Moving Panacea Forward
Team KKS
Kian Sin
Sean Tan
Siswanto Tang
• Executive Summary
• Key Objectives
Introduction
• ESS Framework
• Education & Industrialisation
• SOE Development
• SME Creation
Next Steps
• Summary of Recommendations
• Implementation Timeline
• Appendix
Conclusion
Presentation AgendaThe team will present the way forward for Panacea
I. We should focus on training and developing its
labor first before focusing on services
II. State-owned enterprises are developed to
accelerate industrialization in three identified
industries and to reduce reliance on FDI
III. As the labor force becomes increasingly skilled and
educated, we will start to focus on services and foster
innovation through providing avenues for local
entrepreneurship
Executive Summary
Key ChallengesPanacea faces key challenges in meeting its targets
Lack of skilled labour
Lack of entrepreneurship spirit and innovation
Inadequate soft infrastructure
Current Situation 2030 Targets
• Contributions of services to GDP –25%
• Exports of high-tech products & services - 20.2%
• Limited success of initiatives launched by various ministries
• Contributions of services to GDP - 70%
• Exports of services to 25% of overall exports
• TFP to have increased by 5% every decade
• Development of key sectors in manufacturing and services
Key Challenges
Selected Asian Economies (Services as % of GDP)
Both ways of reaching the target are unsustainable
Panacea should reassess its targets
Assessing Targets
Share of services to
GDP: 25%
Share of services to
GDP: 70%
• Unsustainable growth in low value-added services
• Removal of agricultural & manufacturing sectors
Downsizing non-related sectors
Dramatic increase in services
20101980
Initial Projections
Annual GDP growth of
approx. 6%
12.7% annual growth in GDP
of services
5
SME Creation
SOE Development
Education & Industrialisation
ESS Framework 2013The team recommends a holistic progressive framework approach which aims to build the foundation, drive growth, and sustain results
Lack of skilled labour
Lack of entrepreneurship spirit and innovation
Inadequate soft infrastructure
Key Challenges - Sustaining innovations with less state funding
- Increasing TFP through R&D funding
- Laying foundations for growth and innovation
- Concentrate industry synergies
- Develop indigenous capability in key industries
- Reduced reliance on FDI
Foundation Building
Driving Growth
Sustaining Results
Justifications
Recommendations
Education & Industrialisation
Laying the foundations for a skilled and innovative workforce
Concentrating labor force through manufacturing centers to gain technical expertise
SOE Development
Undertaking long-term investments which the private sectors will not undertake
Accelerating developments into industries with high growth potential
SME Creation
Fostering sustainable local innovations and entrepreneurship
Moving into high value-added service industries whilst leveraging on skilled workforce
Education & Industralisation
Promotes logical and systematical thinking for problem solving and innovation
Rationale
Provides impetus for research and innovation
Shifts the labour force to higher value-adding industries by equipping technical skills
Education
Universities with more
emphasis on engineering,
science, coding
All lessons to be taught in English
Overseas Scholarships
Government-led research
laboratories
Primary schools in rural areas with focus on
Science & Math
Breaks down language barriers
Grooming the future leaders of Panacea
Education & Industralisation
Assimilate the required technological expertise and manpower
Rationale
Lower cost, faster start-ups, reduced cost of operations
Nudge economy up the value chain, and a services-driven one
Industrialisation
Partnerships with industry experts and
co-location of universities
Industrial policies
Infrastructure development
Focus on ICT and
professional services
Joint-venture with foreign companies
Achieve cluster synergy with proximity to research institutes and universities
Provide motivation for citizens to move into cities
Recommendations
Education & Industrialisation
Laying the foundations for a skilled and innovative workforce
Concentrating labor force through manufacturing centers to gain technical expertise
