Boosting Free Trade in Asia - SBF1 Jul•Aug 2013 Chairman’s Message We are halfway through the...

Business Quotient / Business / People / O

pportunities

Jul•Aug 2013

GLOBAL HYDROHUB IN THE MAKING

Singapore builds up its water

resources

ACCESS ASIA

SBF launches one-stop business concierge service

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Chamber chief Mitsuhiro Akiyama:

Japan can take it to another level

Can regional agreements do the job?

Boosting Free Trade

in Asia

Upon approvalPlease sign:

Name and Date:

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Jul•Aug 2013

Chairman’s Message

We are halfway through the year. The latest indications are that we are entering a period of greater uncertainty. The financial markets are turbulent with the prospect of the US ending its fiscal stimulus in the horizon. Currency exchange rates are volatile and emerging markets could be affected by the flight of capital back to safer havens such as the US. These changes will add to the burden of our members as they deal with a tougher operating environment in Singapore with rising business costs and tighter labour supply.

Fortunately, we are in the right part of the world. Opportunities abound as we have stable neighbours who are growing steadily and are prepared to grant market access to our businesses. Through the Malaysia-Singapore Business Council, we are stepping up our engagement with Malaysia, and this is reflected in the enthusiasm of our business community to invest in Iskandar, Johor. Myanmar’s economy is showing promising reforms and our business missions there are very popular with our members. In Indonesia, our companies are also tapping on the opportunities resulting from the continuous strong economic growth in the country and its booming middle class. Attracted by the dynamism of Asia, the Federation is also seeing more business visitors from overseas keen to explore partnership with local businesses.

Partnering Our Members for the Long Term

Tony Chew Leong-Chee Chairman Singapore Business Federation

hee

In this period, where the world is more uncertain but businesses can still grow in the region, it pays to be part of a network where you can find insights to current trends and tap on opportunities for growth.

We urge our members to tap on the Federation’s initiatives and leverage them for their businesses. On our part, we will continue to monitor the changing landscape and sentiment faced by our members.

I wish all of you success!

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ContentsJul•Aug 2013

BiZ Feature

BiZQ looks at how trade agreements facilitate regional integration among diverse markets.

Bridging Trade Ties Across Asia16

Economy Watch

Is the Global Economy Stabilising?Analysts expect the global economy to stablise with signs of US growth rates and healthy domestic demand in the region.

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BiZ Voice

ABAC to Focus on Regional IntegrationForum to look into strengthening Asia’s resilience and integration for sustainable growth areas.

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Innovations

Singapore Aims to be a World-Class HydrohubThe republic is turning its well-documented lack of natural water resources into a global business.

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Business Quotient (BiZQ) is the official publication of the Singapore Business

Federation, reaching out to over 21,000 of Singapore’s business elite, chief executives

and entrepreneurs. The quarterly, published in collaboration with SPH Magazines, is your eye on Asian and global business

trends, bringing you up to date on industry developments, the economy, country profiles,

stories about successful companies and the people who lead them.

ABOVE: The ASEAN Economic Community 2015’s vision is that of a single market with free movement of goods, services, investment, skilled labour and capital flow.

Get

tyim

ages

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Jul•Aug 2013

PublisherSingapore Business Federation

10 Hoe Chiang Road, #22-01 Keppel Towers, Singapore 089315, Tel: +65 6827 6828,

Fax: +65 6827 6807, E-mail: [email protected], Website: www.sbf.org.sg

chairmanTony Chew

chief executive officerHo Meng Kit

chief operating officerVictor Tay

assistant executive director(member relations)

Cheryl Kongdirector, corporate

communicationsGerald De Cotta

Publishing AgentSPH Magazines Pte Ltd

group editor-in-chiefCaroline Ngui

group editorJoanna Lee-Miller

editorial & creativesenior editor

Low Ching Lingcontributing editor

Casuarina Pecksub-editor

Annabelle Bokcreative director

Alex Gohart directorWinnie Ong

senior designerMohamed A Rahman

managing directorDennis Pua

general managerChristopher Chan

sales & client managementassociate account director

Kaz Limsenior executive,

client management Neo Pei Shi

publishing servicesteam headAlice Chee

For advertising enquiries, please call+65 6827 6828 or +65 6319 6326

This news magazine is published by SPH Magazines Pte Ltd (Registration No. 196900476M) for Singapore Business Federation (Registration No. ROS138/2002TAP). Copyright of the materials contained in this magazine belongs to SPH Magazines Pte Ltd and Singapore Business Federation respectively. Nothing in here shall be reproduced in whole or in part without prior written consent of SPH Magazines Pte Ltd or Singapore Business Federation. Views expressed in this news magazine are not necessarily those of SPH Magazines Pte Ltd nor the Singapore Business Federation and no liabilities shall be attached thereto. All rights reserved. Editorial enquiries should be directed to the editor, BiZQ, SPH Magazines Pte Ltd, Media Centre, 82 Genting Lane, Level 7, Singapore 349567. Tel: +65 6319 6319, Fax: +65 6319 6227, E-mail: [email protected]. Unsolicited material will not be returned unless accompanied by a self-addressed envelope and sufficient return postage. While every reasonable care will be taken by the editor, no responsibility is assumed for the return of unsolicited material. MCI (P) 242/04/2013. Printed in Singapore by timesprinters, Singapore (Registration No. 196700328H).

In BiZ With

Sweet Smell of SuccessTakasago’s Managing Director Alfredo Asuncion speaks about the flavours and fragrance market in Asia.

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Inside SBF

SBF Launches AccessAsia@SingaporeSBF has launched a one-stop business concierge service to facilitate global companies to start up in Singapore and the region.

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Commentary

WCS keeps Wages AffordableSingapore’s Wage Credit Scheme aims to encourage companies to share productivity improvements with their workers.

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International Markets

Boosting Infrastructure in BangladeshImproving transportation and communication infrastructure in the country is a major goal of the Bangladesh government.

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SME Resources

Scheme to Insure Singapore DepositsThe Monetary Authority of Singapore sets aside S$20 billion contingent liquidity facility to protect depositors.

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Jul•Aug 2013

Economy Watch

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There seems to be a glimmer of a silver lining ahead for Singapore. Recent

figures from the Ministry of Trade & Industry (MTI) surprised many economists and analysts in the industry.

MTI revealed that Singapore’s gross domestic product grew 0.2% on a year-on-year basis in the first quarter of 2013 despite the advanced estimate of a mild contraction.

As DBS Economist Irvin Seah put it: “Surprise, surprise. Once again the Singapore economy bounced back to expansion.”

Stable environmentAccording to MTI, the growth catalyst came from the financial services industry, which posted a 10.5% growth on a year-on-year basis, adding value of S$987 million

Singapore’s GDP reports growth despite forecast of contraction.

Business climateWhile there is relief in view of moderate growth for 2013, this is about as good as it gets for the Singapore economy, experts say.

From an external demand standpoint, the Chinese economic juggernaut is still adjusting to moderate growth, compared to higher hopes that most analysts had expected. Also, the recessionary and subdued profile of the Eurozone is not expected to provide any upside any time soon.

The periodic BT-UniSIM business climate survey, released in May 2013, points to these undercurrents. Of the 155 firms polled from late March till mid-April, 43% said that business activity in the next six months will worsen compared to a year ago. This reflects a marginal dip from the 45% who thought similarly in the

to the economy in the first three months of the year (refer to chart: GDP and Sectoral Growth Rates in 1Q 2013).

The expansion was underpinned by robust growth in the sentiment-sensitive segment and the financial intermediation cluster amid signs of stabilisation in the external environment.

As the Ministry views it, the expected modest growth in the US economy and “healthy domestic demand from within this region will lend support for the Singapore economy to nudge growth of 1% to 3% in 2013.”

Agreeing with the same sentiments, Mr Seah observed that

“domestically, Singapore is showing gradual improvements in managing inflation and growth”, leading the bank to forecast a 2.5% growth for the full year.

Statement from the Ministry of Trade & Industry

“Healthy domestic demand from within this region will lend support for the Singapore economy to nudge growth of 1% to 3% in 2013.”

Is the Global Economy Stabilising?

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preceding poll.According to the recent SBF-DP

SME Index for April to September 2013, improvements in the global economy are not expected to translate into improved sales and profits for small and medium enterprises (SMEs).

Singapore SMEs are less positive about their sales and profit performance, despite a slightly improved business outlook for the next six months. Local concerns including rising costs, tightening foreign labour policies and the strong Singapore dollar continue to weigh heavily on SME owners (refer to story on the SBF-DP survey in Inside SBF).

Barclays Economist Joey Chew put it succinctly when he said that domestic structural drag, which includes the loss of competitiveness, the fading away of the labour intensive industry, and the cap on the supply of foreign labour has put a lid on any optimism.

On the road to recovery

A bit more bullish on the short term prospects

of the Singapore economy is UOB Economic-Treasury

Research, which forecasts the Singapore economy achieving 3% growth for 2013 (refer to chart for trend analysis).

The team, referring to recent high frequency economic indicators, said that the “recovering trend” in recent months looks set to continue. “Economic growth will be led by a strong recovery in the manufacturing industry, where we expect it to grow 4.3% this year,” it said in a report shared with BiZQ.

The team adds that the service-producing industries, with 62% share of GDP, will continue to provide stable growth to the overall economy by growing 2.3%, better than the 1.2% growth seen in 2012.

Challenges aheadIn this context, most Singapore businesses still bear a cautious visor when it comes to their outlook for the second half of the year. The challenging supply in terms of labour will continue to bite Singapore companies, even though they might be operating in promising markets.

Take the construction sector in general and key players such

ON THE ROAD TO RECOVERY

The “recovering trend” in recent months looks set to continue.Economic growth will be led

by a strong recovery in:

MANUFACTURING

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Expected growth for 2013

4.3%SERVICE-PRODUCING

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Continual growth of

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GDP and Sectoral Growth Rates in 1Q 2013

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Overall GDP Growth

Other Services

Transportation & Retail

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Manufacturing

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as CSC Holdings. Despite the continued growth of infrastructure and construction projects in the pipeline, the group feels that the rest of the year will remain challenging.

Its profit margin will continue to be under pressure as “intense competition within the industry continues to dampen tender prices in the face of rising costs. In addition, the Government’s recent measures to tighten the supply of foreign workers have led to a labour crunch, resulting in escalating wage costs,” said the company’s Chief Financial Officer Lee Quang Loong.

“In light of this, the Group will maintain a prudent approach and keep a tight rein on costs while exploring more efficient ways of harnessing its existing resources to improve productivity. It will also actively seek out opportunities to leverage its presence in Malaysia and Thailand to grow its regional footprint, in order to improve its competitiveness and enhance its income stream,” he said.


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Jul•Aug 2013

Economy Watch

The Group continues to sharpen its focus on increasing its market share from existing customers and winning new programmes and customers,” the company’s spokesperson said. To foster growth, Venture is hoping to pursue strategic investments to meet its longer term objectives.

Another electronics company facing similar prospects is homegrown semiconductor service provider Sunright Limited. Having reported losses in the first quarter of 2013 and faced with a prospect of a global market that is expected to grow 4.5% in 2013, CEO Samuel Lim iterated his view that the market is soft.

Even with the modest growth expected, Mr Lim said that Sunright sees “windows of opportunities within the industry, such as smart phones, media tablets and cars. The latest applications are packed with new features making the future exciting.” But, he maintained, “We remain cautiously optimistic”. •

2013 GDP forecasted to grow 3%

Source: CEIC, UOB Economic-Treasury Research’s Estimate

Mr Michael Tay, Executive Director of The Hour Glass Group

“The confluence of dynamic external political and economic developments and the changing landscape in Asia resulted in an increasingly undefined retail environment. Consumer spending patterns are becoming increasingly difficult to predict.”

