NATIONAL RESEARCH FUND BILL

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NATIONAL RESEARCH FUND BILL: Order for Second Reading read.

5.12 pm

The Second Minister for Finance (Mr Raymond Lim Siang Keat): Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Background

During the National Day Rally last year, the Prime Minister announced that the Government would be stepping up investments in R&D to strengthen our intellectual and knowledge base. More than $13 billion has been earmarked for R&D support through various agencies over the next five years.

The Prime Minister also announced in his Budget Statement for FY2006 the establishment of the National Research Fund under the Prime Minister’s Office. The Government expects to inject $5 billion into the Fund over the next five years, starting with $500 million in this financial year. This Bill provides for the establishment of the Fund, the National Research Foundation Board to manage and administer the Fund, and the Research, Innovation and Enterprise Council to guide and advise the Government on all aspects of R&D activities and innovation in Singapore.

The focus of the National Research Foundation would be on "R&D that matters" and the ultimate success would be seeding new and innovative enterprises

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and industries for Singapore’s economic benefits. Encouraging R&D collaborations between private and public sectors is one way to tap on the knowledge created in the universities by the commercial sector. We can also rely on companies to decide where the most commercial potential lie, and by investing in the relevant technologies validate that the research money is well spent.

Another way of validating our research efforts is through indicators. Today, we use input indicators which are shown to be closely related to the level of innovation.

Looking at the experience of other countries, it will be a challenge to select good outcome indicators. But the National Research Foundation will actively study this and come up with good indicators for adoption.

I shall now touch on the specifics of the National Research Fund. Setting up the Fund as a dedicated statutory fund facilitates the funding of R&D projects on a sustained basis, without subjecting it to the vagaries of year-to-year budgetary pressures and any possible breaks of funding in a year where there is a change of Government. Many R&D projects will require multi-year commitments, so that the assurance of continuous funding is critical.

Main provisions in the Bill

Sir, I shall now highlight the main features of the Bill. Part I of the Bill defines the scope of research and development, and its related activities. These definitions are consistent with widely accepted international norms as to what R&D means, and are in line with the OECD definition.

Part II of the Bill establishes the National Research Fund as a Government fund, and sets out the purposes for which moneys in the Fund may be used. The

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Fund's objects comprise four main thrusts:

First, encouraging the development in Singapore of innovative products, processes and services;

Second, increasing investment by the public and private sectors in Singapore in research and development activities that will make Singapore more internationally competitive;

Third, promoting the technological advancement of the public and private sectors in Singapore through a focus on research, development and innovation; and

Fourth, creating an environment that is conducive to increased commercialisation of new processes and product technologies.

This Bill also sets out the sources and permitted uses of the moneys in the Fund. Funding can come from private and public donations, as well as contributions from the Consolidated Fund. It also envisages income from the sale of any property produced, or from dealing with patents or other intellectual property rights in respect of inventions made, in the course of any research and development activity paid for with money from the Fund.

Part III sets out how the Fund is to be administered. It entrusts responsibility for the administration of the Fund on the National Research Foundation Board. It also provides for the establishment of the Research, Innovation and Enterprise Council (RIEC), whose main function is to oversee the promotion of all aspects of research and development activities and innovation in Singapore.

Part IV of the Bill contains several general provisions ranging from regulation-making to the proper conduct of officers exercising functions under the Bill.

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The Bill also provides for consequential amendments to the Agency for Science, Technology and Research (A STAR) Act, and the Singapore Productivity and Innovation Board (SPRING) Act. These are set out in the Schedule. At the time A STAR and SPRING were conceived, there was no national body like the RIEC to make high level decisions on research, innovation and enterprise for the whole of Government. Their respective Acts had given A STAR and SPRING coordinating functions over scientific research and innovation at a national level. The consequential amendments in the Bill will ensure that both A STAR and SPRING must now have regard to the policies and directions of the RIEC when carrying out their respective statutory functions.

Sir, the establishment of the National Research Fund, the National Research Foundation Board and the Research, Innovation and Enterprise Council will set the stage for accelerating the build up of an excellent R&D community and a vibrant and prolific innovation culture in Singapore.

Sir, I beg to move.

Question proposed.

5.18 pm

Dr Ahmad Mohd Magad (Pasir Ris-Punggol): Mr Deputy Speaker, Sir, I am very delighted that the Prime Minister, in his Budget round-up response, has asserted that R&D would be a key pillar to strengthen Singapore's foundation for sustainable growth and enhancement of our competitiveness.

The recently announced $13.55 billion five-year Science and Technology Plan with three targets of (1) increasing national R&D spending to 3% of GDP by 2010; (2) increasing the private sector

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share of R&D to two-thirds; and (3) increasing research manpower to catch up with countries like Sweden and Japan, is very laudable and I am sure is the envy of many countries in the region.

Sir, as we move forward in an increasingly globalised knowledge-based and technology-driven economy, I believe a country's ability to generate talent and continuously create value will be the primary determinant of who gets ahead in the intense economic race. Therefore, beefing up our R&D capability is a critical piece of securing our economic future.