SOE Development
Undertaking long-term investments which the private sectors will not undertake
Accelerating developments into industries with high growth potential
SME Creation
Fostering sustainable local innovations and entrepreneurship
Moving into high value-added service industries whilst leveraging on skilled workforce
SOE Development
Higher overseas market potential
Rationale
Leverage upon expertise acquired from clusters
Focus on high potential areasSOE
Development
Independent supervisory
boards
Export-orientated
focus
Focus on ICT and
electronics
Grants given for R&D efforts
CEO-sponsored
management teams
Reduce agency costs
Undertake local ICT infrastructure development
To reiterate privatization pressures
Internationalisation
Easier comparison for international KPIs
Move towards services economy
Emphasize urgency and prevent bureaucratic inertia
Recommendations
Education & Industrialisation
Laying the foundations for a skilled and innovative workforce
Concentrating labor force through manufacturing centers to gain technical expertise
SOE Development
Undertaking long-term investments which the private sectors will not undertake
Accelerating developments into industries with high growth potential
SME Creation
Fostering sustainable local innovations and entrepreneurship
Moving into high value-added service industries whilst leveraging on skilled workforce
SME Creation
Matches ideas, entrepreneurs and funds together
Rationale
Reduce burden on state funding
Promotes R&D efforts as it promises adequate rewards for effort
SME Creation
Grants given for R&D
efforts and services
Ideas Marketplace
Attract alternative
funding mechanisms
Enforcement and
monitoring of IP and
investor laws
Promote indigenous TFP growth
Tap on expertise of venture capitalists
Move towards services economy
Provides a market of meeting suppliers and customers for ideas
Safeguard interests of investors
Creates risk-embracing culture
Establishment of Neo-Panacea
Development Council (NPDC)
Neo-Panacea Development Council (NPDC)
Cabinet Secretary
Pla
nn
ing
Lev
el
Chairman
Members
Minister of Commerce Minister of Public Works
Minister of Education Minister of Trade & Investment
Minister of Labor Ministry of Finance
Minister of Social and Welfare Industry Leaders (5 CEOs from targeted
industries)
Mayor for Minas Tirith Mayor for Gondolin
• Streamline KPI• One-stop centre for
business permits• Connection to high-
speed ICT infrastructure
Implementation
• No conflict of interest• Reduce excessive
bureaucracy• Gain commitment to ESS
Framework
Rationale
• Gather feedback on results
• Yearly performance review
• Bonuses contingent on performance
Monitoring
Inculcate and encourage informal networks to actualise benefits of
industry clusters
Establish a cluster management body to increase marketing efforts and
increase awareness of clusters
Establishment of an advisory committee to provide expertise for SOE
Reduce hierarchical levels and bureaucratic inertia through micro-
management from CEO-managed teams
Goods to be exported for objective comparison of financial results
Risks Mitigation
Lack of companies in industry
clusters
Failure of SOE corporate
performance
Competition from other countries
Entrench positive network effects of home clusters
Consider collaborative efforts in sector specialisation
Risk Mitigation
Funding Mechanism
94%75%
6%25%
2013-2020 2020 - 2030
Breakdown of Total Spending (in
Million US$)
Public Private
Funding volumes (in US$ million)
2013 2020 2025 2030
Public 3,604 3,935 4,287 5,111
Private 100 420 1,450 1,550
Total Funding 3,704 4,355 5,737 6,661
Public Funding Means
Private Funding Means
Corporate and income tax
Import dutiesSovereign funds
investments
Infrastructure bondsSocial impact bondsVenture capitalists
Private Equity
Panacea in 2030
25% 18% 9%
30%23%
18%
15%24%
28%
25% 31% 41%
5% 4% 3%
2013 2020F 2030F
Projected GDP Split
Agriculture Primary Secondary Services OthersA conductive and risk-embracing culture and environment for local
entrepreneurship
Highly educated workforce with a strong
foundation in Science and Math.
New challengers in the global marketplace
Vision of ESS Framework
Key Performance Indicators 2011 2020 (Est.) 2030 (Est.)
