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APR/MAY/JUN 2010 [ B U S I N E S S P E O P L E O P P O RT U N I T I E S ]

UOTIENT

MICE INDUSTRY LIGHTS UP AS ECONOMY RECOVERS

READY, SET, GO

TIPPING POINTHELPING SMEs RAISE THEIR PRODUCTIVITY

SINGAPORE ECONOMY

GOING FOR THELONG HAUL

A publication of

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BIZQ BIZQ APR/MAY/JUN 2010 ] 01

ON 1 FEBRUARY, THE ECONOMIC STRATEGIES COMMITTEE (ESC) chaired by the Minister for Finance, Tharman Shanmugaratnam, presented its recommendations for the next phase of Singapore’s economic development. Shortly thereafter, the Minister unveiled Budget 2010. The target of both was to achieve sustainable growth through productivity and innovation.

As Singapore’s apex business chamber, SBF welcomes the ESC recommendations and budgetary measures. We will work with our trade associations, business chambers, as well as government agencies, to grow Singapore as a leading global city in the heart of Asia, with a strong community of internationally competitive, Singapore-based companies.

Arising from the ESC recommendations and the incentives announced in Budget 2010, SBF will look into initiatives and schemes to assist businesses to enhance their productivity and competitiveness. These include training, raising workforce quality, skills upgrading, innovation and ICT. It will step up efforts to promote Singapore as a global hub through business internationalisation via strong strategy, coordination and collaborative efforts. SBF will also focus on Global Entrepolis@Singapore as a regional platform for business collaborations.

Within SBF, we are relentless in our search for new opportunities and markets. In the past few months, we have led members into new markets in Bangladesh, the Czech Republic, Egypt and Botswana, and helped our members understand the multilateral FTAs recently concluded with China and India. As we progress further into the year, members can look forward to more of these opportunities.

These are exciting times. We urge members to leverage the multitude of opportunities coming up.

SBFSAYS]

Arising from the ESC recommendations and the incentives announced in Budget 2010, SBF will look into initiatives and schemes to assist businesses to enhance their productivity and competitiveness.

ESC and Budget 2010 Point The Way To Sustainable Growth

TONY CHEW LEONG-CHEE CHAIRMAN

SINGAPORE BUSINESS FEDERATION

Upon approvalPlease sign:

Name and Date:

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02 [ APR/MAY/JUN 2010 BIZQBIZQ

Cover story 23] MICE INDUSTRY SET TO ROAR AGAINFrom aviation and maritime to medicine, Singapore has clearly grabbed the pole position as the place in Asia to host major conventions. After a lacklustre 2008-2009,

industry experts say better times are ahead.

01] SBF SAYSMessage from the SBF Chairman.

04] SBF UPDATENews and happenings at SBF.

08] EYE ON SMES Helping SMEs grow their businesses.

12] EYE ON ECONOMYTaking stock of emerging trendsin Singapore.

16] BIZ COMMUNITYSingapore companies should ride on the new economy with locally-made innovations.

19] GLOBAL BUSINESSBiZQ looks into one of Saudi Arabia’s key sectors – healthcare – that will offer potential opportunities to Singapore companies venturing into the kingdom.

21] COUNTRY INSIGHTSBiZQ examines the impact the China-ASEAN Free Trade Agreement has inthis region.

CONTENTS]

APR/MAY/JUN 2010

UOTIENT

BIZ COMMUNITYDeveloping an innovation-led economy in Singapore.


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30] INDUSTRY TRENDSBiZQ takes a look at the market dynamics of Singapore’s industrial real estate, as rentals start to pick up as the economy recovers.

34] TECHNOLOGYHelping SMEs raise their productivity level through investing in technology and upgrading skills.

36] MANAGEMENT GUIDE Portable medical insurance allows employees to carry their medical benefi ts with them when they move to a new job.

38] IN BUSINESS WITHBiZQ interviews Indo Straits Trading’s Director, Mr Shabbir Hassanbhai.

39] EXECUTIVE LIFESTYLE Singapore sparkles as the best city in Asia Pacifi c with a world-class airport and an enviable transport system.

40] BOARDROOM TALKSpotlight on Mr Vincent Lim, CEO ofBH Global Marine.

36

IN BUSINESS WITHIndo Straits Trading’s

Mr Shabbir Hassanbhai.

PUBLISHERSINGAPORE BUSINESS FEDERATION

CHAIRMAN Tony Chew

CHIEF EXECUTIVE OFFICER Teng Theng Dar

ASSISTANT EXECUTIVE DIRECTOR (MEMBER RELATIONS) Cheryl Kong

DIRECTOR, CORPORATE COMMUNICATIONS Gerald De Cotta

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

Business Quotient (BIZQ) is the offi cial publication of the Singapore Business Federation, reaching out to over 20,000 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 profi les, stories about

successful companies and the people who lead them.

PUBLISHING AGENTSPH MAGAZINES PTE LTD

GROUP EDITOR, CUSTOM PUBLISHING Joanna Lee-Miller

SENIOR EDITOR Azreen Noor

CONTRIBUTING EDITOR Casuarina Peck

ASSOCIATE CREATIVE DIRECTOR Alex Goh

ART DIRECTOR Bernard Chia

EXECUTIVE SUB-EDITOR Esther Lew

GROUP ACCOUNT MANAGER Charmaine Soh

ACCOUNT MANAGER Yuyeth Robles Tagama

MANAGER, CLIENT MANAGEMENT Mavis Liang

EXECUTIVE, CLIENT MANAGEMENT Jessie Kek

MANAGER, PUBLISHING SERVICES Alice Chee

For advertising enquiries, please call6827-6828 or 6319-6326

This news magazine is published by SPH Magazines Pte Ltd (Registration No. 196900476 M) 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 suffi cient return postage. While every reasonable care will be taken by the Editor, no responsibility is assumed for the return of unsolicited material. MICA (P) 201/06/2009. Printed in Singapore by Times Printers (Registration No. 196700328H).


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SBFUPDATE]

Budget 2010 survey:Companies want more help

SBF poll also revealed that more than two-thirdsof businesses remained upbeat despite the

uncertain economic environment.

L ocal companies want more help with the rising cost of doing business in Singapore,

according to a joint survey involving 15 foreign and local chambers and coordinated by Singapore Business Federation (SBF).

The SBF poll found that about 55 per cent felt business costs have increased and almost 46 per cent believed that operating costs will continue to increase this year.

On a positive note, the survey also indicated that businesses were not as adversely impacted by the global economic slowdown in 2009 as initially feared. With the global economy showing nascent signs of recovery in recent months, companies are beginning to be more optimistic about business prospects for 2010.

The survey was conducted in December 2009, and 307 business owners and senior company executives representing the local and foreign business community based in Singapore were polled.

This survey on business climate was aimed at gathering feedback from the Singapore business community on major issues and concerns faced by them. Some of the highlights of the survey were:

Review of 2009Two-thirds of those polled indicated that they expected to end 2009 on a profi table note. One-fi fth indicated that they expect to break even

while another one-fi fth said they were expecting losses.

Almost 63 per cent of the respondents indicated that “jobs for Singaporeans” was the most useful component of the Resilience Package.

“Stimulating bank lending” (10 per cent) and “enhanced business cash fl ow and competitiveness” (almost 17 per cent) were the other benefi cial outcomes attributed to the Resilience Package. Respondents would like to see the above benefi ts extended into Budget 2010, in addition to rental rebates and “infrastructure stimulus”.

Economic Outlook 2010About 43 per cent of those polled indicated the economic outlook for 2010 to be “average”. Close to 42 per cent were “optimistic” while 15 per cent were “pessimistic”.

In the same poll, 70 per cent indicated that they expect their businesses to be profi table in 2010 and one quarter of the respondents were uncertain of their profi tability.

Almost 70 per cent indicated that their businesses will grow between 1 per cent to more than 10 per cent. About 37 per cent said they “will be making investments” this year in China, Australia and Hong Kong.

The top three business challenges for 2010 are “uncertain economic environment” (72 per cent), “increasing competition” (49 per cent) and “increased operating cost” (46 per cent).

Manpower issues, slower sales

and currency fl uctuation were cited as some of the other key concerns. Almost 40 per cent of respondents indicated that bank loans are more diffi cult to obtain.

Budget wish listThere were two components tothe Budget wish list: Government policy measures to help reduce business costs, and ensuring a business environment conducivefor investment.

Fifty per cent of respondents would like the Government to help in reducing rental costs, corporate tax, personal income tax and other business costs such as CPF, utilities, bank loan rates, increase rental rebates, etc.

On manpower issues, 20 per cent said the Government needs to increase the quota for foreign manpower, supplement training costs for local and foreign workers, and reduce foreign workers’ levy and accommodation cost.

Almost 5 per cent of respondents said SMEs need technology funding support, more tax help, more assistance to hire professionals and managers to stay competitive, and allow small foreign fi rms to operate in Singapore without undue regulation.

The fi ndings of the above joint chamber survey were presented to the Ministry of Finance and Ministry of Trade and Industry for information and consideration for Budget 2010. +

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SBF POST-BUDGET BRIEFINGDuring the recent Budget 2010, the Government announced that it will be devoting signifi cant resources to implement the strategies recommended by the Economic Strategies Committee (ESC) and push ahead longer-term infrastructural and social investments.

In light of this, SBF and Singapore National Employers Federation organised a seminar on Budget 2010 in early March, with speakers from CIMB-GK Research and RSM Chio Lim, who shared with SBF members the highlights of the budget. Some of the topics discussed include tax deduction for angel investors, implementing various pro-business programmes and extending existing tax incentives.

About 700 participants made up of fi nance managers, CFOs and HR practitioners attended the briefi ng.

INVESTING IN EGYPTEgypt’s Minister of Investment, Dr Mahmoud Mohieldin, said Singapore companies can expect investment opportunities in three sectors with substantial growth in Egypt – infrastructure and construction, communication and information technology, as well as fi nancial services.

More than 100 businessmen from diversifi ed sectors heard high-level Egyptian government offi cials and elite business delegates share their perspectives on Egypt’s economic, political and social background at an SBF-organised seminar in March.

The seminar also featured speakers from four Egyptian listed companies who represented the fi nancial services, oil and gas, and the cables and carpets manufacturing industries.

SBF WELCOMES NEW COOMr Victor Tay joined the Singapore Business Federation this January as Chief Operating Offi cer (COO) reporting to Chief Executive Offi cer Teng Theng Dar. As COO, Mr Tay oversees member relations and services, key enterprise development initiatives such as Business Continuity Management andEnterpriseOne Business Information Services, publicrelations and communications, and business development.

ICC ASIAN OFFICEOver 150 guests from the legal and business world attended the offi cial inauguration of ICC’s regional Asia offi ce in Singapore recently. The regional offi ce

will be managed by ICC Regional Director for Trade and Policy Lee Ju Song. SBF is the National Committee in Singapore of the International Chamber of Commerce.

Vibrant ASEAN-Indian region leads to dynamic communityTrade fi gures expected to jump to US$100 billion within the next fi ve years with signing of FTA.

With the ASEAN-India Free Trade Agreement (AIFTA) in force this January, ASEAN-India trade is expected to jump to US$100 billion

from the current US$40 billion within the next fi ve years. To date, three ASEAN countries – Malaysia, Thailand

and Singapore – have implemented phase one of the AIFTA, while a similar agreement on trade-in-services is awaiting approval.

