Vivian Balakrishnan 장관의 스마트 네이션 주제 Bloomberg 면대면 인터뷰 전체 기록

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[The transcript of Bloomberg's subsequent offline interview with Minister Vivian Balakrishnan continues below.]

Bloomberg: Can you tell us about Smart Nation? Are there immediate targets over the next 1 to 2 years that you want to see, because there’s a certain urgency to it now?

Minister: We could look at the Smart Nation at three levels. First level is human quality of life; second is enterprise efficacy; third, the distribution of opportunities in society.

The first level – convenience, security, accessibility. In fact, if you do that right, technology recedes into the background. I mean, you think of the iPad, kids can use it, seniors can use it, and it’s intuitive. That’s about design. So that’s one level.

The next level is enterprise efficacy. Are our companies generating new products; new services that are competitive, which are relevant; are they more efficient, are they capable of scaling up? So it’s really about resource utilization and allocation. And enterprise competitiveness.

But the third and more fundamental level is opportunities. One of the early signs that a society is in trouble, not coping with the digital revolution, is when you get loss of middle class jobs or stagnation of middle class wages. There are new ways of generating value, new ways of distributing the fruits of that value created. You need to completely retool and reskill your society. And you got to do it in a way that makes sure that no one is left behind, I made the point that no one is too young or too old to learn new things, and that’s why our investment on education, on SkillsFuture. We are obsessed with Industry Transformation Maps, which is part of Future Economy Council chaired by Minister Heng Swee Keat. Because if you can really up-skill your society, you can match your people with the new jobs that are being created. At the beginning of every industrial revolution, there is often a gilded age with increased inequality. So if you think about the last industrial revolution, the names that come to mind – Carnegie Mellon, Rockefeller – they represent steel, banking and oil. Today, with digital oligarchs, the names you think of are Gates, Brin, Page, Bezos, Zuckerberg. They are the digital oligarchs, because this is the early phase of the digital revolution.

The real challenge is to commoditise the technology so that the new middle class can arise. Using and enjoying the fruits of this technology, that’s really what this challenge should be.

Bloomberg: So how will Singapore get there?

Minister: For Singapore, we’re doing it at several levels. Number 1, R&D. And that’s why for instance, we’ve set aside $19 billion for the next 5 years for research and development. Number 2, hardware. And for us, that’s almost done because we’ve got fibre in every home, if you look carefully at the Optical Network Terminator – we’ve actually got two fibres. We’re aiming to be the best in the world for our broadband and mobile connectivity. That’s almost the easy part. The other things which we’re working on now are digital platforms – e-payments, secure digital ID, with biometric features and PKI (public key infrastructure) to allow encryption.

We are also rolling out the national sensors platform. I mentioned that sensors are cheap, but the ability to fuse the data, to generate relevant and actionable insights – that’s where the challenge is. We want to open these platforms to the private sector. Open data, open platforms and open APIs. So the private sector can generate new products and services using these shared platforms and shared data.

Finally, we’re going to feed the private sector, not by giving grants, but by buying services.

To give you an example, GovTech’s budget of 2.4 billion dollars for whole-of-government ICT tenders – more than 60% of that goes to local SMEs in the digital space. So it’s an example of feeding through the demand side of the equation, “eating your own dog food”, giving opportunities to your own start-ups and enterprises. We see a crucial role for the private sector to ride on the platforms, to use shared data and to create new products and services which Governments by definition, will not be doing or will not be able to do as quickly and efficiently as the private sector.

And we would feed them by buying their products and services. It’s a demand driven model. I don’t believe in a grantocracy.

Bloomberg: You talked about the digital oligarchs, and you know, you cited those names…but how can you help the middle class raise to that level if it’s really controlled by a handful of people? Are we looking to create our own Zuckerberg or Bezos, or are you looking to tap on what they’ve created and help the middle class be part of that?

Minister: I come back to my point about creating a new digital middle class, where we’ve commoditised, democratised the tools and the technology. Again if we use the example of the last industrial revolution, it was the GI Bill after the Second World War, which led to mass college education for American war veterans, which gave them the education, training and tools to take advantage of the last industrial revolution. And that’s why there was a Golden Age for the middle class of America; not a Gilded Age. A Golden Age is when you have a rising middle class with rising wages, using the technologies of the day.

What we should be aiming for is to repeat that for the digital age. So my index of success is the middle class. Are we creating new jobs? And are our people equipped to take those new jobs? That’s the real index of success – it’s not how many more digital oligarchs we create. I mean, yes, of course it’s great that in Singapore we’ve got a vibrant start up scene, it’s great that we’ve got between half a dozen to one dozen unicorns, which means a valuation of 1 billion, and then if you take a lower figure from say, $500 million to $1 billion, I think you’ve probably got 10s or maybe even a 100 of such companies.

So it’s fine that we’ve got all that, but that’s not a sufficient index of success. That’s probably essential to have, because otherwise you’re obviously not in the game at all. But really, it’s about middle class jobs, middle class wages. That’s the political centre of gravity.

And to bring you back to the international level: don’t blame trade, don’t start trade wars, and don’t just try to onshore obsolete job. Invest in infrastructure, invest in your people. Get on with the digital revolution.

Bloomberg: Which is why you’re having open platforms and you’re actually investing a large chunk of the spending on SMEs, because that’s part of the democratisation and creating this middle class.

