The Business Times | Friday, June 9, 2017

OPINION | 25
Data striking the balance between protection and growth
By Rajiv Bawa data-fuelled mobile and digital technology. As a global provider of connectivity and di- store, transmit, and use information is the As we see it, the way forward requires col-

D ATA is the four-letter word that fuels
our digitised world. Harnessing the
power of these simple four charac-
ters, we have the ability to revolutionise
global business exchange, innovation, trade
and education, to name just a few.
The collection, processing, transmission,
storage, sharing and creation of data already
underpin almost everything we do today. In
2016, the digital economy accounted for 22
per cent of global economic output while the
application of digital technologies such as
cloud computing, data analytics, and the Inter-
net of Things is set to increase global GDP by
US$2 trillion by 2020. In particular, Asia is
reaping the benefits of data with mobile tech-
nology contributing 15 million new jobs, 5.4
per cent of regional GDP and around US$1.3
trillion of economic value in 2015 alone.
However, the social impact of data and mo-
bile technology is even greater. Today, 45 per
cent of Asians have access to the mobile Inter-
net, and by 2020, an additional 800 million
people will be able to shop, listen to music, ac-
cess information, upload selfies, and do other
online activities made possible by
Add to that the billions of machines expected
to become connected in the next decade
through Internet of Things. The heart of this
digital transformation has largely been
powered by a strong stream of information
across national borders via mobile techno-
logy and the Internet.
While the advances in technology have en-
abled a consumer in Malaysia to purchase a
product from a company in the United States,
this flow of data comes with the responsibil-
ity to protect consumers privacy and security
as well as business data. This is rightly so and
echoed in a 2015 Telenor global privacy sur-
vey where nine out of 10 Asian customers say
that transparency and control are important
features for their willingness to share data.
To this end, we are faced with a challenge:
balancing the need for adequate data privacy,
security and protection with the economic
and social needs to drive growth and innova-
tion through data. While customers are right-
fully mindful of their privacy, they also see
value in more personalised services and ap-
plications. Almost eight out of 10 Asians want
apps to be tailored to their specific needs and
70 per cent are willing to share personal data
for tailoring.
gital services, we understand the challenge in-
timately from both sides. We understand the
protection of personal, corporate and sensit-
ive data is of utmost importance to govern-
ments and businesses. We also recognise the
regulations needed to ensure data protection
and privacy give consumers the confidence to
continue leveraging the Internet for growth.
Successfully striking this balance is crucial
for us all. Balance can provide 2.5 billion
people who currently do not use a bank with
access to financial services via a smartphone.
Balance can further power innovation within
the dynamically expanding Asian ecosystem
that has more than 7,000 start-ups. Balance
can help well-established companies like Tel-
enor, with presence in 13 diverse markets,
continue sharing and scaling their footprint
across markets.
ASIAS DATA DILEMMA
While we believe governments should imple-
ment regulations to ensure the protection and
privacy of all data, it is important that regulat-
ors and other stakeholders analyse the full
context of the free flow of data. The ability to
source of economic and social value created
by the digital economy. Restrictions that
range from data localisation (the requirement
to store data on servers within the country
where the data is produced) to restrictions on
the types of data that can be shared across
borders, or in some cases, a complete ban on
data flows out of the country can hamper
Asias continued social and economic develop-
ment.
With digital technologies driving business
growth and innovation, especially for small
and medium enterprises, such restrictions on
data flow will only increase the burden on
businesses and consumers. The global nature
of todays business environment means com-
panies will incur higher costs from the need
to store data locally in every country, and
from investing resources to comply with dif-
ferent market regulations. These higher barri-
ers to entry in turn also serve to disincentivise
companies from competing, and even innov-
ating. The cost of this data restriction ulti-
mately will be borne by consumers in the
form of lost opportunities, services and im-
provements to their livelihoods.
laboration, standardisation and vision. With
digitalisation expected to deliver US$100 tril-
lion in value to businesses and societies by
2025, there is a lot at stake.
This is a complex matter that encom-
passes consumer protection, competition reg-
ulation, privacy and data protection, security
and law enforcement, and even taxation. Too
little protection and regulation make con-
sumers and businesses more vulnerable to cy-
ber threats; too much would throttle inven-
tion and growth needed for the worlds eco-
nomic and social development.
Collaboration must occur between policy
makers, telcos and other digital economy
stakeholders to evaluate current and poten-
tial new data protection, security and privacy
regulations. With such a framework, the abil-
ity for us to collectively build a digitally inclus-
ive Asia where all people have equal access to
opportunities for personal and professional
development is much more achievable. In this
envisioned Asia, digital and mobile technolo-
gies founded on the free flow of data will con-
tinue to drive us forward in ways we never
dreamed possible.
The writer is head of public & regulatory
affairs, Telenor Group in Asia.

