, and you do not have to go down to Tsukiji Market and look at it physically and poke it. It is a way to do things. So I think retail is going to be an area.

Education, I am not so sure yet. I know that people talk about massively online education schemes, but in the end, you still need some degree of human interaction. I think certainly in healthcare we are looking to use IT in a much bigger way.

Mr Barton: And on the regulation, and in your speech, you mentioned on the FinTech side, the MAS is very much encouraging each of these regulatory sandboxes. Do you think that will happen in other sectors as well, just allowing people to experiment with new ways?

PM Lee: I think in other sectors it will be less regulated. In finance, you are always worried about systemic stability, about consumer protection. And it has been traditional very tightly controlled. When you have let go and gone too far, like in London, sometimes we run into difficulties. So when some new animal like this comes along, like FinTech, or a big thing comes along, like Libra, all the regulators and supervisors sit up and say, just hang on a minute. We are very interested in you, can we have a conversation? But at the same time, if you raise your eyebrows too often, nothing will happen.

So you have got to know how to let things start to happen, and to control it at the right point. It can change very fast. Look at the way in China - Alibaba, Tencent - because they went into payments, suddenly they became very big players in the money markets, and then as banks, and there are significant concerns which you have to deal with.

Mr Barton: So basically it sounds like there is a lot of opportunity in ASEAN, maybe I should broaden that to New Zealand and Chile as well. But just to talk a bit about some of the challenges. You mentioned this a bit in your Shangri-La talk, and Hank Paulson has written an op-ed today about the ‘economic iron curtain splinter net’ is a word that is being used - how should we think about that, given 600 million people in this region a lot of opportunity, any advice?

PM Lee: Well, we are not in a position to advise, but we are being carried along for the ride, whether we like it or not, and we hope that the persons in charge of the ships consider carefully what exactly they want to do.  It is two big ships and if they collide, it is a lot of trouble for both parties. There is a lot of trouble for everybody else too because in Asia, all of the countries have got very major economic links with China, and very major ties with America. If the two of them are at odds with one another, we are going to have a problem. If you do have, you can call it a splinter net, but if you have a divide, and you have your technology, I have my technology and I am not giving it to you, then they will have the technology, I will have mine. And if I am in a third country, then what do I do?

I mean, carrying two phones is the least of my problems, but to be able to work together as one human kind to make technological progress and breakthroughs, and to develop new solutions to problems which we all share. It means that you have to give a lot of that up, and in addition to that expend energy countering one another. And I think that is very bad news for the world.

Mr Barton: Well said. I hope people are listening who are broadly out in the system here.  So I just wanted to shift to some of the examples you moved - the government here is moving at a very fast pace, online the ability to be deal with your passport, anything in the system. I am thinking about the societal implications of this, what that means in terms of education or skills, what are the things that you think are going to be most critical to ensure it is kind of stable, and we do not have luddites…

PM Lee: I think you got to look at it both on the supply and demand side. On the demand side, you must make sure that everybody feels that they can access these services. And there will always be some proportion of the population, particularly the older ones, perhaps not so well-educated, who not comfortable doing things online, who for whom this is not natural, and you go there and you are not sure where do I start, and maybe they do not even have a device.

So we have to make a big effort to carry them along, make sure that they get the help they need, and they do not feel that they are left behind.  We have those schemes, we have young people helping old folks, we take an iPad with them and walk them through the process, we take them to make a small transaction, give a hongbao to their grandchildren, you can do that online nowadays without a physical packet. And I think it is partly psychological, but it is also a real problem to be solved.

On the supply side, the changes mean that jobs are going to be affected, and you have to be able to take care of the people whose jobs may change in order to prepare them to go into new jobs. Probably more challenging ones, hopefully more rewarding ones. Coming back to the financial services - habits have changed. People no longer go to counters and tellers in order to do a lot of transactions because the ATMs are so much smarter now. So large numbers of tellers are going to be redundant. What do you do with them? If you left it to the market, the banks may say, “well, I will pay you off, you retire early. And then I will hire young people, and they will become tech advisors to the customers who are coming to use the systems.” But I think then you will have a dislocation socially.