Economic Indicators
GDP growth (%) 4.5 5.5 6.5
TFP growth (annual %) N.A. 5.0 5.5
Innovation Indicators
Exports of High-tech Products (% of total exports)
20.2 23 36
R&D Spending (% of GDP) 1.6 1.8 2.2
Key Performance Indicators 2011 2020 (Est.) 2030 (Est.)
SME Indicators
SME Contribution to GDP (%) 36.2 38 45
Social Indicators
Population below poverty line 28.9 25 20
Budget Indicators
Budget Surplus 6.2 3.5 4.0
Panacea in 2030
25% 18% 9%
30%23%
18%
15%24%
28%
25% 31% 41%
5% 4% 3%
2013 2020F 2030F
Projected GDP Split
Agriculture Primary Secondary Services OthersA conductive and risk-embracing culture and environment for local
entrepreneurship
Highly educated workforce with a strong
foundation in Science and Math.
New challengers in the global marketplace
Vision of ESS Framework
Key Performance Indicators 2011 2020 (Est.) 2030 (Est.)
Economic Indicators
GDP growth (%) 4.5 5.5 6.5
TFP growth (annual %) N.A. 5.0 5.5
Innovation Indicators
Exports of High-tech Products (% of total exports)
20.2 23 36
R&D Spending (% of GDP) 1.6 1.8 2.2
Key Performance Indicators 2011 2020 (Est.) 2030 (Est.)
SME Indicators
SME Contribution to GDP (%) 36.2 38 45
Social Indicators
Population below poverty line 28.9 25 20
Budget Indicators
Budget Surplus 6.2 3.5 4.0
APPENDIX
Appendix
Indicator Value Comparable Country
Area 2,220,760 sq. km Mexico
GDP, current (US$) US$ 728.3 billion (2011) Turkey
GDP per Capita US$ 1047.46 (2011) Kyrgyzstan
Public Debt: 49.5% of GDP Philippines
SME Contribution to GDP
36.2% of GDP
Population 695.3 million 3rd in the world
Net Migration Rate -0.05 migrant per 1000 population
India
Literacy Rate 76.8 of total population Belize
Population below poverty line
28.9% (2010) Sri Lanka
Distribution of income 40.1 GINI coefficient Russia
Key Indicator Comparable
740
84150
1050
120170
50
250
600
850
2013 2018 2025 2030
Additional Cumulative Construction (2013-2030)
University Vocational Schools* Primary Schools
Increased Education Spending in Panacea
Major focus point for S&T universities
50 250 600
850
200
1,000
2,400
3,400
2013 2018 2025 2030
Financial Support for Education
(2013-2030)
(in million US$)
Student Bursaries Student Scholarships
*Does not include 24 vocational schools planned
Key Risks & Mitigations
Type of Risk Risk Probability Mitigation
Lack of vocationalteachers
Low Overseas tie-up
Low enrollments High Financial bursariesand scholarships
Funding Mechanism and Return (Education)
Initiative Cost*Funding (first 10 years)
Funding (next 10 years)
Remarks
Universities Construction
$1,500 Federal Federal150 schools in 20 years, $200 million per school
Student Bursaries $ 50 State -Top 1% (500,000 students), $100 each
Primary School Construction (rural)
$ 200 State State50 schools per year, $4 million per school
Vocational Schools
$ 750 Federal Private10 schools per year, $50 million per school
Additional funding for universities
$ 800 State State
7.5 schools built on average per year, $100 million per school
Student Scholarships
$ 200 StatePublic –Private
1,000 students, $0.2 million per student
Total $ 3,500 Annually (2013 price level)
* In millions annually (USD)
64% 52%
36%27%
021%
2013 - 2020 2020 - 2030
Breakdown of Educational
Spending (in Million US$)
Federal State Private
Key Performance Indicators 2013 2020 2030
Literacy Rate (%) 76.8 82 93
Universities (#) N.A. 20 70
Vocational Schools (#) N.A. 60 100
School Enrolment, Tertiary (% of population of age
N.A 10 18
Government-led research laboratories
N.A 8 20
• Focusing on
electronics and
automotive parts
• Availability of low-
cost labor
• Geographical
proximity to high-
tech manufacturing
countries
Manufacturing clusters (HIDE Zones) to
be developed
Partnership with
industry & Academia
Infra-structure Development
JV with foreign
companies
Industrial Policies
Panacea Industry Cluster
Why investment into ICT,
Electronics, and Automotive?
