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WHY SINGAPORE IS A HOTBED FOR ICOs FIND OUT THE PERFECT COWORKING SPACE FOR YOU BIKE-SHARING HITS MAJOR ROADBLOCKS IS DEATH LOOMING FOR BANK BRANCHES? SINGAPOREâ€™S LOST MICHELIN STARS 84 73
Y VE ST S R SU LARGESPACE 20ORKING
W CO MICA(P) 244/07/2011 KDM No: PPS1645/3/2008
FROM THE EDITOR About Us
This issue deep dives into the world of ICOs as Singapore solidifies its status as the third best ICO hub in the world. Channel checks revealed that eleven of the 100 largest ICOs in the world, ranked by funds raised, are held by firms in Singapore.
AUDITED CIRCULATION: 22,265 ONLINE READERSHIP: 215,000 monthly uniques through Google Analytics The Singapore Business Review is the highest circulating and best read business magazine in Singapore. Our online readership has an average of 215,000 unique viewers, according to Google Analytics. We won the Business Trade Media of the Year Award at the 2017 MPAS Awards. Do reach out to us if you would like us to tell your story to our readers via print & online advertising or events. Publisher & EDITOR-IN-CHIEF Tim Charlton production editor Genelie Sta.Ana-De Leon GRAPHIC ARTIST Elizabeth Indoy ADVERTISING CONTACT Rochelle Romero email@example.com
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The Financial Insight column also revealed that Singapore is struggling against its Asian peers in the IPO front as cross-border listings ballooned 300%. Given the highly competitive landscape of IPO activities in the Asia-Pacific, can Singapore’s equity market stay competitive? Meanwhile, Singapore’s retailers are literally adding games to their menu as they try to capture millennial shoppers. From in-store arcades, games, to make-up apps, retailers further embrace these novel approaches in their physical stores. In Singapore’s heated property scene, the boom in co-working spaces will continue with around 110-120 operating flexible workspace centres islandwide, and leasing demand hitting 550,000 square feet in 2018. Property giants are banking on the trend, and are launching their own co-working spaces. This issue also bears the coverage of the most recent awards that we’ve held, the Singapore Business Review Business Case Studies Awards. Flip the pages to find out the best business solutions providers in the city. Enjoy the issue!
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Cover Story Why Singapore ranks as the third most favourable country in the world for ICOs
Financial insight Singapore IPOs lag Asian peers as homegrown firms rush to list abroad
business case studies awards 2018 Singapore Business Review unveils winners of the Business Case Studies Awards 2018
08 In-store games, make-up apps
24 Growth slows down in the face
40 Marketing briefing
48 Legal Briefing
of a full-blown trade war
09 Singapore takes big solar step
10 Bike-sharing hits roadblocks
22 Why high-end, Michelin-star
12 From bank transactions to flight
restaurants are shutting down
bookings, robots at your service
14 Is death looming for bank branches?
36 Coworking boom has no end
in sight as property giants launch
their own spaces
Published Bi-monthly on the Second week of the Month by Charlton Media Group 101 Cecil St. #17-09 Tong Eng Building 2 SINGAPORE SingaporeBUSINESS 069533 REVIEW | september 2018
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MAS warns stolen SingHealth data could be used in bank fraud
88% of Singaporeans unhappy about property market due to soaring prices
CPF withdrawals via PayNow hit $40m in 3 months: OCBC
The Monetary Authority of Singapore has urged financial institutions to tighten customer verification processes in light of the recent cyberattack at government public health database SingHealth. All financial institutions are discouraged from relying on the information stolen from the attack such as name, and NRIC numbers for verifying customer identities.
PropertyGuru revealed that about 88% of Singaporeans cited soaring home prices as the key reason why they remain unhappy about the property market. The consumer sentiment index for the first half of 2018 remained at 39 points. It is calculated based on six parameters including satisfaction, housing prices, and consumers’ future expectations of the market.
Central Provident Fund (CPF) members used PayNow withdrawals 4,000 times in 2018 which reached to around $40m withdrawals, OCBC revealed. Bernard Liew, whose first PayNow transaction is his withdrawal request to CPF, said that he got the money from his account instantly. “For people who may need the money urgently, this would be very useful,” Liew said.
Are smart technologies the future employees for customer experience? BY ARTHUR KIONG How did you reserve your most recent hotel booking? Did you call the hotel’s front desk, or did you power up an app on your mobile to book your stay? If your answer is the latter, you reside with 52% of Singaporean users who make travel plans through their mobile devices. Digital innovations today are changing the way our guests engage with brands, not only in Singapore, but around the world.
Singapore & the future of finance: global lighthouse on a little island BY ARVIND SANKARAN In 1942, Austrian economic prophet Joseph Schumpeter coined the term “creative destruction.” Schumpeter envisioned innovation to be the key driver by which industries are “destroyed” and replaced with newer, more creative ones. This force is seen rapidly transforming the world of finance – from the legacy of branches, tellers and vaults to the future of data, algorithms and money.
MOST READ COMMENTARY What did Singapore get apart from US$15m bill from the Trump-Kim summit? BY ANTONIO ACUNZO What’s in it for Singapore from improved relations with North Korea? Well, to start with, there’s a US$15m bill Singapore has to pay for hosting the summit, and the amount includes all the security in place in the city state for the duration of the summit plus the hotel bill, as a welcoming gesture of hospitality, at the 5*Luxury St. Regis hotel for the suite where North Korea’s Mr. Kim stayed for 2 nights.
SINGAPORE BUSINESS REVIEW | september 2018
Co-published corporate profile
AIA Singapore: Enhancing customer experience through digital transformation AIA Singapore’s game-changing digital after-sales service - - POS EZ, allows customers to authenticate requests without having to meet up with an insurance representative.
Customers can now make a change in address in a matter of minutes with the POS EZ platform.
n enlightening discussion with Ms Melita Teo, Chief Operations Officer of AIA Singapore, showcases POS EZ, the first-in-insurance market innovation which allows customers to authenticate their requests without having to meet up with an insurance representative through a remote authentication function, anytime and anywhere in the world. According to research conducted by EY in 2017, around 40% of global insurance consumers place a high value on quality digital experiences. This tide of digital transformation is leading the insurance industry to rethink how they are adapting their products and services to meet their customers’ changing needs. Staying one step ahead With this in mind, AIA Singapore launched POS EZ in April this year. Melita explains, “We put our customers at the heart of everything we do. The majority of the technological advancements and investments in the insurance industry over the years have largely focused on building robust digital platforms for new business applications. After-sales service, on the other hand, has remained on the backseat of most companies’ digital transformation efforts.” This gave AIA Singapore the opportunity to create POS EZ, which is focused on aftersales service that engages the customer end-to-end in an integrated digital ecosystem that will support their insurance needs throughout their policy’s lifetime. Melita elaborates, “POS EZ provides
benefits to customers on two levels: convenience and security. With the availability of remote authentication functions, customers can now cut their transaction processing times exponentially. For instance, customers can now make a change in address in a matter of minutes. Previously, this simple transaction would require various forms to be filled up, a meeting with their insurance representatives, and days to process.” “The POS EZ platform also lowers the propensity for errors in inputting information with the Smart Forms feature, which can affect the quality of service that customers can get without delay. POS EZ prompts the insurance representatives when there’s outstanding information required for the submission, reducing the need for back-and-forth administration,” she explains. Since its launch, AIA Singapore has already seen more than 10% of the processing requests converted from the traditional paper format to POS EZ. This utilisation is set to increase as more service requests are added to POS EZ over the next few months. Digital security Melita also highlights AIA Singapore’s unwavering commitment when it comes to security in the new digital era. “Our online platform allows customers to authenticate their requests through a two-factor authentication system using a personal OneKey device.” She adds, “On top of being an added convenience, customers can rest assured that their authentications are secure, as this OneKey device is already employed for transactions with almost 60 government agencies in Singapore.” Digital transformation journey Melita enthusiastically recounts the beginning of AIA Singapore’s digital transformation journey: “One of the first
customer-facing efforts towards digital transformation that we undertook was the launch of iPoS in 2012. This was followed by the launch of the first-in-market Digital Underwriter that gives an underwriting decision almost instantly, as well as the AIA eCare App for the convenience of customers by engaging them with digital tools.” AIA Singapore’s digital transformation journey continues with POS EZ, which enables service excellence and deep engagement with customers, anytime and anywhere, empowering them to live healthier, longer and better lives. “Central to AIA Singapore’s digital transformation efforts is the desire to provide current and prospective clients with the most customer centric experience enabled by technologically advanced proposition,” says Melita. “Rapidly developing technology has brought about the inevitability of ever-rising customer expectations. Our customers today expect unprecedented levels of service delivery.” According to Melita, “POS EZ is a crucial component of the digital ecosystem that AIA Singapore has been building to provide a unified experience across our many customer touch points.” The AIA digital ecosystem is a game-changer which increases the efficiency of the company’s insurance-purchasing process, allowing clients to obtain life insurance coverage in a matter of hours. “Our digital transformation efforts are all geared towards one goal: making AIA Singapore the most customer centric digitally enabled life insurer,” Melita adds. Achieving this goal of digital transformation ultimately benefits the customer, and Melita concludes, “With form-filling and paper pushing now a thing of the past, face time can now be spent on relationship building and strategic consultations, enabling high human touch back to our customer interactions.”
“AIA Singapore has already seen more than 10% of the processing requests converted from paper to POS EZ.” SINGAPORE BUSINESS REVIEW | september 2018
Agenda PEOPLE | PLACES | SERVICES | OPPORTUNITIES
EASB The second edition of Automechanika Ho Chi Minh City will open its doors once again from 25 – 27 April 2018, with an even more ambitious show planned following a successful first year. The three day fair has now become Vietnam’s leading regional trade fair for the automotive service industry, which is complimenting the country’s position as a frontier for growth within the sector. Automechanika Ho Chi Minh City 2018 is expected to house 360 exhibitors and welcome 8,500 visitors at the Saigon Exhibition and Convention Center in Ho Chi Minh City, Vietnam.
East Asia Institute of Management (EASB) is a four-year EduTrust certified private education institution. We offer Diploma, Bachelor’s Degree, Master’s Degree, and MBA programmes. Major disciplines include Hospitality and Tourism Management, Business Management, Accounting, Banking & Finance, Medical Bioscience, and many more. For more information, visit www.easb.edu.sg
kaplan singapore Ranked by JobsCentral as the number one Preferred Private Education Institution consecutively in 2012 and 2013, and by AsiaOne People’s Choice Awards in 2009, 2010, 2013, 2014, and 2015, Kaplan Higher Education provides full-time and part-time diplomas, bachelor’s and master’s degrees to individuals looking to pursue careers in various fields. For more information, visit www.kaplan.com.sg
The Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP) organises a series of clinics on the Tripartite Standards (TS) to assist organisations understand what the TS initiative is about, so as to help them adopt and implement the various standards that have been launched to date. For more information about the Tripartite Standards Clinics, visit tafep.sg or email firstname.lastname@example.org.
FOR MORE INFORMATION on EVENTS AND ADVERTISING
SINGAPORE BUSINESS REVIEW | september 2018
Seamless Seamless is the key meeting place for this brave new world of commerce. It is a new event built on 20 years of experience – a seamless continuity from Asia’s largest and longest running conference focussed on cards and payments, to a dynamic summit and large-scale exhibition bringing together the converging worlds of ecommerce, retail, and payments.
SCCE Over 3,600 compliance professionals around the world have already come to an SCCE Basic Compliance and Ethics Academy to master the fundamentals of managing a compliance and ethics program. The Academy provides three and a half days of classroom-style training, and class size is limited to facilitate interaction amongst the attendees and with the faculty. Learn from experienced practitioners and prepare for the Certified Compliance and Ethics Professional-International (CCEP-I)® exam, which is optional and is offered at the conclusion of the Academy. Join us on 10-13 July for this once-ayear event in Singapore.
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FIRST to be seen stepping into an ‘uncool’ shop. As such, brands must constantly refresh their image to attract the younger crowd,” she said. Watsons Singapore and Sephora Singapore have also spruced up their stores with the help of technology by incorporating interactive digital screens that allow consumers to try on makeup virtually. “Such features are fuss-free, more hygienic, and attract digital-savvy millennials to enter the stores to try on new products and have fun. This encourages customers to try more products, have fun, and hopefully buy more,” said Cai.
RENTS UP In singapore
When the URA rental index posted its first quarterly growth of 0.3% in the first quarter of 2018, analysts attributed the rental rebound partly to rising demand from displaced owners of sold en bloc properties. Aside from this, a flurry of buyers opting to rent for a bit longer also increased due to the uptick in home prices on the back of higher Additional Buyer’s Stamp Duty rates. Whilst it will likely take a few more quarters before the rental market shows convincing signs of recovery, “recent evidence on the ground suggests, however, that the inflexion point for rents across all segments — CCR, RCR, and OCR - may be coming sooner than expected,” said Savills Singapore research & consultancy senior director Alan Cheong. The URA’s 0.3% uptick in rentals marks the first quarterly expansion in the last four and a half years. Landlords set to benefit “Amidst the frenzy of collective sales and limited new supply in the highend market segment, the market has tightened up a bit and landlords are now in a better position to raise their asking rents; whilst tenants, especially in renewal cases, have to accept the higher rentals which are still lower than when they signed two years ago,” Cheong said. The Additional Buyer’s Stamp Duty rates may also provide a short-term boost to the HDB rental market, which has seen falling demand and rental prices. “Some may lease slightly longer since the replacement cost of buying a new home is now higher under the new cooling measures, especially for those who own multiple properties,” said OrangeTee & Tie head of research & consultancy Christine Sun. “Buyers looking at entry-level private properties may potentially consider HDB properties instead, as the latter are not affected by the latest cooling measures and loan restrictions,” said Withers KhattarWong partner Kenneth Szeto. 8
SINGAPORE BUSINESS REVIEW | september 2018
Level-up bar’s in-store arcade
In-store games, makeup apps woo shoppers
hen entrepreneur Mark Huang opened Level Up in Clarke Quay in 2017, it generated a lot of buzz as the island’s first-ever arcade bar. Huang noted the novelty of Level Up’s conceptcustomers can spend time and money in food and games all in one place. Singapore is starting to see more mixed retail concepts like Level Up’s that combine food, play, and shopping experiences, said Juliana Cai, analyst at RHB. “In this digitised era where food delivery apps are sprouting, we think that the ‘playing element’ at these bars gives consumers a more compelling reason to visit the physical outlets,” she said. “With this, we are able to keep guests at Level Up for longer periods of time. Market reaction has been good and we are constantly trying to better the experience for the customer,” said Huang. Aside from launching mixed concept stores, Cai said retailers are also updating their store visuals to woo younger customers. “Millennials are image-conscious and do not like
Singapore’s retail sales index has shown a fairly positive trend, reaching 2% overall growth for the first four months of 2018.
Flagship stores Another key strategy for retailers to draw in more customers is to open flagship stores. Major retail players like Uniqlo have led the trend, and this has convinced the likes of Victoria’s Secret and Apple to follow suit. Muji opened its flagship store in Plaza Singapura in 2017, whilst technology and electronics retailer Challenger opened a flagship store in Bugis Junction. As retailers further embrace these novel approaches in their physical stores, Singapore’s retail sales index has shown a fairly positive trend, reaching 2% overall growth for the first four months of 2018, according to RHB. “The past three years of intensifying competition from e-commerce and muted consumer spending have compelled retailers to be less complacent, and they are now revamping themselves to reel in consumers to spend,” said Cai. “Many retailers have not only embraced online platforms but also reinvested in physical stores to improve the overall brand experience.”
Watson’s Singapore’s virtual make-up app screens
FIRST The 14,000 square metre solar farm can generate an average of 2.4 GWh of electricity annually through its 6,605 solar panels and 55 inverters.