Discerning the line when

it comes to non-executive
directors duty of care
By Julie LY Huan

N ON-EXECUTIVE directors (NEDs) owe a duty of care to the company to

which they are appointed. In recent years, they have attracted greater
scrutiny because of the increasing importance of their roles as watch-
dogs to monitor the conduct of management. Unfortunately, this has brought
with it more litigation where NEDs have been sued for breaching their duty of
care.
What responsibilities come under this duty of care? And what considera-
tions for example, risk versus reward should prospective or incumbent
NEDs take into account? Given that the NED typically has principal commit-
ments outside the company, the dilemma is knowing how closely to monitor
the activities of the company to properly discharge his or her duty. A recent
legal case may help shed some light on this. An O-level
Late in December, the Singapore High Court had to rule on whether two English
nominee directors (a category of non-executive director) had breached their preparatory
duty of care. It was undisputed that the two directors had not been aware of class in session
the terms of the companys business contracts and had not supervised its del- at Kaplan
egates. Notwithstanding this, the court ruled that they had not breached their Higher
duty of care. Education.
While this judgement may be reassuring to NEDs, there are other cases FILE PHOTO
where NEDs have been found guilty. Hence, the implications of this judge-
ment on the duty of care should be seen in a broader context.
Unlike executive directors, NEDs do not have responsibilities for the
day-to-day operations of the company. However, they are still required under Improving the role of
private education institutions
the Companies Act to discharge a duty of care to the company.
Be that as it may, when applying this duty to any one director, Singapores
courts have shown an appreciation of the myriad functions that different dir-
ectors perform. Indeed, while the statute does apply a broad sweep of general
principles, it is in the spirit of the law that the courts have discretion to decide
how one statutory provision should be applied in order to be fair in each indi-
vidual case.
In Decembers High Court case, the two defendants were each the sole dir- Industry players and the government need to rethink the role and services of such bodies
ector of a company which was specifically set up to purchase and own mer-
chant shipping vessels. Both directors were appointed solely to fulfil the regu-
vis--vis the big international players and public institutions. BY FAIZAL BIN YAHYA
latory requirement of having a Singapore resident director; real control lay

