a publication of the ministry of trade and industry, singapore

contents
by Ow Foong Pheng, Second Permanent Secretary, Ministry of Trade and Industry, Singapore

ministryoftradeandindustrysingapore

4 Foreword

by Lee Chor Pharn

6 Overview

by Cheryl Chung

10 The Age of Big Data 20 The Great Reset

by Lee Chor Pharn

30 Korea, the future is already here

by Lee Chor Pharn

38 Climate Hacking
by Ivy Ng

by Cheryl Chung

54 Social Enterprise 62 Young Singaporeans on their way forward

by Lee Chor Pharn

70 The New Silk Railroads

by Lee Chor Pharn

79 Jugaad - The illustrated guide to Indias way of frugal innovation

by Jeffrey Tan

90 Demystifying the FG Process

by Sim Phei Sunn

preface

Imagining the new normal

4

Some

are now heralding this as Asias century. The implicit assumption is that we will continue to see the progress, prosperity and peace witnessed during the American century, with locus on growth now shifting to Asia. By most accounts, Singapore should continue to shine brightly in Asias century. But it would be hubris for us to assume that this is a given. Challenges abound for us in the road ahead. Changing demographics and longer life spans could sharpen the divide between the wealthy old and indebted young. Climate change is beginning to impact economic choices. Geo-engineering can be a unilateral technological and economic choice for countries and non-state actors. Accelerating Arctic ice melt raises the possibility of the emergence of alternative trade routes between Europe and East Asia, potentially bypassing Singapore. While pundits proclaim that the passing of a uni-polar world will be replaced by a multi-polar world symbolized by G20, we may be faced with a non-polar world where no single power is able to, or wants to, make the hard decisions. We are in a transitional period towards a new normal that may take a few decades. This publication is an effort to imagine the new normal, and explore the challenges and opportunities that Singapore may face in the coming decade.

Ow Foong Pheng
Second Permanent Secretary Ministry of Trade and Industry, Singapore April 2011

overview

Weve overtaken the future

We used to have prophets peering out into the unknown, throwing clues of the future back at us. There are not that many clues coming back to us today. Contemporary science fiction works appear well, contemporary. William Gibson, author of Neuromancer and the inventor of the term cyberspace, is one of the best known science fiction writers. Yet when William Gibson writes about the future today, it is set in the present. When asked, he replied he has retreated from writing about the future 6 because extrapolation is too hard. Forecasts too are increasingly questioned. Randy Tinseth, VP of Boeing Commercial Airlines, was quizzed by the Chinese press if Boeings twenty year commercial airline forecasts can be relied on as they are built upon economist projections. When asked why it was that the worlds economists did not see the financial crisis of 2008-9 until it was too late, he became quiet and then replied he did not have the answer.

What has changed? Life has gotten weird. In the not so distant past, tectonic changes came about more slowly. Today, tectonic changes come from everywhere and dont stop shaking. Where in the past prophets could still craft grand narratives of the future, today we are left with scouts peering over the edge, giving us at most three minute early warning sirens.

We have overtaken the future. We are in new territory where we do not have the maps. But the need to sense the future has only increased. In this publication, Futures Group shares highlights of our explorations. In the absence of maps, themes have emerged that appear to be fairly certain.

BUSINESS: DISRUPTED RISE the much talked-about shift OF THE of global power and demand, especially to emerging Asia. ENGINEERING REST medicine and human REVOLUTION advancesareinincreasingly transformed biology off-balance by information technologies where sheet E A R T H currentlycosts like they are subject to the law of ecosystem services, accelerating returns and become exponentially cheaper, smaller and and resource MATTERS carbon emissions distributed. productivity are SOCIAL increasingly moving on-balance sheet. the rise of civil society, new ways of being human, IS BACK demographic boom and bust
start to take center stage in economic calculations.

new business models that severely disrupt value chains on a large scale.

Describing the themes does not mean we can somehow know the future. It is the dynamics and feedback loops between these themes which create the uncertain and unpredictable actual future.

This exploration continues. Futures Group will continue to share our dispatches from the future in the hope that this helps you see whats next. | Lee Chor Pharn 7

The precious child

[Social is Back: Little Economy, May 2008]: More at http://futuresgroup.wordpress.com/2008/10/03/the-little-economy/]

THE AGE OF
How can Singapore use data to give the economy a competitive edge?

BIG DATA
We are entering an age of big data. In a 2008 feature article highlighting the impact that massive data capture and storage has already had on science, medicine, business and technology, Wired Magazine Editor-in-Chief Chris Anderson argues that the growth of data will enhance opportunities to find new answers to fundamental questions. In the era of big data, Anderson pointsout, more isnt just more. More is different. Similarly, in a 2010 special report on smart systems, The Economist suggests that data, and the knowledge extracted from them, may [become] a factor of production in their own right, just like land, labour and capital. Could data be the new oil: fuelling the next major wave of productivity gains and economic growth? by Cheryl Chung | April 2010

10

WHATS DRIVING THE AGE OF BIG DATA?

The age of big data is being primarily driven by two trends Technological Development and Data Democratisation:

TECHNOLOGICAL DEVELOPMENT: Data has become more useful

Technological developments in recent years have enhanced our ability to Collect, Store, Analyse, Present and Optimise data driving up data value, improving decision-making and changing consumer behaviour at different segments of the value chain (see Figure 1).

previously created by people will increasingly be machinegenerated flowing out of sensors, RFID tags, meters, actuators, GPS and more. Inventory will count itself. Containers will detect their contents. Pallets will report in if they end up in the wrong place. This significantly simplifies the data collection process. We are now producing more information than we have the ability to store.

Store
Googles DJ Collins has suggested that organisations, like Amazon, Sun and even Google, are demonstrating the amazing benefits in scale and interoperability that come through moving data storage into the cloud. Merrill Lynch estimates the volume of cloud computing market opportunity would amount to US$160 billion in 2011.

Collect
An IBM Study in 20093 predicted that information that was

COLLECT

STORE

ANALYSE

PRESENT

OPTIMISE

WWW

The sensor goes into your running shoe. The receiver goes onto the base of your iPod.

The sensor tracks your run and sends the data to your iPod.

Syncing your workouts with nikeplus.com allows you to see your workout and analyze them.

Workout information is presented in a visually appealing way.

You can set goals with friends and train together.

Fig 1. The data value chain. 11

Analyse
Companies are making significant strides in data mining and database management, suggesting that smart systems will become increasingly prevalent. For example, IBM has launched a campaign called Smarter Planet to intelligently interconnect the many systems that keep the modern world running. They envision that digital technology will make energy, transport, cities and other areas more synergistic, responsive and adaptive.

Wired Magazine July 2008

12

Sensors everywhere. Infinite storage. Clouds of processors. Our ability to capture, warehouse, and understand massive amounts of data is changing science, medicine, business, and technology. As our collection of facts and figures grows, so will the opportunity to find answers to fundamental questions. Because in the era of big data, more isnt just more. More is different.

Present
In the age of big data, as the amount of data collected and in need of analysis rises, we can also expect that new tools to present and visualise this data will emerge. Geoff McGhee, an online journalist specialising in multimedia and information graphics, was awarded a 20092010 John S. Knight Journalism Fellowship at Stanford University to study data visualisation. He explained that, Journalists are coping with the rising information flood by borrowing data visualisation techniques from computer scientists, researchers and artists. Some newsrooms are already beginning to retool their staff and systems to prepare for a future in which data becomes a medium.

Optimise
Having more data is only interesting to the extent that you can make better decisions and change behaviour with relevant information. In his book, The Numerati, Stephen Baker suggests that a mathematical modeling of humanitywill manipulate our behaviour how we buy, how we vote, whom we love without our even realising it.

DATA DEMOCRATISATION: Data has become more accessible

Some cities, including London, New York and San Francisco, have begun to open up their public service databases, making large amounts of public data freely available to citizens. IBM, among many other companies, has built a web-based application called City Forward that takes in data from 50 cities. These trends towards unlocking public data could well change the way that local governments, in particular, are organised. Instead of being a col-

lection of departmental silos, public agencies could come to act as task-specific computing platforms. Most services, from payment systems to traffic information, could be provided as a single consolidated version to be used across all departments or by private firms that want to offer their own urban applications. As Glen Allmendinger, President of Harbour Research, suggests, more openness should be good for innovation, not just in terms of the information itself but how it is handled.

of the next decade. We already see this increased demand for datacrunching capabilities reflected in employment data. The US Bureau of Labour Statistics lists Numerati-type jobs amongst the fastest growing and highest paying.

2. Big data creates new industries

In an age where there is a homogenisation of product and technological offerings across industries, differentiated business processes are among the last few sources of competitive advantage. We see this reflected in a significant increase in IT spending on business analytics and optimisation.11 Technology futurist, Paul Saffo has postulated that soon many companies will suddenly discover that their main business is data. Indeed, two data crunchers discovered this in the late 1990s, and founded Google. According to Stephen Baker, For the age were entering, Google is the marquee company. Its built almost entirely upon math, and its very purpose is to help us hunt down data. Googles breakthrough, which transformed a simple search engine into a media giant, was the discovery that our queries the words we type when we hunt for web pages are of immense value to advertisers. The company figured out how to turn our data into money. In the age of big data, we are likely to find a new wave of sophisticated computing and mathematical techniques and tools being embraced by mainstream businesses. More and more data-driven companies will disrupt incumbent industries in the same way that Google has

HOW WILL BIG DATA CHANGE THE GAME?