Once the agreement on trade-in-service is approved, companies in ASEAN and India will be able to tap into each other’s expertise and opportunities in the information technology, business process out-sourcing, and space sciences sectors.

The US$100 billion trade target within the next fi ve years is reasonable when compared to the current combined GDP of ASEAN and India at US$2 trillion.

With this exciting economic development unfolding, the Singapore Business Federation (SBF) organised a seminar on the AIFTA recently together with representatives from IE Singapore, Singapore Customs and Singapore International Arbitration Centre.

Seventy-eight participants from the logistics, manufacturing and industrial goods, commodities, automotive, infrastructure, infocomm, real estate and services sectors were given in-depth knowledge on how to make use of the AIFTA for their specifi c India-related business needs and interests.

The AIFTA trade-in-goods agreement will create an opening for more than 4,000 duty-free items from ASEAN member countries to enter India’s market of over a billion people.

These items make up almost 80 per cent of imports from ASEAN into India. Likewise, Indian enterprises will be able to tap into the rich and diverse natural resources of Southeast Asia and export its products to ASEAN’s combined consumer market of 550 million people. +

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SBFUPDATE]

SINGAPORE SYMPOSIUM- DIALOGUE SESSION WITH MM LEE, MODERATED BY PRE-EMINENT BUSINESSMAN, MR RATAN N TATA (SEATED NEXT TO MM LEE, WITH LIGHT BLUE TIE).

Singapore Symposium held in New DelhiComprehensive Economic Cooperation Agreement and ASEAN-India Free Trade Agreement will strengthen Singapore-India bilateral trade.

New Delhi, an important epicentre for international politics and trade, is fertile

ground for business investment. New Delhi has a highly skilled

labour force, high proportion of English-speaking population, liberalised foreign investment regulations and potential business opportunities in several industry sectors, said Mr Anjay Roy, Advisor to the Federation of the Indian Chamber of Commerce and Industry (FICCI).

He said that such key sectors include information technology, telecommunications, hotels, banking, media and tourism.

New Delhi’s manufacturing base has grown considerably as many consumer goods manufacturing enterprises have established their factories and headquarters in the capital. He said that Delhi’s large consumer market, coupled with the easy availability of skilled labour, has been a major push factor.

To help SBF members tap into the vast opportunities in this cosmopolitan city, the Singapore Business Federation organised a fi ve-day business mission last December for a 19-member delegation led by Mr Vikas Gore, Director, DP Architects Pte Ltd.

SBF’s mission roleSBF partnered the Confederation of Indian Industry (CII) who organised the recent Singapore Symposium in New Delhi, as well as the site visits during the business mission.

The Confederation of Indian Industry (CII) is an MOU partner of SBF and CII is India’s premier business association, with a direct membership of over 7,800 organisations from the private and public sectors. These include SMEs and MNCs, and an indirect membership of over 90,000 companies from around 385 national and regional sectoral associations.

The highlight of the mission was the Singapore Symposium held on December 16, attended by over 170

participants. Minister Mentor Lee Kuan Yew was one of the speakers at the Symposium whose aim was to share Singapore’s experience in education, corporate governance and infrastructure development.

Among the attendees were several industry leaders including Philip Yeo, Chairman of Spring Singapore and Special Advisor for Economic Development; Sat Pal Khattar, Co-Chairman Singapore India Partnership Foundation and Chairman of Khattar Holdings; Anand Sharma, Minister of Commerce and Industry Government of India; Ratan Tata, Chairman of Tata Sons; and Sunil Bharti Mittal, Chairman and Group CEO of Bharti Enterprises.

Business contactsSBF business mission leader Mr Gore said: “We share this historical connection, and the fact that we were both former British colonies make it easier for us to do business.”

Some of the best takeaways from the SBF business mission were the key contacts made by the Singapore companies in New Delhi.

Participants felt that they now have excellent legal, operational and strategic advice to venture into India. Following the mission, three companies are now in pursuit of business leads that surfaced during the meetings in New Delhi.

Several SBF mission participants are in talks with Indian counterparts for possible collaboration as a result of this visit.

For more information, contact Teo Chi Howe, Senior Executive for South Asia at Tel: 6827-6855 ore-mail [email protected]. +



Setting up business in the Czech Republic

P rague and Kunovice are the two major cities where Czech Republic’s dynamic

aerospace manufacturing clusters are located. For decades, the country’s aerospace industry was ranked among the most competitive in the world.

This vibrant industry is now undergoing privatisation and this sector presents ample opportunities for foreign investors. Czech manufacturers and investors are currently participating in numerous multinational joint-projects where an increasing number of Czech-made components and solutions, for example, are featured in the A380 and B787 programmes.

ICT is another key sector which has been growing steadily over the years in the European region. The republic has a competitive advantage in providing skilled and well-educated IT workers at a fraction of the cost of other countries in the region, explained Mr Ondrej Votruba, Executive Director (Japan Operations) of CzechInvest, the country’s investment and business development agency.

He was speaking at a recent seminar on “Business Opportunities in Czech Republic & Networking Session 2010” jointly organised by the Singapore Business Federation (SBF) and CzechInvest.

The seminar, attended by some 50 local business representatives from various sectors, provided useful information on the country’s business opportunities in the aerospace, ICT and high-tech

Attractive business perks including reduced corporate tax rate and highly skilled workforce.

manufacturing sectors, as well as the legal and fi nancial aspect of doing business in Czech Republic.

Mr Martin Yuoon, SBF’s Assistant Executive Director, noted that the Czech Republic and Singapore both share common ground – both countries are geographically small with open economies strategically located in their respective regions.

Attendees were also updated on the geographical and sectoral incentive schemes in the country, and the fi nancial support available from the European Structured Funds.

THE CZECH REPUBLICThe country is considered one of the most dynamic and industralised countries in Central Europe, thanks to its advantageous geographical position, liberal regime for foreign capital and highly skilled workforce.

Czech Republic is ranked as Singapore’s 58th largest trading partner in 2008 with the balance of trade in Singapore’s favour.

Infl ows of foreign direct investment were roughly US$10.73 billion in 2008. Trade between both countries continue to soar, reaching S$963.2 million in 2008, a 44.8 per cent increase in trade value from 2007.

Some of the companies who have successfully established their presence there are Flextronics International Ltd, System Access Ltd and Amtek Engineering Ltd.

New incentive schemes were made known recently and market information is accessiblethrough the CzechInvest website www.czechinvest.org/en.

Based on the positive feedback from the participants about the developments in the country, SBF will look to increasing its engagement of the market in the coming years.

For more information on such events, contact Cindy Chua, Executive for GBD Europe & Central Asia, at Tel: 6827-6887 or e-mail [email protected]. +

(FROM LEFT) MARTIN FELENDA, MANAGING PARTNER, SCHAFFER & PARTNER; ONDREJ VOTRUBA, EXECUTIVE DIRECTOR (JAPAN OPERATIONS), CZECHINVEST; MARTIN YUOON, ASSISTANT EXECUTIVE DIRECTOR, SBF; THEO SPEELMANS, MANAGING DIRECTOR, KBC N.V. BANK.



EYEONSMEs]

SME NEWS

S ingapore is widely regarded as one of the best places in the world for doing

business. With a deep pool of talent and expertise, strong global connectivity, and a reputation as a trusted hub, Singapore-based companies are well-positioned to seize global opportunities.

However, Singapore’s small domestic market makes it necessary for local enterprises to internationalise, often at a relatively early stage of their growth. In particular, emerging markets, especially in Asia, represent a major opportunity for local enterprises in the next decade and beyond.

To this end, the Economic Strategies Committee (ESC) recommended that the Singapore government should do much more to help SMEs access capital, build capabilities, establish networks and nurture talent.

In a multi-pronged approach, the ESC Sub-Committee report recommended fi ve proposals which were featured in the recent Budget 2010 announcements. These are:

a. Develop an Export-Import bank-like institution:As overseas business opportunities for Singapore companies expand, the need for cross-border fi nancing will increase. The proposal recommended that the government develops EXIM (Export-Import) banks for cross-border fi nancing, including a commercially-managed specialist institution.

The government is studying

various models and evaluating how best to realise the development of a market-based institution to support and catalyse the growth of cross-border fi nancing for Singapore-based companies.

b. Catalyse supply ofgrowth capital: The ESC report said that feedback from both local companies and the fi nancial sector suggests that there is room to develop and catalyse market fi nancing of SMEs.

The government announced during the Budget that it will set up partnerships with the private sector that will see S$1.5 billion, over 10 years, directed to helping smaller fi rms expand overseas. Half the funds will come from the government, with the rest from private fund managers with expertise in the venture capital fi eld. More details to be announced by May.

c. Empower local trade organisations to drive growth and internationalisation:The report recommended that the government strengthens trade organisations’ institutional capabilities and empowers trade associations and chambers like the Singapore Business Federation to serve as industry champions and market facilitators.

The government will commit S$100 million over fi ve years to scale up support for business associations through initiatives such as the Local Enterprise and Association Development programme, and the Enterprise Development Centers. More details to be announced by June.

d. Establish track record with signifi cant consumers: The Singapore domestic market, though small, has signifi cant consumers with sophisticated demand and large purchasing power.

One major source of signifi cant consumers are multinational companies (MNCs). The proposal recommended that the government provides incentives to facilitate partnerships in which MNCs, including large local companies, assist local companies to develop new partnershipsand capabilities.

e. Enhance access tohuman capital: Enterprises need talent to drive their growth. The ESC recommended that the government broadens the scope of internship programmes at the polytechnic and undergraduate levels and facilitates a network of advisors and mentors to provide strategic expertise to SMEs.

The government will commit S$45 million over fi ve years to enhance SPRING’s Business Leaders Initiative – an umbrella programme to attract young talent into SMEs, and groom a future generation of SME managers and entrepreneurs.

By implementing the following strategies, it is possible to double the number of local enterprises with revenues of over S$100 million to 1,000 over the next 10 years, said the ESC Sub-Committee. +

The Economic Strategies Committee report recently proposed a S$1.5 billion funding boost and an export-import bank to assist SMEs.

Financial help for growing SMEs


Name and Date:

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SME HELPDESK

SBF links up Singapore business community with high-level Japanese trade mission

NEW EDITION

EVENTS

The global economic landscape has changed over the

past 12 months and many companies are concerned that the debt crisis in Dubai may hamper economic recovery.

As such, Singapore recognises the importance of linking business communities across Asia to help this region become a driving force for a strong and sustainable economic growth.

At a recent high level dialogue session between 19 Singapore business representatives and a 26-member delegation from the Nippon Keidanren (Japan Federation of Economic Organisations), SBF Chairman, Mr Tony Chew, said that both Singapore and Japan shared a common vision for a strong and vibrant Asia.

The Nippon Keidanren delegation was led by its Chairman, Mr Fujio Mitarai last December. The Singapore business representatives were led by several SBF council members and captains of various industries.

As the leading business and economic organisation in Japan, Nippon Keidanren keenly promotes closer cooperation between the

FOOD & HOTEL ASIA 2010April 20-23 • Singapore ExpoThis event provides SMEs with the opportunities for forging new partnerships and strengthening existing business relationships. FHA2010 encompasses specialised events – FoodAsia, HotelAsia, Bakery&Pastry, HospitalityStyleAsia and HospitalityTechnology all under one roof.

business communities in Asia as well as regional economic integration.