3M’s solar roof in Tuas
Singapore takes a big solar step
n June, industrial giant 3M unveiled one of the biggest rooftop solar farms in Singapore atop its Tuas manufacturing plant, representing not only a sprawling new power source for the global science company, but also a banner project that the government hopes would embolden other firms to follow suit. “This initiative to utilise rooftop space which would otherwise have been unused to generate cleaner forms of energy to power its manufacturing facility is an example
of how companies can maximise resources,” said Amy Khor, senior minister of state for the Environment and Water Resources. The 14,000 square metre solar farm can generate an average of 2.4 GWh of electricity annually through its 6,605 solar panels and 55 inverters. The facility sits atop 3M’s major manufacturing plant in Tuas and can power over 500 four-bedroom flats. The solar farm is projected to lower carbon dioxide emissions by 1,139 metric tonnes a year, in line with 3M’s efforts to boost renewable energy use
to 25% of its total electricity use by 2025. Under the Sustainable Singapore Blueprint, the city-state is targeting to boost solar penetration rates and solar power adoption in the country’s energy system to 350 MWp by 2020, or about 5% of total projected peak electricity demand.“The switch to cleaner forms of energy will make our economy greener and grow our green economy at the same time. I am glad that companies in Singapore like 3M are adopting solar energy and contributing towards greater resource efficiency and a greener economy,” Khor said. Earlier in April, European solar photovoltaic panel maker REC Group also broke ground for its own industrial solar rooftop installation in its factory in Tuas. Projected to go on grid in August, the new solar installation is set to become one of Singapore’s biggest that will feed around 2.6 GWh annually into Singapore’s electricity grid, enough to power 550 HDB fourroom apartments, and will save 1,400 tonnes of carbon emissions every year. “We want to see more companies think and speak carbon,” said Khor, citing the government’s Climate Action Plan which outlines strategies to build a low-carbon and climate-resilient Singapore through improving energy efficiency and investment in solar energy and other low-carbon technologies.
The Chartist: M&A targeting Singapore companies plunged to 5-year low This chart from Thomson Reuters shows that foreign acquisitions targeting Singapore-based companies plummeted by 51.9% YoY to US$4.3b, marking a four-year low since 2013 (US$1.7b). Data showed that the retail sector accounted for 46% of Singapore’s inbound M&A activity and totalled US$2b, up 99.5% from the first half of 2017. Alibaba Group Holding Ltd of China planned to raise its interest in Lazada South East Asia Pte Ltd, a Singapore-based online retailer, for a total US$2b, in a privately negotiated transaction. It was the opposite for the M&A activity of Singapore companies targeting foreign firms. It rose 24.5% to US$12.4b in deal value, but there was a 23.2% decline in the number of announced outbound acquisitions.
Any Singapore involvement announced M&A top five target industry
Sources: Thomson Reuters
Any Singapore involvement announced M&A first half volume comparison
Sources: Thomson Reuters
SINGAPORE BUSINESS REVIEW | september 2018
FIRST Ambassador briefing switzerland
His Excellency Ambassador Fabrice Filliez
witzerland and Singapore might be continents apart, but they have more in common than the first letter in their names. “Without natural resources, being small, exportoriented countries, situated in the middle of much larger players, both Switzerland and Singapore had to work hard and be creative in order to attain comparative advantages in some various industries,” noted Ambassador Fabrice Filliez, Switzerland’s newly appointed ambassador to Singapore. Prior to his appointment, Filliez oversaw multilateral tax issues as the Swiss state secretariat for international financial matters in Bern, Switzerland for nearly five years, and headed the economy and finance department at the Swiss Embassy in London. Sweet trade relations Strong trade ties between the two nations can be seen with nearly half of all Swiss exports to Southeast Asia going to Singapore, and Switzerland placing amongst the top 11 trade partners of Singapore.“A similar picture can be drawn for investments,” said Filliez, citing Switzerland as the seventh largest investor in Singapore after the U.S., the Netherlands, Japan, the U.K., Luxembourg, and Hong Kong. “Over 400 Swiss firms are represented in Singapore, employing more than 25,000 people.” Filliez described the Swiss business community in Singapore as “diverse and vibrant” and mainly represented by the SwissCham Singapore, which counts over 200 members. Swiss firms and small-sized enterprises seeking opportunities in Singapore can also coordinate through the Swiss Business Hub ASEAN which provides trade services, including organising the Swiss presence at various trade fairs in Singapore.“Switzerland is certainly a very interesting destination for businesses with innovative solutions, seeking to expand into Europe,” said Filliez.
SINGAPORE BUSINESS REVIEW | september 2018
Bike-sharing hits roadblocks in Singapore
hen Singaporean bikesharing firm Obike announced its exit from the Singapore market in June, it signified bigger problems in the bike-sharing industry in the city which rang alarm bells for operators and users alike. The new government regulation is forcing bike-sharing operators to incur extra costs related to technical implementation and fleet re-balancing, which added to the difficulties of oBike, said Zhang Xiaohu, Postdoctoral Associate, SMART Future Urban Mobility Interdisciplinary Research Group (FM IRG). However, cost may not be the only reason for oBike’s closure in Singapore, Zhang noted. “The bike-sharing business has been very competitive especially after Ofo and MoBike’s entry into the market last year.” GBikes and ShareBikeSG have also folded up their Singapore operations in the aftermath of new LTA rules, whilst remaining players are rolling with the punches. Anywheel has faced challenges, especially in meeting LTA’s technical requirements, but believe it is well prepared to comply with the set standards, said its strategy manager RJ Seet.
The bikesharing business has been very competitive especially after Ofo and MoBike’s entry into the market last year.
Investment experts see the new regulation as piling on to an array of challenges that bike-sharing firms already face and potentially dampening investment. “It was already an extraordinarily difficult business to begin with; adding in onerous regulation to the crowded competitive landscape, low margin business model, and high capex, and you have a very unattractive industry,” said Justin Hall, Golden Gate Ventures principal. “Like all things, I think a highly crowded space is self-defeating for all parties,” Hall added. “Once the landscape becomes less crowded, there might be space for one player, perhaps two, but I wouldn’t hold my breath.” The regulatory tightening is likely the start of an expected rationalisation of the bike-share market, said Hugh Mason, co-founder of JFDI Asia. “We have just seen the land-grab phase and now there will be a war to the death and we will end up with one or maybe two providers.”
Mobile App Watch
This F&B platform matches part-timers with employers New homegrown Singaporean platform YY Part Time Jobs app seeks to help users discover parttime, flexible, and daily paying jobs with attractive hourly rates. Developed by the YY Hong Ye Group, the platform matches part-timers with employers looking for extra manpower, bringing convenience to the recruitment and job-seeking processes. The YY Part Time Jobs app allows employers to list their job vacancies and even specify job details The app uses an algorithm that connects relevant applicants such as time, place, and other criteria like relevant skills and years of experience. The app’s algorithm then makes sure only relevant candidates are matched with the employers. IT Project Manager Wendy Wang says the YY Part Time Jobs app is more than just a jobsmatching platform. “It is a one-stop app where part-timers, besides being able to view the jobs available, can view their time-card at work, their schedule, as well as calculate their own salary.”
Creativity is our Essence At Firmenich, our people build our legacy every day! With a passion for taste and scent, we are constantly pushing the boundaries of our creativity and innovation to delight consumers around the world, sustainably. Discover more about us at Firmenich.com.
Winner of the SBR International Business Award 2018 Manufacturing Category
From bank transactions to flight bookings, robots at your service
hen OCBC branch teller Teng Wan Xian left her role to retrain as a digital ambassador that guides customers how to use the new ATMs and digital service kiosks that have basically taken over her previous functions, she would eventually be followed by other tellers. Digitalisation has led some firms to cut headcount but Teng represents the other side of the coin: Firms keeping staff for other value-added work that humans can still do better than machines and chatbots. OCBC Bank, for example, is upskilling half of the tellers in its 35 branches to take on ambassador and other advisory roles over the next two years. The move to reduce bank tellers comes amidst falling foot traffic in bank branches as OCBC rolled out digital transaction channels, as well as a new fleet of ATMs and digital service kiosks that can perform the transactions previously handled by bank tellers. Teng, who has been with the bank for seven years, said that the new ATMs and digital service kiosks have reduced the waiting time for customers at the branch. “I feel the new machines are like a ‘new generation’ of tellers, processing everything very quickly,” she said. OCBC ‘s bank teller headcount has been
reduced by 15% in the past five years, but it was quick to assure that none of the bank tellers in the planned retraining initiative will lose their job. The staff will be taught how to perform “higher valued-added tasks that require decision-making or physical verification” instead of the repetitive counter tasks like processing cash transactions which currently account for nearly 90% of transactions performed at branch teller counters. “With the advent of technology, we have retrained staff for higher-value job functions that will transform our business and allow a more efficient workforce to deliver optimum results,” said Dennis Tan, head of consumer financial services Singapore at OCBC. “Customers must know that our staff can competently help them with digital age processes and tools.” The digital shift can also be seen in Singapore’s airlines industry, where Scoot has soft-launched a transactional chatbot called M.A.R.V.I.E. on its Facebook page via Facebook Messenger on July 2. A few weeks since its launch, M.A.R.V.I.E. has managed to resolve about 37.5% of all queries, and the airlines expects more customers to use the chatbot for queries in English, search for flights and make flight bookings.
OCBC launched a new fleet of ATMs
“We do not have a target for now for the number of queries as a chatbot with transactional capabilities is still new to the market and M.A.R.V.I.E. is still an ‘intern’ learning the ropes, so we will need to continue training him… over time his resolution rate will improve,” said Vinod Cannan, Chief Commercial Officer at Scoot. “However, our call centre and ground customer service representatives perform an extensive array of functions and we don’t see the chatbot replacing them.” Scoot’s hybrid approach entails retaining customer service staff whilst expanding M.A.R.V.I.E.’s capabilities to take up a greater share of query resolution and booking operations. In the future, after undergoing a continuing learning process, the chatbot is expected to eventually be able to accept promo codes, assist customers to manage and make changes to bookings, accept additional payment modes aside from the current credit card option. The airline also intends to offer M.A.R.V.I.E. in more languages and on more platforms, including Scoot’s website.
Check out 3M’s swanky, new HQ in Ang Mo Kio American multinational company 3M has opened a new 10,000 square metres headquarters in Ang Mo Kio. Housed inside Techpoint, the new space spans three floors and is double the size of its previous headquarters at Yishun to host over 500 employees from the regional, functional, and supply chain operations. “Our Singapore footprint has grown significantly over the last 52 years”, said Yuko Nakahira, managing director, 3M Singapore. “This complements our growth in the region whilst supporting the government’s push for a more liveable city.” The space features several wide collaboration spaces in fresh colours of green and yellow as 3M aims to boost networking and interaction amongst its employees whilst boosting productivity. “As we expand our presence in Singapore, 3M is looking into ways to foster more collaborations with local and regional partners, and develop Asiacentric solutions that addresses our customers’ sustainability challenges,” Nakahira added. 12
SINGAPORE BUSINESS REVIEW | september 2018
3M collaboration hub in new HQ
It can host over 500 employees
Interaction amongst employees
As an employer, you can give strength to our NSmen by coming on board NS Mark, a nationwide accreditation scheme that recognises organisations for showing strong support towards National Service and Total Defence. Your support matters. Begin by implementing NS-friendly policies and practices at your workplace.
Many businesses across Singapore have been accredited with NS Mark. Some have implemented pro-NS initiatives for their recruitment, retention and reward systems. Others recognise NSman employees with a simple thank you note or celebrate their successes and achievements in NS. Regardless of what you are able to do, your support matters.
“ TO SUPPORT NS IS A WIN-WIN SITUATION FOR US. We constantly challenge ourselves to initiate innovative solutions that can help us cope with the constraints we face when our NSman employees are away for duty. Ms Christina Siaw Chief Executive Officer, Singapore Cruise Centre Pte Ltd
“ NATIONAL SECURITY IS A SHARED
The defence of our nation is a necessary investment that requires extraordinary contributions on the part of our NSmen. Its returns include the stability our firms and businesses need to succeed and thrive.
ADVOCACY FROM EMPLOYERS & BUSINESSES
OUR SECURITY OUR STABILITY YOUR SUCCESS
COMMITMENT AND RESPONSIBILITY.
Our NSmen stand guard for Singapore. It’s time for us to stand in solidarity with them. Get accredited with NS Mark today.
To find out more, contact us at email@example.com, or visit www.NSmark.sg today.
As a key pillar of Total Defence, it is in the interest of every company, large or small, to do its part to support NS and safeguard our way of life. Mr Gan Seow Kee Chairman and Managing Director, ExxonMobil Asia Pacific Pte Ltd
the drive for the digitallyenabled workplace
Why go to the branch when you can transact online?
Is death looming for bank branches?
Source: IDC Asia/Pacific Employee Sentiment Survey 2018, commissioned by Workday, IDC Asia/Pacific Digital Transformation Pulse Survey 2017, IDC FutureScape: Worldwide IT Industry 2018 Predictions – APEJ Implications
SINGAPORE BUSINESS REVIEW | september 2018
ith the use of mobile banking in Singapore easily overtaking physical branch interactions by 15% in the past year, there is some question whether doing financial transaction in branches still remains relevant for a population that has gotten used to living their life in front of a screen. Nearly eight in 10 Singaporeans are considering opening an account with branchless banks, according to a survey by management consultancy firm McKinsey. Of this number, more than a third (35%) are willing to transfer their account assets into a digital wallet. In recent months, DBS unveiled a chatbot, POSB digibank Virtual Assistant, allowing customers to perform transactions via Facebook Messenger. Not to be left behind, OCBC rolled out an algorithmbased robo-advisory service for its wealth management arm whilst UOB launched contactless ATMs. “In Singapore, the role played by and the support given by our government as well as bodies such as the Monetary Authority of Singapore (MAS) and the Association of Banks in Singapore (ABS) to the banks is a clear strength,” said Kok Yong Ho, Financial Services Industry Leader at Deloitte Southeast Asia. However, the ongoing migration of financial services to mobile begs the question of whether branch banking still
Banks could save around $10,000 to $70,000 monthly which is the going rent for a typical bank branch.
remains relevant. “Why even have branches and pay rent and staff costs to service the branches when banking can be carried out online or on mobile devices?” according to Choon Fah Ong, CEO of Edmund Tie & Company. “With the convenience of mobile banking anytime, anywhere, customers are moving towards mobile banking. So banks adapt to the trend and save costs at the same time, making them more nimble and cost efficient.” Although the impact on the property market could be hard to accurately measure as bank branches seldom occupy standalone buildings due to their location in shopping malls or office buildings, banks could save around $10,000 to $70,000 monthly which is the going rent for a typical bank branch, according to Huttons Asia. Ong, however, is of the belief that the trend will be much more felt in the property market in the long term. “The reduction in banking space is part of the global trend affecting the way we live, work and play – enabled by technology. Overall, there will be lower demand for office space as technology enables us to work any where, any time, and not just from offices.” On his part, Deloitte’s Ho suggests that the migration of banking services to online is more an evolution than an extinction of banking as we know it.
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Fish-feeding tech startup Umitron bags $11.2m fund
quatech startup Umitron has successfully raised $11.2m (US$8.25m) in an equity financing round, which it claims is the largest aquatech early-stage investment. Umitron’s first product called UmiGarden is an IoT-powered feeding management system that could optimise feeding cost through data. A proprietary algorithm developed by the team is said to have the ability to detect when fish are hungry, allowing farmers to feed their fish at the right time. Data-driven analysis of feeding can significantly benefit
the aquaculture industry especially as feeding represents roughly 50% of total production costs and avoid eutrophication and red tide. Umitron’s technology optimises the aquaculture feeding process by reducing cost whilst reducing environmental risk. In May, Umitron entered into a research agreement with Ainan municipality, Ehime prefecture in Japan to demonstrate the capabilities of their technology as they bid for the development of sustainable aquaculture. “Umitron is here to install Sustainable Aquaculture on Earth and improve safety, eco-friendly, stable supply of aquatic resources and work environment in aquaculture by technology,” the company said in a statement. It was a co-investment round by Innovation Network Corporation of Japan, Design for Ventures (D4V) by IDEO and angel investors. The financing will be used to strengthen Umitron’s existing services and research and development activities. Umitron also claimed that to date, this is the highest early-stage investment made in the aquatech sector.