W
with three other individuals who represented the shareholders and who had ITH the governments em-
been granted powers of attorney (POA holders) to conduct the companies busi- phasis on lifelong learning
ness. and professional conversion
When the companies breached an agreement for the purchase of vessels, programmes, is our private
the seller sued the companies leading to their liquidation. The liquidator then education industry the weak
sued the defendants, the two NEDs, alleging they had breached their duty of link in this effort, or is it ready to play a key role
care as they were unaware of the terms of the agreement, and had delegated in shaping our workforce and the transforma-
every function relating to the agreement to the POA holders without super- tion of the Singapore economy?
vising them. The outlook for private education institu-
At the outset, the court noted that it is common practice to appoint persons tions (PEIs) is mixed and uncertain for some. In-
as nominee directors solely to fulfil the resident director requirement, while dustry players and the government urgently
business decisions are typically left to other more qualified persons. The court need to bring clarity to their role and services
added that while this does not mean that the defendants are relieved of their vis--vis the big international players and public
duties of care . . . it does impact the extent to which they are expected to be institutions.
informed of the companies affairs. Who are our PEIs? PEIs registered with the
Applying that approach, the court concluded that it was entirely reasonable Committee of Private Education (CPE) include
for the defendants to have left all matters pertaining to the purchase agree- those offering (i) education leading to a diploma
or degree, or full-time post-secondary education
ment to the POA holders. The defendants had not breached their duty of care.
leading to a certificate; or (ii) full-time preparat-
This case can be compared with the saga surrounding Airocean Group Lim-
ory courses for placement tests for local main-
ited some years ago, where legal proceedings were instituted against the com-
stream schools or for external examinations.
panys directors. Among them was the case of Ong Chow Hong, an independ-
Also included are Foreign System Schools (FSS)
ent director (a category of NEDs) who was convicted of breaching his duty of
offering full-time primary or secondary educa-
care because he neglected to review an announcement that the company
tion in accordance with a foreign or interna-
made in response to an SGX query. Ong had instead relied on his co-director, a
tional curriculum, and private special education
lawyer, to review the announcement.
schools.
There are close to 300 such schools re-
DIFFERENT STANDARDS gistered with the Ministry of Education (MOE), of
which about 30 are considered international
Ong was convicted in the State Courts and, when he appealed against his sen- schools. They offer programmes ranging from
tence, not only did he fail the High Court increased his sentence. In the 2011 pre-school education to post-graduate degrees.
High Court judgement, the court stated that each director of a listed company In 2015, 2,872 courses were offered by PEIs, of
has a solemn and non-delegable duty of due diligence to ensure compliance which 16 per cent were under FSS.
with market rules and practices. The courts strict approach in Ongs case has Singapores biggest private school, the Singa- also established its Four Acre campus in Singa-
been lauded as setting the right standards for NEDs although his conviction pore University of Social Sciences (SUSS), hit a
was technically set aside in 2014 for other unrelated reasons. high of 23,000 enrolment, with 20,000 locals, in
Faced with these two contrasting cases, what should an incumbent or pro- 2013. Subsequently, its total number fell to
spective NED do? Based on these two cases, there are at least two lessons that 21,500 (18,000 locals) in 2014, but its foreign
can be drawn. First, every NED is subject to a duty of care. However, the Singa- student numbers increased from 3,000 to 3,500.
pore courts take a pragmatic view of the reality of the situation by looking care- PEIs provide a vital alternative for locals who are
fully at the role that each NED has been given. unable to secure a place at our public universit-
Second, the standard of care expected varies according to the nature of the ies or afford overseas studies.
activity. If it is about business decision-making, the standard of care expected To understand the current state of the in-
may be lower, justifiably because the NED is not as familiar with the business dustry, it helps to recall the 2002 Global School-
of the company compared to management. house Programme mooted for Singapore to cap-
ture a bigger slice of the then US$2.2 trillion
However, if it is about ensuring that the company complies with rules and
global education market. An ambitious target of
regulations, the standard of care expected is higher. This is consistent with the
150,000 full-fee paying students by 2015 was es-
corporate governance principle that independent directors fulfil an important
tablished, from the then estimated number of
role as watchdogs to ensure regulatory compliance. Hence, in this type of acti-
50,000. Coming at the tail-end of the 2001 eco-
vity, the NED must watch out with more vigilance, probe deeper to the best of
nomic recession, it was aimed at boosting our
his ability and exercise his own independent judgement.
competitiveness and human capital.
At the end of the day, NEDs cannot expect the Companies Act to prescribe
all the different situations they may face and how they should act in each of Policy-makers wanted to establish an optimal
them. Such an approach would be too rigid and constrained. mix of institutions to attract more international
Nonetheless, by carefully monitoring court judgements, it is possible to students to Singapore. At the top tier were
draw specific principles to follow and see with greater clarity what is expected world-class universities with centres of excel-