The objective of this economic mission to Asia – which included Thailand and Vietnam – was to understand how countries in the region responded to the current global economic crisis, as well to explore ideas on achieving sustainable future growth in Asia. Nippon Keidanren believes that it is paramount for Japan and the rest of Asia to develop close economic ties amongst themselves through the expansion of trade and investment, as well as the promotion of technical and fi nancial cooperation.

For more information on forthcoming events, contact Ms Juliana Seah, Senior Executive for GBD China & North Asia or email [email protected].

INTERACTIVE DME 2010June 15-18 • Singapore ExpoInteractiveDME is the event where one gains insights into future interactive digital media and entertainment industry and see how the market continues to evolve in ways where information, content and entertainment are obtained, accessed and shared.

COMMENTARY ON UCP 600Members of the Drafting Group that produced the new UCP 600 have produced this Commentary guide explaining the rationale behind the changes in the new rules on documentary credits. This guide contains an analysis of each article and sub-article of the new UCP, as well as cross-references to the changes from UCP 500.

INTERNATIONAL STANDARD BANKING PRACTICE (ISBP) 2007This publication, an update of the successful ICC Publication 645, refl ects international standard banking practice for all parties to a documentary credit under UCP 600. Users will fi nd guidance on how to deal with documents covering at least two different modes of transport, insurance documents and coverage, transferable credits and other issues covered in the new documentary credit rules.

BiZQ readers can order these valuable and informative publications direct from SBF.For more information, refer to www.sbf.org.sg.

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PP 003-008 NTU BIZQ April.fh11 3/17/10 3:59 PM Page 1

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EYEONECONOMY]

Growing Singapore for the futureRecent Budget 2010 announcement will help Singapore achieve

recommendations set out in the Economic Strategies Committee report.

A year after the Singapore economy – alongside just about every other major

economy – was crushed by the global financial crisis, the island republic looks set to go full steam ahead for the long haul.

After the mild contraction of the economy in 2009, the Ministry of Trade and Industry expects Singapore’s GDP to expand by 4.5 to 6.5 per cent in 2010.

Minister of Trade and Industry Lim Hng Kiang told Members of Parliament in mid January that “external demand will continue to grow, but at a sluggish pace. There will be some support from continued inventory restocking and resumption in global trade.

Domestically, the opening of new facilities for the chemicals and biomedical manufacturing clusters as well as the opening of the Integrated Resorts (IR) will also provide a boost to growth in 2010.”

In sum, he said the recovery of the Singapore economy in 2010 is expected to be uneven.

Sustainable recoveryPrivate sector economists are a tad more bullish. Merrill Lynch’s Silvia Liu expects the Singapore economy to continue its growth trajectory in 2010.

“As an open economy where trade and exports are 285 and 150 per cent of GDP, we see the country as a leveraged play into the global economy. Having seen the worst in 2009, we expect Singapore will continue to rebound sharply in 2010, driven by a sustainable Asian recovery, increasing evidence of a fi rming G3 that will sustain

Singapore’s export-led recovery well into 2010,” she said.

Macquarie Equities’ Soong Tuck Yin said that manufacturing growth will remain important this year but services, which

accounts for 75 per cent of GDP, will evolve into a more important driver of economic growth in 2010.

“The opening of the two IRs will boost tourist arrivals, demand for hotels and tourism-related sectors like retail and land transport.

Singapore Macroeconomic Forecasts

2007 2008 2009 (F) 2010 (F)

Real GDP (%YoY) 7.8 1.1 -1.6 6.5

Private consumption 5.2 2.4 -1.8 4.3

Fixed investment 19.2 13.7 -3.7 6.8

Exports 8.7 1.3 -11.8 9.6

Imports 8.3 6.1 -12.8 9.0

3 Month interbank rate 2.38 1 0.75 0.75

CPI infl ation 2.1 6.5 0.1 3.1

SOURCE: CEIC, BANK OF AMERICA


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(However) the full impact from the IRs is likely to be felt only in 2011,” he said.

Equally bullish is CIMB-GK Research head Song Seng Wun. “The clear and modest global recovery (in recent

months) currently underway suggests Singapore may enjoy two to three quarters of strong growth in the coming year. The government’s expansionary bias in 2009 and the fi rst half of 2010 will continue to support private consumption growth of 2 to 4 per cent,” he said.

Business climateOne of the early indications of the upside momentum in the Singapore economy was recently captured in the BT-UniSIM Business Climate Survey, which was just completed in January. The survey, a copy of which was shared with BiZQ, shows that 149 fi rms surveyed expect to witness growth of between 7.3 and 8.4 per cent in 2010.

The survey also shows that businesses have turned upbeat from the preceding survey. In the latest polls, the business prospects indicator leapt 40 percentage points, indicating a sharply improved sentiment. The 45 per cent net balance (the difference between the proportion of optimistic fi rms and those who were not) amounts to a dramatic turnaround from a year ago.

But Singapore has started planning and preparing for the road ahead. Amid the economic contraction arising from the global fi nancial crisis, Singapore conceptualised the Economic Strategies Committee (ESC) to map out growth for the next fi ve to 10 years.

Spearheaded by Minister of Finance Mr Tharman Shanmugaratnam, the Economic P

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• FOCUS ON PRODUCTIVITY TO SUSTAIN LONG-TERM ECONOMIC GROWTHTo achieve GDP growth of 3% to 5% a year over the next decade, Singapore needs to target productivity growth of 2% to 3% a year. The report says that a key strategy to attain this target is to ensure continuous upgrading of skills through retraining, encourage innovation and investment in technology. The quantity and quality of foreign workers have to be managed through phased increases in foreign worker levies.

• REITERATING EXISTING STRATEGIES OF MAKING SINGAPORE A GLOBAL ASIA HUBThe ESC reiterated the need to anchor Singapore as a Global Asia hub and build a vibrant and diverse corporate eco-system. One encouraging recommendation was the growing of up to 1,000 Singapore companies with revenues over S$100m by 2020.

Another suggestion is to establish the likes of an Export-Import Bank.

• SEIZING GROWTH OPPORTUNITIESThe report identifi ed fi ve strategic thrusts for Singapore to become a pioneer for “future-ready” green urban solutions; a leading consumer Business Centre; a global base for complex manufacturing services; a fi nancial and business hub; and a global node for innovation.

• DRIVE INNOVATION To increase overall R&D expenditures of 3% to 5% of GDP and build the foundations for translational R&D and downstream opportunities and strengthen emphasis on business innovation.

• ENERGY RESOURCESTo enhance energy security, the ESC recommended looking at the feasibility of nuclear energy, importing electricity and how to price energy to refl ect the real costsin a carbon-constrained world.

SINGAPORE’S ESC REPORT:

KEY THRUSTSIn the February report released by the Economic Strategies Committee, the thrust of the recommendations are as follows:

Strategies Committee aims to achieve productivity growth of 2 to 3 per cent a year, supporting a 3 to 5 per cent GDP growth a year over the next 10 years.

The 25-member ESC took about eight months to come up with its comprehensive report. The government reviewed the recommendations during the Budget debate in late February.

Key growth strategyIn his assessment of the Singapore economy at the start of Year of the

Tiger, Prime Minister Lee Hsien Loong, emphasised that productivity is a key growth strategy for Singapore’s economy.

On the back of the ESC announcements, Nomura economist Lim Jit Soon told BiZQ that the current planning will enable the republic to make “2010 a year of rebalancing as Singapore readjusts its economic policies and model to address its over-reliance on developed markets and declining productivity”.

From an industry perspective, the recommendations contained in the >


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EYEONECONOMY]

ESC report were welcomed by VP Bank Singapore’s Managing Director, Reto Isenring, who said that the proposed plan to boost skills at every level resonates with all Singaporeans.

“Human resource plays a vital role in Singapore's economy, and it is therefore not surprising that the government has been actively encouraging Singaporeans to constantly improve themselves by upgrading their education and skill levels,” he said.

FedEx Express South Pacifi c’s Regional Vice President, David Ross, said that he fully agreed with the ESC recommendation that “Singapore companies

• $5.5 BILLION TO RAISE PRODUCTIVITYSingapore will commit S$1.1 billion a year over the next fi ve years in the form of tax benefi ts, grants and training subsidies to support the national effort to raise productivity. The incentives include allowing fi rms to claim tax deductions of 250 per cent of their expenditure on activities such as design, training and automation, subject to a maximum of $300,000 for each activity.

• $1.5 BILLION TO HELP GROWING COMPANIESThe government will mobilise up to $1.5 billion of growth capital by seeding a range of funds over 10 years. Up to half the money will come from government coffers.

• FOREIGN WORKER LEVYThe government will increase the

must go beyond what they have already developed, and differentiate themselves by extending their expertise and reaching new markets.”

“We also support the ESC’s call for local companies to innovate more, and for companies to do more to raise the productivity and effi ciency of their employees,” he added.

Budget defi citSingapore expects a smaller budget defi cit for the fi scal year starting April 1, 2010. The government will, however, increase spending to raise productivity.

The government expects a basic budget defi cit of $7.2 billion, or 2.6 per cent of GDP, for the fi scal year beginning April 2010, down from an

levy on low-skilled foreign workers over three years. The levy on work permit holders will be raised by $10 to $30 per worker per month on July 1, 2010, and will average about S$100 over three years.

• PROGRESSIVE PROPERTY TAXThe government will introduce a ‘progressive’ property tax on owner-occupied homes with a top rate of 6 per cent of the property’s annual value. Owners of government-built HDB apartments and owners of most private homes will pay lower taxes under thenew formula.

• WAGE SUBSIDY Singapore’s ‘Workfare Income Supplement’ scheme will also be extended to workers earning up to $1,700 a month from the current $1,500 a month. The enhanced workfare scheme will cost the

government $100 million annually and benefi t around 400,000 low-wage workers.

• INDUSTRY INCENTIVESThe government renewed tax incentives for real estate investment trusts and aviation maintenance, repair and overhaul to promote these industries.

• NO TAX REBATESSingapore did not extend property and income tax rebates.

• JOB CREDITSThe government will cut and eventually phase out a subsidy paid to employers to encourage them to hire or retain Singapore citizens or permanent residents. The job credit applies only to regular staff who make monthly contributions to the Central Provident Fund, the pension fund.

estimated $8.5 billion, or 3.3 per cent of GDP, last fi scal year.

The basic budget defi cit excludes transfers by the government to endowment funds as well as net investment returns from the country’s reserves.

The overall budget balance for FY2010/11 is an estimated defi cit of $3 billion, or 1.1 per cent of GDP, the Singapore fi nance ministry said.

Consensus among economists is that the 2010 Budget will become the main tool to drive Singapore’s longer term ambitions, as outlined in the ESC report. DMG & Partners economist Leng Seng Choon expects the Singapore government to continue its budget defi cit stance from 2009. +

Budget 2010 at a glanceFinance Minister Mr Tharman Shanmugaratnam recently reaffi rmed the government’s commitment to help growing companies expand their businesses and announced several measures to help them raise their level of productivity. The following are highlights of the Budget:


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Vietnam is a promising emerging economy in Southeast Asia. Bilateral trade was $13 billion last year and Singapore is Vietnam’s fifth-largest investor with investments of $24 billion in 766 projects. With Vietnam aiming to become an industrialized nation by 2020, there are opportunities for businesses to leverage the country’s development as it works towards its

goal. Learn first-hand about the country’s latest developments and the key challenges to look out for, in order to thrive in this emerging market.