Doctor Anywhere raises $6.5m series A fund charged separately. Although the telehealth market in Singapore is still in its nascent stages, the startup believes that the technology offers users a strong alternative to connect for quick advice and treatment on simple healthcare issues. “There are a few telehealth solutions out there but what really sets us igital healthcare platform Doctor apart from other industry players is Anywhere raised $5.6m in a our integrated platform approach. series A financing round, as it Through this technology, we can offer aims to make quality healthcare more care-seekers end-to-end services that accessible to the tech-savvy population. Founded in 2015 and launched late 2017, accompany them throughout their health journeys,” said Lim Wai Mun of Doctor Doctor Anywhere offers its users access Anywhere. to healthcare providers, through video The firm will use the proceeds consultations on its mobile app which from the funding round to continue currently has three features—general developing its products and services. It practitioner, lactation, and medical will also be used to beef up the team aesthetic. and explore new business verticals.“We Patients who received the virtual aspire to be a key player in personalised consultation need only wait for healthcare by boosting secure, medication and other e-documents to customised and convenient access to be delivered. One consultation costs healthcare professionals for everyone in $20, although prescribed medicines are Singapore and the region,” Mun added.
SINGAPORE BUSINESS REVIEW | september 2018
Influencer marketing platform Affable nabs $1m
ingapore-based influencer marketing platform Affable has raised $1m (US$747,000) in seed funding round involving the participation of Decacorn Capital and SGInnovate. Founded in October 2017 as a SaaS platform for influencer marketing, Affable connects brands and marketing agencies with micro-influencers that can add further value to their campaign. It provides tools for brands and agencies for influencer discovery, campaign management, content vetting, and ROI measurement using state-of-the-art machine learning technologies. “Affable is building a self-service platform where a marketer will be able to find, engage and measure any influencer they work with globally. We provide this as a subscription platform to customers who find influencers on our platform using search parameters relevant to the audience they want to reach,” said CEO and co-founder Nisarg Shah. Customers can view detailed demographic and psychographic insights about the followers and information about competing brands that the influencer might have collaborated with in the past. Customers can also analyse the performance of the influencer posts through the Affable platform and if they are reaching the target audience. One-stop shop for influencer marketing “We launched early in order to avoid developing features that customers do not want. This resulted in the customers always demanding more features which was a good problem to have,” Shah added. The startup was incubated by Entrepreneur First, who in turn pitched in for the startup’s latest funding round along with BANSEA and a host of other angel investors including senior executives from Microsoft and Google. Affable’s funding round also marked the first participation of SGInnovate in funding promising firms through its Startup SG Equity Scheme. The startup plans to use the funding to support product development by hiring engineers to scale their technology and fuel their expansion plans to key markets across Southeast Asia over the next 18 months. But the dream has always been larger than that as Affable aims to be a household name.“Today, there exists Google AdWords for search ads and facebook ad network for sponsored ads. Five years from now, Affable wants to be that one-stop platform for word-of-mouth marketing through influencers, for any company size, anywhere in the world.”
Co-published corporate profile
Pure Diamond Farm eyes US$200m on ICO to fuel growth of lab-grown diamonds business Two-thirds of the fund will go to plant and equipment investment, intellectual property rights, and R&D.
hen Hideyuki Abe established Pure Diamond Farm, a company that is looking to manufacture labgrown diamonds that exhibit completely the same characteristics as nature-made ones, he ditched the traditional fundraising route and is now eyeing to raise US$200m through a token sale. The deciding factor was speed, and Abe believed that it was important to get a firm footing in what he believes will be a highly promising industry due to the intrinsic advantages that lab-grown diamonds provide compared to expensive, low-supply nature-made diamonds. “This market is new and I wanted to start this project as soon as possible, so I chose ICO in Singapore.” Abe said. A favourable market Abe, who has familiarity with launching ICOs through his other company, said the most important aspect with the Pure Diamond Farm project is speed as other players, including big-name jewellery brands start to also look into making lab-grown diamonds. “With the vast knowledge and blockchain expertise of Jun Kawasaki, the white hat hacker who solved Japan’s high-profile NEM coins theft, we’re confident that our blockchain will be highly stable and equipped with strong security features to prevent cryptocurrency hacks and theft,” he said. The Pure Diamond ICO is scheduled on September 11 to November 15, 2018, and the company will offer investors cryptographic currency called Pure Diamond Coin, which can then be used for trading its lab-grown diamonds that take around one-a-half months to produce from a process involving carbon, gas and electricity. “Lab-grown diamonds can have a lot of different colors and sizes that nature-made diamonds cannot or may be very difficult to have,” he said. “It’s quite difficult to make nature-made diamonds very thick. But for lab-grown diamonds, it is easy to create any type and size -- so if you want to make the ideal jewellery pieces, it’s easy to design and make different colors and shapes.” Abe is also confident that the company’s lab-grown diamonds, which he said has
zero impurities, will fetch a high value in the market, citing how nature-made diamonds with a lot of impurities still sell for a high price. He estimated that 98% of nature-made diamonds are not very pure, with many other materials mixed into the diamond. Nature-made diamonds are also scarce, but lab-grown diamonds will have a more stably supply and pricing, he added. Pure Diamond Farm plans to use roughly two-thirds for the proceeds from its ICO, which will end when the company reaches the hard cap of US$200m, for plant and equipment investment, research a nd development and intellectual property rights. The company noted though that Pure Diamond Coin token holders do not have the right to purchase a certain amount of any physical diamonds or similar benefits, nor will they receive any dividends or revenue from the company or its affiliates. There is also no assurance that it will buy back Pure Diamond Coin tokens from any person. However, Abe said the company has a two-phase project plan to ensure the sustainability of the tokens. The first phase is where investors can exchange Pure Diamond Coin for labgrown diamonds, which the company then sells to retail shops and jewelry brands, which in turn sell them to end-consumers.
The second phase is when the company pushes for the Pure Diamond Coin to have “segmental functions” so they can be used for daily expenses such as buying a train ticket or convenient store items. “We expect there will be a B2B and B2C system that will be completely finished,” he said. Abe said the company chose to create its own blockchain network because it is different from other virtual currencies which are tied to virtual assets. “If you buy the Pure Diamond Coin, the capital will be used to buy real equipment to manufacture diamonds. After all the infrastructure is finished, so the machine can manufacture diamonds every day, every year. ” Pure Diamond Farm also wanted to provide traceability for its lab-grown diamonds. “We actually use blockchain technology to give traceability to help the consumer know it’s birthday, what cut it is and make it clear to the consumer what type of diamond they hold. They can confirm the value of their diamond.” “Through the blockchain technology, we give every diamond a story,” Abe added. “With nature-made diamonds, there is no story; you just know they just mined it from the mountain but you don’t know any other things about it.”
“The company’s lab-grown diamonds, which he said has zero impurities, will fetch a high value in the market.”
Left to Right: Shigeyuki Ishida, President of Pure Diamond Co. Ltd.; Chris Yang, President of Pure Diamond Farm Pte. Ltd. and Hideyuki Abe, President of Pure Diamond Lab Co. Ltd
SINGAPORE BUSINESS REVIEW | september 2018
FINANCIAL INSIGHT: IPOS & EQUITIES
Deal #1: included in the top domestic ipos is SASSEUR REIT’s $300.68m fund
Deal #2: SLB DEVELOPMENT LIMITED RAISED $41.82M IN IPO PROCEEDS
Singapore IPOs lag Asian peers as homegrown firms rush to list abroad Singaporean firms who opted to list abroad ballooned 300% in volume compared to domestic flotations.
hen Singaporean gaming company Razer chose to list in Hong Kong last year, it did not only send a clear game-over sign to the local bourse. It started the spate of cross-border listings from other homegrown firms, and the bourse took all the blows. Overall IPOs by Singapore issuers ballooned 78% YoY to raise US$459m in the first half of 2018 although this represents weaker activity compared to their Asian counterparts. The 12 listings in Singapore, which indicates a 20% YoY increase, also represents a gradual decline in number of listings in the last ten years, according to law firm Baker Mckenzie. “SGX’s domestic IPO activity and performance remains stable and strong,” said Tay Hwee Ling, Global IFRS and Offering Services Leader for Deloitte Southeast Asia and Singapore. However, with a growing number of Singapore companies choosing to list abroad, the number of crossborder listings ballooned 300% in terms of volume and 166% in terms of value compared to the 64% increase in domestic capital raising. The lion city is also losing out on profitable tech companies as gaming technology company Razer chose to list in Hong Kong last year. Less than eight months after delisting from SGX, OSIM International relisted as V3 Group in the Asian financial hub. As a 18
SINGAPORE BUSINESS REVIEW | september 2018
Overall IPOs by Singapore issuers ballooned 78% YoY to raise US$459m in the first half of 2018 although this represents weaker activity compared to their Asian counterparts.
result, Singapore has been steadily rolling out programmes to boost the competitiveness of the local bourse and lure tech companies to list. The Hong Kong GEM has emerged as the top destination for local companies seeking outside listings after accounting for two-thirds of total number of issues from Singapore with market experts attributing the close proximity of Hong Kong to China’s massive market and effectively diminishing Singapore’s attractiveness. Notable deals in 2018 Included in the top domestic IPOs by Singaporean issuers in the first half of 2018, meanwhile, are Sasseur REIT’s $300.68m in proceeds, through Real Estate Investment Trusts (REIT), and the $41.82m in proceeds from SLB Development Limited in the real estate sector; the $14.93m in proceeds from LY Corporation Limited in the consumer products and services sector; and the $8.22m in proceeds from Asian Healthcare Specialist in the healthcare sector. All of the mentioned domestic IPOs were listed on the Singapore Exchange (including Catalist). Anthony Ang, chief executive officer of Sasseur REIT manager commented, “Given that the portfolio of Sasseur comprises of assets based in China, a listing in Hong Kong
FINANCIAL INSIGHT: IPOS & EQUITIES or the Mainland of China would have been a more direct option for Sasseur. However, a listing in Singapore was sought as the preferred option as the Sponsor believes in the importance of listing the REIT on a stock exchange that attracts quality investors and one with higher liquidity in the REIT and Business Trust (BT) space.” “In addition, Singapore has a more robust and mature REIT market compared to Hong Kong, with over 40 REITs and BTs listed on SGX including many with assets in China,” Ang added. “The Sponsor is of the view that investors in SGX listed counters are more familiar with the REIT and BT product, has a global perspective, and are therefore more appreciative of what the REIT can offer. This would help to support demand and bolster the liquidity of the REIT’s units.” Meanwhile, some of the top cross-border IPOs by Singaporean issuers in the first half of 2018, according to data from Baker McKenzie, include the $22.42m in proceeds by HPC Holdings Limited and the $14.01m in proceeds from Hke Holdings Limited for the industrial sector; the $20.45m in proceeds from ZACD Group Limited for the real estate sector; the $8.95m in proceeds from ISP Global Limited in the telecommunications industry; and the $8.32m from IAG Holdings Limited in the materials sector. All of the mentioned cross-border IPOs by Singaporean issuers were listed in Hong Kong (HKEx and HK GEM). A global dilemma This relatively mild performance from Singapore’s local bourse in the first half of 2018, however, is not an isolated case, according to industry experts and observers. Deloitte’s Ling noted that other major bourses around the Asia and Pacific region are relatively seeing a similar moderating trend over the first half year of 2018. “Looking at the key exchanges in the region, there have been a year-on-year decrease in the first half of 2018,” she explained, citing for example the Shanghai Stock Exchange’s experience in the first 6 months of 2018, which saw 37 IPOs listed, raising around RMB64.8b. This is a 70% decline in volume from the 120 IPOs in the first half of 2017, which raised RMB76.7b, due to a fall in listing approvals. “The Stock Exchange of Hong Kong saw a 8.6% fall in funds raised, despite seeing a 44.1% increase in the number of IPOs from 68 to 98,” Ling elaborated.
Tay Hwee Ling
Singapore Equity Capital Markets - First Half Volume Comparison
Adrian Koh, EY Assurance Growth Markets Leader, explained that the continued global uncertainties have hampered activities despite Southeast Asia region’s dynamic growth trajectory. “IPO activity in Singapore, like other parts of the region—Indonesia, Malaysia, the Philippines, and Thailand—with the exception of REITs, have predominantly been smaller cap listings for the first half of 2018,” he mentioned. “This is a trend we expect to continue into the second half of 2018 as geopolitical uncertainty, trade tensions, and macroeconomic conditions continue to mute IPO activity.” SGX’s move Given the highly competitive landscape of IPO activities in the Asia-Pacific—with bourses vying against each other for the lion’s share of cross-border listings— industry experts and observers are in agreement that Singapore’s equity market will need to up its game in order to stay competitive and attractive. Some efforts are already being rolled out to boost the competitiveness and attractiveness of Singapore’s equity markets over the last two years, particularly targeting technology companies to list in the city state’s bourse. For instance, SGX partnered with Infocomm Media Development Authority in 2017 to make IPO launches easier for high-tech startups. The partnership would allow the bourse operator to organise financial support for IMDA-accredited companies in their IPO journey. SGX also signed an agreement with Nasdaq in 2017 to enable companies to list on both venues and promote each other’s market—helping Asian companies to first list in Singapore as a springboard and then ease smoothly to Nasdaq as they expand their global footholds, according to analysis by Baker McKenzie. Another effort is the decision of SGX to team up with the Tel Aviv Stock Exchange in May 2018 to get technology and healthcare companies to list on both exchanges by assisting during the pre-listing stage, facilitating the listing process, and providing issuers with post-listing support. Staying competitive Ling is firm that despite the challenges plaguing the local equity market in terms of staying competitive and attractive for cross-border listings in the Asia-Pacific, the city-state’s local bourse will remain a hot item especially for technology firms aiming to tap into Singapore’s wide investor pool. For instance, in the last five years, there were 45 Singapore companies and 40 foreign companies that listed on the SGX alone. “The SGX continues to be an attractive listing destination of choice for both Singapore companies and foreign companies,” she explained. “With the introduction of dual-class shares structures, SGX is now in a position to support high-growth companies and attract blockbuster listings from around the world, whilst broadening investment options for investors and adding to the vibrancy of Singapore’s capital market.” SINGAPORE BUSINESS REVIEW | september 2018
FINANCIAL INSIGHT: IPOS & EQUITIES hong kong view
Singapore ECM by Issue Type
Where are the mega-IPO deals?
