Jat consulting frost and sullivan

Panacea: The World’s Innovation Hub
Key challenges and solutions for the consideration of the Panacean Prime Minister’s Office

Cabinet Secretary Team: Nattawut Arunanondchai | Tan Kwan Hong | Vishal Jain

1 Sources of Innovation
Five crucial factors that determine the innovativeness of a country

Institutions

VISION
To Become an Innovative Service-
Driven Export Economy Human
Market
Sophistication
Capital &
Research

Possible through
INNOVATION

Infrastructure Business
Sophistication

Objectives Current State Solutions Action Plan Resources Impact

2 Current State Analysis
Where we are and where we want to be in the future

Components 1 Present Time 2 Desired Outcome 3
Political environment Strong & committed government Strong, committed government
Institutions Regulatory environment No information in the case study Effective law enforcement
Business environment Poor interworking of various M&As Efficient interworking environment

Education 76.8% literacy rate 99% literacy rate*
Human Capital
Tertiary education Does not cover relevant skills Education covers all relevant skills
& Research Research & development 1.6% of GDP spending on R&D 2-3% of GDP spending on R&D**

ICT 20.3% broadband penetration 25% broadband penetration***
Infrastructure General infrastructure Low no. Of SEZs for services 15 SEZs for services
Ecological sustainability No information in the case study Sustainable eco-development

Market Credit No information in the case study High availability of credit funding
Investment Lack of SME funding mechanisms Available funding mechanisms
Sophistication Trade & competition 20.2% of exports from high tech 20% by 2020 and 25% by 2030

Business Knowledge workers Low no of knowledge workers Abundant knowledge workers
Innovative linkages No formal linkages Abundant innovative linkages
Sophistication Knowledge absorption 56.7% of import are high tech 60% of import are high tech***

1 Components derived from INSEAD Research * Benchmarked against Switzerland
2 Taken from Case Study ** Benchmarked against Switzerland & Singapore
3 Healthy Situation (based on existing country data) *** Benchmarked against Singapore


3 The i4 Initiative
Our solutions packaged into four distinct functions

Innovate

SEZs for Services Innovation Platform for Services

Invest
I4 4 Integrate
System

SME Stock Exchange
Central Agency

Improve

Public Crowdfunding International Standardization
Screening (ISS)
U-Cities


4 Innovate
How we can help foster innovation among industrial players

Innovate SEZs for Services

• Target high-technology and services sectors
• Tourism, Healthcare, and ICT
• Development towards a tertiary economy will attract FDIs
Invest 4 Integrate
Innovation Platform for Services

• A Multi-stakeholder collaborative platform
(SME/Individuals/MNCs/Universities) under each special economic zone
Improve • Managed by SEZ Agencies that reports to the Government
• Begin with services-related R&D to fulfill Neo-Panacea Framework KPI

Special Economic Zones

Positive Impacts
SEZ Agencies
• Fosters academic-industry collaborations on R&D projects
• Industry-education alignment in skills development
University Industrial • Reduce asymmetric information for better resource allocation
Talents Professionals

Concerns
Ideas
• Companies’ reluctance to set up operations in Panacea Unlikely, as
Innovation
Panacea is a big market with a lot of growth potential. Moreover, the supply
Real Experience
of talent will be plenty with new initiatives from the government.
Knowledge Transfer


5 Invest
How we can assist in creating new funding opportunities

Innovate SME Stock Exchange

• Allows for SMEs to be listed with less stringent constraints than
they would face on the main board
4
Invest Integrate • Creates a platform to raise equity funding at an earlier stage
• Targeted investors are sophisticated enough to understand the
risk of investing in SMEs

Improve

Funding Mechanisms Positive Impacts
Public as Investors
• Increases the investment options for retail and institutional investors
• Easier for SME to raise funding necessary for growth
Innovative • There can be more incentives for entrepreneurs to start businesses
Businesses
The Public