International Enterprise (IE) Singapore and the Singapore Business Federation (SBF), together with Vietnam National University, Hanoi School of Business (HSB) and University of Economics in Ho Chi Minh

City (UEH), invite you to attend the International BusinessFellowship (iBF) Executive Programme on Vietnam.

Jointly organised by:

INTERNATIONAL BUSINESS FELLOWSHIPExecutive Programme on Vietnam

6 - 12 May 2010

DOUBLE TAX DEDUCTION SCHEME (DTD)*Eligible companies can apply to IE Singapore for double tax deduction for travel and accommodation costs for up to 2 employees per participating company.For details, please refer to www.iesingapore.gov.sg/dtd.

SEMINAR DETAILSDate 6 – 12 May 2010Duration 6 daysVenue Vietnam National University, Hanoi School of Business (HSB), Hanoi, Vietnam University of Economics in Ho Chi Minh City (UEH), Ho Chi Minh City, VietnamEstimated S$1,050 per participant (after 70% Course Fee iBF Course fee support)* includes lecturers’ fees, Course Fee, course materials, daily lunch and over-land local transfers.Other Costs Airfare, accommodation, subsistence allowance and other incidental expenses will be borne by participantsDress Code Business casuals during lectures Business attire (suit and tie for gentlemen) during site visitsLanguage Course will be conducted in English

REGISTRATIONIf you are interested to attend the iBF Executive Programme on Vietnam, please contact the below and submit your registration by Friday, 16 April 2010.

For more information, please contact: Mr Alan Tan Ms Loong Lai YongTel: 65 6827 6894 Tel: 65 6827 [email protected] [email protected]

PAYMENTPayment will be collected upon confi rmation of placement in the programme.

TERMS AND CONDITIONSProgramme date, fees and details are correct at time of printing but are subject to change without prior notice.

*Terms and conditions apply.

To be conducted in Hanoi and Ho Chi Minh City, Vietnam, the programme is designed to provide participants with a comprehensive overview of Vietnam’s business systems, practices and varied possibilities. Topics covered include:

• Vietnam’s economic and business scenario• Government and politics in Vietnam• Vietnamese culture• Human resource issues in a competitive Vietnamese market• Business experiences in Vietnam• Opportunities in various industries

Participants can look forward to company visits to gain practical insights on business operations in Vietnam as well as networking opportunities with the speakers, business experts and industry practitioners.

THE PROGRAMME IS SUITABLE FOR:• Senior management from Singapore-based companies that have business or seek to explore business opportunities in Vietnam• Senior offi cers from public sector organizations who support business initiatives that add value to Singapore and Vietnam

Only 25 participants will be accepted for each programme and class placements will be decided by IE Singapore / SBF.

ABOUT THE INTERNATIONAL BUSINESS FELLOWSHIP PROGRAMMEIE Singapore’s International Business Fellowship Programme supports Singapore-based companies in the training of company executives to acquire business knowledge and build networks in the supported markets of Central Asia, China, India, Latin America, the Middle East, Russia and Vietnam.


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BIZCOMMUNITY]

Developing an innovation-led economySingapore companies should ride on the new economy with Singapore-made innovations. SBF’s recent seminar looks into how successful companies brand their innovative products and services.

R esearch and development activities in Singapore need to increase

signifi cantly, following the likes of Japan and Sweden, according to a recent report by the Economic Strategies Committee (ESC).

The report revealed that greater R&D spending is needed to boost innovation and help Singapore become an Asian hub for innovation and enterprise. The ESC recommendation calls for an increase in expenditure from about 3 per cent of GDP this year to 3.5 per cent by 2015.

In addition, the report recommended that the Singapore government remains fi rmly committed to public sector R&D and helps to develop a pool of

research talent in the country.Emphasising the need for more

public-private R&D initiatives, Mr Lim Chuan Poh, Chairman of the Agency for Science, Technology & Research (A*Star), said that Singapore has already established a strong base through signifi cant R&D investments such as Biopolis and Fusionpolis, while local universities and polytechnics have their own research centres.

He said that it is important for Singapore companies to know that innovation through R&D investments and the commercialisation of locally made products and services will help create new technologies and successful start-ups.

Promoting commercialisation requires different partners such as

innovators, patent agents and start-up mentors for small and medium companies. One proposal is to help the public sector access intellectual property knowledge and provide facilities for testing innovative solutions.

In addition, various platforms can be created to allow research

SUCCESSFUL START-UPS DEPEND ON COMMERCIALISING INNOVATIVE PRODUCTS AND SERVICES.

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THE HDB’S SOLAR TEST-BEDDING SITE IN SERANGOON IS AN INITIATIVE THAT IS PART OF SINGAPORE’S SUSTAINABLE-DEVELOPMENT BLUEPRINT. A $680 MILLION FUND HAS BEEN SET ASIDE FOR R&D AND MANPOWER TRAINING TO GROW THE CLEANTECH SECTOR.

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institutions, fi rms and public agencies to work together to provide innovative solutions.

Such proposals are already in the works. Under the EnterpriseOne Technology Innovation Programme, SPRING Singapore is funding several “Centres of Innovation” across educational institutions such as Nanyang Polytechnic, Ngee Ann Polytechnic, Singapore Polytechnic and SIMTech, which allow SMEs to access professional services at an affordable rate.

These one-stop centres provide access to facilities such as laboratory equipment, professional services such as technology consultancy and training courses, and testing and developing technology projects. For more information, refer to website www.business.gov.sg.

Community networkAt a recent seminar, Singapore Business Federation (SBF) announced that it will collaborate with SPRING Singapore and Singapore Manufacturers’ Federation (SMa) to strengthen the product design and development community.

In addition, the three organisations hope to encourage Singapore businesses and manufacturers to push forward with product and service innovation so that they remain competitive in today’s global market to better serve their clients.

SBF CEO, Mr Teng Theng Dar, said: “The evolving global economy presents both challenges and opportunities. Amidst a landscape of scarce resources and increased volatility, as well as growing levels of affl uence, ageing and urbanisation, it is key for businesses to embrace technology-led new product development and innovation to deliver sustainable high-value-add customer-centric >

Innovation partnership fundThe Singapore government, as a signifi cant consumer of products and services, will itself play a larger role to help companies turn their research and development into marketable solutions.

The government announced during Budget 2010 that it will commit S$450 million over fi ve years to start a Public-Private Co-Innovation Partnership fund.

Government agencies will work with private sector companies in co-developing innovative solutions for medium- to long-term needs. These areas include urban mobility, environmental sustainability and energy security.

Singapore’s gross expenditure on R&D stood at 1.9 per centof GDP in 1990 and grew to 2.8 per cent in 2008, and is on track to achieving 3 per cent this year.

The government will sustain its commitment to public sector basic- and mission-oriented research at 1 per cent of GDP.

While the government will maintain public sector support for R&D, it will encourage private sector R&D to grow from 2 per cent of GDP currently to 2.5 per cent over the next

five years.In addition, the new Productivity and

Innovation Credit scheme will provide significant incentive for companies to engage in R&D. It will provide a tax deduction of 250 per cent on the

first $300,000 of R&D expenditures,and 150 per cent on the remaining R&D costs. For more information, refer to

www.singaporebudget.gov.sg.

OVER 120 BUSINESS REPRESENTATIVES FROM VARIOUS SECTORS IN MANUFACTURING AND SERVICES ATTENDED THE SEMINAR “EMBRACING A BRAVE, NEW ECONOMY: DEVELOPING A PRODUCT-LED ECONOMY”, ORGANISED BY SINGAPORE BUSINESS FEDERATION.


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Spending more on innovationsTo help Singapore increase its productivity levels, the Economic Strategies Committee released its recommendations in a 46-page report including proposals for more research and development spending on innovations.

At a glance:- Spend 3.5 per cent of GDP on R&D by 2015, up from 3 per cent now.- “Designed in Singapore” accreditation to emphasise design-driven innovation.- Centres of Innovation in polytechnics to help firms enter new growth areas.- Recruit faculty with entrepreneurial skills in universities to help develop innovation.

products and services.” “Singapore companies need

to step up and lead the change, particularly in the fast-expanding Asian market,” he added.

The SBF-organised seminar – “Embracing A Brave, New Economy: Developing a Product-led Economy” – saw business leaders sharing their product development experiences on how they had attained success in commercialising their products in the global market.

Over 120 participants from various sectors in manufacturing and services learnt how these companies leveraged on mega-trends and regulatory issues to successfully develop world-class products.

Made in SingaporeExplaining the move to embrace a product-led economy, Mr Victor Tay, Director for Industry Development Group at SPRING Singapore, noted: “Singapore manufacturing sector’s value-add has doubled to S$56 billion since 1997. However, in recent years, Singapore faced growing competition from regional developing economies and cheaper manufacturing sites.”

He explained: “Singapore SMEs, which rely heavily on MNCs

subcontracting, should develop their own intellectual properties to ensure alternative revenues.”

Among the speakers at the event were panellists from Aeromobile Pte Ltd, Pamarine Pte Ltd, and KOOPrime Pte Ltd who revealed their experiences in achieving Singapore-made products – highlighting the critical success factors for the product development process that starts from conceptualisation to marketing.

Aircraft ground support equipment maker Aeromobiles revealed that it had scored a global fi rst with its proprietary A380 Airbus Hi-lift. It participated in the fi rst trial run of A380 airbus working with EADS Airbus and Singapore Airlines. Currently, Aeromobile has about 80 per cent market share in the Middle East.

Another product in development is the Intelligent Healthcare Robotic Assistant by KOOPrime, a bioinformatics company. The system, which assists patients at healthcare institutions, is a collaborative project spearheaded by KooPrime, several contract manufacturers and healthcare institutions.

One other local player who made a mark on the international scene

is Pamarine, which specialises in marine safety solutions.

The company recently launched a regional fi rst, a Singapore-made voyage data recorder (VDR) product which enables audio, video and navigation data recording.

It saw opportunities in the International Maritime Organization (IMO) regulation which called for the mandatory installation of (VDR) to enhance safety of navigation of passenger and cargo ships.

SBF’s Mr Teng said that these initiatives are encouraging in an era where multinational manufacturers are shifting their outsourcing activities to lower-cost countries.

He said that these showcases will encourage local subcontractors to reduce their reliance on MNC outsourcing, and instead look to develop their own intellectual properties to generate revenue.

Such efforts in service innovation – where companies’ products are boosted with technology and innovation – will steer Singapore companies well amid global competition as they provide good customer-centric value-added products. +

AIRCRAFT GROUND SUPPORT EQUIPMENT MAKER AEROMOBILES SCORED A GLOBAL FIRST WITH ITS PROPRIETARY A380 AIRBUS HI-LIFT.

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GLOBALBUSINESS]

Healthcare is one of the key sectors that will likely offer upside potential to Singapore companies venturing into Saudi Arabia. BiZQ looks into this growing market segment.

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H ealthcare and information technology are not among the top two sectors one

would immediately recall when one discusses market opportunities in Saudi Arabia. But this is exactly what happened when Singapore companies from these sectors explored while on a recent business mission to Saudi Arabia.

Perhaps, little known to many here is the fact that the Saudi Arabian government is placing a major emphasis on improving healthcare services for its population. Hence, in 2009, Saudi Arabia’s total expenditure on the healthcare sector amounted to US$16.7 billion, a signifi cant 27% increase from the previous year’s expenditure of US$13.2 billion.