1. Big data requires new capabilities
In The Numerati, Stephen Baker posits the rise of a new math intelligentsia who would analyse the data trails we create and build accurate models to predict our behaviour. Some precursors of this trend are already evident in the retail sector, with supermarket chains mining customer loyalty card data to target advertising and stimulate impulse purchases. As we enter a world where data is increasingly free and ubiquitous, industry leaders such as Google Chief Economist Hal Varian believe that the ability to find, process, understand, and extract value from relevant data will become ever more important. Indeed, just as the computer engineer was the desirable job of the 1990s, Varian believes that the statistician will be the most sought after professional

Information-technology (IT) firms have identified smart systems as the next big thing. IBM The company launched a campaign called Smarter Planet, touting digital technology that would make energy, transport, cities and other areas more intelligent. Cisco The biggest maker of networking gear, is trumpeting smart connected communities. Hewlett-Packard The number 1 in hardware, intends to spin a Central Nervous System for the Earth.
13

disrupted the advertising industry. New data-driven industry mashups will also be created. In recent years, we have already seen how biomedicine and wireless technology have converged to create a booming remote-healthmonitoring market which enables individuals and clinicians to better monitor changes in an individuals physiological condition in order to better understand and manage their health. The industry is expected to more than double to $7.7 billion a year by 2012.

3. Big data uses new methods

After successfully sequencing the human genome, Craig Venter went from sequencing individual organisations to sequencing entire ecosystems. In 2003, enabled by high-speed sequencers and super computers that statistically analyse the data they produce, Venter started sequencing much of the ocean, retracing the voyage of Captain Cook. In 2005, he started sequencing the air. In the process of data-crunch-

ing and analysing correlations, he discovered thousands of previously unknown species of bacteria and other life forms and advanced the frontiers of science more than most other scientists of his generation. In recent years, we have seen a shift away from hypothesis-based research methods. Through the Cluster Exploratory (CluE) programme, the US National Science Foundation now funds researchers to use software and services running on a Google-IBM cluster to explore innovative research ideas in data-intensive computing. Access to highly effective internet-scale applications powered by massively scaled, highly distributed computing resources are likely to fuel advances in science and engineering.

HOW CAN SINGAPORE SUCCEED IN THE AGE OF BIG DATA?

In a report on A Vision of Smarter Cities: How Cities can Lead the Way

GARMIN

The US Millitary developed and implemented the GPS as a millitary navigation system, but soon open it up to everyone else.

This lead to an explosion of the private GPS market (companies like Garmin).

By mining for useful patterns in huge collections of continually updated spatio-temporal data, individual drivers are able to make smarter driving decisions.

Fig 2. Democratizing data creates value for industry and individuals. 14

into a Prosperous and Sustainable Future, the IBM Institute for Business Value explained that cities are based on a number of core systems composed of different networks, infrastructures and environments related to their key functions: city services, citizens, business, transport, communication, water and energy. However, these systems are not discrete. Instead, they interconnect in a synergistic fashion that reaches towards optimum performance and efficiency. These core systems, in effect, become a system of systems. For better system performance, cities adopt new technologies to become smarter. We might take a leaf out of Seouls experience. Over the last 10 years, Seoul has become a hotbed of early adopters, and global powerhouses from Microsoft to Cisco Systems to Nokia use it as a laboratory. While Seoul took the considerable risk of being out front in an untested field, it has demonstrated the potential gains to the city government, as well as its citizens, from being an early adopter of the smart city strategy. Seoul is not the only example. In many major cities, large portions of stimulus packages are being spent on smart city infrastructure projects, and some have made smart systems a priority of industrial policy. Urban centres in China are a good example of this: for instance, without an infrastructure enhanced by digital technology, Beijing knows that it will be difficult to provide the countrys newly urbanised population with enough food, transport, electricity and water. Singapore too aspires to be a smart city, a living laboratory of sustainable urban solutions that are scalable and exportable. How can Singapore succeed in the age of big data? To start with, Singapore needs to develop new numerati capabilities in its people and businesses, to seed new data-driven industry mashups and encourage the adoption of data-driven business solutions and methods. Another interesting area might be urban applications using real-time data. LIVE Singapore!, a research project funded by the National Research Foundation and developed by MITs Senseable City Lab, gives us some clues about how this might look like. LIVE Singapore! is in its research phase, but we should already consider how Singapore could scale up such open platforms to become a system

of systems, with real-time data dissemination and broader application development. We can begin to imagine a Singapore of the next 10-20 years where data-driven activities form the basis of a new, truly knowledge-based growth industry: deep data-crunching and analytics capabilities could drive growth in other industries like healthcare and clean technology; Asias top numerati could come here to work on leading-edge urban applications of real-time data; private companies could collaborate with the public sector to turn Singapore into a living laboratory, developing data-driven applications that enhance standards of living around the world. What else might Singapore be able to achieve in the coming age of big data?

I keep saying the sexy job in the next ten years will be statisticians. People think Im joking but who wouldve guessed that computer engineers wouldve been the sexy job of the 1990s.
McKinsey Quarterly, Jan 2009

Hal Varian, Google Chief Economist

This article first appeared in ETHOS (Issue 9, June 2011), a biannual publication of the Centre for Governance and Leadership, Civil Service College, Singapore. For more information, please visit www.cscollege.gov.sg/ethos.

15

Crowdsourcing application design LIVE Singapore! Real time data platform and tools

Real Singapore and its people

Fig 3. LIVE Singapore! is an enabling platform for application development.

16

Live Singapore! closes the feedback loop between people moving in the city and the digital real-time data collected in multiple networks. It gives the data back to the people who themselves generate it through their actions, allowing them to be more in sync with their environment as well as to make decisions based on information that reflect the actual state of their city. To achieve this, LIVE Singapore! consists the development of an open platform for the collection, the combination, fusion and distribution of real-time data that originate from a large number of different sources. The platform is not aimed at one single application; instead it rather resembles an ecosystem and a toolbox for real-time data that describes urban dynamics. Building on this platform, a community of developers can build multiple applications in a joint effort which harnesses the creative potential of citizens in extracting new value from real-time data.

17

18

The Rise of the Rest is a term coined by Fareed Zakaria on the post-American world. This is not a world marked by American decline, but by the rise of everyone else. The rise of China and India are the most obvious signs, but the GCC are also remaking themselves beyond hydrocarbons, and Africa is beginning to be distinguished into tier 1, 2 and 3 countries of promise.

PLAY

Please see the animation at http://youtu.be/0mxJZ6Jhnrk

[Rise of the Rest, Oct 2008]

19

THE GREAT RESET

or the end of the world (economy) as we know it.
The Great Reset was an attempt to describe the post-crisis world during the heights of the Atlantic financial crisis. It is built around the idea that demand, not supply, is king and the shift in global activity to Asia will be primarily that of a shift in global demand. Other than a few cosmetic updates, this article is left in its original state. by Lee Chor Pharn | April 2009

20

Many economists have described the recent economic and financial crisis as the most severe economic recession since World War Two. The crisis has indeed had far-ranging consequences: once-mighty banks and financial institutions have evaporated; major industries are now experiencing significant consolidation; thousands of factories all over the world have shut down, and millions of workers have lost their jobs. Some economists have even speculated that the world was poised for a second Great Depression. It is still too early to determine if the global economy has indeed seen the worst of the downturn. There are simply too many uncertainties that could destabilize any sort of recovery. But it has become increasingly clear that the global economy will not revert to its pre-crisis status quo. The years leading up to the financial crisis were marked by very benign economic conditions leading to structural imbalances in the global economy. At the global level, the developed economies saw strong credit and private consumption growth, while the levels of savings plummeted. The emerging economies, which had excess savings, recycled these savings to the developed economies, to finance the consumption there. This cycle reinforced trade interdependence between the G3 and emerging Asian economies and meant that Asian economic growth became more, rather than less, dependent on G3 growth. The financial and economic crisis unravelled this intertwined relationship, which the historian Niall Ferguson has described as Chimerica. Consumption in the US has fallen. Exports from Asia to the developed countries collapsed. Singapores economy experienced its largest contraction since 1965. Singapores economic success has largely been attributed to the openness of its economy and its concentration on activities which largely serve G3 demand. But with the

unravelling of Chimerica bringing long-term change to the global demand landscape, Singapore, along with much of Asia, faces a significant challenge. (Note from author: the chatter has moved from Asia-G3 coupling, to Asia-G3 decoupling, and now to G3 recoupling on Asias growth. It is still unclear.) We are by no means out of the woods. We envision three scenarios in which the world could emerge from the crisis and identify the associated legacy effects that will set the foundations for each scenario.