In going through the provisions of the Bill, I have a few clarification requests which I would like the Second Minister for Finance to address. First is with respect to Part I, clause 3(2) of the Bill. This clause contains the listing and definition of activities which are not considered as systematic, investigative and experimental in nature. I presume that the activities under this clause are deemed to be non-R&D activities and therefore are ineligible to receive funding. While I agree that many of the items may be classified as such, I have reservations over activities, like market research and development and pre-production initiatives, such as demonstration of commercial viability being categorised as non-R&D.

Sir, viewed from a private sector perspective, such activities are crucial to prepare products and bring them early to market. With product cycles today getting shorter than ever, first mover advantage is a key competitive advantage. Therefore, I believe, as the hon. Member Dr John Chen does, that it is crucial that we devote special effort, including funding and resources, to the commercialisation of R&D result. Commercialisation sows the seeds which leads to wealth creation and growth and, subsequently, sinks in the pillars for enterprises to become mature and large innovative companies. Just R&D alone

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without such infrastructure support cannot achieve this. There are obviously risks in supporting such activities, but not doing them leads to shelving and decay of the R&D product which, ultimately, would become worthless when they are overtaken by new competing technologies. I would like the Minister's assurance that adequate funds would be set aside for commercial exploitation of research results.

Sir, I know for a fact that the Government has attempted to boost entrepreneurship with a variety of incentive schemes. A STAR, for instance, has the commercialisation of technology (or COT) scheme but it only funds development activities of the research institutes under A STAR itself. Unfortunately, it does not extend assistance to SMEs, or technopreneurs, who may be interested in tapping into and commercialising the research results of these institutes. I see it as beneficial if this policy could be reviewed and changed so as to enable companies, particularly local SMEs, to ride on existing R&D efforts, instead of having to reinvent the wheel themselves.

However, I would like to see that our SMEs are able to reap a fair share of the huge funds set aside for R&D. As I already said in my speech during the debate on the Budget Statement, MNCs know very well what to do to take advantage of the funds. But how do we make the various schemes more easily accessible to our SMEs so that more could become the MNCs of the future? We must never forget that they form an integral part of our enterprise eco-system and provide significant employment to our workforce.

Second, Sir, I applaud the wide ranging purposes and objects of the establishment of the research fund, as outlined in clauses 5(1) and 5(2) of the Bill. With respect to the purposes of the fund, I have the following comments and

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concerns, some of which were also raised by several hon. Members of this House during the Budget Statement debate. I would like to echo the concern raised by Prof. Ivan Png on the need for sharper performance measures. As he correctly stated, most of the measures currently in place are input based, such as fixed asset investment derived from R&D spending and total value-added. To evaluate the effectiveness of policies, we really should know the incremental value-add of the policies. Hence, I would like to propose that we consider outcome measures, such as: (i) the incremental value-added or value created by companies arising from the R&D funding inputs, (ii) the incremental investments and business spending derived from the extension of R&D incentives and grants by Government agencies, such as A*STAR and the Economic Development Board.

Considering that one of the key goals of NRF is to generate more talent to support a knowledge-based economy, what is the connection between R&D spending to enhance science and technology and talent generation? The production of graduates and post-doctorate students transferable to industry is widely understood to be an important sector for technology transfer, but most Government-sponsored alliance programmes assume this to happen naturally, rather than setting specific targets or KPIs.

Where agencies, such as A*STAR, are given hefty incremental budgets to propel R&D activities, there has to be a higher degree of governance and accountability of fund expenses. I know the National Research Foundation Board will be charged with this responsibility but, since billions of dollars are involved here, I would like to suggest that the Board be required to submit a quarterly report to ensure transparency and proper appropriation and application of the fund.

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Additionally, there should be a clear and transparent framework to ensure that funds and resources are invested in the targeted domains so that optimum benefits could be extracted from the investments. The framework should include both top-down and bottom-up approach. The former ensures that there is proper overview and supervision that resources are appropriately directed, while the latter draws expertise from seasoned researchers to identify emerging domains that we should be investing in.

Third, Sir, Prof. Ong Soh Khim expressed her concern about discrimination and more favourable treatment being granted to foreign researchers and scientists, in comparison to home-grown research talent. If these were true, it goes against the spirit of wanting to generate more local talent and does not augur well for Singapore's future. It calls for a review of the approval procedures for research grants to ensure that a fair and more level playing field exists as Prof. Ong has asked for.

On that note, Sir, I wholeheartedly support the NRF Bill.

5.28 pm

Dr Tan Sze Wee (Nominated Member): Mr Deputy Speaker, Sir, I am delighted to hear that the Government shall soon be establishing a National Research Fund (NRF) for the purpose of funding and administration of research and development activities by Singaporeans. With the introduction of the NRF, this may be the much needed impetus to encourage and stimulate further innovations in the technological, scientific and multimedia industries in Singapore.

The Prime Minister mentioned, in his Budget speech, that R&D is one foundation upon which Singapore’s key

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competitiveness will be built upon, and I agree wholeheartedly.