The Singapore Business Federation has long been an active proponent in building relations with Saudi Arabia when it started its

Saudi-Singapore Business Council (SSBC) in April 2006.

This was when the visiting Crown Prince of the Kingdom of Saudi Arabia, Sultan Bin Abdul Aziz Al-Saud and Prime Minister Lee Hsien Loong witnessed the signing of a Memorandum of Understanding between SBF and the Council of Saudi Chambers of Commerce and Industry to set up a Joint Business Council.

The SSBC is the fi rst of its kind to be formed on a business-to-business level to boost bilateral trade and investment relations. It is underscored by the strong and cordial relationship between the leaders of Singapore and Saudi Arabia.

The inaugural SSBC Meeting was held in Riyadh in December 2006, in conjunction with a SBF business mission to Saudi Arabia. Both sides agreed to develop direct exchanges of business information to increase

awareness and understanding of the market climate and business opportunities in each other’s countries.

A non-exhaustive list of industries was identifi ed including infrastructure development, water and environment, oil & gas and petrochemical, info-communication technology, transport and logistics, services (fi nance, education and healthcare) and small and medium enterprises.

Growing linkagesRecognising the importance of bilateral ties, Saudi Arabia and Singapore took steps to up the ante to form an action plan for the development of bilateral trade. Coming together in January this year, members of the 3rd Saudi-Singapore Business Council Meeting decided to take small steps to bolster their trade and investment relationship. The SSBC is jointly chaired by SBF >

CITY OF RIYADH WITH AL MAMLAKAH (KINGDOM) TOWER, SAUDI ARABIA.

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THE SINGAPORE DELEGATION WITH THEIR SAUDI HOSTS AT THE VISIT OF SAUDI ARABIA BASIC INDUSTRIES CORPORATION (SABIC).

GLOBALBUSINESS]

and Council of Saudi Chambers of Commerce and Industry.

Both countries agreed to promote individual businesses between the two countries in fi ve sectors including transport, tourism and infrastructure development.

The Saudi team was led by Abdullah Al-Melehi, while the Singaporean team was headed by Tang Kin Fei, SBF Council Member, who is also Group President and CEO of SembCorp Industries. Besides Singapore offi cials, representatives from 24 companies and leading local businessmen took part in the discussions.

SembCorp’s Mr Tang reminded members present that Singapore signed a free trade agreement with the GCC (Gulf Cooperation Council) in 2008 and it is currently awaiting ratifi cation by all member countries.

“We are optimistic that with the anticipated ratifi cation, trade and investments between the two countries will be propelled to new heights. Our partnership need not restrict itself to the two countries,” said Mr Tang. “Given our respective positions as a gateway, the two countries can act as a hub for our marketable products and services in regions in Southeast Asia and West Asia.”

Agreeing with these sentiments, Yew Sung Pei, Assistant Chief Executive Offi cer of IE Singapore,

said: “The large market and the emphasis placed on healthcare services make Saudi Arabia a potential partner for our healthcare services players across the entire value chain.”

IE Singapore led a mission to Saudi Arabia this January, with the expectation of trying to understand the healthcare sector in Saudi Arabia, including the trends and regulations, manpower issues and needs of the population.

Healthcare marketLeading healthcare group ParkwayHealth has already made its fi rst foray into the Middle East by sealing a hospital management contract in Abu Dhabi. The group is now exploring the growth potential for healthcare services markets like Saudi Arabia.

Leading IT fi rm CrimsonLogic, a home-grown company specialising in eGovernment services, is another company keen to pursue opportunities in the kingdom. The company was scouting for more

HEALTHCARE SERVICESIn an effort to improve the level of healthcare services in Saudi Arabia, the Kingdom is earmarking a greater portion of its public expenditure to this sector. For example, about 10% of the economic stimulus budget of US$126.7 billion) announced last year was earmarked for health services and social development.

The country plans to increase the number of public and private hospitals to 500 in 2013, up from about 400 currently. Another indicator is the growth in hospital beds in the private hospitals, which rose 41% between 2003 and 2007.

Saudi Arabia’s annual population growth rate of 2.4% is relatively high compared to the average global population growth rate of 1.17%, which could potentially mean greater demand for healthcare services.

TRADE 2009

Imports 11,751,848

Exports 1,080,872

Total Trade 12,832,720SOURCE: IE SINGAPORE’S STATLINK

SAUDI ARABIA – SINGAPORE TRADE: A SNAPSHOT

opportunities and had taken part in a recent business mission to Saudi Arabia led by SBF.

Already, the company made a foray by building SaudiEDI for the investment arm of the Kingdom’s Ministry of Finance. SaudiEDI is an integrated suite of eTrade services resulting in an automated, transparent and collaborative trading community.

There are also companies which continue to focus and make inroads into the oil and gas sector. Rotary Engineering, an engineering, procurement and construction company, has been on a trailblazer route, picking up contracts in Saudi Arabia. This includes a US$745 million contract to build a refi nery tank farm at Jubail.

These companies are increasingly putting Saudi Arabia on their radar screens. Saudi Arabia was Singapore’s 17th largest trading partner in 2009 with total trade amounting to S$12.8 billion. +

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COUNTRYINSIGHTS]

The China-ASEAN Free Trade Agreement is being billed as a welcome shot in the arm for China and six Southeast Asian countries. BiZQ examines the impact this FTA has in the region.

CHINA’S TRADE WITH ASEAN HAS JUMPED SIX-FOLD SINCE 2000 TO US$193 BILLION LAST YEAR.

A population of 1.9 billion. A total trade volume of US$4.5 trillion. A combined

GDP of about US$6 trillion. An average tariff rate of 0.1%, down from 9.8%.

DEVELOPING WORLD’S BIGGEST FREE TRADE AREA

These are the characteristics of the newly formed free trade agreement between China and the Association of Southeast Asian Nations (ASEAN). Refl ecting the largest FTA in the developing world,

the agreement which kicked in on Jan 1, 2010, was eight years in the making.

When conceptualised earlier in the last decade, policy makers were clear that they wanted to >

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COUNTRYINSIGHTS]

reap the following benefi ts from the China-ASEAN FTA:

• Strengthen and enhance economic, trade and investment cooperation.

• Progressively liberalise and promote trade in goods and services as well as create a transparent, liberal and facilitative investment regime.

• Explore new areas and develop appropriate measures for closer economic cooperation.

• Facilitate the more effective economic integration of the newer ASEAN Member States and bridge the development gap among the Parties.

Reducing tariffsUnder this FTA, the six original ASEAN members, Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand, will slash the average tariff on Chinese goods to 0.6%, down from 12.8%. By 2015, the policy of zero-tariff rate for 90% of Chinese goods is expected to extend to the four new ASEAN members: Cambodia, Laos, Myanmar and Vietnam.

Analysts expect sectors like the services, construction and infrastructure, and manufacturing industries to reap the biggest benefi ts from this new FTA.

Mr Phua Kok Khoo, president of Singapore-China business association, hails the FTA between

China and the ASEAN as a “good event” for both. He reckons that the FTA will make trading between the 10-member regional bloc and China more liberal and convenient.

Companies and analysts that BiZQ spoke to as part of this article said it was hard to state the quantitative and tangible benefits that businesses will reap because this FTA is in its early days. They add that they can see the benefits are obvious from a macroeconomic perspective.

From a broader perspective, the benefits appear clear. China’s trade with ASEAN has jumped six-fold since 2000 to US$193 billion last year. During this same period, ASEAN’s trade deficit with China widened by five times to US$21.6 billion. This trend, with greater open access, can only increase, say analysts.

Analysts like Tan Khee Giap

WHAT TARIFF SAVINGS CAN BUSINESSES ENJOY?

A Free Trade Agreement (FTA) is a legally binding agreement between two or more countries to reduce or eliminate barriers to trade, and facilitate the cross-border movement of goods and services between the countries and regions involved.

Since the signing of the FTA under the ASEAN Free Trade Area (AFTA) in 1992, Singapore’s network of FTAs has expanded to cover 18 regional and bilateral FTAs with 24 trading partners.

Singapore’s FTAs have been instrumental in helping Singapore-based businesses strengthen cross-border trade by eliminating or reducing import tariff rates, providing preferential access to services sectors, easing investment rules, improving intellectual property

regulations, and opening government procurement opportunities.

In simple terms, when Singapore signs an FTA with another party, Singapore businesses exporting goods to the country in question would be able to enjoy preferential tariff rates, instead of paying the full rates. To enjoy this benefit, the goods being exported must originate from Singapore.

For businesses wanting to find out more on what tariff savings they can enjoy from Singapore’s FTAs, government agency IE Singapore has a tariff calculator located at www.fta.gov.sg/tariff_calculator.htm. Businesses should visit this site to get a better understanding of the tangible benefits of FTAs.

postulates that the less developed countries within ASEAN can export their agriculture goods to China while countries with abundant

resources could sell oil, minerals and rubber to China. In return, ASEAN countries can buy cheaper manufactured goods from China.

Razeen Sally, an analyst with the European Centre for International Political Economy, says that the latest FTA is going to make a difference at the margin to some ASEAN countries but not others. Basically it takes down the tariffs but does little on all the non-tariff barriers where you would have much bigger gains to trade, she says. +

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COVERSTORY]

MICE industryset to roar again

From aviation and maritime to medicine, Singapore hasclearly grabbed the pole position as the place in Asia

to host major conventions. After a lacklustre 2008-2009, industry experts say better times are ahead.


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COVERSTORY]

A VIEW OF THE RESORT WORLD SENTOSA (RWS) FROM THE TIGER SKY TOWER.

A fter two years of a rough-and-tumble ride, Singapore’s MICE (Meetings, Incentives, Conventions and Exhibitions) industry is

set to ride out into brighter times. There is more than a glimmer of hope in this

recovery as the MICE sector was buzzing with lots of business activity in recent weeks. For a start, the 2010 Singapore Airshow brought 800 exhibitors from over 40 countries to Singapore in February – numbers far exceeding expectations.

Resorts World Sentosa, which opened on the back of the Airshow, gave another booster shot to the Singapore MICE sector. Resorts World Sentosa told BIZQ that it has lined up about 30 confirmed events over the next two years. Of these, 25 per cent are annual events that will be held here for the first time, one-off international events that rotate from country to country, and one-off regional events.

In addition, Singapore’s star attraction, the Marina Bay Sands, said that it would open its doors on May 27, 2010. Marina Bay Sands told BiZQ that it has secured more than 30 events to be held from 2010 to 2012, of which six are making their debut appearance. The events are expected to attract over 150,000 visitors.

DYNAMIC DEVELOPMENTSPointing to the emerging buoyancy in the MICE sector, Singapore Tourism Board’s (STB) Assistant Chief Executive for Business Travel and MICE, Melissa Ow said: “All vital signs are pointing towards the return of business confidence in the Singapore business events sector, fuelled by the dynamic developments taking place within the tourism landscape.

“Leveraging on our sterling track record and sound business fundamentals, Singapore has secured a robust pipeline of business events, including key international association meetings, in the coming years,” she added.

Singapore’s business travel sector is a key tourism driver for Singapore. In 2008, amid a

challenging global economic climate, Singapore’s business travel sector set a new record with three million business and MICE visitors and generated about S$6 billion in tourism receipts.

