6 September 2002

SPEECH BY MR THARMAN SHANMUGARATNAM, SENIOR MINISTER OF STATE FOR TRADE AND INDUSTRY & EDUCATION AT THE TAN KAH KEE FOUNDATION 20TH ANNIVERSARY PUBLIC SEMINAR ON "ENTREPRENEURSHIP AND EDUCATION:
THE TAN KAH KEE SPIRIT IN TODAY"
ON 6 SEP 2002 AT 9:00 AM AT THE MANDARIN COURT, MANDARIN HOTEL

1. It is my pleasure to be here this morning at the Tan Kah Kee Foundation's 20th Anniversary Public Seminar. I congratulate the Foundation for its efforts over these past 20 years to promote education and culture. You carry on the philanthropic work that Tan Kah Kee (1874-1961) began more than a century ago. Through your efforts, you have kept his legacy very much alive.

2. The subject of today's Public Seminar, "Entrepreneurship and Education", brings together two major preoccupations in Tan Kah Kee's extraordinary life. The history of how he grew his business and created wealth is a story of seizing opportunities, acquiring detailed knowledge of each area he ventured into and, above all, of having great confidence and faith in himself - from the time he came to Singapore at age 16 to apprentice in his father's rice business, set up on his own after that business failed, expanded into pineapple canning and planting, and then in 1906 became one of the early Singapore pioneers in the rubber plantations and in manufacturing, going on to build a diversified industrial empire employing 32,000 people at its peak in 1925, giving him his reputation as the "Henry Ford of Malaya".

3. Tan Kah Kee's tireless commitment to education, in order to lift up the community, is equally inspiring. In Singapore, he founded, through the Hokkien Huay Kuan that he led, 5 primary and secondary schools¹ and donated generously to many others. He established several schools in his home village of Jimei (Chip Bee) in Fujian - the first of these in 1894, at the age of 21. In 1921, he founded Xiamen (Amoy) University, the first university in China to be set up by an Overseas Chinese. Besides making a great personal donation, Tan Kah Kee travelled across South East Asia, from Myanmar (then Burma) to the Indonesian archipelago, from port to port, persuading wealthy overseas Chinese to contribute to setting up the University. He records with disappointment in his memoirs how several of these wealthy gentlemen were unwilling to help, offering all manner of excuses - even those who did not have sons to carry on the family business. His eventual success in setting up the university was itself a feat of social entrepreneurship.

4. We cannot recreate the unsettled circumstances that motivated the pioneers like Tan Kah Kee to set out and create wealth in virgin economies and new industries, and to want to uplift their communities. But the spirit of Tan Kah Kee, a willingness to venture into areas that are new and untested, and a desire to contribute to something much larger than oneself, remains relevant to all of us today, and to future generations of Singaporeans.

5. We have entered the knowledge-based economy. Economic growth among the higher income Asian countries like Singapore will increasingly be driven by the ability to innovate rather than the ability to absorb and adapt advances made elsewhere and to make products more efficiently. In other words, economic growth will be innovation-driven rather than efficiency-driven. The countries that will succeed will be those that build and sustain vibrant innovation systems - the institutions, networks and cultures that support continuous innovation.

6. There will always be an element of serendipity in successful innovation, reflecting the flux and unpredictability of the markets. But nations that build strong innovation systems will increase the chances of developing ideas that achieve commercial success. They will also make it onto the fast lanes of the international flow of research and talent.

7. We have to do what it takes to develop a vibrant system of innovation, and stay in the global, knowledge-based competition. There are at least three dimensions to this.

8. First, we need skills, knowledge and creativity of a high order. Innovative economies depend on well educated manpower and advanced research capabilities. Without these, we will not be able to create new and differentiated products, develop new business models or manage complex international supply chains.

9. Second, markets have to be allowed to work. Intellectual property protection, competitive domestic markets and openess to new entrants enhance innovation. New ideas with commercial potential must also have access to risk capital. There must be an adequate supply of venture capital, and banks have to develop the skills and risk management systems needed for lending to young companies with little collateral.

10. Third, an innovative economy needs a culture that respects and encourages entrepreneurship. High levels of knowledge and management skills alone will not produce the technological and organisational innovations that lead to economic gains without entrepreneurs, and a spirit of entrepreneurship that extends across society. Without entrepreneurship, value will not be created from knowledge.

11. Of these three dimensions needed for an innovative economy - skills and research capabilities, competitive markets governed by rule of law, and an entrepreneurial culture, our biggest shortfall in Singapore is in entrepreneurship. In the well known Global Entrepreneurship Monitor 2001 Executive Report, Singapore was ranked 27th out of the 29 countries studied in terms of the overall level of entrepreneurial activity.