H Source: http://dmi.thomsonreuters.com/
Growth drivers Despite persistent uncertainties plaguing the global economy with the spectre of a trade war dampening growth prospects, industry experts and observers remain optimistic regarding Singapore’s equities market and IPO activities. Deloitte, for instance, mentioned that the citystate’s local bourse will be driven mainly by the real estate and healthcare sectors, if previous performances are to be used as basis. In a separate report, Ling noted a bullish trend seen in the healthcare industry with healthcare IPOs showing a growing price earnings ratio on listing over the last five years. “At Deloitte, we continue to see a healthy pipeline of domestic and cross-border IPOs,” she noted. “We are cautiously optimistic that there will be more listings in the second half of 2018.” Outlook Regionally, EY data showed that listing activity in AsiaPacific is expected to remain robust in the second half of 2018 despite a slight drop in IPO activity in the first six months of the year. Ringo Choi, EY Asia-Pacific IPO Leader, highlighted Asia-Pacific’s’ strong macroeconomic fundamentals and investor appetite as an effective counterbalance to the otherwise volatile performance of IPO activity across the region. After all, Asia-Pacific still accounted for a 46% share of global share sales and 31% of global IPO proceeds in the first half of 2018 on the back of blockbuster listings in Vietnam and Japan, with tech and financial firms taking the lead. “Following the general declines in IPO performance in the first six months of 2018, largely resulting from recent interest rate increases as well as global political and economic uncertainties, we expect to see a rebound in the deal size of the IPOs in the second half of the year as a number of mega IPOs begin to hit the market,” he said. In terms of the outlook of global IPO activity, which will inevitably have an impact in the region’s (and Singapore’s) equity market performance, EY’s Steinbach reckoned a more accommodating global economic environment for the rest of 2018. “The good news is that economic conditions continue to be encouraging, equity valuations are high in many parts of the world, and interest rates remain low,” he explained. “As a result, we expect a resurgence in IPO activity during the second half of 2018.” 20
SINGAPORE BUSINESS REVIEW | september 2018
We expect to see a rebound in the deal size of the IPOs in the second half of the year as a number of mega IPOs begin to hit the market.
ong Kong’s IPO activity and performance continued to be vibrant in the first half of 2018 with a total of 108 new listings, which is around a 59% increase in volume compared to the 68 new IPO listings from the same period last year. In terms of value, however, total funds raised of the new listings in the first half of 2018 reached HK$50.4b, which is around an 8% decrease from the HK$54.8b funds raised from the listings in the first six months of 2017. Hong Kong’s GEM board, meanwhile, posted a stronger performance, which recorded 50 IPOs that raised HK$3.4b of total funds, according to data from PwC. This is a significant increase, 43%, in volume of companies listing in the bourse, whilst the increase in total funds raised from the same period last year is 31%. The main board, on the other hand, raised a total of 58 new listings in the first six months of 2018, with total funds raised reaching HK$47b, which is a 57% increase in the number of Main board IPOs but a 10% decrease in total funds raised. “Looking back at the market performance in the first half of 2018, we can see the IPO activities are very active, with the number of IPOs reaching a new record high,” Ringo Choi, EY Asia-Pacific IPO Leader said. “Whilst in terms of funds raise, due to the lack of mega-IPOs, the global IPO ranking of the Hong Kong market reaches only the fifth place temporarily. As a matter of fact, all the top 10 IPOs were not listed in Hong Kong.” Edward Au, Co-Leader of the National Public Offering Group of Deloitte China, noted that part of the decline in terms of value in most new IPO listings in Hong Kong is because of the dominance of small and medium-sized issuers in the territory’s local bourse—something that may eventually a boon for Hong Kong’s equity market in the long-run. Notable deals Some of the largest domestic IPOs by Hong Kong issuers in the first half of 2018 include medical provider C-MER Eye Care Holdings Limited’s $83.99m in proceeds in HKEx in early January. Other top deals include the $66.74m in proceeds from Tsit Wing International Holding in the consumer staples sector; the $29.42m in proceeds from Time Interconnect Technology Limited in the industrials sector; the $28.53m in proceeds from Thing On Enterprise Limited in the real estate sector; and the $28.04m in proceeds from LH Group Limited in the retail sector.
2018 H1: Top 5 sectors - by numbers of IPOs
Co-published corporate profile
Consumer-centred logistics drives Direct Link
The company believes that to be able to succeed in the cutthroat logistics sector, they need to deliver continuous innovation by letting go of old success models in favour of new. delivery company, range of delivery options, such as home delivery, delivery to servicepoint or parcel locker, time-definite delivery and more,” he says.
Hugh O’Connell, Direct Link Worldwide Distribution Pte Ltd’s regional sales and marketing manager for the Asia Pacific
ased in Singapore for over two decades now, Direct Link Singapore continues to innovate to maintain its competitive edge in the ever-changing e-commerce logistics market. For the company, providing top-notch logistics solutions means putting more premium on finding the right way to the market than dwelling on which truck takes them there. Hugh O’Connell, Direct Link Worldwide Distribution Pte Ltd’s regional sales and marketing manager for the Asia Pacific, says they have observed a shift away from low-cost untracked postal services to quality tracked and partially-tracked services. In other words, e-commerce firms are focusing on what the consumer wants. “Marketplaces and retailers are recognising and responding to consumer behaviour which is driving a more consumer-centric approach to logistics,” he explains. The consumers, O’Connell says, are firmly in the driving seat of change. “Rudimentarily, consumers want their orders yesterday, they want to be able to see their orders in transit and they’d like to pay as little as possible. Delivery choice is also increasingly prevalent, influenced by factors such as transit time, preferred
E-commerce hotbed O’Connell says Singapore continues to offer favourable business and trading conditions which makes it an optimal location for regional and global distribution. The logistics firm’s local operation is situated inside the Changi Airfreight Centre free trade zone (FTZ) where it runs an international mail processing centre for outbound e-commerce, as well as a regional transit hub that facilitates the onward movement of e-commerce volumes originating from other parts of the region. The Lion City, he adds, is a prime location for transit cargo originating in other parts of the region. “Being a relatively open market, there is a healthy level of competition, not only from the dominant incumbent post and express businesses, but also other foreign companies entering the market as well as platforms themselves, such as Amazon, taking greater control of the logistics chain,” explains O’Connell. “From our location inside the FTZ, we can reach consumers around the world by leveraging the global postal network in combination with select commercial partners to service our chosen key markets.” Singapore is also expected to be at the centre of the booming e-commerce sector. “The opportunity however is a hotbed of fast-emerging ecommerce markets in ASEAN, not to mention gargantuan consumer markets in China and India, all of which are within 5 hours flying time from Singapore,” he says. With its goal to deliver custom-built solutions and provide the best possible delivery solution to every client around the globe, Direct Link has been ramping up its digitalisation efforts. Data-driven logistics, O’Connell says, is at the forefront of the company’s key performance indicators. “Data-driven logistics begins with enabling our customers to interact and
integrate with our services and systems, from labelling, order tracking, consumer delivery notifications, through performance monitoring and even marketing tools,” he explains. “Digitalisation of cross-border logistics is largely being driven by global trends in online retail and consumer behaviour. Not only do we consider the needs of our customers but also those of our customers’ customers. No matter how we measure ourselves, the consumer is the ultimate barometer in determining delivery performance.” Continuous innovation Direct Link is very much committed to its investment in Singapore. The logistics firm considers the city-state a strategic gateway to a wealth of emerging ASEAN markets as well as the Lion City being a growing crossborder e-commerce market. Focusing on consumer-centred logistics means Direct Link cannot sit on its laurels. The e-commerce space has moved companies from the conventional relationship between cost and service — low cost-low service and high service-high cost — to the low cost but high service paradigm. This has put pressure on the logistics sector to do more. “Do it better than you did yesterday, but do it for less, or as little as possible,” says O’Connell. “Continuous improvement, whilst important, isn’t enough to maintain a competitive edge in the current and ever-changing e-commerce landscape,” he adds. “We need to be in a state of flux, of continuous innovation, letting go of old success models in favour of new.”
CONTACT Company name: Direct Link Worldwide Distribution Pte Ltd Address: 7 Airline Road #04-11, Cargo Agents Building E, Changi Airfreight Centre PO Box 795 Singapore 918110 Phone number: +65 6745 0773 ext. 109 Website: www.directlink.com
“Rudimentarily, consumers want their orders yesterday, they want to be able to see their orders in transit. ” SINGAPORE BUSINESS REVIEW | september 2018
INDUSTRY INSIGHT 1: f&B
Are high-end restaurants losing their flavour?
Why high-end, Michelin-star restaurants are shutting down in Singapore Singapore is perhaps not at a juncture which can wholeheartedly accept luxury restaurants, an analyst said.
hen the late celebrity Michelin-starred chef Joël Robuchon announced the closure of Joël Robuchon Restaurant and L’Atelier de Joël Robuchon in June, analysts were quick to ask: are Singaporeans losing their palate for high-end restaurants? In February, two-Michelin starred Restaurant André also permanently hung the closed sign after eight years of
Les Amis, Singapore
SINGAPORE BUSINESS REVIEW | september 2018
We’ve seen a shift towards opening smaller fine-dining restaurants that are able to house between 30-35 guests, or even less.
operations in Singapore. “Over the last few years, we’ve seen a shift towards opening smaller fine-dining restaurants that are able to house between 30-35 guests, or even less,” said Sebastien Lepinoy, executive chef of two-Michelin star restaurant Les Amis. When the stars lack lustre This was echoed by Inside Retail Asia director of content Robert Stockdill when he commented on the recent closure of three-Michelin star restaurant Joël Robuchon, the only one of its kind in Singapore.“There seems to be a trend internationally that high-end restaurants are becoming less popular as mid-grade restaurants with a more relaxed dining atmosphere—but still with a quality food offer—take greater market share,” he said. Lepinoy described these new establishments further and said,
“These restaurants are often helmed by the chef, who are also the coowner. The food and the overall focus is usually driven by the personality and creativity of the chef.” The executive chef observed that, at times, it seems as though more focus is paid to the artistic style of the chef compared to the art of service, which is comprised of service standards, customer journey, efficiency, communication, and knowledge, amongst others. “The cuisine is either western or locally-inspired when helmed by a local chef. I believe they are still surfing on the wave of the northern Europe cuisine, which is deemed ‘fashionable.’ Usually, these restaurants will have 1 or 2 menus and the dishes will be well-presented,” he added. Savills Singapore research & consultancy senior director Alan Cheong said the shift towards these
industry insight: F&B
Is it too early to have Micheln star restaurants in Singapore?
new types of F&B establishments is beyond what is considered fashionable. “Personally, I believe that we are still too early in the game to have Michelin star restaurants here,” he said. “For them to thrive, you will also need a local populace that can accept such haute couture cuisine. Unfortunately at this stage, I am not convinced that there are enough Singaporeans who would pay for this,” he added. “Singaporeans love food. However, does the love for, say Char Kway Teow, Laksa, mean that their taste buds are ready for fine Western cuisine?”For Cheong, Singapore is perhaps not at a juncture which can wholeheartedly accept luxury restaurants. Chef Andre Chiang, who gave up the two Michelin stars of Restaurant André and returned to Taiwan last year, said that lack of support put some F&B establishments at a disadvantage.“Restaurant ANDRE was running successfully the past 10 years in Singapore,” he said. “The only ‘disruptors’ I might say is that, for those who fought for the country, bringing tourists in, putting Singapore on the global map, should have some support from government or the Ministry of Manpower (MOM).” Not only that, Cheong said food delivery companies are making it harder for some of these restaurants to survive. “With the many food delivery companies dotting the business landscape, they are both symbiotic and catalytic to propel F&B turnover even higher as it extends their market reach. Unfortunately, for luxury restaurants, where the dining informs
the core experience, these food delivery companies are of no help at all,” he added. A recipe for disaster For Singapore, many high-end F&B establishments, from restaurants and cocktail bars to nightclubs, are under growing pressure from landlords demanding high rents, Inside Retail Asia’s Stockdill said. Lepinoy concurred that rents for F&Bs are high and could go beyond 10% of the restaurants’ revenue. However, with the e-commerce sector “growing stronger” and making it hard for landlords to lure tenants, he does not foresee that there will be a huge spike in rents. “Many malls are empty, and shop spaces are vacant, as customers are shopping online. Given this trend, it would make sense for landlords to at least stabilise or decrease the rent to deter tenants from taking their business online or shifting their business elsewhere. In Hong Kong, prices didn’t decrease, instead, it stabilised,” he added. In the event that revenues decline due to the lack of patronage demand, fixed rents as a percentage of turnover rise to a level that makes operations unviable, Cheong said. Lepinoy also noted that those who wish to open a high-end restaurant in Singapore (with a cheque of $100 onwards per guest) will need a longer checklist more than ever to make sure they can endure headwinds in the sector. “The restaurant has to invest a lot in the décor, manpower, and location. The management’s approach has to be different too, as opening a
high-end restaurant involves a lot of investment,” he said. Moreover, depreciation should be calculated based on 5-6 years rather than 2-3 years. “Next, it doesn’t matter what cuisine you are serving, a very clear direction has to be set, as customers need to know your unique selling propositions (USP) and understand why they keep coming back to you,” Lepinoy added. Cheong concurred with the chef and said one must be “in sync with the millennials” to understand what missing concept they are yearning for here. “If we look at some of the successful F&B concepts here, it has a link back to Asian pop culture, all things Korean and Thai and so we see F&B outlets that sing to these themes having a greater chance of succeeding,” he said. Lepinoy emphasised that budding high-end restaurateurs must be able to clearly define what cuisine they are serving. “Likewise customers should be able to easily understand the type of cuisine you are serving—be in classic, innovative, Chinese, Japanese, French, Italian, and so on. In short, there is a lot more consideration required due to the high investment required to open a fine-dining/highend restaurant,” he said. In short, there is no miracle solution that can be used to solve all problems. Every restaurant has to assess and see what is best for them and their concept, Lepinoy said. Chiang agreed and said, “I think every business has its cost, challenge, and risk to take, being a restaurateur, understand the business, manage cost, and problem solving is a skill that every owner need to have.” Danielle Mae V. Isaac
Les Amis’ caviar
SINGAPORE BUSINESS REVIEW | september 2018
Singapore economy would slow to 2.5% in 2018
Growth slows down in the face of a full-blown trade war The worst is yet to come as analysts warn that the brewing US-China trade war puts Singapore’s exports-driven growth prospects in peril.
hen Singapore released its advance estimate for GDP growth in the second quarter of 2018, it missed forecasts as both the manufacturing and construction sectors weakened, weakened, whilst services bounced back from the previous quarter— and the worst is likely yet to come as analysts warn that the brewing US-China trade war puts its exportsdriven growth prospects in peril. The 2Q18 advanced estimates, which drew primarily from April and May data, showed the Singapore economy grew at a slower 1.0% on a quarter-on-quarter seasonallyadjusted basis, compared to 1.5% growth in the prior quarter. But since the data was collected, the trade spat between the two largest economies has escalated, with the US and China imposing tit-for-tat tariffs on each other’s goods worth $34b on July 6, and the US moving to slap duties on an additional $200b of Chinese goods. “The outlook is now more uncertain given the latest negative developments on the US-China trade front,” said Edward Lee, chief 24
SINGAPORE BUSINESS REVIEW | september 2018
Authorities currently project full-year GDP growth of 2.5% to 3.5% in 2018.
economist for ASEAN and South Asia at Standard Chartered Bank in Singapore. “We had projected slower growth in H2, but the negative trade developments are increasing the downside risks.” He noted that new export orders within the PMI readings have also decelerated. Whilst Singapore’s annual exports growth is still holding firm, with nonoil domestic exports likely to expand 17% in June after a 13% rise in May, according to Prakash Sakpal, Asia economist at ING, other electronics export-focussed countries in Asia are already feeling the trade pinch. “Global demand remains upbeat but has slowed from the lofty heights Inventory cycle has slowed further
Source: CEIC, Deutsche Bank
enjoyed in 2017 and high base effects are overstating the slowdown in 2018. The global tech cycle, a critical driver of Singapore’s economy, is on a gradual slowing path,” Moody’s Investors Services noted. Singapore’s trade-related cluster—manufacturing, wholesale trade, transport, and storage—accounts for nearly half of its GDP. “Heightened global trade tensions, especially between the US and China, remain a downside risk to the outlook given Singapore’s outsize exposure to global demand,” the ratings agency added. Whilst the impact of the US-China trade conflict remains limited so far, an escalation to a full-blown trade war will have severe implications for the global economy, Ravi Menon, managing director of the Monetary Authority of Singapore, warned in early July. Authorities currently project full-year GDP growth of 2.5% to 3.5% in 2018. Menon noted that trade risks stem from Singapore’s role as a node in the regional electronics production value chain, as well as a hub for air and sea transport and financial intermediation services. “These are important intermediate inputs to the main trade flows between the US and its trading partners,” he added, noting that bilateral trade between the US and China indirectly contributes to about 1.1% of Singapore’s GDP. Menon cited other drivers for growth such as a rebound in construction in the coming quarters, as seen in the contracts awarded for public infrastructure projects and the pace of private residential enbloc activities. He also expects firm labour market conditions and healthy consumer demand to support the recovery in retail and food services.
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TenX Singapore raised US$80m in an ICO that only took seven minutes to raise.