Public as Crowdfunders Concerns

Domestic Market for Services • Early failures can affect the adoption rate There is a list of criteria for
companies to fulfill before being listed
Export Rapid Product
Market Commercialization • Investors who don’t understand the risks might come to invest and lose
money A minimum investment criteria is imposed


6 Invest (continued)
How we can assist in creating new funding opportunities

Innovate Public Crowdfunding

• Citizens can elect to contribute 1% of their income taxes towards
selected SMEs in exchange for benefits/equity/debt depending on
4 the companies (Free market mechanism)
Invest Integrate
• Catered towards very young startups at the early stage where
raising funds through other mechanisms is almost impossible
• Beneficiary details to be distributed via newspaper and websites

Improve
Positive Impacts

Funding Mechanisms • Kickstarts innovative projects
• Makes it easier for socially good but not commercially viable projects to
Public as Investors
attain funding
• Easier to start a new business
Innovative
Businesses Concerns
The Public

Public as Crowdfunders
• Few companies’ failure can affect the program’s adoption rate There
is a list of criteria for projects to pass before being considered eligible
Domestic Market of Services
• Crowdfunded companies do not honor the agreement A regulatory
board is set up to enforce companies to honor the promises
Export Rapid Product
Market Commercialization • Public not adopting the crowdfunding option Unlikely. Tax payment is
sunk cost, so instead of paying everything to government you can
choose to give to a company and get something in return


7 Integrate
How we can enhance interworkings between ministries and agencies and cut red tape

International Standardization Screening (ISS)
Innovate
• Approvals/Permits don’t need to be applied for in Panacea if they are
held by the same company in another “guaranteed country”
• This is similar to the Schengen Agreement

Invest 4 Integrate
Central Agency

• Approvals which cannot be gained through ISS will go through this
Agency
Improve • A “one-stop-shop” for companies requiring information or permit
approvals
• Board comprised of representatives from each ministerial department
to coordinate efficiency-enhancing activities

Integrated Interworking Mechanisms
Positive Impacts
Approvals
ISS
from
• Reduce administrative barriers to entry for companies
Guaranteed
Country • Create a business-friendly environment since day one
• Enhance collaboration between M&As and reduce red tape

Concerns
Central Cut Red tape &
Agency Enhance interworking • Unable to effectively reduce red tape Unlikely. This initiative has
been tried and tested in many other countries (Refer to Appendix 9)


8 Improve
How we can improve our human capital

University-
University-Cities (U-Cities)
(U-
Innovate
• Exist to foster knowledge creation between tertiary institutions and
industry players to provide the development of a relevant skill set
• Create an ecosystem for interactions between individuals from various
4 institutes and drive innovative thinking through competition
Invest Integrate
• The execution would be segmented into three different stages:

Improve
Digital Gap Physical Gap International Gap

Positive Impacts
U-Cities
• Increase the knowledge base in Panacea
• Enhance level of education
Local University
• Increase collaboration between local and overseas universities
Staffs/Students
Concerns
• Low adoption rate in Phase 1 Can be mitigated by having
Pool of Knowledge participating universities make it compulsory for students to do
research based on the knowledge available in the online platform
• Students might not travel for joint research in Phase 2 Can be
mitigated by encouraging shared research facilities in different areas
• Overseas universities might not be interested in Phase 3 By then,
Overseas University Experienced Panacea should be a vibrant economy with a lot of industrial players
Staffs/Students Professionals which can be attractive for overseas universities


9 Solution Framework
How we envision Panacea’s future innovation-driven framework

Primary beneficiaries who want to innovate

Special SEZs set up by govt. to Foreign MNCs train
MNC MNC
provide a platform for innovation. SME Individual
(Local) (Foreign)
Panacean students

New Tech
SEZs Universities
(U-Cities)
Panacean Innovation Platform for
One agency in each SEZ runs the
platform in that SEZ
Service-based R&D University supplies skilled talent
to companies for innovation