12. By common observation, Singaporeans are averse to taking risks. This is especially so among the more academically successful. This is however not surprising. The success of our past economic strategies, beginning with the jumpstarting of the economy in the 1960s with policies to attract MNCs and set up GLCs, through to the upgrading of capabilities in the 1990s and development of new clusters of international firms in manufacturing and services, has given successive generations of graduates a wealth of opportunities to pursue well-paid, stable careers in government, the MNCs and other large corporations, and the supporting professions.

13. Some of our most successful local companies came about because of spin-offs from the MNCs, as local engineers launched their own shops after gaining experience with the MNCs. But a striking feature of the business landscape is the large number of entrepreneurs who got to where they are without a high level of formal education. A disproportionate number never made it to university, and some of our most successful entrepreneurs did not go beyond a school education. Many say they went into business because they did not have the attractive career options that a university education would have given, and because they had little to lose if they failed.

14. However, the success of past economic strategies in generating good, well-paying jobs is not the only reason why well educated Singaporeans have not taken naturally to business. Another reason is the traditions and institutions we inherited. The attitudes of successive generations of parents, and what they wish for their children, have been shaped by the combination of two legacies - the education system we inherited from the British, and a long-standing East Asian tradition that placed scholarship above all other endeavours. It was a potent combination, that placed high regard on academic success as a goal in its own right, and gave little respect to alternative routes to success in life.

15. The British system of education was geared to producing an intellectual elite that would form their governing class - Westminster, Whitehall and professional jobs in the City. All that mattered to the British was your "O"s and "A"s, and most important of all which school you went to and which university you went to. It was an academic bias, shaped by the needs of the Empire, and by an encrusted social order. They looked down on the commercial, technical and entrepreneurial routes to success. Their educational structure and ethos reflected this academic bias, even as pressure built up from the 1960s to open up more places for a tertiary education. They converted their polytechnics into universities, shifted from the technical to the academic, and introduced new academic degrees in subjects like sports studies to allow more people to make it to university. What mattered was getting people university.

16. Even business schools, long a feature of top North American universities, were introduced to the Oxbridge universities only in the 1990s. The British have been trying to develop a more positive social attitudes towards entrepreneurship, but old attitudes have been difficult to shake off. Well after the Thatcherite revolution, a Blair government poll found a majority of the British public having a weak regard for entrepreneurs. People who go into business were variously described as "sharpies", "exploiters" and "freebooters".

17. We have made many changes to the education system since we inherited it from the British. In particular, we have given special emphasis and focus to technical and engineering education, through our schools, ITEs, the polytechnics and universities. The education system recognises different abilities and talents, and encourages different routes to success. However, some old social attitudes about the paths to education and success have been slow to change.

18. These attitudes are deeply rooted in East Asian tradition of reverence for scholarship. Across East Asian cultures, parents aspire for their children to go as far possible up the educational hierarchy, with a university degree being the pinnacle of achievement. Even in China today, despite the monetary rewards from private enterprise vastly exceeding the pay of government officials, I am told that every parent's first wish is for their child to succeed scholastically and get a government job. Competition to get into a good provincial university is intense. Getting into Beida or Qinghua, or if he can't, then Shanghai Jiaotong or Fudan, is the ultimate dream.

19. Not all of this traditional East Asian culture of reverence for scholarship runs counter to entrepreneurship. Scholars have observed that the traditional values like perseverance and diligence also serve well in entrepreneurship. However, the East Asian tradition has not placed emphasis on other values that are critical to entrepreneurship, such as individual initiative, creativity and innovation. East Asian scholarship has traditionally placed emphasis on the accumulation of knowledge and rigorous analysis of problems, rather than experimentation and exploration beyond the curriculum, and beyond what is already known.

20. There is some simplification in these generalisations, and they hold true much less now than even a decade ago. But they do explain why East Asian universities have collectively lagged behind those in the West, and especially their counterparts in the US. Educationists across East Asia are studying how to reform their systems, for this reason.

21. A new generation of Asian entrepreneurs is however emerging in the knowledge-based industries, with characteristics quite different from the old. They are highly educated, often having done undergraduate or graduate work in the US before returning home. Numerous companies are being set up by Chinese returnees in the high technology districts in China, such as Beijing's Zhongguancun Science Park and Shanghai's Zhangjiang Hi-Tech Park. The same has been happening in Bangalore, Hyderabad and other emerging knowledge hubs in India. The returning generation brings along with it a familiarity with US entrepreneurial practices, and technological expertise. Many have experienced working in US labs or start-ups. They carry with them some of the American spirit of seeing failure as a pathway to success, and even American social habits. But they are quite evidently Asian at the core - the cultural DNA has not changed. They want their children to grow up in Asia, and they want to contribute to their own societies.

22. It will take a few generations for this new breed of entrepreneurs to shape a new East Asian business culture. But they are providing the seeds of a new cross-cultural model of entrepreneurship in Asia.