Legacy effects from the crisis: Tipping points for the world
The crisis of 2008 2009 will have at least four legacy effects that could permanently alter the global demand landscape. Rising public debt in the US, Japan and Europe has escalated with the high cost of recovery fiscal spending. If these countries do not offer viable and sustainable solutions to reduce debt levels in the longer term, investors confidence in assets denominated in these currencies could diminish. In any case, investors would also be wary that high levels of public debt now could lead to high levels of taxation later. Reduced foreign appetite for G3 assets (in particular US assets) will impair these governments abilities to invest in areas such as education, infrastructure and social safety nets, reducing their long-term economic potential. Increased government intervention in the financial sector may stifle the innovation necessary for wealth creation and the financing of the real economy. Over the long run, private consumption and growth levels may be muted if access to credit is restricted. Creeping protectionism could reduce the overall level of global trade and affect the main mechanism that has supported

21

Chimericas prosperity. Blatant forms of protectionism, such as tariff wars, seem less likely. But more subtle forms of protectionism, embedded as clauses in many fiscal stimulus plans, may hinder the free flow of trade too. Fundamental changes in G3 consumption behaviour could affect the growth path of the world economy. US consumption spending, in particular, accounts for 1/3 of global growth in private consumption. Hence, any decline in G3 consumption, arising from higher levels of unemployment and the need to save more, would significantly affect global GDP growth

22

It has become increasingly clear that the global economy will not revert to its pre-crisis status quo.

The Changing Landscape of Global Demand: Possible Scenarios

The interplay and depth of these legacy effects will determine the likelihood and extent of revival in the growth engines of Chimerica. While the current crisis has certainly increased the range of possibilities facing the world economy over the next ten to twenty years, we can use these legacy effects to derive three possible scenarios for the future of the global economy. Scenario 1 : Wounded Beast In this scenario, the world emerges relatively unscathed from the economic crisis of 2008 2009 as coordinated government efforts succeed in stabilising the global financial system. Financial innovation, in turn, manages to outpace the tightening in regulation, allowing households and firms to attain easy access to credit. Consumer and business confidence are restored in the major developed economies, and the export-led Chimerica engine revives. The pick-up in export earnings accelerates the urbanisation process in many emerging Asian economies, resulting in larger numbers joining the urban middle class in Asia. While wealthy and buying power

23

How long will it take Pearl River Delta to reach BostonWashington-NYC region consumption levels?

Boston-Washington-NYC Pearl River Delta Greater Mumbai

Today

36 years!
cess of economic recovery. Conservative lending practices become entrenched in the commercial banking sector, and credit growth to the private sector and households slows down. A global demand shortfall results as savings rates in the G3 permanently rise with the protracted downturn. Consequently, trade flows are significantly reduced with the fall in G3 demand. Creeping levels of protectionism further inhibit Asias ability to tap into G3 demand. The emergence of new and more insidious forms of protectionism occurs as governments are pressured to take actions with mass appeal in stimulating the economy. In response to both diminished G3 consumption demand and more restricted market access, Asia governments step up public spending and focus on building up domestic demand. Domestic consumption in Asia, however, will need several decades of growth before it can fully replace G3 as a final source of demand. Global growth therefore slows down considerably, below its long-term potential. Scenario 3: Abyss In the Abyss, international recovery efforts fail to contain the ad-

increase in these urban centres, the pressures associated with urbanisation, such as infrastructure shortages, also intensify. The demand for raw materials and other resources to support infrastructure grows strongly, but reduced investments in supply during the 2008 2009 downturn create severe upward pressures on resource prices. In addition, speculative activity, occasional supply disruptions and seasonal shortage add to the volatility in resource prices. This scenario is not a return to a stable status quo. A quick revival of Chimerica means that there will be less will to deal with the structural imbalances that led to the crisis in the first place. The persistence of these imbalances and the intensification of demand on limited resources and commodities increases the likelihood of asset bubbles and crashes, and volatile, unstable growth over the long run. Business cycles, which have already become shorter over the last ten years, will shrink even more. In this world, Singapore, as a small and vulnerable open economy, will have to deal with the impact of a volatile, unstable global macroeconomic environment. Scenario 2: Chasm A lack of international coordination and political will delays the pro24

With both public and private sector spending diminished, unemployment rates soar to historic highs. Political instability in many countries mounts. Fears of more job losses to foreigners feed social and political unrest amongst the public; governments are pressured into implementing a massive slew of protectionist measures that eventually lead to a complete breakdown in existing trade architectures. With world trade stalled, the export-led model of growth in Asia collapses. Economic activity stalls in these nations and government expenditure becomes the primary driver of growth in the region. Economic growth will eventually resume, but it will take several years of persistent effort from Asia, as well as extraordinary coordination across governments, to restart the engines of growth again.

Implications for Singapore

All three scenarios present significant challenges for Singapore. Against this backdrop, Singapore would need to address three main themes of Resilience, Survival and Relevance to secure its continued economic progress. In the Wounded Beast, Singapore would need to develop deeper resilience to resource shocks and shorter business cycles to cope with heightened economic volatility. Muted G3 consumption growth as in the Chasm and the Abyss suggests that Singapore would need to develop new capabilities to survive a shortfall in G3 demand. Finally, the reduced relative importance of G3 final demand will require Singapore to stay economically relevant to Asia as economies in the region seek to jump-start their domestic demand.

PLAY

Please see the animation at http://youtu.be/80JRHoOcPHU 25

verse effects of the financial and economic crisis. The global economy stagnates for a prolonged period of time, akin to a Great Depression II. The protracted nature of the downturn causes deficit governments in the developed economies to exhaust their arsenal of fiscal and monetary tools. Public debt burdens rise to unstable levels and prevent G3 governments from enacting key longer-term structural reforms.

In the Abyss scenario, with world trade stalled, the export-led model of growth in Asia collapses.

Asia

26

Asias rise is not without its challenges. Asias rise itself is not a given. And even if it was, Singapores continued prosperity is not a foregone conclusion. This publication does not offer predictions or even likely outcomes but presents plausible scenarios of the future. In doing so, it points to the potential challenges and opportunities that Singapore faces in this coming decade. Imagining the future is a good way to prepare for it.
Ravi Menon
Managing Director, Monetary Authority of Singapore (Former Permanent Secretary, Ministry of Trade and Industry)

27

Ice free arctic

Northern Sea Route

Suez Canal Route

Singapore

Northern Sea Route Compared to Suez Canal Route

28

How soon
before trade flows via the Northern Sea route?

bypass Singapore

[Earth Matters: Arctic Meltdown, Nov 2008]: More at http://futuresgroup.wordpress.com/2008/11/04/arctic-meltdown-and-shipping-boo/]

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Korea, the future is already here.

People look to S Korea as leaders in technology, culture and design. But is it also a leading indicator of Chinas future development path? This Q&A suggests that if you would like a glimpse of tomorrows China, you should take a look at todays S Korea and scale it up. by Lee Chor Pharn | July 2010

30

Chinas rise is the big deal, why should we notice Korea? Korea is often sidelined in the obsession over China. However, a rising Korea has a good chance to be the economic, technological, cultural and even political heavyweight of Asia. What is Korea getting right? Well, lets start with the economy. For a long while, the major complaint about S Korea economy is that its stuck in the middle - it falls short of Japan on quality and cant hope to match China on price. However, S Korea did well post-crisis. S Korea registered only a single sequential quarterly decline during the downturn and by 3Q09 growth was back to 3%. Production and consumption returned to pre-crisis levels within 3 quarters. Amid a 12.2% drop in the global real trade volume, Koreas exports bucked the trend for a slight increase. S Korean companies actually increased market share during the crisis. How did they manage that? In a twist of events, Korean companies benefit from being in the middle ground. In the post-crisis era, consumers the world over have turned cautious. The new mantra is value for money. South Korean companies are well positioned to capitalise on that new ethos with products that optimise the quality and price trade-off. This turnaround is credited to the second golden age of chaebols. A second golden age of chaebols? Werent chaebols largely discredited during the Asian Financial Crisis? Since the crisis, many chaebols had successfully restructured themselves to become frontrunners of change in the global economy. Beyond the traditional strongholds of consumer electronics and automobiles, they are making inroads into non-traditional industries delivering value for money. A good example is Korea Electric Power, S Koreas only electricity utility. KEP won a UAE deal in 2010 delivering a no-frills nuclear power package that beazt traditional Western vendors and Japan. The 10-year long project is expected to have a positive effect on the Korean economy for the next 50 years by creating the economic value of about US$ 40 billion, and 110 thousand jobs.

The chaebol conundrum. The Economist. March 2010

This turnaround is credited to the second golden age of chaebols.

