China Daily Asia Weekly:Expanding sphere of innovation

Expanding sphere of innovation
Speakers at the China Daily co-branded session titled Asia Rising: The Future of Asia – Where Do We Go From Here during the 9th Asia Economic Summit in Kuala Lumpur on Nov 3. (Jennifer Lo / CHINA DAILY Asia Weekly)
From Gangnam Style pop to the fried chicken craze sparked by popular TV drama My Love From the Star, South Korea’s cultural exports are causing a frenzy these days in Asia and elsewhere in the world.
Such exports are worth about $5 billion a year, and contribute about one-tenth of the country’s GDP, according to the International Confederation of Societies of Authors and Composers.
The global spread of South Korean culture is a good example of the intertwined relationship among innovation, investment and infrastructure, particularly in Asia.
Thanks to investment in human capital, research and development (R&D) and infrastructure, “K-pop and (South) Korea’s games industry is so successful these days,” said Ilham Habibie, president director of Ilthabi Rekatama, an Indonesian private investment company.
"It has to do with the innovation ecosystem there (South Korea),” said Christine Ennew, provost and CEO at the University of Nottingham Malaysia campus, speaking at a China Daily co-branded session on Nov 4 during the 9th Asia Economic Summit co-organized by think-tank Asian Strategy & Leadership Institute (ASLI) and the Ministry of International Trade and Industry of Malaysia.
"It doesn’t have to be Silicon Valley to do this,” said Ennew, also pro vice-chancellor of the University of Nottingham in the United Kingdom. “But it has to bring together expertise, seed funding, infrastructure and all necessary support to take that idea to a commercial stage.”
Held in Kuala Lumpur on Nov 3 and 4, the Asia Economic Summit attracted scholars, officials and business executives from 17 countries including China, Japan, Switzerland and members of the Association of Southeast Asian Nations (ASEAN).
The summit, which centered on the theme Asia Rising: The Future of Asia — Where Do We Go From Here, took a critical look at what Asia has achieved, the rise of China and opportunities for regional integration.
South Korea has the world’s highest mobile broadband penetration rate, according to the Pacific Telecommunications Council, an international association of telecoms professionals with interests in the Asia-Pacific region.
Three percent of the country’s GDP, or some $27 billion, was spent on R&D in 2010. This puts South Korea well ahead of Singapore with 2.2 percent, China with 1.5 percent and Indonesia with 0.007 percent.
Unlike South Korea, the rest of Asia differs in the pace of infrastructure development. “It has often been argued that we live in two Asias,” said Michael Yeoh, CEO of ASLI and chairman of the summit.
"(One) is a bright, shining and prosperous Asia in Kuala Lumpur, Singapore, Jakarta, Hong Kong, Tokyo, Seoul and Beijing,” he said, adding that a developing Asia can be found in “poorer countries like Laos, Cambodia, Myanmar and the slums of India, the Philippines and Indonesia”.
Sustainable growth
To narrow the development gap in the region, Asia needs more of “the four I’s” to ensure sustainable growth: Investment, infrastructure, innovation and inclusive growth, Yeoh explained.
Indonesia is set to become the world’s seventh-largest economy by 2030. Yet the country’s heavy reliance on commodity exports has drawn the economy into twin deficits in budget and trade.
"The government still dominates about 80 percent of research funding, and the R&D budget is far from the standards applied by UNESCO, which is 2 percent of GDP,” said Habibie, who is also chairman of the Culture, Arts and Technology Empowerment Community, a grouping of media, arts and business professionals from Indonesia, Malaysia and Singapore.
"The future of Indonesia should move from passive consumption to active shaping,” he added.
Also lacking in developing economies is hardware infrastructure — one aspect of which is connectivity.
As early as 2009, the Asian Development Bank (ADB) estimated that Asia would require a whopping $800 billion in infrastructure investment annually over the next 10 years.
South Asia will have to spend $250 billion every year to bridge the infrastructure gap in the next decade. East Asia and ASEAN will require $600 billion.
Between now and 2020, four middle-income ASEAN countries — Malaysia, Thailand, Indonesia and the Philippines — will need to invest $500 billion in infrastructure.
"Connectivity is today’s buzzword,” said Yeoh. “We need greater connectivity through closer and faster transport and telecommunications linkages and people connectivity if we are to realize our vision of an integrated ASEAN community.”
China leads the world in infrastructure spending, surpassing that of the United States and Europe after two decades of aggressive investment.
Between the 1990s and 2011, China spent nearly 8.5 percent of its GDP on infrastructure — well above the global average of 4 percent, according to global management consultancy McKinsey & Company. By 2015, it aims to invest as much as 7 trillion yuan ($1.03 trillion) in urban public facilities and 3 trillion yuan in rail networks.
For others, infrastructure development goes far beyond massive hardware build-outs. What is often overlooked is the development of soft infrastructure to empower the grassroots community.
Soft infrastructure includes measures of competitiveness spanning regulatory frameworks to taxation regimes and even anti-corruption initiatives.
"It’s key to structural reform for future development and escape of the middle-income trap in Asia,” said Ennew.
Empowering creativity
A knowledge-based economy today requires not only the protection of intellectual property rights, but also an education system that encourages individual thinking, said Hong Kong-based Michael Kurtz, chief Asia equity strategist of Nomura International, a global investment bank.
"What is equally important is a financial system that empowers garage businesses with creative ideas rather than channeling national savings from state banks to state-owned enterprises,” he added.
Tong Yee, cofounder and director of Singapore’s Thought Collective, a 160-strong social enterprise network with annual revenue of $60 million, told the story of Cambodia’s approach to the elimination of landmines in the country.
Back in 1996, when the UK was gripped by mad cow disease, a Cambodian newspaper published an open letter proposing that infected British cattle be brought to the Southeast Asian country to get rid of its 11 million unexploded landmines.
"The heart of social innovation is really about contextualization. How we do work with things that we perceive to be garbage and make it become (relevant) again,” said Tong, adding that private-public-people partnership is conducive to encouraging youth innovation.
Innovation is intricately linked with talent development.
"The key challenge lies in nurturing creativity and critical thinking skills in students,” said Ennew.
"The government needs to resist temptations to prescribe what is taught at school,” she added.
Habibie echoed this sentiment. “If we are not careful enough to treat human capital in a right manner through education, human beings — just like capital — can experience a process of depreciation,” he said.
In China and India knowledge diffusion is beginning to shape the entrepreneurial landscapes.
Highly educated returnees from overseas continue to play a part in leveraging their knowledge and entrepreneurial capacities in their home countries.
Official data show that 413,900 Chinese students studied abroad last year, up 3.58 percent from a year earlier. That figure is estimated to reach 500,000 this year.
In addition, research facilities set up by Fortune 500 companies have grown in India and China. In Beijing, for example, as of 2012 there were more than 600 offices and R&D centers run by multinational companies.
Consequently, one observation is the gradual disappearance of the Western and Japanese multinationals monopolizing knowledge and technology. Instead, homegrown innovative brands such as South Korea’s Samsung and Chinese e-commerce giant Alibaba have sprung up across the region.
"What you see today is the incredible convergence of technology,” said Claude Smadja, president of Swiss-based strategic advisory firm Smadja & Smadja and former managing director of the World Economic Forum.
The implication: Innovation is virtually everywhere.
"It means countries that cannot position themselves in this (era) of innovation and knowledge will be left on the sidelines and will have no way to recover,” said Smadja.
jennifer@chinadailyhk.com
http://www.chinadailyasia.com/asiaweekly/2014-11/07/content_15188068.html