23. The changes are taking place within East Asian societies, even among the majority who never went abroad. Within China, recent studies have noted a reshaping of values across recent generations. The generation aged below 40, who grew up mostly in the period of social reform that began in 1977, is distinctly more individualistic than previous generations. While they are not forsaking Confucian values, they are less collectivistic and more likely to take risks in the pursuit of profits.

24. Singapore too is changing. More of our university graduates are now venturing into business, either on their own or with groups of friends. Their numbers are not large, but they are growing. They are providing new role models for the young, and the trend feeds on itself. In time, we will see more of our young venture out on their own. It will take shape a new economic culture.

a) Richard Lai, ex-scholar (postgraduate studies at MIT in the US); former co-head of Bain & Company's Financial Services Practice in Asia. He set up dollarDEX, a financial products and services portal that has won several awards and nominations.

b) Anil K Ratty, an NUS graduate with a PhD in Biochemistry, a former research affiliate at the Institute of Molecular and Cell Biology and former Regional Director of the Biotech Business Unit of the Defense Medical Research Institute. He founded Chakra Biotech, which uses transgenic animal models for drug discovery².

c) Rosemary Tan, who has a PhD in molecular immunology from NUS, former Chief Scientific Officer/Director at Amdon Consulting Pte Ltd. Founder and CEO of Genecet Biotechnologies, a life sciences educational kit provider, selling bioscience-related products to academic institutions to complement academic curricula and as stand-alone project work .

d) Dr Choon How Lau, formerly with National Semiconductor, who with Dr Zheng Zheng, formerly a researcher at A*STAR's Institute of Microelectronics (IME), founded Intelligent Micro Devices, a fabless design and application company that provides value-added intelligent module sensors and total solutions to customers in the integrated circuit industry. Although around for less than a year, they have obtained major customers like Matsushita Electrical Works Ltd and SUNX Ltd in Japan.

26. Most people would agree that the basic ingredients of entrepreneurship lie in personality traits, such as a desire to achieve and make a difference, and the tenacity to persevere in the face of failure. These are habits of mind, either intrinsic or ingrained by experience and circumstance. Very little of this can be taught in any formal fashion. But what we do know is that entrepreneurship can be brought to the surface and nurtured by the environment, just as it can be thwarted. A favourable environment makes it much less likely for entrepreneurial talent to stay latent.

27. Our approach to grooming an entrepreneurial spirit in our young is reflected in two dimensions of the school experience.

28. First, through the school and JC curriculum, we are seeking to develop students who can think, explore and experiment, independently and creatively. We have infused critical thinking skills across the curriculum and in revised assessment methods. To give students an additional platform to develop thinking skills, project work has been introduced in the schools. We are shifting the focus away from content learning towards the imparting of skills that will support lifelong self-learning. Such skills are key to the innovation economy.

29. Second, the non-academic curriculum plays a critical role in nurturing the skills and habits required for success in the business world: being a good team player, being willing to take a risk, and showing determination and resolve in the face of setbacks.

30. Some of the specific skills required for entrepreneurship can be taught, even if we cannot make entrepreneurs through education. These skills include market opportunity analysis, hedging risks, raising funds, networking, and negotiating with investors. Educational institutions, particularly tertiary institutions, can play a significant in nurturing these skills and giving students exposure and opportunity to practice them. Our universities have already initiated Education and Training programmes for Entrepreneurship, imparting basic skills and familiarity with the entrepreneurial processes. A number of our schools have also set up Enterprise Clubs, giving students the experience of running minimarkets and other business activities.

31. Not many students will actually go on to become entrepreneurs. Even in the US, less than 15% of adults are involved in owning businesses. Neither can we identify and groom future entrepreneurs in schools. But we can try and ensure that innovative talents are not stifled, and give room for everyone to develop a spirit of experimentation and a willingness to take initiative and try new approaches in whatever they do. Everyone should be groomed to be part of an innovative society, and have a bit of the entrepreneurial spirit in them.

32. Creating an entrepreneurial spirit is not about creating individualists, and not just about economic growth. For Tan Kah Kee, and many other pioneers like him, entrepreneurship was a profoundly social undertaking. It was not just about creating wealth, but about improving society and leaving behind a worthwhile contribution for future generations. It is this true spirit of entrepreneurship - a desire to contribute to something much larger than ourselves - that we have to recreate in our next phase of development as a society.

33. In closing, let me congratulate the Tan Kah Kee Foundation once more for the good work that it has done in the past 20 years in promoting education and culture in Singapore, and for keeping alive the rich legacy of Tan Kah Kee. Thank you.

1. 2 secondary schools: Chinese High School and Nan Chiau High School; and 3 primary schools: Tao Nan School, Ai Tong School and Chongfu Primary School.