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How did the Koreans manage to beat the West and Japan? Through speed and coordination. Chaebols are well suited to exploit new services/products that require coordination across many industries. The vertical integration structure of chaebols makes it easy for the board to push through a vision fast. It is not brand new technology, but the speed in rollout that gives them advantage. You can see this at SKs Museum of the Future, T.U.M.I, which shows SKs vision in automobiles, apartments, retail, and communications of the future. It helps that SK owns companies in telecoms, energy, logistics, property, payment and other industries, and can rally sister companies to deliver a vision fast. The Economist (Mar 2010) described the skills needed in this business as running a digital sashimi shopthe trick is to get products so swiftly to market that they do not lose their freshness. If its just speed and coordination, then Chinese companies can also play this game? Yes. There is no inherent reason why Chinese firms cannot eventually catch up. China is more open to imports and foreign direct investment than South Korea, which helps Chinas quest for intellectual property. But the chaebols have a secret sauce. What is their secret sauce? Its the mashup between technology & design. It is well known S Korea spends generously* on research and development, so lets look at the design angle instead.
* Gross domestic expenditure on R&D as % of GDP

S Koreas investment in design has been substantial, from the Korea Institute of Design Promotion to 230 design schools (more than the United States!) to the design institutes of LG and Samsung. The investment is paying off. For example, in 2008, according to FT, half of the most talented emerging designers chosen to be honored in Gen Arts Fresh Faces fashion exhibition were from S Korea or Korean Americans. At Parsons The New School of Design in NY, nearly a third of all students are Korean. Chaebols such as LG and Samsung have been sweeping international design awards. In the prestigious iF design rankings, awarded by International Forum Design in Hannover, Germany, Samsung is #1 in the world ahead of #2 Apple. LG is #8, ahead of German design legends BMW, Miele and Gaggenau. But Koreas story is not just about chaebols. For example, how about what Korea is doing to revolutionize future cities? Korea is revolutionizing future cities? Korea is emerging as a testing ground for creating templates for new cities. The boldest example is from Cisco Systems to create new Songdo city from scratch, completion by 2015. It is the largest private real estate deal in history, designed to emit a third of the greenhouse gases of a typical metropolis its size and run as a smart city. This is Ciscos way of getting out of the plumbing business and into offering cities as a service. Asia needs hundreds of new cities in this decade and this plug and play model is attractive. Cisco has announced plans to eventually roll out 20 new cities across China and India, using New Songdo as a template. This boldness and speed in the private sector is mirrored in the public sector. Koreas current President Lee Myung-Bak has declared he wants to move Korea from the periphery of Asia and into the center of the world. How does President Lee want to make Korea the center of the world? Essentially, he wants to turn Koreas geographic disadvantage, its

Sweden 3.7% S Korea 3.2% USA 2.7%

France 2.1%

32

small size wedged between giant neighbors, into a geopolitical advantage. Todays Asia is economically integrated, but barely politically integrated. Against a backdrop of steady American decline coupled with Chinas rise, Korea is testing the outlines of its future role to be the platform to integrate East Asia. For example, it is vigorously setting the pace for a China-Korea-Japan trilateral FTA, the secretariat will be setup in Seoul in 2011. Beyond the trilateral FTA, Koreas aspirational goal is a full Asian free-trade zone, with an Asian monetary system centered in NE Asia. Multilateral activities include S-Koreans ASEAN summit in June 2009.

President Lee has declared he wants to move Korea from the periphery of Asia into the center of the world.
Korea 2020: Global perspectives for the next decade Random House, Korea, 2010

If completed, this will diminish the role of ASEAN+3 and the East Asian Summit. The Lee administration is pushing for a slew of freetrade agreements with the U.S., the European Union, Peru, Colombia, Canada, Australia; as well as hosting world events like the G20 summit in Nov 2010. Koreas MFA strategically lobbies for Korean faces to head international institutions, cementing Koreas role as a central deal-maker. President Lee has been busy. He is also positioning the Korea development model within Asia as a dynamic alternative to both Chinas mighty command economy and Japans no-growth economy. Why is the Korea development model attractive? The Korean model is a more mature cousin of Chinas a hybrid economy, part free market, part state-controlled but with more freedom for the market and for political dissent. For example, did you know that for food security reasons, the Korean state directed the chaebols to buy up overseas farmland? This was done quietly but it suddenly moved into the limelight when the sale of farmland to Korean chaebols triggered a political scandal in Madagascar. Grain. org has compiled data that shows Korea, and not China or the GCC, as the largest buyer of overseas farmland in the world (please see graphic). 33

World Land Grab: Korea is top of the list.

Source: www.grain.org

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How about national image? This is the unusual part. You might not think that Korea has an image problem, but surprisingly S Korea lacks a cohesive, differentiated brand outside of the country. Many S Korean companies are not seen as S Korean. Less than 10% of US college students in an Anderson Analytic Survey identified Samsung and LG as S Korean, they thought they were Japanese. The result is S Korea invests vast sums in R&D and design, her companies make world beating products, but Japan gets the credit. In response, Mr. Lee setup a presidential committee on national branding to push for recognition beyond political forums. But S Korea has so many organic, bottoms-up efforts like its designers and the Korea pop culture craze that Mr. Lee should consider them instead of another top-down, government led branding effort. How S Korea is defining a modern Asian identity The power of the Korean wave hallyu is well known so I wouldnt talk much about it. Suffice to say that Asian youth increasingly identify with Korea as a desired modern Asian identity that is successful, confident, technologically advanced but still embedded with Asian values. As Bill Gibson might say, the future has arrived but its not evenly distributed. Can we say that the future is here in Korea? Maybe its worth asking if Koreas successes are like Japans, meaning the experience is peculiar to Korea only? Actually, my take is no. Korea is just faster. Observers have noted Japan suffers from Galapa-

gos syndrome i.e. business models have difficulty travelling beyond Japans domestic fetishes. However, because of a limited domestic market, Korea takes inspiration from Japan but designs business models for export. This typically is targeted at China which further refines it along the price-quality curve to scale for its domestic market. It is the China portion where it gets interesting. What does todays Korea tell us about tomorrows China? China has so far announced seventeen mega-city region plans. Each plan announces the vision of a prosperous, export-oriented, technologically advanced society with a hybrid market-state economy like todays Korea. If China succeeds even part of the way, there may be multiple Koreas within the decade. How might the competitive landscape change? Will these mega-city regions like the Pearl River Delta be economic heavyweights that demand their own FTAs? Where might the center of youth culture and Asian youth identity shift to then? What does this mean for Singapore? Here are some thoughts. If Koreas secret sauce lies in the mashup between technology and design, can we honestly say Singapore has a critical mass of design institutes? What is the social and economic impact of Singapores voice absent in the creation of a future Asian youth identity?How should ASEAN, and Singapore, position to take on the momentum generated by S Korea in the creation of N East Asian institutions? How can we engage S Korea early to embed ASEAN in a position of strength in these institutions?

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How do you build new land?

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In the face of rising sea levels, the

Maldives government and Dutch Docklands

signed an agreement to develop

a series of floating islands.

Could this be Singapore 2.0?

[Earth Matters: Ocean Economy, July 2010]

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Climate Hacking

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Climate hacking, more prosaically known as geo-engineering, is moving from the fringe into mainstream discussion. No longer just the domain of state actors, large corporations and even rich individuals may choose to act beyond the purview of governments and turn climate hacking into a competitive advantage, or a weapon.

by Ivy Ng | Oct 2010

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Shift to a China-centric trade architecture.

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The IMF and World Bank are Anglo-Saxon legacies of Bretton-Wood. Today, to Africa than the World Bank.

China lends more money

China is laying the ground for an Asian Monetary Fund. When could a Chinese-supported parallel system emerge?

[Rise of the Rest: Future of Global Trading Regimes, Nov 2009. Download the study at http://www.cscollege.gov.sg/cgl/pub_ethos_11h1.htm ]

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Social is Back

Social Enterprise
It may seem counter-intuitive but could there be a case for Singapore to promote social enterprises? Can social enterprises be the vehicle to anchor impact investments as a new asset class in Singapore, and address the aspirations of Singaporean youth to do well and to do good?
by Cheryl Chung | Jan 2011

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Sunlabob is a Vientiane-based company which operates as a profitable, full-service, energy provider selling hardware and providing commercially viable energy services for remote areas where the public electricity does not yet reach. When they looked at setting up operations in Singapore, it seemed like a counter-intuitive move. Why would a rural-electrification company set up in Singapore, a place that is advanced, high cost, high tech and no market because everyone is on the grid. The reason, as it turns out, is that they would have better access to energy companies and funding and that Singapore would be a good base from which to internationalise. The example of Sunlabob leads to the question: In spite of the lack of a market for social enterprises to operate in Singapore, is there still a case for Singapore to promote social enterprise? What could be the potential of Singapore-based for-profit enterprises using sustainable and scalable business models to bring social benefit to emerging markets?

WHY WILL SOCIAL ENTERPRISE BE IMPORTANT TO SINGPORE?

Social enterprises do not refer to a specific sector of the economy as they could be set up in any industry sector. Rather, social enterprises may be viewed as having a unique business model, which differs from that of traditional enterprises because they focus on delivering social benefit. There are 3 trends that may signal a growing role for social enterprises in Singapore:1) 2) 3) Impact Investing Youth Aspirations Emerging Markets

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Impact Investing
Impact investments are investments intended to create positive social or environmental impact beyond financial return. They are emerging as a new asset class that offers a new alternative for channeling largescale private capital for social benefit. A report by JP Morgan and the Rockefeller Foundation (on impact investments) estimates an investment opportunity of between US$400 billion and US$1 trillion and profit opportunity of between US $183 billion and US $667 billion over the next decade in 5 sectors housing, water, health, education, and financial services serving global populations earning less than $3,000 annually.4 Why is this important? These characteristics are present for such asset classes such as hedge funds which channel significant capital

flows as a result. In the same way that investments into clean technology have driven growth in the sector, the availability of funds, especially in Singapore, could drive the rise of social enterprises in the region and be a strong magnet for social impact investors. In addition, the report by JP Morgan and the Rockefeller Foundation on Impact Investments suggests that Banks and Corporations will face further pressure to engage in the impact investing field, and will respond. They will see it as a bottom of the market opportunity, but will need new intermediaries to aggregate supply and different sources of capital. Investors range from philanthropic foundations to commercial financial institutions to high net worth individuals. A key development in this area would be the launch of Asia Impact

IMPACT INVESTMENTS
Impact investments are emerging as a new asset class that offers an alternative for channeling large-scale private capital for social benefit. This new asset class will no longer be defined simply by the nature of its underlying assets but by how investment institutions organise themselves around it. The new asset class will have the following characteristics: Requires a unique set of investment/risk management skills Demands organisational structures to accommodate this skillset Serviced by industry organisations, associations and education Encourages the development and adoption of standardised metrics, benchmarks, and/or ratings For example, Acumen Fund focuses on patient capital which seeks to bridge the gap between the efficiency and scale of market-based approaches and social impact of pure philanthropy. It is debt or equity investment in an earlystage enterprise providing low-income consumers with access to healthcare, water, housing, alternative energy or agriculture inputs.

