New technologies will have an impact on a wide range of sectors and jobs, but there are ways to respond to make the most of the coming disruption while minimising harm, Finance Minister Heng Swee Keat said yesterday.
Responding to questions from students of Tsinghua University, Mr Heng said a more globally integrated and digital economy means competition can come from totally unanticipated sources, pointing to home-sharing firm Airbnb, for example, which now has the largest network of "hotels" in the world.
Other sectors that are seeing significant change include manufacturing and finance, where fintech (financial services using innovative technology) firms threaten to disrupt banks.
"I believe that the digital economy will cause a lot of changes in many sectors, not just in the financial sector but in practically every sector that you think about," he said.
Cryptocurrencies, for instance, have the potential to cut out the middleman in sectors where they have long played the role of a trusted go-between. But it is their underlying technology, called blockchain, that has the potential to cause significant change to many industries, said Mr Heng.
"You now have a machine, an algorithm, that can be that trusted partner, and can match demand and supply much more efficiently," he said.
KEEPING UP THE PACE
We will continue to make some progress, but at the same time, we must never underestimate the pace of change, and we just have to move a little faster than before.
MR HENG SWEE KEAT, on Singapore's efforts to catch up in the area of cashless payments.
"It is something that is worth monitoring very closely, because it will have some impact on many transactions, particularly in the services industry, an industry which depends on a high level of trust."
But the disruption on the horizon is also about creating value and eliminating inefficiencies in the market, rather than disruption for its own sake, said Mr Heng.
"In the old days, many (fintech) companies said 'I'm going to disrupt the big companies'," he said.
"I noticed that many of them are now realising that there is also a lot of scope to work with major financial institutions, to match the strengths of existing financial institutions with the agility and innovativeness of a fintech to see what new value they can create."
Yesterday, Mr Heng also visited ride-sharing giant Didi Chuxing, where he was shown how the ride-hailing platform was able to lessen traffic jams in gridlocked cities by sharing its data and analytics with local governments. The platform has also helped bus operators kept afloat by state subsidies become profitable again through on-demand services.
5 WAYS TO TAKE CHINA-SINGAPORE PARTNERSHIP FORWARD
In his speech at Tsinghua University yesterday, Finance Minister Heng Swee Keat outlined five areas of potential cooperation between Singapore and China.
1. TRADE. As the Asean Chair next year, Singapore is committed to working towards the conclusion of the Regional Comprehensive Economic Partnership.
2 INNOVATION. Singapore and China have been partnering each other in areas relevant to both sides, including national science programmes and university collaborations. Singapore firms are actively engaging the Chinese market to testbed new ideas and build experience with large-scale projects.
3 FINANCIAL COOPERATION. Singapore has been an early supporter of the Belt and Road Initiative. With a strong financial hub and professional services base, Singapore will support the ventures along the Belt and Road.
4 PEOPLE-TO-PEOPLE EXCHANGES. There are cross-cultural learning and exchanges between schools, universities and research institutes, including collaborations with Tsinghua University. Prominent groups such as the Singapore Chinese Orchestra and Beijing People's Art Theatre perform regularly in both countries. Singaporeans Joanna Dong and Nathan Hartono entered the finals of Sing! China to compete with and be inspired by the best talents in China, and vice versa. ''I'm sure they have their own fan base in China now!'' said Mr Heng.
5 ENVIRONMENTAL SUSTAINABILITY. Citing the Tianjin Eco-city as an example, Mr Heng said collaboration in this area has broadened to include sustainable and innovative city-planning and urban solutions. Singapore companies are also learning from China's experiences in renewable energy and cleantech
Answering a question about universal basic incomes, Mr Heng said it is important to have a better understanding of the future and to navigate carefully, adding that it is "very hazardous" to try and predict it.
On cashless payments, Mr Heng said Singapore started on the back foot but is now making an effort to catch up.
"We will continue to make some progress, but at the same time, we must never underestimate the pace of change, and we just have to move a little faster than before," he said
Mr Heng has met senior Chinese officials while on on a five-day visit to China, beginning last Wednesday.