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changing landscape in Asia resulted in an increasingly undefined retail environment. Consumer spending patterns are becoming increasingly difficult to predict.”

Mr Eli Manasseh (Nash) Benjamin, CEO of F J Benjamin Holdings, echoed a similar sentiment: “As expected, we continued to witness softness in retail spending in Southeast Asia and further declines in demand for luxury

timepieces in China and Hong Kong.”

Another industry sector facing

similar concerns is Singapore’s traditional mainstay – manufacturing. Emerging from a reported drop in

profits in the first calendar quarter

of 2013, Singapore’s flagship electronics

contract manufacturer Venture Corporation said that the operating environment for the global electronics industry remains challenging.

“There is still no clear sign that customers’ end market is staging a strong recovery in the near term.

Changing retail landscapeThe retail sector is no exception. Major players like specialist watch retailer The Hour Glass and fashion and lifestyle group F J Benjamin Holdings see challenges ahead.

The Hour Glass Group Executive Director Michael Tay told BiZQ: “The confluence of dynamic external political and economic developments and the


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BiZ Voice

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JAPANESE TRADE CHAMBERThe Japanese Chamber of Commerce & Industry (JCCI) was established in 1969 in Singapore. With more than 700 members engaged in various sectors of businesses and industries in the country, JCCI aims to promote and expand both trade and investments between Singapore and Japan.www.jcci.org.sg

Japan to Facilitate Free Trade in AsiaMr Mitsuhiro Akiyama, newly appointed President of Japan’s trade chamber in Singapore and an SBF Council Member, talks about regional trade ties.

J apan’s recent decision to enter the Trans-Pacific Partnership (TPP) free trade agreement

(FTA) negotiations is a major inflection point for the TPP negotiating parties. Many industry observers are looking to Japan to contribute towards the creation of robust trade and investment rules within this region.

The inclusion of one of the world’s largest economy shows promise of an impending recovery, which augurs well for Asia, said Mr Mitsuhiro Akiyama, Director and General Manager of Sumitomo Mitsui Banking Corp in Singapore.

Mr Akiyama is also the President of the Japanese Chamber of Commerce and Industry (JCCI) in Singapore, Council Member of the Singapore Business Federation (SBF) and the Singapore National Employers Federation.

He believes Japan can contribute to creating and strengthening free and open economic partnerships in the region through the TPP agreement. The Regional Comprehensive Economic Partnership involves 10 members of ASEAN and six other countries, including Japan and New Zealand.

Promote strong partnershipsMr Akiyama explained that existing ASEAN FTAs do not adequately deal with post-border trade and investment barriers. Non-tariff measures such as industrial standards and sanitary measures can still become non-tariff barriers blocking trade.

For example, the ASEAN

Trade in Goods Agreement has eliminated almost all import duties on intra-ASEAN trade. However, goods are still blocked through member-specific non-tariff barriers, he explained.

Such restrictions continue to be created, but he believed that ASEAN does not have sufficient institutional structures to deal with them effectively.

This is where he hopes that he can make a concerted effort in helping ease similar restrictions between Singapore and Japan in his role as President of JCCI and Council Member of SBF.

Mr Akiyama said that Singapore and Japan are both open economies and thus, well-positioned globally to gain from improving trade relations in Asia. With Japan’s economic recovery strengthening, this partnership would greatly promote regional and global trade and investments between the two countries.

He said that many countries around the world are already placing greater focus on Asia in order to ride on the region’s rise in economic vibrancy.

Japanese companies seeking to establish regional headquarters in Asia would be able to leverage on Singapore’s stable institutional and economic framework to grow their businesses in the region. This will cement Singapore as the key regional hub in finance and trade. In particular, Singapore’s real estate and construction sectors are set to benefit from these developments, he explained.

However, he also pointed out that Singapore’s rising business costs, labour shortage and dependency on foreign labour were factors which could dampen the influx of Japanese investments into the country. Some of the other concerns he raised were rising wages and growing competition which have been influencing Japanese corporate strategies. •

Japanese companies would be able to leverage on Singapore’s stable institutional and economic framework to grow their businesses in the region. This will cement Singapore as the key regional hub in finance and trade.


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APEC Business Council Focuses on Partnership, Resilience and GrowthPressing issues facing businesses and recommendations to facilitate trade and investment were also discussed.

Opportunities in the regionAt the meeting with APEC MRT in April in Surabaya, ABAC presented their recommendations relating to the FTAAP and on foreign direct investments to several APEC trade ministers. The council urged the ministers to ensure that the pathways to an FTAAP – which include the Trans-Pacific Partnership and the ASEAN-led Regional Comprehensive Economic Partnership – will eventually converge into the FTAAP.

The recent APEC Business Advisory Council (ABAC) meeting in Singapore this

April saw some 150 prominent business leaders from the 21 Asia- Pacific Economic Cooperation (APEC) economies attending this second – in a series of four – ABAC Meeting 2013. This year’s overall theme for ABAC is “Partnership, Resilience and Bridges to Growth” and Indonesia chairs this year’s forums.

This forum was organised by the Singapore Business Federation (SBF) in its capacity as the Singapore secretariat for the APEC Business Advisory Council. The meeting was an opportunity to profile Singapore as a champion of free and open trade, as well as a pro-business and attractive investment destination.

Singapore is currently represented by Mr Gautam Banerjee, Chairman of Blackstone Singapore; Mr Ho Meng Kit, CEO of SBF; and Mr Jackson

Yap, Group Managing Director & CEO of United Engineers Ltd.

Issues which were highlighted during the meeting included accelerating regional economic integration, promoting sustainable development, fostering Small, Medium and Micro-sized Enterprises (SMMEs) development and entrepreneurship, and strengthening and promoting the integration of financial markets.

Trade recommendationsDuring the meeting in Singapore, ABAC delegates discussed many current and pressing issues faced by businesses. The delegations also offered recommendations on facilitating trade and investments to the APEC Ministers Responsible for Trade (MRT).

The realisation of the Free Trade Area of the Asia-Pacific (FTAAP) as the best mechanism for achieving regional economic integration remains one of the key ABAC recommendations to the MRT.

ABAC said in a statement that it had been heartened by the progress made in two of the leading pathways to FTAAP – the Trans- Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP).

In particular, the interest in TPP has escalated with the recent announcement on Japan’s participation. As the world’s third largest economy, Japan’s participation is expected to boost the agreement’s economic and strategic significance and create new vibrancy and interest. This

will provide further impetus to other countries joining the TPP.

The aim of the TPP is to eliminate barriers to trade and investment, which will lead to better conditions and opportunities for business and economic growth in the region.

Key platformSBF CEO and ABAC Singapore Member, Mr Ho, said: “ABAC is a valuable platform for us to bring together top businessmen from the APEC region and our business community to forge connections and share experiences towards greater collaboration.”

This second regional meeting was a lead-up to the annual APEC Economic Leaders Meeting which will be held in Bali, Indonesia, this October. •

THE AGENDAACCELERATING REGIONAL

ECONOMIC INTEGRATION

PROMOTING SUSTAINABLE

DEVELOPMENT

FOSTERING SMMEs

DEVELOPMENT &

ENTREPRENEURSHIP

STRENGTHENING &

PROMOTING THE

INTEGRATION OF

FINANCIAL MARKETS


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Jul•Aug 2013

BiZ Voice

The Russia-Singapore Business Forum (RSBF) 2013 is

taking place this year from September 23 to 26 with the theme, “Connecting Markets, Linking Businesses”.

This forum focuses on business with the primary aim of creating opportunities for networking and concrete tie-ups. RSBF 2013 is expected to attract high-level political and business leaders from Asia and Russia/Commonwealth Integrated States (CIS) which are likely to number more than 800.

The forum, now in its 8th year, is a global business-to-business platform that was initiated by Mr Michael Tay, Executive Director of RSBF and former Singapore Ambassador to Russia. The RSBF Organising Council is led by Mr Tay under the umbrella of the Ministry of Trade and Industry.

Since the inaugural forum in 2006, RSBF has grown in stature to become Asia’s leading business and networking platform for Russian/CIS and Singaporean/Asian businessmen. It has set a precedent in bringing together top government officials and the business elite from these regions.

RSBF 2012 was graced by several high-level government officials and business leaders such as Lee Kuan Yew, Former Prime

RSBF 2013 Connects Markets, Links BusinessesThe Russia-Singapore forum aims to attract political and business leaders from both countries.

Minister of Singapore; Tharman Shanmugaratnam, Deputy Prime Minister and Minister for Finance of Singapore and Chairman of the International Monetary and Financial Committee (IMFC); Igor Shuvalov, First Deputy Prime Minister of the Russian Federation; Andrei Slepnev, Russia’s Minister for Trade and board member of the Eurasian Economic Commission; and Jim Rogers, Chairman of Rogers Holdings and Co-founder of Quantum Fund.

Rise of AsiaRSBF is taking place against a backdrop of optimism about Asia’s rise. As more companies look

to Asian markets to drive their businesses and growth, and with Russia joining the World Trade Organization, this platform is the catalyst that could energise the business potential of the Russian-Asian market.

The topics that RSBF 2013 will cover are:• The New Emerging Markets: The Case of ASEAN• Russia/CIS: Opportunities and Challenges• Global Russia: The Rise of the Global Russian Entrepreneur• Trends in Wealth Management• The Shape of the World Economy

Emerging marketsThis year, RSBF 2013 will undertake incisive discussions on new and emerging markets in the ASEAN region.

Russia has proposed many initiatives, especially in energy and food security with ASEAN, and is looking to discuss the ASEAN-Russia Free Trade Area (FTA). In fact, Vietnam has begun free trade agreement negotiations with the customs union of Russia, Belarus and Kazakhstan, which could serve as a model for an ASEAN-Russia FTA.

RSBF 2013 will examine how this region can be used as a platform by both Russia/CIS and ASEAN countries to venture into each of the markets.

Economic modernisationAs the world economy continues to shape and evolve, Russia’s growing integration in the global processes is aided by its accession to the World Trade Organization. One of the sessions in this forum will bring together policymakers and business leaders to discuss the multi-layered challenges that are needed to spur growth. •

RUSSIA-SINGAPORE BUSINESS FORUM 2013Sept 23-26, 2013Suntec Singapore Convention And Exhibition Centre

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GES 2013 Fuels Investment Hot SpotsGlobal summit eyes Southeast Asia as frontier market.

S ingapore will host the region’s leading business leaders’ forum,

“Global Entrepolis @ Singapore (GES)”, for the 10th edition from October 28 to 31 this year at Resorts World Sentosa Singapore.

The GES Business Leaders Summit 2013 is a global networking and business matching platform for influential senior business executives, entrepreneurs, high-net-worth individuals, founders and policymakers who attend the forum each year.

Presented by the Singapore Business Federation (SBF), the republic’s apex business chamber, the summit will focus its annual outlook on the global financial landscape and provide insightful analyses of the impact of leadership transition in major economies on regional businesses.

International speakersGES 2013 will feature more than 120 international speakers who will provide insights on global trends and insights into regional markets. The summit will help attendees understand some of the key issues to

convenient opportunities for trade, investment and networking”.

Representing the Sharjah Investment and Development Authority (Shurooq) in the event last year, HE Marwan bin Jassim Al Sarkal said: “Singapore has one of the fastest growing economies in the world and its government actively encourages foreign investment to diversify the State’s resources.”