of them. Keeping abreast of case law developments is therefore vital. This will lence undertaking R&D (research and develop-
go a long way in helping NEDs perform their roles without undue fear of being ment) and knowledge transfer to industry. Next
sued for breaching their duty of care. were public universities such as the National Uni-
versity of Singapore, Nanyang Technological Uni-
The writer is a senior lecturer in the Department of Strategy & Policy at the versity and Singapore Management University;
National University of Singapore (NUS) Business School. The opinions the third tier comprised other private universit-
expressed do not represent the views and opinions of NUS. ies.
The programme encountered various prob-
lems in the succeeding years. First, while Singa-
pore was able to attract well-known foreign insti-
tutions such as Insead, others withdrew their
campuses and programmes. Second, several
cases of fraud were uncovered in the industry.
Third, more broadly, there had been growing
public anger and debate over the sustainability
of a liberal immigration regime. The govern-
ment began to tighten the inflow of foreign stu-
dents and workers, blunting Singapores ambi-
tions of becoming a broad-based education hub.
By 2009, the government had shifted its fo-
cus towards building industry-relevant man-
power capabilities and sought to attract, de-
velop and retain talent for the Singapore eco-
nomy as the war for talent erupted on a global
level. It would emphasise the quality of educa-
tion and relevance to our economy, and not stu-
dent numbers or GDP share.
Indeed, the Singapore Economic Develop-
ment Board (EDB) has been encouraging the in-
troduction of industry-relevant programmes at
our universities. The Singapore Institute of Tech-
nology (SIT) is working with Seattles DigiPen In-
stitute of Technology, renown for game develop-
ment and animation, to offer degree courses for
polytechnic graduates. EDB has collaborated
with companies to bring in leadership centres
and training programmes for corporate execut-
ives. For example, Sony University has estab-
lished a Singapore campus to train managers
and business leaders for the future. Unilever has
courses, when provided by large educational in-
pore. These moves make for a vibrant environ-
ment for career and professional development.
However, new public universities such as the SIT
are also offering courses traditionally provided
by PEIs, thereby competing for the same student
pools e.g. diploma holders from the local poly-
technics.
EVOLVING MISSION?
In 2016, MOE announced the formation of a new
statutory board, SkillsFuture Singapore (SSG), to
drive and coordinate the implementation of
SkillsFuture. The CPE was placed under the SSG,
suggesting an intent to better align the private
education sector closer to the SkillsFuture move-
ment.
Indeed, some of the PEIs have been approved
by SSG to conduct SkillsFuture professional con-
version programmes. These include Comat
Training Services Pte Ltd, which runs courses on
IT, soft skills and workplace health and safety.
Lithan Academy undertakes IT and desktop sup-
port services training. 3dsense Media School
and CG Protg Animation School provide train-
ing for the creative industries in relation to com-
puter graphics. Others such as 4As Limited
provide training in digital advertising. In the
area of pre-school teacher training, KLC Interna-
tional Institute undertakes programmes for
SkillsFuture.
Singaporeans can use their S$500 SkillsFu-
ture Credit for approved courses delivered by
any PEI, and could also seek funding of up to
S$5,000 for courses under the SkillsFuture
Study Awards Scheme. Some PEI undergraduate
and postgraduate courses receive funding for IT
and IMDA-approved courses under this scheme.
For example, mid-career Singaporeans wanting
to deepen their IT skills for the thriving in-
focomm and media sector could apply for the
awards.
To strengthen this sector, the government
and industry players may wish to consider the
following suggestions:
First, PEIs could serve as a complement to tra-
ditional educational pathways instead of offer-
ing similar products as public institutions. For
example, they could provide training for specific
sectors such as food & beverage (F&B), as
schools like Auston and Shatec have done over
the years. They could also deliver training for
Singaporeans under the SkillsFuture Mid-Career
Enhanced Subsidy and Work-Study Degree pro-
grammes. Currently, these are administered
only by public institutions.
Second, while government funding in educa-
tion is critical, selective government subsidies
for private schools may skew competition un-
fairly, and lead to a crutch mentality among
those that do not have sustainable business
models.
Third, the proliferation of subsidised
stitutions such as Kaplan, James Cook Univer-
sity and SUSS, has the potential to crowd out spe-
cialised training institutes that offer similar
coursework. While some overlap is unavoidable,
there is a need for more oversight on which insti-
tutes should be able to provide what kinds of
courses.
Fourth, to promote more trust and assurance
in PEIs, the CPE has introduced the Enhanced Re-
gistration Framework and mandatory standards
in the areas of governance, information transpar-
ency and quality of service provisions. A volun-
tary Edu Trust Certification which ranges from a
validity period of one (Edu Trust Provisional) to
four years (Edu Trust and Edu Trust Star) was
also established as a benchmark for PEIs to
demonstrate their quality. Some analysts have
mooted for Edu Trust Star PEIs, such as La Salle
College for the Arts, to be given incentives like
more inclusion in SkillsFuture Schemes.
PEIs can retain and boost their traditional role
in retraining and upgrading our workforce. But
they and the government would need to develop
better channels of communication and coordina-
tion.
The author is Senior Research Fellow at the
Institute of Policy Studies, Lee Kuan Yew School
of Public Policy, National University of
Singapore.