Douglas Foo, the founder of Sakae Sushi, a multiple award-winning sushi chain in Singapore, spoke to TOC about the ever-evolving economic landscape in the Republic, in anticipation of his appointment as one of the nine new Nominated Members of Parliament (NMPs), which will take place next Monday (1 Oct).
Mr Foo, who is also the founder, chairman and chief executive officer of Apex-Pal International Ltd., a public listed food and beverage company that owns Sakae Sushi, believes that in the era of “the new economy,” it is important for enterprises and the government to collaborate in coming up with solutions not only for the present, but also for the future.
He also emphasised the role of individuals, namely workers, in ensuring the robustness of this new economy, which is being done and will continue to be done through the upgrading of their professional and technical skills.
Mr Foo suggests that in today’s world, sheer productivity is insufficient in itself, and that the growth of innovation — particularly in terms of systems, technologies, and labour — will become the backbone of a resilient economy.
He also encouraged individuals to be aware of their passions and capabilities in assessing their potential contributions to Singapore’s ever-competitive workforce.
TOC: Singapore’s economic strategy has largely been dependent on foreign investment, such as the entry of multinational companies (MNCs) into the Republic. What is your view of small and medium enterprises (SMEs) playing second fiddle to MNCs? What additional measures can the Singapore government take to assist the growth of SMEs in the face of strong competition from MNCs?
DF: I think there have been plenty of existing initiatives on that front for many years – we even have a person looking after entrepreneurship – and that is important, because entrepreneurship is essentially [the] building of our future enterprises.
Today, we are [in a] much better [economic position] compared to many years back, and if you ask me, I am highly confident that, very soon, we will start to see some more opportunities where some of our enterprises will actually undertake even bigger challenges going forward.
So the start of our economy was getting direct investments in here, training the workforce to be ready … It has brought us here today, but going forward, you see the shift now – it is about building intellectual property, it is about building enterprises that are ready to undertake far larger projects and things that we could do by ourselves. And that has to be done in a collaborative manner.
For example, if you create a game on a digital platform, is that manufacturing? [pauses]
TOC: Traditionally saying, no.
DF: Exactly. Remember, previously when you wanted to play a game, you needed to buy an Xbox, a PSP box, a Nintendo box… Then you need to buy a cartridge. These boxes, these cartridges are manufactured somewhere. So they are a part of the whole manufacturing supply chain.
We used to be called the Singapore Manufacturers’ Federation. About 6 years ago, we evolved into the Singapore Manufacturing Federation. We get the whole supply chain of manufacturing … The old way of having your raw materials on the left-hand side and the finished goods on the right-hand side is gone.
Today, many of your mobile devices – where are they made? Different parts are made in different places. And ASEAN [countries] have got a good opportunity [for this manufacturing style] because they are at different levels of development. Some places might have a competitive edge in developing or manufacturing some of these parts.
This is what we essentially label as the “Business Model Innovation” where you relook your whole business model to make it much more competitive and collaborative. When you want to manufacture something, do you need a factory for that? No, you don’t. You work with somebody who has done that.
You look at all of these mobile devices that you are using and holding. These guys don’t manufacture the devices themselves. They get different parts that have competitive advantage, they keep the IP [intellectual property] and R&D [research and development], and they go out [into the consumer market] as a brand. So it’s about brand-building, going forward.
Last year, we actually had a professor who shared with us this thinking – about the definition, and also the new world of manufacturing … This game that you have created in the digital space – it brings the same enjoyment as the one where you bought a box and put a cartridge in. You still play the same game. The outcome is the same. But now, it’s digital. And this digital game now can be played by thousands, hundreds of thousands, or even millions of people around the world, and this could be created here. Therein lies the new world of manufacturing.
So instead of going out there and saying, “Look, we are an 86-year-old organisation,” we are going to tell you, “This is the new definition. We went on a journey of having a conversation of the future of manufacturing.” And a key portion of the stakeholders that we would like to garner interest from are the young people, because if the young people do not want to join the manufacturing sector, then what will be the future of the manufacturing sector?
Thus, we have started Transformative Internships, an Incubation Hub, and moving towards offering manufacturing as a service to optimise the resources that are available in this region.