Global outlook for 2014 One of the keynote sessions during GES 2013 will highlight the changing landscape of the global economy for 2014. Panelists will discuss how emerging markets will continue to gain momentum relative to the more advanced economies and how Asia is now

GLOBAL ENTREPOLIS @ SINGAPORE 2013Oct 28-31, 2013Resorts World Sentosa Singapore

be discussed at the summit this year. Last year’s attendees of the

Business Leaders Summit include Mr Lim Hng Kiang, Singapore Minister for Trade and Industry; HE Dato’ Sri Mustapa Bin Mohamed, Malaysia Minister of International Trade and Industry; Pavlo Sultanskyi, Ambassador of Ukraine to Singapore; Mr Gordon Orr, Chairman of McKinsey & Company (Asia); as well as Dr Han Duck-soo, Chairman & CEO of Korea International Trade Association and former Prime Minister of Korea.

Last year, GES 2012 presented 132 speakers who highlighted opportunities in the mega-infrastructure build-up of Asia and explored the hot sectors and projects in nine emerging regional economies. It was complemented by forums on Asia Pacific Sustainability Leadership, Supply Chain Leadership, Growth through Franchising and the SBF SME Convention.

Ukraine Ambassador to Singapore, HE Pavlo Sultansky said that the country participated in GES 2012 because Singapore provided a “comprehensive platform and p.14 SB

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Highlights for GES 2013

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Emerging markets will continue to gain monentum relative to the

more advanced economies – in consumption and investment

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Asia Pacific region as the centre of influence for global businesses.

N America and Europe continue to be vital export destinations for Asia

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Opportunities available in emerging economies that continue

to be supported and driven by their domestic demand

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How businesses can balance growth opportunities amidst challenges

in the global landscape


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Jul•Aug 2013

BiZ Voice It Pays to Build Sustainable Businesses

Companies that compete in the global arena are increasingly conscious of the

need to incorporate sustainability as a significant part of their operational framework and identity. Sustainability reporting is gaining traction as an important process to measure or assess a company’s performance.

The key areas of corporate responsibility that businesses should look into include governance, labour practices and resource management.

The Singapore Business Federation (SBF) organises its annual Singapore Sustainability Awards as part of its efforts to promote eco-friendly business practices. Launched in 2009, the awards recognise companies for their contributions to the adoption of best sustainable practices.

SBF’s Chief Operating Officer, Mr Victor Tay, believes that sustainability in business will create environmentally friendly products and services, foster greater social responsibility and contribute to enhanced inclusive growth.

In this article on sustainability

in business, he speaks about how these outcomes are substantial milestones in the push for a greener business community.

What does it take for a company to be sustainable in Singapore in terms of costs and investments?Companies need to understand that the cost of not adopting sustainability will leave them vulnerable, uncompetitive and unattractive to the new generation of discerning consumers which far outweigh any perceived investment and costs related to implementing sustainable practices.

A company would need to create a framework for meaningful implementation engaging stakeholders, management, staff and customers. Many successful companies have ingrained sustainable practice as a virtuous cycle, which is intertwined with their business model and processes. Sustainable companies no longer compete just on streamlining bottom line of cost and extending top line of profit. They aim to capture mindshare of market

regarded as the global economy’s growth engine – both in terms of consumption and investment.

While North America and Europe continue to be vital export destinations for Asia, the Asia- Pacific region has become central in influencing global businesses. This session will look into how Asian corporations have emerged as global leaders in their own right – challenging traditional hegemonies.

Growth for frontier economiesDespite weakness in the global economy as it continues to be challenged by Europe’s debt crisis, Asia is still experiencing growth at a moderately strong pace.

Join in this session for a look at the opportunities available in emerging economies that continue to be supported and driven by their domestic demand. Panelists will also discuss how businesses can balance growth opportunities amidst the challenges in the global landscape.

Dynamic Southeast AsiaFuelling the region’s hotspot for investments are countries such as Myanmar, Vietnam and Indonesia which are attracting the largest percentage of Singapore’s investments abroad.

GES Business Leaders 2013 will be the best platform where decision makers and business leaders will provide unprecedented insights into what the ASEAN Economic Community 2015 (AEC 2015) can mean to investors.

With the focus on Asia’s demographics – the middle class, a young population and urbanised markets, this region will continue to fuel growth and spur increasing foreign direct investments into the region.

Get insights into what the Regional Comprehensive Economic Partnership, the Trans-Pacific Partnership and the AEC 2015 can mean to the global business community. •

SBF’s Chief Operating Officer Victor Tay says the benefits of sustainability far outweigh the costs.


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partners, thus, linking them to business leads in the clean energy and sustainable development sector. In addition, members have access to available help schemes, incentives and sources for funding.

Do you think sustainability is a C-level concern for many companies currently?For the progressive companies, sustainability has become the top issues preoccupying the minds of C-level executives. Certain companies are already having appointments with the title of Chief Sustainability Officer. One of the key guidelines (1.1f) in Singapore’s Code of Corporate Governance pertains to roles of the board to ‘consider sustainability issues, e.g. environmental and social factors, as part of its strategic formulation’.

It is increasingly apparent that governments and civil society at large require businesses to contribute to inclusive growth, and it is imperative for C-level executives to formulate the vision, set the path, evangelise and push for better sustainability practices within the company. This has become an important license for businesses to be accepted as a good corporate citizen.

To help drive Singapore as a hub for sustainable development, SBF and the National University of Singapore is launching an Executive Programme called Fundamentals of the Triple Bottom Line in Sustainability and Innovation and it’s tailored for C-level professionals.

How important should sustainability be weighed against traditional business aims?Sustainability has become an important licence for businesses to operate across multiple regions and societies. Businesses need to understand today’s stakeholders and societal expectations to operate and deliver products and services in a more responsible manner. In order to reach this goal, the view of sustainability must be embedded within the organisation’s operating principles.

Companies need to remember that their ‘traditional’ stakeholders such as employees and customers are the same people who are asking for better compliance, and sustainably developed products.

What more do you think can be done regarding sustainability in Singapore?Singapore already has a commendable baseline in terms of standards that demonstrate sustainability and responsibility. This provides Singapore companies a global operating license, which we cannot afford to compromise.

However, policymakers have an avenue to encourage more companies to participate in Sustainability Reporting; aligning to principles and standards including Global Reporting Initiative (GRI), ISO 26000, UN Guiding Principles of Business and Human Rights.

We are starting to see that moving forward, Sustainability Reporting will confer our Singapore companies with that all important competitive edge in the global arena.

In April, SBF and Singapore Compact organised a two-day training seminar on Sustainability Reporting and we were encouraged by the large number of attendees. This shows that companies are aware of the importance of, and the need for, Sustainability Reporting. •

place and motivate staff while contributing to the society.

Why would companies want to implement sustainable practices in their organisations?Sustainability is changing the way companies operate and compete. Today, the global trend in the marketplace balances the triple-bottomline of:● Planet leading to environmental efficiency● People leading to social efficiency● Profit leading to economic efficiency

Planet: Over the past decade, environmental issues have created numerous opportunities across energy efficiency, water cleansing, waste recycling, as well as, urban solutions. In an attempt to “reduce, reuse, recycle”, many companies had refined their business model to reduce carbon footprint and leverage on these opportunities. .

People: Many sustainable practices require intimate involvement of stakeholders including customers, management and staff. One example of such best practice is the focus on corporate social responsibility through fair employment. This will foster better trust and employee-employer relations which will in turn drive productivity and innovation.

Profit: The SBF Sustainable Development Business Group (SDBG), set up in 2009, assists companies to implement sustainable business practices and opportunities in green growth businesses. It also connects members to various industry verticals and technology

Mr Victor Tay’s experiences include industry strategies to upgrade overall ecosystem competence, implementing capability upgrading programmes, as well as initiate seed funding and financial assistance to enterprises.

Prior to joining SBF, he was a Director at SPRING Singapore overseeing a spectrum of sectors. He was previously a principal consultant with PricewaterhouseCoopers, KPMG and Coopers and Lybrand focusing on Greater China region.

GLOBAL TREND IN THE MARKETPLACEbalancing the triple bottomline

PLANET

environmental efficiency

PEOPLE

social efficiency

PROFIT

economic efficiency


Name and Date:


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RCEP (Regional Comprehensive Economic Partnership). FTAAP (Free Trade Area of the Asia Pacific). APFF

(Asia-Pacific Financial Forum). TPP (Trans-Pacific Partnership). EAFTA (East Asia Free Trade Area). AEC (ASEAN Economic Community).

For the uninitiated, this is just an alphabet soup. Closer examination of these terms reveals what they all have in common – the point of economic integration. As a case in point, AEC 2015 will happen in just about two years’ time.

AEC 2015 envisages the transformation of the integrated group into a single market and production base, with free movement of goods, services, investment, skilled labour, and freer flow of capital. In support of this vision, the Singapore Business Federation (SBF), together with the ASEAN Business Advisory Council Singapore (ASEAN-BAC), has championed several initiatives, including ASEAN logistics connectivity, the ASEAN Competitiveness Survey and the Asean Business Awards.

But as some would say, the road to Rome may not be an easy one. In this case, the run-up to the integration by 2015 may not be all that smooth.

At the recently-concluded ASEAN Summit, Philippines President Benigno Aquino told the media that Southeast Asia’s efforts to create a single market by 2015 are in their hardest phase, owing to protectionist reflexes on sensitive sectors.

“They have finished with the easy parts but the accomplishments will not be as fast as in discussing the hard parts. When you reach that point, there can be some protectionist measures taken by each economy.

“But since we are focused on reaching the target, everyone

Upping the Ante in

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BiZQ looks into how regional trade agreements are the key to transforming Asia.

Economic Integration

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who believes that one community is beneficial to everybody concerned will really try hard (to reach the goal),” he said.

Cross-border opportunitiesNot surprisingly, in the midst of this frank assessment, the Management Association of the Philippines (MAP) echoed concerns that some of its industries would not be ready to step up to the upcoming changes.

At stake is a market-based cross-border opportunity comprising 600 million people. With a group this big, ASEAN houses a population larger than Europe and generates an aggregate gross domestric product larger than that of countries like India or Russia.

A recent report by the Asian Development Bank (ADB) forecasts strong infrastructural and trade growth in the region in support of this market. It estimates that ASEAN needs US$600 billion (S$752 billion) in such investments up to 2020 to build the necessary power, transportation, water and sanitation, and telecommunications infrastructure.

At present, ASEAN members have stated that about 78% of the measures under the AEC blueprint have already been implemented.

ASEAN adopted the AEC blueprint at the 13th ASEAN Summit in 2007

– over the past five years, member states have committed real effort to integrating this grand regional community.

Growing regional outlookExperts see beyond the current challenges in order to anchor longer term potential.

Mr Rajiv Biswas, Senior Director and Asia Chief Economist of global information company IHS, said that the size of the ASEAN economy will double by 2020, with the nominal gross domestic product of the regional bloc increasing to US$4.7 trillion by then.

He explained that intra-Asia partnerships will transform the landscape, given that frontier markets such as Vietnam and Myanmar continue to open up while Indonesia is expected to continue to grow.

Agreeing with these same sentiments is Mr Aninda Mitra, head of ANZ’s Southeast Asia Economics desk. “Southeast Asia is firmly back on global investors’ radar screens. We keep hearing of increasing investor interest in building or broadening allocations in the region and several regional corporations are increasingly keen to hear about the macro prospects of other ASEAN countries,” he said.

Referring to the team’s recent research, Mr Mitra told BiZQ that the Southeast Asia region’s

Philippines President Benigno Aquino

“They have finished with the easy parts but the accomplishments will not be as fast as in discussing the hard parts. When you reach that point, there can be some protectionist measures taken by each economy.”