The United States and Japan have long and established records of leading advances in science and technology that serve to improve the human condition. I believe that Singapore, with its excellent infrastructure, financial resources and manpower capabilities, is similarly positioned to become a strong contender and a central repository, or knowledge hub, where ideas and innovations flourish. The introduction of the NRF is one step towards reaching this goal; however, some refinements to the Bill can still be made.

I support the focus on R&D in the biomedical sector, as befitting my role as a medical doctor, and also an entrepreneur with a keen interest in the commericalisation of biomedical innovations. In its report for 2005, A*STAR reported that, "The Biomedical Sciences (BMS) industry's manufacturing output grew to about $18 billion in 2005, which is a 9.8% increase over 2004. Pharmaceuticals accounted for 88% of the total while Medical Technology enjoyed a strong 10.6% growth to reach

S$2.1 billion in output. Employment also expanded by a healthy 8.6% to cross the 10,000 mark. Of the 10,200 jobs in the BMS manufacturing sector, 62% are in Medical Technology."

Since the BMS initiative was launched in 2000, the manufacturing output, value-added and employment for the industry have grown strongly over the past five years with compounded annual growth rates of about 23%, 19% and 12% respectively.

This figure looks set to grow, as an increasing number of multinational pharmaceutical and medical equipment firms set up operations in Singapore. Providing the underlying foundation for the BMS industry is the strong base of

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basic science research capabilities established by BMRC. Five key areas of research have been identified by BMRC where Singapore could play a critical role:

(1) Drug discovery;

(2) Bio-imaging;

(3) Stem cells;

(4) Cohort studies; and

(5) Biomarkers.

I support the continuing funding of these key research areas, as these translational programmes will interface with our basic biomedical core capabilities to further strengthen the BMS industry cluster.

Figures from the Economic Survey of Singapore conducted in 2005 also showed that private sector expenditure on R&D increased from S$2.1 billion in 2003 to S$2.6 billion in 2004, accounting for 64% of total expenditure on R&D work.

The clinical-research base would therefore be enhanced with the much needed R&D capital transfusion provided by the NRF, serving to boost Singapore’s R&D levels and contribute to our knowledge base. This is indeed timely.

However, what are the Key Performance Indicators (KPIs) that we will be using to measure the success of our funding measures? At the national level, we have aimed to increase the Gross Expenditure on R&D (GERD) to 3% of GDP in the next five years. This aim is to close the gap in R&D investments with innovation leaders, such as Sweden, Finland, and Japan.

We have also aimed to increase the private sector’s share of GERD to two-thirds over the long term, from the 2004

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level of 64%. The last objective is to increase the research manpower to support our R&D thrusts and the higher level of R&D activities, where the current level is about 98 Full-time Employee (FTE) Researcher per 10,000 labour force. The aim is to catch up with countries like Sweden and Japan and also to ensure an adequate supply of manpower.

On the agency front, we have also used criteria, such as the number of PhD students trained and graduated, patent application numbers, and scientific publications as KPIs to measure our R&D efforts.

I believe that an important KPI of our National Research Foundation is to improve the innovation activity of our small and medium enterprises (SMEs) and to promote private-sector R&D activities. We have a multitude of programmes and schemes to address technology innovations in SMEs. However, there is a limited take-up rate of these initiatives, as well as low R&D activities in SMEs. Most SMEs, lack the know-how and capability to absorb and develop new technologies. Most are either technology followers or technology-indifferent, with only a minority possessing the technological foundation and skilled personnel to take advantage of technology.

Any SME that focuses purely on technology innovations is viewed as "high-risk", similar to the "Dot-Com" companies, which "burn" a lot of money with no visible return to their investors. Biomedical companies that focus on drug or device development also fall into this category, as they consume a lot of resources but do not provide immediate financial returns.

In a commentary made in 2004 by Sir Peter Williams, the Chairman of the UK Engineering and Technology Board and Chairman of the UK National Physical Laboratory, he said:

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"We recognise that R&D is only one indicator of innovative activity within a company, as the DotCom boom has taught us that technology and investment success are not guaranteed bedfellows. It is financial success which both a manager and investor alike seek - not scientific achievement."

"It is nevertheless this link between science, engineering and technology (SET), R&D, and wealth creation, which is often a prerequisite for success, as shown in a study led by the Engineering and Technology Board of the UK, in partnership with the Royal Society and the Royal Academy of Engineering."

They observed that SET intensive Small Caps and spin-outs emerging from UK universities have provided one of the fastest growing investment sectors, with the FTSE Small Cap index out-performing the FTSE 100 since market recovery commenced in early 2003.

The Science and Technology Plan 2010 also quoted the importance of SMEs in their report. They mentioned:

"SMEs, because of their small size and less entrenched modus operandi , hold great potential as a source of creativity and innovation. In the US, four out of 10 highly innovative firms are small firms. Indeed technology innovation can provide a powerful platform from which SMEs launch into the competitive economic landscape of the 21st century."

As I scrutinised the NRF Bill, two key concerns emerged. Firstly, how can the NRF be best directed to the private sector? Secondly, it is hoped that the RIEC will consider how best to utilise strategic private and public sector partnerships, eg, establishing linkages between the higher institutes of education and the private sector companies in sharing best practices in research development, to allow the best possible

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leverage on R&D opportunities provided by the fund. I hope that the RIEC will provide us with the guidelines very soon.

