International Productivity Conference 2001
2-4 October 2001, Shangri-La Hotel, Singapore
Keynote Address
by Mr Lim Hng Kiang,
Minister for Health, Second Minister for Finance and
Chairman of Singapore's National Innovation
Council
Mr
Lim Boon Heng, Chairman, Asian Productivity Organisation
Mr Takashi Tajima, Secretary-General, APO
Distinguished Guests, Ladies and Gentlemen
Good morning
I am pleased to be here this morning at this conference,
which marks the 40th anniversary of the Asian Productivity
Organization (APO), and the 20th anniversary of Singapore's
Productivity Movement. I understand that there are
more than 300 foreign participants from the Asia Pacific
region who have come to Singapore especially for this
event. I wish all of you a pleasant stay in Singapore.
The conference theme, "Enhancing Competitiveness
through People and Value Creation," is timely
and relevant to all APO members. I am told that through
your deliberations, APO hopes that a new framework
and direction for the productivity movement in the
21th century can be worked out.
Growth of Asian Economies over 40 years
In the last 40 years, the Asian economies have experienced
high growth interposed by several episodes of downturns.
But overall, they have done well. Asia ex-Japan experienced
economic growth which averaged 6% per year' over the
past 40 years. In most countries, rapid economic growth
helped to significantly reduce poverty and raise the
standard of living and quality of life for wide segments
of the population. In China, for instance, its economic
growth of 9.6%2 per annum since 1978 has made a vast
difference to the society. According to the World
Bank, China was among the world's poorest countries
in 1978, with 80% of the population having incomes
of less than US$l a day and only a third of all the
adults being able to read or write. Ten years later,
only about 12% of the population lived with incomes
of less than US$l a day and the illiteracy rate was
down to 7%.
The rate of growth is even more phenomenal among
the eight founding members of the APO -- Japan, Korea,
Taiwan, the Philippines, Thailand, India, Pakistan
and Nepal. In 1961, the year that APO was established,
the GDP per capita of the eight economies ranged from
US$70 to US$500. Today, the range is from US$1,200
to US$24,000.
Asia's economic growth in the past 40 years can be
attributed to a combination of economic, social and
political factors. On the economic front, three key
factors have been critical.
First, an abundance of hard-working labor resources;
Second, the availability of capital, both domestic
savings and foreign investments, and;
Third, a strong focus on productivity.
Productivity growth, in particular, is a crucial
driver of economic growth. The fastest-growing economies
in Asia are those with the greatest productivity improvements.
China's post-1978 growth was propelled by productivity.
The 1978 market-oriented reforms raised economic efficiency
and helped generate productivity increases of 3.9%
per year during 1979-94, compared to only 1% before
1978. This resulted in faster economic growth, of
which more than 50% was accounted for by productivity.
Besides
China, the newly industrialized economies (NIEs) were
also able to sustain economic growth rates averaging
about 9% per year during 1971-90, higher than those
of the rest of Asia. Despite the Asian financial crisis
and the weakening of the global economy in the 1990s,
the NIEs managed to grow by 6% per year in the last
10 years, supported by productivity increases of between
3 to 5%3.
On the political front, the fast-growing economies
in Asia operated in a stable political climate with
their governments focusing on economic development
and prosperity. For example, Vietnam embarked on economic
restructuring from 1986, transforming its economy
from a highly centralized to a market-oriented economy.
As a result, Vietnam began to enjoy a high growth
rate, averaging 7.4% per year between 1990 and 19994.
Similarly, Korea shifted the focus of its economic
development policy in the 1990s from quantitative
improvements to improving the quality and structure
of its economy. Although the restructuring slowed
down economic growth to an annual average of 7.6%
between 1990 and 1996, it strengthened Korea's international
competitiveness and long-term growth potential5.
Complementing the economic and political factors
are the human aspects, such as labor-management relations
at the enterprise-level, work attitudes, leadership
and management practices. Notable examples of countries
where the spirit of tripartism has been given due
importance are Japan and Singapore. Right from the
start of Japan's productivity movement in 1955, the
Japan Productivity Center established close linkages
with industry, trade unions and academia and was incorporated
as a tripartite body. Today it continues to enlist
cooperation from managers, trade union leaders and
the academia to tackle new challenges. In Singapore,
tripartism is one of the critical success factors
underpinning the productivity movement. Employer groups,
trade unions and the government are all represented
on the Board of Directors of PSB and key committees,
such as the National Productivity and Quality Council
and the National Wages Council.