ICT
• ICT-driven innovation could contribute about one third of GDP Growth1.
• ICT investment drives productivity growth in the economy1.
• Continuous growth. Projected to reach US $4 T globally by 20152.
Electronics
• Growth in electronics goes in-tandem with ICT growth
• The competitive nature in this industry requires companies to continuously develop innovations
• Global gadgets spending to reach $1 T in 20131
Automotive
• CAGR of 5.5% for vehicle assembly (2010-2017)1
• 83% growth will be contributed by emerging markets1
• Automotive industry represents 8.5% of total value-added generated by manufacturing in Europe (High Value-add to GDP)2
1 International Institute of Communications2 Gartner Report
1 PWC Auto Report2 Alphametrics Auto Employment
1 PWC Auto Report2 Global Edge Report
Major Phases in Industry Clusters
Phase I (2013-2015)• Generate awareness, build
linkage• Improve regulatory
environment in IPR• Create funding mechanism to
develop successful home-grown companies
• Create organization to accelerate cluster development and attract activities into clusters
Phase II (2015-2020)• Nurture existing companies
in the clusters• Improve funding
mechanism for established companies
• IPO, M&A, cross-border transactions
Phase III (2020-2030)• Identify next wave of
emerging technology in cluster
• Solidify Panacea’s leading position in selected industry clusters
2013 2015 2020 2030
• HIDE Zone recognized as an emerging cluster
• Measurable increase in collaboration and technology transfer
• HIDE Zone recognized as emerging world class industry cluster
• Cluster effects take over to attract activities into HIDE Zone
• Innovation starts to take place in HIDE Zone
• HIDE Zone recognized as a world class industry cluster
• World-leading innovation flourishing in HIDE Zone
• HIDE Zone becomes a pillar in big company global R&D network
Cluster Development Initiatives
• Industry & University cooperative research centers
• Co-funding industry and university R&D projects
• Develop training programs for the industry
• Western Corridor of Panacea to be developed
• Increased infrastructure investment in the clusters
Industrial Policies
Promote partnership with industry & academia
Infrastructure Development
• Attractive tax structure and reduced customs duties
• Tax holidays for setting up in industry clusters
• Further subsidies and supports for local JVs
• Interest subsidies for purchase of capital goods
Cluster management body is
established to ensure the progress
Manage network openness to
business outside the cluster
Risks and Mitigations to Cluster
Development
Clusters not sustainable in the future
Lack of stakeholders in clusters
Lack of R&D Expertise
facilitating strong inter-organisational relationships within the cluster
Enhance investments in R&D by facilitating overseas tie-ups
Risks Mitigants
Funding Mechanism and Return (SOE)
Initiatives 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Subsidies and reduced customs duties (0.3*0.05*import duty) 0.00 0.00 0.00 0.00 2.94 4.41 11.76 22.05 49.98 83.46 119.99 207.84 287.52 418.20 530.12 721.73 877.82 1066.58
Tax Holidays 0.00 0.00 0.00 0.00 0.30 0.44 1.18 2.21 5.02 17.42 5.61 18.75 8.27 31.73 4.72 16.97 4.72 16.97
Interest Subsidies for purchase of capital goods (2.5% discount) 2.50 2.75 5.42 6.92 12.92 15.08 19.17 23.00 29.58 34.25 42.08 48.67 59.58 57.17 66.25 63.67 72.08 57.00
Co-funding industry and university R&D Projects 1.00 1.00 2.00 2.00 4.00 4.00 5.00 5.00 6.00 6.00 7.00 7.00 8.00 8.00 9.00 9.00 10.00 10.00
Develop training programs for the industry 0.50 0.50 1.00 1.00 2.00 2.00 2.50 2.50 3.00 3.00 3.50 3.50 4.00 4.00 4.50 4.50 5.00 5.00
Increased infrastructure investment in the clusters 100.00 100.00 200.00 200.00 300.00 300.00 300.00 300.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00
Total Outflow 104.00 104.25 208.42 209.92 322.15 325.94 339.61 354.76 293.58 344.13 378.18 485.75 567.37 719.10 814.59 1015.87 1169.62 1355.55