Minister: Yes, it’s about opportunity. So that’s why that three-level analysis is important. One is human well-being and second is enterprise efficacy. But really the more fundamental thing is opportunity. Now that value chains are completely disrupted, new ways in which value is created and the political problem is the distribution of the fruits of this digital economy. And actually the mission of political systems, I believe, is to democratise the tools of production and to promote a more equitable sharing of the fruits of this revolution.

Bloomberg: So basically you’re going to look at how the middle class can benefit from this?

Minister: Yes. This kerfuffle about how we can’t go cashless because some people might find it inconvenient? The answer is not to go more slowly. The answer in fact, is to double down and go faster.

And while you’re doing that, make sure that no one is left behind. You tell me you don’t have a smartphone? It’s cheaper for me to give you a smart phone than hold back that revolution. You tell me the current payment for public transport is inconvenient? I agree with you. It’s crazy, the way we currently do it. We need to speed up revolution and make it so convenient, so painless, so transparent, so seamless, that the objections disappear. That’s what we need to do, so the thing is, you can’t slow down. You need to speed up. And that’s basically what the PM’s speech was about. Doubling down and speeding up.

Bloomberg: So are you going to bring down, say, transaction fees for credit cards?

Minister: Well, that’s not for Government to do.

Bloomberg: No, but you could regulate it.

Minister: Let me put it this way – We forced the banks to create FAST (Fast and Secure Transfers) and then we forced them to create PayNow. What does this mean? This means today, I don’t need your bank account number. With your phone number I can transfer money. And what’s the transaction fee? Zero. If I was a credit card company or the e-wallet companies, I would be paying attention to this. Why is the Government creating or forcing such platforms which bring transaction costs down to virtually zero? Because the real value comes back to value creation in the economy. It’s not just collecting commission of 3% or 6% on transactions, but on lubricating transactions so that real products and services are generated in a competitive and relevant way. That’s what we’re trying to do.

If today I can transfer to you for free, why should I use a credit card to pay you? But now if I can do it at an individual level, what about hawkers, retailers and enterprises? Should they also be allowed to ride on this common infrastructure?

And the point is, once you’ve created this platform, and you open the platform, the other thing which I’m pushing for is to open up the APIs. And you should notice the recent speech that Minister Heng Swee Keat made. Hitherto we’ve tried to draw a very firm line between banks and non-banks, but I think that line needs to come down, because the technology has changed. So should the fintech provider of the future be a bank, a telco, a retailer or a sharing company? And the answer is, you’re not sure. Government’s job is to open up the platforms, allow innovation and competition to occur. And may the winner succeed. And hopefully, what that really does, if you think especially about less developed countries, you want the producer, whether it’s the farmer, handicraft-maker, the provider of service, to be able to access the global market. You want him or her to be able to collect money or pay money at lowest possible transaction cost. You want global finance, cross border to occur efficiently, cheaply, instantly and securely. That’s what all these platforms actually allow. So the point is, we are living through a period of great ferment, you mustn’t take a priori decision as to which species will succeed.

It’s possible that the company that will succeed may not yet have been invented. But we need to keep options open, then we’re in the game. So that’s really the philosophy. Go beyond just the convenience, go beyond even enterprise competitiveness - although that’s important. At the deeper level - is opportunities, value creation and distribution.

Bloomberg: And the fact that you’re willing to bring down all the barriers of entry is a huge step and change in mind set.

Minister: But we have to do it because again I started off by saying look, you’ve got connectivity, you’ve got AI, you’ve got robotics, you’ve got genomics. This is a revolution. It’s changing the way we live, work, play, mobilise, organise, communicate. Whether you like it or not, there’s a revolution going on. Hence, a risk worth taking, and investments must be made. If you’re short sighted, that’s when you start doing things like blame trade.

Well LTA said go cashless by 2020, but actually, between you and me, I think it needs to be faster than that. Why shouldn’t we? We can now transact freely at individual level instantly. The obvious next step is to move it to retail. The question is, why do we need to wait three years for it? The answer is, there is one missing piece- that’s digital ID. I don’t mind if it’s a few hundred dollars and send to you.

But will I buy a car from you, will I buy a house from you digitally? And can I do that as a paperless, cashless and presence-less transaction? To do that, the missing ingredient is digital ID. If we succeed in our plans – I’m not ready to announce details – I think we’ll have a very interesting and cutting edge digital ID system, which is secure using a combination of biometrics and everyone will have access to PKI infrastructure.

Bloomberg: Is this a Government digital ID?

Minister: Yes, we are creating the platform but obviously the key thing is to open it so the private sector can ride on it. You think of what’s happening in China, with Ali Pay, they are trying to create a pseudo digital ID with a digital reputation. What if I can actually give you a real ID with real verification by government and with real digital signatures and with real encryption to allow secure transactions? We already have ICs (Identity Cards), which you need for any serious transaction. But ICs are so last century. Even if you think about ICs, the larger question is when I ask you today, what is the one item which you always carry with you even more than your wallet?

Your handphone.

Bloomberg: In China, things just happen overnight.

Minister: It happened in China, paradoxically, because the conventional banking and financial system was less convenient and accessible. The digital system leapfrogs over the older systems which were not meeting people’s needs.

In Singapore, we have the opposite problem. Our financial system actually works and the regulators are on top of their game. But we can be trapped because we’re too good at a local optimum. We are prepared to go one up because we have regulators that get it, and we are prepared to take risks and we’re prepared to break the old ways of doing things.

Dr Vivian Balakrishnan Minister-in-Charge of the Smart Nation Initiative