NATIONAL SCIENCE AND TECHNOLOGY BOARD (AMENDMENT) BILL

Order for Second Reading read. 1.46 pm

The Minister of State for Trade and Industry (Mr Lim Swee Say): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Sir, the National Science and Technology Board (NSTB) Act was introduced in 1991. At that time, the Singapore economy was making the transition from a developing economy to a more advanced developing economy. We needed to strengthen our capabilities in undertaking higher value-added activities, and invest in R&D to better harness the full potential of latest development in science and technology. We therefore upgraded and expanded the Science Council into the NSTB to nurture manpower development, and encourage R&D in the public and private sectors.

Sir, 10 years have gone by. Gross expenditure in R&D has increased from 0.84% of GDP in 1990 to 1.78% in 1998. The number of research and scientific engineers (RSE) has tripled from about 4,300 to 12,600 over the same period. The private sector now accounts for more than 60% of R&D, compared to only 54% in 1990. The NSTB has also helped establish a technology infrastructure comprising 13 research institutes and centres to support R&D in the industry. On the whole, we have made good progress in enhancing our capabilities in technology development.

Looking ahead to the next 10 years, our new challenge is to transform the Singapore economy into a knowledge-based economy. We recognise that innovation and speed are the two key attributes for success in the New Economy. We therefore need to continue to strengthen not only our capabilities in up-stream technology development, but also our capabilities in mid-stream innovation; and down-stream commercialisation.

More importantly, we also need to strengthen the link among these up-stream, mid-stream and down-stream capabilities, so that we can speedily turn creative ideas into marketable products and services to enjoy first mover's advantage.

Our business communities will need to reinvent their businesses to seize the huge opportunities presented by these rapid changes. Likewise, NSTB and all our economic agencies will have to rapidly evolve in response to the emergence of the New Economy.

Sir, the purpose of the proposed amendments to the NSTB Act is to enable the NSTB to respond to the New Economy by expanding its role. The expanded role encompasses the development of an environment conducive not only for science and technology development, but also for innovation with science and technology, and commercial deployment of science and technology.

I will now run through the proposed amendments. In clause 2, we have inserted the definitions of "commercial application" and "financial assistance". This is to state clearly the proposed expansion in the scope of NSTB's functions beyond science and technology development to include innovation and commercialisation.

Clause 3 of the Bill and the amended First Schedule will allow the Minister to appoint up to two members of the NSTB Board to be Deputy Chairmen instead of one. This will provide greater management flexibility to NSTB, bearing in mind its expanded scope of functions.

To strengthen the link between up-stream R&D with mid-stream innovation and down-stream commercialisation, we will expand NSTB's functions to include development and promotion of technopreneurship in Singapore. This is reflected in clause 4 of the Bill. This will empower the Board:

to create a pro-enterprise, pro-discovery and pro-innovation environment;

to promote pervasive development and exploitation of science and technology knowledge in commercial applications; and

to encourage more collaborations in the education and research communities, as well as between the public and private sectors.

The Board will also step up its activities in the development and attraction of local and foreign science and technology and technopreneurial talents, investors and corporations.

Clause 5 of the Bill empowers NSTB to embark on a wider range of developmental activities. This includes the granting of financial assistance to individuals and enterprises for manpower development, technology development, innovation and commercialisation.

It also includes the provision of incubator and business support facilities, as well as the development of properties such as the proposed Science Hub for the development of science and technology, innovation and technopreneurship.

It also provides for partnership with the private sector to offer incubator and business support facilities for new and growing technology-based start-ups.

Sir, in conclusion, NSTB has done a good job in building our capability in science and technology. In our next stage of economic development, we need to build and exploit our science and technology capability speedily, and to the fullest potential for maximum commercial returns.

The proposed amendments would empower the NSTB to perform an expanded role in the development of science and technology, innovation with science and technology, and commercialisation of science and technology, as we venture into the era of the knowledge-based economy.

Sir, I beg to move.

Question proposed.

Mr Leong Horn Kee (Bishan-Toa Payoh): Mr Speaker, Sir, in joining this debate on the National Science and Technology Board (Amendment) Bill, I wish to raise two issues so as to seek further information from the Acting Minister.