TOC: On foreign worker quota and levies, do you think the recent changes have been putting immense pressure on SMEs? Should the government hold back on further changes, or even roll back the restrictions placed?
DF: In my humble opinion, I think using price as a mechanism to undercut is usually not a sustainable model. You can enter [the competitive market], but if that is the only advantage you have, there will be someone out there who will go lower. So what do you do next? Do you go lower? And where do you go? Do you go down to zero, or you go minus?
If you lift such levies for one industry, every other industry will say, “I’m very important as well; you need to lift it for me.” So where do you cut it? It is a decision that has to be made on what the future of this industry will be. How is it transforming to be “future-ready”? That is a more essential question than simply looking at the current state. How will this impact tomorrow?
I think it has to be a bit longer-term in terms of how the enterprise wants to do it. In fact, if you can prove to the Ministry of Manpower that you are able to have a whole blueprint … Now you give me a little bit more [quota], but it is to help me transit into a future where I will be much more efficient with less [resources]. They are ready to listen; there is a scheme for that.
TOC: Do you believe that it is slowly for the market to adjust itself? You give a certain condition, and usually the ones who can adjust will stay, while the ones who cannot, they either have to learn to adjust or be left out?
DF: I think, of course, we try and help everybody to move forward and to transit over [into the new economy]. But you know that during transitions, there will always be some people who will need to be left out, and they need to find their foothold somehow in this new world [of manufacturing]. So that’s why we are trying to help different enterprises to do that.
Initially when we tried to start the conversation about Business Model Innovation, it was a very difficult conversation, because SMEs are talking about “next week, I’ve got an order, I need to fulfill it.” Five years? Naw, come on. Next year? Come on. They’re not even ready to think about what’s going to be the next [step].
And that is where the Trade Association Chambers can act and have the ecosystem to go in to support … So it’s not really hand-holding, but to actually use different mechanisms and come up with different models of help. It can’t be a one-size-fits-all.
TOC: Productivity appears to have not increased significantly over the years. In your view, are Singapore companies inefficient, or are there any other underlying issues that might be causing the lack of productivity?
DF: Productivity has got to be linked to innovation. So over at SMF, we have got the Singapore Innovation Productivity Institute. Notice that it’s Innovation Productivity, not Productivity Innovation – because productivity is about how you carry out the process, how to maximise or produce incremental output using the same resources [that you have], to get a better leverage on that … but at the end of the day, there is only that much.
Innovation is when you look at the entire supply chain and utilise resources that you do not have, and in a very collaborative manner, you are going to be right ahead, way ahead in terms of how the rest of the enterprises are moving. So the innovation part is far more important than just focusing on the productivity part, and that is an area that we have been pushing towards in the last 5-6 years on the SMF Business Model Innovation.
TOC: Do you think cheap labour is a deterrent or hindrance against SMEs in seeking greater productivity?
DF: Well, when you start having readily available labour [labour that does not require reskilling or retraining], that will not be an impetus for you to be innovative, because [they] can [simply] get it done. But can they sustain? [smiles] So the sustainability is important. There is always a tradeoff, and there is always a social cost. That can only get us so far. But if you want to bring us to the next level, it has to be innovation that is going to kick you up and give you that leap.
TOC: The difference between the job market then and now is that there seems to be a lack of job security now. In the past – it will be likely for people working for SMEs to stay there for 5-10 years, or even 20-30 years for the more senior generation – but there doesn’t seem to be such permanence with today’s generation, in that there is no guarantee that workers today will not be subjected to retrenchment or reshuffling. How would you suggest that we address the anxiety that today’s workforce face regarding the lack of job security in today’s market?
DF: I think this is where one has to really subscribe to lifelong learning and see how the world is evolving so rapidly, because it’s not going to wait.
The old model that we spoke about – it’s gone. That’s a fact … and we need to face the fact at the front. We can’t run away from that, and that’s real.
So, once you understand, and you start to look at [certain] areas … For example, in the Singapore Manufacturing Federation, we’ve got the Practicing Management Consultant Programme here. We’ve got a unit called Singapore Practicing Management Consultant, and we essentially certify consultants. Because if doctors, lawyers, accountants are certified, why not consultants?