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www.asiaiix.com
Asia IIX is the first social stock exchange to operate in Asia. It provides access to a range of impact investors much broader than those able to make private investments in Social Enterprises today. These include charitable endowments, family offices, and other institutions, as well as high-net-worth individuals and retail investors. IIX also expects to attract investments from existing SRI funds and to encourage the development of funds targeted at investment in Social Enterprises. Asia IIX has chosen to set up in Singapore because Singapore is a proven global financial centre, with a large concentration of investors and financial service providers, including local arms of many international financial institutions which offer access to a significant pool of investment capital. Singapores markets also enjoy a reputation for strong regulatory standards which offers credibility for the exchange and confidence for investors.

Investment Exchange in Singapore. Impact Investment Exchange (IIX) will be a regulated trading platform for securities issued by sustainable for-profit and not-for-profit social enterprises in Asia. It provides a liquid and transparent market where social enterprises can raise capital for expansion to multiply their social and environmental impact, and Impact Investors can achieve both financial and social/ environmental returns. Through IIX, there is the opportunity for Singapore to anchor an supporting ecosystem comprising regulators, research companies, rating agencies, brokerage firms, investors and social enterprises.

back to the community among youth in Singapore. It is likely that these values will shape their future career choices and more young people may choose to work in the social sector. This trend is reflected in the rising number of education and research opportunities related to social enterprises that are becoming available in tertiary institutions.

Emerging Markets
The rise of the rest is a well recognized trend that emerging markets will increasingly take centre-stage and shape the global economy over the next few decades. What is not so clear is how to tap into the potential of these emerging markets, especially since Singapore has typically focused on the G3. Can the social enterprise model be an effective vehicle to reach the emerging markets?

Youth and their future career interests

A study of Singapore youth undertaken by MTI in 2009 found an emerging sense of social consciousness and a desire to contribute

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SOCIAL ENTERPRISE AND SINGAPORE IN 2025

The confluence of the 3 trends, that is impact investing, youth aspirations against the growing importance of emerging markets, suggests that there is likely to be a future scenario where both human and financial capital come together to focus on solving societal problems of the emerging markets. In such a future, where social enterprises, especially in Asia, gain prominence, how might things change for Singapore? Allow us to suggest a number of ways. In the next 10-20 years, impact investment could become a more main-stream asset class as better metrics for assessing social benefit are developed. This will cause a shift of funds from other asset classes to impact investment funds and his surge of available capital will lead to a growth of social enterprises in Singapore and in the region.. New competing financial hubs in Mumbai, with their well-established microfinance sector, and Bangkok, with their ecosystem of international organizations, will emerge but Singapores first mover advantage and deep expertise in impact investments and ability to cater to sophisticated investors will help to maintain its competive advantage. Young, bright Singaporeans return home after working overseas because this is a place where they can work on thorny societal problems and still enjoy a certain quality of life. Wealthy investors come to Singapore because they find it is the sweet spot of well-managed funds and good governance and hands on access to markets in the region. Local institutions, like the Lee Kuan Yew School of Public Policy and the Lien Center for Social Innovation, become premier research in-

SOCIAL INNOVATION EDUCATION AND RESEARCH PROGRAMMES IN SINGAPORE. Ngee Ann Polytechnic offers a diploma in Business and Social Enterprise. National University of Singapore has a Centre for Social Entrepreneurship and Philanthropy. Singapore Management Universitys Lee Kong Chian School of Business offers an undergraduate module in Social Entrepreneurship and runs the Lien Centre for Social Innovation.

stitutions on social innovation. If Singapore is unable to capitalize on this opportunity now, in 10-20 years we might find ourselves in an alternative scenario where Singapore loses its financial hub status as the growth in emerging Asia drives the demand for impact investments and other financial centers like Mumbai or Bangkok grow in prominence. Young Singaporeans work overseas because they find that Singapore can no longer meet their aspirations to do well and do good. Singapore finds it difficult to attract young, bright people from the region as there are now more opportunities in their home country. It becomes difficult for Singapore to tap into the rise of Asia as its economy follows the path of the US and Europe to economic stagnation.

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Youth Movement

Where do the young and educated want to migrate?

Top 10 Countries Young People Would Flock To Top 10 Countries Educated People Would Flock To

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Source: Gallup.com, March 2011

Welcome to

Singapore
If all would-be migrants were allowed in , Singapores population of five million would triple. According to the indexes, its rank of young residents would climb by six times, and its educated population would quadruple. This runs counter to the trend for other developed Asian countries, with some even seeing losses in these categories.

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Young Singaporeans
on their way forward
Youth are our literal future. Youth can also vote with their feet. Is Singapore able to hold on to our youth when compared with other cities? What do our youth consider for their future?
by Lee Chor Pharn | Nov 2009

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Youth talent
In the intersection of literature on urban cities and the war for talent, Richard Floridas Creative Class theory has done its rounds among policymakers in recent years. The concept puts forward how a creative class chooses open, dynamic urban environments to live in, which in turn attracts businesses and capital to tap on this talent pool, and this in turn attracts even more creative people, closing a positive feedback loop. This concept is being tempered with current financial realities of affordable housing and employment. Fellow urban theorist Joel Kotkin observes that, in this current decade, the advantage in the war of talent may instead lie in family-friendly regions rather than hipness or urban density. One important outshoot for us was identifying that while Singapore is structurally family-friendly and attracts the requisite talent pool, is it similarly attractive to a talent pool of youth? Is Singapore able to hold on to our youth when compared with other cities? What do our youth consider for their future? There is not that much literature on the intersection of youth and cities outside of the USA, and global city indexes do not specifically mention youth. Hence, we commissioned a study through a third party.

They are not Singaporeans in the same way as their parents, they feel they are citizens of the world; they no longer feel bound by typical Singaporean boundaries, physical or ideological.

Not a study of regular youth

We werent interested in doing a study on regular youth who have perfectly normal ambitions of becoming a doctor, lawyer, accountant, engineer and so on. This chunk of youth will have relatively fewer problems finding their way in our economy and contributing to it in the future. We wanted to study a sliver of youth in Singapore who have slightly different, offbeat aspirations; those who are educated, well-travelled, articulate, and energetic. We wanted to get a sense of their energies, their aspirations, whether they would leave Singapore and never 63

The emergent (and most surprising) aspect of the new mindset of youth is their sense of civic responsibility centered on the urge to give back to society.

come back, or whether they felt they could accommodate their aspirations and dreams in Singapore. The core idea was to find and engage with unusual young people who are potentially tomorrows industry leaders, a small but representative sector of the youth who will take Singapore into the future.

The Approach
We felt that the way to reach out to this sector was a qualitative study rather than through the usual quantitative studies. Blogging and ethnographic interviews allowed us to immerse ourselves in their world, to allow us to get under their skin. So what did we learn?

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Values and Attitudes

Young Singaporeans are realistic and positive about their lives! The realism stems from a sense of hard work and perseverance, which is ingrained early on from a strict educational system. While this streaming system comes under heavy fire from youth, it does establish a mindset of hard work reaping tangible rewards. The inherent positivity does not just stem from being young, but also from living in a modern world where they feel that anything and everything is possible. This occurs on a local level and a more global level. Singaporean youth feel that Singapore the country provides a stable home base from which they feel confident to reach out and realize their dreams. There is an obvious, expressed appreciation of the positive infrastructural aspects of Singapore, while noting the flip side to Singapore (conservatism, censorship etc). On a global level, the youth feel that borders no longer bind them.

They are generally well travelled, constantly connected to the world. They feel connected to a global flux of youth culture and as such, do not feel trapped in Singapore, nor do they feel the need to escape.

Changing Definitions of Success

We see new attitudes towards success and failure. Success has become much more holistic while failure is increasingly accepted as part of the learning process on ones journey. The typical Singapore Success of 5Cs (credit card, country club, condo, car, cash) along with stable DALE careers (doctor, accountant, lawyer, engineer) as routes to success of older generations seem old-fashioned. This is more than a reaction against old conventions. Their notions of success and lifestyle is rooted in this generations sense of self. They are not Singaporeans in the same way as their parents, they feel they are citizens of the world, they no longer feel bound by typical Singaporean boundaries, physical or ideological.