First, I wish to ask the Acting Minister what are the future plans of the Government and the role of the NSTB with respect to the Technopreneurship 21 plan. In particular, I understand, as reported in the press covering a speech made by the Deputy Prime Minister Dr Tony Tan, he said that the $1 billion technopreneurship fund would be fully invested by about the middle of this year, which is quite soon. Hence, I would like to know what are the Government's intentions to provide additional funding of this programme, and how the NSTB would be involved in actively pursuing the objectives of Technopreneurship 21. I also like to urge the NSTB to work closely with the private sector in its future plans in promoting entrepreneurship and technopreneurship development.

Sir, my second query relates to clause 5 of this Bill. It says that the amendment Bill would expand the powers of the NSTB in order for it to discharge additional functions. And the NSTB would have powers to provide or develop, in partnership with the private sector, programmes such as incubator centres and other business support facilities.

Sir, here, I would like to declare that I am a director of a company involved in incubator centre facilities in Singapore. However, my view is that we should encourage technopreneurship, there should be more competition and more incubator centres and more of such support facilities to be established in Singapore. Only by having more such facilities can we then be able to build up a critical mass of young entrepreneurs among our Singaporeans.

Sir, in the experience of other countries such as in the US, incubator centres have been set up by the private sector. In the US, they call them by various names like hatcheries, garages or even accelerator programmes. These are all based on the same concept, which is to help start-up companies to be formed and enable them to grow quickly from a start-up stage to a mature stage. Even in Malaysia, I understand that they have the Multi-Media Super Corridor. They have provided a very huge area to provide for a very massive incubator centre, so as to encourage Malaysians to get into this incubator centre concept.

Sir, I would like to ask the Minister what are NSTB's plans to support or develop incubator facilities in Singapore, and what are the programmes of the NSTB to collaborate with the private sector to create more incubator centres. Also, will the Government consider giving special incentives or encouragement so that the NSTB together with private enterprise can set up more incubator centres in Singapore in future?

Mr Inderjit Singh (Ang Mo Kio): Mr Speaker, Sir, I would like to make some general comments on the Bill.

Sir, many Members of the House have recently given many excellent suggestions on how we could effectively participate in the new economy that will be mainly driven by information and the technology sectors of our industries. It is quite obvious that more can be done in creating a conducive environment that can nurture entrepreneurs as well as many more new start-up companies, and also in supporting the many new small companies in Singapore to be groomed to become world-class companies in the long term.

It is therefore timely that an agency be given the task to focus on doing the things I just mentioned, and the National Science and Technology Board is the best agency to assume this role. I must say that in the past few years, the NSTB has played a proactive role in trying to promote technopreneurship and in encouraging the development of technological activities, and we have been very successful in doing so.

The expansion of the functions and powers of the Board is therefore an excellent measure for promoting and supporting technopreneurship and to organise Singapore to continue to be the centre of technological development in this region. Increasingly, I feel that the role of NSTB is being divided into two parts. The first role is of initiating and promoting longer term development efforts, the results of which may not be so obvious in the short term, and which will involve huge investments that may not yield financial returns for the Board or for the Government in the short term or in the long term. But these are still necessary so that we could steer the country and the private sector to the desired directions, the results of which would create the future industries and therefore the wealth for the country, and also future jobs for Singaporeans.

The second role is one that can have an immediate or short term impact and which could also result in financial gains for the Board. The amendments in clause 5 of the Bill basically reflect this role. In this role, the NSTB acts as an incubator and as an angel investor, or as a venture capitalist which can help stimulate many new start-ups to set up shop in Singapore. With its infrastructure, the Board can also help start-up companies with a network of companies that it is incubating and with the connections that the Board has, and this will help them basically progress in setting up their companies and in progressing further.

The role of being an incubator and an investor is also a useful role in creating a dynamic environment where many new companies can thrive and grow to become world-class companies. In this capacity, the Board should not restrict itself to the local market, but rather it should participate as a global player entering into the best technology centres around the world.

Sir, in my opinion, it would be wise to at least have a separate organisational structure for each of these two roles that I have mentioned. In fact, in order not to lose focus, it may be a good idea to have separate agencies handling these two roles, with the possibility of the second role or function being privatised in the long term.

Sir, one other suggestion I have is for the Board to be responsible for supporting and growing the smaller companies from the point of them being in the start-up stage to the point when they become world-class companies. Currently, both the Economic Development Board and the Productivity and Standards Board have a bigger role to play in supporting such companies. In my opinion, the NSTB could play a more effective role than both of these agencies that I have mentioned, especially for the technology-type of companies, if we are serious about growing many more world class companies in Singapore.

