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asia’s art season WHAT’S NEW FOR ASIA’S ART MARKET


dislike gold

banking on

better times RICHARD BRANSON



re p ort

MICA(P) 244/07/2011 KDM No: PPS1645/3/2008



FROM THE EDITOR SBR strengthens its presence in the industry

Publisher & EDITOR-IN-CHIEF Tim Charlton Assistant Editor Jason Oliver Art Director Jane Kristine Cruz

Two exciting bits of news passed the Singapore

Editorial Assistant Queenie Chan

Business Review Magazine editor’s desk this last

Media Assistant Daniela Gujilde

month. The first was that we were again voted the

Editorial Assistant Alex Wong

local business magazine of the year by marketing


directors and advertising agency leaders polled by Loren Laylay

the respected trade magazine Marketing. This is

the second year in a row that we have won this

Rochelle Romero Allan Andrada

accolade and we are grateful for the recognition from the industry.

The second is that the website for our publication,, has now surpassed an average of 65,000 monthly unique visitors, and this has been ADMINISTRATION Melania Ticman Advertising Editorial

achieved in less than two years. We are adding staff for our online website and hope to cross the 100,000 unique visitors mark later this year - which is my way of saying that if you as a reader of our print magazine haven’t been to our website, please visit it.

SINGAPORE Charlton Media Group #06-09 E, Maxwell House 20 Maxwell Road Singapore 069113 +65 62237660

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11:05:28 AM

One unique feature of the website is that we do accept professional contributions about the Singapore economy and each one of those is being read by an average of 1,500 people, making the website a very important clearing house for ideas about Singapore and business. Some articles are even being read by over 10,000 people. If you feel you have something of value to our readers please do get in touch with Nikki at with your ideas. All the best

Tim Charlton

Average audited issue circulation 13,152 copies

Can we help? Editorial Enquiries If you have a story idea or just a press release please Email: and our news editor will read it. For a personal message to the editor put the word “Tim” in the subject line. Media Partnerships Please Email: and put “partnership” on the subject line and it will forward to the right person. Subscriptions Email: Singapore Business Review is published by Charlton Media Group. All editorial is copyright and may not be reproduced without consent. Contributions are invited but copies of all work should be kept as Singapore Business Review can accept no responsibility for loss. We will however take the gains. Sold on newstands in Singapore, Malaysia, Hong Kong, London and New York *If you’re reading the small print you may be missing the big picture 

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30 ANALYSIS Should investors fear or face

COVER STORY Asia’s new artist of 2012


the dragon?

35 Will unsolicited calls and

26 Asia’s new artists of 2012

Consumers may be found cheering once the Personal Data Protection Bill takes full effect.

Is Asia set to be home to visual feasts and great galleries?


42 Asian luxury sales soar despite


The birth of 2012’s dragon ushered weak growth in America, political unrest in the Middle East, and a debt crisis in Europe. Should investors risk getting burned?

34 Will Singaporeans finally be

the global economic crisis

Statistics shows that a crunch does not mean a plunge in splurging.

30 Should investors fear or face the

messages finally stop?

Published Bi-monthly on the Second week of the Month by Charlton Media Group #06-09 E, Maxwell House 20 Maxwell Road 4 SINGAPORE BUSINESS REVIEW | APRIL 2012


24 Reputation vs reality

REGULAR 36 Legal Briefing 48 Life & Style 50 Numbers



14 Private banking with Asia’s

new rich

10 Singaporeans dislike gold 11 Banking on better times

preferred over foreign workers?

With the policy on reducing inflow of foreign workers, it may be probable.

18 7 tips on how to destroy employee

17 Bringing romance back to the


For the latest business news from Singapore visit the website


News from Daily news from Singapore Latest news from top companies most read TELECOM & INTERNET

SingTel layoffs part of a lean and mean strategy? A renewed focus on core competencies seems to be the driving force behind its new 500-staff retrenchment. “In Singapore SingTel was in the spotlight after announcing it was laying off around 500 staff as part of a restructure. But they will be offered jobs at a Chinese subcontractor to SingTel instead,” IG Markets reported in its evening update. TELECOM & INTERNET

M1 to raise prices of 4G services Retail users may also avail of these services come 2H12. According to CIMB, M1 noted no competitive flareups in the mobile space. Instead, it has withdrawn unlimited data offering on 3G services to customers, hoping to better monetise data traffic.

