S UPPLY S IDE OF I NNOVATION P OLICY

4.1 Supply Side of Innovation Policy

The main differences in supply-side innovation policy between Taiwan and Singapore are public enterprise and information policy (Table 2). Singapore has many sovereign funds that directly or indirectly control key industry, for the policy is still a debate in Taiwan. In information item, Singaporean government built iN2015 master plan while Taiwanese government also posts Intelligent Taiwan project under i-Taiwan 12 projects. Singaporean government plans to build information and communication industry (infocomm) as a major engine of economic growth and to be the lead country in the world that harnessing infocomm to add value to the economy and society. Taiwanese government emphasizes on creating a reliable infrastructure that benefit everyone on the island and create more competitiveness to the country. Besides, the Singapore Government provides more expenditure on R&D budget than Taiwan Government (See Table 3).

Table 2

Comparison of Supply-Side Policies between Taiwan and Singapore

Singapore Taiwan

Public Enterprise

• Several giant holdings companies

• Commanding state-owned enterprises involve directly or indirectly in technology and science

• Engaged in banking, investment, real estate, land, infocomm, biomedical and other advanced industries

• Five State-Owned Enterprises

• Traditional manufacturer

• R&D activities that focus on product development and basic science research

Network and Entrepreneurship

• Listed in national economic plan

• Social and cultural side reform

• Innovation Voucher Scheme

• Incubator Development Programme

• Innovation Alliances

• Incubator Establishment

• Setting up of VC Associations

Scientific and technical

• Four major clusters

• The Agency for Science, Technology and Research (A*STAR)

• Spearhead on biomedical and infocomm industry

• Industry and Research Conferences

• Support of University Research

• Establishment of Research Institutes

• University Research Grants

Education

• Autonomy of universities

• Enhance entrepreneurship education in campus

• Government Training

• Development Plan for World Class Universities and Research Centers of Excellence Development

Information

• iN2015 master plan

• Infocomm Development Authority Of Singapore (IDA) develops policies to ensure the growth of an innovative and competitive Infocomm sector

• Enhance linkage between national institutes and businesses

• Intelligent Taiwan project within i-Taiwan 12 projects

Source: EDB, Singapore

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Table 3.

R&D Expenditure by Source of Funds

2006 2007

Business Government

Other National

Source

Abroad Business Government

Other

Source: National Science Council, Taiwan

4.1.1 Taiwan

In aspect of public enterprise, the five Taiwanese state-owned enterprises were established to meet strategic and tactical needs of the government. The mission of these state-owned businesses are to protect certain industries, by constructing of large scale business through direct operation of upstream, heavy industry which the private sector was unable or unwilling to undertake (Nolan &

Wang, 1999). Taiwanese government is now trying to pick up their competitiveness by privatization (Council for Economic Planning and Development, Taiwan). But this has still yet to materialize.

In the item of entrepreneurship, Taiwanese government adopted the tool of incubator, FDI and deregulation to boost entrepreneurship (Wu & Huang, 2003). Since 1996, the Small and Medium Enterprise Administration (SMEA) of Taiwan has continued to promote the establishment of incubators through the use of financial support available from the Small and Medium Enterprise Development Fund for office equipment, personnel, and related costs. After five years of continuous effort, the SMEA has promoted 63 incubators and attracted around 900 firms to move into these incubators (Tsai and Wang, 2005). The inward FDI also helps to establish plenty SMEs in Taiwan. Those MNCs not only introduce advanced technology to the industry, but also create a center-satellite manufacturing model to shape a supply chain. Taiwan’s government promulgated several laws to encourage nationals to be involved in business affairs through investment, such as the Statute for Encouragement of Investment promulgated in 1960. In addition, the Statute for Establishment and Management of Export Processing Zones (1965) and the Statute for Establishment and Management of Science-Based Industrial Parks (1979) created the two most significant areas for Taiwan’s industrial development, Export Processing Zones (EPZ) and the Hsinchu Science-based Industrial Park (HSIP). Taiwan’s venture capital (VC) has made a considerable contribution to the growth of Small and Medium-Sized Enterprises (SMEs), particularly those in the emerging industries, and the government has set up many VC associations and offered financial support to help investors (Tsai and Wang, 2005). In addition,

According to the Taiwanese strategies and policies announced in 2007-2010, we can see the role of government as a direct provider (as opposed to facilitator) is emphasized. Examples are abundant: the establishment of Industrial Technology Research Institute (ITRI), Technological Information Center, and National Science Council (NSC), which conduct research on a large scale and undertake studies into the feasibility of industrializing new technology. In Taiwan, from the late 1980s through the early 1990s, in order to promote industrial upgrading, the government directed a considerable number of innovation alliances in the areas of notebook computers, high-definition televisions, fax and communications equipment, and so on, working through research institutions such as the ITRI. The most successful of these was the Notebook PC Joint Development Alliance (Tsai and Wang, 2005).

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Higher education system in Taiwan has some problems like: rapid higher education expansion on the allocation, low education quality, shortage of funding and staff (Development Plan for World Class Universities and Research Centers of Excellence, 2009). For solving these problems, Taiwanese government constructs education such as “the Program to Move toward Top Universities” and “Development Plan for World Class Universities and Research Centers of Excellence “. The plans are aimed to raise competitiveness of higher education and formulate standards for teaching and research faculty and facilities with reference to world class universities.