I would also like to emphasise the importance of allowing more private sector companies, regardless of their sectors, to be given the opportunity to tap into this Fund, as long as the basic criteria outlined for application of this Fund are met.

Further, I would like to highlight the importance of allowing Singaporeans based overseas, such as those working in research institutes abroad, to tap into the NRF fund for the purpose of conducting investigative research for data collection that would assist in scientific and technical breakthroughs. Under Part III, clause 2 of the NRF Bill, the "activities taken to be systematic, investigative and experimental" as described within, are important points that should be adhered to, but their scope could be widened to allow overseas Singaporeans the same leeway to use the Fund to carry out relevant R&D activities.

On Part IV, clause 14(2) in the NRF Bill, I find the penalty for the breaching of confidentiality clause or of falsifying records too low. Because of the premium that must be placed on guarding the intellectual property of patented products, I would like to suggest that the monetary fine of $5,000 be increased to $10,000 to serve as a better deterrent.

I hope the esteemed NRF Board and the RIEC will be able to advise the public on how soon the Fund will be made available, and also to outline the criteria that must be met by private and public sector companies in order to qualify, and successfully apply for this Fund.

Assoc. Prof. Ong Soh Khim (Nominated Member): Mr Deputy Speaker, Sir, thank you for allowing me to speak on this Bill. I would first like to declare my interest. I

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am an academic at the National University of Singapore where my work involves both teaching and research.

This Bill aims to set up a National Research Fund that will be managed by the National Research Foundation (NRF) Board, and the purpose of this fund is to encourage the development of innovative products, processes and services.

The Prime Minister said, in the latest Budget speech in March this year, that the fund will be armed with $5 billion over the next five years to fund R&D activities. It will have an initial injection of $500 million this year. The Government is targeting to raise Singapore's GDP expenditure on R&D to 3% by 2010 from 2.3% in 2004.

Sir, I would like to reiterate a point that I mentioned in my speech on the motion for the adjournment on the topic of Singapore's R&D Strategic Thrusts in the September 2005 Parliament sitting, ie, we need to view this increase of R&D spending from a macro perspective. China has experienced a very strong growth in its R&D intensity recently. In a July 2005 EU Report on Key Figures 2005 for Science, Technology and Innovation, it was reported that China experienced a very strong growth of its R&D intensity over the recent years, with an annual growth of 10% since 1997, and that China will catch up with EU by 2010, in terms of the share of GDP allocated to R&D. Sir, this strong growth in our R&D intensity in China will affect the implementation of Singapore's R&D plan. Thus, I would like to raise a few questions here.

Is our target of 3% GDP within the next five years sufficiently competitive? How do we compare with China's R&D efforts? Also, by that time, Japan, EU, etc, would have probably spent something like 4% to 5% of their GDP per year on

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R&D, if not more. Are we still competitive then?

Next, I would like to raise a few points with regard to several clauses in this Bill.

Clause 3 of the Bill specifically defines what is meant by R&D activities. Subclause (1)(a) states that R&D activities include those that are carried out "either wholly or partly within Singapore". Subclause (1)(b) also states that R&D activities include those that are carried on "either wholly or partly within Singapore".

Sir, the inclusion of "partly within Singapore" in this clause 3 is certainly an exciting news to overseas researchers and research institutes, and they could be even more excited than Singaporeans over the inclusion of this phrase in this clause.

Sir, what these two subclauses imply is that research grants from this NRF Fund can be used to fund overseas R&D activities. This will lead to a few possible undesirable outcomes.

Firstly, overseas researchers could make use of pseudo-research or "name-sake" partners or collaborators in Singapore, including private companies and research institutes, to apply for research grants from this NRF Fund, indirectly sponging the limited R&D resources away from worthy Singapore R&D projects and proposals. In such cases, the research outputs of such overseas R&D activities would not lead to increased direct R&D outputs, intellectual properties (IPs) and patents from Singapore.

Secondly, one could argue that overseas funding bodies, such as the US National Science Foundation (NSF), DARPA, etc, award some of their research grants to overseas researchers to carry out R&D activities outside of these countries. However, NSF and DARPA award a very small percentage of their grants to overseas researchers, compared

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to the amount that is retained in the US. Personally, I feel that NSF is NSF, and the US has vast resources that we do not have. In addition, they want to be seen as "donor" countries. Do we want to be seen as a donor country? Hence, it may not be in Singapore's interest to spread resources thinly trying to attract the top 1% of the research proposals from all over the world, creating some high-end technologies that have no specific practical applications and mass appeal in Singapore and its neighbouring countries.

Sir, here, I echo the comment made by Prof. Clayton Christensen of Harvard Business School, a member of the newly-formed RIEC council, in his recent interview reported in the Straits Times of 31st March 2006, where he commented that Singapore should develop products that can be mass-produced and sold at affordable prices in neighbouring countries and not waste resources creating high-end technology with little mass appeal.