Singaporeans are intensely curious of the world outside their physical and ideological island. This is beyond the quitters and stayers dialogue of the older generation as we will see in the section on giving back. Education overseas is probably the most important aspect of foreign exposure. This becomes a necessity for youth with non-mainstream career choices that require specialized education which Singapore simply doesnt offer. While many of this new generations values seem self-focused, there is a very stable and secure grounding for their confidence and, in some cases, their incredible drive to excel: their families. The value of family feels like one of the oldest and most traditional set of values. It also feels the most modern and contemporary, as it still fundamentally affects the way in which these young people make their decisions. Along with their children, parents are also changing their view on life and their attitude towards alternative careers paths and interests. In the youths minds, their parents are less rigid than they had previously thought. Parents are in the unique and difficult position where they have to span two worlds: one, the world they grew up in with the values instilled in them when Singapore was a very different place. The other, the world of their children where things have changed drastically; and they need to adopt new ways of thinking in order to understand their childrens passions and motivations. Something which bolsters parents more progressive thinking is the encouragement and legitimization by the broader establishment of more alternative careers and interests. Centers like the Singapore School of the Arts (SOTA) and Singapore Sports School (SSS) of-

Entrepreneurial Spirit
More and more young Singaporeans feel the need to start their own businesses. This group recognizes their own talents. They want to express themselves, show their skills in a public forum and make a living from their passion, a living that drives them beyond material or financial gains. This is aligned with the new mindset they have adopted, and also to do with the changing view on success. Its felt that existing local industries dont offer enough variety and scope, so young Singaporeans are excited to expand the horizons of what already exists. Online businesses are an easy entry point, and the youth are filling the gap in online gaming, retail and so on.

Foreign Exposure
While Singapore is largely seen as a good place to root a family, young

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fer clear and practical ways for youth to engage in their creative or alternative passions while ensuring they are working on more regular and stable career paths.

Overall, there is a large amount of goodwill towards Singapore; its a place where youth feel comfortable, safe and well taken care of. Its a stable base from which they feel they can reach their goals. It is also the basis for them to want to return home if they venture overseas.

Giving Back
The emergent (and most surprising) aspect of the new mindset of youth is their sense of civic responsibility centered on the urge to give back to society. In some instances, the respondents mentioned that even though theyd like to go overseas to work or study, theyd like to return to Singapore to give something back to society here. This is not a simple act of charity. Practically, they also envision this contribution as part of their entrepreneurial efforts: returning to Singapore to establish businesses, and then somehow contribute, through their skills to society. This is particularly relevant to those who want a future in an industry that is only starting to grow in Singapore environmental concerns, dance, culinary arts and the like.

Barriers to engagement
While positive sentiments towards Singapore as home exist, there are two aspects which can cause youth to disengage. The first is the education system that continually comes under fire from youth academic streaming in schools, the intense pressure to win at all costs, and the fact that from a young age their futures are dictated by the type of school they attend and the kind of points they are able to earn. While the system seems to be opening up now, with the introduction of SOTA, SSS and new learning methods in Republic Polytechnic, there is distinct dissatisfaction with the regular school system because it seems outdated. The second is Singapore societal behavior. Youth are able to easily discern between the efficient, first world infrastructure, and the rather basic behavior of Singapore citizens that is not commensurate with a first world society. These people seem to be of an older generation, or those with lower education levels, or simply those who have a less global and liberal mindset. In other words not this generation of open-minded young people.

Of Singapore
How does this young generation, who are so globalised and forward thinking, relate to their home country of Singapore? Its all too easy to imagine their views as wholly negative, but in reality, they look at Singapore in a way that is nuanced and colorful. One topic that is continuously referenced is the Singapore government. While there is a lot of talk about the controlling role that it plays in Singapore society, its efforts are recognized and appreciated by youth. The government is largely seen through the lens of the infrastructures that it creates and maintains: healthcare, education, safety and security; environmental consciousness; political and economic stability. Youth are well-versed enough with the world to understand that such a spectrum of world-class infrastructure is rare and even rarer when combined in one country.

Enabling while protecting

It is clear that Singapore is both a springboard and a magnet for youth in Singapore. A springboard in that it is able to nurture youth, through stable and secure infrastructure, and family life to the point where they are ready to face the wider world and feel confident in themselves and their abilities and skills to compete on a broader scale.

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A magnet in that there are always elements that draw youth back to Singapore. Family is a large part of this, but more than family, the feeling that Singapore is a home and a place to make a career, creating their own families and making a home for themselves in a place they know they are always welcome. There is also an emergent feeling that Singapore itself is changing, in terms of the openness of laws and policies, and encouraging a greater sense of inclusivity and liberal thought.

Singapore in comparison with other cities

The study concludes that Singapore appears to be moving in the right direction. However, in the war for talent, relative attractiveness counts. Current global city indexes do not specifically account for youth attractiveness, so we cannot tell how Singapore compares with other cities. In the absence of comparative data, we notice that other Asian mega-city regions are also working hard to get the right mix of liveability, employment opportunities, social buzz etc and some like Seoul have the added buzz of a vibrant youth culture. Singapore may have current advantages but will need to stay alert and aware as the war for (youth) talent continues. Research was conducted by Flamingo Asia Pacific. Download the full study at http://futuresgroup.wordpress.com/sgpyouth

Singapore may have current advantages but will need to stay alert and aware as the war for (youth) talent continues.

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Thanks to massive Chinese infrastructural investment,

ASEAN
identity and institution?

could become divided,

with the Greater Mekong sub-region more tied-in to China.

How might this impact the ASEAN

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The New

Railroads

Chinas domestic and proposed transcontinental high speed rails (HSR) are potential game changers by 2020. Of particular interest is the China-ASEAN HSR network which, when completed, will bind mainland ASEAN closer to Chinas economy, and lead to the rise of a few winner cities. by Lee Chor Pharn | Nov 2010

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There is a railway renaissance in Asia, specifically high speed rail (HSR). This development presents two potential game changers. The first is the completion of Chinas domestic HSR network by 2020, already the largest in the world. The second, also originating in China, is a proposed transcontinental HSR network which if completed, will bind mainland ASEAN and central Asia tighter into Chinas economy. These networks are already being termed the New Silk Railroad. Why should we care? The economic agglomeration effects observed in mature HSR markets of Japan and Europe show that a few cities gain over the long term at the expense of others. Even though both Chinas domestic and transcontinental HSR network are on a scale never seen before, we can ask (a) what might be the likely economic agglomeration effects; (b) which are the possible new winner cities of the new silk railroad?

zation, inland transportation networks and government policies to transfer growth from the coast to the interior. Nonetheless, we can make some educated guesses via the interior routes of the planned HSR network. The developed dumbbells regions of Beijing and Hong Kong will be joined by the HSR barbell of Changsha-Wuhan-Zhengzhou-Shijiazhuang. Similar configurations exist for the barbells of Hangzhou-Nanchang joining Shanghai to Changsha, Zhengzhou-Xian-Baoji and joining Xuzhou to Lanzhou. These megacity corridors bear watching.

Barbells and Dumbbells: How High-Speed Rail will connect mega-city clusters and create mega-city corridors.

HSR ACCELERATES THE FORMATION OF A UNIFIED CHINA DOMESTIC MARKET BY 2020

China already has the worlds longest high speed rail network at 7,400 km (Sept 2010). As part of the stimulus package announced during the financial crisis, China plans to spend US$300bil to establish a 25,000km-long HSR network by 2020. This will be longer than the worlds entire HSR lines combined. Chinas goal is to reshape its landscape around train services to a similar degree that the Interstate highways have reshaped America . The upcoming decade of HSR network building will coincide with intense urbanization and the formation of megacity clusters, allowing for a days travel to reach any major city. This will accelerate the formation of a unified Chinese domestic market. The HSR developments will most certainly strengthen the economic positions of existing coastal megacities, such as the Pearl River Delta, Yangtze Delta and Bohai Delta. Identifying potential winner inland cities is more challenging given concurrent developments in urbani-

PLAY

Please see the animation at http://youtu.be/CLrmUTDJan8

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Chinas Transcontinental High-Speed Rail

Source: Transport Politic, Chinas High Speed Rail plans, March 2009 72

THE REGIONAL IMPACT OF CHINAS TRANSCONTINENTAL HSR NETWORKS

The strategy of transcontinental HSR lines is obvious when seen in the context of Chinas regional plans for a parallel trade infrastructure. China is already investing in highways, sea and air ports, oil and gas pipelines in neighboring countries, like Myanmar and Pakistan. This allows China to open up alternative energy supply routes, establish new trading routes through its own secured trading infrastructure, and open up new markets that border its outer provinces. The proposed transcontinental HSR lines further consolidate Chinas centrality as the major hub of Asia. There are four transcontinental HSR lines proposed by China, and one transoceanic HSR line proposed by South Korea. The transcontinental lines extend westward across Central Asia to Europe, and southwards across mainland ASEAN ending at Singapore. The transoceanic line extends eastward across to join the HSR networks of Korea and Japan. The Urumqi Central Asia line is planned from the Western Chinese city of Urumqi towards Kazakhstan, Uzbekistan and Turkmenistan, possibly connecting through Pakistan, Iran, and Turkey through to Germany. The intention of this westward line is twofold. First is to develop Chinas western regions, and second to acquire natural resources. The Harbin Russia line is planned from Heilongjiang, across Mongolia, Russia and heads west across Siberia on the way to Europe. In Nov 2010, China has signed a MOU with Russia and Belorussia to explore the Russia HSR line. The Kunming Middle East line is planned from Kunming towards Myanmar, Bangladesh, north India, south Pakistan and ending in Irans Tehran. The railway could later be extended to London. China is building considerable infrastructure (highways, ports, and oil and