Challenges Facing Asia and APO Members
Today, Asian countries face three global challenges.
First, the pace of technological changes is relentless.
Given the rapid changes brought about by information
technology and the Internet, the rules of competition
have changed. Knowledge and speed are the key factors
of success in the new economy. It is critical for
national productivity organizations (NPOs) to recognize
these changes. They affect the strategies and programs
that NPOs adopt to support enterprises and industry.
Second, the extent of interdependence and linkages
among national economies is increasing rapidly and
has resulted in what is termed as "the networked
economy." As a result, difficulties in one country
or region inevitably affect other countries and regions
within a short space of time. Just three years ago,
this region experienced economic turmoil with the
sudden collapse of some half a dozen Asian currencies.
Today, there is synchronous slowdown in all three
major economies -- the U.S., Japan and Europe. This
will have a big impact on the Asian countries.
Third , competition in the region and around the
world is expected to intensify. Companies are no longer
restrained by physical boundaries; they can now locate
their assets worldwide in the most attractive locations.
Nations have to compete to attract investments, not
only by creating a pro-business environment, but also
by developing policies to entice the best talents
to their countries. Australia, for instance, recently
implemented a $2 billion package to attract and retain
high-level technological talents. Not only nations,
companies also face heightened global competition.
It is important that nations and businesses recognize
this new reality and reform their policies to handle
it.
How can we respond to these challenges? For the past
40 years, the APO has steadfastly helped economies
in the region to raise productivity through sharing
of experiences and expertise between and among members.
But the scope of productivity has also widened over
the past 40 years. In the early years, productivity
was largely regarded as a cost-reduction strategy
and expressed as "minimize input, maximize output."
Then, quality gained prominence and became the No.
1 priority of industrialists around the world. After
nearly two decades, the attention paid to improving
quality of goods was extended to improving and re-engineering
systems and processes. In recent years, the focus
has shifted to the other side of the productivity
equation. Innovation has become the new focus of productivity.
Industry and enterprises are concerned not only with
adding value to products and services, but creating
value in order to build greater wealth.
Here in Singapore, the government is setting up a
National Innovation Council to nurture and encourage
greater innovativeness in the private and public sectors.
Our aim is to transform Singapore from an "efficiency
city" to an "innovation nation," in
which a culture of innovation permeates all aspects
of the economy and society.
To do so, the National Innovation Council will develop
and coordinate policies and strategies for the National
Innovation Movement. It is quite clear that it is
not possible to direct and drive the population to
become innovative. What we can do is to facilitate,
stimulate and nurture an innovative culture in Singapore
and an enterprising spirit in all Singaporeans.
The Council will use the National Innovation Plan
developed in April this year as the starting framework
to guide its work. The Productivity and Standards
Board will serve as the Council's secretariat. This
will underline the close linkage between productivity
and innovation.
Just as Singapore has realized that productivity
must not only embrace efficiency and quality but also
enter the realm of innovation and value creation,
other countries are making this transition, too. There
is therefore scope for us to share experiences and
work together. This will be a constructive way for
all of us to deal with the challenges of globalization
and technological change.
Conclusion
Productivity has become multi-dimensional, embracing
social, community and environmental aspects. But the
fundamentals of productivity are still important.
APO, with its vast experience and resources, should
look for new ways to help members to address the challenges.
It could collaborate with organisations and agencies
in other parts of the world to accelerate productivity
improvements in Asia. Singapore, as an APO member,
pledges its continued commitment and contribution
to share its knowledge and expertise with others.
This joint conference, as well as the 40th anniversary
of APO and the 20th anniversary of Singapore's Productivity
Movement, serves to aptly remind us that the pursuit
of productivity is a marathon with no finish line.
We must soldier on. On this note, it is my pleasure
to declare the International Productivity Conference
open.
- Source: IMF, International Statistics Yearbooks
1990 and 2000
- Source: IMF, International Financial Statistics
Yearbook 2000
- Source: Department of Statistics, Singapore
- Source: APO publication, "Changing, Productivity
Movement in Asia and the Pacific", 1999
- Source: ibidem
