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Infrastructure and Skills: Some lessons from Singapore’s experience

Parth S. Tewari, The World Bank Group

Bogota, July 17th, 2013

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"The future of India lies in it’s villages“

Seven decades ago when over 90% of India was rural Mahatma Gandhi had asserted that

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By 2050, 70% of the world will live in cities and this will have significant implications

Cities Matter: socially, politically and economically Emerging points of engagement and delivery for corporations Nodes of growth outperform rest of the country and generate ideas that shape the world Urbanization structurally changes social fabric

Effective models of public-private funding partnerships

Long term green strategy

Hard infrastructure and soft infrastructure

$53 trillion of global infrastructure investment needed in next 20 years

+One in 5 people aged 15 - 24 has not completed primary school and lack the basic skills for life and work

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• The World Bank Group context

• What makes a city competitive?

• Some lessons from the Singapore experience

Today’s Discussion

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The World Bank Group’s mission is to reduce global poverty which is delivered through five organizations

International Bank for

Reconstruction and

Development

International DevelopmentAssociation

International Finance

Corporation

Multilateral Investment Guarantee

Agency

International Centre

for Settlement of Investment Disputes

The World Bank

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Competitive Industries (CI) global practice operates at the unoccupied middle, bridging macro and micro

Economy-wide

Firm-level

Long-term shifts in broad development

Short-term development outcomes at smaller scale (e.g. through better financing and strategies)

Unlocking investments, growth and jobs

Private sector investment

Government investment, policies to provide public goods with high economic returns

Spatial; value chain; industry levels

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CI initiated US$1 billion* in new projects in 2012 Not exhaustive

* Actual or estimated loan commitment

MacedoniaDeveloping high-value manufacturing, unlocking the potential for agribusiness and upgrading trade logistic services

BrazilEconomic competitiveness components in sub-national projects

AfghanistanCreating a resource growth corridor around large-scale mine investments

West Bank/GazaValue chains in agribusiness and ICT

Africa: multiple countriesGrowth poles and Value Chain projects in Mozambique, Nigeria, Burkina Faso, Madagascar, DRC, Senegal, Kenya, Ghana, Ethiopia, Cote D’Ivoire and Tanzania.

IndiaRealizing potential of Buddhist tourist circuit

HaitiDeveloping tourism destinations and enterprises in the north of the country, around citadels, national park, and cultural heritage

VietnamRegional industrial competitiveness project to develop jobs in the refinery value chain

NigerDevelopment of meat and butchery industry and supporting mining value chains

IndonesiaCity competitiveness planning and analysis capacity building (labs)

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CI is witnessing a surge in demand for lending and technical assistance

Last Year This Year0

0.5

1

1.5

2

2.5

$1 B bn

$2.2 B

Timely new knowledge• Competitive SMEs paper• Africa Competitiveness Report

2012• Sector Prioritization toolkit • Growing Africa: Unlocking the

Potential of Agribusiness• Industrial Policy Implementation

Lending portfolio

Technical assistance

Some new projects • Vietnam regional

competitiveness • Haiti Business Development

and Investment Project• Mozambique Integrated

Growth Poles Project• Macedonia Competitiveness

DPL

50+ advisory projects providing high-level knowledge and TA to governments, including 12 in conflict affected countries

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Various product themes form part of CI engagements

Zones and growth poles

Competitive SMEs

Value chains and linkages

• Areas of exceptional policy regime and public goods provision composed of competitive industry clusters

• Targeted actions to unlock the growth potential of several industries based around an exogenous asset, through provision of public goods

• Inclusive policies and initiatives that support the development of a small but high potential section of SMEs, called competitive SMEs, which drive economy’s competitiveness

• Investments (e.g. in SMEs) to raise local economy’s share of an industry’s upward and downward value chain, facilitate moving up the value chain, and build clusters.