So we have put a lot of effort in and the banks have worked with us to put effort to retrain their staff so that from being a teller at a counter, they now become a manager of multiple ATMs and when the customer runs into problem and presses help, and the face appears on the screen and say “can I help you”, it is not a deep fake avatar, but a real person who can empathise and talk him through the problem. So you are talking about thousands of people and that is just Singapore as one city. So we are talking about big country, we are talking about millions of people and is not easy to do, but we have to make the effort.

Mr Barton: Is that a topic amongst this smart city network you are talking about?

PM Lee: I think it will be. We are probably further along the way than the others, but it will affect all of them too.

Mr Barton: I just want to ask one more question. So we can make sure we get the input from the audience. Just more on a personal note, if you do not mind on leadership.  In your career as a leader, you have gone through many transitions. So I think about the financial centre that was set up when people did not think Singapore would be a financial centre, and you built it and you are driving it. As you look back, what would you teach your younger self if you were now looking at this, and you are looking ahead - what are some of the most important things and skills that you would want to have, as you think about this transition coming up, based on what you have gone through before.

PM Lee: The tech part is just the tech part of it. It is a non tech part of it, which is difficult. Which is to be able to accept a new way of doing things, and to be able to change our organisations and our processes in order to take full advantage of what has now become possible. That is very, very hard. You can do it once and you think you have made a tremendous breakthrough. We started computerising our systems, probably in the 60s, early 70s.

But actually, you have to reinvent yourself many times. That is extremely difficult. You look at a company like Microsoft, which is one of the best companies in the world, they started off, first they made Disk Operating System (DOS), then they made Office, then they tried to reinvent themselves to become an internet company. But they did not capture all the apples on the tree; many other companies came along and Bill Gates says he should have made Android. So it is very, very hard to keep on reinventing yourself. In our case, if we do not reinvent ourselves, and somebody else comes along and picks the apple off our tree, we will not have lunch. I think that is a lesson which we ourselves, not just the population, need to know and remind ourselves every morning that we have to keep on being prepared to reinvent ourselves, and sometimes to cannibalise ourselves. Because otherwise somebody else will do it to you.

Q (Kevin Aluwi, Co-founder of GOJEK): GOJEK has set up an engineering and data science centre in Singapore. We have more than 100 software engineers and data scientists in our Singapore office today. We have seen that the demand for engineering talent based in Singapore has just grown exponentially over the years – with local, regional and global companies setting up here. So we are seeing that the demand is far outstripping the supply, which is a great problem to have as a nation. Selfishly, I want to understand: what is the government strategy to continue growing the supply of this technical talent as the need for these talents continue to rise exponentially?

Q: I love what you said earlier about recruiting tech talents back to Singapore and getting all of them back home. We are in a desperate need for talents back here. Research also says that diversity is great for innovation. When will our regulation finally support a very diverse and inclusive workforce? With Pink Dot this Saturday, I would love to see the government coming out and being supportive; getting the diverse workforce from overseas here, and supporting the very diverse workforce that is in Singapore.

PM Lee: First, on engineering talent, I think we have always leaned towards producing STEM graduates from our education system. We have biased the system to produce a disproportionate number of engineers, including IT and computer engineering. The students’ responses have varied from time to time. If the property market is hot - they graduate from engineering and may become property consultants. But right now, the IT market is hot, and people have been coming. I think people and the students have noticed it and the quality of the students going into our institutions – polytechnics and universities to study IT has gone up sharply. Wherever there is a shortage, we will increase the capacity but the flow will grow. We do not only have to depend on our own, we can bring in people from overseas. We welcome people from overseas – talent from abroad. We welcome also bringing back Singaporeans who are working overseas.

As the engineers among you will know, you are not just dealing with a number of engineers and coders when you are dealing with IT projects. There is a mythical man month. You are dealing with making sure that the right person is in the right place, is empowered, can really be productive and deliver the results. That is a matter for the management to make the most of their capabilities, and to make sure that they can build a team. If they have a good team, more will come. I am sure GOJEK is doing that; this is also what the government is doing. So I am giving the government effort a small puff down here.