Thirdly, another perspective of viewing this inclusion of "partly within Singapore" in clause 3 is that it would serve to encourage researchers in Singapore to have overseas collaborators in their R&D activities, as well as to jointly apply for research grants from the NRF Fund.

In this regard, I would urge that detailed implementation procedures of such overseas partnerships be clearly spelt out, such as the level of involvement and commitment required of overseas collaborators, the percentage or amount of co-funding that overseas collaborators would need to provide in such partnerships and collaborations, the maximum allowable percentage or amount of overheads that can be charged by overseas collaborators, etc.

In addition, these detailed procedures have to be meticulously followed through

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in the implementation of the research proposal awarding and grant application process. As a researcher myself, I have had experience where I received "invitations" from overseas researchers asking me to lend my name to their research grant application that they are applying to, to fulfil the need of having a so-called overseas collaborator. In many cases, the actual participation of the overseas collaborators is very minimal, and hence does not truly amount to an overseas collaboration.

Fourthly, in including a phrase of "partly within Singapore" in the definition of R&D activities in this clause, a question to raise is: will this favour awarding grants to research proposals that have overseas collaborators, even though overseas partners do not contribute financially or may even request for high overhead components and expenses when they come to Singapore? As a researcher myself, I have witnessed "special collaboration" where the overseas collaborators charged an overhead of as high as 50%-60% of the total research grant, and "demanded" VVIP treatment when they come to Singapore. Sir, there could be just as many good research proposals coming from within Singapore that may not have overseas collaborations. I would like to urge the NRF, in managing and awarding research grants, not to unduly favour proposals that have overseas collaborations unless they truly add value and are bona fide . What we hope to achieve, with this ramping up of research grants, is to build up the R&D landscape in Singapore and groom local R&D talents and budding industries from the SMEs rather than for the mere purpose of bringing in big players from overseas, whether a company or an institute, that may siphon the limited R&D resources away as well as force the smaller local R&D players out of the R&D

scene and, worse still, having their own agenda which may not benefit Singapore directly.

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Clause 5, subclause (1), sets out the purposes to which the moneys in the fund may be applied to. One of the objectives listed in subclause (1)(b) is to fund R&D activities so as to increase investment by the public and private sectors in Singapore in R&D activities.

Firstly, private sector usually drives technologies that are of immediate use to them. Economically relevant no doubt, but they may not be addressing technologies of the far future. Currently, most local research laboratories of MNCs and local large companies are application-driven. Local SMEs are mostly only keen on short-term downstream application-oriented research that can provide solutions for an immediate problem that they have experienced, if not yesterday.

Sir, the private sector and SMEs tend to only focus on the needs that are of immediate concern to them. To them, upstream research is not an important component, and they are only concerned in solving the current industries' immediate problems. Sir, if it is just solving the immediate problems as well as generating revenues, then the three identified R&D sectors would be better driven by some private organisations for profit-generation rather than under NRF for the creation of a knowledge-driven economy.

Singapore is moving towards a knowledge-driven economy, and an important component is the creation of new knowledge in the possible new industries that may spring up as the three identified sectors grow. Singapore-based IP needs to be created in the long run. It is not sustainable to build research capitals in these three sectors just by using imported technologies forever. Such a lead can be easily eroded.

Hence, I personally feel that it is important that research efforts should be more generic and not be skewed too much towards these specific private sector or industry's needs as well as

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profit-driven targets. Although the ultimate aim of R&D is to generate economic payoff, there should be a fine balance of developing new basic skills that could reap even greater payoff eventually and applying existing skills for the smaller but more immediate payoff.

In this regard, a good balance is needed: basic research to fuel the private sector or private-sector led applied research which is of immediate relevance.

Secondly, in the July 2005 EU report, it was reported that 22.4% of the business R&D is performed by SMEs in the EU; 14.1% in the US and 7% in Japan. SMEs, being small, have limited funding to channel into research. In order to increase the percentage of business R&D by SMEs in Singapore, we would need to study and analyse the profile of these SMEs, such as their primary business activity and employees' qualifications, the funding structure in their projects, their financial cashflow patterns, etc, so that new incentive schemes can be proposed to encourage these SMEs to engage in R&D activities and help them to align their R&D investments with commercial opportunities.

A new research grant funding scheme can be introduced for the SMEs. Currently, the Academic Research Fund (ARF), which is managed by the Ministry of Education, has bi-annual calls for research proposals mainly for the Institutes of Higher Learning (IHLs), while A*STAR has similar open as well as thematic research proposal calls, again mainly for the IHLs and RIs. There is no specific scheme calling for proposals from the SMEs. To promote private R&D among the local SMEs, a new scheme can be introduced where SMEs can submit research proposals for consideration by the NRF. This SME research grant scheme can be targeted at specific local industry sectors that Singapore is keen to grow. Examples are the precision engineering

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and the food industries. This will encourage local SMEs to engage in greater research activities.

Thirdly, to encourage more private sector R&D investments, we need to increase the efficiency with which good ideas are turned into new products, processes, services and solutions so as to create a conducive environment for firms to increase R&D investment in Singapore. In this regard, we need to bridge the gaps between the research in the universities, RIs and the private sector research in MNCs and SMEs to turn R&D outputs into new products, processes and services. Sir, in my speech during the September 2005 Parliament sitting on the topic of Singapore's R&D strategic thrusts, I mentioned that there is a R&D value chain that can be considered.

