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September 16, 2019 Monday 09:48:34 AM IST

Digitisation: Learning from Singapore


Those of us who were watching with awe the growth and the dominance of the US economy during the turn of the century, were bedazzled also by the then Chairman of the Federal Reserve, Alan Greenspan.

The US economy was in a Goldilocks position, neither too hot nor too cold; but just right. Financial markets would lap up every word of what Greenspan said, and he proffered the theory that technological advancement was the reason for the continued growth of the US.

“We are within weeks of establishing a record for the longest economic expansion in this nation's history. The 106-month expansion of the 1960s, which was elongated by the Vietnam War, will be surpassed in February. Nonetheless, there remain few evident signs of geriatric strain that typically presage an imminent economic downturn,” he trumpeted in 2000.

“Innovation (through technology) has brought about a multitude of new products, such as subprime loans and niche credit programs for immigrants. Where once more-marginal applicants would simply have been denied credit, lenders are now able to quite efficiently judge the risk posed by individual applicants and to price that risk appropriately. These improvements have led to rapid growth in subprime mortgage lending; indeed, today subprime mortgages account for roughly 10 percent of the number of all mortgages outstanding, up from just 1 or 2 percent in the early 1990s,” Greenspan explained in 2004.

Barely four years later, the mortgage market collapsed,and the US and the world at large stared at a global recession, comparableto the Great Depression of the previous century.

Power of digitisation

In a different context now, countries across the world are speaking about the power of digitisation to boost economic growth. One need not be an economist to understand that higher digitisation will optimise growth opportunities by removing information asymmetries and making the world flat.

A 2016 report on ‘Economic Outlook for Southeast Asia, China and India’ indicates that ICT (information and communication technology) services embodied in manufacturing and services account for a considerable share of the value of exports from China, India and other Asian nations.

Singapore, for instance, has been laying much emphasis on digitisation for growth. It has adopted a mission for growth based on the digital way called the ‘Smart Nation’.

“There is an ongoing digital revolution, and advancements in digital technologies are transforming the way we live, work and play. We envision a Smart Nation that is a leading economy powered by digital innovation, and a world-class city with a Government that gives our citizens the best home possible and responds to their different and changing needs. Crucially, these efforts are underpinned by efforts to ensure that all segments of society are able to harness digital technologies and benefit from them,” says Singapore’s official website for this purpose.

Silent tech revolution

A whistle-stop halt at the island-nation last month was an eye opener about the digital ground covered by Lee Kuan Yew’s country in the last four years or so. While the must-see tourist attractions like the Merlion and the Marina Bay Sands continue to draw people, a round of the heartlands indicated a silent tech and E-vehicle revolution of sorts.

Near Khatib, a predominantly Chinese part of the country, I chanced upon 11-year-old Cherwey praying at the local Soon Say Keng Tao temple. Taoism strikes a chord, with its rites, especially to someone from India.

 I watched him light a pair of incense sticks, wave them reverentially before the idols, join his hands in a ‘namaste’ and say his prayers during the traditional Ghost Festival which falls in the 7th month of the Chinese Lunar Year. That the Vaavu Bali in Kerala falls in the same month appeared to me more than just a coincidence.

Be that as it may, it was what little Cherwey did next that was incredible, for a visitor like me, back in Singapore, after about 5 years.

Quite instinctively, he flashed his mobile (‘handphone’ to Singaporeans) on to the QR code on the donation box (our ‘kaanikkavanchi’) to offer his 5 dollars to the temple’s collection.

The 5th Standard boy’s action exemplifies the new Singapore which is moving all transactions on to the digital platform so fast that not only is cash disappearing fast, even plastic cards, whether debit or credit, are making their exit.

Automated service

The Taoist temple now gets most of its donations digitally as also a wayside restaurant nearby. Like the small tea shops we have, the place is distinguished only by its cleanliness. Otherwise, the settings and the clientele are akin to the eateries we have in our countryside.

I sat down with my friend, a Singapore national,but no waiter came up to me. I was amused. For the Singapore that I lived in for four years, was known for its prompt and speedy customer service.  But my friend clarified the current procedure.

You have to just scan the QR code stuck on the table and the menu card appears on the phone. Choose whatever items you want and place the order through the phone. Your credit card or debit card, which is in the form of an e-wallet on your phone, debits your account. The order goes to the kitchen automatically and the waiter brings the food. “Soon, even the serving of the food will be done by robots, Sir,” the owner, a young Chinese in her thirties, gleefully said.

Outside, on the streets, electric vehicles dot the landscape with men and women, on errands and outings, buzzing by. While our Prime Minister Modi’s FAME scheme (Faster Adoption and Manufacture of E-vehicles) is being debated, Singaporeans have taken to E-vehicles in a big way. In the small nation of about 6 million people, nearly 75,000 E-vehicles were sold in June alone.

Demand for E-vehicles

A dealer for e-vehicles tells me the demand is so huge that the Government has made registration compulsory for even E-cycles now. The cost is about Singapore Dollars 300 (Rs 15,000) and it makes for smart local mobility - to the market, the neighbourhood eatery or the visit to a friend’s place. 

Under its ‘Smart Nation’ mission - similar to Modi’s Digital India - Singapore seems to have changed the way ordinary people transact their business. Says Mohammed Salim, a Singaporean national of Indian origin, who works for a bank, “I do all my transactions through the mobile phone nowadays. I don’t have to remember to carry cash or even my credit or ATM cards because the handphone is my payment gateway.”

These changes have been driven by the Government’s initiative called ‘Infocomm Media 2025’ which aims at ‘driving economic success, empower and ease everyday life, connect people and make Singapore continue to be a successful nation.’

The E-vehicle foray is not part of this mission, but in terms of the approach of the people, the electric bike or cycle jells with a lifestyle which is becoming more and more tech-based.

Virtual banks

In a latest, Singapore is now actively studying whether to allow companies with no banking parentage to set up ‘virtual’ banks.

“Some other countries have created frameworks to license new players with no banking parentage to set up digital banks, i.e. banks without branches or ATMs,” Singapore Prime Minister Lee Hsien Loong said in a speech at the Smart Nation Summit last month. “The Monetary Authority of Singapore is now actively studying whether to allow this in Singapore”, he said.

People are signing up to volunteer as Smart Nation ambassadors to make people tech-savvy and use digital modes in their day-to-day lives.

It is here that Prime Minister Modi’s Digital India rings a bell. While tiny nations like Singapore are turning smarter, can India be far behind? Digital seems undoubtedly to be the way forward in day-to-day transactions in India as well though rural India will take some time in catching up.

The theme of booting up growth through technology and digitization is vast and multi-dimensional. Though we cannot say with certainty that digitization will lead to growth, at least we can be sure that there will not be growth without digitization.

(The author, a senior banker, had worked in Singapore. The views are personal.)

CAPTION 1: The electric vehicle is a popular sight now on the streets... From Woodlands in Singapore.

CAPTION 2:  After QR-coding his donation, Cherwey, a schoolboy, at a Tao temple in Singapore.

CAPTION 3: Scan and eat.... The scan code for ordering at a wayside eatery. Singapore is digitizing fast.


( The writer is a Senior banker.The views expressed are personal )

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