0
1000
2000
3000
4000
5000
2013 2016 2019 2022 2025 2028
Cumulative Investment
(in US$ Million)
Import & Tax Subsidies Grants Private FundingInstitutio
nal
Investors
42%
Import
Duties &
Tax
Subsidie
s
50%
Grants
8%
% of Project
Infrastructure bonds
Targets overseas investors seeking:1. New financial product for
diversification2. Safe returns, with excess returns
dependent on usage of public utility
Infrastructure funded includes:1. Roads (roadtoll booths)2. Power plants3. Water treatment plant4. Airports (airport tax)5. Ports (port services tax)
Pricing depends on product mix and type of bond, and whether payout is contingent on social impact reached.
Objective reporting of KPI is vital.
KPI for Cluster Development
Key PerformanceIndicators
2013 2020 2030
Total SEZ (#) 7 12 17
Joint Ventures (#) N.A. 200 850
Unemployment(%)
8.3 8.0 6.5
Urbanization (%) 35.2 40 48
0.00
1000.00
2000.00
3000.00
2013 2016 2019 2022 2025 2028
Total Capital Goods Stock ( for one cluster)
FDI Local JV
Export value 200 300 600 1,200 2,400 4,000 4,500 7,800 9,900 12,000 15,000 17,500 19,000 20,000 Value add to GDP 4 6 12 24 48 200 225 390 495 600 750 875 950 1,000 Import Value 196 294 588 1,176 2,352 3,800 4,275 7,410 9,405 11,400 14,250 16,625 18,050 19,000
Benefits of Industry Cluster
Agent of growth
FDI SOE SME
Pros:1. Quick transfer
of technology and expertise
2. Low costs to government
3. Transfer more different (optimal) management organisationalmethods
Cons:1. Over-reliance of GDP on FDI2. Loss of national sovereignty3. Diversion of local talents to MNCs with higher pay
Pros:1. Strategic
industry development to fill demand not met by private sector
2. Easy to form and effect changes
3. Fully internalisedprofits
Cons:1. May be
manipulated to fulfill selfish political goals
2. Inefficiencies and slackness of government bureaucracy
3. No expertise or technology
• ICT is a key strategic industry that should be internalised.• Expertise to be obtained from scholars and JVs• Transparent boards coupled with privatisation pressures
Agent of growth
SOE SMEFDI
Pros:1. Strategic
industry development to fill demand not met by private sector
2. Easy to form and effect changes
3. Fully internalisedprofits
Cons:1. 1. May be
manipulated to fulfill selfish political goals
2. Inefficiencies and slackness of government bureaucracy
3. No expertise or technology
Pros:1. Long-term
sustainable innovations
2. Constant competitive pressures
3. No agency costs
4. Generates more employment
Cons:1. Small in scale
and limited resources
2. Failure rate is high
3. Difficult to dominate in overseas markets
• ICT is a key strategic industry that requires economies of scale• Mandate of government to shift to sustainable innovation and driven by
services sector
SOE Development
Rationale
Pursue active participation in focus
industries to catalyze the
industrialization process and develop
indigenous capability
Key Characteristics• No state interference or favors• Expected to be efficient and
profitable with clear financial targets
• Export orientation ensures learning the best technology overseas
• No protection in domestic market after 5 years
Clear financial targets
Increased transparen
cy
Export-oriented
focus
Free from political
interference
State-owned
Enterprises
Major Phases in SOE Development
Phase I (2018-2023)• Start recruitment of expertise
for SOE• Injection of working capital• Purchase of capital goods• First production starts• Source of innovation:
• Indigenously developed• Licensing
Phase II (2015-2020)• SOE starts developing
products for export• Gradual privatization
• IPO, stake sell• Continuously develop
innovations
Phase III (2020-2030)• SOE starts developing more
highly sophisticated products• SOE invites more capital
injection from private sectors• SOE starts to develop
proprietary technology
2018 2023 2027 2030 and beyond