In this R&D value chain, firstly, the universities can be responsible for most of the basic and fundamental research. This is followed by the RIs, which act as halfway houses and the next stage where discoveries and inventions from the universities can be transferred for further development into prototype systems and products. The last stage is the polytechnics, which can take the prototypes further and develop them into commercial products together with the companies.

Hence, in encouraging R&D in the Singapore SMEs, the polytechnics, which have very good industry networks, can be roped in to perform downstream application-oriented research jointly with these SMEs. In this R&D value chain, these polytechnics can partner the RIs and universities on one hand and the SMEs on the other hand to perform application-oriented research that can provide immediate solutions to the technical needs of these SMEs. A new research funding scheme can be set up for

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polytechnics and the SMEs to jointly apply for grants to perform such research.

Fourthly, I have proposed introducing a new industry-oriented engineering Doctorate degree in my Motion for the Adjournment on the topic of Singapore's R&D's strategic thrusts. Here, Sir, I would like to propose that NRF consider providing research scholarships from this NRF Fund for Singaporeans to pursue such industry-oriented PhD degrees in the local universities.

Sir, this industry-track PhD degree has been proven with great success in the UK and Europe, and it can be introduced in local universities to increase the industry-relevant research conducted in the universities. This will ensure that the research performed is of greater practical use and can be transferred to the industry. Hence, companies will be more willing to participate and provide such R&D funding. This will encourage private-sector participation, bridging the universities' research efforts with the industries.

Clause 5, subclause (2)(a), states that the moneys in the Fund may be paid to "other person (whether in Singapore or elsewhere) undertaking or facilitating R&D activities". Sir, the inclusion of this phrase in this subclause could again be more exciting news to overseas researchers than Singaporeans. This inclusion would mean that the moneys from this NRF Fund can be paid to overseas researchers in a manner similar to what our local research agency is currently doing in "catching whales". So far, this local research agency has caught many "whales", and they are renowned researchers from the US, Japan and UK who have made their names in the cancer and life science research.

Sir, in my speech during the MTI's COS debate this year, I put forth a series

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of questions that we need to carefully consider before paying out huge sums of money to such overseas scientists or researchers. I would urge the Ministry of Finance to consider these questions as well when managing this NRF Fund. What has already been practised by this local research agency should preferably not be repeated by NRF, otherwise, it would only mean more moneys being paid to expensive overseas scientists. It would also mean that - if I may be frank here - Singapore, which has been viewed as a "Santa Claus" by many overseas researchers and research institutes, would have more goodies to dish out now with the setting up of this new NRF Fund. Sir, as the Prime Minister has said in his Budget summary speech, which I quote, "We will not spend it blindly; we must make sure it is well spent".

To reiterate, the questions we need to ask ourselves here are:

(1) If a world-renowned scientist is not able, or is facing certain difficulties, to find grants to support a certain research project in the US, UK or his home country, there must be some reasons and important factors to it, and we should analyse carefully before we throw in huge amounts of money for this person to come to Singapore and conduct the research work here. A different angle to view this is: is the Singapore Government offering them huge sums of research grants without requiring them to clearly state their research objectives and deliverables in the form of writing research grant proposals?

(2) In attracting these world-renowned scientists with huge research grants and/or salaries, what are the key performance indicators (KPIs) that we have set for them to meet, and within what kind of a timeframe do these scientists have to deliver what they have promised?

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(3) Is "buying" scientists the right approach for Singapore to put us on the world map of R&D? Are we merely using them to decorate a list of who's who in research in Singapore?

(4) Are we giving a different treatment to the foreign scientists as compared to home-grown researchers in research grant application and approval? If these foreign scientists in the US and elsewhere have to go through competition and rules to secure grants, they should also follow the same rules in Singapore, ie, compete on merits and level ground. Why give them special concession? Sir, I would again like to make a plea for equal treatment as I did during the MTI's COS debate, ie, that NRF should not favour the foreign researchers and, therefore, discriminate against the local R&D talents. We are only asking for a chance to compete equally. Let us compete on level grounds.

Sir, I welcome clause 14 and clause 15 that deal with research governance, which spell out the penalties for persons who reveal trade secrets, etc, and penalties for persons supplying false information to the Board respectively. These clauses would promote IP protection and are steps towards strengthening research governance. However, these two clauses alone are not sufficient to safeguard scientific integrity and prevent misconduct in research.

Scientific research today is increasingly about access to grants and rewards, such as fame, prizes and commercial spin-offs - these incentives that can sometimes lead to unethical practices, as in the South Korea's stem cell research scandal. In Singapore, we have the Bioethics Advisory Committee (BAC) to guide the biomedical research and an external oversight system. However, we need a sound research governance framework that is aimed at continuous improvement of standards and

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the reduction of unacceptable variations in research practice to safeguard scientific integrity, ensure financial probity and prevent fraud and misconduct in research.

