Singapore and Hong Kong compete on many fronts. These two city-states, comprising half of the original Four Asian Tigers, which also include South Korea and Taiwan, routinely top global rankings and surveys when it comes to indicators such as competitiveness, business environment, transparency, infrastructure, education standards, quality of the labour force and the rule of law. These factors have contributed to their positions as major financial centres rivalling New York and London.
The flipside of their success is their unenviable positions among global cities with the highest cost of living and the largest income inequality. Hong Kong and Singapore are placed first and fourth, respectively, in the 2016 Mercer Cost of Living Rankings while their Gini coefficients, a measure of income disparity, place them among the world’s most unequal countries.
The challenge for both Singapore and Hong Kong now is how to use their considerable wealth and resources to improve the quality of life of all their people and ensure that no one gets left behind in the countries’ never-ending search for economic growth.
A high GDP per capita does not appear to equate to a happy populace. While Singapore and Hong Kong both enjoy some of the highest GDP per capita figures in the world, their rankings in the latest World Happiness Report tell a different story. Singapore ranked 24th out of 158 countries surveyed – not a terrible position – but Hong Kong came in at a distant 72nd.
Another poll, published in 2012 by Gallup, reported that just 36 percent of Singaporeans expressed experiencing feelings, positive or negative, on a daily basis, though such expressions are “a vital measure of a society’s well-being”. This places Singapore last among 148 countries surveyed. In the same poll, Hong Kong ranked 73rd, with 69 percent of its citizens expressing feelings of happiness.
Although we should be careful not to read too much into these statistics, these two polls clearly show that there is room for improvement in both Singapore and Hong Kong. There would not be any quick fixes, but a dose of social innovation might just be the right medicine to rectify the woes facing these two high-flying cities.
“There is room for improvement in both Singapore and Hong Kong.”
The funding position
Based on the actions of the governments of Singapore and Hong Kong, the leadership in these two city-states seems to agree as well. In the past two years, Hong Kong has launched two funds, each worth HK$500 million (US$65 million); the Social Innovation and Entrepreneurship Development Fund promotes social innovation through “innovative solutions that address poverty and social exclusion,” and the Innovation and Technology Fund for Better Living applies technology to improve the lives of its citizens.
In Singapore, the ambitious SkillsFuture programme, announced in 2016, offers every Singaporean over the age of 25 a credit of S$500 (~US$360) to enrol in classes that promote lifelong learning and mastery of new skills. While it is unclear if these examples of social innovation initiatives would ultimately succeed in improving lives and reducing social problems, they represent ideas worth pursuing.
Both cities are also focusing on becoming technology start-up hubs in areas such as fintech, healthcare, education and e-commerce. The proliferation of new co-working spaces and start-up accelerators in both Singapore and Hong Kong in recent years suggests that their start-up scenes are thriving. TechinAsia reports that Hong Kong’s start-up ecosystem is valued between US$2.8 billion and US$3.5 billion, and that Singapore’s is approximately four times higher.
Given the importance of technology, the Hong Kong and Singapore governments should be actively encouraging start-up founders to also use their skills and knowledge to help design products and services for under-served communities, including those of the elderly and of children from economically disadvantaged households.
Stanford Business School defines a social innovation as “a novel solution to a social problem that is more effective, efficient, sustainable, or just than current solutions” with “value created accru[ing] primarily to society rather than to private individuals.” For social innovation to meet such lofty goals, the public, private and third sectors need to collaborate and acknowledge that any one of them would be unable to solve complex social problems by working alone.
Such collaboration, however, is challenging because it requires government, foundations and non-profits to work with mainstream businesses and private capital. These entities speak different languages, often have little understanding on how others work and tend to have “silo” thinking that makes extension beyond their own comfort zones and mindsets to work with other people difficult to achieve.
I have, for example, witnessed many examples of government departments and foundations happy to make grants to non-profit projects that provide employment to disadvantaged groups despite these projects not being scalable or having any long-term viable business models. I am not saying that grants are a bad thing, but I do get frustrated when many for-profit social enterprises find themselves ineligible to receive any funding because the same grant-makers believe that grants should, under no circumstance, be used for private gain.
Instead of searching for models that best solve a social issue, these myopic officials focus only on the fact that the start-up founders might profit from public funds and ignore the fact that profitable social start-ups are often best positioned to address social issues at scale and that any public funds used to achieve such goals represent money well spent.
Just as government officials and foundation leaders need to modify their mindsets if they truly wish to find innovative solutions to existing social issues, I also believe traditional investors, both institutional and individual, need to re-examine how they view returns on their portfolios. When I make investments in a social start-up, I focus on the total return of an investment, including its social and environmental impact, and not just its financial return.
Two mindset shifts
In my view, two mindset shifts need to happen. First, those hoping for social innovation have to first break out of their silos and start talking to all players in their ecosystem.
Second, they need to shift their focus from structure to results. Deng Xiaoping was right when he said, “It doesn’t matter whether a cat is white or black, as long as it catches mice.” Grant-makers need to accept that for-profit social start-ups are often better positioned to solve social issues at scale; grants for such start-ups are acceptable.
“They need to shift their focus from structure to results.”
Investors also need to evaluate their investments by assessing their social and environmental impact and not just their financial return. Many foundations and family offices have started to embrace this approach. Corporations and institutional investors now need to do so as well to realise systemic change.
Finally, we need to encourage and incentivise our best young minds to focus their energy and intellect to design products and services that create social value and go beyond just making profits. Only then can social innovation begin to thrive and allow Singapore and Hong Kong to take their places among the most sustainable, equitable and just societies in the world.
P. Ming Wong is cofounder and CEO of Asia Community Ventures. Following a long career in banking and finance, Mr. Wong has spent the past eight years promoting impact investing as a bridge between philanthropy and investing. He also promotes investing in social start-ups that are creating innovative solutions to improve education, healthcare and the environment.
This article was first published in THink: The HEAD Foundation Digest and reproduced with permission. The HEAD Foundation is a Singapore-based think tank that is focused on the research, policy influence, and effective implementation of education for development in Asia.