• SOE develops its core competitive strength
• SOE produced the first product or services by first phase
• SOE starts to attract private capital
• SOE starts to develop innovation
• SOE recognized as a emerging world-class company
• SOE starts to have innovation on its own
• SOE is seen less government-linked (50-50%)
Domestic Nurturing
Export-focused Building competencies
Funding Mechanism (SOE)
Year 1 2 3 4 5 6 7 8 9 10 11 12 RemarksSOE Establishment 40 80 120 200 160 120 80 40 0 0 0 0 $20m/ capital injection
SOE Privatization -15 -15 -15 -15 -15 -15 -15 -1515 % stake per privatization
R&D Grants 5 5 5 5 5 10 10 10 $ 5m/ research grantTotal Govt Outlay 40 80 120 200 150 110 70 30 -10 -5 -5 -5
ICT infrastructure development 10 20 100 200 250 300 300 300 300 300 300 300
$300 m/ year after 5th
yearTotal Private Outlay 10 20 100 200 250 300 300 300 300 300 300 300
SOE Funding Source
Public Funding Private Funding
R&D GrantWorking Capital
Public Guaranteed Loan
Capital Goods
Local BanksForeign Loans
50% Co-Funding
50% Co-Funding
Foreign technologies• Public capital Injection follows VC funding structure and are
conducted in stages. SOEs are eligible for further capital injection after fulfilling certain requirements
• This measure reduces risk for the government
KPI for SOE Development
015
3045
55
10085
7055
45
Year 1 Year 6 Year 12 Year 18 Year 24
Changes in Ownership Structure
Private Source Public SourceKey Performance Indicators
2013 2020 2030
State-owned enterprise (#)
NA 4 10
Broadband Penetration (>256kbps) (%)
20.3 25 50
Mobile Penetration (%) 78.5 82 95
Exports of High Technology Products & Services (% of total exports)
20.2 23 40
Tax incentives to incentivize R&D activities
Accelerated Depreciation
R&D Expense Carry- Over
Contract Research Off-set Profit Tax
Personal Income Tax Incentive
Examples from other country
• Implement similar incentives in Panacea
• Implement similar incentives in Panacea
• Allow certain percentage of R&D expense directly off-set profit tax
• Equipment related to high-tech R&D:• In US, R&D related equipment can be
fully depreciated in 3 year, software in 2 years
• Singapore and Korea allow 50% depreciation of R&D equipment in first year
• Allow life sciences companies carry over their loss due to R&D investment t off-set future profit
• In Korea, foreign experts who work in domestic companies and government entities are entitled to exemption of personal income tax
• In Korea, foreign experts who work in domestic companies and government entities are entitled to exemption of personal income tax
• In accelerated depreciation cycle for R&D related investment• Equipment fully depreciated in 3 years• Software in 2 years• Up to 50% depreciation in first year
• In US, 65% of R&D expense on contract research with university and non-profit institutions can be off-set in profit tax
Proposed Possibilities for Panacea
R&D Expense Off-set Profit Tax
• In Korea, companies can withhold 3%-5% of sales before tax for R&D purpose
• Direct R&D expense off-set: Singapore -100%
Seed Funding Mechanism
Seed Financing Initiative
SME
Venture Capitalist
Seed Funding
Scout for investors
with higher risk appetite
Post Collateral
Seed Funding
Forming the deal
Seed Financing Initiative
SME
Venture Capitalist
Payout if SME successful
Expertise given
Payout
Major Phases in SME Creation
Phase I (2019 - 2020)• Improve regulatory
environment in terms of IPR
• Establish Seed Financing Initiative (SFI) to attract overseas venture capitalists
• Initial promotion of KCC in Minas Tirith with construction of basic infrastructure
Phase II (2021-2025)• Launch of initiatives to attract
entrepreneurs• Ideas Marketplace• R&D Grants• Co-funding Schemes (for
ideas scalability)• Key focus is on high value-added
services such as professional services, healthcare, tourism
Phase III (2026-2030)• Review performance of SMEs
under seed financing• Launch of the Market
Assistance Grant for internationalisation of SME Operations