So when the consultants are certified by our body, when they go out there and do work for enterprises, every two years they’ve got to keep it current. It’s just like a pilot who needs to fly a plane – you have to keep your “currency”. That’s what we are doing.
Some of this knowledge that people have are very valuable to help enterprises both locally, and even ASEAN, because ASEAN is growing very rapidly. It’s not very far out … Recent articles have been talking about how the youth are not looking at ASEAN – every time they talk about internships or exchange programmes, they’ll be talking about the usual places [presumably European countries, North American countries, and East Asian countries such as Japan and South Korea]. But ASEAN is now the 6th – moving from 7th recently – and going on to become the 4th largest economy in the world by 2030! Thus, this focus should be within ASEAN.
In fact, the Singapore Manufacturing Federation has been around for 86 years. So we have seen how Singapore had car manufacturing, household appliances, evolving into today’s high value manufacturing. And manufacturing still accounts for about 20 per cent of our GDP [Gross Domestic Product]. How do we do that? We need to look at the whole ASEAN [region] as a manufacturing base and its own manufacturing hub.
TOC: There seems to be a trend in the Singapore employment scene dubbed as the “gig-economy” where young individuals in particular are shifting away from full-time jobs to contract-based jobs. What is your opinion regarding this “gig-economy,” especially with the apparent lack of job security, and do you have any concerns regarding this growing trend?
DF: The new economy … It’s going to be very different from what we are seeing today. What we are seeing today is a transition phase [from what we have seen] into the new economy … If you look at 20-30 years ago – how things worked, how things were done – they are all changing very rapidly. And [now], the pace and rate of change is going to be even faster.
My humble view on that [the “gig-economy”]? It’s going to be a norm.
In the new economy, everything is moving. There are many more moving parts ever [now] than we have ever encountered [before] in history …
That is why the workforce, the enterprises, and the policymakers all have to be equally agile. I am a firm believer in tripartitism, because that [the economic tripartite structure linking the workforce, enterprises, and government together] has brought us to where we are today.
TOC: The main complaint regarding Singapore’s tripartite economic structure is that it is more of the enterprises and the government working together, and the workers that are supposed to be represented by the union are not so well-represented, in a sense. Do you think that such is the case, or do you think that the workers are properly represented?
DF: I think that kind of comment is superficial, because if you understand how the union is structured, you will know that there are many in-depth studies [done] and a lot of thought [being put] behind making sure that the workers’ interests are protected. At the same time, the employers’ interests have to be protected as well.
Sometimes you see that these are the opposite sides of a needle, right? But how do you braid them together? Well, look through our economic cycles. When we had a downturn, times were tough. What happened? Workers tightened their belts, enterprises appreciate [their efforts], and they continued to ride through those difficult times … It’s better to have a job with an undercut and to ride through, right?
So afterwards when the cycles come up, and things are much better, the enterprises and employers are encouraged to reward the workforce, so that they will remember that they have rode through the difficult times.
TOC: In the 80s and 90s, the SMEs do that, where they treated workers like family, which is why they went through thick and thin with the enterprises. But in the new economy, workers are digits – what if, slowly, employees find that there there is no so-called appreciation by the companies? And they will expect more, as in, “You have to reward me at this point, or else I will have no guarantee that you will reward me in the future.”
DF: That is exactly why we need to have agility in all of the different segments, whether it is the workforce or in the enterprises, because that was the old model that we were discussing … But tomorrow, I could be working at Company A, I could be doing legal work, I could be doing accounting work … Does it prevent me from going to Company B in the afternoon? It doesn’t.
TOC: If there is a conflict of interest, then of course.
DF: In the future, everything will be so professional that when I do work for Company A, I’m not going to bring everything over to Company B, because in the new social circuit, all of these people will get to know.
TOC: I agree, but the current legal framework does not allow that.
DF: It will evolve to allow people to do that. And so, at the end of the day, am I a worker, or am I an employer? I’m doing work for this company … There is going to be a blurring of all of this, over time. And that is where the agility has to come through.
How do we all come together as one to build on this foundation? That is essentially [the question]. So it is no longer “Okay, you are on the worker’s side, I am on the employee’s side.” No, we are all in this together. This is the country that we are in, this is the economy that we need to build, and the future is in our hands.