SEZ
Agencies International
Central Agency Approvals & IP Standardization Screening

Citizens Private
Funding Funding Sector
Crowdfunding
SME Stock
via tax
exchange
redirection

Innovation


10 Timeline
How and when our initiatives will pan out

Click here for detailed YEAR ENDED 2014
Timeline including KPI and
Individual Workflows
Central Agency’s
operations begin
2025-
YEARS 2025-2028

SME Exchange trading Final phase of U-Cities
begins completed

2012
2012
(Present)
(Present)
2013 2014 2015 2016 2017 2018 2019

Local U-Cities
Public Crowdfunding operations begin
begins
(Phase 2)

International SEZ and Innovation
Standardizational Platform Agencies
Screening established begin operations
YEAR ENDED 2017
Digital U-Cities’
operations begin
(Phase 1)
YEAR ENDED 2012


11 Organizational Structure
How the government offices would handle different solutions

Handles I4 Committee
Prime Minister Ensures NPF initiatives are fulfilled
Monitors public sentiment

Minister of Minister of Trade Minister of
Central
Finance and Investment Education
Agency Board
I4 Committee
Public
Oversees all Deputy Crowdfunding Director of University
projects and General of Committee Panacean Governing Board
reports to Prime Central Agency Economic Zone Committee
Solely responsible for
Minister for Oversees Central Authority
Public Crowdfunding
checks and Agency operations Manages foreign
balances Selects a list of projects Directly in charge of universities
Acts as point of contact to receive crowdfunding maintaining Services SEZs Strategic planning
for escalation for U-Cities
Compiles monthly
performance reports for
SME
Minister of Trade and
Exchange Investment
ISS Corporation
Committee
Solely responsible for U-City Director(s)
Manages International
Standardization SME Exchange Board Each director runs his/her own
Screening operations Manages application U-City and reports to UGBC
SEZ Agency Deputies
Updates the system and approval system
every year with new for potential listings Each deputy manages an SEZ
countries agency which facilitates the
Manages the private
innovation platform and
partners
manage the private partners


12 Risk Environment
The four major risks we foresee and how we can manage it

Mitigating
Implementation Risks
Document before
Implementation Risks Political Risks
proceeding Risk that the projects won’t go as Mitigating Political Risks
Risk that political will is not strong
Utilize reputable planned. This includes set-up and
enough to maintain the i4 initiatives
subcontractors operational failure
Purchase insurance Binding contract between
beforehand govt. and contractors
Ensure clear Agreement between
communication 1 2 bicameral parties

Mitigating Market Risks Mitigating Liquidity Risks

Increase domestic
Establish emergency
consumption. Reduce
reliance on global econ. Market Risks Liquidity Risk reserves for future
Lock in long-term interest
Run a stress test Risk that cash flows will be
Risk that the world volatility will rates
semiannually insufficient to cover the costs of
adversely affect the i4 initiatives
maintaining the i4 initiatives

4 3

How to monitor the success of each initiative

Establishment of an inter-ministrial committee (i4 committee) which oversees the
execution of all projects and reports directly to the Office of the Prime Minister


13 Resource Requirements
What you will need to commit to get the work done

Capital Investment Source of Funds Funding
Initiatives (millions of USD) Mechanism

International Standardization 0.5 Public Equity
Screening
Central Agency 62 Public Equity
SEZ for Services 53,909 PPP Equity + Debt

Innovation Platform for Services 274 Public Equity

Public Crowdfunding 21,950 Public Equity
SME Exchange 671 PPP Equity
U-Cities 10,642 Public Equity + Debt

Notes:
1. From our calculations, there will be enough budget surplus each year to commit to most initiatives
2. The cost here includes the investment cost and the operation cost accrued over a 18 year period
3. Consult attached .xlsx file for elaboration on stated figures