Sir, we are reminded of proper corporate governance in the recent meltdown of NKF. In line with more accountability and transparency, we need proper research governance to enhance accountability and transparency in the use of moneys from this NRF Fund. Hence, we need to formulate a research governance framework considering that this NRF Fund will be armed with $5 billion over the next five years to fund R&D activities.

Clause 14 prohibits any person exercising any function under this Bill from revealing any protected information which may, at any time, come to his knowledge in the course of his duty under this Bill. The penalty is a fine not exceeding $5,000 or imprisonment for a term not exceeding two years or both.

In this case, consider the scenario of research proposals that have been submitted to the NRF for consideration. Many of such proposals could lead to research breakthroughs as well as patents and commercialisation. It is thus of great importance that such research proposals and plans be carefully guarded to prevent unethical behaviour, such as stealing of research ideas from peer researchers or information being leaked out to other parties. This is more crucial in the case of documents relating to filing of patents and commercialisation of research outputs.

Hence, Sir, this penalty of $5,000 or imprisonment of a term of not exceeding two years or both is, in my opinion, a little too lenient. I would urge the Ministry to consider harsher penalties in this instance.

Clause 15 provides for various offences relating to supplying false

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information to the Board. The penalty is a fine not exceeding $5,000 or imprisonment for a term not exceeding six months or more.

Sir, again, this is lenient. Looking at the South Korea's stem cell research scandal, where large amounts of research grants were awarded to Prof. Hwang before his team was being found out to have fabricated certain data, these large amounts of research grants could have been awarded to other worthy research projects and proposals.

Clause 19, read with the Schedule, makes consequential amendments to two other written laws which deal with, namely, A*STAR and SPRING.

An observation here is: will these amendments lead to better coordination in the funding of research by NRF and A*STAR? I would also like to raise a question here with regard to funding of research by NRF. As an academic in the university, I have had experiences where some Ministries seem to be very particular in funding either basic or applied research, although it is very difficult to draw a clear line. May I know whether the NRF Fund will be used to fund both types of research? I would also like to mention that all engineering research is ultimately applied in nature since engineering research is to solve problems in the end, whether near or far.

Next, I would like to raise a few points with regard to key performance indicators (KPIs). As the Prime Minister has said, we need to have proper performance measures because how we measure influences what people will do. Thus, we need to have a coherent set of KPIs to measure the achievement of the R&D activities. However, research outcomes are often not easily quantifiable. We should not be relying on winning awards and competitions alone, the total number of research publications and their citation counts. We should also not be too

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skewed towards commercialisation of technologies and ideas as that would influence the research towards more downstream development work.

What is needed is a range of indicators, such as the numbers of publications, citation counts, awards won, invention disclosures filed, primary patents filed, patent commercialised, manpower trained, research dollar attracted from the industry, attraction of overseas R&D headquarters and laboratories to Singapore, etc.

This whole range of indicators should not be applied equally to all institutions conducting research, ie, there is no one pair of research shoes that fits all approaches. Rather, depending on the institution, whether it is a university, polytechnic, research institute or SME, a different combination of these indicators should be applied to measure the research output. In addition, it should vary from proposal to proposal and from discipline to discipline. For example, it does not make sense to ask how many research laboratories or research companies a proposal to set up a research centre can bring to Singapore. Sir, it is not realistic to ask for such indicators in such proposals, at least not at the onset. Research always has a sense of uncertainty. Who can be so sure to promise these figures upfront?

Thus, we need to formulate a few sets of KPIs to cater to the different enterprises that are conducting research and these sets of KPIs should be based on the unique characteristics of the enterprise conducting the research as well as the nature of the research being conducted.

Sir, the last point that I would like to speak on with regard to this Bill is the need to be more proactive in identifying new strategic research areas in the three identified research sectors, namely, the biomedical sciences, water and environmental technologies and interactive and

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digital media (IDM) sectors. NRF should be more proactive in identifying new research areas and industries in these three identified sectors to meet the strategic needs of the country.

As an example, for the IDM sector that has been identified as a strategic focus, the current discussion seems to be focused on the gaming, animation and digital movie-making industries, which have probably been identified based on feedback from the current creative industries. However, basing on feedback will mean that there will always be a time lag of three to four years, ie, "past data". Now we may want to do a bit of forecasting ourselves, to predict the possible new IDM industries that may spring up as the IDM sector grows and take a lead in researching in those areas. This forecasting would also apply to the other two strategic sectors that have been identified. This is similar to what Mr Shai Agassi, a member of the Scientific Advisory Board of the NRF said in a report in the Straits Times on 31st March 2006. He said, and I quote, "You don't wait for the market change, you make the market change if you want to remain as a global leader".

Sir, in conclusion, I support this Bill that provides the necessary structures and resources to support Singapore's R&D drive. I support it and hope to see many positive changes going forward.

6.03 pm

Mr Raymond Lim Siang Keat: Mr Deputy Speaker, Sir, I would like to thank the Members who spoke, in particular, Assoc. Prof. Ong, because she was conscious that the hour is somewhat late, so she went at an extraordinary pace without any discernible taking of breath. It is worthy of a research project in itself.