• Analytical tools to diagnose the problem (i.e., what constraints are most important) and optimal solutions (i.e., what actions yield greatest economic return)

• Cross-cutting for all other products, or offered as stand-alone

Competitive cities

• Policies and investments at an urban level to create more competitive local urban economies based on a city’s ‘economic vocation’

An

alytical app

roach

es

1

2

3

4

5

Common objective: remove the binding constraints to rapid growth of competitive industries

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CI has also empanelled a world-class advisory board to augment our thinking and to enhance our delivery

1. Dato Sri Idris Jala, CEO, PEMANDU

2. Shri Arun Maira, India Planning Commission

3. Prof. Eduardo Bitran, Ministry of Public Works, Chile

4. Prof. Antoni Subira, Ministry of Industry, Catalonia

5. Mr. Clinton Dimes, CEO BHP, China

6. Mr. Kibati Mugo, Director-General, Kenya Vision 2030 Delivery Board

7. Prof. Dani Rodrik, Harvard University

8. Prof. Ricardo Hausmann, Harvard University

9. Prof. Charles Sabel, Columbia University

10.Prof. Francis Fukuyama, Stanford University

11.Prof. Mushtaq Khan, SOAS

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• The World Bank Group context

• What makes a city competitive?

• Some lessons from the Singapore experience

Today’s Discussion

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Unlocking city competitiveness through CI

City competitiveness is complex and requires an integrated approach

1 2 3 4 5

Regulatory environment

Infrastructure City specific financing

Skills and capabilities

Technology and

innovation

Collaboration between public and private: • to identify opportunities and constraints• to jointly agree on targeted support program

Demand for support

• Jobs

• Incomes

• Investments

Programmatic support across WB and IFC

Advisory services and

technical assistance

Public and private financing,

institutions, special purpose vehicles

Coordination across

stakeholders, joint policy dialogues

Private investment (e.g., IFC in firms, PPP)

Guarantee services

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Some aspects of the five pillars are beyond “City Limits”

Regulatory Environment

Urban Infra Financing Skills Innovation

PR

IVA

TE

S

EC

TO

RC

ITY

GO

VT

NA

TIO

NA

L

GO

VT

Connectivity and access to markets

Quality and availability of

utilities

HighwaysPorts

AirportsNational Grid PPP

LawsLand Use

plan

implementing Infrastructure

Projects

Utility costs

Allocation of capital

Knowledge hubs

Linking firms with

academia

Talent Recruitment

TrainingPrograms

Immigration Policies to

attract talent

National Skills

Development Plan

Finance for Capital Up gradation

Innovation Policy

National TaxRevenues

Fiscal Managemen

t

Municipal Tax

Revenues

Road, Water Taxes

City Bonds

Equity and Debt

Lobbying for industry-specific policy

changes

Agency coordination

Performance management

Ease of doing business

Inter-Ministerial coordination

Project Implementation

Units

Investing in R&D

Adopting innovative

technologies

Investing in R&D

Adopting innovative

technologies

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Roles and responsibilities of different agencies in infrastructure development in Singapore

Air Transport DivisionOversees the planning and development of civil aviation policies

Provides inputs to and implements civil aviation policies in Singapore

Corporatized; manages and re-invests in Changi Airport

Oversees maritime policies

Corporatized; operates Keppel and Pasir Panjang Terminals

Sea Transport Division

Responsible for overall development and growth of port of Singapore

Owns and operates Jurong Port

Oversees land policies which strive to maintain a world-class land transport

Land Transport Division

Responsible for planning, operating, and maintaining land transport infrastructure and systems, including roads and train tracks

Owns and operates public bus and rail systems; listed on SGX

Master PlanningNational land use planning authority; coordinates closely with infrastructure agencies on planning and implementation [Ministry of National Development]

Industrial Park Planning and DevelopmentPlan, promote and develop industrial landscape [Ministry of Trade and Industry]

Energy Market Regulator and PromoterRegulate and promote energy sector [Ministry of Trade and Industry]

Infocomm Regulator and PromoterRegulate and promote infocomm sector [Ministry of Communications and Information]

Source: Various Singapore Government websites; Team analysis

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Roles and responsibilities of different agencies in skills development in Singapore

To develop local workforce and to manage foreign talent policies

To develop and strengthen the Continuing Education and Training System to encourage lifelong learning and advancement

Directly manage inflow of foreign talent through comprehensive system of employment passes, S-passes and work permits

Directly manage primary, secondary and pre-university education providers

Each of five polytechnics exists as separate statutory board

Institute of Technical Education exists as separate statutory board

Each of three universities exists as separate statutory board

Council of Private Education regulates and develops private education providers

Source: Various Singapore Government websites; Team analysis

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• The World Bank Group context

• What makes a city competitive?