14 Impact Assessment
What the economic and social impacts are and how we can curtail them

Create a net benefit of $183Bn USD for the economy
Economic
SEZs would be able to increase the employment level of the country
Impact ISS should help increase the productivity of foreign companies

U-Cities will increase the education level of the population as a whole
Key Performance Indicators

U-Cities will create a knowledge spillover effect and encourage more sharing of knowledge
Social Impact between different entities (e.g. industries and institutions)
Public Crowdfunding would induce a sense of ownership in each citizen

All the initiatives in synergy will enhance R&D spending from the industry and academia
Innovation
All the initiatives will increase the export of Panacea’s services and technology R&D
Factor Attractive FDI would create knowledge a transfer network to bolster innovation

Impact on Public crowd funding will help support startups financially in the early stage
By reducing red tape, it would be easier to start a business.
Business The SME Exchange will help small businesses raise early stage equity capital
Creation The SEZ Innovation Platform will encourage entrepreneurship directly

Impact on
By doing PPP for many of the big initiatives, the government would be able to limit its
Budget involvement in running those initiatives
Deficit
*Note: All calculators for Impact Assessment can be found in the attached .xlsx document


15 Impact Assessment
Real Cumulative Value Added to the Economy

$88 Bn $271 Bn $183 Bn 210%
Numbers at a
Glance*

Present Value of the Present Value of the Net Present Value Added to Return on Investment over
Lifetime Cost (until 2030) Cumulative Benefits Added the Economy by the i4 18 years
to Economy (until 2030) Initiatives

$300,000.00

$250,000.00
(in USD millions)
$200,000.00
Worst Case
$150,000.00
Moderate Case
$100,000.00
Best Case
$50,000.00

$-
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
$(50,000.00)

$(100,000.00)

Worst Case Assumption: Moderate Case Assumption: Best Case Assumption:
• Annual GDP Growth at 3 - 4% on • Annual GDP Growth at 5 - 6% on • Annual GDP Growth at 6 - 7% on
average average average
• Cost is 20% higher than projected • Cost is as projected • Cost is 10% lower than projected


16 Your Future
The future of Panacea

2012 2022 2030
• 25% Services/GDP • 50% Services/GDP • 70% Services/GDP

• $1,000 GDP/Capita • $3,000 GDP/Capita • $6,000 GDP/Capita


17 Discussion
Let us know if you want to see any previous slides or our Appendices

Appendix 1: Your Cabinet Secretary Team

Appendix 2: Complementary Solutions

Appendix 3: Risks for SEZ

Appendix 4: Risks for Public Crowdfunding

Appendix 5: Listing Criteria for SME Stock Exchange

Appendix 6: Listing Criteria for Public Crowdfunding

Appendix 7: Framework for Global Innovation Index

Appendix 8: KPI for Individual Initiative

Appendix 9: Examples of Demonstrated Efficiency Measures for the Interworking of Ministries and Agencies

Thank you for the opportunity. We welcome any questions you may have for us.

Your Cabinet Secretaries
The faces behind the ideas

Nattawut Arunanondchai | Thailand
Singapore Management University
Bachelor of Science (Economics)
Key Achievements:
• Co-Founder and Managing Director of Casetomise Pte Ltd
• Winner of Credit Suisse Q2C Competition and Delta Partners Case Competition

Vishal Jain | Thailand
Bachelor of Business Management
Key Achievements:
• Awarded Deans List placement (‘09,’10,’11) and Krishna Exchange Scholarship
• Held two strategy-based positions in Fortune 500 company

Tan Kwan Hong | Singapore
Bachelor of Science (Economics)
Key Achievements:
• Awarded with 3 Scholarships, 2 Student Life Awards, and 2 Youth Awards
• Co-Author of SIAS Investment Guide Book

Thank you for the opportunity. We welcome any questions you may have for us.

i Complementary Solutions
Solutions to Compliment Panacea’s Future Innovation-Driven Framework

Adopt • Increase tax holidays for specific innovative industries to encourage net
FDI inflow