Why Singapore ranks as the third most favourable country in the world for ICOs Eleven of the 100 largest ICOs in the world, ranked by funds raised, are held by firms in Singapore.
hen blockchain startup TenX raised close to US$80m from its initial coin offering, in 2017, it was a seven-minute event that took months of careful preparation and banked on Singapore’s status as one of the most attractive hubs for such fundraising. Eleven of the 100 largest ICOs by funds raised are held by firms in Singapore, ranking third in the world just behind the U.S. and Switzerland, which had 30 and 15, respectively, according to a July report from the Crypto Finance Conference. Notably, Singapore pulled ahead of other Asian countries in the ranking, with China attracting only four of the top 100 ICOs, and Hong Kong and Japan having two each. Since then, Singapore has further solidified its position for ICOs, wherein startups drum up capital typically by selling cryptocurrency tokens in exchange for a widely-used virtual currency like Bitcoin or Ether, or cash. The tokens basically represent a right to receive some sort of benefit, or represent asset ownership or security interest over assets or property. Some of the largest ICO campaigns in Singapore are Fusion Foundation, a startup building an “inclusive cryptofinancial platform” which US$110m; Quoine, a cryptocurrency exchange platform which raised US$105m in November 2017; and TenX, a cryptocurrency payments
SINGAPORE BUSINESS REVIEW | september 2018
Fusion Foundation, a startup building an “inclusive cryptofinancial platform” raised US$110m.
startup which raised US$80m in June 2017. Meanwhile, some of the latest ICOs that took place in Singapore include Electrify, a retail electricity marketplace business that raised US$30m in March; PolicyPal, an insurtech company and the first startup to graduate from the Monetary Authority of Singapore (MAS) fintech regulatory sandbox in August 2017 which raised US$20m,and Bluzelle, a blockchain solutions provider and a partner of KPMG Digital Village which raised US$19.5m in February in a lightning speed 24-hour campaign. Jurisdiction of choice Singapore’s overall positive attitude and encouraging regulatory treatment towards cryptocurrencies has made the country a “jurisdiction of choice” for ICOs and helped foster a cryptocurrency and blockchain system, according to a joint report from consulting firm PwC and the Swiss Crypto Valley Association. In Singapore, tokens are treated as assets and MAS issued guidelines in November 2017, saying it will not regulate virtual currencies, but rather the involved activities. “Essentially, if the tokens being offered do not fall within the definition of securities under Singapore laws, the ICOs are largely unregulated. MAS expects ICO issuers to
cover story conduct their own independent legal due diligence that the tokens are not securities, and to also address anti-money laundering and counter financing of terrorism risks when issuing tokens,” said Nizam Ismail, partner at RHTLaw Taylor Wessing LLP and head, financial services and cofounder of RHT Compliance Solutions. “This regulatory clarity has largely made Singapore one of the top jurisdictions in the world for the issuance of ICO tokens,” said Ismail, whose firm is advising the likes of Health FX, a health-based ICO that is looking to raise up to US$38m on ICO Bench in September, as well as Soar, which seeks to create the global super-map using drone content, is looking to raise up to $21.8m. Despite the falling prices of cryptocurrencies, ICOs continue to boom, as ICO volume in the first five months of 2018 has already doubled that in the entire 2017, said the PwC-CVA joint report. From January to May, 537 ICOs with a total volume of more than $13.7b have been registered compared with 552 ICOs with a volume of just over $7.0b in the whole 2017. PwC Switzerland noted that the average size of an ICO has also nearly doubled from $12.8m in 2017 to more than $25.5m. Ease of doing business Compared to other jurisdictions where regulations are hazy or in flux, Singapore holds an advantage in attracting a big chunk of this rising ICO activity because it communicates clearer rules on what is permitted and what is not, allowing issuers to make decisions more confidently. The country also appeals to issuers that are seeking a strong support ecosystem as the government has set up incubator programs and investment funds focused on nurturing cryptocurrency and blockchain startups and development. The ease of doing business in Singapore and its active local startup community further add to its appeal. Financial technology startup PLMP Fintech in July launched a sixstorey blockchain centre at Serangoon North that focuses on speeding up blockchain ecosystem development for Singapore small and medium-sized enterprises. The facility, known as the Blockchain Technology Creatanium Centre, plans to offer consultancy services as well as development and training. The financial technology startup envisions blockchain as a way to improve financing access beyond Singapore’s large corporates, as it estimated that more than Funds raised in Singapore
Lee Boon Ngiap
half of SMEs fail within the first three years primarily due to lack of capital. There are approximately 219,000 SMEs in Singapore, contributing $196.8b in gross value added to the economy and also hire more than 2 million of the population. Of these SMEs, up to four out of five do not qualify for business financing due to losses reported in their financials as well as being too young as most banks require loan candidates to have two to three years of operational history, according to research conducted by business loan consultancy Linkflow Capital in late 2017. This gap in financing has also driven up interest in pursuing ICOs in the Lion City and globally — and regulatory scrutiny with it. “Regulators worldwide are looking at ICOs with keen interest, as ICOs gain traction as an efficient manner of direct fund raising for blockchain-based enterprises. ICOs have also afforded an alternative means of investment for investors,” said Ismail. Regulatory divergence Ismail reckoned regulators have varied in their approach to ICOs, with a handful of jurisdictions banning them outright. In 2017, China and South Korea blocked ICOs, although more optimistic observers believe these are temporary setbacks whilst the two countries look to set up their regulations. Some jurisdictions have introduced specific regulations even for utility tokens, which represent future access to a company’s product or service, as opposed to tokens that are designed as investments, Ismail added. “Some have taken the view that so long as the tokens do not fall within the regulatory definition of securities or regulated activities, these are allowed or tolerated. Most regulators will have issued investor alerts on the risks of ICOs.” In May, MAS stopped an unnamed ICO as it did not follow the rules on securities and futures contracts, including making an offer without an MAS-registered prospectus. The regulator asked the issuer to return all the funds it had obtained from Singapore-based investors. The MAS also warned exchanges that permit the trading of digital tokens to consult the regulator first before trading in digital tokens that are considered securities or futures contracts. MAS guidelines suggest that many digital tokens that promise a form of return are, in effect, securities, which means they must abide by the rules encompassing shares, units of real estate investment trusts and bonds. “The number of digital token exchanges and digital token offerings in Singapore has been increasing. We do not see a need to restrict them if they are bona fide businesses. But if any digital token exchange, issuer or intermediary breaches our securities laws, MAS will take firm action,” said Lee Boon Ngiap, assistant managing director (capital markets) at the MAS, in a statement. “The public should be aware that there is no regulatory safeguard if they choose to trade on unregulated digital token exchanges or invest in digital tokens that fall outside the remit of MAS’ rules,” Lee added. The regulator pledged to continue monitoring the ICO SINGAPORE BUSINESS REVIEW | september 2018
cover story industry carefully, and said it was ready to issue more targeted legislation if needed. Ismail reckoned the impetus for future ICO regulation could focus on specific issues such as mandating certain disclosures in white papers for better investor decisionmaking, regulation of forward-looking promises or projections, addressing liability for any false or misleading statements in white papers, putting in place a post-ICO communications framework with investors on project progress, and addressing market abuse on tokens that could take place in exchanges. However, he noted that regulators are wary about moving ahead of the game from their peers, especially in the absence of international benchmarks set by supranational bodies. They are also careful in issuing regulations before they fully understand how ICOs work, and their impact on enterprises and the investing public. Trust and transparency Whilst regulatory conditions have become favourable for ICOs in Singapore, there is still the matter of building trust with the investing public to ensure a successful issuance. “The biggest lesson I learned during TenX token sale was that trust and transparency are everything. In blockchain environment that is supposed to be ‘trustless’, people actually want to trust someone,” said Dr. Julian Hosp, cofounder and president of TenX, amidst lingering investor concerns on the credibility of ICOs. “At the end it helps you nothing, if you have a great product but the team is not reachable. That’s why we put all of our top management people into customer-service roles before the token sale to make sure people knew who we all are,” said Hosp. He recounted that the TenX team released regular newsletters, shot YouTube videos, published Facebook posts, and engaged the community through multiple channels such as WeChat, with the added complexity of translating messages in different languages. “Our transparent and authentic communication had massive impact on the success of the token sale,” said Hosp, adding that “I think the key is also in delivering value. Around half a year before our token sale we started educating people on the token sale. We were delivering value and building a product without getting any money for two years leading up to the token sale.”
Julian Hosp, founder of TenX
SINGAPORE BUSINESS REVIEW | september 2018
Fusion Foundation, a startup building an “inclusive cryptofinancial platform” raised US$110m.
“And then within 7 minutes we basically cashed in on all that work without spending at all on marketing, because we already had the credibility. Many companies don’t want to work upfront, they want to get money first,” added Hosp. The TenX founder admitted though that he is not following other ICOs that much since it takes a lot of time to evaluate them. This difficulty in understanding and keeping track of ICOs, coupled with a lack of specific regulations, has prompted industry initiatives to promote transparency and accountability in token sales. “We are aware of ICO issuers who engage independent professional firms to provide custodial services for funds raised, those who conduct assurance audits on certain aspects of their ICOs,” said Ismail, whose firm is part of the Global ICO Transparency Alliance that aims to lift the industry standards and self-regulatory mechanism amongst ICO issuers through cooperation with ICO rating agencies, cryptocurrency exchanges and global blockchain associations. “Investors are also getting more discerning and asking tough questions,” noted Ismail, drilling down on the value proposition of the ICO, the track record of the founders, the team’s ability to execute the project, the quality of the ICO advisory team, amongst others. “This engagement takes place even after the conclusion of the ICO.” On its website, ACCESS, Singapore’s leading industry association promoting cryptocurrency and blockchain, advises ICO purchasers should start their due diligence by identifying the underlying rights the tokens are offering.“If the coins do not offer securities, but offer some other underlying rights to services, goods or utility, it is largely unregulated by MAS. It would still be prudent for an investor to find out from the white paper, or from their own due diligence, how the company intends to use the proceeds from the ICO,” ACCESS added. Investors must also scrutinise the company’s promoters, advisers, physical presence or lack thereof in Singapore, and track record. However, ACCESS warned that a company located outside of Singapore may present “practical legal difficulties in taking legal action against the company, or enforcing judgment against it.” Looking forward to the regulatory future of ICOs, Ismail paints three potential scenarios panning out: The first is a “doom and gloom” scenario wherein most jurisdictions place an outright ban on ICOs, the second is a “heavy-handed regulations” scenario in which regulations are “very prescriptive, closely modelled after securities regulations” that require prospectus requirements. The third is a “balanced and sensible regulations” scenario wherein regulators work closely with the industry to frame rules that are not too prohibitive but still offer high protection to investors. Ismail said the level of ICO issuer responsibility and amount of investor complaints on ICOs will likely play key factors in how heavily regulated token sales will become in Singapore and the rest of the world. “This is likely to be a quickly-evolving space. The outcome of ICO regulations will largely depend on the interplay of these drivers,” said Ismail.
Sasseur Reit’s Hefei Outlet
Is the worst over for Singapore’s embattled REITS? Rents have been in a three-year slump but analysts foresee a recovery.
he looming supply of new retail space to be installed in the next four years in Eastern Singapore is expected to pose a larger threat to the performance of the city’s struggling real estate investment trusts (S-REITS) than the spectre of online shopping giants, according to Moody’s Investors Service. Around 2.5 million sqft of retail space is expected to be developed until 2019, estimates Edmund Tie & Company. Such level of supply is expected to keep a recovery in rents to a minimum, Moody’s argued. After a mild 0.1% recovery the earlier quarter, retail rents once again fell by 1.1% in Q2, according to data from the Urban Redevelopment Authority, extending a persistent downward trend since Q3 2015. Players like Suntec REIT, CapitaLand Commercial Trust and Mapletree Commercial Trust which hold considerable assets in other property segments and geographical locations are more likely to weather through the weakness in Singapore’s retail market than their peers, Moody’s added. If investors are looking for bigger bang for their buck, the retail sector may not be the ultimate choice in light of weak 30
SINGAPORE BUSINESS REVIEW | september 2018
Around 2.5 million sqft of retail space is expected to be developed until 2019.
market conditions. Singapore’s REIT market offers a myriad of investment possibilities, being the sixth largest in the world and third in Asia with a market cap of US$53b as of February, according to Q Investment Partners. “The retail sector is not a preferred pick for now vs other sectors like Office and industrials who offer better growth visibility, which we believe to be a main driver for outperformance,” Derek Tan, vice president at DBS Vickers Securities said.The sentiment was echoed by Krishna Guha, equity analyst at Jefferies, who cautioned that REITs still need to be judged for their rental reversion, occupancy, gearing amongst other fundamentals. “At subsector level, we like industrial (business parks) and Forward S-REIT yield spread
Source: Bloomberg Finance L.P., DBS Bank
hospitality. We like office selectively while being cautious on retail,” he said. However, REITs remain attractive for most retail investors especially since they offer attractive dividend yields as they distribute at least 90% of the profits, according to David Gerald, president and CEO of Securities Investors Association Singapore (SIAS). “REITs too are improving their disclosure practices as can be seen in research announced today. Nevertheless, investors should have a diversified portfolio so as to mitigate risks, like growing e-commerce adoption especially for those invested in retail mall REITs,” he added. This was echoed by Jefferies’ Guha. “All REITs in Singapore have a gearing threshold of 45%. So, unless there is an external shock which significantly lowers valuation of properties, financial risk is limited.” Although S-REITs have only a number of levers to offset weakness in the retail sector, landlords could still deploy a number of strategies to eke out gains, Jefferies’ Guha added. “Retail landlords can change trade mix, tenant mix, lease tenor and structure, mall efficiency as well as lower operating expenses. If operating yields cannot be improved, SREITs can recycle capital by reinvesting, de-gearing or distributing divestment gains.” “In terms of longer term trends, brick and mortar retail will be supported by initiatives of landlords to keep malls attractive and relevant to shoppers, the preference of Singaporeans for physical shopping, and the country’s position as a regional shopping hub,” Saranga Ranasinghe, Moody’s assistant vice president and analyst said in a report.
Country report: Switzerland
Emilija Georgieva, Deputy Head of Mission Swiss Embassy Singapore, Roger Nagler, Country Manager Mövenpick Marché Singapore, Dr. Tom Ludescher, Chairman of Swiss Chamber of Commerce and Industry
Swiss companies leverage on Singaporean workers’ ethos
Currently, there are around 400 Swiss companies headquartered in Singapore.
oasting of a 28,000-strong workforce composed mostly of Singaporeans, Swiss companies in the city consider local talent to be their most valuable asset. Educated, multilingual, and with a good work ethic, Singaporeans are what keeps Swiss business booming in ASEAN. In fact, Singapore is Switzerland’s largest trading partner in the region, and Switzerland is amongst the top five investors in Singapore. With bilateral relations going back almost 200 years with now over 400 Swiss companies making their home in the city, the ties between the two countries have been going strong. Dr Tom Ludescher, Chairman, Swiss Chamber of Commerce and Industry (SwissCham), said that the relationship between Singapore and Switzerland go beyond business— the two countries share important values, such as reliability, integrity, and, most importantly, honouring one’s word. “These shared values, combined with a culture of continuous innovation make Singapore and Switzerland attractive for foreign companies and investors, as can be seen from the top scores in
Perhaps one day Switzerland and Singapore will even consider implementing the free movement of persons, including students, employees, and entrepreneurs.
international rankings on business friendliness and competitiveness. The long-term stability, predictability, and credibility give comfort for local talent and industries to commit themselves to their homeland and attract foreign talent and foreign investors,” Ludescher said. At present, Swiss companies in Singapore employ local talent for the banking, transport & logistics, specialty chemicals, biotech, insurance or reinsurance, and professional services industries. From the birth of Singapore in 1965, Swiss companies have been a constant employer and investor, sharing in Singapore’s economic success. Riding the Fintech boom Over the past years, there has been a positive track record in successful startups in both countries, particularly in the fintech space, increasing the opportunities for collaboration and innovation. Some examples of Swiss tech firms that recently launched in Singapore are Additiv, Appway, Netguardians, Squirro or Zuhlke Engineering in fintech or Entsia in insurtech. These startups are targeting the local market and often use Singapore as their
regional hub for Southeast Asia. With continued disruption in the digital space, traditional services and high-tech industries in both countries need to step up their game and embrace change. “As can be seen from the recent initiatives launched by MAS in the fintech area, such as establishing a ‘Regulatory Sandbox’ for fintech and insurtech experiments as well as having a supportive environment for the crypto economy and, particularly, initial coin offerings, Singapore has become a leader and frontrunner in creating a regulatory framework which will help fostering its position as a fintech, insurtech, and crypto hub of world reference,” said Ludescher. Swiss companies prize Singapore’s local talent also due to the high level of education in the city. According to Ludescher, both countries have a university landscape of world reference, combined with highly motivated and engaged people. In this regard, the SwissCham introduced the Swiss Business Award back in 2017 to recognise Singapore-based companies for their efforts in developing their local workforce. Last year, the SwissCham awarded Firmenich and this year, Mövenpick Marché. “And perhaps one day Switzerland and Singapore will even consider implementing the free movement of persons, including students, employees, and entrepreneurs. This would be a big step towards an even closer exchange of know-how and talent in both directions and allowing our people to have the most educational and inspiring insight into each other’s way of living and working,” Ludescher added. At present, the SwissCham in Singapore has an annual collaboration with the St. Gallen Institute in Asia, offering students from the University of St. Gallen HSG and the Singapore Management University SMU business consulting projects with its members, as part of the students’ courses to get a real business insight during their studies.
