Singapore’s Push for Transformative Ideas
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A report by the OECD has found that the largest economies in Asia now outspend the U.S. on science and technology research and development. This trend will only increase throughout the decade. China’s spending on R&D has risen by 25% per year since 2009, which is the main driver of these costs. Last fall Singapore’s Prime Minister made it clear that he wants the country to expand its investment into technical R&D from its current level of 2.6% of GDP to 3.5%
The lion’s share of the total R&D investment in Singapore is carried out by private companies. The percentage has hovered around 65% for more than a decade, so a 40% expansion by the government would be a significant increase and put Singapore on par with Sweden and Finland, the two highest spenders as a function of GDP.
Manufacturing Ideas
Singapore’s manufacturing sector, especially in electronics, is the main driver of its economy, which has the 2nd highest per capita income in the world, on a PPP basis. As of 2009, private investment into manufacturing comprised 62% of private R&D spending, with electronics receiving 41.8% of that according to a report by the OECD.
With its stable government and strong legal system and property rights, Singapore has been playing catch up to countries like Taiwan and South Korea in the advanced R&D playing field. Their results, however, have been impressive in terms of quality of research produced. Singporean research is cited 32% more often than either Korean or Taiwanese research and 57% more often than that of China. More than 85% of the patents granted have been in the past 10 years. Companies like Singapore Telecom and Keppel, which are two of the main holdings of the iShares MSCI Singapore Index ETF (NYSEMKT: EWS), are among the biggest spenders in this area.
So, while the research base is relatively small in a global context, Singapore’s focus is squarely on the future, with nearly half of their annual R&D expenditures going towards experimental development versus one-third going to applied research. The biggest constraint for Singapore is the lack of manpower. Per capita researcher statistics are low compared to its direct competitors like Korea and Taiwan.
The Next Wave
Along with Singapore, neighboring Malaysia is entering the high tech research arena with a RM20 billion ($6.3 billion USD) high tech corridor between Kaula Lampur and Cyberjaya which is being developed by Setia Haruman (SHTech) with the hope of turning the area into the next Silicon Valley. Singapore just announced a major remanufacturing R&D center that will bring together both academic and major high-end manufacturers such as Boeing (NYSE: BA), Siemens (NYSE: SI), Rolls-Royce and others who have already signed MoUs along with a handful of Singaporean SMEs. The focus will be on cost reduction and sustainability research in remanufacturing used automotive, shipping and electronics back to original specs. Global Industry Analysts estimate the automotive remanufacturing industry will reach $105 billion by 2015.
Qualcomm (NASDAQ: QCOM) moved much of their chip manufacturing to Singapore at the end of the 1990’s. They recently announced a pilot program with Microsoft (NASDAQ: MSFT) to create a 21st century classroom model built around the smartphone Microsoft’s MyDesk mobile learning software and 24/7 collaborative inquiry this is an experiment in having learning be driven by the students themselves. This project at the Nan Chiau Primary School is an example of how important being ahead of the curve is to Singapore’s government. It sounds like an offshoot of the Khan Academy mixed with unschooling principles.
Breaking away from the top-down education model is going to be one of the dominant trends in the 21st century as technology and communications will transform how and when children access information and integrate it. Projects like these will pay dividends in the future.
PeterPham8 has no positions in the stocks mentioned above. The Motley Fool owns shares of Microsoft and Qualcomm. Motley Fool newsletter services recommend Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