Intelligent • Allocate short-term government subsidies to increase imports of high-
tech goods and services that can increase manufacturing capacity
• Set up global trade offices for effective liaising with global business
Government entities
• Seek alternative forms of government revenues to maintain a healthy tax
Intervention environment

Develop Solid • 5 Seaports of non-international standards: Promote these ports to that of
international standards to support SEZs throughout the island, and for
future SEZ locations
Infrastructures • Increase Railways and Roadways connecting main SEZs and U-Cities

Panacea: 2 World’s Metropolis | 18/02/2013 | JAT Consulting
Appendix The

ii Complementary Solutions

Enhance •Major foreign universities (Harvard, etc) will be invited to set up
university cities.
Competitive •Enhance inter-university collaborations on research and innovation

Knowledge • This increase competitiveness will give rise to innovation and will
supply talent to the innovation platform too, thus providing a
world-class education while benefitting the country.
Creation

Enhance • Increase ease of getting credit
• Increase Domestic Credit to Private Sector (% of GDP)
Financial • Enhance cross-border credit flows to reduce reliance on
precautionary savings
Services

Appendix The

iii Complementary Solutions

Ensure
Adequate • Ensure opportunities for population below poverty line: 28.9%
• Reduce risks of widening Gini Coefficient

Safety Nets

Appendix The

Risks for SEZs
What specific risks there are any how we can counter them

Risk: Companies don’t want to come to SEZ

Our Response: There are two drivers why a company would want to set up a
base in another country:

1. Access to Talents Pool
2. Attractive Market

With our U-Cities and 24 new vocational institutes to be set up, we believe
that we can have a good pool of talents.

Moreover, by the time SEZ is completed, the GDP is expected to reach $1
trillion which is roughly the same size as today Korea (a technology hub). So
companies should find it attractive to go into the country.

Appendix The

Risks for Public Crowdfunding
What specific risks there are any how we can counter them

Risk A: No adoption Free market so no reason why no one would take it.
Tax payment is sunk cost, so instaed of paying everything to gov you can
choose to give to a company and get something in return. Marketing to be
done from government and smes who are listed as well. Worst case scenario
no one uses, but its not a major cost center, and smes will still apply to use
the system for the slightest amount of income they can receive.

Risk B: Company fails Firstly, the government chooses company to be
featured thus lowering the risk. Secondly, there is a regulatory board to
ensure the funded companies carry out their promises on the usage of funds
and the benefits in kind.

Appendix The

Listing Criteria for SME Exchange
What needs to be submitted by SMEs in order to be listed on the exchange

Listing Criteria for SME Exchange
Net working capital of $10,000 USD. Revenues must not exceed
Quantitative Criteria
$1,000,000 USD per annum.

Shareholding Spread Atleast 30% of the shares issued must be held by 500 different entities.

Operating Track Record At least 1 year

Sponsorship required. An institutional investor with at least 20% stake in the
Sponsor Requirement candidate must apply for a sponsorship permit on behalf of the candidate.
The sponsor will assume all liabilities in event of any unfilfilled obligations.

Accounting Standard Panacean or US accounting standards

An annual report for the first year (or more, up to 5 years) of operations must
Offer Document
be submitted for consideration.

Audit Check Government approved auditor’s report.

For pre-IPO investors who obtained their shares within 12 months from IPO
date, the capital gains portion of their shares will be subjected to a
moratorium period of 12 months after the IPO.
Moratorium Period
The capital gains portion is defined as the number of shares derived from the
difference between the cash paid by the investor for the shares and the value
of the shareholdings based on the IPO price.

Appendix The

Criteria for Public Crowdfunding
What SME’s need to submit to the government to be eligible to be chosen

A company seeking candidacy for the Public Crowdfunding platform must meet the following admission
requirements. All the following factors will judged on a 10-point scale and top submissions will be selected.