As an indication of the emphasis and importance of this sector, Singapore clinched the title of ‘Top International Meeting City’ last year in the Union of International Associations 2008 Global Rankings for the second consecutive year.

Singapore continues to reign as Asia’s top country and city for meetings for the 25th consecutive year, accounting for more than 25 per cent of the meetings held in the continentin 2008.

STB’s Ow added: “As we move into 2010,

ONGOING CONTRUCTION AT THE MARINA BAY SANDS INTEGRATED RESORT.


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GLOBAL INVITATIONThe Singapore Tourism Board (STB) has been a prime driver for the MICE sector in Singapore. Working closely with partners in the medical profession, the Singapore Exhibition and Convention Bureau (SECB), a group of the STB, put forth competitive bids and secured a number of major business events within the biomedical sciences and medical cluster.

These include: • International Conference on Emergency Medicine (ICEM) in 2010, • International Congress on Aviation and Space Medicine in 2010, • Third World Congress of the International Academy of Oral Oncology (IAOO) in 2011, • 15th World Conference on Tobacco or Health (WCTOH) in 2012, and • World Congress on Cardiac Pacing and Electrophysiology 2015.

According to STB, these target events will bring an estimated total attendance of over 7,000 participants to the republic and will entrench Singapore’s status as Asia’s leading medical and intellectual exchange hub where influential opinion leaders gather.

Other significant association conferences secured by Singapore and scheduled to take place in the next few years include:

• The International Council for Commercial Arbitration (ICCA) Conference 2012, which will debut with a distinguished delegate audience comprising top international lawyers, judges and arbitrators, providing an opportunity for Singapore to showcase its achievements in commercial arbitration.• The 13th Conference of the Associated Research Centers for Urban Underground Space 2012 which provides a forum for experts to discuss opportunities and challenges in the use of underground spaces in cities. • The 15th Asian Chemical Congress 2013 which will bring together established scientists for information exchangeand education. • The 16th Baptist Youth World Conference 2013 which will welcome 6,000 young adults to Singapore, representing the largest-ever international gathering of Baptist youths.

All vital signs are pointing towards the return of business confi dence in the Singapore business events sector, fuelled by the dynamic developments taking place within the tourism landscape.- Melissa Ow, Singapore Tourism Board




COVERSTORY]

Singapore has rejuvenated itself in the past few years as an exciting cruise destination and now plays an important role as a platform for the global and regional industry to showcase itself.- Michael Duck, UBM Asia

SINGAPORE AIRSHOW 2010 IS NOW THE LARGEST IN ASIAAgainst the backdrop of a weak aviation sector, Singapore pulled a coup with Airshow 2010 – it attracted 112,000 visitors and 250 delegations from 80 countries when it was held in February earlier this year.

“When the economy gets tough, people do come out and network, see for themselves and build alliances as quickly as they can. And this has been the trend we have seen in most of the shows, especially in Asia Pacific,” said Jimmy Lau, Managing Director of Singapore Airshow & Events, the organiser of Airshow 2010.

Speaking at a media briefing, he said that Singapore Airshow 2010 has emerged as one of the top three aviation events in the world and is now the largest in Asia, despite the aviation industry’s woes. One of the indications of a strong traction is the return rate of visitors, he said.

Lau added that the Airshow was able to secure a healthy rate of returning visitors. About 85 per cent of companies who participated in the show two years earlier returned for the 2010 show, he said.

The organiser did its bid to promote the MICE sector by setting several firsts in Singapore. Apart from being able to draw more than 30 airline CEOs from around the world, it also launched new initiatives at the event.

and a climate of economic recovery, the STB will continue to work closely with our industry partners to meet business event organisers’ evolving needs, explore new business leads and strengthen our international marketing and channel development efforts.”

TOURISM COMPASS 2020Beyond the current horizon, the STB has bigger ambitions. In the spirit of the Economic Strategies Committee (ESC), which is trying to drive change and growth in the Singapore landscape, the STB has its own game plan as mapped out in Tourism Compass 2020.

Tourism Compass 2020 was launched recently and is an enhancement of Tourism 2015. The Tourism 2015 master plan aimed to generate $30 billion in tourism receipts and 17 million visitor arrivals to Singapore by 2015.

As part of this plan to achieve new goals, the STB put together a steering committee that includes members of the Tourism Consultative Council (TCC) who are leaders in the business and tourism sector. The Tourism Compass 2020 Steering Committee will provide strategic direction for future tourism development in Singapore.

Five taskforces have also been set up to map out tourism strategies specifically pertaining to business, enrichment, lifestyle, marketing, and travel and hospitality. Each taskforce is led jointly by STB and Tourism Consultative Council (TCC) representatives, and is supported by members of various backgrounds from the private and public sectors that provide valuable insightsand perspectives.

FRESH PERSPECTIVESExplaining the broad-based approach adopted under the Tourism Compass 2020 umbrella, Gerald Lee, Deputy Chief Executive Officer of The Ascott Group and also co-chair of the steering committee, says: “This will provide us fresh perspectives and a 360-degree vantage point for a sustainable tourism roadmap.”

He explains: “Tourism is not just for visitors; Singapore tourism belongs to residents too. By bringing members of the public into this




For the first time, there were business forums on market opportunities in India, China and the Middle East. There was also an inaugural Green pavilion that featured environmental aspects of the aviation industry.

Another government agency that actively promotes this subsector under the MICE umbrella is the Economic Development Board (EDB). “As Asia’s most important aviation event, Singapore Airshow provides an excellent platform for participants to reach out to their target audience, be it exploring

commercial opportunities, forging partnerships or making announcements for maximum impact,” EDB Director for Transport Engineering Sia Kheng Yok told the media.

The 2010 Singapore Airshow was spread across 40,000 sq m of indoor exhibition space and 100,000 sq m of outdoor space. “When you consider what we went through in the past year, I think we did pretty well,” Lau quipped.

Speaking of the show, Airbus Head of Marketing for freighters Didier Lenormand said: “The number and quality of visitors exceeded our expectations, as the A330-200F really created a ‘buzz’ at the show.” The company used the platform to showcase its A330-200F, its latest freighter, which was the largest aircraft on exhibit.

Looking ahead to 2012, the event organiser has already sold more than 60 per cent of the exhibition space. “We are committed to delivering another iconic and strategic event,” said Lau.

discussion, we hope to include ideas and suggestions close to the hearts of people living in Singapore, Singaporeans based overseas, visitors who love Singapore – everyone. We want to evolve the destination into one that will excite and engage people in a personal and authentic way.”

The STB conducted a road show to seven cities in Europe, including London, Frankfurt and Geneva, Vienna and Paris In November 2009. Through meetings and networking sessions with over 400 business events trade partners and

intermediaries, and key decision-makers from international associations, STB organised the road show to raise awareness of Singapore as a premier destination for business events and a springboard to tap on the burgeoning economic growth of Asia Pacific.

REGIONAL BASESTB’s effort has already started to show traction. One of the key industry associations that the STB met was the International Air Transport >


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COVERSTORY]

With our extensive experience doing business in Singapore, it is our opinion that the accommodation available is at very competitive prices, the meeting and conference facilities are extensive and of the highest standards, and the corporate entertainment and cuisine can cater to every taste. - Elena Ciuperceanu, International Air Transport Association

Association (IATA), which has set up its regional base in Singapore and is looking to stage more events in the city-state.

IATA Manager for Passenger Services, Elena Ciuperceanu said: “IATA has been operating in Singapore since 1969. We held our Annual General Meeting in Singapore in 2004 and we are working with the Singapore Airshow, Ministry of Transport and Civil Aviation Authority of Singapore to organise the Aviation Summit in February 2010.”

“With our extensive experience doing business in Singapore, it is our opinion that the accommodation available is at very competitive prices, the meeting and conference facilities are extensive and of the highest standards, and the corporate entertainment and cuisine can cater to every taste,” she added.

GROWING MARITIME SEGMENTReed Exhibition Services, one of the main players in the Singapore exhibition market, notes that exhibitors are increasingly telling them that they see greater growth potential in Asia, and Singapore in particular, than ever before. The company secured the mandate to manage the Asia Pacific Maritime 2010 (APM 2010) which took place in March at the Singapore Expo.

The event featured 900 companies and 13 country pavilions and many first-time participants showcasing new technologies, equipment and systems for shipbuilding, shipping services and port operations. In 2008, when the event was last held in Singapore, the show attracted 7,100 visitors and 841 companies from 52 countries.

“APM 2010 is getting tremendous response

from an even bigger cross-section of the maritime industry this time, because they anticipate the economic recovery in Asia will precede that of other regions in the world and they want to be here when it happens. Exhibitors are telling us they see greater growth potential in Asia than ever before,” said Michelle Lim, General Manager for Reed Exhibitions Singapore.

UBM Asia is another company playing on the maritime theme in the MICE sector. The company, which organises the annual Cruise Shipping Miami, the world’s largest and most important international tradeshow and conference serving the cruise industry, told BiZQ that it has launched a new product called Cruise Shipping Asia. The inaugural trade event will take place in November 2011 at the Marina Bay Sands in Singapore.

“The arrival of this major cruise event in Singapore underscores the growing recognition of this market’s strong potential, and will greatly complement our ongoing efforts in promoting Asia’s cruise industry development,’ said Jennifer Yap, a spokeswoman for Asia Cruise Association and Managing Director of Royal Caribbean Cruises Asia.

Michael Duck, Senior Vice President for UBM Asia said it was happy to bring Cruise Shipping Asia back to Singapore. “It has been 10 years since we last organised a cruise event here and today the Asian market is primed for tremendous growth. Singapore has rejuvenated itself in the past few years as an exciting cruise destination and now plays an important role as a platform for the global and regional industry to showcase itself,” he said. +



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BiZQ is circulated to the federation’s members, professional associations and overseas business chambers and aims to keep companies and businesses up-to-date with the latest economic trends, industry news and trade and investment opportunities in Singapore and around the world.

With a circulation of 20,000 copies, BiZQ reaches out to decision-makers including CEOs, MDs, Chief Financial Offi cers, businessmen and entrepreneurs.

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INDUSTRYTRENDS]

The year 2009 would have been a good year for businesses to buy or lease

industrial real estate for medium to longer term use. But all is not lost in 2010 because industrial rental rates are beginning to recover although demand is only showing signs of a pick-up in recent months, said analysts.

As history would tell, take-up of ready-built factory space fell in

2009 in Singapore. Further, rents and capital values for factories and warehouses fell in the fi rst quarter but held fi rm in the remaining three quarters in 2009, according to recently published data.

But the market is improving on fronts, they add. While demand is starting to pick up, rental rates still have room to climb further before they reach their 2008

The recovering economy is stimulating demand for industrial real estate. With supply expected to contract in 2010, rentals are expected to recover later. BiZQ takes a closer look at the market dynamics.

UPSWING IN INDUSTRIAL REAL ESTATE MARKET

highs. This will certainly give space to businesses looking to secure industry real estate to ride the current growth trend.

“General business sentiment is on the upswing for 2010. As such, a healthy demand for industrial properties is expected in 2010 and rents are projected to begin their upward climb in the second half of the year,” CB Richard

Upon approval Please sign:

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Ellis’s industrial real estate analyst Elizabeth Choong said.

She added that the upswing will be fuelled by GDP growth of between 3 and 5 per cent for Singapore, following the contraction in 2009.