• Consolidate knowledge assimilation by connecting SMEs to university research institutions
2019 2020 2025 2030
• KCC recognized as an emerging cluster
• Measurable increase in marketing Panacea to the world
• KCC recognized as the latest city of indigenous innovations
• Cluster effects take over in knowledge assimilation, allowing for collaborations and mergers across SMEs
• KCC recognized as a centreof mass idea commercialisation and industry consolidation
• SMEs to increase contribution to GDP through international operations
Laying Foundations
InitialisingGrowth
Driving Forward
SME Creation Initiatives
• Internationalisation of SME operations
• Provides capital, connections and capability for SMEs
• Training programmes to understand cultural differences
• Actively match investors’ targets with suitable SME
• Government to serve as counterparty to give assurance to foreign investors in return for entrepreneurs’ collateral
Ideas Marketplace
Market Assistance Grant
Seed Financing Initiative
• Free platform for meeting place of ideas, people, funds
• Counterparty to be found after agreement of non-divulgence of ideas
• Technical advice to be given for each starting SME
Key Performance Indicators
2013 2020 2030
SME Contribution to GDP (%)
36.2 37 45
Spending on R&D (% of GDP)
1.6 2.0 3.5
Services % of GDP 25 27 32
Patent Granted by US (per year)
N.A 500 3000
KCC Parks/Clusters N.A. 2 4
*in millions USD
Year 1 2 3 4 5 6 7 8 9 10 11 12 RemarksInfrastructure 100 100 100 100 0 0 0 100 100 100 100R&D grants 50 50 50 50 50 60 60 60 60 60 $300k each, 200 SMEsCo-funding scheme 100 100 100 100 100 100 100 100 100 100 $500k each, 200 SMEsMarket Assistance Grant 100 100 100 100 100 $100k each, 1000 SMEs
Total Cash Outlay 0 0 150 150 150 150 150 260 260 260 260 260
Breakdown of control mechanism
Risks Mitigations
Multi-tiered privatisation targets, transparent reporting to independent board
Lack of companies in clusters Create informal networks for synergy generation,
establish cluster management body
Failure of SOE corporate performanceAdvisory committee established for consulting
purposes from the onset
Widespread imitationsEstablish a IPR Task Force to issue and enforce
patents
Increase in oil prices due to armed violence in
Middle East
Increase fiscal budget, and slow down pace of
ESS framework execution
Reduce price of Panacian goods, and give tax
breaks to local exporters to Europe
Emergence of low cost centers (e.g. Myanmar)Move to higher value-added industries where
their competitive advantage is reduced
PO
LIC
Y R
ISK
MA
CR
OR
ISK
Eurozone collapses due to Greek exit
Types of Risk
Low enrolment in schools
Risks Mitigations
Financial bursaries (primary/secondary) and
scholarships (university)
Lack of Vocational Teachers Attach more industry tie-ups with overseas MNCs
Lack of shareholders in clusters Create informal networks for synergy generation,
establish cluster management body
Lack of technical expertiseSet up Board of Investments to encourage joint ventures
/ Attract industries requiring lower-end skills
Failure of SOE corporate performanceAdvisory committee established for consulting
purposes from the onset
Multi-tiered privatisation targets, transparent
reporting to independent board
Failure to find buyers during IPOExpand outreach of investors to more regions,
slow down company privatisation if required
Lack of capable CEOsSet up a talent recruitment centre, engage
local scholars and talented entrepreneurs
Lack of entrepreneursMarketing campaign to encourage
entrepreneurship spirit and risk taking
Lack of foreign capital fundingEstablish an efficient financial capital
market
Widespread imitationsEstablish a IPR Task Force to issue and
enforce patents
ED
UC
ATI
ON
IND
USTR
IALI
SA
TIO
NSO
E
DEV
ELO
PM
EN
TSM
E
CR
EA
TIO
N
Breakdown of control mechanism
Dimensions of KPI
Key Performance Indicators 2011 2020 (Est.) 2030 (Est.)
