ASEAN ASEAN –– An Important An Important Growth Engine in AsiaGrowth Engine in Asia

By Dr Robert YapBy Dr Robert YapChairman & CEO, YCH GroupChairman & CEO, YCH Group

CoCo--Chairman, ASEAN Business Advisory CouncilChairman, ASEAN Business Advisory Council

HKTDC World SME Expo | 4 December 2009HKTDC World SME Expo | 4 December 2009

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• Brief Profile of YCH Group

• Case Studies / Outlook on Asean: Latest economic development and business opportunities in ASEAN region

• How Logistics & Supply Chain Management drives the growth of the ASEAN region

AgendaAgenda

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YCH Asia Pacific NetworkYCH Asia Pacific Network

YCH GroupYCH Group

Perth

MalaysiaMalaysia,, Johor, KL,Penang

Indonesia,Indonesia, Jakarta,

Surabaya, Medan,

Cibitung

Suzhou, Kunshan, Hangzhou

Shenzhen, Hong KongHong Kong

Philippines,Philippines, ManilaThailand,Thailand, Bangkok

North AsiaNorth Asia

Greater ChinaGreater China

ASEANASEAN

Xiamen

SingaporeSingapore

IndiaIndia, Chennai

Sydney

AustralasiaAustralasia

ShanghaiTaiwan,Taiwan, Hsinhsu

TianjinChengdu

KoreaKorea

EndEnd--toto--End Supply Chain MgtEnd Supply Chain Mgt

YCH provides Integrated Logistics and End-to-

End Supply Chain Management services

through a holistic suite of supply chain

solutions to world-class MNCs.

AwardAward--winning winning Proprietary Proprietary Innovative SCMInnovative SCM SolutionsSolutions: :

INTRIBUTIONINTRIBUTION®®, , INTRABUTIONINTRABUTION®®, , RETROGISTICSRETROGISTICS®®

Complementary Complementary ValueValue--creating creating

Innovations & SolutionsInnovations & Solutions::

7PL7PL™™, ZIM, ZIM™™, ePOD, ePOD™™, , VV--HubHub™™, Y, Y--MergeMerge™™

YCH Integrated YCH Integrated EndEnd--toto--End Supply End Supply

Chain ManagementChain Management

AwardAward--Winning HeritageWinning HeritageTestimony to Supply Chain

Excellence6 Innovation Dev’t Awards

IT Leaders Award

Singapore Quality Class

eSCM Award

Asia Logistics Hall of Fame Award

ISO 14001OHSAS 18001ISO 9001ISO28000

Corporate HR Award

National IT Award

National Training Award

Singapore Innovation Class

ZD NetAsia SMART 50 Award

CIO 100 Award

Singapore Customs’ STP Cert

Zero GST Licence (Type III)

Frost & Sullivan ASEAN 4 Logistics Awards: - Best IT/Electronics LSP (S’pore)- Best Domestics LSP (S’pore)

Supply Chain AsiaAsian 3PL of the Year

Ernst & Young Entrepreneur of the Year

WorldWorld--Class MNC ClientsClass MNC ClientsElectronicsElectronicsConsumerConsumer ChemicalsChemicals

/Healthcare/Healthcare

National Infocomm

Award

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The YCH Story: The YCH Story: Shifting the ParadigmShifting the Paradigm

1995 1995 –– 20052005

Supply ChainSupply ChainManagementManagement

19551955

Passenger Passenger TransportationTransportation

YAP CHWEE HOCK TRANSPORT AND

GENERAL CONTRACTORS

1980s 1980s -- 1990s1990s

Integrated TotalIntegrated TotalLogistics Service Logistics Service

ProviderProvider

Your Partner in Total Logistics™

2005 onwards2005 onwards

Supply Chain Supply Chain SolutionsSolutions

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CHINACHINA

INDIAINDIA

AustraliaAustralia

New New ZealandZealand

PhilippinesPhilippines

KoreaKoreaJapanJapan

IndonesiaIndonesia

ThailandThailand VietnamVietnam

MalaysiaMalaysia

SingaporeSingaporeCorporate HQ Corporate HQ rr ii ss ee @@ ychych

Hong Kong Hong Kong TaiwanTaiwan

Several gateways to connect the entire Several gateways to connect the entire Greater China regionGreater China region

CHINA

Our Asia Pacific NetworkOur Asia Pacific Network

Growth Engines Growth Engines of the Worldof the World

Calcutta

Chennai

Hyderabad

Pune

INDIAPresence in 13 Key Cities Presence in 13 Key Cities and expandingand expanding

Delhi / Noida / Gurgaon

Ahmedabad

Bangalore

Mumbai

Cochin

Specialization

Emerging Growth Markets and Developing Countries

ASEAN

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• With the China Dragon and India Elephant awakening, these massive consumer-driven populations will be next two main engines of growth in Asia

• Asean is frequently seen as 3rd engine of growth in Asia

• With ASEAN straddled between the 2 superpowers China and India, we can either:

COMPLEMENT – provide complementary services like value-adding, regional distribution to support its manufacturing and production. Plenty of synergy to make entire Asean region more competitive, OR

COMPETE – band together as a single production base / hub and provide other competitive advantages. (Regional integration and collaboration through various Asean-related schemes, such as APPS, AGL, ASW..)

To Complement or Compete?To Complement or Compete?