According to CIMB, DBS’s GTS Head Tom McCabe explained why the business became a key growth driver for the group. GTS contributed 14.2% of 2011 group revenue and 15.2% of PPOP. The change started in 2010 when management realigned its sales focus, workflows and processes; recruited


Citi, JP Morgan and StanChart losing to DBS in SME transaction banking: CIMB CIMB claims DBS’ transaction business which account for 14% of revenue is growing at the expense of rivals. 6 SINGAPORE BUSINESS REVIEW | APRIL 2012

talent and deployed new technology. RETAIL

Singapore posts deteriorating consumer confidence Singaporeans showed strong declines in consumer sentiment compared to the previous six months. According to a

release, consumer confidence among developed markets in Asia/Pacific has dropped as concerns about slow growth spread across the region, according to the latest MasterCard Worldwide Index of Consumer Confidence. AVIATION

Singapore Airlines ranks 14th in Asian monthly carrier performance Only 82.92% of its flights were on time in March relative to better-performing Japanese and regional airlines. J-Air topped the monthly rankings with 91.58% on time flights, which are described as flights taking off with less than 15 minutes delay. Japan Air muter and Hokkaido International Airlines rounded up the top three, according to a new report from FlightStats.

HR & Education

2 in 3 Singaporeans polled strongly support foreign worker reduction policies: survey The government’s moves to reduce foreign hires received broad support in a new poll. Only 68.1% agreed or strongly agreed that it is necessary to reduce the inflow of foreign workers. Meanwhile, just 69.4% were in favor of introducing a calibrated reduction in Dependency Ratio Ceilings in the manufacturing and services sectors. These two polices, which were announced during the Budget 2012 announcements last month, received the least amount of support from poll respondents, according to REACH in a recent survey of 868 respondents aged 18 above.

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Manchester Business School is the first UK business school, with global presence in Singapore, Manchester, Miami, Dubai, Shanghai, Hong Kong and Rio de Janeiro. Study at Raffles Place for this top international MBA tailored to suit the needs of middle to C-suite level professionals, with about 35% company sponsored by MNCs here. For a truly global experience, we offer two sponsored trips to any of our international centres and a Global Careers Service for professional development and international career opportunities. Enquire about our prestigious MBA and DBA programmes: mbaenquiries@mbsw. or call 65384454

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FIRST overall discretionary spending among 14 Asia Pacific markets in 2010 was US$1,074 billion and this is projected to grow significantly in the next five years. “This is reflected in the card ownership and spending patterns of the affluent segment,” he added.

Temasek vs Khazahna Temasek Holdings has been the undisputed grand-daddy government owned holding company for banks in Asia. It owns a majority stake in DBS, 18% of Standard Chartered and a chunk of UBS, among others. But now it may be in for some competition as Malaysia’s government backed sovereign fund Khazahna surprised everyone when it quickly upped its stake in Malaysia’s CIMB from 1% to 29.9% in March. The move caught analysts by surprise, and it may just be the beginning of a bigger plan for both CIMB and also Khazanna’s interest in the group. Sources said the increase in ownership is part of Khazanah’s strategy of seeking new sources of growth. It could also be a prelude to a larger objective by the sovereign wealth fund that sees CIMB as a core competitive asset. CIMB is included in Khazanah’s broader strategy of rebalancing its portfolio to conform with current market conditions. CIMB Group claims to have the widest retail branch network in ASEAN. Khazanah managing director Tan Sri Azman Mokhtar said early this year that the longer term aim for Khazanah and its subsidiaries was to drive them to become regional champions. CIMB is the second largest bank in Malaysia after Maybank, and is on track for record profits this year as it looks at more acquisitions in Asia, the most recent being the RBS assets announced in March.


