Speech by Deputy Prime Minister and Coordinating Minister for Economic Policies Heng Swee Keat at the Opening Ceremony of Industrial Transformation Asia-Pacific 2021 On 22 November 2021.
Ladies and Gentlemen,
Welcome to Industrial Transformation Asia-Pacific 2021! ITAP returns this year as a hybrid event. The physical component of this event, which welcomes 5,000 attendees over three days, will be one of the largest gatherings in Singapore since COVID-19 began. I congratulate Constellar and Deutsche Messe, for your creativity and commitment in putting this event together, despite the challenges and uncertainties of the pandemic. COVID-19 has accelerated the pace of technological transformation, including Industry 4.0. The underlying technologies that enable Industry 4.0 are well known – AI, IoT, robotics and automation. Businesses around the world have intensified their efforts to adopt these new technologies and upskill their workforce, to overcome the operational constraints and disruptions amid the pandemic.
The 4 “S” of Change in Advanced Manufacturing
When we talk about manufacturing, the discussion is often in the context of production bases. As a consumer, “Where is it manufactured?” is often one of the first questions that come to mind when you look at a product. As a manufacturer, certain criteria are considered when selecting a viable production base. These are traditionally the factors of production – the availability of land and labour in particular. But today’s lighthouse factories showcase the many possibilities an advanced manufacturing production base can achieve with technology. With automation and IoT, these modern factories require much less land and labour. This has made manufacturing activities, previously unthinkable in Singapore, possible again. Hyundai’s Electric Vehicle facility is one example testament to this. Singapore is also the proud home to a few lighthouse factories – Micron, Infineon, and HP. The availability of technology, coupled with robust supply chains, make Singapore a good manufacturing location.
But COVID-19 has reminded us that advanced manufacturing goes way beyond the factory floor. The pandemic has shifted the spotlight from “where we manufacture” to “how we manufacture” – how do we ensure that supply chain and other disruptions do not knock-out manufacturing capacity? And are our businesses well equipped to embrace a low-carbon world?
These questions are best answered if we have a better appreciation of the forces of change in advanced manufacturing. To fully ride the wave of Industry 4.0, the region must master these forces well. Let me set out four factors –
a. Smart supply chains;
b. Sustainable production;
c. Swift innovation; and
d. Secure machines
Smart, sustainable, swift, and secure. Or the 4 “S” of advanced manufacturing. Let me cover each in turn.
Smart Supply Chains
First, smart supply chains. COVID-19 has shone the spotlight on the global logistics network. From factory lockdowns to border restrictions to disruptions at ports, COVID-19 made it more challenging to produce and deliver goods. The weaknesses of supply chains were exposed. But we should also acknowledge that the underlying vulnerabilities existed way before the pandemic, and will persist even as we learn to live with the virus. The Ever Given incident at the Suez Canal is a case in point. The fragility and limitations are reflected by the rise in shipping prices. Shipping prices have gone up nearly five times since pre-COVID-19, something most manufacturers would not have foreseen.
We believe that Southeast Asia can play a strategic role in strengthening the resilience of global supply chains, as companies leverage manufacturing locations in the region to diversify risk and exposure. To support this effort, Singapore launched the Southeast Asia Manufacturing Alliance earlier this year. This alliance brings together the complementary advantages of participating industrial parks in the region and Singapore. By providing access to connections and expertise through Singapore, we help businesses grow their manufacturing footprint in Southeast Asia.
We can do more to strengthen resilience. The diversification of supply chains alone is not sufficient. We must also tackle the significant inefficiencies in the flow of goods, and the magnitude of documentation required as the cargo flows through the supply chain. Smart supply chains can bring our global logistic network to the next level. In Singapore, we are looking at the end-to-end digitalisation of supply chains via the SGTraDex initiative. SGTraDex is a common data infrastructure that allows supply chain stakeholders to exchange data easily and securely. This digital backbone enables the optimisation of cargo handling and operations, and also provide users with real-time cargo location for forward planning. Today, A*STAR will be launching an $18 million Supply Chain 4.0 Initiative with partners – including universities NUS and SUTD – to develop digital and automation solutions for more agile, resilient, and secure supply chains. A*STAR will also open a Supply Chain Control Tower – with McKinsey as a knowledge partner – to testbed the solutions before deployment. I welcome more companies to be part of these initiatives.
Let me touch on the second S - sustainable production. Value creation is increasingly viewed not just in dollar terms, but also in carbon terms. Governments made renewed commitments to reduce emissions at the recent COP26 in Glasgow. More companies are also committing to net zero. Singapore too is fully aligned. Climate change is existential for a small island state like Singapore. So earlier this year, we launched the Singapore Green Plan 2030, which serves as our national roadmap towards sustainable development and net-zero emissions.
For companies based here, we are creating access to cleaner energy that can help reduce your carbon footprint. Singapore has announced plans to decarbonise our power sector. By 2035, low-carbon electricity imports will make up 30% of our electricity supply, and we are actively exploring technologies such as carbon capture utilization and storage, and low-carbon hydrogen. Our advanced manufacturing hub in Singapore – the Jurong Innovation District – also has the highest sustainability standards for buildings in Singapore. We are expanding the ecosystem in this District, to create a more conducive environment for testbeds of new sustainable solutions for the advanced manufacturing sector. I am further encouraged that more companies are manufacturing sustainable products here – such as renewable diesel producer Neste and bio-based polymer manufacturer Arkema. We welcome more industry partners to be part of our sustainability efforts.