SINGAPORE BUSINESS REVIEW | september 2018
Country report: SWITZERLAND
Swiss excellence with a Singaporean touch
Hilti Singapore is set to bringing state-of-the-art digital solutions as an answer to local construction sector’s woes. VP Bank caters to its client’s individualised needs with top-notch advisory services.
hen Hilti first opened its doors in Singapore 50 years ago, no one could have predicted that the city-state would play a crucial role in the company’s global growth story. Hilti Singapore has grown from its humble beginnings to become a true leader in the domestic construction sector, driving innovation through cutting-edge products and services. “As part of the global company, Hilti in Singapore is very strongly connected and supported by strong global team and lead markets, such as Switzerland,” said Gavin Gui, general manager of Hilti Singapore. “We trace our roots to Schaan, Liechtenstein, where Hilti was founded in 1941 and where we have our global headquarters and Innovation Centre. Globally, we run a direct sales business model across 140 countries.” Groundbreaking technologies Hilti’s products and services are proof of its commitment to improving construction productivity and safety. In the past few years, together with its customers in Singapore, the company has been actively exploring faster and safer ways of doing construction projects. “All construction companies face double challenges of increasing labour costs and lower bidding price. Therefore, they badly demand for savings in operations. Such challenges lead to great opportunities for improvement in productivity and safety, which perfectly fit into what Hilti can offer,” explained Gavin. “This is why most of our premium drilling machines come with safety features to help prevent jobsite injuries. Also, our cordless power tools and dustless solution have in recent years become a health, safety, and environment (HSE) recommendation in many key projects in Singapore,” he added. On top all of these, Hilti also provides customers with its state-of-the-art Fleet Management solution. This is an all-inclusive service, which helps customers manage their inventory and maintenance of Hilti tools, reduce the risks of downtime, and, hence, save money and improve productivity. Hilti is also actively investing and developing construction solutions, using the Internet-of-Things (IoT) to connect
SINGAPORE BUSINESS REVIEW | september 2018
Gavin Gui, general manager of Hilti Singapore
services. “The technology is the enabler, but physical objects with digital information and people makes the difference,” Gavin noted. processes. Its latest product is the ON!Track “We understand that digital transformation Asset Management, which provides critical requires organisational change management information with a single click. and a focus on people. We set up a dedicated “ON!Track gives customers complete service team to offer clarity into what professional on-siteassets they have, “All construction analysis.” where the assets companies face double The company also are, and who is using them, and challenges of increasing interacts daily with more than 9,000 when the assets labour costs and contractors and need maintenance. lower bidding price.” engineering firms With this critical through its direct information at their sales team, engineers, customer service, fingertips, our customers can efficiently get Hilti Store, and Hilti Online. By building their assets where they need to be—keeping in-depth connections with its clients, Hilti their jobs on track and profitable,” Gavin said. has established itself as a market leader in construction, providing solutions for Strength in diversity fastening systems, power tools, and fire Apart from its innovative services, Hilti protection. is also proud of its elite workforce in Apart from its investments in manpower, Singapore. It has over 170 talented Hilti also remains committed to investing professionals from more than 25 countries, in infrastructure. Looking forward, Gavin with vast diversity in terms of academic is optimistic on Hilti’s future prospects in background, work experience, age, and Singapore and the wider region. gender. “Singapore is a strategic location “To celebrate our 50-years presence in for our talent development for local and Singapore, we will invest even more. We global leaders. We have exported dozens have established our regional hub, Hilti of Singaporean talents to our HQ and other Asia Pacific Pte Ltd, to accelerate Hilti’s markets. Singapore is also a fantastic development in ASEAN, India, Australia, and destination for the talents from other parts New Zealand, and build a modern Regional of Hilti world. Even in the downturn, we have Training Centre facility. With these, we are expanded our sales, engineering, and service ready to bring more global innovations and teams,” Gavin said. contribute more to the development of Through its committed professionals, Singapore’s construction sector,” he says. Hilti helps its customers ease into its IoT
Country report: SWITZERLAND
or over 60 years, VP Bank has been at the forefront of world-class banking and prudent wealth management. With its impartial and personalised services, the bank helps its clients make smart investment decisions. As one of the largest banks in Liechtenstein, VP Bank is committed to providing top-notch customised solutions for every client, offering tailor-made asset management and investment advice for both private individuals and intermediaries. It established its Asian subsidiary in Singapore in 2008. The Singapore branch provides specialised wealth management solutions and family office services for highnet-worth clients and professional asset managers. “VP Bank is committed to grow safely ahead in both Singapore and the Asian region, with 2018 marking a special year for VP Bank Group as we celebrate our 10th anniversary here in Singapore,” says Bruno Morel, chief executive officer, VP Bank Singapore. “Backed by a solid balance sheet and capital adequacy, VP Bank stands squarely behind continuity, independence and sustainability – just as how we have for the past 60 years,” he says. Top-notch financial solutions VP Bank is the partner of choice of its highnet worth clients, thanks to its unblemished reputation for providing top-notch advisory services. It is free from any conflict of interest as the bank itself does not supply investment products. Instead, it provides a full range of advisory services and offers tailored solutions in the areas of asset management and investment advisory services. “VP Bank is committed to offering a first-class individualised service that caters to the personal needs of our clients. We believe there is no one-sizefits-all solution for the needs of our clients. Each and every client is unique and deserves the very best,” says Christoph Mauchle, VP Bank’s head of client business and member of the Group Executive Management. “We are also highly flexible with our streamlined hierarchies where decisions are taken expeditiously, and direct contact with top management can be arranged with minimal red tape. Intermediary clients benefit from the direct access they have to the trading rooms in Singapore and Liechtenstein/Switzerland, which cover the key time zones for securities transaction purposes,” adds Morel.
The bank’s approach stresses the importance of advisors and specialists having personal contact with their clients, along with additional support from digital tools so that advisors can serve their clients even more effectively in today’s fast-paced business climate.
Singapore with a bang. For one, it will be upgrading its offering from subsidiary to branch. It will also be broadening its license from a merchant to a wholesale bank. The new structure will be implemented by 1 September 2018.
Spotlight on Asia The bank is also set to double its current Digitalisation at the forefront headcount of 50 across the intermediaries To further improve the quality of client and private banking segments within the care, VP Bank is focussed on implementing next three years. This year also marks the its digitalisation strategy. In 2018, these first time that VP Bank Singapore will measures will focus mainly on the client be collaborating with a local educational side, such as modernising communication channels and expanding the range of online institution through a knowledge partnership, in which VP Bank will collaborate with the offerings. A new e-banking system was also launched Business Families Institute at Singapore Management in May this year. University (BFI@SMU) “Automated and digital “ VP Bank is committed to present a panel in September processes to offering a first-class session 2018, titled Safely are employed individualised service Ahead - Towards A by the bank’s that caters to the Lasting Legacy beyond experienced and knowledgeable personal needs of our Wealth Transfer. “As a boutique staff to address clients. Each and every bank, we are clearly basic client client is unique and positioned as a needs, and also to deserves the very besT.” source of top-notch propose optimal financial solutions for solutions for a demanding clientele. more complex We do not engage in risky investment client needs,” Mauchle says. banking activities, nor do we offer retail To provide clients with even better banking services in Asia,” Mauchle says. We support, VP Bank introduced the new intend to recruit up to 40 new advisors in “ProLink” intermediaries platform, Asia. Plans are that the proportion of total which offers extensive round-the-clock information on all investment and regulatory Group revenues attributable to VP Bank’s foreign target markets will increase from matters. We will continue to devote the current approximate 30% to 50% – and considerable resources in this area, in the Asia will play a central role in this regard,” he years ahead,” he adds. says. VP Bank is celebrating its 10th year in
Bruno Morel, Chief Executive Officer, VP Bank Singapore (left) and Christoph Mauchle, head of client business and member of the Group Executive Management, VP Bank Ltd.
SINGAPORE BUSINESS REVIEW | september 2018
Healthy loan growth, stable asset quality, and well-capitalised balance sheets are tailwinds for the city’s banks.
Will banks suffer from the escalating trade tension?
Some also flagged potential dampening effects on investments and business sentiment as early as the second quarter of 2018.
ingapore’s commercial banking sector is firing on all cylinders, as seen from the strong Q118 results of DBS, OCBC, and UOB, and we are positive on the sector’s outlook over the coming quarters. Healthy loan growth, stable asset quality, and well-capitalised balance sheets are tailwinds for the city’s banks. Cause for optimism We remain optimistic on the prospects of the Singapore commercial banking sector over the coming quarters as it is likely to benefit from relatively healthy loan growth, stable asset quality, and robust capital adequacy. Indeed, Singaporean banks are performing well, according to Q118 results released by the city’s three biggest local banks, DBS, OCBC, and UOB. Their respective net profits grew by 26% y-o-y, 14% y-o-y, and 21% y-o-y to $1.5b, $1.1b, and $978b. The equities of these three financial institutions have also achieved strong gains, averaging 36.4% in terms of price increase over the past 12 months, and they remain on an uptrend. 34
SINGAPORE BUSINESS REVIEW | september 2018
A trade war between the two largest economies in the world will have a big, negative impact on Singapore.
Data from the Monetary Authority of Singapore showed that total credit extension via DBUs (representing loans denominated in Singapore dollars) expanded by 5.4% y-o-y in March (versus 5.6% y-o-y in December 2017), and we are forecasting credit growth to come in at 6.4% in 2018. Loans to businesses (which account for roughly 60% of overall credit) will continue to be the key driver over the coming quarters. Whilst growth in the manufacturing sector will likely moderate, the Singapore government’s expansionary budget for 2018 will likely provide considerable support, as the government remains committed to planned infrastructure upgrades to ensure that Singapore is able to maintain its competitiveness, Construction and building loans account for 18.5% of overall loans, and are likely to recover from the 0.4% y-o-y contraction in March as upgrading projects are rolled out over the coming months. In addition, the services sector continues to expand at a steady rate, supporting related loans. Indeed, Singstat’s Q218 Business Expectations
(Services Sector) survey showed that a net weighted balance of 8% of firms expect more favourable business conditions for the period from AprSep 2018 compared with Oct 2017Mar 2018 (versus 3% in the previous survey). Furthermore, Singapore’s property sector is showing some signs of picking up due to pent-up demand, and this is likely to provide support to housing and bridging loans, which account for 30.5% of overall loans (and more than 75% of all consumer loans). Indeed, the overall URA private residential property price index rose by 3.9% q-o-q and 5.4% y-o-y in Q118 (versus 0.8% q-o-q and 1.1% y-o-y in the previous quarter) Stable asset quality Singapore banks have largely moved past the issue of deteriorating asset quality due to the stress facing the oil and gas sector amidst a recovery in the global crude oil prices, and we expect non-performing loans (NPL) to remain largely stable over the coming quarters. According to the financial reports of DBS, OCBC, and UOB, the average NPL ratio for these three banks remain generally low, and fell to 1.57% in Q118 from a high of 1.64% in the previous quarter. With asset quality stabilising, this suggests that the amount of loan loss provisioning that banks have to set aside over the coming quarters will be lower, which should be positive for profitability. Indeed, the average allowances to non-performing assets declined to 85.4% in Q118 from 104.5% in Q217, as banks have also taken advantage of a switch to a new accounting standard that allowed banks to draw down funds from their general provision reserves to cover large allowances for certain soured loans. The risks to our banking sector outlook is weighted to the downside, mainly due to escalating trade tensions between the US and China. Singapore’s small and open economy makes it susceptible to changes to the global trade outlook, and a potential trade war could significantly dampen exports, economic and loan growth, and could also result in worsening asset quality. From BMI Research
Competence is our global language. Always with a local accent. The qualities our local clients value are to be found in VP Bank the world over. For you we are present in select locations, whose many benefits open up new perspectives. Working with partners who are familiar with the markets and the specific concerns of our clients.
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INDUSTRY INSIGHT 2: COWORKING SPACES
Even real estate giants are jumping in on the flexible workspace trend
Coworking boom has no end in sight as property giants launch their own spaces There are around 110-120 operating flexible workspace centres islandwide, and leasing demand is poised to hit 550,000 square feet in 2018.