• Some lessons from the Singapore experience

Today’s Discussion

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Singapore punches above its weight by dynamic policy implementation and by leveraging its geographic advantage

Singapore’s share of WorldBasis points

1 Energy resources include petroleum, natural gas and coal2 Basic materials scan included Iron ore, Copper ore, BauxiteSource: World Bank; USGS; EIA; Team analysis

38

0

PopulationBasic Materials2

7.6

0.05

TradeLand Energy resources1

~0

GDP

220

Human and natural endowments

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The country has covered a lot of distance in the last five decades…

• No natural resource endowment• Minimal industrial base (mainly in non-durable consumer goods)

• Withdrawal of British military base

• Low education base

• High unemployment (~9%) • Small domestic market and loss of a common market, i.e. Malaysia

• Over-dependent on entrepot trade and servicing British navy base

• #1 Ease of Doing Business• #1 Gallup Net Migration Index• #1 skilled labor in Asia-pacific• #2 WSJ Index of Economic Freedom• #2 in best investment potential (BERI)

• #2 WEF Global Competitiveness Index

• #11 Economist Quality of Life Index• Asia’s most “Tech-ready” City, PwC Global IT Report

1960 Today

Source: Various websites; Team analysis

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Clean air: seeks to phase out diesel use from factories and industries and to test sustainable energy generation from hydrogen fuel and solar.

Clean water: focuses on supplying water to all homes and industries through the national ‘Four Taps Strategy’ of sourcing water from its own reservoirs, from Malaysia, from recycling (NEWater), and through desalination.

Clean land: emphasizes the continuing recycling efforts at the national scale to ensure that virtually no waste will be going into landfills in 50 years.

…and the approach is sustainable

Source: Singapore’s Sustainable Development Blueprint 2009

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Some guiding principles from the Singapore experience

Pragmatic and dynamic planning

Coordinated implementation

with accountability across agencies

Customized best practices with short feedback

loops

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Import substitution

Export Orientation and Labor-intensive Manufacturing

Capital intensive manufacturing

Innovative

competitiveness

Singapore’s economy has evolved to stay competitive – 1/2

1965 - 1985 1986 - 1997 1997 – 20XX1960 - 1964

19601962

19641966

19681970

19721974

19761978

19801982

19841986

19881990

19921994

19961998

20002002

20042006

20082010

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

$395

$46,241

CAGR of 10.2%

Source: Civil Service College of Singapore (May 2012)

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Import Substitution

Export Orientation and Labor-intensive Manufacturing

Capital-intensive Manufacturing

Innovative

Competitiveness

Singapore’s economy has evolved to stay competitive – 2/2

1965 - 1985 1986 - 1997 1997 – 20XX

Regulatory Environment

UrbanInfrastructure

Skills &Capabilities

Financing

Innovation &technology

• Import tariffs, quotas to protect infant manufacturing

•Jurong Industrial Estate begins development

•EDB established in ’61

•Survival-driven phase•Basic education expands quickly

•S$100 million start up grant for EDB •Loans to companies from revenue surpluses

•Generic standard factories

•Twin engines approach of manufacturing and services

•Nationalized where private sector lacked expertise (GLCs)

•URA’s 1971 concept plan provided industrial estates just outside central ring

•Plug-and-play industrial environment

•Technical Education Department set up at the Ministry of Education

•Skills training centers with Tata, Rollei and Phillips

•FDI in manufacturing through Economic Expansion Incentives Act

•Services growth through headquarter tax incentives

•Singapore Sciences Park 1 built•National Computer Board formed

•Cluster development strategy adopted

•Business friendly investment climate

•S$1 billion CDF launched to catalyze high growth clusters

•Seven offshore islands reclaimed into Jurong Island

•2 technology corridors marked for development

• ITE established for high quality technical and vocational education.

•Local industry upgrading program

•Close coordination between industry and tech institutes for technology sharing

•Focus on higher value-added industries (e.g. biomedical sciences)

•URA instituted “impact-based” zoning

•Industry-specific infrastructure prioritized

1960 - 1964

•Programs to nurture local science and R&D talent, and attract foreign high skilled labor introduced

•EDBi, investment arm of EDB, sets up department for biomedical sciences

•Major resource commitment made to science and R&D in schools and colleges

Discussed furtherSource: Civil Service College of Singapore (May 2012)

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A well designed focus on petrochemical has made Singapore Asia’s #1 oil hub

Jurong Island: benchmark petrochemicals cluster

Single island formed in 1995 from 7 small islands

3000 hectares costs $7 billion in reclamation costs

Hosts 95 industry heavyweights, such as BASF, Celanese, Exxonmobil, Dupont, Mitsui Chemicals, Chevron Texaco, Shell and Sumitomo Chemical.