Economic Indicators
GDP per capita, current (US$) 728.3 1384 2598
GDP growth (%) 4.5 5.5 6.5
Unemployment (% of population) 8.3 7.5 6.8
TFP growth (annual %) N.A. 5.0 5.5
Social Indicators
Population below poverty line 28.9 25 20
Gini Index 40.1 39 36
Literacy Level (% of population) 76.8 82 93
Innovation Indicators
Exports of High-tech Products (% of total exports)
20.2 23 36
R&D Spending (% of GDP) 1.6 1.8 2.2
Key Performance Indicators 2011 2020 (Est.) 2030 (Est.)
SME Indicators
SME Contribution to GDP (%) 36.2 38 45
FDI net inflow (% of GDP) 1.8 1.9 2.0
Patents granted by US patent office annually
N.A. 1,000 4,000
Budget Indicators
Budget Surplus 6.2 3.5 4.0
Finance Cashflow
Public Funding(in millions USD)
Education 3500 3500 3500 3500 3500 3500 3500 3500 3500 3500 3500 3500 3500 3500 3500 3500 3500 3500
Industralisation 104 104 208 210 322 325 340 355 294 344 378 486 567 719 815 1016 1170 1356
SOE Development 40 80 120 200 150 110 70 30 -10 -5 -5 -5
SME Creation 150 150 150 150 150 260 260 260 260 260Total Govt Expense (Real) 3604 3604 3708 3710 3822 3825 3880 3935 4064 4194 4178 4246 4287 4509 4565 4771 4925 5111
Private Funding (in millions USD)
Education 950 950 950 950 950 950 950 950 950 950
Industralisation 100 100 200 200 300 300 300 300 200 200 200 200 200 200 200 200 200 200
SOE Development 10 20 100 200 250 300 300 300 300 300 300 300
SME Creation 100 100 100 100 0 0 0 0 100 100 100 100Total Private Funding (Real) 100 100 200 200 300 300 410 420 1350 1450 1400 1450 1450 1450 1550 1550 1550 1550
Total Funding (in millions USD)Total Govt Expense (Real) 3604 3604 3708 3710 3822 3825 3880 3935 4064 4194 4178 4246 4287 4509 4565 4771 4925 5111Total Private Funding (Real) 100 100 200 200 300 300 410 420 1350 1450 1400 1450 1450 1450 1550 1550 1550 1550
Total expenses 3704 3704 3908 3910 4122 4125 4290 4355 5414 5644 5578 5696 5737 5959 6115 6321 6475 6661
Knowledge Services Clusters
• Focus on: o ICT services and Professional services
• Rationale:o Availability of lower-cost skills
o Skilled workforce and proficient in english
• Trend:o Increasingly commoditized knowledge services
• Examples:o Software development
o Engineering support
o Analytical services