Singaporeans dislike gold, preferred platinum


he world may be in the thrall of gold, but in Singapore it is another precious metal that people crave. Platinum, in the form of a credit card, has well and truly replaced the gold card in Singapore, and is the colour held by 71% of Singaporean credit card holders, according to a survey by HSBC. This represents a 3% growth since 2010 and cements Singapore’s position as the platinum credit card capital of Asia. By comparison, in Hong Kong, just 41% of credit cards issued are platinum. Singaporeans’ surging card takeup But the credit card bingeing doesn’t stop there, with Singaporeans also topping the Asian credit card leagues with an average of 3.3 cards per person, compared to 2.7 in Hong Kong and Taiwan, according to HSBC. According to Singh, MasterCard’s latest research on the affluent segment shows that

Asian credit card leagues with an average of 3.3 cards per person

Burgeoning credit card spend Paul Arrowsmith, head of retail banking and wealth management at the bank’s Singapore office said the survey points to an emerging trend towards an increased take up of platinum cards in the Singapore market. And in spite of a poorer economy, or perhaps because of it, Singaporeans increased average monthly credit card spending a whopping 19% over the previous year to US$1,020 a month, again well ahead of Hong Kongers who spent an average of just US$730 a month. Only Australians spent more at US$1,320 a month in 2011. One interesting trend noted in HSBC’s survey was that Singaporeans are tending to shy away from merchant specific installment plans, which dropped from 34% to 28% in 2011. HSBC’s survey also showed increasing numbers of Singapore respondents intend to apply for a new card. This has gone up from one in ten (11%) to almost one in five (17%). Attractive rewards programme (46%) is the key criterion for Singapore respondents in selecting their preferred new credit card, followed by attractive usage benefits (17%), attractive welcome gifts (15%) and annual fee waiver (14%).

FIRST We forecast loan growth to move up to 8% in 2013E

Banking on better times


ingapore’s domestic bankers have some reason to cheer with bad loans officially at a bottom and some room for new loans to foreign companies now unable to get funding from European banks. But they still face a tough time growing profits because with interest rates so low, there is little wriggle room to their net interest margin, which is the difference between their borrowing cost and lending rate. So with little room to increase net interest margins, loan growth will be the main hope for banks in 2012. In the final three months of 2011 DBS was only able to increase loans by 4.9%, compared to 2.5% at UOB and 4.5% at OCBC. Interestingly of the big three banks, only UOB was able to actually cut its operating expenses by 1% for the same period, whilst DBS and OCBC continue to see their costs increase. So what can we expect for the rest of 2012? Loans will probably only grow

in the single digits or low teens, compared to record 25-28% levels seen in 2011. Macquarie Bank analyst Matthew Smith notes that last year’s lending binge was impressive, and unprecedented in the post AFC period. “Our initial forecast was in the area of 10-12% at the start of the year. The fact that it came in at 27% YoY for the aggregate sector in 2011 gives us plenty of room for pause in trying to gauge how it will go this year. However, we think a repeat of last year’s parabolic rise is not likely. We forecast loan growth to move up to 8% in 2013E, with more than a little uncertainty on this number,” he said. One thing the banks have been doing is rapidly reducing their exposure to European bank debt. UOB, for example, cut more than half a billion dollars in its portfolio and is now exposed to just $600 million. Some of the banks are also struggling to increase loans in Singapore which helps to explain the rush to buy banks

in overseas markets, such as DBS’ proposed $6.5 billion purchase of Indonesian Bank Danamon. OCBC, for one, continues to lose market share in Singapore, with Credit Suisse noting the bank grew its Singapore loan portfolio by just 0.1% in the final quarter of 2012. So where will Singapore lending come from? Macquarie’s Smith argues there is still room for growth in residential lending. “Overall, lending in Singapore should remain bolstered by the property market, as new projects coming on line and drawdowns of previous commitments are likely to provide plenty of financing opportunities despite the property market slowdown,” he notes. “We see this as healthy to the extent that residential property prices remain within our property team’s expectations. Property analysts Tuck Yin Soong and Brandon Lee are forecasting a 10% decline in residential property prices in 2012. In our view, this would not meaningfully impact the banks given that loan to value for existing mortgages is 50-60% – and perhaps just 5% of outstanding mortgages have LTVs of higher than 80%.”

