PM Lee Hsien Loong at the Sequoia Capital Annual Retreat 2011

Don Valentine, Founder of Sequoia Capital
Michael Moritz, Partner, Sequoia Capital
Members of Sequoia Capital
Ladies and Gentlemen

Thank you for inviting me to your annual offsite retreat.

I am happy you are meeting in Singapore.

The relationship between Sequoia Capital and Singapore goes back a long way. I thank Don for our excellent ties and cooperation. He told Mr Teo Ming Kian of his “love affair with Singapore”. He said Singapore and Sequoia are united by a common purpose, of ‘creating value by identifying and seizing opportunities’. There are many chances to work together to seize opportunities in Asia.

Asia is bright spark in a world recovering from turbulence and recession. China and India are growing strongly, and acting as twin engines for the region. Southeast Asia nations are doing well, but are also having to upgrade and band together to remain competitive, e.g. the roadmap to become ASEAN Economic Community by 2015.

Some medium term concerns include growth and trade imbalances causing tensions, and disputes over exchange rates, which fortunately fall short of currency war. There is the danger that countries will clash over trade. Thankfully countries have avoided the worst protectionist moves. We have also made a few positive steps – e.g. KORUS and the Trans-Pacific Partnership (TPP). But we need to remain vigilant – with workers worried about jobs, governments under pressure to raise trade barriers. Asia risks over-heating economies and inflation — property, fuel and food prices have gone up sharply. Governments across region grappling with property booms and rising costs of living.

But we expect economies to overcome these challenges. Transformation in Asia will continue for decades. Key to this is talent. Shanghai topped 2009 PISA tests. India did not participate, but its population is young, bright and eager to learn. These talents will value-add to both local and foreign companies, and fuel new, innovative enterprises. They will sustain Asia’s development and vibrancy for at least another generation.

Singapore benefiting from region. Strong recovery in 2010 – 14.7% growth. We expect to revert to a more measured 4-6% growth this year. The target 3-5% in the long term — an ambitious target requiring significant effort.

It is critical to raise our productivity. The only way to sustain higher earnings. We must upgrade workers to stay ahead. We will spend $5.5b over next five years on productivity efforts.

Beyond this we have to make full use of talent and technology.

Talent
We attract many very talented people, to study, work and hopefully settle herProfessionals – free inflow, even though we need to limit foreign worker population. The is a systematic effort to recruit very bright students from region, e.g. foreign students make up half the top scorers in ‘O’ level exams this year. We are also investing in our schools, polytechnics and universities to groom technological talent. Our polys are offering courses on computer programming, animation and games design. SIT for polytechnic students to earn specialised, technical degrees later. SUTD is in collaboration with MIT and Zhejiang University.

Technology
We are raising R&D spending from 3% to 3.5% of GDP. The Government will invest $16b over next five years. Singapore’s advantage is that we can sustain funding commitment over the long term, across business cycles. The Campus for Research Excellence and Technological Enterprise (CREATE) brings together research centres of universities and corporations from all over the world – MIT, UC Berkeley, ETH, Technion, Ben Gurion University, etc. An ecosystem to germinate and grow new ideas

Result
We do not yet have a eBay or Google, or Alibaba or Baidu. But we have many interesting activities, and much ferment and exchange. We will provide fertile ground for entrepreneurs, our own and from the region, to start up and grow.

Singapore aims to be a high tech, high performance society, operating at “high clock rates” and applying multiple processing to find breakthrough solutions. Our environment has encouraged high tech companies, including IT firms like Facebook and Groupon to open offices here (Groupon in fact bought over a local start-up, Beeconomics), to tap on Singapore’s resources and talent and to ride on Asia’s growth.

We welcome Sequoia Capital’s portfolio companies to help develop Singapore into a vibrant and distinctive global city.