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IoT to drive Singapore’s Smart Nation vision

IoT to drive Singapore’s Smart Nation vision

This was first published in The Business Times on 30 Jan 2019


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Move over Silicon Valley. Here comes Singapore, the new digital innovation hub of the world.

This imagination could soon be a reality if the country adopts the Internet of Things (IoT) to super-charge its trajectory of being a Smart Nation.

Through a network of internet-connected physical objects that can collect data automatically, IoT is already a phenomenon in Silicon Valley and is used in conjunction with cognitive computing to better analyse health data, and to help in asset monitoring and maintenance across the utilities, logistics, transport and industrial sectors.

Singapore’s highly skilled workforce, track record of major infrastructure projects such as the Tuas mega port under its belt and a crop of high-growth enterprises make it a strong candidate to replicate the successes of Silicon Valley and adopt IoT faster than any other country.

However, despite all of IoT’s potential, adoption by the private sector here has generally been slow, mainly because of high implementation costs and the lack of skills, cyber security threats and the complexity of integration and interoperability.

For IoT to really take off, the government could focus on two areas, mainly to develop the ecosystem and boost its adoption. 

Develop the IoT ecosystem

Firstly, more IoT-related innovation can be fostered by setting up a sandbox environment for virtual experimentation in regulated areas such as telcos, similar to the fintech space.

For example, innovators could test-bed IoT applications such as using smartphones to link up with aspects of smart homes including remote control of electricity and IoT-enabled white goods.

To facilitate such innovation, tax deductions can be allowed on costs incurred for bringing in international technology experts and urban planners to pilot projects using Singapore talent and to facilitate local or overseas training for employees.

For IoT innovators, the potential for scaling up into regional expansion is already well-founded. The regional impetus is already in motion as seen by the setting up of the inter-government ASEAN Smart City Network by Singapore last year, in its capacity as chairman of ASEAN, to link up participating cities digitally across the region.

To plug into this regional scope, a Smart City Hub programme could be set up in Singapore to provide technology, capital, talent and advisory services to lead smart city programmes in other countries such as Malaysia, Indonesia, Thailand and Myanmar.

To boost such regional expansion from Singapore, a concessionary tax rate of, say, 10 per cent , could be allowed for qualifying businesses deriving income from deploying smart city programmes overseas.  This will further help Singapore to attract new technology companies to set up their global or regional headquarters here.

Other ways the government could develop the ecosystem include co-funding up to 50 per cent of R&D-related costs incurred by established enterprises active in Public-Private Partnerships (PPPs) to drive IoT initiatives aligned with Industry 4.0. These activities may include urban mobility solutions and autonomous technologies and further spur adoption in other vertical industries such as manufacturing and smart public transport.

For nascent start-ups and their investors, extending the Angel Investor Tax Deduction Scheme to projects backed by “smart capital” from technology funds, consortia investments and private equity with a pedigree in large-scale, public technology projects implementation would build the ecosystem for IoT to thrive.

Lastly, the government can enhance training subsidies to organisations and encourage universities to focus on IoT-related curricula around industrial automation, information technology knowledge in networking, analytics and insights into manufacturing or public governance, and technology integration skills.

Drive higher IoT adoption

Secondly, even with an established IoT ecosystem, more needs to be done to shift the mindset and convince existing industry players and potential entrants to make the transition into an IoT-powered world.

To drive greater IoT adoption, a 250 per cent tax deduction on expenditure incurred in IoT development, for example in system and software integration, could be given in respect of payments for prescribed expenses made to Singapore-based service vendors, and a 200 per cent tax deduction for prescribed expenses made to overseas service vendors.

Furthermore, a 250 per cent tax allowance on capital expenditure on technology-based investments into approved infrastructure projects, and a concessionary tax rate of 5 per cent on qualifying intellectual property income for activities under Smart Nation and Industry 4.0 blueprints could also be considered.

The government could also extend the Intellectual Property (IP) Development Incentive with a concessionary tax rate of 5 per cent on qualifying IP income for activities under Smart Nation and Industry 4.0 blueprints.

Lastly, it could further encourage industry partnerships in Smart Nation projects with a concessionary tax rate of 5 per cent on income from qualifying IoT projects to any consortia that includes three or more Singapore-registered businesses.

Taken in totality, these incentives and initiatives will allow Singapore to put itself at the forefront of IoT and build a stronger foundation to become the world’s next Silicon Valley. 


The article was contributed by  Juvanus Tjandra, Head of Technology, Media and Telco, KPMG in Singapore. Views expressed are his own.

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