Singapore banks-net interest margin (%)

Source: Company data

What happened to the great recession everyone was fearing for Singapore in 2012? So far, things have been so good, with economists such as HSBC raising their full year forecasts for economic growth from 2% to 2.6%. The good news is traditional hot spots like electronics manufacturing are picking up, as are pharmaceuticals. The bad news is that inflation is also expected to persist at a higher level than previously thought. HSBC notes this was initially attributable to higher prices for housing and rent and also the squeeze on COE’s which has seen prices shoot through the roof. But now higher oil prices and tight capacity in Singapore mean inflation may

hit 4.1% in 2012 compared to earlier forecasts of 2.6%. DBS is also concerned about inflation, noting that the slight drop was mainly due to declining COE prices but added that the current rate of “core inflation,” which is running at 3.5%, is the highest seen in three years. And what is the cause of this spike? “This recent spike-up in core inflation has been driven by domestic non-traded items, which reflects a buildup of underlying cost pressures, particularly labour costs,” noted DBS. It added that the cumulative changes in levies introduced by the government to reduce reliance on low-

waged foreign workers may increase foreign labour costs of some companies by as much as 20-25%. Local demand and services exports are powering...

Source: HK Censtatd, HSBC


co-published Corporate profile

The global outlook and Singapore’s position – a mixed picture Singapore is one of the Asian economies most sensitive to the EU crisis - so what risks should we be prepared for in 2012?


he very nature of the global economy ensures that many emerging and more mature economies are intrinsically linked. As a result, the relative strengths and weaknesses of individual countries can inevitably have an effect on neighbours as well as regions on the other side of the globe. No further proof of this principle is needed than the dramatic global crisis of a few years ago. The crisis is still having an ongoing impact on many economies and for some, such as Greece and Portugal, these effects continue to be severe. Singapore is regarded as one of the world’s most open economies and as a trade, transport and financial hub we are sensitive to the global business cycle Unsurprisingly, the continuing poor outlook for economic developments in Europe does present a risk to Singapore’s export growth and economic conditions in general. However in light of the performance from surrounding emerging economies and the continuation of the weak recovery in the United States, current forecasts still suggest that Singapore will achieve a GDP growth of 2.7% during 2012 and 4.9% in 2013. Singapore trade is well diversified globally and we are expected to continue to show strong macro-fundamentals and sovereign payment capacity, which is regarded as the best in the whole of Asia, as reflected by the AAA ratings of the three major rating agencies. The manufacturing sector is dominated by pharmaceuticals and electronics and while the pharmaceutical sector faces an uncertain outlook in the current climate, an even more challenging year is expected for our export focused electronics businesses as consumer demand remains weak in many major markets. Singapore’s real estate market has experienced a boom during the past years supported by the government’s fiscal stimulus programme and cheap credit which helped stave off the effects of the global downturn. It also boosted the construction sector and although growth in the sector has levelled off, new publicly financed investment in infrastructure is expected 12 SINGAPORE BUSINESS REVIEW | APRIL 2012

to continue to support the sector in the coming years. So, for the moment, at least, Singapore appears to be in a fairly stable position, but what external influences can we expect to be subjected to in the future? Overall, the global economy appears to be slowing, with a growth rate of 2.6% expected during 2012. While this is only a reduction of 0.3% on 2011, it’s almost 1.5% down on 2010. It’s also clear that there is a two-speed growth pattern, with emerging markets growing at a much higher rate than more advanced and mature economies. Currently, emerging markets are on average expected to reach growth of between 4-5%, while the more advanced economies are closer to 1 - 2% growth. China continues to be a star performer in terms of GDP growth and is likely to grow by around 8% during the next 12 months, which is significant by any standards and spectacular compared to most Western economies, where the best performing country is looking to be the US. Indian GDP is also expected to increase by around 7%, although this is 2% down from 2011 and should be viewed in light of significant inflation challenges, while the other key developing markets of Russia and Brazil are forecast to grow by 3 - 4 %. The Eurozone is expected to fall into a recession and although it will be muted, there will still be a fairly large contraction of economies in countries such as Portugal & Greece with conservative estimates expecting a contraction of 3 - 4%. Even so, there have been signs of stability in the financial markets, since the European Central Bank (ECB) intervened by providing the banks with a large amount of liquidity at very low rates of interest. In December 2011, this figure was EUR489 billion and this process was repeated at the end of February 2012 with a further injection of EUR530 billion. The Eurozone is one of two major sources