(1) Registered Company
Only a registered company may apply to be listed on the public crowdfunding platform. Individuals
may not apply.
(2) Innovativeness Factor
The applying company’s project should not violate any IP rights of any other entities in Panacea or
otherwise. The suggested use of funds (project) must be innovative in its
approach, design, features, etc. The level of innovativeness will be determined by an independent
panel of judges.
(3) Feasibility of the Project
The project plan and benefits must be achievable within three (3) years after public crowdfunding.
An independent feasibility report must be submitted detailing all, but not limited to:
operational, economic, management, and benefit feasibility.
4) Team composition
The team must have the skill set, or must hire a specialist to complete the outlined goals.
5) Company financials and investor profiles
The company, its managers, and its investors must not have any civil or criminal records in Panacea
or any other country.
Appendix The

Framework for Global Innovation Index
How can Innovativeness be Measured?

Source: INSEAD Business School: http://www.globalinnovationindex.org/gii/main/framework.html

Appendix The

LEGEND
Click here to return to

Timeline
Competitive Knowledge Creation (U-Cities)
simplified Timeline
International Standardization Screening (ISS) and Central Approvals Agency
Technology SEZs and Innovation Platform
Public Crowdfunding Platform
How and when our initiatives will pan out SME Stock Exchange (Named: SME Exchange)

KPI: Capital generated
from public crowd-
funding exceeds $500M
Key Performance

USD after one year of
operations KPI: Average lead time KPI: Number of patents
for R&D license from SEZs and number of
Indicators

KPI: Number of approval decreased by new businesses set up in
companies with 50% within one year SEZs increases by 10% yoy
approved licenses of agency opening.
increased by 50%
KPI: Online
KPI: Budget platform KPI: Total amount of KPI:
(Phase 1) of KPI: 20 LOIs KPI: 30 LOIs Physical infrastructure KPI:
for all money invested Internationa
initiatives U-Cities is from from through SME (Phase 2) of U-Cities is
launched companies potential completed in major l Universities
approved Exchange exceeds establish
who wish to companies $100M USD areas
be listed on planning on local base
SME joining new (Phase 3) for
Exchange Technology U-Cities
SEZs

2012 2012 2013 2014 2015 2016 2017 2018 2019 …
Completions

• Begin Public Crowdfunding • Begin SME Exchange Operations • Local U-Cities operations (Phase 2) • Final Phase of U-
• ISS Introduced in Panacea • Central Agency begins operations begins Cities completed
and government suspends licensing • SEZs and innovation platform in 2025-2028
agencies begin operation

Research on International Standardization Screening System (ISS)
Individual Project Workflows

Establishment of a Central Agency which issues licenses/approvals

Sourcing for renown universities
Physical Linkages
Clustering

Determine areas (near U-Cities) for new Technology SEZ and source for companies/FDI into SEZs
Construction of Technology SEZs begins

Establish infrastructure for Public Crowdfunding and select SMEs to receive funding

Establish infrastructure for SME Exchange
Source for companies to be listed
Construction of SME Exchange Office

Appendix 8
Appendix The World’s Metropolis | 18/02/2013 | JAT Consulting
Panacea:7

Central Agency
Harnessing the Inter-Workings of Ministries & Agencies

Spain The Netherlands Denmark
Handled by the Ministry of the Presidency Budget instructions contain specific Working groups set up to prepare action
Appoints spokespersons from each obligations to report on red tape plans
Ministerial Department to co-ordinate reductions 25% target red tape reduction divided
reduction activities Ministries threatened with budget cuts if across ministries
Spokesperson from the Service they fail to achieve targets Prime Minister’s commitment to
Inspection division, which is a horizontal This clear link to the budget cycle has the simplification put pressures on ministries
body advantage of encouraging decisions over Performance appraisals on Permanent
A high-level group chaired by the first how to finance burden reduction projects Secretaries takes into account their
vice-president leads the process such as ICT investments Ministries progress, and determines
bonus

Appendix The

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