On inclusiveness, I think we are open. You know our rules in Singapore; you can be of any sexual orientation and be welcomed to work in Singapore. Some people have an issue with the 377A, which is our legislation against homosexual acts. This remains on the legislation, and it will for some time. But it has not inhibited people from living, it has not stopped Pink Dot from having a gathering every year. It is the way this society is – we are not like San Francisco, nor are we like certain countries in the Middle East. We are something in between and that is the way this society is. In this framework, I think it is completely possible for us to have a vibrant tech and cultural scene.

Mr Barton: I have 75 Sli.do questions, including “what type of durian do you prefer?”. I think you may be in the wrong conference. There are a number of questions surrounding youth. What is it that youth and millennials can do to work on regulation? To look for and seize opportunities, what are the ways that youth and millennials can participate more?

PM Lee: I mean, if you are going to be Bill Gates, or Steve Jobs, or Mark Zuckerberg, by all means. If not, master a skill, make the most of it. At some stage, if you wish to start something, then I say go for it. The sky is the limit because the opportunities are here for you to be educated.  It is the best that you can get anywhere in the world. In fact, you can go to the best places in the world, and a disproportionate number of Singaporeans do that. If you look at the Ivy League universities, or Oxbridge, we are hugely over represented compared to our population. So take the most of those opportunities, come back, make a difference first in your job, and then go out and change the world.

Mr Barton: There are some questions on R&D. The importance of R&D - some are asking whether we should be spending even more? Another question about whether we are getting the impact from it? Have we had a conversion of a R&D into a well-known tech company?

PM Lee: R&D is a long term business. You have to maintain a consistent policy, you have to spend over many years, and you have to have the right balance between demanding results, and allowing the human imagination to roam.

We have been spending about 1% of GDP as a government on R&D now for more than 10 years. Our idea is that we hope this 1% will help to stimulate 2% from the private sector, and that will bring us somewhere to the spending levels of what the developed countries are, and the results from R&D of what the developed countries are. We are not quite there yet. We spend 1% as a government and on the private sector side it is about two and a half percent. It is not bad. We are beginning to see results. The emphasis for R&D in the earlier years; particularly we have put a lot of resources into biomedicine. We are beginning to see results there. We also have put bets on infocomm and media; we have not financed a unicorn yet, but we are still trying.

Mr Barton: Quite a lot of questions on talent, like in the first round. But one question is - with China producing a million engineers a year, is there really an opportunity to be an engineer in Singapore?  So how to think about the massive amount of talent there and what happens here. There are several questions around that theme.

PM Lee: You can have 10 million engineers in the world, but we need more engineers in Singapore. You need quality engineers.  There is not a surplus of engineering talent in the Silicon Valley. You look at what the companies have been paying engineers - not senior people who are 40-50 years old, but young people in the 20s and 30s. They are very well rewarded.  I mean, they are very productive. But it is also a reflection that the people who are able to do work and function at that level are not in such an abundant supply. I think if you have talent, you will be able to have a good career for yourself.

Mr Barton: There are a number of questions around displacement. You mentioned earlier that we have to take care of the people being shifted out. To what extent should companies be responsible for taking care of the talent that they displace? What is their role in that?

PM Lee: If you are a small company, it is harder, but if you are a large company, I think you do have a social responsibility. If you are in a big country like the US, you can say, “well, I cannot answer for this; this is a federal government's problem and the government is here to help you”. But if you are in Singapore, the government will help but I think the company which is purely profit maximising will not thrive in Singapore. You have to have the social conscience.

Mr Barton: You are known for your computer science background and the mighty Sudoku solver code. I did not know you came up with that. What is the next code that you are working on?

PM Lee: I am open to suggestions. It is too difficult. These are things you can do one-off, but to be productive as an engineer today, you need to know so many things and to tap on so many pieces. Before you write any code, what you include at the beginning of your source code is already the work of thousands of man-years of other people – packages, APIs, other people's systems and remote procedure calls. Unfortunately, I am not in that business anymore. Maybe when I retire I will come back to it.

Mr Barton: Thank you. Please join me in thanking the Prime Minister.