To Welcome An Advent of Innovation
By Will Lee
This is an opinion piece written by Blue Whale Foundation CEO Will Lee and was published in Korean for the Chosun Biz Opinion. You may find the original article in Korean here.
After finishing a quick meeting at Gangnam Station, I could not see a single taxi in South Korea’s most crowded prime district, even after waiting for 15 minutes. When I asked the man who was standing next to me in line for a taxi, he told me that taxi drivers in South Korea were so unhappy with the recent launch of a new car-pooling service that they went on a strike.
Ride-hailing service Uber is hailed as the flagship of the sharing economy since its 2010 launch in San Francisco and is currently at a potential valuation of $120 billion. However, studies have shown that the impact that Uber has on the taxi industry in a range of American cities is muted and both businesses could still co-exist. As someone who has been working in the sharing economy industry since 2013 in Silicon Valley, my question is: if this can work in the United States, why is South Korea at a standstill?
In my opinion, the reason why the sharing economy industry in South Korea is only beginning to show signs of growth now is due to the inadequacy of the right environment to develop innovative possibilities and the lack of a proper system to assess and establish that potential in the past — key factors required for the sharing economy to prosper. In the United States, we have the Silicon Valley — the global centre of innovation and technology which creates an ecosystem for high-tech innovation and development and attracts the world’s best tech corporations and startup companies.
Another example would be Singapore, which is well known for its standing as a global hub for technology and its government-led initiatives on progressing innovation. While Silicon Valley is widely acknowledged to be synonymous with innovation, how did Singapore rise through the ranks above other technologically advanced cities to clinch its current position?
Singapore may only be a small island-country with a land area of 721.5 square kilometres; but it has one of the largest number of accredited investors in the world and is the choice locale for many multinational tech and social media companies, such as Google and Facebook, to set up their Asian headquarters. It is also home to Grab, a Singapore-based ride-hailing platform which has made waves in the sharing economy of Singapore and Southeast Asia. Often hailed as the “Uber of Asia”, Grab and its CEO, Anthony Tan, actively received support from the Singaporean government with state-owned investment fund firm Temasek Holdings being a major shareholder.
In the past two years of operating with the global headquarters of Blue Whale Foundation in Singapore, I was able to experience the strength of innovation in Singapore. And this is driven by the excellent strategies developed by the local government to attract foreign capital and ventures through economic deregulation. One of the common misunderstandings that people have of Singapore is that although the local population boasts strong individual calibre, the country is limited by insufficient manpower and technology. Young entrepreneurs may also be more afraid to challenge new business ideas, and those who are more willing to take risks for innovative business ideas are few and far between.
So how did Singapore create such an innovation-driven business environment that it is known for today with these less than favourable conditions? That is because Singapore has created an optimal environment for foreign businesses to enter and operate freely. The revenue that is generated is then actively utilised to develop the domestic industries.
When I was in Singapore, I met up with a startup founder whose company received approval of operations from the local government. During our conversation, one of the tips he had given me was to consult a legal advisory to understand all of the company’s business possibilities and feasibility under local regulations before sending any applications to the Monetary Authority of Singapore (MAS), Singapore’s central bank and financial regulatory authority.
This system of direct communication between businesses and law firms is unique to Singapore. Instead of only being limited to conducting judicial reviews to prevent problems caused by insufficient regulations or licenses related to new industries, law firms are present in the early stages in the process to support promising companies and solve potential issues on regulations under governmental cooperation. Contrary to my experience of running a business in the United States, this was a different approach and I felt that it was a particularly beneficial method for countries like Singapore to overcome limitations such as lacking manpower and resources.
MAS also holds an annual Singapore Fintech Festival, which invites entrepreneurs and investors from all over the world and connects them with key policy-makers and other stakeholders to develop new business ideas and create opportunities. The 2018 edition held last year saw the participation of many companies and their founders, who were experienced and understood the various policies and governmental processes involved in finding opportunities and establishing businesses in the country.
In the United States, the core of its innovation is based on its vast resources and foreign companies and talent, whereas Singapore leads a new business technological convergence industry by establishing a stable hub where foreign companies can enter the Southeast Asian market under government initiatives.
In South Korea, there are many efforts to introduce regulatory sandboxes but it has not led to a successful wave of innovation in the country yet. This might be because the scope and role of the regulatory sandbox are only limited to Korean companies and individuals, restricting the active participation of foreign companies. However, in order to drive innovation, I believe that regulatory sandboxes should not be restricted to local participants but allow foreign companies to participate in a local free economic zone, so as to meet global standards and attract these companies.
In this new digital age, is it not prime time that we welcome a new advent of innovation?