ith Singapore easily being one of the most open markets in Asia-Pacific for flexible workspace arrangements thanks to a thriving startup culture and the government’s support for innovation and enterprise, leasing demand is poised to hit 550,000 square feet in 2018 as a growing number of corporate identities
SINGAPORE BUSINESS REVIEW | september 2018
Rising office rents are poised to fuel demand for coworking strategies
are jumping in on the coworking bandwagon. “The demand for coworking or flexible workspace—led initially by startups, freelancers, and tech firms— has grown substantially since 2015 as large businesses embrace the sharing economy,” Colliers International head of office services Duncan White told Singapore Business Review. No signs of slowing down There are around 110-120 flexible workspace centres in operation islandwide, with around three quarters situated in the central business district. The spaces occupy 3.9% of the premium and Grade-A office space or around 944,000 square feet of net lettable area, representing a 36% surge since 2016. Local and international operators alike are leaving no stone left unturned in rooting out the necessary
space to develop coworking setups amidst a booming demand for alternative work experiences. Assets like retail podiums and grade-B office buildings may even be repositioned to make room for coworking occupiers amidst limited land bank in the lion city and secured exclusivity clauses, White noted. The lion city’s rising office rents are similarly poised to fuel demand for coworking strategies with Grade A office space prices extending its climb at 1.3% QoQ in Q1 or at a monthly rate of $9.06 per sq ft. “Additionally, Singapore’s high rents will continue to stoke the adoption of coworking strategies due to sustained cost advantages,” said Sigrid Zialcita, managing director, Research, Asia Pacific for Cushman and Wakefield. “More and more, cost containment strategies will necessitate incorporating flexible working
industry insight 2: COWORKING SPACES Cost comparison: coworking office vs traditional office
arrangements to manage real estate footprint.” To avoid being outpaced, Singapore’s blue chip property developers are also jumping in on the coworking trend, observed Zialcita, with Mapletree Investments unveiling its coworking space called CoQoons, CapitaLand launching its own brand Flexi Suites. Keppel Land also established its own coworking brand Kloud whilst Ascendas-Singbridge’s has thebridge as its flexible workspace solution. “Coworking and Corporate Real Estate are stronger together,” Zialcita noted. “Establishing their own coworking offerings serves to preserve its revenue base rather than risk a seepage which will happen if a tenant bases part of its operations at a competitor’s coworking space,” she pointed out. When big players enter the fray As a growing number of operators aim to cash in on the heated coworking trend and jostle for market share, players are dedicating energy and resources to differentiating their concepts, space design, as well as the communities they support. For instance, there is Treehaus, which is Singapore’s first shared office with child-minding facilities. Paperwork at National Design Centre is similarly branding itself as the designer’s co-creation space boasting Virtual Reality equipment to provide tenants with 360-degree experience of how a design project will look like upon completion, according to Ong Choon Fah, CEO and head of research & consulting at
Edmund Tie & Company. “There is an increasing differentiation of the different operators, as they build out their coworking space to suit their segments and also adapt to the needs of their tenants,” noted Ben Eckblad, cofounder of workspace marketplace GorillaSpace.co. Multinational firms are also making dedicated efforts to redesign their workplaces in a bid to stay competitive against up-and-coming flexible workspace operators. “For most corporate occupiers, coworking has become a business solution, not just a real estate alternative; companies today realize that workspaces can be a tool to engage its workers and attract new talent,” said Zialcita. For instance, insurance firm Prudential Singapore’s new office, PRU WorkPlayce, features an open amphitheatre and collaborative work zone for employees. Unilever’s Level 3 in Mapletree Business City also serves as a base of operations for startups as well as a space where teams can visit and connect with companies and ideas they find interesting.“The quality of fit-outs is getting better. In the beginning, there was little attention paid to “quiet work” or furnishings. There is much attention paid to meeting rooms and phone booths. The quality is definitely much better than it was even a year ago,” observed Ecblad. A few other flexible workspace examples in the financial services industry include the LumenLab, a 7,800-sq ft innovation centre by
Ong Choon Fah
MetLife and OCBC’s The Open Vault, a 2,400-sq ft fintech innovation centre by OCBC bank. In retail, coworking spaces are also sprouting up as Justco opened its latest space in Marina Square Shopping Centre. Wework also has plans to unveil a space in Funan’s retail component in the coming months. “We can expect to see continued evolution of differentiated services and niches offered within the physical space, the membership community, and also the tech platforms offered by the operators,” White said. Against a backdrop of strong government support and eager market take up, the coworking trend in Singapore shows no sign of slowing down with total coworking stock driving 15% of new demand for premium office spaces in the island last year. Around 11 spaces are expected to be rolled out within the year or by 2019, said Edmund Tie & Company’s Ong. “Between them, we expect Justco, Wework and Regus to open six more spaces in the coming months,” according to Zialcita as the market matures toward consolidation and larger players contineu to ease smaller operators through M&A’s such as when WeWork acquired NakedHub. “Coworking is now almost a staple. With interest in the segment still strong, coworking operators have ample funding from investors; developers are also keen to establish strategic tie-ups,” she added. “What started out as a disruptor and an alternative to traditional offices is now a fundamental part of the commercial real estate market,” said White. Sandra B. Sendingan
JustCo Marina One West
LArgest coworking spaces 1. JustCo Marina Square
2. Distrii Location: 9 Raffles Place, Republic Plaza Amenities: wifi; phone; phone booth; print, scan, copy; phone answering; cafe; bathroom; drinks for sale; pantry; reception; waiting area; locker Number of hot desks: ~80 Price range: $500 for 40 hour minimum 6 lease per month
Location: 6 Raffles Boulevard, #03-308, Marina Square Amenities: wifi; phone; phone booth; print, scan, copy; wired internet; drinks for sale; pantry; reception; waiting area; locker Number of hot desks: ~100 Price range: $398 monthly
4. The Great Room Offices Centennial
3. JustCo UIC Location: 5 Shenton Way, UIC Building #10-01, Singapore 068808 Amenities: wifi; phone booth; print, scan, copy; phone answering; bathroom; drinks for sale Number of hot desks: ~70 Price range: $398 monthly
5. The Great Room Offices Ngee Ann City Location: 391B Orchard Rd, Level 22, Ngee Ann City Tower Amenities: wifi; phone; phone booth; print, scan, copy; wired internet; drinks for sale; pantry; reception; waiting area; locker Number of hot desks: ~70 Price range: Hot Office “Home” with $100 meeting room credits per month $750 7. JustCo Marina One East Location: 7 Straits View, Marina One East Tower, #05-01 Amenities: wifi; phone; phone booth; print, scan, copy; wired internet; drinks for sale; pantry; reception; locker Number of hot desks: ~60 Price range: $398 monthly 9. The Hive Lavender Location: Level 6, Vanguard Building, 1 Kallang Junction Amenities: wifi; IT support; phone booth; print, scan or copy; phone answering; cafe; 24/7 aircon; reception; waiting area Number of hot desks: ~60 Price range: $500 monthly Photos and data from gorillaspace, valuepenguin, coworking singapore
Location: 3 Temasek Ave, Amenities: wifi; phone booth; print, scan or copy; bars; bathroom; cafe; drinks for sale; showers; nap room; pantry; reception; waiting area; locker Number of hot desks: ~70 Price range: Hot Office “Home” with $100 meeting room credits per month $780
6. JustCo Robinson
Location: 120 Robinson Road, #15-01 Amenities: wifi; phone booth; print, scan or copy; server; bathroom; pantry; waiting area Number of hot desks: ~60 Price range: $398 monthly
8. JustCo Marina One West Location: 9 Straits View, Marina One West Tower, #05-07 Amenities: wifi; phone; phone booth; print, scan, copy; wired internet; drinks for sale; pantry; reception; waiting area; locker Number of hot desks: ~60 Price range: $398 monthly 10. Working Capitol Location: 1 Keong Saik Rd, Singapore 089109 Amenities: wifi; IT support; phone; print, scan or copy; phone answering; cafe; showers; pantry; reception; waiting area; locker; gym Number of hot desks: ~50 Price range: $255 monthly
LArgest coworking spaces 11. U Commune Suntec
12. UCommune Ayer Rajah
Location: 9 Temasek Boulevard, #07-01 Suntec Tower 2, Singapore Amenities: wifi; IT support; phone; phone booth; print, scan or copy; cafe; 24/7 aircon; pantry; reception; pool; waiting area; locker; gym Number of hot desks: ~50 Price range: $398 monthly
Location: 67 Ayer Rajah crescent #02-10/17, Singapore Amenities: wifi; IT support; phone; print, scan or copy; phone answering; cafe; 24/7 aircon; pantry; ping pong; reception Number of hot desks: ~50 Price range: $250 monthly
14. Collision 8
Location: 2 Science Park Drive Amenities: wifi; IT support; phone booth; print, scan or copy; phone answering; cafe; drinks for sale; showers; sit stand desks; nap room; pantry; ping pong; reception; locker Number of hot desks: ~50 Price range: $440 monthly
Location: High Street Centre #0808, 1 North Bridge Road Amenities: wifi; phone; phone booth; print, scan or copy; phone answering; wired internet; bar; bathroom on premises; cafe; drinks for sale; 24/7 aircon; pantry; reception; waiting area; lNumber of hot desks: ~40-50 Price range: $450 monthly
16. WeWork Beach Centre
Location: 3 HarbourFront Place HarbourFront Tower 2, Level 11 Amenities: wifi; IT support; phone; phone booth; print, scan or copy; ; wired internet; showers; sit-stand desks; pantry; reception; pool; waiting area; locker Number of hot desks: ~40 Price range: $480 monthly
Location: 15 Beach Rd, Singapore Amenities: wifi; phone; phone booth; print, scan or copy; bar; cafe; drinks for sale; sit-stand desks; pantry; reception; waiting area; locker Number of hot desks: ~30-60 Price range: $550 monthly 18. WeWork 22 Cross Street
17. WeWork Anson Road Location: 60 Anson Road Amenities: wifi; IT support; phone booth; print, scan or copy; phone answering; cafe; showers; sit-stand desks; pantry; reception; waiting area; locker Number of hot desks: ~30-60 Price range: $620 monthly 19. WeWork 71 Robinson Road Location: 71 Robinson Rd Amenities: wifi; IT support; phone booth; print, scan or copy; phone answering; cafe; showers; sit-stand desks; pantry; reception; waiting area; locker Number of hot desks: ~30-60 Price range: $620 monthly
Location: 22 Cross St, Singapore Amenities: wifi; IT support; phone booth; print, scan or copy; phone answering; cafe; showers; sit-stand desks; pantry; reception; waiting area; locker Number of hot desks: ~30-60 Price range: $520 monthly 20. WeWork Spacemob Ascent Location: 2 Science Park Dr, #02-06 Singapore Amenities: wifi; phone booth; print, scan or copy; wired internet; drinks for sale; sitstand desks; nap room; pantry; reception; waiting area Number of hot desks: ~30-60 Price range: $450 monthly
SINGAPORE BUSINESS REVIEW | september 2018
Do influencers really deliver ROI? Whilst influencer marketing seems like the next big thing, marketers who do not do their homework may run the risk of running their own campaigns and ROIs into the ground.
hen Singapore’s Ministry of Finance decided to promote their Budget 2018 campaign through young influencers on social media, they thought that the glitz and glam would do the trick. Far from it, the campaign backfired as the subject of serious financial planning did not quite fit in a curated Instagram feed showcasing holiday weekend trips, staycays, food splurges, and parties. Clara Low, marketing manager, Quorier, said that the topic of long-term financial planning was not taken seriously in Singapore because young people are not attracted to the idea of being associated with a government initiative. Whilst influencer marketing seems like the next big thing, Low said that marketers who do not do their homework may run the risk of running their own campaigns and ROIs into the ground. Marketers have been quick to jump in on the bandwagon called influencer marketing, as it has proven to create not only brand awareness, but also brand resonance, brand loyalty, and brand advocacy among target markets. Compared to physical store visits and traditional advertising through radio and TV, influencer marketing is the most cost-effective customer acquisition channel today. Relevance, reach and resonance Despite the financial planning blunder, the Singapore government was able to pull off their environmental campaign called #ClimateActionSG. Benny Chow, project marketing manager, Firefly Photography Pte Ltd, said that the campaign engaged many micro-influencers to spread the message of environmental awareness and government budget, generating a lot of buzz and resulting in greater exposure through mainstream media. Cat Williams, founder and CEO, Humanisation, said that influencers can be valuable if a firm has a clear goal in mind. As influencer marketing becomes more popular, influencers are also growing to be less transactional and more towards building-long term relationships with
Circles.Life successfully promoted “20GB for $20” by secretly engaging Singaporean duo Youtiao666
SINGAPORE BUSINESS REVIEW | september 2018
brands. To ensure that brands maximise the benefits of influencer marketing, Low said that marketers must keep in mind three things: relevance, reach, and resonance. For an influencer to be relevant, their personality, tone of voice, style, advocates, interests, and possibly even their worldviews should be aligned with one’s brand. She said that it is unthinkable for @PewDieDie to be flexing a skincare ad on his social media. Chow emphasised that brands must be careful not to use influencers just because they have a huge social reach, as the lack of knowledge in a particular field may result in devastating consequences like media backlash.
To ensure that brands maximise the benefits of influencer marketing, marketers must keep in mind three things: relevance, reach, and resonance.
“Marketers need to dive deeper into the numbers and understand that having a big following count doesn’t equal to influence and conversions. Dig through the comment sections, analyse the reactions and engagements, investigate if the followers are authentic and are not bots or paid followers. Also, do keep an eye out for sponsorship saturation - the last thing you want is an influencer to be labeled a sell-out and for viewers to be bombarded with sponsored ads,” Low added. In terms of resonance, marketers may benefit more from leading trendsetters, decision-makers and tastemakers who do not necessarily have the largest followings. For instance, Circles.Life successfully promoted “20GB for $20” by secretly engaging Singaporean duo Youtiao666 to vandalise a “competitor’s” out-of-home assets while challenging Singapore’s police to catch them on social media. Low said that this unique idea became viral in Singapore, increasing website traffic by up to 250x within just 24 hours. Furthermore, some of these influencers could be VS influencers who create content on what’s trending. Low said that marketers can often distinguish VS influencers through extremely diverse topics of sponsored ‘conversation’, from a tech review in one post to a commentary on the World Cup in another. Influencer marketing can indeed be influential, even on a brand’s ROI. Chow said that analytics is key, and the use of tools such as Social Baker is extremely important. Low added that marketers should avoid focusing on surface metrics such as likes and comments. “Employ the use of Google and Facebook Analytics and build up a list of tracking key indicators such as website traffic, leads, and conversions directed from the respective influencer. Simple methods like UTM parameters (short text codes pegged to URLs to track) are a good starting point in providing data,” she added.
EXCELLENCE Products that are manufactured in Singapore can be nominated for the Made in Singapore Awards.
SUBMIT YOUR ENTRIES UNTIL
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Eleonor Angeles firstname.lastname@example.org +65 3158 1386 ext 209
AWARDS FOR DESIGN EXCELLENCE Products that are conceptualised by a Singapore-based office but are manufactured outside the country, can be nominated for the Designed in Singapore Awards.
event coverage: business case studies awards 2018
Singapore Business Review unveils winners of the Business Case Studies Awards 2018
ingapore Business Review paid tribute to outstanding business solution providers at Business Case Studies Awards 2018 held at the Sheraton Towers Singapore on 21 June 2018. Now on its third year, Singapore Business Review’s Business Case Studies Awards lauded companies that pioneered unique and revolutionary solutions, and achieved greater efficiency and solved various problems for their clients. The winners were chosen based on Uniqueness & Innovation, Effectiveness & Impact, Dynamism, and Client Feedback.
Syafiq Yussoff of Riverwood Pte Ltd
Singapore Business Review congratulates the following winners: Enable Business Pte Ltd’s human resource management platform QuickHR has provided clients with a cost-effective solution for their hiring process. The company gives clients flexibility and scalability by helping HR departments focus on less paper, more people. QuickHR can automate a company’s entire HR workflow with a few mouse clicks via its extremely user-friendly interface. Clients are also able to allocate funds to other needs instead of upgrading storage infrastructure every year because QuickHR is cloud-based. This won QuickHR the Human Resource Consulting Case Study of the Year award. Zendesk won the Customer Support Solution Case Study of the Year award for its customer service software solutions for Circles.Life. Zendesk’s omnichannel strategy aided Circles.Life to achieve its vision of giving power back to the customer by allowing them to choose what channel is most convenient and best fits their needs. Zendesk’s omnichannel strategy includes Zendesk Support, Guide, Chat, Message, and Answer Bot. The firm does not trainsagents to specialise in a particular channel. Instead Zendesk trains agents across various channels and products. Vinculum Group’s flagship product Vin eRetail is a cloudbased order and warehouse management software that allows brands and retailers to automatically list their products on marketplaces in over 30 countries. Vinculum helped automate Riverwood Integrated Logistics Solutions’ near-manual operations and warehouse processes. It implemented Vin eRetail for order management and warehouse management and configured Riverwood’s systems to allow B2B and B2C eCommerce order fulfillment, providing the firm an efficient way to scale domestically and internationally.
Vinculum Group’s case study presentation
Enable Business’ case study presentation
Zendesk’s case study presentation 42
SINGAPORE BUSINESS REVIEW | september 2018
Zendesk with Client Circles.Life
Venkat Nott of Vinculum Group
An Li Shin of Enable Business Pte Ltd with Sukhveer Bajaj
Tom Blackman of Zendesk with Megan Yulga of Circles.Life
Vinculum Group with Client Riverwood Pte Ltd
Enable Business Pte Ltd with Client SINGAPORE BUSINESS REVIEW | september 2018
Customer Support Solution Case Study of the Year
Circles.Life, giving power back to the customers as the region’s first fully digital telco
Zendesk’s customer care solutions boost the rapid expansion of Circles.Life With Singapore’s fourth telco’s aggressive expansion plans, Circles.Life needed all the help it could get in keeping up with burgeoning demand and expectations of its customers.
art of Circles.Life’s vision of giving power back to the customer was to allow them to choose what channel is most convenient and best fits their needs. This is where Zendesk’s customer service software solutions came in. Zendesk’s omnichannel strategy, including Zendesk Support, Guide, Chat, Message, and Answer Bot, supports agents across channels and products instead of requiring them to specialise in a particular channel. Onboarding Circles.Life’s Zendesk agents, who are based in Singapore and the Philippines, takes only two weeks — one week for learning about Circle.Life’s own products, and another on Zendesk’s. Circles.Life marketing manager, Megan Yulga, said Zendesk’s fast onboarding time meant the telco could launch in new markets very quickly. “Everything we have is digital, from our customer touch points to our onboarding, and the way we engage with our customers and allow them to manage their subscriptions through our mobile app,” she said. “With Zendesk, we can set up in a matter of weeks and months, versus years.” Circles.Life head of Customer Service, John Epok Pascual, recommended Zendesk and has been using Zendesk for customer support from day one. “Zendesk is easy to use because it’s been designed for the agent,” Pascual said. 44
SINGAPORE BUSINESS REVIEW | september 2018
“That’s one of the great parts about Zendesk—it’s simple, not only to use, but also to configure. Making changes is straightforward, which allows us to derive the most value from it,” he added.