GDP growth gap with India has closed and the gap with China has narrowed.

“Some of this convergence is, of course, due to the slowing economic growth of India and China. Nonetheless, resilient growth, alongside low inflation, reasonably stable external balances and sovereign debt profiles should warrant any investor to seriously look at the region, if they have not done so already,” he said.

Marching forward ASEAN is becoming increasingly compelling as a collective market in terms of demand and supply to key regions in the world.

A strong case in point is that ASEAN – as a collective group – recently replaced Japan as China’s second largest import source.

One of the key areas where significant progress has been made is in transportation and logistics. ASEAN has already adopted a roadmap in the area of maritime transportation services, embarked on multilateral agreement on the full liberalisation of air freight services and agreed on an Open Sky Policy and a Transport Facilitation Agreement that enables interstate transport.

Experts say that Singapore’s attraction in the emerging 2015 group lies in these above areas and not so much as a production base but more as a springboard, and a

ASEAN surpassed Japan as China’s No.2 import sourceUSD mn250,000

200,000

150,000

100,000

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02001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

China’s imports from ASEAN

China’s imports from EU

China’s imports from Japan

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gateway to ASEAN.A good case in point is reflected

in the recent moves by regional logistics giant Toll Group.

Sensing strong opportunities in Singapore’s hinterland, the company, fresh from upgrading its offshore logistics capabilities, is looking to grow its exposure to the marine and offshore, oil and gas industries in Southeast Asia and beyond. The South China Sea and the Andaman Basin have been identified as areas ripe for oil and gas exploration and production.

It has been forecast that global deepwater spending is expected to double from over US$100 billion in the last five years to over US$200

forwarding and supply chain solutions. Kerry has just commenced operations in Singapore.

According to the company’s Managing Director for South Asia, Mr Robert Tan, the focus of the new operation is on offering its supply chain management activities from its Singapore hub to meet growing demand from clients in South East Asia and Australia.

“The hub will facilitate the needs of our high-end customers in the fashion & lifestyle and electronics industries. We have special areas designated for the handling of these time sensitive and valuable products and there is a high level of security,” he said.

Kerry also set up a joint venture with Vietnam’s Tin Thanh Express earlier this year. The joint venture will complement the Singapore operation to offer a complete range of freight and logistics services in Vietnam and the region.

The ASEAN grouping is making it easier for businesses to expand their business within Asia.

Out of the ASEAN Summit 2013 in April has come the APEC Business Traveler Card (ABTC), which should be in use by 2015. This is a card that will allow frequent business travelers from ASEAN countries to stay for months at a time in other ASEAN countries without the need to obtain a visa.

TRAVELLING AROUND THE REGION

ASEAN ASEAN Secretariat (SME Agencies)

Brunei Darussalam ● Entrepreneurial Development Centre ● Ministry of Industry and Primary Resources

Cambodia ● Department of Small Industry and Handicraft ● Ministry of Industry, Mines and Energy

Indonesia ● Ministry of Cooperative & SMEs ● SME’s Co-Indonesian Trading Board

Laos ● SME Promotion and Development Office ● Ministry of Industry and Commerce

Malaysia ● SME Corp Malaysia ● SME Info – One Stop SME Resources

Myanmar ● Ministry of Industry

Philippines ● Bureau of SME Development ● Department of Trade and Industry

ASIAN DEVELOPMENT BANK (ADB) FORECASTS

Estimates ASEAN needs

US$600 billion

(S$752 billion) in investments up to 2020 to build

NECESSARY POWER

TRANSPORTATION

WATER AND SANITATION

TELECOMMUNICATIONS

INFRASTRUCTURE

The free movement of business and leisure travelers within ASEAN is one of the pillars of the Asean Economic Community.

Discussions about extending this to countries outside of ASEAN, most likely businesses from the so-called “plus three” (China, Japan and South Korea), are underway.

Below is the list of point agencies for companies looking to expand into the region.

billion in the next five years. Topping that, Asia is expected

to be at the centre of this growth, especially in the number of deepwater wells drilled, with a projected growth rate of 20%.

Naturally, this means that companies will need an efficient base in Asia to undertake activities such as repair and maintenance of specialised offshore equipment, as well as re-supply and mobilisation of offshore vessels.

Supply chain managementAnother step in the same direction is being taken by Hong Kong-based Kerry Logistics, an integrated logistics, international freight


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Aninda Mitra, Head of Economics, Southeast Asia, ANZ

“Southeast Asia is firmly back on global investors’ radar screens. We keep hearing of increasing investor interest in building or broadening allocations in the region and several regional corporations are increasingly keen to hear about the macro prospects of other ASEAN countries.”

Healthcare playersBeyond logistics, in the pharmaceutical space, drug development services company Covance Inc which is looking to use Singapore as a springboard to expand its reach into other ASEAN markets like the Philippines.

“For the last 13 years, Covance has provided central laboratory testing services in Singapore, where we have seen increasing demand for efficient, high-quality clinical trial data and support,” said Mr Jonathan Koch, Corporate Vice President and President, Covance Central Laboratory Services.

“This expansion will help us better serve both our local and multinational customers’ R&D needs in key therapeutic areas like oncology and metabolic diseases.”

SBF’s role in internationalisationSingapore companies are no strangers to overseas ventures, and are quick to latch on to emerging opportunities.

The SBF National Business Survey 2012/2013 indicated that Myanmar, Vietnam and Indonesia in particular, and Asia in general, are on members’ radar screens.

About 94% of respondents indicated that they are looking to Asia for better opportunities to invest and expand their operations.

Some 40% of firms polled also declared that 70% of their revenue is generated overseas – mainly in trading, manufacturing and logistics and transportation.

Businesses are painfully aware that forays into unfamiliar territory must be bolstered by on-ground assessments – market knowledge of legal, social and economic environments as well as local business and government connections.

As Singapore’s apex business chamber, this is where SBF can help its 19,000 members. SBF’s extensive network of nearly 100 MOUs and linkages with business chambers and government agencies across more than 60 countries enables its members to potentially connect with some nine million businesses worldwide.

In addition, SBF annually leads more than 20 overseas missions and receives over 100 visiting business and official delegations. At the bilateral level, SBF works through business councils to promote two-way trade and investment.

SBF also plays an active role in communicating the benefits of Free Trade Agreements (FTAs), as these commercial instruments confer advantages in cross-border transactions like trade and foreign direct investments. It engages the business community in FTA dialogue sessions to gauge their

needs and concerns in the run up to FTA negotiations.

SBF is also exploring the establishment of a Trade & Investment Policy Business Group to consolidate feedback from the private sector on the development of and issues and impediments to cross border trade and investments. The group will also deliberate new ideas and proposals and forward feedback to the Government for consideration.

This initiative will strengthen the voice of Singapore’s business community in international trade and investment policy development, and ensure that Singapore’s business objectives and interests are promoted and safeguarded.

Comprehensive partnershipBeyond private sector initiatives, there are also the likes of the regional efforts taking place through the RCEP and Asia-Pacific Economic Forum (APEC).

Many analysts believe that such efforts will further entrench ASEAN integration. •

ASEAN EXTERNAL ECONOMIC RELATIONS

EAFTA

RCEP/CEPEA

ASEAN - Pakistan

ASEAN - Russia

ASEAN - US TIFA

ASEAN - Canada

ASEAN - Japan CEP

AEC

TPP

ASEAN - Australia -New Zealand FTA

ASEAN - EU

ASEAN - GCC

ASEAN - India FTA

ASEAN - Korea FTA

ASEAN - China FTA


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RSM Chio Lim LLP is the public accounting arm of Chio Lim Stone Forest. With

more than 600 staff in Singapore and 300 in China, the company is experienced in providing foreign investors with one-stop convenience and dedicated expertise to set up operations in Singapore and overseas.

Mr Lim Lee Meng, Senior Partner of the company, gives BiZQ his insights into his passion and commitment in helping both local and foreign companies internationalise in diverse markets.

Singapore has grown to become one of the most attractive investment destinations. What are some key factors that have made entry into the Singapore market easier for many foreign businesses?Primarily, the Singapore government’s pro-business stance enables hassle-free establishment of businesses, where the process of incorporation is effected within three days. This, coupled with Singapore’s transparent legal system, simple tax structure and low tax rates, means that foreign businesses face low barriers to entry, and creates a holistic environment for businesses to operate in with little fear of facing legal or operational threats. Attractive tax incentives such as the Global Trader Programme for concessionary tax rates, further enhances Singapore’s attractiveness as an investment destination.

Singapore’s extensive list of 74 tax treaties, 18 FTAs and 40 investment guarantee agreements with numerous countries/territories makes it an attractive base for foreign businesses to set up their regional investment holding vehicles and international trading platforms. As the fourth largest financial centre in the world, Singapore is also well-positioned to take on the role of a regional funding and treasury management centre.

In other markets like China and Japan, what are some major challenges faced by businesses that want to expand into such countries?In the case of China, foreign businesses often worry about intellectual property rights, the relatively complex tax system and labour laws that are biased towards employees. China’s large geographical area also poses a challenge when businesses build sales and distribution channels, as well as supporting service outlets.

Foreign businesses are also wary of China’s relative lack of respect for corporate governance. Entrusting a legal representative with the authority to run the company and the use of company seals to execute important corporate documents without requiring signatures from authorising officers are common practices. Practices like these threaten enterprise-wide risk management

Keeping a Clean SheetGood corporate governance helps companies set up systems, principles and processes to pave the way for internationalisation.

as well as internal accounting and operational controls.

In Japan, the high cost of setting up and operating a business proves to be the main challenge for foreign businesses. Japan’s tight labour laws also generally favour employees, making it harder to fire than to hire.

Another major hurdle for foreign businesses interested in Japan is the language. With Japanese being the sole language spoken for many Japanese, finding a business partner who is able to communicate in English is often daunting.

How important is it for companies to understand that they need to improve their standard of corporate governance, especially when they have offices in diverse markets?With many recent corporate failures, the need for good corporate governance remains in the limelight. Corporate governance incorporates a set of systems, principles and processes established by the Board that helps a company achieve its objectives.

Good corporate governance starts at the top with the Board and senior management adopting robust, transparent and accountability-driven practices, including policies, approval limits and frameworks; this helps to ensure consistent application. Robust corporate governance is held in high regard by stakeholders as a mechanism that preserves business value. •

Mr Lim Lee Meng, Senior Partner of RSM Chio Lim LLP

“As the fourth largest

financial centre in the world, it is also well-positioned to take on the role of a regional funding and treasury management centre.”


HYFLUX LTD80 Bendemeer Road, Hyflux Innovation Centre, Singapore 339949Tel: 65 6214 0777 Fax: 65 6214 1211 Website: www.hyflux.com

Hyflux is dedicated to delivering solutions for a sustainable and secure water future.

With a fully-integrated platform and proven membrane technologies in water and process streams, Hyflux is the partner of choice for cost-effective and environmentally responsible solutions in seawater desalination, water recycling, wastewater treatment and potable water treatment.

Over the years, Hyflux has amassed in-depth experience in designing, developing, testing and commissioning, operating and maintaining industrial and municipal water treatment plants of varioussizes and functions.

Through its projects across the world, Hyflux has left an indelible imprint on the communities that it serves,driven by its commitment to produce water that is clean, safe and affordable.

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Innovations

Singapore’s well-documented lack of natural water resources may be a thing of the past

in the near future as it looks to transform into a global hydrohub.

Singapore’s water hub is being developed through a three-pronged strategy – capability development, cluster development, and internationalisation of Singapore-based companies, said Mr Vivian Balakrishnan, Minister for the Environment and Water Resources. He also recently announced that the inaugural Singapore International Water Week

(SIWW) Water Utilities Leaders Forum would be held in September.