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YCH’s Focus • Pioneer to enter Chinese market in mid 90s; well-established gateways along coastal regions such as Tianjin, Shanghai, Xiamen, Hangzhou, Guangzhou, Hong Kong and Macau

• Next step is to tap on the strong potential in second-tier and inland cities, eg: Chengdu City Supply Chain

• Working with provincial governments to ensure food quality and hygiene, minimize traffic congestion and air pollution, improve SCM best practices in solutions and infrastructure.

• Also strengthening our VMI and ODM capabilities to help boost manufacturing efficiency – increasing trend of global electronics and hi-tech companies outsourcing their manufacturing to ODMs in Taiwan and China

ChinaChina

Worldwide EMS & ODM industry revenue forecast

2005 to 2013

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YCH’s Focus • Entered India since 2006; presence in 53 Indian cities today

• Refine last mile distribution and end consumer goods fulfillment processes to streamline the last leg of the end-to-end supply chain

• Unique IOR and comprehensive freight capabilities

• Project delivery specialist appointed by Indian Ministry of Education

IndiaIndia

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• China-Asean CooperationChina-ASEAN Free Trade Agreement would be put in place by 2010 as plannedChinese Premier Wen Jiabao announced in April 2009 that the Chinese government would set up a 10-billion-U.S. dollar "China-ASEAN Fund on Investment Cooperation" to support infrastructure development in the region, and also plans to offer a credit of 15 billion dollars to ASEAN countries and provide 270 million yuan (39.5 million dollars) in special aid to less-developed ASEAN countries.

• India-Asean CooperationIn Aug 2009, India and Asean also signed a free trade agreement, which will kick in from January 1, 2010, to allow duty free trade of 4,000 products ranging from steel to apparels to sugar and tobacco over time. Expected to boost trade by USD 10 billion in the very first yearThe pact opens a 1.7-billion consumer market to the member countries with a combined GDP of USD 2.3 trillion

AseanAsean’’ss Key Trading PartnersKey Trading Partners

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YCH’s Focus• Boosting cold chain and FMCG (fast moving consumer goods) capabilities in large consumer markets like Indonesia and Philippines

• Optimization of complex transportation networks to simplify consumer distribution and ensuring food freshness and product quality

AseanAsean

Value-adding to world-class manufacturers and suppliers in the hi-tech and consumer electronics industries

Partnership and scalability in Asia Pac networkEnsuring seamless end-to-end flow of goods

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• When realized by 2015, the AEC (Asean Economic Community) would represent a single market and production base of 556 million people and a combined gross domestic product (GDP) of over US$1.17 trillion.

• Although IMF sees contraction in Asean due to current economic recession, it forecasts growth for the region from 2010 once economy recovers.

• Some 90% of businesses in Asean today are SMEs > this represents many growth and expansion possibilities through organic growth, or mergers and acquisitions

General Outlook on AseanGeneral Outlook on Asean

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“The rise of emerging economies, particularly China and India, has reinforced ASEAN’s determination to create a stronger, more united and cohesive ASEAN for sustainable growth”

- Asean Charter

> ASEAN is rapidly developing and evolving(a) from subsistence farming to more diversified economies and (b) from command economies to more open, market-based economies

> Some Asean countries are endowed with abundant but relatively unexploited natural resources> developing these markets and their related infrastructure/logistics become extremely essential

> A large, untapped potential market > not just in consumer spending but also talent development to fuel growth of logistics industry in Asean

Our Asean LandscapeOur Asean Landscape

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• Good Synergy among Asean countries to provide a seamless value chain: While some countries like Indonesia and Vietnam are low cost manufacturing and production bases, others like Singapore, Malaysia and Thailand offer value- added/tertiary services, good infrastructure, ports and hubs for superior connectivity

• Trade Facilitator: Due to its nature of cross border exchange and movement, Logistics/SCM encourages the creation of various business diasporas in the region

Supply Chain Management in Asean

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These sectors were selected on the basis of comparative advantage in natural resource endowments, labour skills, cost competitiveness, and

value-added contribution to ASEAN’s economy.

AseanAsean’’ss 12 Priority Sectors12 Priority Sectors

Air Travel

Hospitality & Tourism

Logistics & SCMLogistics & SCM

E-Asean

Wood-based Products

Rubber-based Products

Agro-based Products

Fisheries

Electronics

Healthcare

Automotives

Textiles & Apparel

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• Transport and Technology Trigger TradeGood logistics network, infrastructure and well-integrated systems are the success factors that allow businesses to Scale and Grow in a very short durationWorld Bank states that improving (1) Port Facilities and (2) Competitiveness in the Internet services sector could expand Asean trade by up to 7.5% (USD 22 billion) and 5.7% (USD 17 billion) respectively, far more than the 2% by cutting applied tariffs

• Apart from being identified as one of Asean’s Priority Integration Sectors, regional Logistics/SCM is also a key enabler of business growth in Asia

Contract logistics in Asia has grown at 11% over the past 3 yearsIt provides Efficiency, Speed, Resource optimization and Cost-savings to fuel Asia’s growth

ConclusionConclusion

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Think Global, Act LocalAct LocalTo successfully do business in ASEAN/Asia, companies must first align with local interests and culture attributes…

For YCH, what has worked for us:Last mile partnership, developing local talents, investment in strategic long-term assets, and leveraging industry initiatives in a timely manner…

• By bringing in best practices in infrastructure and SCM capabilities, local government authorities welcome us to invest in their countries and in return, help us acquire strategic locations or licenses.

• Benefits to government, business community and the indigenous population

> Our CSR (Corporate Social Responsibility) approach

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Visit us at www.ych.com