Drawn investments of US$42 billion and employs about 8,000 people as of 2012.

2011 manufacturing output: S$285 B

Singapore Is:

Asia’s Leading oil hub (3rd largest trading hub globally)

Top 5 export refining hub at a single location

Top 10 global chemicals hubSource: Economic Development Board of Singapore (Apr 2013)

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Jurong Island’s plug and play infrastructure maximizes value creation

- “Plug and play" infrastructure, saves costs through shared third-party utilities and services, and build synergy through product integration.

- Logistics hub: storage tanks, chemical warehouses, tank filling, cleaning and maintenance, drumming and waste treatment facilities. Also used by companies to do trans-shipment, bulk breaking and distribution

Source: Economic Development Board of Singapore (Apr 2013); JTC (Apr 2013)

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Skill development covering formal education and vocational training led to significant productivity improvements for the sector

Chemical Process Technology Centre (CPTC) trains recruits for energy and chemical industry

Institute of Chemical and Engineering Sciences undertakes world class research programs and processes for chemical industry.

ITE established as a post-secondary technical education institution in 1992

World-class facilities: ITE College East 2004, S$184.6 million), ITE College West 2010 $260 million, ITE College Central coming in 2013.

Highest proportion of locals employed and skills profile among manufacturing industries

Remuneration/worker for chemical sector is twice that of the manufacturing average

Formal education Vocational training

Source: Economic Development Board of Singapore (Apr 2013); Speech by Minister of Trade and Industry (2009) http://www.news.gov.sg/public/sgpc/en/media_releases/agencies/mti/speech/S-20090925-1.print.html?AuthKey=

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Industry-specific skill building moves students to growth sectors, reduces over-supply in lag industries

Results:- Across the board boost in skills in every job through partnership of enterprises, people, unions and government- Deepening capabilities among Singapore companies to seize opportunities in new markets and industries. - Making Singapore a distinctive global city to attract the best talent.

Ministry of Manpower

EDB

Ministry of Education

Identify critical manpower needs; project demands for future skills. Specific

Industry Groups

Univs, Polytechnics and technical

institutes

Use skill projections to inform education planning

Source: OECD Case Study on Singapore’s education system

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Institute of Technical Education ITE

• Established as a post-secondary technical education institution in 1992 to promote Vocational Training

• Practice-oriented curriculum, process-based teaching

• IT-based teaching and learning environment

• High employability in the job market.

Learning:• Policy shift towards Vocational Training to go hand in hand with development

• Changing public perception and positioning ITE As a Post-Secondary Institution

• Leveraging industry partners to develop specialized skills

• Use ITE as a tool to attract right type or FDI

Source: International Symposium on vocational training, keynote address by Dr. Law Song Seng, Director and CEO, ITE

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Import Substitution

Export Orientation and Labor-intensive Manufacturing

Capital-intensive Manufacturing

Innovative

Competitiveness

Singapore’s economy has evolved to stay competitive

1965 - 1985 1986 - 1997 1997 - 2010

Regulatory Environment

UrbanInfrastructure

Skills &Capabilities

Financing

Innovation &technology

• Import tariffs, quotas to protect infant manufacturing

•Jurong Industrial Estate begins development

•EDB established in ’61

•Survival-driven phase•Basic education expands quickly

•S$100 million start up grant for EDB •Loans to companies from revenue surpluses

•Generic standard factories

•Twin engines approach of manufacturing and services

•Nationalized where private sector lacked expertise (GLCs)

•URA’s 1971 concept plan provided industrial estates just outside central ring

•Plug-and-play industrial environment

•Technical Education Department set up at the Min of Education

•Skills training centers with Tata, Rollei and Phillips

•FDI in manufacturing through Economic Expansion Incentives Act

•Services growth through HQ tax incentives

•Singapore Sciences Park 1 built•National Computer Board formed

•Cluster development strategy adopted

•Business friendly investment climate

•S$1 billion CDF launched to catalyze high growth clusters

•Seven offshore islands reclaimed into Jurong Island

•2 tech corridors marked for development

• ITE established for high quality technical and vocational education.