Tan Boon Leong, Director of Industrial at Colliers International, said that “on the back of an expected improvement in both the economy and the manufacturing sector, as well as more optimistic business sentiments, we expect to see a pick-up in the demand for industrial space in 2010.”

Looking backThe events of 2009 were of little surprise in the industrial real estate market in Singapore. Amid the global fi nancial crisis and the resulting squeeze in credit from the fi nancial sector, companies had little choice but to scale back their business activities. This resulted in downward pressure on industrial rents (see chart).

The latest data from a major industrial property player in Singapore brings this to bear. JTC Corporation, one of Singapore’s largest providers of industrial real estate services, released its latest report in late February and clearly displays this trend.

The data showed that overall gross allocation of prepared

The gradual, albeit modest, recovery in strata sales activity has encouraged a return of developers’ interest in development land.– Tan Boon Leong, Colliers

International

AVERAGE PRIME INDUSTRIAL RENTS

HIGH-TECH $2.25 PSF

FACTORY (GRD FLR) $1.40 PSF

FACTORY (UPP FLR) $1.15 PSF

($ psf per month)

4.00

3.50

3.00

2.50

2.00

1.50

1.00

0.50

0.00

Q1

04Q

2 04

Q3

04Q

4 04

Q1

05Q

2 05

Q3

05Q

4 05

Q1

06Q

2 06

Q3

06Q

4 06

Q1

07Q

2 07

Q3

07Q

4 07

Q1

08Q

2 08

Q3

08Q

4 08

Q1

09Q

2 09

Q3

09Q

4 09

SOURCE: CBRE RESEARCH

ANALYSTS EXPECT THE TAKE-UP RATE FOR READY-BUILT FACTORY SPACE MARKET TO INCREASE AS THE ECONOMY RECOVERS.

industrial land fell 34 per cent to 175.6ha in 2009 while terminations increased by 17 per cent to 74.7ha. Prepared industrial land refers to land

that is made ready for lessees to develop their own industrial facilities.

The industrial real estate developer also showed that net >

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INDUSTRYTRENDS]

allocation of ready-built facilities fell into negative territory at -24,800 sq m,compared to 90,700 sq m in 2008. The main reason for this was because of the big fall in the segment relating to business parks.

However, JTC added that this was from an exceptionally high base in 2008, during which it benefi ted from the successful completion and take-up of Fusionopolis Phase 1.

Elsewhere, weak business conditions led to negative net allocations for fl atted factories and conventional low-rise factories.

The JTC report also showed that 60 per cent of all the industrial land terminated under its control in 2009 came from the manufacturing sector. Within the manufacturing sector, the electronics segment registered the highest termination of 23.9ha, followed by precision engineering companies at 7.3ha.

Holding fi rmCB Richard Ellis’s Ms Choong summed up: “Year 2009 was

a quiet one for the industrial properties market. Rents and

capital values for factories and warehouses fell in the

fi rst quarter but held fi rm in the remaining three

quarters. High-tech rents decreased

throughout the four quarters but the rate of decline slowed towards

General business sentiment is on the upswing for 2010. As such, a healthy demand for industrial properties is expected in 2010 and rents are projected to begin their upward climb in the second half of the year.– Elizabeth Choong, CB Richard Ellis

the end of the year.”The consultancy’s research

data showed that monthly rent for high-tech spaces fell by 15 per cent (year-on-year) to $2.55 per sq ft (psf) at the end of 2009. High-tech rents reached a peak of $3.45psf in the third quarter of 2008 before it started to decline.

At the end of 2009, the average occupancy rate for high-tech space fell by 5.2 percentage points (year-on-year) to an estimated 89.8 per cent. The average occupancy rate for business parks declined from 93.8 per cent at end of 2008 to an estimated 86.5 per cent at end of 2009, the fi rm’s data showed.

Driving supply-demandWith the industrial real estate market heading out of the recent troughs, companies and analysts expect more competitive pricing and greater stock offerings to inject some zest into the market.

For a start, businesses now have the option of securing industrial developments with unit sizes of less than 1,000 sq ft or on short leasehold titles of 30 and 60 years at the half-a-million-dollars benchmark price, according to experts at Colliers.

Located on the fringes of the city, some of these industrial real estates can go for less than S$500,000, a crucial barrier in the Singapore marketplace.

“This has effectively reduced the barrier for investing in the industrial property sector and signifi cantly

raised the attractiveness of strata industrial properties,” said

a Colliers analyst.

THE FIRST PHASE OF FUSIONOPOLIS’ TAKE-UP WAS SUCCESSFULLY COMPLETED IN 2008.


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MAJOR UPCOMING INDUSTRIAL PROJECTS

Name of development Est NLA* Est TOP Year (sq ft)

One Commonwealth 240,000 2010

Mapletree Business City 1,191,000 2010

Midview City 1,105,000 2011

West Park BizCentral 1,132,000 2011

Crescent at Kallang 123,000 2012

Integrated business park development 607,000 2012by Ascendas Frasers

*Nett Lettable Area SOURCE: DTZ RESEARCH

The types of strata industrial properties have also become more varied. In addition to the typical flatted factories and warehouses with cargo lift access, the range has widened to include those with ramp access.

Colliers highlighted that one of the newer offerings in the marketplace include a to-be-completed four-storey ramp-up light industrial building located at Tagore Lane.

One of the salient features of this industrial property is that the development has an integrated ramp-up driveway that provides direct access to all units and a loading bay for 40-foot prime movers.

From a demand perspective, business interest and sales volumes have picked up from the lows seen in 2008, added analysts. “The gradual, albeit modest, recovery in strata

sales activity has encouraged a return of developers’ interest in development land,” said Mr Tan from Colliers.

Growing land salesAnother indication of growing appetite was reflected in the resumption of government land sales. After the collapse of Lehman Brothers in 2008, there was a lull in the industrial property market. When the government returned with the sale of three industrial plots in May 2009, there was an overwhelming response.

“The keen interest in and aggressive bids received for development sites in the second half of 2009 is a reflection of developers’ confidence that the industrial strata market is near bottom and that prices will be heading up over the coming quarters,” said Mr Tan.

Investment trustAnother segment of the market which was lying low for most of 2009 was the industrial real estate investment trust segment (REITs). This market segment was re-ignited in the fi nal quarter of 2009 when Mapletree Logistics Trust became the fi rst industrial REIT to make an acquisition in the year.

The REIT bought a warehouse at 7 Penjuru Close for $43 million under a sale and leaseback agreement with SH Cogent Logistics Pte Ltd.

Lending some support on the demand side of the market are some mega players looking to take up space. For example, Indian telecommunications giant, Tata Communications is gearing up for the upturn by investing US$180 million in a modern 165,000 sq ft green-certifi ed data centre in Paya Lebar, which is scheduled to be completed later this year.

There will be another shot in Singapore’s industrial real estate marketplace as Abbott Laboratories will be investing US$20 million in a nutrition science research and development centre at Biopolis to develop food and nutrition products for Asia.

With the market just starting to warm up, a DTZ research analyst told BiZQ that new supply of industrial real estate in 2010 is estimated to fall to about 6.6 million sq feet, lower than the estimated 17.1 million sq ft in 2009 and below the 10-year average new supply of 7.9 million sq ft.

With expectations of a recovering economy and less new supply in 2010, rental declines will be more gradual with a possible bottoming by the end of 2010, DTZ predicted.

Major projects to be completed in 2010 will include Mapletree Business City and One Commonwealth (see table). +

SINGAPORE’S PREMIER BIOMEDICAL RESEARCH HUB, BIOPOLIS, IS LOCATED NEAR BOUNA VISTA.

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Helping SMEs raise their productivity level through investing in technology and upgrading skills.

TECHNOLOGY]

TIPPING POINT

Technology can help businesses create new products, improve existing

processes, fi nd new ways to serve customers and develop new business models. And companies keen on investing in technology and raising their workers’ productivity will get a boost from a range of government measures announced recently.

A new National Productivity Fund will be set up to finance such initiatives to help companies restructure their business models, innovate their work processes and enhance productivity, said Manpower Minister Gan Kim Yong.

During the recent Budget 2010 announcement, the Singapore government said that it aims to put S$2 billion into this fund, which will be handled by the National Productivity and Continuing Education Council.

It will also create a “Productivity and Innovation Credit”, which will provide signifi cant tax deductions for investments in these areas: Research & Development, intellectual property (IP) registration, IP acquisition, design, automation through technology or software, and employee training.

All businesses will be eligible for this credit, based on the amount they invested in any of the above activities. Two hundred and fi fty per cent of their expenditures from each of these activities can be deducted from their taxable income, with the enhanced tax deductions capped at $300,000 of expenditures for each activity, aimed at benefi tting SMEs.

National councilSMEs, in particular, can benefi t greatly from creative use of technology because of their small size and fl exibility. Many SMEs have used this to their advantage to derive

a new competitive strategy that distinguishes them from other players in the market.

In addition, a Productivity and Innovation Centre will be set up to research on the best practices that companies can adopt – such as better management of supply chains.

Spearheading this drive will be a high-level national council, which will be formed to coordinate efforts between government agencies and the public-private sectors.

These initiatives were envisaged by the Economic Strategies Committee (ESC) on how Singapore can achieve higher productivity growth over the next 10 years. The committee believes that this can be achieved by getting companies to invest in technology and workers’ training.

The ESC reported that Singapore should aim for productivity growth of two per cent to three per cent yearly in the next decade – this is double that of the current one per cent.

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One local company which can attest to how high-tech investments can boost its revenue is Muthu’s Curry restaurant.

The restaurant invested S$90,000 in personal digital assistants (PDAs) and point-of-sale systems at its two outlets at Race Course Road and Suntec City in 2006. This investment has since paid off – the faster turnaround of orders and

improved revenues have

led to higher salaries for its staff.Chief Executive

of Muthu’s Curry, Visvanaath A, said that the

initial investment doubled the

company’s annual turnover a year later – S$7 million in revenue.

Local real estate agency Propnex also believes that investing in technology eases the workload of its property agents.

Propnex spent more than S$200,000 on a virtual offi ce system that alerts its agents whenever the fl ats they are targeting are up for sale, saving them from having to search the agency’s database daily.

This also cuts down the company’s paperwork. It no longer needs to print and mail income statements to its 5,000 agents for tax purposes, as the agents can obtain

the statements themselves through the system.

TIP grantTo help SMEs here tap innovation to transform their businesses, Infocomm Development Authority of Singapore and Spring Singapore run a Technology Innovation Programme (TIP) – fi nancial grants in identifying the right technology platforms, as well as expert advice on R&D projects. (Refer to www.ida.gov.sg/sme for details).

Under TIP, SMEs can apply for up to 70 per cent in co-funding support for the remuneration of technology experts seconded from tertiary institutions, research organisations or other industries.

This can cover costs related to manpower, professional services, prototyping, testing, certifi cation, equipment, materials and consumables, software and intellectual property rights. +


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MANAGEMENTGUIDE]

MEDICAL BENEFITS

ON THE GO

The evolving job market environment holds out challenges for employees’ medical benefits. This happens when an employee falls sick for

prolonged periods and may have to part ways with his employer. And the global financial crisis has proven that it is not difficult for job security and stability to disappear overnight.

The permutations under which an employee can depart or move from his current job are numerous. Lifetime employment with a single company has become increasingly rare in the marketplace. With each employment change, an employee may lose his medical benefi ts provided by the respective employers.