The Bill is also being amended to allow for the appointment of two Deputy Chairmen. I would like to suggest that one of the Deputy Chairmen's position be filled by someone who is still in the private sector to complement the strength of the existing members of the Board. In this way, industry perspective and current trends will always be available and will be useful in the decisions of the Board. The Vice-Chairman should also have executive functions for greater ownership and effectiveness in executing his or her role.

Sir, the changes proposed in this Bill, in my opinion, are good and I hope that the Minister of State will consider the suggestions that I have made in executing the Bill.

Sir, I support the Bill.

Mr Lim Swee Say: Mr Speaker, Sir, I would like to thank the two Members for speaking up in support of the Bill.

Mr Leong Horn Kee asked whether the Government would inject additional funding for T21 beyond the US$1 billion TIF. Since the launch of the US$1 billion TIF, we have invested in 24 funds amounting to about $620 million. As a result of the TIF as well as the efforts by the EDB and NSTB in promoting venture capital in Singapore, in fact, today the total pool of venture fund managed out of Singapore has grown to about $10.2 billion. So the total fund size is actually quite large and is still growing. The NSTB right now is studying whether there is a need for the Government to inject additional funding into the venture market. We will certainly do so if there is a need for the Government to continue to play this role of risk sharing by co-investing with the industry. Certainly, if we were to inject more funds, the intention is to work very closely with the industry.

Mr Leong also asked whether NSTB and the Government would do more to promote the creation of more incubation centres to create more competition in the market place in order to create the critical mass of technological start-ups. We agree with Mr Leong's assessment. It is important that we continue to encourage more start-ups and at the same time create more incubation facilities for the start-ups so that they could go into operation as quickly as possible.

Since the NSTB started the incubation centre programme about five years ago, I am happy to report to this House that at this moment we are seeing at least 20 incubation centres being set up by the private sector. What is even more exciting is that some of these private sector-driven incubation centres even offer equities in lieu of rent so as to reduce the cash flow demand on these start-ups. Looking to the future, the NSTB does intend to continue to work very closely with the private sector. For example, NSTB will continue to refer new start-ups and deal flow that we come across to these incubation centres. Some of these incubation centre management companies do set up incubation venture funds to invest in the start-up. If need be, the NSTB is prepared to co-invest with them to share their risks.

Mr Speaker, Sir, I believe Mr Inderjit Singh brought up three points. First, he divided the role of NSTB into two parts - long term development to create future industries and short-term impact to stimulate new start-ups. He suggested that we have two separate agencies to handle these two roles.

Sir, I think the two roles are inter-related. After all, the long term is made up of a series of short terms. What is long term today will become short-term in five to 10 years from now. Our key challenge is really to find ways to better align our efforts for long term development and short term impact so as to maximise the benefits we can derive from our investment in these long term and short term development efforts. In fact, this is the main motivation behind the proposed amendments to ensure that we will be able to derive maximum synergies from science and technological development and technopreneurship development. It will therefore still be useful, at least for the time being, for the NSTB to continue to perform both roles, of long term science and technology development and short term technopreneurship development. However, I would like to assure Mr Inderjit Singh that in performing these two roles, the NSTB will work very closely with the industry, the research community as well as the private sector because, at the end of the day, we recognise that the private sector is really the engine of growth.

Mr Inderjit Singh suggested that the NSTB be responsible for supporting and growing companies from start-up through to world class corporations. I think companies at different stages of their development do face different challenges. Over the years, various economic agencies such as, the EDB, NSTB, PSB, TDB and so on, have built up their areas of core competencies that can complement and supplement each other. We feel that it would be useful to continue to let each of these agencies play its role. What we will do is to continue to strengthen the coordination across these agencies so that collectively they will be able to provide a better level of support to our start-ups as they grow into major corporations.

Mr Inderjit Singh also suggested that one of the positions of the Deputy Chairmen be filled by someone who is still in the private sector. The NSTB believes in drawing on the expertise of the private sector. In fact, on the present board of 12 members, six of them are from the private sector. With these proposed amendments, the Minister will now be able to appoint not more than two board members to the position of Deputy Chairman. In that sense, the private sector members of the board likewise can be appointed to the position of Deputy Chairman. The Minister will certainly consider the suggestion put up by Mr Inderjit Singh.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [Mr Lim Swee Say].

Bill considered in Committee; reported without amendment; read a Third time and passed.