•Local industry upgrading program

•Close coordination between industry and tech institutes for technology sharing

•Focus on higher value-added industries (e.g. biomedical sciences)

•URA instituted “impact-based” zoning

•Industry-specific infrastructure prioritized

1960 - 1964

•Programs to nurture local science and R&D talent, and attract foreign high skilled labor introduced

•EDBi, investment arm of EDB, sets up department for biomedical sciences

•Major resource commitment made to science and R&D in schools and colleges

Discussed furtherSource: Civil Service College of Singapore (May 2012)

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With changing times, Singapore is pursuing a new frontier yet again

In the 1990s Singapore decided on a strategy to widen its industrial base from manufacturing and service sectors to higher value added services that would need research based cluster of activities.

Sets the agenda and sector for focus and promotion

Relevant ministries called upon to set in place appropriate policies

Relevant agencies create action plans to support direction from ministries

Research institutes and laboratories then become recipients of funds for their selected programs

Source: NRF presentation 2006

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Biomedical sciences identified as one of the sunrise industries

2.4% of GDP spent on R&D in 2006

24,500 scientists and engineers employed

$18.8 bn of biomedical manufacturing output in 2007; $10.1 bn in value added

Market sensing approach to sector prioritization• Growing market for research in diseases

prevalent in Asian ethnic groups• Exploitable gap, since US clamp down on

stem cell research• Culture of celebrating science learning in

Singapore, existing pharmaceutical manufacturing

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Co-location of research, delivery, private, public at the biotech cluster creates opportunities for integrated offerings

• Phase 1: Two buildings dedicated to private sector biomedical players. Five more buildings house seven biomedical research institutes that are under A*Star.

• Phase 2: Two more buildings house public research units, corporate R&D labs.• Phase 3: Multi-tenanted research facility bridges private and public sector

research work

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The cluster helps local and global scientific minds collaborate

Developing home-grown scientific talent In 1987, Institute of Molecular and Cell Biology set up at NUS A*Star and EDB launch $1 bn scholarship program to fund undergraduate and graduate

training for scientists PhD students to work with leading global scholars, then continue PhD research in

Singapore Long gestation period signals commitment to developing the industry

Attracting global talent “Signaling” to wider industry that Singapore was creating a global biomedical industry Attracted established leaders in the field to be part of new cluster Nobel Prize winners and well known scientists take the helm of newly formed research

institutes, IMCB and Genome Institute Liberal policy for inward migration of high-skilled workers

Forming a global network Singapore Global Network: Karolinska Institute of Sweden, University of Sydney Cancer

Centre, Cambridge University and US National Cancer Institute International Advisory Panels with top researchers

Biotech firms like Glaxo, Eli-Lily, Schering-Plough, Lonza use Singapore as a research base

Source: Singapore government case study on biomedical cluster development

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Some guiding principles from the Singapore experience

Pragmatic and dynamic planning

Coordinated implementation

with accountability across agencies

Customized best practices with short feedback

loops

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Some lessons from the Singapore experience

Pragmatic and dynamic planning

Customized best practices with short

feedback loops

Coordinated execution with accountability across

agencies

• A carefully crafted culture of a learning society• International advisors on government committees to provide policy

inputs and help strategize• New growth frontiers inspired by Korea/Taiwan’s success in value

added manufacturing• Biopolis inspired by North Carolina research triangle,

Stanford/Silicon Valley nexus• Strong links with private sector allows constant feedback

• EDB, URA, JTC work in tandem to deliver Jurong cluster • EDB’s BioOne Capital and BMSG work with A*Star’s BMRC to

support the biomedical cluster• Ministry of Manpower, Education and EDB work together to identify

and mitigate skills gaps• Well qualified civil servants have flexibility to rotate and are paid well• Public service quality pegged to performance with variable pay

• Structural shift in economy four times over four decades • Ongoing Prioritization of sunshine sectors leveraging human capital

strengths and high global demand potential• Land Acquisition Act allowed government to reclaim and

amalgamate seven islands to form Jurong• Economic Expansions Incentives Act, OHQ Tax Incentives, ITE

setting up, tie ups with Philips, Tata were pragmatic institutional responses to industry demands.

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Some questions for Bogota to further the discussions

• What are the constraints to Bogota becoming a globally competitive city? What are urgent problems to solve in the regulatory, infrastructure, access to finance, skills and innovation pillars?

• What are Bogota’s next potential industry success stories and how can they be effectively energized?

• How to implement competitiveness reforms in Bogota – what kind of pragmatic planning, execution support and international lessons does the city need?

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GRACIAS!

Parth S. TewariHead, Competitive Industries Practice

Finance and Private Sector Development NetworkThe World Bank Group, Singapore

ptewari@worldbank.org