I would like to thank all three Members for going through the Bill, taking time and giving us their comments and

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suggestions. I would just address the key issues and as for the rest of their suggestions, I will forward them to the relevant agencies.

First, on the issue of governance. Dr Ahmad Magad and Assoc. Prof. Ong have raised this very relevant issue, as we need to have a proper governance framework because of the huge amounts of moneys involved here. I agree. What we would do is that for every major commitment of funds, we will require the approval of the full NRF Board. Also, in line with the rest of the Government, the NRF will submit an annual report and also their expenditure in the Budget Book every year. The NRF will also submit regular reports to the Prime Minister and the Cabinet at least twice a year. We will review whether we need to do this more frequently but, as a start, it will be done twice a year.

Related to governance is also the issue of key performance indicators. Assoc. Prof. Ong is right that this is quite challenging. She said that there is a whole diversity of them and you cannot just have one particular shoe size and say it fits all, as we might need different combinations. As I mentioned in my speech earlier, the NRF will be actively studying this to come up with good indicators, including outcome indicators where they are appropriate. We need, however, to bear in mind that in R&D, the gestation period is very long. So again, you have got to come up with outcome indicators that make sense and are relevant.

On the overall approach, when we come to KPIs, we will consider all proposals, but we will subject them to vigorous evaluation on their merits before funding is approved, and we will be guided by experts who will be sitting in our panel and members of the RIEC, not just scientists, but CEOs and CTOs, people who understand the business of

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R&D and who will help us assess and evaluate the R&D on how best to allocate these funds.

All three Members - Dr Ahmad Magad, Prof. Ong and Dr Tan - brought up the issue of commercialisation of our R&D. I agree that it is important. At the end of the day, we are spending all this money in R&D because we expect some economic pay-off. Again, as Prof. Ong said, we must be prepared to invest in the whole continuum, not just in the downstream application, but the whole continuum.

Yes, in the past, we focused very much on the downstream application but, increasingly, we need to spread it out, including upstream. When we go upstream, we want to do it in a more focused approach, so as to increase the chance of having a better commercial outcome.

Dr Ahmad Magad asked whether the NRF would fund the commercial exploitation of R&D. He says that it is very important. Clause 5(2)(b) of the Bill allows the funding for the commercial exploitation of R&D. So it does not preclude.

Prof. Ong suggested an R&D value chain. I think it is a sensible approach that we should have collaboration to link up with the research institutes, the polytechnics, the universities, together with industry, and encourage private and public sector collaboration. This is what MTI has been doing, and will continue to do.

On SMEs, again, all three speakers brought it up. I agree with Dr Magad, Prof. Ong and Dr Tan that it is very important. I would like to assure them that we are doing our best to encourage R&D in our SMEs. We do not discriminate against the SMEs. What is really important is the size of the idea, not the size of the company, and we will be guided by that.

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SPRING, for instance, has now allocated some funds to SMEs for this. Members might be familiar with the Enterprise Technology Fund. This is to encourage SMEs to innovate and to use technology. The various things that they would do here are: technology advisory and matching services for the SMEs, support R&D innovation by the SMEs and secondment of research experts from our public and research institutes, to help the SMEs.

Dr Tan was concerned that overseas Singaporeans doing research should not be left out. Prof. Ong was worried about the possible abuse by overseas researchers - I presume overseas Singaporeans included. The NRF Bill does not limit the location of the research, as she has pointed out. However, to ensure that Singapore benefits from the research, it is likely that most of the research would have to be done locally. We will, however, not preclude the NRF from funding projects where a portion of the research is undertaken abroad if it can be shown how the value created can benefit Singapore.

On the wider issue of foreign researchers' overseas projects, I agree that we need to develop our local talent, but I think all three speakers will agree with me that we just cannot rely on local talent alone to drive our R&D efforts. In fact, we need to attract the best talent, local and foreign, into Singapore if we really want to build a truly world-class research environment in Singapore. But I would like to assure Members that even when we bring in and employ overseas research personnel or foreign researchers, we will ensure that those that we bring in are, to use Prof. Ong's words, "whales" but they will be bona fide "whales", and not sharks in disguise. We will ensure that this is really the case. All R&D proposals will be evaluated on the basis of merit and not nationality.

What about talent generation? A*STAR's plan for 2006-2010 is to

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encourage locals to do PhDs in the area of R&D, and make R&D a career. They hope to encourage at least 220 new PhDs and graduates, and the majority will be locals.

On penalties, both Dr Tan and Prof. Ong felt that they might be too lenient, not tough enough. Let us have a sense of perspective here. For false disclosure, the proposed fine of $5,000 is consistent with the penalty levels in other Acts. In serious cases, the offender can be charged under the Penal Code.

As for clause 14 regarding disclosure of trade secrets, the penalty is appropriate, as patentees and other confidential right owners are not precluded from suing the individuals concerned for much larger sums, if they can prove a breach of confidentiality.

Sir, these are some of the key issues that they have brought up and I have tried to address them. As I said, there were many suggestions and comments made, which I will pass to the relevant agencies to study them.

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 Raymond Lim Siang Keat].

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