To emphasise the importance of investing to become a water hub, the Republic is stepping up its collaboration between scientists and the industry in the search for real-world applications.

The Nanyang Environment and Water Research Institute (Newri) is setting up a facility for water research and will gather four centres of excellence – water management, waste management, membranes applied environmental

Singapore Aims to be Global Water Hub

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microbiology, and bioprocesses – under one roof.

The institute was set up by the Nanyang Technological University (NTU) in the JTC CleanTech Park. About 50 tenants dealing in clean technology (cleantech), such as DHI Water & Environment, Sinomem Technology and Solid Asia, are expected to be housed in CleanTech One.

Newri expects to receive S$132 million in renewed funding from public agencies like the National Research Foundation, the Economic Development Board, the

The nation is stepping up investment efforts, looking at innovative solutions and developing talent in this field.

Mr Vivian Balakrishnan, Minister for the Environment and Water Resources

“Singapore is close to being a global hydrohub, turning the country’s well-documented lack of natural water resources into a global opportunity.”

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Environment and Water Industry Programme Office (EWI), and the National Environment Agency.

The institute is also looking to firm up its next phase of research that aims to commercialise existing technologies through collaborations with leading water companies such as Suez, Keppel, Sembcorp and Toray.

Innovative solutionsSingapore’s national water agency PUB is also currently working with a Dutch water supply company, PWN Technologies, in the search for innovative water solutions to boost the country’s status as a global hydrohub. PWN Technologies develops innovative drinking water treatment technology, on advanced water treatment. The collaboration is expected to strengthen industry relations between Singapore and the Netherlands. Both sides are expected to work on developing knowledge-intensive programmes and projects to reap scientific and technological benefits.

PWN Technologies currently has a demonstration plant at Chua Chu Kang Waterworks, which is funded by EWI’s Technology Pioneer (TechPioneer) scheme.

Growing the talent poolDeveloping a world-class pool of water professionals has been and remains a key pillar of EWI’s capability development strategy to help water companies capitalise on growth opportunities outside of

Singapore. EWI supports the Aquarius

Programme, jointly developed by PUB and the Human Capital Leadership Institute (HCLI) as a platform for water companies to develop leaders for their regional control towers and innovation centres in Singapore.

The Aquarius Programme – Raising the Next Wave of Water Business Leaders – aims to develop the next generation of regional and global water business leaders, and position Singapore as a world-class water talent development hub.

The programme is customised towards meeting the increasing international demand for executive management professionals who understand the water industry’s dynamics, particularly in Asia.

As the premier executive leadership programme under PUB’s Academy@WaterHub (an institute of advanced learning for water professionals), the Aquarius Programme will bring together an exclusive group of senior executives to expand their capabilities in effective leadership and

The inaugural SIWW Water Utilities Leaders Forum will be held on September 18-19. The forum is an intimate gathering of global water utilities leaders to discuss challenges and co-create solutions in their respective areas. Discussion outcomes will be documented and showcased at SIWW 2014, which will be held in June 1-5 next year.

Currently in its sixth edition, SIWW gathers global water leaders and practitioners from both public and private sectors to engage in discussion and debate, network with key industry players, and showcase leading-edge technologies and best practices.

SIWW comprises the Water Leaders Summit, Water Convention,

Singapore International Water Week

management of water businesses. As Asia’s rapid economic and

population growth generates greater demand for water-related services and infrastructure, there is a need for a deeper appreciation of its infrastructure markets, an understanding of the dynamics of the global water industry, and a drive to enhance leadership capabilities in managing water businesses.

To meet these needs, the Aquarius Programme will cover both leadership and business modules with a strong focus on water and hold a by-invitation-only inaugural run from Sept 16-19.

Recognising the drive to increase the pool of leaders in the water industry, Mr Peter Ong, Chief Executive Officer of HCLI said:

“Leaders who are able to lead and manage across dynamic, cross-social, cross-environmental and cross-technological boundaries are increasingly required to face the water industry globally.

“HCLI recognises that a sustained successful development of Asian human capital capabilities is key.” •

Water Expo, Business Forums and more. It culminates in the presentation of the Lee Kuan Yew Water Prize.

This global water prize honours outstanding contributions by individuals or organisations towards solving the world’s water problems by applying innovative technologies or implementing policies and programmes to benefit humanity.

THE AQUARIUS PROGRAMME

Raising the Next Wave of Water Business Leaders

JOINTLY DEVELOPED

BY PUB AND HCLI

Aims to develop the next generation of regional and global water business leaders, and position

Singapore as a world-class water talent development hub.

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Chances are you’ve tasted or caught a whiff of something fragrant that Takasago has had a hand in creating. Francis Kan speaks with Alfredo Asuncion Jr about the flavours and fragrance market in Asia.

chewing gum flavour for a client that can last far longer than usual, Mr Asuncion revealed.

“It is about the whole experience, and flavour is only one component. As the economy improves, people constantly look for more indulgent experiences. You may have a good flavour, but a lousy delivery system is not going to sell the product well,” he explained.

To determine how best to do their jobs, Takasago staff spend a lot of time observing how the products they are working on are purchased and consumed. This involves visits to homes, markets and even river streams.

The same product can also be used in different ways depending on which country you are in, which means that its delivery system may need to be adjusted accordingly.

To illustrate this: In one particular country where people wash their hair from basins due

to water shortages, the company realised that the experience of fragrance released from a shampoo product was different from washing your hair in a shower.

Mr Asuncion explained: “In that situation you don’t need a lot of bloom, which describes how fragrance fills up the bathroom quickly. It is important to know at which stage of the product cycle the product is being assessed (or experienced). When you wash your clothes in a washing machine, the assessment point is the stage when you open the machine door once the washing cycle is completed.”

Expansion in asiaTo expand its capabilities and better serve its clients, Takasago International is moving to new headquarters in Singapore later this year that is double the size of its current premises. The new Pioneer Road plant will also boast larger research and development (R&D) space − three times its existing site.

“The Singapore operation will be pivotal in creating new offerings for the Asian marketplace while attempting to get a stronger understanding of consumer behaviour,” said Mr Asuncion.

Takasago is also developing a new facility in Chennai, India, at an industrial park currently being built by Singaporean developer Ascendas. It is currently leasing

Sweet Smell of Success

Watch any housewife shop for washing detergent and you are likely to

catch them sniffing the product.The powerful influence of smell

over consumers of fast moving consumer goods (FMCG) has kept Japanese firm Takasago busy. Established in 1920, the company has developed flavours and fragrances for some of the world’s most successful food, beverage, fine fragrance and household products.

“People validate their visual assessment of whether something is clean by smelling it,” said Takasago International (Singapore)’s Managing Director Mr Alfredo Asuncion Jr in an interview with BiZQ. The Singapore office oversees the Asian markets outside of Japan, Korea and greater China, covering an area that stretches from New Zealand to Pakistan.

Counting giants in the fast moving consumer goods industry among their clients, anyone who has drunk orange juice, used shampoo or chewed gum is likely to have sampled some of Takasago’s work.

Innovation is keyBut Takasago goes beyond creating scents and flavours. The company partners its clients by providing valuable research into how people behave when they consume certain products.

“The key for our growth in this market is innovation. We are investing a lot more in consumer insights which, in our opinion, should drive innovation by understanding what their unmet needs are, and then understanding how to extract those needs and making products to satisfy them,” explained Mr Asuncion.

The company looks not just at the pure flavour of the product, but how that flavour is delivered. For instance, the taste of an orange flavoured product can be adjusted to deliver a different sensation once it is in the mouth.

Takasago is currently using a unique technology to create a

We are witnessing a strong growth in consumer product manufacturing industries, particularly in emerging markets like Asia.

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To cater for the growing demand for natural flavours like fruits, Takasago is in collaboration with a citrus processor and has set up a Citrus Centre in Florida. It also has another tie-up with a coffee extract producer in Malaysia.

temporary premises to carry out its manufacturing and research operations in the country.

“We recognise that India is a big market and one that is unique. It is a fast and dynamic market with quickly changing preferences, so consumer insight becomes very important,” Mr Asuncion said.

Working with local playersWhile most of Takasago’s clients are multinational companies, Mr Asuncion said that smaller local players in Singapore and the regional companies can boost their competitiveness by leveraging on their services. He explained that while local companies tend to be rather cost-conscious, there are many opportunities for them to develop creative and innovative products to excite consumers.

“They have to be more willing to develop strategic partnerships and be prepared to engage at the start of a project, not at the end.”

To stay ahead of the competition, Takasago has started to acquire assets that will ensure a steady supply of raw materials that are needed to produce flavours desired by consumers. To cater for the growing demand for natural flavours like fruits, the company is in collaboration with a citrus processor and has set up a Citrus Centre in Florida. •

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Singapore Business Federation (SBF) has launched a one-stop business concierge service

– AccessAsia@Singapore – to facilitate global companies to start up in Singapore and the region.

With an increasing number of foreign companies setting up their operations in Singapore and other parts of Asia, SBF believes that this initiative will help companies reduce their time and cost to market by tapping on the various services offered by AccessAsia@Singapore and its strategic partners.

SBF has assembled a network of 18 strategic partners to provide a suite of business services such as banking, company incorporation, legal and taxation advice, expatriate

with suitable partners in their quest

for regional expansion.”

Such firms can leverage on

SBF’s advisory services to better understand government programmes and incentives.

In addition, foreign companies that relocate to Singapore can draw on SBF’s extensive international network and participate in outbound business missions and inbound visits by overseas delegations to expand into regional markets.

Commenting on this initiative, Mr Lim Lee Meng, Senior Partner of RSM Chio Lim, said: “Our expertise in accounting and business advisory complements the capabilities of AccessAsia@Singapore’s strategic partners. Collectively, we offer a comprehensive suite

of business services customised to meet the growing demands of global companies which are interested to leverage Singapore as their business hub in Asia.” •

relocation, corporate insurance coverage, HR strategy consulting and office space solutions.

Network of partnersThese global companies will be able to tap into SBF’s 19,000 corporate members to deepen enterprise competency and explore collaborations for potential business ventures.

Mr Ho Meng Kit, CEO of SBF, said that global companies can “benefit from SBF’s membership resources, where business matching services and other partnership opportunities are made available to help them identify and collaborate

SBF launches AccessAsia@SingaporeOne-stop business concierge service aims to help companies expand into Singapore and Asia.

AccessAsia@Singapore PartnersBanking ServicesDBS Bank LtdOversea-Chinese Banking Corporation LimitedUnited Overseas Bank Limited

Relocation, Insurance, HR ServicesAIA Singapore Private LimitedAlign Group of Companies Pte Ltd Asian Tigers Mobility by K.C. DAT (Singapore) Pte Ltd

Corporate Advisory ServicesJanus Corporate Solutions Pte LtdKPMG Advisory Services Pte LtdMazars LLPRSM Chio Lim LLP

Legal ServicesColin Ng & Partners LLPRajah & Tann LLPRodyk & Davidson LLPWong Partnership LLP

Virtual and Serviced OfficesCentennial Business Centre Pte LtdServcorp Singapore Holdings Pte Ltd

Office and Business Space SolutionsAscendas Pte LtdJTC Corporation

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SBF-US Seminar on Sanctions with Iran

Singapore Business Federation (SBF) and the United States (US) Embassy in Singapore recently organised a seminar to brief the Singapore business community on the new US sanctions on Iran and its potential implications for businesses.

The Iran Freedom and Counter-Proliferation Act of 2012 (IFCPA) comes into effect on July 1, 2013.