Medical benefi ts are, more often than not, taken for granted. Many employees assume that should anything unforeseen happen, they will automatically be covered under their company’s medical insurance. This is a phenomenon that is becoming increasingly rare.

Furthermore, how many people are mindful of exactly how much their company will cover for daily ward and medical charges? How much does the employee need to fork out? More importantly, are they still covered when you leave the company?

Hence, under conventional circumstances, the medical benefi ts of an employee ceases when the individual leaves the company. In this case, the employee may be subject to fresh underwriting when he joins a new company or seeks to purchase his own medical insurance. Furthermore, the new medical insurance policy may also exclude coverage for any pre-existing illness.

Continuous coverageIncreasingly, employees, and more importantly employers, should be looking towards the concept of

Portable medical insurance allows employees to carry their medical benefi ts with them when they move to a new job.

the Portable Medical Benefi ts Scheme – or PMBS in short – as the answer in addressing this gap in the marketplace.

PMBSs help employers and employees overcome this by providing continuous medical coverage to their staff in-between jobs and after retirement. They minimise overlapping or duplication of coverage, and so reduce cost for employers and employees.

PMBS offers affordable and more comprehensive medical coverage with guaranteed unlimited lifetime cover, which individuals can keep for life regardless of their employment status.

Employers riding out rough times may be tempted to save costs by cutting medical benefits. On the flip side, they should view robust medical benefits as an investment for their staff, if not as one of their talent retention tools. Employers need to look at long-term benefits rather than focus on short-term cost reductions. In addition, medical expenses incurred by employers are tax deductible, up to 2 per cent of the total payroll.

Employers should take a more creative look at their bottom line when managing cost-cutting measures, and employees should start thinking about the basics and what really matters in such trying times.

When employers decide to embark on implementing a PMBS, employees will either pay the premiums on such plans directly to the insurance company or reimburse the premium into their Medisave accounts.

With the participation of many major insurers in such schemes in Singapore, employers can now take advantage of this high level of voluntary participation from Singapore insurers to enhance their group medical insurance schemes, to meet the needs of Singapore’s changing employment patterns. +


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ADVERTORIAL

In the face of globalisation and intensifying competition, companies need a workforce that is dynamic and responsive.

To achieve this, the Workforce Development Agency (WDA) established several Continuing Education and Training (CET) centres to enhance the capability of the Singapore workforce through promoting and facilitating skills acquisition and upgrading.

BiZQ speaks to Mr Goh Eng Ghee, Deputy Chief Executive of Singapore Workforce Development Agency.

1. What is your vision for the Continuing Education and Training (CET) landscape in Singapore?WDA wants to build a comprehensive and rigorous CET system that will be a lifelong companion to workers in their careers, and to companies in their growth and development. This is because skills are key to individual employability and economic competitiveness. We need to be able to prepare our workers for the jobs the economy is creating and to produce the goods and services companies can sell.

With this in mind, as part of our vision, two CET campuses will be set up by 2013 to strengthen our CET system. The objectives are to:

a) Broaden the reach of CET to ensure that the majority of the workers can access and benefi t from CET, and tap on the opportunity to use the national CET system to attain industry relevant skills; andb) Enhance the relevance of CET and its recognition by employers so that employers can train and look for highly skilled workers.

The campuses will therefore provide the space to bring together complementary

TRAINING SINGAPORE’S WORKFORCEproviders and services that will best serve the needs of employers and workers to build skills and capabilities, as well as raise productivity. They will look into implementing initiatives like apprenticeships and industry attachments, and setting up “labs” to conduct CET and worker productivity research, and design new training programmes to prepare our workers for new investments and jobs. The campuses will cater to about 150,000 training places annually when set up.

2. How can employers benefit from investing in a trained workforce?The benefi ts of having a well trained workforce are well documented. The latest MOM’s report, Employer Supported Training 2008, found that training increased organisational and staff performance. A large majority of the surveyed establishments that evaluated the training eff ectiveness found that training had raised productivity (83%), quality of products and services (79%) and customer satisfaction (69%).

Training has to be relevant and eff ective to make an impact at the workplace. This is why WDA invest a lot of energy to collaborate with industries to develop specifi c skill competency frameworks under the Singapore Workforce Skills Qualifi cations (WSQ) System. Currently, WSQ covers 24 sectors, including frameworks such as the Creative Industries, Healthcare Support, Precision Engineering and Tourism.

WSQ is more than a training system. Employers can use it to ascertain the suitability of its job candidates in terms of their skill levels, as well as a way of developing a progression pathway

for its employees to take on bigger responsibilities and more complex jobs.

3. You mentioned earlier that two new CET campuses will be ready by 2013. What can employers expect from this latest development? The CET campuses will serve as a one-stop centre that integrates career centres, skills assessment facilities, best-in-class CET centres, facilities for recruitment and career workshops, and facilities for CET research and development of new CET programmes. Each campus will adopt sector themes and training providers will be clustered along these themes for greater eff ectiveness. For example, hospitality-related courses, such as tourism, hotel, food and beverage and retail, can be located at the same campus. Training related to social services such as healthcare, childcare, youth and student care and senior services can likewise be clustered together.

Employers can therefore send their staff for high-quality training at these campuses. All levels of staff can undergo training here — that is, from rank-and-fi le to professionals, managers, executives and technicians.

Employers planning new investments or expansion can partner the campuses to jointly develop customised courses and train a pipeline of skilled workers for their business needs.

They will also have the opportunity to work with the training providers on traineeships, and deal with just a single party for a package of services to meet their current and future training needs. They also have the advantage of recruiting from a readily available pool of well-trained workers. In short, employers will be able to shop conveniently for their training solutions at our CET campuses.


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INBUSINESSWITH]

STAYING ON COURSE IN A DYNAMIC WORLD

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T he industry of recycling metals is a crowded one, comprising many players

and a myriad of products. It is marked by companies getting in-and-out, driven by the realities of business cycle changes.

Amidst this constant fl ux in this industry, Singapore-based Indo Straits Trading Pte Ltd has thrived for 85 years. The company started out in Gujarat in India before the founding family moved the business to Singapore in 1925. By 1985, the company, taking the cue from the Singapore government to build an external wing for itself, moved its main operations to the United Arab Emirates, with offi ces in Oman, Kuwait and India.

Unlike companies focused on various aspects of the scrap metal recycling business, Indo Straits Trading is focused only in the non-ferrous segment.

BiZQ caught up with Director Shabbir Hassanbhai, a third-generation member who manages the business alongside various other family members. Apart from his role in the company, he is also Vice Chairman of the Middle East Group at the Singapore Business Federation. He is also Co-Chair

of the Singapore-Oman Business Council and Vice Chairman of the Singapore-Saudi Arabia Business Council. He is also Singapore’s Non-Resident High Commissioner to Nigeria.

Q What has been the vision of Indo Straits Trading?Since our founding, our vision has been simple: We are very focused on the business of recycling scrap non-ferrous metals. We have not departed from this core business and that is why we have survived several recessions. We don’t speculate in this business.

We also know our customers very well. We know how to r ide the var ious business cycles. We don’t just compete for the sake of competing. When we collect the metals from the gates of customers, we wil l process it and take it to the smelting plant. We remove all the impur ities in the process because we believe our end customers should get true value for the product that they contracted for.

As a result, we are able to deliver a premium product that is very eco-fr iendly.

Q How do you manage your customers? Our industry is a closed industry. There is no such thing as having 100 customers. There is a high level of trust with our customers and we give them a differentiated product. We keep to our promise of meeting our supply obligations. This is what makes us different from our competitors.

As a result of this core principle, we have been able to serve our customers from different parts of the world. Today, our Middle East operation in Dubai serves the Indian sub-continent. Our Singapore offi ce serves the markets in the Far East, Taiwan, China and Korea.

Q What is your management style?Although we started out as a family business, we had to professionalise our company to expand overseas. A core group in the family still makes the business decisions. We are hands-on and work very closely with the employees.

If work needs to be done, we roll up our sleeves and go down to the yard. We work with them and have a reverent style, which is conducive to good relationship all round. We treat our people as part of our family. +



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EXECUTIVELIFESTYLE]

Singapore is a rising star and the city has gained importance as a fi nancial centre and boasts

an airport with excellent facilities and connections.

According to last year’s Mercer report on Quality of Living survey, Singapore ranks fi rst with the highest score worldwide (109.1). New York is the base city with an index score of 100.

Singapore offers a wide range of international and private schools to cater to its expatriate community, as well as an effi cient and extensive public transport network.

Other high rankers in the region include Hong Kong (8), Sydney (11) and Tokyo (12). Dhaka ranks lowest in the region at 197.

Beijing has also moved three places in the ranking, up from 116 in 2008 to 113, mainly due to improvements in public transport facilities from the Olympic Games.

New Zealand, Taiwan, Hong Kong

Singapore ranks top for city infrastructure with a world-class airport and enviable public transport network system.

TOP 5 CITIES IN ASIA PACIFIC

ASIAN TIGERS Singapore (1st)

Tsukuba, Japan (4th)

Yokohama, Japan (5th)

Hong Kong (tied 8th)

Tokyo, Japan (12th)

Mercer’s Quality of Living ranking covers 215 cities and is conducted to help governments and major companies place employees on international assignments. The quality of living rankings are based on a point-scoring index, which sees Vienna score 108.6, and Baghdad 14.4. Cities are ranked against New York as the base city with an index score of 100.

and South Korea have also been experiencing gradual improvements in quality of living.

Asia is a diverse region. Recent political unrest and terrorist attacks in some cities in the region have made a negative impact on the quality of living there. Dropping in the rankings, mainly due to a decline in stability and security are Bangkok (from 109 in 2008 to 120) and Mumbai (from 142 to 148).

While the quality of living in many regions was affected by political turmoil, health and climatic concerns and the global fi nancial crisis in 2008, 2009’s ranking also ranks the countries on additional factors.

The survey identifi ed the cities with the best infrastructure based on electricity supply, water availability, telephone and mail services, public transport provision, traffi c congestion and the range of international fl ights from local airports. + S

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BOARDROOMTALK]


T he year 2009 was a tough year for just about every business operating amid the global fi nancial crisis.

However, BH Global Marine, a supply chain management company specialising in premium lighting, cables and electrical equipment for the marine and oil and gas industries, embarked on several strategic acquisitions and joint ventures in Oman and Myanmar.

As a result, the company, under the stewardship of CEO Vincent Lim, was ableto register a record turnover for the company.

And he is focussed on growing these new businesses and ventures to achieve its vision of becoming a vertically integrated marine electrical solutions provider in the region. “We will also continue to explore opportunities in overseas market with good potential, such as the Middle East, Myanmar and India,” he says.

Having operated BH Global as a business for 40 years, Mr Lim is bent on becoming a “world-class corporation with supply chain management capabilities in Asia.”

A key reason for the group’s success today is linked to its business focus. Positioned as a supply chain management provider specialising in cables, lighting, switchboards and accessories for the marine and oil and gas industries, BH Global does not face identical competitors with similar set-ups.

“We do have competitors who specialise either in the cable or lighting sectors. But in view of our one-stop solution concept, we are usually the preferred supplier or vendor to our partners,” says Mr Lim. Certainly a case of turning crisis into opportunities. +

MAKING GOOD OF TOUGH BUSINESS PERIODS


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