The third S is swift innovation. COVID-19 has taught us the importance of being able to adapt quickly to a fast-evolving situation. Being located in a global innovation node helps. When COVID-19 struck, one of the first priorities around the world was to develop effective diagnostics for the virus. Singapore was able to develop and produce PCR test kits for two reasons. First, we had deep research capabilities in A*STAR and our research hospitals. Second, we had end-to-end productization capabilities in diagnostics, which allowed us to scale. Today, these test kits – named Fortitude Kits – are used by more than 40 countries around the world. But it is not just in diagnostics that manufacturers contributed. Around the world, and in Singapore, manufacturers stepped up to 3D print nasal swabs and face shields, and pivot their production lines to manufacture essentials such as ventilators and face masks. In Singapore, systems integrator Sysmatic Global worked with A*STAR researchers to develop an Automated Vaccine Inoculation Dispenser or AVID system, which uses robotics and smart sensors to draw vaccines from vials into syringes. This greatly simplified the work for nurses at our vaccination centres, at a time when healthcare capacity was stretched.
All these contributions would have been much harder had Singapore not been a global innovation node. In Singapore, advanced manufacturing is a key part of our $ 25 billion five-year R&D agenda. In addition, Temasek has committed to invest $1 billion a year in deep tech investment. More companies based here are also investing in R&D, and making Singapore their regional base for research. To further innovation and digital adoption in the manufacturing sector, our government agencies and the Singapore Precision Engineering & Technology Association will be launching the Precision Engineering Industry Digital Plan tomorrow. The Plan provides a roadmap of digital solutions and capabilities for SMEs to be embark on their Industry 4.0 journey. We will also be witnessing the signing of several MOUs later in support of digital transformation in Singapore’s manufacturing sector. What we spend in R&D and innovation, while significant, is small relative to what the the rest of the world spends. To maximize the impact of our work, we are strengthening global partnerships. Earlier this year, Singapore joined the Eureka network. This is the world’s biggest intergovernmental network for R&D, which has cluster programmes involving advanced manufacturing. In addition, startups and tech SMEs based here can be connected through the Global Innovation Alliance, which was started in Singapore, to innovation nodes around the world, including Bangkok, Ho Chi Minh City, Jakarta, and Manila in this region.
In a much more complex and uncertain world, innovation will be a key competitive advantage for manufacturers. We welcome more advanced manufacturers to set up their innovation and research functions here and look forward to working with like-minded global partners.
This brings me to my fourth factor – secure machines. As manufacturing becomes increasingly digital, the potential threat from cyber-attacks has grown. These cyber-physical attacks are not new, but they have become more sophisticated and frequent in recent years. A successful cyber-attack will increasingly have real-world consequences – a production line could be sabotaged leading to workplace safety risks. Earlier this year, cyber-criminals hacked a water plant in Florida, remotely changing the chemical mix of the water supply to toxic levels. Thankfully, this was detected in time, but imagine the consequences had they succeeded.
Hence, as we ride the wave of Industry 4.0, we must also strengthen cybersecurity. Cybersecurity is a collective responsibility. This applies to protecting your operating and manufacturing systems against cyber-attacks. Equally, this also applies to the products that you manufacture, if they are plugged into the digital ecosystem. I am pleased to announce that Singapore will be launching the “cybersecurity self-evaluation checklist and guidelines for digitalisation in manufacturing” at ITAP 2021. This standard helps manufacturing companies identify cybersecurity gaps as they digitalise. This is a joint effort by 58 stakeholders from across consumer and industry associations, academia, and government in Singapore. I encourage manufacturing companies to make use of this new standard to strengthen cybersecurity. Beyond the efforts of individual companies, we must also strengthen regional and global cooperation to tackle issues like cybercrime and cybersecurity. No single country or company – big or small – can deal with these complex challenges alone.
Singapore is contributing to this effort. We are chairing the United Nations Open-Ended Working Group on cybersecurity for the next five years. We hope to deepen conversations on how to create an open, secure, and interoperable ICT environment, including for IoT and other smart devices that our advanced manufacturers produce. Closer to home, we are also working with ASEAN and a wide variety of partners to defend ourselves collectively against malicious actors. I am glad that companies are increasingly taking cybersecurity more seriously, viewing this not just as a technical risk, but also as a business risk. To avoid getting disrupted by malicious actors, I encourage our businesses to give even greater emphasis to cybersecurity as we tap the potential of Industry 4.0.
Let me conclude. COVID-19 has accelerated the pace of Industry 4.0. But it has also reminded us that advanced manufacturing goes way beyond the factory floor. As the spotlight shifts from “where we manufacture” to “how we manufacture”, we must better understand the forces of change. If we can master the four factors – smart supply chains, sustainable production, swift innovation, and secure machines – we will be able to fully ride the wave of Industry 4.0.
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