About 160 Singapore businessmen attended the briefing conducted by experts from the US Department of State and Department of the Treasury. The seminar is part of SBF’s commitment to being an organisation that gives current affairs

issues a central position in the service of its members.

The new sanctions cover a broad scope within the oil and petrochemical sectors. It authorises commercial and financial restrictions by the US on individuals, companies, and activities connected to Iran’s shipping, shipbuilding, port and metal sectors. This includes supporting services such as underwriting, insurance and reinsurance.

There are, however, no sanctions on humanitarian goods such as agricultural commodities, food, medicine, and medical devices, unless the organisations or individuals involved are sanctioned under the US Specially Designated Nationals (SDN) List.

Exercising due diligenceSingapore companies present at the briefing were concerned about the monitoring of their products across the supply chain, as well as the extent of due diligence to be exercised for non-sanctioned export items

Concerns from SBF membersDuring the seminar, one local manufacturer of medical equipment highlighted that he faced challenges obtaining the necessary financial services from financial institutions for his company’s Iranian transactions.

Another participant whose company deals in tyres with land-locked countries in the Commonwealth of Independent States (CIS) region faced difficulties too, as cargo is discharged at the Iranian port of Bandar Abbas for trans-shipment to its final destination.

Singapore firms urged to keep up with policy issues that impact business.

to Iranian partners. Companies, especially

SMEs, highlighted the difficulty of identifying and segregating legitimate and non-sanctioned parties from the illegitimate and sanctioned ones. The companies indicated that this issue has impacted trade with Iran.

Mr Ho Meng Kit, CEO of SBF, commented: “As Singapore companies seek new opportunities in emerging markets, it is important to stay abreast of policy issues that may impact their business. SBF provides platforms to help the business community obtain updates, seek clarifications and air their views.”

He advised companies to conduct background checks before any business dealings. •

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Mr Ho Meng Kit, CEO of SBF

“Companies are advised to take precautions…before entering into business transactions; especially those involving middlemen; and keep careful records as safeguards against misrepre- sentation.”

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28

Overall Index (OUT OF 100)

Commerce/Trading 57 54 51 52 55 58 54 54 55

Construction/ Engineering - - - 51 48 52 54 54 55

Manufacturing 55 56 48 48 54 55 54 51 54

Business Services 59 59 51 51 54 57 52 51 55

Transport/Storage 57 54 50 47 48 52 54 51 55

Overall 59 57 51 51 52 54 53 52 55

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Singapore SMEs are less positive about their sales and profit performance, despite a slightly improved business outlook for the next six months.

According to the recent SBF-DP SME Index for April to September 2013 (Q2 and Q3), improvements in the global economy are not expected to translate into improved sales and profits for SMEs. Local concerns including rising costs, tightening foreign labour policy and the strong Singapore dollar continue to weigh heavily on SME owners.

The overall outlook for SMEs rose three points

27

Outlook for 2Q13–3Q13 F (APRIL–SEPTEMBER 2013)

SMEs in the commerce/trading and construction sectors. Improving trade volumes may have helped commerce and trading companies with their access to trade financing.

In the construction sector, property demand and prices are still high, indicating the long term strength of this industry.

Mr Ho Meng Kit, CEO of Singapore Business Federation (SBF), noted that despite expectations of the global economy turning the corner in the second half of this year, Singapore’s economic outlook, and consequently its business sentiment, continue to be impacted by global uncertainties and a challenging local operating environment.

“Inflation, high business costs and tightened foreign workers policy continue to be a drag on businesses and the

economy. Businesses are mindful that they need to urgently raise productivity through capital investment, as well as look to alternative markets to make up for the shortfall from traditional trading partners,” he said.

According to Ms Chen Yew Nah, Managing Director of DP Information Group, SMEs are investing in capital equipment to drive productivity improvements in their businesses.

“Capital investments in technology and equipment increase efficiency and the output from each employee,” said Ms Chen.

“What is interesting is that this increased capital expenditure comes at a time when SMEs are less positive about their profit outlook.

“It means Singapore SMEs understand they need to make productivity improvements now. It is investment they can no longer put off.” •

SBF-DP survey reveals need to boost productivity, capital investments.

SMEs Expect Slower Growth, Profits this Year

2Q11

- 3Q

11F

3Q11

- 4Q

11F

1Q12

- 2Q

12F

2Q12

- 3Q

12F

3Q12

- 4Q

12F

4Q12

- 1Q

13F

1Q13

- 2Q

10F

2Q13

- 3Q

13F

4Q11

- 1Q

12F

t

to 55 compared to the preceding six months (1Q and 2Q 2013). The index score for turnover expectations fell from 5.44 to 5.36, while profit expectations fell from 5.33 to 5.12.

Manufacturing and transport/storage saw the largest drop from 5.01 to 4.69 and 4.96 to 4.65 respectively due to expansion plans.

Bucking the trend are

SBF-DP SME IndexThe SBF-DP SME Index is a joint initiative of SBF and DP Information Group (DP). It is a six-month forward-looking index that measures SME sentiments based on 3,000 interviews with SME owners and managers, as well as the actual financial

performance of SMEs.

The five industry sectors included ● commerce/trading● construction/engineering● manufacturing● business services ● transport/storage.

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p.30

Companies Must Pursue Productivity-led Growth

policies, the message from the Government is clear that firms must actively pursue productivity-led growth. Only then will they be able to tap into the Budget support packages and consequently reap the long-term benefits.

According to a recent SBF survey on its members’ sentiments towards the Budget, reactions gathered from three post-budget sessions have been decidedly mixed. More than 180 of about 2,500 attendees participated in this survey

and were queried on the following topics:● Tightening of foreign worker (FW) policies,● Three-year transition quality growth package,● Usefulness of productivity schemes,● Impact on general business.

Tightening of FW policiesRespondents have indicated that the tightening measures on foreign worker (FW) policies have affected many businesses, with the increase in FW levies having the greatest impact.

For all the measures listed, except for the reduction in Dependency Ratio Ceiling–Work Permit quota, half or more of the respondents indicated that their

businesses would be affected.

More than 60% said that the increase in foreign worker levies and the increase in S Pass qualifying salary pose the greatest impact on businesses.

Three-year growth packageMost employers will continue to give the same wage increment to employees as planned and only one-third intend to give a larger wage increment. Some have raised concerns over maintaining equality in the workplace between locals and foreign workers in their wage plans. Thus, giving a larger wage increment to only

TOP CONCERNS OF MANY

BUSINESSESWHAT ARE THE

AREAS THAT ARE

NOT SUFFICIENTLY

ADDRESSED IN

BUDGET 2013?

Tax incentives for appointing of local professional firms

(legal and consulting fees) to encourage use of

Singaporean professionals/firms.

Lack of foreign workers for basic roles/positions.

More incentives to encourage homemakers

to join the workforce, and for employers to

hire them.

Assist local companies in moving out for business.

With further tightening of manpower policies but more support with a view to improving productivity, initiatives announced in the 2013 Budget drew a mixed reaction from the business community.

Singapore Business Federation (SBF) said that mixed reactions are not surprising given that some of the measures announced will take time to yield results.

While many SMEs were greeted by a host of tightening measures, such as on foreign worker

Post-Budget survey: Mixed reactions from business community.

TOP 3 MEASURES FOR

LOWERING BUSINESS

COSTS1

Wage Credit Scheme (WCS)

2

Corporate income tax rebate of 30%,

up to $30,000 per year of assessment

3

PIC Bonus of up to $15,000 over 3 years


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30

SBF Missions

SBF leads mission to IraqSBF led its first-ever business mission to the Republic of Iraq in March and the delegates visited the country’s capital Baghdad, and Erbil, the capital of the Kurdistan Autonomous Region of Iraq.

The delegation comprised about 20 companies, led by Mr Zainul Abidin Rasheed, former Senior Minister of State for Foreign Affairs and Advisor to SBF’s Middle East Business Group.

Members met up with representatives from the Ministry of National Planning, Ministry of Oil, Iraqi National Investment Commission, Kurdistan Board of Investment

and other government officials to learn about Iraq’s current phrase of its Five-Year National Development Plan (2010 – 2014).

In addition, they had the opportunity

to network with the local business community through meetings with the Federation of Iraqi Chambers of Commerce, Iraqi Businessmen Association, and the Kurdistan Federation of Chamber of Commerce and Industry.

SBF has been engaging Iraq since 2005 and has hosted a number of Iraqi trade delegations to Singapore, the most recent being the visit of Iraqi Deputy Prime Minister Dr Hussain al-Shahristani in June 2012.

SBF CEO mission to MyanmarA recent SBF-led visit to Myanmar this April saw 32 senior corporate executives from various industries showing keen interest to engage the Myanmar market.

Following three well-participated business

Budget 2013 measures are useful to help companies embark on productivity improvements.

Programmes businesses would be interested in, given challenges affecting their company

Productivity

Up-skilling workforce

Strengthening financial management

Internationalisation

Seeking relocation assistance

60%

54%

31%

16%

7%

local employees could result in discrimination.

Almost half the respondents indicated that the Wage Credit Scheme (WCS) will help lower their manpower cost. Around one-third responded that it will help them attract and retrain their local employees.

Usefulness of schemes While respondents indicated that Budget 2013 measures are useful to help companies embark on productivity improvements, it falls short in addressing issues –

especially in the hiring and retention of experienced foreign workers.

Almost half also mentioned that rising business costs and issues surrounding the hiring of local workers were not adequately addressed.

General business impactWhen asked what measures they will take to restructure, most respondents said they might embark on productivity improvements or employee wage reviews.

The WCS, Corporate Income Tax Rebate and Productivity Innovation Credit (PIC) bonus were the three measures businesses deemed most useful in lowering their business costs.

Almost half also mentioned that rising business costs and issues surrounding the hiring of local workers were not adequately addressed. About one-third said that they might consider consolidating or relocating. •

Clear message from the

GovernmentFirms must actively

pursue productivity-led growth.

Only then will they be able to tap into the Budget

support packages and consequently reap the

long-term benefits.

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31

business alliances and partnerships with Myanmar to strengthen and deepen our bilateral trade and investment links.

“SBF works very closely with our counterpart, The Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI), to promote greater business linkages. “

SBF and UMFCCI inked a Memorandum of Understanding to work towards developing and organising an Executive Programme on Myanmar for the International Business Fellowship (IBF) platform in 2013.

This programme, co-funded and supported by IE Singapore, includes a two-week market immersion itinerary in Yangon with the vital business know-how and insights on the dynamics of doing business in Myanmar.

Investment opportunities in Latin AmericaSBF, International Enterprise (IE) Singapore and the APEC Business Advisory Council (ABAC) Chile, Mexico and Peru recently co-organised a seminar on Investment and Business Opportunities in

Chile, Mexico and Peru.SBF Vice-Chairman Mr

Gautam Banerjee hosted the 50 attendees and drew attention to the trade bloc’s ambition to promote free trade and increase economic integration with Asia. He urged Singapore businesses to engage the Latin American region on a more robust basis.

During the seminar, participants were able to receive first-hand updates and insights from the speakers across various issues including:● Economic developments in the respective economies;● Chile’s position within the Pacific Alliance;● Peru’s legal framework and infrastructure for Foreign Direct Investments;● Mexico’s connectivity and ascension to the Trans-Pacific Partnership.

An MOU between SBF and COMEXPERU (The Foreign Trade Association of Peru) was also ratified during the session. The agreement aims to formalise ties between both organisations and promote bilateral business engagements and exchanges.

Singapore, Belarus ink MOUSBF and the Belarusian Chamber of Commerce and Industry (BelCCI) recently inked an MOU to increase trade and investment between both countries.