Circles. Life’s clients are heavy users of Zendesk Chat with 65% of the questions coming in through live chat.
Providing a great digital experience Benefits of the Zendesk omnichannel support solution include saving costs and gaining the ability to keep customer data consolidated and readily available to agents. The efficiency of being recognised at each contact also does not go unnoticed by customers. “We want to provide a great digital experience for our customers, and we see Zendesk as a great fit for our customers and our support experts on the backend as well,” said Pascual. Circles.Life’s customers are heavy users of Zendesk Chat, with 65% of the questions coming in through the live chat platform. The rest of the volume is a mix between email and social media messages. Agents also carefully monitor Answer Bot to make sure it captures the most effective answers from Zendesk Guide for customers. “Having insights integrated into one system is extremely helpful for the customer experience,” said Tom Brown, Circles.Life Customer Service operations manager. Brown explains Answer Bot resolves about 10% of customer questions
Customer Support Solution Case Study of the Year coming through the email channel and saves 50% on costs per question over a live agent answer. He also said that Zendesk saves them from having to worry about integrating multiple systems. Circles.Life also tries to assist customers in helping themselves first using Answer Bot. “We want to make our selfservice options as powerful as possible. We invested a lot of time into the guide articles, and they’re constantly refined and reviewed,” said Brown. This effort pays dividends with the resulting ticket deflection the team sees with Answer Bot. “The more well-written the articles are, the more customers will get their answer without having to speak with someone, which is a win for both parties,” explained Brown. “With Zendesk, we’re able to get an overall view on how happy our customers are,” he said. Support philosophy centered on customer needs “Everything is refined based off what we know about the customer journey, and what they need to know to proceed,” said Yulga. “Everything is taken and reviewed under a microscope, and it all goes back to providing a more refined customer experience,” she added. Circles.Life Customer Service operations manager, Tinesh Raj, said they closely monitor the quality of their support to ensure they are putting the customer experience first. The team maintains an email SLA of three hours, a chat SLA of 60 seconds, and a first response for social media messages of 22 minutes. Circles.Life has also raised its customer satisfaction benchmark at 90%. The company aims to uphold an NPS score of 54 as well, which is well above the Singapore industry average of -25. “Not only is customer satisfaction important, but we also monitor whether the interaction fits the way we want to communicate with our customers. There will be times when what the agent says will be in line with the company’s policies, but would not be the best for the customer,” said Raj. Aside from these, the telco uses several apps with their support: Time Tracking to monitor time spent on tickets, Quickie to organize ticket views, Answer Suggestion to suggest relevant content for agents to give customers, and Linked Ticket to connect tickets about the same topic. Tymeshift, meanwhile, is particularly useful for managing agent schedules and performance. Triggers and macros also come in handy to alert customers when tickets are answered, and auto-fill answers for agents. Brown said working with Zendesk has been fantastic for Circles.Life, both on the agent and customer side. “Whether it’s a small technical question or throwing around ideas for a bigger project, we always get swift and knowledgeable help from Zendesk. Our relationship is very good,” he said. “Zendesk is such an easy tool for agents to work with. It’s really been developed for them—it’s fluid, it’s simple where it needs to be, and it’s powerful when it needs to be.”
Reduce friction with software that’s designed to increase speed and efficiency—and turn your team of agents into experts.
Scaling is easy because Zendesk works right out of the box, integrates with other tools, and expands to fit your business.
Unified suite of products
endesk is a customer-service platform designed for companies that want to create customer relationships that are more meaningful, personal, and productive. Its suite of products are not just simple, but more importantly, functional. This means taking design elements that people have grown to expect from consumer software and incorporating them into an easy-touse platform that simplifies the tough work of customer service. Founded in a loft in Copenhagen, Denmark in 2007, Zendesk is based in San Francisco, California and currently serves over 119,000 customers in 150 countries. Angel investor Christoph Janz provided Zendesk with $500,000 in June 2008. The company then moved to San Francisco after receiving $6 million series B funding from Charles River Ventures and Benchmark Capital. From there, Zendesk began its rapid expansion. The customer service company acquired Singapore-based live chat software firm Zopim Technologies Pte Ltd in April 2014. Zopim Technologies Pte Ltd soon became Zopim Premium Live Chat. Zendesk debuted with an initial public offering (IPO) price of $9 per share in May 2014. It further expanded its portfolio by acquiring We are Cloud SAS, the firm that created BIME Analytics software. BIME Analytics is the core of Zendesk’s omnichannel platform, allowing clients to access its products using a shared customer data platform.These products include Zendesk Support, Guide, Chat, Message, and Answer Bot. Zendesk’s platform is available in both mobile and tablet. The company even launched the Networked Help Desk initiative in 2011, which aims to create an open standard for sharing data between separate customer support apps. Zendesk also integrated SurveyMonkey and MailChimp to support surveys and email campaigns. Through its suite of products, Zendesk offers broad customer service expertise and deep product knowledge to help clients deliver a differentiated customer experience, ensuring that its solutions would have a strategic impact on the business. SINGAPORE BUSINESS REVIEW | september 2018
Human Resource Consulting Case Study of the Year
Human Resource Consulting Case Study of the Year
Optimizing HR one click at a time
The big shift: QuickHR’s ‘less paper, more people’ solution QuickHR presents users an extremely user-friendly interface that can automate any company’s entire HR work with a few mouse clicks.
ingapore’s Saintmarc South East Asia’s old server-based human resource platform made hiring new employees a tedious process. Not only was its antiquated system inflexible, it also limited the company’s growth and profitability. Following the move to go digital, Saintmarc adopted QuickHR, a cost-effective solution that has helped boost the company’s overall productivity. Chris van Dompselaar, SaintMarc’s head of finance and human resource noted that QuickHR’s cloud-based system has made HR management easier and more convenient for the company. “Our previous HR platform was server-based in the office. Once a payroll mistake has been made, we have to restart the process all over again.” Sukhveer Bajaj, QuickHR’s chief executive officer said that its HR management platform is a solution ‘that anyone can master’. “This is especially helpful,” Bajaj said, “for companies like Saintmarc that has a small HR team. In many SMEs that we have served, resources are often limited and it’s usually a ‘one 46
SINGAPORE BUSINESS REVIEW | september 2018
I have access anywhere I need. If there is a need to extract certain data, I can do it anytime and anywhere.
man show’. You’ll be surprised to see that there are even larger companies with a significant number of head count who operate with a small HR team.” Less paper, more people As a cloud-based Software-as-aService (SaaS) solution, QuickHR gives clients the ‘flexibility and scalability’ to run their business. By hosting its data on Amazon Web
Disrupting HR departments, one solution at a time
uickHR is a disruptive tool here to help HR departments focus on less paper and more on their people. Through a cost-efficient, user-friendly and people-centric model, QuickHR ensures that businesses can go digital without a steep learning curve. With a few mouse clicks, businesses can now remove paper from the equation and focus on their most important asset—its people. QuickHR’s cost-effective programme allows businesses to invest in other more pressing needs. QuickHR even allows companies to monitor and manage their employees anytime, anywhere, allowing flexibility and efficiency in allocating tasks and projects.
Services (AWS), the largest cloud infrastructure in the world that’s secured with multi-tier encryption technology, QuickHR also ensures that clients get to enjoy a secured solution at a low cost. By going paperfree, Bajaj said that “HR departments can now focus on less paper, more people.” “It doesn’t matter if you’re just an admin in your start-up or a HR Director in a large corporation; as long as you use QuickHR, you will be able to solve all of your HR concerns,” he expressed. Since QuickHR is cloud-based, this has given Saintmarc South East Asia the freedom to allocate funds to other needs instead of upgrading storage infrastructure every year. “Such infrastructure is rigid, expensive and security can be a concern. Once the storage space is used up, businesses would have to spend more money to purchase more information storage space,” explained Bajaj. QuickHR’s built-in payroll module also gives it an edge over other similar HR management systems. Besides an extremely user-friendly interface, it is also integrated with awardwinning accounting software such as Xero and QuickBooks Online. QuickHR now offers an all-in-one management solution that allows clients to use it for more than just HR. It also has an in-built CPF calculator, auto computation of allowances, deductions, overtime pay, basic salary, gross salary, funding, and donations.
The HR management platform is hosted on Amazon Web Services (AWS), the largest cloud infrastructure in the world also used by corporations such as Instagram, Netflix, Hulu, and Mcdonald’s. With AWS’s SSL encryption and QuickHR’s multi-tier encryption technology, company data is secured and stays compliant with the PDPC Act.
Enabling companes with a safer and more secure solution
SOFTWARE SOLUTIONS Case Study of the Year
Software Solutions Case Study of the Year
Vinculum is a global software company, featured in Gartner’s Magic Quadrant and other global research reports
Brands, retailers can reach 30+ countries in one click Vin eRetail is the software of choice for leading logistics providers in Asia.
long with traditional shopping channels, marketplaces have emerged as a channel of choice for many consumers. Today, customers shop on both offline and online channels for their brands. To address this need, brands are looking for efficient ways to scale domestically and internationally by listing their products on popular marketplaces globally. They face challenges in making their product catalogs accessible, due to the varying requirements set forth by marketplaces for product attributes, image definitions and naming conventions. Global reach with a single click Vinculum’s flagship product Vin eRetail is a cloud-based order and warehouse management software. Vinculum also works on product enrichment and automated listing with their PIM (Product Information Management) solution. It allows brands and retailers to maintain data consistency across channels and automatically list their products on marketplaces in over 30 countries.“We have also created the automated listing of product catalog
Our WMS system helps automate the warehouses for brands, retailers, and third-party logistics providers (3PLs).
which helps companies to ‘create content once’ and publish it across the sales channels globally. The listing tool automatically resizes pictures, changes resolutions and retrieves templates for each marketplace and push them directly to the marketplace. This facility addresses the time consuming and an often difficult challenge of making a product catalog and provides a serious ‘time to market’ advantage,” says Venkat Nott, CEO & founder, Vinculum Group.
Riverwood scales up operations with Vinculum
hen Vinculum first worked with Riverwood Integrated Logistics Solutions, it had to address near-manual operations and automate Riverwood’s warehouse processes. To do this, it implemented Vin eRetail for order management and warehouse management and configured Riverwood’s systems to allow B2B and B2C eCommerce order fulfillment. Riverwood’s productivity improved thanks to better inventory control and improved turnaround time in servicing orders. Riverwood also enjoyed better control over operations, as the integrated sales channels and last-mile delivery allowed end-to-end visibility of the supply chain.
Another deterrent to selling in multiple countries is to address the Marketplaces’ stringent SLAs for time bound deliveries, which requires a model for local deliveries. Today’s customers also like to track their orders until they receive their goods. This makes it imperative for brands to either have their own operations or have local 3PLs as partners for last mile delivery that can be tracked. Vinculum has created a network of brand distribution companies, logistics solutions providers and sales channels, which allows brands to work out multiple business models and do cross-border sales. Vin eRetail is the software of choice for leading logistics providers such as DTDC India, LBC Philippines, Lion Parcel Indonesia etc and Brand Distributors like On Point in Vietnam. Using Vinculum’s software, third-party logistics companies can easily fulfill orders from marketplaces without making any major change to their existing systems. “We enable 3PLs to fulfill orders from marketplaces, brands and retailers. Our WMS system helps automate the warehouses for brands, retailers, and third-party logistics providers (3PLs). “Our key differentiator is the ability to fulfill both B2B and B2C orders. Leading 3PLs across the globe have experienced enhanced productivity, inventory management efficiency and order fulfillment accuracy after using Vin eRetail WMS,” says Mr. Nott.
“We appreciate Vinculum’s proactive approach and ability to suggest improvements to a prospective solution on both software and business levels,” adds Syafiq Yusoff, CEO of Riverwood. “With Vinculum, we can not only scale easily but grow our business quickly!” To know more about Vinculum, visit www.vinculumgroup.com
Riverwood is an integrated logistics provider for companies like DHL, Amazon Prime Now & more
SINGAPORE BUSINESS REVIEW | september 2018
Improving transparency of short positions Traders are required to report their short selling positions through MAS’ new online portal SPRS.
n 28 May, the Monetary Authority of Singapore (MAS) announced that it is requiring investors to report their short positions and short sell orders in securities that are listed on the Singapore Exchange (SGX). The rationale behind the new rule, which will take effect on 1 October this year, according to MAS, is to improve the transparency on short selling activities in the securities market and enable investors to make more informed trading decisions. What’s the new rule all about? Investors who are engaging in trading activities of at least 0.2% of total issued shares or units or at least $2m in securities listed on SGX are required to report to MAS through a new online portal, the Short Position Reporting System (SPRS). In line with transparency and information dissemination, MAS noted that it will publish aggregated short positions of each security on Wednesday of each week.“The new rules will also provide statutory backing to SGX’s trading rules which already require securities brokers and banks to flag all investor short sell orders to the exchange,” according to MAS, adding that there will be no change to the current arrangement for investors to inform their brokers when they submit short sell orders.
The rule basically applies to both primary and secondary listings on shares. Some of the products that will be affected by the new rule from MAS include shares, units in a business trust, and units in a real estate investment trust (REIT) that are listed on the SGX, according to analysis from Allen Overy. The rule basically applies to both primary and secondary listings on shares. Kai Loon Loh, counsel at Ashurst Singapore, said in a company paper about the new MAS ruling that there remain some clarifications, and interesting questions, as to whether stapled securities are covered by the Short Selling Regulations.“For example, if a stapled security consists of a unit in a REIT and a unit in a business trust, one would expect the stapled security to be caught by the short selling rules,” he noted in the company paper. “However, if the stapled security consists of a share and a note, then it becomes less clear-cut.” “Accordingly, where an investor has other persons making trades on his behalf, he remains responsible for reporting the short position although he may delegate the task to these other persons,” the Allen Overy analysis pointed out. “Unlike the requirement to disclose short orders, there is no exemption for market makers.” But when should these investors and registered representatives report these short positions and short selling activities? According to Allen Overy, the reporting of the short position must be done within two working 48
SINGAPORE BUSINESS REVIEW | september 2018
A new online portal is dedicated for the reporting of short positions
days after the position day. Ordinarily, therefore, this will be the following Tuesday, but it depends on the actual position transaction.
Kai Loon Loh
Preparation As MAS’ new rule will only take effect at the beginning of October this year, affected firms and stakeholders will have at least a month to prepare for the repercussions in their operations and business dealings. According to Ashurst’s Loh, Singaporean businesses and firms can prepare by focussing on various action points and implementation decision-making processes. These include working out when is a sell order a “short sell order” and how to determine “short positions”; working out how to perform the relevant calculations to determine whether the short position threshold has been breached; applying to the MAS to be registered as an account holder of the SPRS; and having in place the operational processes to monitor and disclose short sell orders/report short positions in a timely fashion. It will also be extremely helpful if Singaporean businesses can start considering whether to disclose/report at a trading desk level, fund manager level, or trust level (as applicable) or on an aggregate basis, whilst setting up the infrastructure to report short positions, or creating the necessary user accounts like how many and at what level, for instance, and familiarising with the functionalities of the SPRS to avoid confusion and errors. Whilst the rationale behind the MAS ruling was straightforward in a sense that it aims to improve transparency in the securities market in the city-state, not everyone is convinced that it makes life easier. President of the Society of Remisiers Jimmy Ho, noted in a separate interview, that the new requirement presents a hassle to investors because it doubles their reporting work since, according to him, they already report to SGX— questioning the need to report to MAS and presenting the case of why can’t the two organisations be linked in their systems instead.
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