Chinas goal is to reshape its landscape around train services to a similar degree that the Interstate highways have reshaped America.
High-speed rail in China, The Transport Politic, Jan 2009

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gas lines) to bypass the Straits of Malacca via Bangladesh, Pakistan and Myanmar. The HSR line does not appear to link with the rest of Indias proposed HSR system. Another variant of the line starts in Kunming via the ASEAN line through Yangon and Bangladesh. However, this HSR line may be fragmented as it is not clear if India is prepared for Chinas HSR system to run through the country. The Kunming ASEAN line is planned from Kunming city through Vietnam, Cambodia, Thailand, Malaysia, and ending at Singapore. This will likely run in parallel to the proposed China-ASEAN conventional railway link between Kunming-Singapore. Two additional legs will be from Kunming through Myanmar, and Kunming via Laos, to be built by 2015. Vietnam has turned down a 1630km HSR based on Japanese technology between Hanoi and Ho Chi Minh City due to its high costs. China is reported to have offered an alternative at lower cost, but Vietnam has yet to accept. Bangkok has already agreed to deploy Chinese technology and management to help build 4 domestic HSR lines, including one from Bangkok to Rayong province which will connect to Laos. Aside from transcontinental HSR links, there is talk of a transoceanic link linking the HSR systems of northeast China (via ShandongWeihai) to Korea (via Busan) to Japan (Fukuoka). South Korea has commissioned a feasibility study into undersea HSR tunnels. There are major technical, funding and geopolitical considerations, and the results are expected to be released end of 2010. Nonetheless, South Koreas neutrality may be place it in a good position to drive such a development for further integration in NE Asia.

The proposed transcontinental high speed rail lines further consolidate Chinas centrality as the major hub of Asia.

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WHAT MIGHT DERAIL THE NEW SILK RAILROADS?

The cost will be enormous high speed track is three times more expensive than conventional rail and the vast majority of the routes

would require laying new tracks. Some countries are prepared to offer trade incentives in exchange for financial backing on the high speed routes. E.g. Myanmar may offer its rich reserves of lithium. Customs issues (quarantine, visa requirements etc) need to be harmonized, though this can be overcomed by treating cross-border HSR in the same way as airports. The Chinese expect to face IP challenges from their former JV partners when they venture overseas. This challenge can be sidestepped by focusing on emerging markets where the IP challenge will be weaker. However, this issue cannot be ignored in developed markets such as the USA. A persistent weakness is lack of overseas experience. Chinese HSR operators pulled out of the Saudi Arabia HSR bid in July 2010 due to lack of familiarity with the bidding process. This can be overcomed with time & increased exposure. The unspoken wildcard will be geopolitics. Vietnam, Russia and India are concerned with deepening Chinese links into their territories and can frustrate the building of a continuous transcontinental link. A fragmented transcontinental link is of little use. This may change over the decade as Chinas economic and political influence grows and alters the balance. For now, the Kunming-ASEAN HSR line seems more plausible as it rides on an existing China-ASEAN conventional railway agreement for the line to be completed by 2015.

800 kilometers, or three hour short hauls. In Europe, airlines have either seen their share slashed by up to 80%, or passengers quit flying the routes altogether. For tourism, the number of tourists in cities linked to HSR tends to increase, but the number of nights spent in hotels is reduced. In the longer term, economic studies compiled by GiM-IREA Universitat de Barcelona, Research Institute of Applied Economics show that the agglomeration and dispersion effects of HSR lead to a relocation of activities. These studies of mature HSR markets in Europe and Japan have shown that HSR does not cause growth, but concentrates growth. For regions/cities that compare economically unfavorably to their neighbors, a connection to the HSR may result in economic activities being siphoned away, resulting in a net negative impact. Medium-sized cities may suffer most as activities drain to more dynamic and bigger cities. However, cities with a service-heavy economic structure will benefit from HSR. Face-intensive activities that benefit from clustering of talent like education, finance, business services, media, and R&D will consolidate in big node cities. Rent-intensive activities like manufacturing/ agriculture are indifferent to HSR. This means that while HSR does not accelerate the hollowing out of industrial activity, it also does not slow it. Finally, the studies show that HSR has only marginal impacts on population and housing growth. There is a caveat. Existing HSR studies are of mature HSR systems which do not face simultaneous urban, migration and transport network transformations as in China. It is entirely possible that the outcomes from Chinas HSR plans, amplified by these concurrent changes, may result in quite unexpected effects.

WHAT ARE THE REGIONAL EFFECTS OF HIGH SPEED RAIL?

In the short term, HSR is known to decimate existing air routes of

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When George W Bush uttered the term internets he was roundly laughed at by the media as to how he didnt get it. But after watching this video, do you think there is some merit to terming East Asias internets?

PLAY

Please see the animation at http://youtu.be/wuRslUxZ_e8

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Peoples Republic of Change

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What is the face of China in 2020?

[Rise of the Rest, Peoples Republic of Change, April 2010]

PLAY

Please see the animation at http://youtu.be/YKJ5x68N5jw

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The End of Cheap Food

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Rising food prices are a persistent future threat; how can it also present Singapore with an enormous opportunity?

[Earth Matters: Future of Food, Nov 2007]: More at http://futuresgroup.wordpress.com/2008/10/03/future-of-food/

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DEMYSTIFYING
the FG process
Futures research is part science, part art and part storytelling. How do we persuade policy makers to consider plausible futures that are not proven? This is our attempt to articulate the art, and we hope that new foresight teams will benefit from these ideas. by Sim Phei Sunn | Jan 2011

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The Singapore public sector has had a long history of applying strategic foresight to policy planning. We began using scenario planning actively in the 1980s to anticipate plausible futures. This capability has more recently expanded to include risk management, strategic foresight and futures studies, resulting in several foresight teams being formed in different public agencies. The Futures Group (FG) at the Ministry of Trade and Industry (MTI) was one of the pioneering foresight teams, set up in 2006 to scan trends on the horizon and analyze their potential economic implications for the next 5 10 years. FG is positioned as the idea generator, competency developer and network builder to shape the Singapore economy of the future. As any foresight practitioner will attest to, the challenge in our work is in imagining plausible futures and convincing decision makers to consider them. Since the future has not happened, providing quantitative proof or rigorous validation to support possible futures scenarios is not an option. How then do we persuade policy makers to take a leap into those possible futures?

Surprise me.

Head, Civil Service and Permanent Secretary, Ministry of Finance, Singapore (former Permanent Secretary, Ministry of Trade and Industry, Singapore, 2007)

Peter Ong, on what he expected of the Futures Group

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One key challenge confronting public agencies today is the need to make sense of and mitigate increased complexities in the global and local operating environment. The recent financial crisis clearly showed up the complex global inter-linkages among economies. Environmental and health-related disasters have thrown curveballs at economic plans. Technological innovations have given rise to new business models, disrupted markets and incumbent market players.

Research Sweet Spot

At FG, we try to position our research in a sweet spot connecting feasibility, viability and desirability (Figure 1).

Feasibility refers to how we balance the forward-looking nature of our work with practical policy considerations. We need to anchor our research topic within the realm of what is reasonable in the next 5 10 years. The way we define the time frame, the angle and scope determines if our audience will pay due attention to the study or write it off as science fiction. This means that topics on flying cars and growing human wings are less likely to find their way into our portfolio. Viability frames the research problem and solutions in relation to MTIs interest and policy levers. We want to identify areas where

our agencies can influence or intervene and suggest how that can be achieved. We look at a diverse range of issues and ask What-if questions, imagine disruption points and how they might branch out. When the audience sees how the topic is of relevance and interest to them, they will have a higher stake in the issue and ideas.

Desirability informs and communicates the research output in

ways that trigger the audiences curiosity to find out more. If a piece of futures work is done well, it would typically be a few years ahead of the mainstream curve. Hence we want output that can create a long-tail effect and generate policy traction over the years. In FG, we constantly experiment with different media and forms of communications, ranging from video, research papers, manga and bite-sized presentation teasers, to get our audiences attention.

Research Sweet Spot

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Figure 1. Finding the research sweet spot

T1
Q: What are the relevant drivers? Trendpack

T2
Q: What is the focal question(s)? 2-pager research proposal

T3

T4

Q: Why should Q: What is the key Singapore / MTI care? message? Internal draft Paper, slides &/ or other media Slideology, Prezi

S.T.E.E.P

Backcasting, Cynefin, Causal Layered Analysis (CLA)

Futures wheel, Futures triangle

Figure 2. Research Phases

Research Phases
Trend scanning and desktop research underpins much of foresight work. When some trends surface repeatedly, the research proper phase is triggered. This falls into four main stages, T1 T4 (Figure 2).

c. Economic: How might demand or supply patterns be disrupted? d. Environmental: How can we price our environmental ecosystem and externalities? e. Political: How might current institutions or political structures be challenged? The output from T1 will be a trend pack, which can take the form of a short presentation deck, with each slide highlighting a trend and asking a provocative disruptive question. It can also be a short video or manga or other formats that best convey the trend and raise awareness amongst the target audience.