The signing took place at the inaugural Belarus-Singapore Business Forum held in conjunction with the state visit of the President of the Republic of Belarus HE Alexander Lukashenko.

Both chambers will facilitate direct exchange of information and promote agreements between the Belarus and Singapore business communities on economic and market situations, business opportunities, and technological and industrial cooperation.

According to IE Singapore, the total bilateral trade value between Singapore and Belarus in 2012

was S$61.6 million.The forum

saw close to 40 Singapore company representatives meeting and networking with

an equal number of Belarusian business

delegates from a myriad of business sectors. •

Mr Tony Chew, Chairman of SBF and Chairman of Asia Resource Corporation

“Through regular exchanges we can and will develop business alliances and partnerships with Myanmar to strengthen and deepen our bilateral trade and investment links.”

missions organised in 2012, this SBF CEO business mission was led by Mr Tony Chew Leong Chee, Chairman of SBF and Chairman of Asia Resource Corporation, and Dr Robert Yap, Vice Chairman of SBF, Board Member of IE Singapore and Chairman of YCH Group.

Mr Chew commented: “Through regular exchanges we can and will develop

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Jul•Aug 2013

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SBF endeavours to enable its members and the wider Singapore business community to keep up with the latest industry news and trade opportunities in the country and around the world.

Business Mission to Mozambique and AngolaMay 8, 2013

Launch of ACCESSASIA@SINGAPOREApr 29, 2013

Tanzania-Singapore Business ForumJune 5, 2013

Briefing on New US sanctions on IranMay 6, 2013

2nd China International Fair for Trade in Services (CIFTIS)May 28, 2013

Vietnam-Singapore Business ForumApr 16, 2013

SBF fronted a business mission to explore trade and investment opportunities in Mozambique and Angola. Singapore companies participated in business matching sessions with the business communities of the two countries and explored investment opportunities with them.

This session was conducted to brief the Singapore business community on the new US sanctions on Iran and its potential implications for businesses. Over 160 businessmen attended the session.

SBF launched a one-stop business concierge service for global companies looking to set up their business operations in Singapore. The initiative will also help companies expand into Asia.

Organised in partnership with the Vietnam Chamber of Commerce, the forum was among a series of commemorative events held this year to celebrate the 40th anniversary of diplomatic relations between Vietnam and Singapore.Engaging

the business community

Over 150 representatives attended the trade fair, which helped advance the services industry and trade in services though high-level seminars, business talks, exhibitions and themed days.

Over 200 participants attended the event that touched on economic developments, investment laws and incentives available for Singapore firms. Four Memorandums of Understanding were signed to enhance trade and investment between both nations’ business communities.

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Commentary

A recent poll with several human resources (HR) experts revealed that most

Singaporeans can expect a 3% to 4% pay rise this year.

HR experts observed that Singaporeans earning under S$4,000 a month can be optimistic as the Singapore government announced during its reading of Budget 2013 that it will co-fund 40% of their wage increases over the next three years.

The Wage Credit Scheme (WCS) – one of the most notable measures introduced in the latest budget – is intended to encourage companies to share productivity gains with their workers.

Deputy Prime Minister and Minister for Finance Tharman Shanmugaratnam made this clear when he spoke about the massive three-year Transition Support Package worth $5.3 billion for businesses, of which $3.6 billion will be spent on WCS. This is to help companies struggling with the rising costs of doing business, as well as to nudge bosses to give higher pay increments for lower-wage workers.

Mark Hall, Vice President and Country General Manager at Kelly Services Singapore commented:

“Most companies will look forward to the Wage Credit Scheme to capitalise on it, especially since it’s quite an easy scheme to apply to their employees.”

Competitive environmentEfforts to help workers and businesses adapt to the new business environment through schemes like the WCS are currently underway.

Wage Credit Scheme likely to have wide-ranging positive effects on wages.

In his May Day message, Prime Minister Lee Hsien Loong said that companies, workers and unions must come together and

“uphold tripartism”, and keep it as Singapore’s “competitive advantage” as the economy shifts towards a slower pace of growth.

Mr Lee said: “Companies must value their workers and nurture a strong Singaporean core. They should share the fruits of success with their workers and the community, and strengthen the social compact.

“Workers must value their jobs and strive to upgrade and adapt to changing conditions. They also have to support leaders who care for them and work with them to secure a better future.” •

PAYMENT OF WCS PAYOUT

Eligible employers will receive an automatic payout annually. The first payout will be in the

second quarter of 2014, and the last payout will be in 2016.

WCS BENEFITSIf an employer increases the gross monthly wage of his

employee by S$200 in 2013, the Government will co-fund 40% of the

S$200 wage increase and for the subsequent two years if the

increase is sustained.

If further S$200 increases are given in 2014 and 2015, the

Government will co-fund 40% of the further wage increases,

ie total wage increase of S$400 and S$600 in 2014 and 2015

respectively.

At the end of three years, the employer has paid a total of

S$14,400 more in wages to the employee and the Government

has co-funded S$5,760.

HOW TO QUALIFY FOR CO-FUNDING IN 2013

Employees must be● Singapore citizens;● Earn a gross monthly wage less than S$4,000;● Employed for at least three months in 2012;● On employer’s payroll for at least three months in 2013 (ie employer must have paid employee CPF contributions for at least three months in 2013).

Qualifying employers● Employers need not submit any application to IRAS.● All employers will automatically

Rising Wages Affect Business Costs

be covered under WCS except government-related entities and entities not registered in Singapore.

Qualifying wage increases● WCS aims to support productivity gain sharing between employers and employees through meaningful wage increases, especially for lower wage workers.● Once an employee’s gross monthly wage exceeds S$4,000, the portion of the wage increase that brings the gross monthly wage above S$4,000 will not be eligible for co-funding under WCS.


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agencies have kept Bangladesh’s credit status unchanged in recent years.

“I think the government of Bangladesh has rightly decided to go for a funding like that, but the timing is also important – it has been fuelled by the consistent four-time stable outlook from Moody’s,” Mr Rahman said.

with a stable outlook.“The stable outlook

reflects strong growth prospects and ongoing donor support, which ensures low-cost and long-maturity external debt and minimises refinancing risk,” S&P said in a statement reaffirming the country’s rating last year.

But S&P added that Bangladesh’s weak institutions and governance are likely to hamper investment and development. Its volatile political setting detracts from legislative efficiency and harbours the potential for instability.

Buoyed by firm macroeconomic fundamentals however, Bangladesh’s gross domestic product (GDP) is expected to

expand by 6.1% in 2013. Bangladesh has

maintained 6% or more growth over most of the last 10 years through strong export and remittance growth, and it’s among the top 35 out of 150 countries in the

Stable investment outlookDespite Bangladesh’s political instability, international credit ratings agencies like Moody’s and Standard & Poor’s (S&P) have maintained an investment-grade rating for the South Asian country,

I n a sign of economic maturity, the

People’s Republic of Bangladesh is planning to issue its first sovereign bond denominated in US dollars as it seeks funds to boost infrastructure development.

The move was confirmed recently by Bangladesh Bank governor Atiur Rahman in an interview with International Financing Review.

“There is a lot of money in developed countries at a very low cost and investors are looking at new markets. The new markets also need these funds for infrastructure and they offer a high-yielding investment,” he said.

Helping to reassure investors is the fact that international rating

On the Road to Bangladesh

BiZQ looks into investment opportunities in the South Asian nation.

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Bangladesh is reviewing its Foreign Exchange Regulation Act to simplify procedures for attracting foreign investment, said Dr Hassan Zaman, Chief Economist of Bangladesh Bank.

Speaking at the inaugural ceremony of the Bangladesh Investment Summit held in Singapore in December, he explained that Bangladesh’s central bank and its securities regulator are looking at impediments to foreign investment.

The summit was organised by AsianInvestor and FinanceAsia to explore trade and investment opportunities for Asia’s sovereign wealth funds, family offices, public and private pension funds and other financial investors.

Dr Zaman noted that the central bank remains committed to managing the Bangladesh’s balance of payments, which means

Simplifying processes to attract investments

Atiur Rahman, Bangladesh Bank governor

“There is a lot of money in developed countries at a very low cost and investors are looking at new markets. The new markets also need these funds for infrastructure and they offer a high-yielding investment.”

trade have been growing from strength to strength.

Bangladesh was Singapore’s 36th largest trading partner in 2012, with total trade amounting to S$2.7 billion according to government agency International Enterprise (IE) Singapore.

Last year, the two countries agreed that their robust and growing bilateral trade and investment flows could be further enhanced through increased air connectivity, following a meeting in Dhaka between Singapore’s Senior Minister of State for Home Affairs and Foreign Affairs Masagos Zulkifli and Prime Minister of Bangladesh Sheikh Hasina.

They also concluded that heightened connectivity would facilitate greater people-to-people exchanges.

Infrastructure opportunitiesInfrastructure development presents plenty of opportunities for Singaporean companies. Building projects involving bridges, roads and ports are on the cards, according to Captain Sohail Hasan, President of the Bangladesh Business Chamber of Singapore.

As road use and road users increase, improving transportation and communication infrastructure is becoming a major goal of the Bangladeshi government. Captain Hasan noted that upgrading the country’s

telecommunications capability meets both individual and business demand; the government has declared information technology as a key growth sector.

Where urban development is concerned, Bangladesh, a predominantly rural country, is urbanising at a remarkable pace. This will result in significant demand for housing in urban areas.

Improving standards and practicesMore than three quarters of Bangladesh’s export earnings come from the garment industry, which began attracting foreign investors in the 1980s due to cheap labour and operating costs.

Bangladesh exports around US$20 billion (S$25 billion) in garments annually – third-highest

International Monetary Fund’s October 2012 World Economic Outlook.

Bangladesh should remain on an even keel in a trajectory of strong economic growth from 2013 to 2017; real GDP should expand by about 6.3% a year. Its economic growth is predicated on steady rises in its private consumption and investment projects.

Private consumption growth is expected to be driven by the robust performance of its agricultural sector, as well as continuing remittances from the country’s diaspora.

Strong bilateral tiesSingapore’s economic relations with Bangladesh in the area of bilateral

using capital controls to deal with domestic inflation and other macroeconomic issues.

Speakers at the summit said Bangladesh has evolved into Asia’s steady growth centre. After decades of limping along at an average annual GDP growth rate of 2%, the country has enjoyed about 10 years’ worth of steady, impressive growth; its economy has grown by 6.2% per annum for the past five years despite the global financial crisis, and it ranks as one of Goldman Sachs’ “next 11” growth markets.

Social metrics such as life expectancy, infant mortality, literacy and fertility have all improved over the past decade. These factors were attributed to the country’s growth driver – its labour force – which is behind the robust remittance inflow and the garments industry, making up 75% of its exports.

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Jul•Aug 2013

36


Singapore-based oil and gas exploration and production company KrisEnergy secured its first Bangladesh-producing asset for US$42.35 million through its 100% acquisition of Tullow Bangladesh from UK-based Tullow Oil International Ltd.

“It more than doubles KrisEnergy’s oil and gas production to 7,000 barrels of oil equivalent per day, from around 3,300 bpd currently,” said Mr Richard Lorentz, Director of Business Development at KrisEnergy.

Tullow has a 30% interest in and operates Block 9 on behalf of

output globally behind China and Italy. But the industry’s reputation was damaged following the recent collapse of a Bangladeshi garment factory in April that killed more than 1,100 workers.

The disaster raised serious questions about Bangladesh’s garment industry standards and management practices. The sector, already under pressure due to conflict between the ruling party and their rivals, has been shut down by strikes for 33 days this year since early February.