Taiwanese government is focused on providing the tools of innovation, i.e., technically educated students, government funded research, training, and information. One criticism of the approach by Shyu (2006), however, is that the needs of industry are not always served by the supply policy system; this is the result of the separation of education, industry, and government and to the political nature of such a government focused system.

4.1.2 Singapore

Public enterprises in Singapore, i.e. Government of Singapore Investment Corp (GIC), Temasek Holdings, are established by the government to control or monopoly several strategic industries. Over time, the statutory boards not only became major actors in the economy but also formed subsidiary companies to add flexibility to their own operations. These subsidiaries, i.e.

Jurong Town Corp., have great contribution on attracting corporate investment by offering fund and the promise of cooperation from government departments and to ensure that the corporations transferred proprietary technology and training to Singapore.

In Singapore, entrepreneurship is listed as a strategic subjective of economic development. The policy makers aim at create a pro-entrepreneurship environment in Singapore, from social culture to education to business friendly environment, they seek an entrepreneurship-driven economy.

There is no shortage of government’s aids on opening a new business. The “Startup EnterprisE Development Scheme (SEEDS)” in Singapore, a $50 million fund, was launched on 1st Oct 2001 with the aim of providing equity financing for start-ups in the seed stage of enterprise formation.

The Innovation Voucher Scheme (IVS) connects public Knowledge Institutions (KI) with SMEs to encourage SMEs in adopting technology to develop their innovative ideas. The Incubator Development Program provides various financial or non-financial services that an entrepreneur may need.

Singapore government has already successfully built up Jurong Town Science Park by attracting inward FDI. The government creates an environment by establishing specialized infrastructure, a climate attractive to knowledge workers, and regulatory policies that protect IP and support risk-taking. In addition to excellent general infrastructure (efficient transportation, high speed internet network, a safe and clean city), Singapore has gone one step further by building more science parks (Tuas Biomedical Park, One-North Science Habitat), city within a city (the Biopolis), and clusters (Communication and Media) for being in the frontier of technology. They specifically caters to the unique research needs of advance technology and new business model to create value. Opening its first phase in June 2003, the Biopolis is a S$300 million project with 190 hectares near National University of Singapore. Besides having A*STAR’s biomedical research institutes as the anchor tenants, Biopolis is intended to attract biomedical MNCs, start-ups, and support services such as a cluster. Now there are four major clusters created under the Singapore Industry 21 Plan under the initiative of the Singapore Economic Development Board (See Table 4). Singapore’s specialized industrial parks are designed to facilitate the development of specific technological areas for the different industry

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clusters. Singaporean government now strategically fosters specific industries such as biomedical, information and communication, media in these clusters.

Table 4.

Main Science Parks in Singapore

Location Provision

Singapore Science Park Local and multinational R&D organizations Agro-Bio Park

Agro-biotechnology companies: involved in aquaculture, crop and livestock production, micropropagation and tissue culture, genetic engineering, animal vaccines

Tuas Pharma Zone Pharmaceutical, healthcare and biotechnology companies Jurong Island Petrochemical and chemical industries

Source: Singapore Economic Development Board

The country’s competitiveness is propped up by a strong focus on education, providing highly skilled individuals for the workforce (GCR, 2009-2010). Quality of higher education system and quality of math and science education is the best of the world in Singapore (GCR, 2009-2010).

The National University of Singapore is not only the leading academic organization in higher education; it is also a decisive player in university-industry collaboration on applied R&D. It provides a campus location for regionally outstanding research institutes, such as the Institute for Systems Science, the Institute for Molecular and Cell Biology and the Institute for Microelectronics, pointing to a research focus on information and communication technology (ICT), microelectronics as well as life sciences. These institutes co-operate with multinational enterprises and international research partners, covering a range from contract research to mutual agreements of understanding (National University of Singapore, 1996). The second major academic player is Nanyang Technological University with research institutes like the Advanced Materials Research Centre and the Gintic Institute of Manufacturing Technology. Its strategic outlook of R&D activities exhibits an even more applied orientation, closer to the innovation segment of product improvement (Nanyang Technological University, 1996). This assessment holds also for Singapore’s four Polytechnics, which are engaged in the promotion of R&D activities on a minor scale (Ebner, 2004). “Singapore Education” program was officially launched in Aug 2003. This will be the umbrella under which Economic Development Board (EDB) will spearhead the promotion of Singapore as an Education Hub. The Singapore Quality Class (SQC) for Private Educational Organisations (PEOs) Award was also launched in Feb 2003 to provide quality assurance for PEOs.

These state universities are being given greater autonomy to be competitive in the fast-emerging educational services sector of Singapore. They are now adding—to their traditional roles of training scientific, engineering and managerial manpower—such new roles as forming and incubating university spin-off firms since its inception in 1992, while the Innovation and Technology Transfer Office (ITTO) at Nanyang Technological University (NTU) is currently incubating numerous high-tech start-ups.

Information and communication (Infocomm) is a very important industry for Singaporean government. The government has established the Ministry of Information, Communication and Arts (MICA) to develop a comprehensive infrastructure and manpower, then use infocomm factors toboost the economy. In the 10-year master of infocomm industry (iN2015), the city state aims to become “An intelligent nation, a global city, powered by infocomm”. The infrastructure

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and manpower of infocomm will not only speed up economic growth, but also sets the businesses in Singapore apart from others. It will help to make ideas and creativity happen and builds brands to fostergrowth and expands and attract more global talent and expertise (iN2015). The government provides enterprises rich information content as well. Through public research service in JCT, IT database, library, consulting service, the enterprises can access the information they need.