T1
At the T1 phase, the main objective is to raise awareness and educate audiences on a particular trend or set of trends. We compile relevant drivers for the emerging issue and sift through the mountains of data to decipher the weak signals. One possible way is to ask probing questions along the S.T.E.E.P framework to help us filter through the noise. a. Social: Why is this cutting edge and when is it likely to become mainstream? b. Technological: When is a prototype likely to be available and how will this be a game-changer?

T2
If there is potential for the outcomes from T1 to be developed into a deeper piece of research, we move into the T2 phase. The aim is to drill the trend down into a focal question that we want to concentrate on, and have a sense of its feasibility. Most emerging issues are too broad and require foresight methodologies to deconstruct it into more manageable and focused areas.

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a. Backcasting is a good visioning exercise to imagine the preferred future and explore pathways in which our current situation might go wrong, leading to an unwanted future. This exercise requires heavy facilitation to help participants paint the causal map and narrow down to key events or trends. b. Cynefin framework is used to deliberately tease apart an issue and re-frame it to arrive at new scenarios or topics. It clusters issues into Simple, Complicated, Complex and Chaotic categories, and focuses on the complicated and complex ones. It is a repeated process of divergence, convergence, divergence and re-convergence to dissect a topic into its basic parts and re-combining them in new mash-ups. c. Causal Layered Analysis (CLA) forces us to unpack an issue to understand it deeper. The way we frame an issue affects the scope of policy influence, solutions and the actors involved. CLA system-

atically drills down our thinking along four levels Litany, Systemic, Worldview and Myths/ Metaphors with each level probing a deeper Why than the previous. Each level requires different solutions and approaches. Moving vertically or horizontally along the levels allows us to construct different scenarios for policy analysis. The result of T2 phase will be a 2-page research proposal describing the focal question that we wish to tackle, the research approach, resources and timeline. The FG team will then discuss if there is sufficient relevance to MTI and our agencies and decide if the project should proceed.

T3
Once the research project commences, we want to be very conscientious in drawing out the implications and strategies for MTI and the Singapore economy. The research is moot if we cannot answer the So what? viability concerns of the audience. In approaching the over-arching question of Why should we care?, we can use some simple tools to tease out indirect consequences and understand our policy operating environment. a. Futures Wheel helps us to think laterally and identify 1st-order direct and 2nd-order indirect effects of a particular policy or issue. It is akin to drawing a mind-map and word association, to arrive at the non-obvious consequences. Depending on the subject matter, we can choose to proceed deeper into the 3rd-order effects. This is a straightforward exercise that can be used for individual or group brainstorming on the policy implications of the research topic at hand.

Futures research is like a scout collecting weak signals.

b. Futures Triangle is a sense-making tool that allows us to look at an

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issue in the future and competing demands affecting it. It maps out associated factors along 3 axes of Push (pushing us towards the desired future), Pull (pulling us away), and Weight (weighing and anchoring us in the current). The Futures Triangle can be used to sharpen proposed policy solutions and follow-up actions, for instance by highlighting the Push areas to reinforce or the Weight blindspots to watch out for. By the end of T3, we will have a first draft of the research paper or presentation slides. Refining the research will be an iterative process between T2 and T3.

to bringing interested parties together and persuading them to consider acting upon it. One often does not see immediate fruition from his work. Acceptance is more forthcoming when the weak signals get stronger and enter the mainstream radar over time. One long-tail research that FG undertook in 2007 was on Food, analyzing the possible disruptions and opportunities that might arise from weak signals in related issues. The food crisis then struck, and one suggestion on overseas farmland caught the attention of policy makers. Three years later, Singapore invested in a food zone in the Jilin province in north-eastern China. Another example is our study on Future of Data, where we first pitched the idea of working with LIVE Singapore data to the MIT Sensable City Lab in 2008. That coincided with several other public agencies interests to develop aspects of a smart city and responsive public services, and we saw opportunities in connecting them. Subsequently, ideas from our study sparked off an EDB industry cluster on pervasive sensing. MIT Senseable City Lab was also awarded a 5-year research funding from the National Research Foundation (NRF) to work on a LIVE Singapore project to develop a platform for real-time applications.

T4
When the research is sufficiently completed, the final phase is to identify relevant reporting platforms and ways of communication to share our findings. This phase is just as important as research, especially for foresight work. Too often, the importance of good scripting and messaging is overlooked, on the assumption that research output will speak for itself. We spend an enormous amount of time scrubbing What is the key message? and filtering it from the research data noise. We want to keep our communication sharp, clean and edgy so that its desirability factor is high. The aim is to create an impact on the direct audience to generate a viral effect in communicating the key messages.

Conclusion
Futures research combines science with art. Parts of the process, such as trend scanning and monitoring, may leverage on computational intelligence to make it as systematic and bias-free as possible. Subsequently, however, analysts will have to make sense of these signals and weave them into compelling stories that provoke decisionmakers into thought and action. This article is an attempt to articulate the art, and we hope that new foresight teams entering the foray will benefit from these ideas. Happy futuring!

Research Long-Tail
Much of futures research is qualitative. It is akin to a scout collecting weak signals in the environment and combining them into plausible images of the future. It then requires repeated efforts to communicate and challenge stakeholders with those scenarios. A good piece of futures research has a long tail effect, from seeding the initial idea,

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contactus
We appreciate dialogue with our readers and welcome your opinions, thoughts and insights on this publication. Cheryl Chung | Cheryl_Chung@mti.gov.sg Talk to me about: Technology. Social Innovation. Visual Communication. Cheryl is a strategist with the MTIs Futures Group, where her research interests focus on technology and innovation as drivers of economic growth. Prior to this appointment, she was at the Agency for Science, Technology and Research and the Ministry of Laws Land Policy Division. Cheryl graduated from the University of Melbourne with a first-class honours degree in Economics in 2002 and is currently a part-time MPA candidate at the Lee Kuan Yew School of Public Policy. Outside work and school, Cheryl sketches regularly with Urban Sketchers Singapore and is a co-curator for TEDx Singapore, a programme of local, self-organised idea events. She is also a trained graphic facilitator and believes that visuals are often the key to understanding and remembering complex information. Lee Chor Pharn | Lee_Chor_Pharn@mti.gov.sg Talk to me about: China. Climate Weirding. Media. Chor Pharn is a senior strategist with the MTIs Futures Group. He thinks it is time that Asian voices are heard in equal measure on visualizing our common future. His research interests are the rise of Asia, climate weirding and how these ongoing dislocations will affect trade and industry flows. He is keen to use different types of media to communicate foresight powerfully. Chor Pharn has spent some time working in Shanghai PRC, and holds a Masters in Engineering degree from Cornell University. In his private time, Chor Pharn designs Peranakan bead artwork and trades Imperial Chinese robes. Ivy Ng: Ivy_Ng@mti.gov.sg Talk to me about: Economics. Finance. International Relations. Ivy is a strategist with the MTIs Futures Group. She graduated with an honors degree in Economics from NUS and has worked as a Customs Specialist in Singapore Customs. She has pursued further studies at the Lee Kuan Yew School of Public Policy (scholarship) and graduated with a dual degree in 2008: Master in Public Policy by the LKYSPP and Master in Public Administration (Specialisation in Public Policy and Management) by the London School of Economics. After graduation, Ivy worked as an Export Analyst in International Enterprise Singapore before joining the Futures Group. In her free time, Ivy enjoys photography and gym-ing.

ministryoftradeandindustrysingapore

Sim Phei Sunn | Sim_Phei_Sunn@mti.gov.sg Talk to me about: Organizational Foresight. Talent. Foresight Tools and Methodologies. Phei Sunn is a senior strategist with the MTIs Futures Group. She sees emerging issues through a human and social capital lens and imagines how those dynamics may be reorganized or disrupted. She is intrigued by how countries and organizations organize their foresight activities, and excited by new tools for thinking and innovation. Her previous appointments at the Workforce Development Agency and the Civil Service College, focused on developing Singapores workforce and public sector leadership. In her own foolhardy world, she will be scaling mountains and trying to survive ultra-marathons and ironmans. Jeffrey Tan | Jeffrey_Tan@mti.gov.sg Talk to me about: Emerging Market Enterprises. Geo-Engineering. Smart Cities. Jeffrey is a strategist with the MTIs Futures Group and his research interests focus on enterprise development in emerging markets, climate change, geo-engineering, and innovation for sustainable cities. Prior to this appointment, he was involved in business development and corporate strategy with a leading aerospace company. Jeffrey graduated from the University of Sheffield with a Bachelor degree in Mechanical Engineering (first class honors) and holds two Masters of Science in Large Scale System Engineering and Operations Research from National University of Singapore and Naval Post Graduate School respectively. Outside work, Jeffrey is an avid golfer and seasoned traveler, both on business and leisure. Wang Ning | Wang_Ning@mti.gov.sg Talk to me about: Entrepreneurship. Finance. Technology. Wang Ning is a strategist with the MTIs Futures Group. He is still new to the field of Futures, but he is very eager to learn and cant wait to jump right into Futures work. He graduated from Stanford University with a B.S. in Electrical Engineering and a M.S. in Management Science & Engineering. Wang Ning loves exploring the world, experiencing various cultures, meeting new friends and enjoying great food. Follow us at: http://futures-group.net

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http://futures-group.net
April 2011
Splicing Room Productions