Many garment factories supplying Western brands are now trying to operate normally despite the disruptions and transportation shutdowns (including

those to roads, ports, government offices and customs offices). Such disruptions have prevented the import of raw materials and timely shipment of finished goods.

However, Bangladesh is more than just textiles. Domestic demand is its great untapped story – the country’s wage structure is cheap, and

SPH

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Singapore’s Oil and Gas Play

the low cost of living and government dedication to social inclusion maintain stability.

Bangladesh’s entrepreneurs also have ventured into the shipbuilding, pharmaceutical and leather industries to tap their export potential. The country is now exporting US$24 billion worth of goods and services annually, noted Alamgir Morshed, Head of Global Markets at Standard Chartered Bank in Dhaka.

IT services industry Though the current size of the Bangladesh IT Industry and software services industry in particular is still a lot smaller compared to the overall economy and the number of population (over 150 million), over the

last few years the industry has grown considerably and is expected to grow at that rate for some time.

It is estimated that during the last five years the average yearly growth rate of software & IT services industry has been over 40%.

The growth has been driven by both good export trends in recent

years as well as the growing IT automation demand in domestic

market (local demand has been led by large automation projects

by telecom, banking sector and export oriented garments/textile industry).

Currently there are

BANGLADESH’S GDP

EXPECT TO EXPAND BY

6.1%IN 2013

MAINTAINED A

6%or more growth over

most of the last 10 years through strong export and

remittance growth

TRADING PARTNER

Bangladesh was Singapore’s 36th largest trading partner in 2012,

with total trade amounting to

S$2.7 billionpartners Niko Resources (60%) and Bangladesh Petroleum Exploration and Production Company (10%). The 1,770 sq km block includes the Bangora gas producing facility and the Lalmai discovery. Last year, gross production from the Bangora field averaged around 2.8 million cubic metres per day and 309 barrels of condensate daily.

Singapore conglomerate Keppel Corporation is a key shareholder of KrisEnergy, after acquiring a 20% stake in the company for US$115 million (S$144 million) in July 2012.

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37

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Opportunities● Extremely competitive labour costs.● Investment in infrastructure projects such as power generation, oil and gas, mineral exploration, telecommunications, ports, roads and highways.● Easily trainable workforce of 56 million.● A large domestic market, with disposable income growing among the middle class.● Strategic location as

BANGLADESH’S INVESTMENT CLIMATE

over five hundred registered software and IT services companies in the country employing over 20,000 ICT professionals. Out of these companies, around 60% are mainly domestic market focused while 40% are mainly export focused (significant number of companies work for both local and export clients).

Engineering sectorThe light engineering industry in Bangladesh continues to grow each year.

This labour-intensive

sector produces a diverse range of items, including import substitute machinery spares, plant machineries, small tools, toys, consumer items and paper products for the domestic market.

Most of these enterprises are located in and around Dhaka metropolis. Entrepreneurs from China, Japan and Korea have taken advantage of Bangladesh’s cheap and easily trainable labour and its infrastructure facilities to manufacture products for the export market. •

the bridge between South and East Asia’s high- growth regions.● Low land and energy costs.

Weaknesses● Large perceived gap between good policies and their weak implementation.● Unreliable power supply and poor transport and communication infrastructure.

Source: Bangladesh Business Chamber of Singapore


Name and Date:

Bangladesh’s economy is primarily dependent on agriculture. About 84% of the population lives in rural areas and is engaged in a wide range of direct and indirect agricultural activities.

The country’s abundant natural resources support a range of highly profitable agribusiness investment opportunities. Over 90 vegetable varieties are grown in Bangladesh, yet this fertile land’s agricultural capacity is still underutilised. This presents myriad opportunities for investors seeking to export agricultural products, or to meet the rapidly growing local demand.

Sector highlightsThriving in this sector are canned juices, fruits, vegetables, dairy and poultry businesses. Bangladesh offers:● A huge supply of raw materials.● A tropical climate for year-round growing,

abundant fresh water from numerous rivers, and available land with fertile soil.● The government and NGOs conduct regular training programs to develop skilled manpower within the industry.● A wide range of biodiversity exists for different crops.● Agricultural commodities have a comparatively higher value added than non-agricultural commodities.

Investment opportunitiesThe wide variety of investment opportunities available include:● Cold storage facilities serving the supply chain, especially fresh produce for export.● Fresh produce production for local and export markets.● Production of fertilizers and cultivation of seeds.● Eco-friendly jute production, supported by jute technology development institutes.● Shrimp farming.● Halal foods.● Milk and dairy products.● High value-added foods

for export, including herbs, spices, nuts and pulses.

Source: www.boi.gov.bd

Abundance of natural resources


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Contingent Fund Helps Protect Depositors

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A contingent liquidity facility of up to S$20 billion

– which can be tapped into when a Deposit Insurance (DI) Scheme member fails and liquidity is required to pay assured depositors with payments

– has been set up by the Monetary Authority of Singapore (MAS).

Participation in the DI Scheme is mandatory for all retail deposit-taking institutions (full banks and finance companies) in Singapore, except for those with special exemptions from MAS.

According to the Singapore Deposit Insurance Corporation Limited (SDIC), which is administering the scheme, the coverage limit has been raised from

S$20,000 to S$50,000 for each depositor with each member.

The coverage was expanded from only individuals and charities to all non-bank depositors such as sole proprietorships, partnerships, companies and unincorporated entities.

Singapore dollar savings accounts, fixed deposits, current accounts, and monies and deposits under the Supplementary Retirement Scheme are covered by the DI Scheme.

This is intended to mitigate potential cash flow problems of small business depositors in the event of a bank failure. The increased coverage has raised the proportion of

SME Resources

MAS sets aside S$20 billion in the event that a member of the Deposit Insurance Scheme fails and depositors need to be compensated.

fully insured depositors from 83% to 91%.

SDIC is a company limited by guarantee under the Companies Act, with the SDIC Board of Directors accountable to the Minister in charge of MAS.

In the event of a payout, SDIC will collect premium and levy contributions from DI and Policy Owner Protection Scheme members respectively, and compensate insured

depositors, insured policy owners and beneficiaries.

The DI Scheme was implemented in 2006 with the primary objective of protecting small depositors.

In the past, the DI Scheme covered Singapore dollar deposits of individuals and charities in current, savings and fixed deposit accounts up to the DI coverage limit of S$20,000 for each depositor with each DI Scheme member. •

What is the Deposit Insurance Scheme?It protects the core savings of small depositors in the event that a full bank or finance company fails, up to S$50,000 for each depositor with each DI Scheme member.

How does it work?When a full bank or financial institution in Singapore fails, MAS will request for SDIC to step in. Arrangements will be made for depositors to be paid either by cheque or through accounts opened for them in another financial institution. SDIC will make the compensation from insurance premiums that DI Scheme members pay every year.

Who is covered?Individuals and non-bank depositors like sole proprietorships, partnerships and companies, and other unincorporated entities such as associations and societies, who have insured deposits placed with a DI Scheme member.

How do I know if my deposits are covered?Individuals and other non-bank depositors with accounts in full banks and finance companies are covered by the DI Scheme.

You can request for a register of insured deposits from any full bank or finance company to find out which deposit products are covered. The account opening forms and deposit account statements also state which deposit products are covered.

What types of deposits are covered?Singapore dollar savings accounts, fixed deposits, current accounts, and monies and deposits under the Supplementary Retirement Scheme. Monies and deposits under the CPF Investment Scheme and CPF Minimum Sum Scheme are also aggregated and separately insured for up to S$50,000.For more information, refer to www.sdic.org.sg.

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BiZQ is the official publication of the Singapore

Business Federation, the nation’s apex business chamber with more than 19,000 members. Distributed to some 21,000

readers – many of whom are decision-makers such as

CEOs, managing directors and entrepreneurs – BiZQ keeps them

informed and updated of the latest economic trends, industry news and trade and investment opportunities in Singapore and overseas. The multiple-award-

winning publication also provides an analytical approach to, and

in-depth coverage of, issues that matter.

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To find out more about advertising in BiZQ, please fill in this form with your contact details and fax this page to the Singapore Business Federation at 6827-6807 or SPH Magazines Custom Publishing at 6319-3095, or contact the Singapore Business Federation at 6827-6828.

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SME Resources

If you have any views, comments or suggestions about BiZQ or other SBF events, we want to hear from you. Please send your contributions to:

The Editor, BiZQ MagazineSingapore Business Federation10 Hoe Chiang Road#22-01 Keppel TowersSingapore 089315.

Or e-mail us at [email protected].

LETTERS FROM OUR READERS

together the best minds from across Asia to participate in knowledge-oriented exchanges on medical innovations and developments.

In line with this year’s theme, The New Reality in Medicine – Caring for Patients with Multiple Co-Morbidities, the congress will address issues and challenges such as the

correct diagnosis and treatment in an era of

ageing populations and medically complex cases.

Scientific symposium topics include

advances in breast cancer treatment,

management of diabetes, developments

in clinical dentistry, management of conflicts of interest in medicine, emerging epidemics in emergency medicine, and the role of molecular genetics in obstetrics and gynaecology.

SME WorkshopsIntroduction to Supply Chain Risk Management July 26

SBF Seminar Room,

Keppel Towers

Organised by SBF, this workshop aims to help companies understand why supply chain continuity is a crucial aspect of business continuity. As security risks are a growing concern, it is important to address potential security issues at all stages of the supply process, starting from the logistics sector from which threats can affect the entire supply chain.

Learn how to manage supply chain risks by looking into key elements such as risk analysis and incident reporting. Acquire knowledge of best practices in managing your supply chain risks.

Accounting 101: A Crash Course for Non AccountantsAug 5

SBF Seminar Room,

Keppel Towers

Decisions are often made based on financial statements. The risks of misinterpretation can be high if one is unaware of how financial statements are prepared in the first place.

This course aims to educate participants about the underlying meanings of different terms found in financial statements, impart knowledge of how transactions are reflected in financial statements, and provide insight into common grey areas in transaction recording.

Upcoming EventsPALME Asia 2013July 17-19

Marina Bay Sands

PALME Asia is the region’s leading international audio, lighting, software and entertainment technology exhibition. Attendees can

look forward to a bigger and more vibrant presentation in this showcase of the latest products and technologies, with commercial and learning opportunities for those in the professional audio, lighting, audio-visual (AV), entertainment, education, transport, security and broadcast industries.

There will also be numerous programmes that explore the developments of emerging trends in Southeast Asia, such as architectural lighting, music software, information & communications technology, and LED technology.

47th Singapore-Malaysia Congress of MedicineAug 23-24

Grand Copthorne Waterfront

Hotel Singapore

This event will bring

Employment of Foreign Workers – Legal ObligationsAug 23

SBF Seminar Room,

Keppel Towers

It is essential for business owners, managers and HR practitioners to understand the legal implications of employing foreign workers, and comply with the Employment of Foreign Manpower Act (EFMA).

The objective of this workshop is to introduce to HR managers the dos and don’ts of employing foreign workers. Case studies and exercises will be discussed during the workshop to help participants acquire the skills and knowledge to manoeuvre through this territory.

Tax Matters: A Matter of Due DiligenceNov 14

SBF Seminar Room,

Keppel Towers

IRAS has been stepping up audit efforts on companies with high-risk potentials for non-compliance. In response, you need to be fully aware of the possible tax risks associated with your company’s business activities and ensure full compliance with tax laws.

This one-day workshop aims to arm participants with a clearer understanding of the income tax compliance process and ways to manage the potential tax risks in your company so as to avoid monetary and/or reputational loss.

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