of uncertainty for 2012 and 2013, due to the ongoing debt crisis. The other is the rising oil price exacerbated by supply concerns most notably the continued political tensions in the Middle East. Political tensions in the Middle East present a particular concern to the global economy as it could stimulate further increases in the already inflated oil prices. Any oil price rises will crimp profit margins of many businesses and further depress consumption levels in advanced economies, which are already under pressure due to the austerity measures implemented by many governments. Singapore clearly has a range of unique strengths and characteristics that have helped us maintain our robust position in the global market. One of those key strengths has been the ability to adapt to change and while there continues to be significant unrest and instability in key parts of the global economy, it’s clear that this ability will continue to be tested during 2012.

“Singapore will achieve a GDP growth of 2.7% during 2012 and 4.9% in 2013”

Atradius Credit Insurance NV (Singapore) #31-02, AXA Tower, 8 Shenton Way Singapore 068811 +65 - 6372 5316

Michael Frigo Atradius Country Manager – Singapore

Co-published corporate profile

NFIA gives Singapore gaming companies a fair play in Europe How can Singapore companies benefit from NFIA’s access to the Dutch creative industry and stay ahead of the game in the European market?


he Singapore creative industry may be young but its vibrancy never goes unnoticed which drove the Media Development Authority (MDA) to allocate S$6million to attract overseas collaborations. Seeing Singapore’s potential, the Netherlands Foreign Investment Agency (NFIA) now taps the city state’s creative industry, helping local companies to establish and expand their European operations. The NFIA is an operational unit of the Ministry of Economic Affairs, Agriculture and Innovation and helps and advises foreign companies on the establishment, rolling out and/or expansion of their international activities in the Netherlands. As a government agency, their services are provided on a confidential and complimentary basis. Adeline Tan, senior project manager at NFIA, notes that Singapore and the Netherlands share an appetite for development in the gaming industry. Singapore is home to emerging creative companies while the Netherlands has a very sophisticated market which is eager and active in the industry, be it in casual or serious gaming. The two countries are working on the “adaptation of existing products to the Dutch/Singapore market via local partners, and Singapore and Dutch companies are jointly exploring new areas of applications for serious gaming concepts and developing new products and services,” she added. Never ditching the Dutch According to Tan, the Dutch government’s new Innovation Fund for SMEs will make 3.8 million Euros available for private investment funds looking to invest in the creative industry. “The creative industry has for years been one of the fastest-growing sectors in the Dutch economy. The new Fund will invest up to 50% of start-up capital for creative industry enterprises. Private investors in the Fund will receive the lion’s share (80%) of the return on investment,” she added. Singapore companies therefore realize that to target the European market, it is best to do it via the Netherlands where they have access to good partners with networks into the rest of Europe. Tan warns that to remain

competitive, it is no longer enough for local firms to just be service providers or to only cater projects to institutions that require it. To break new boundaries, they need to look for partners with complementary skills and expertise for the market that they want to reach. With this in mind, NFIA then started working with a handful of local companies to explore the validation of their existing products via the Dutch market. “There, we pair companies with research institutes that will be able to provide the more scientific aspect of the developmental process to make the product a success,” says Tan. In 2010, the Dutch Media Hub was in Singapore for Broadcast Asia and it was during that time that an MOU was signed between the Film Content Company Europe and Alternative Content Distribution Network looking at the digitalization of content using Singapore and the Netherlands as Media Hubs. Also during the 2011 Serious Games Conference, Dutch games company, Grendel Games, specializing in serious games for the health industry made a very strong impression leading to numerous interest from local healthcare groups and institutions. No room for child’s play To further promote the Dutch creative industry to the Singapore market, NFIA laid out a 3-point strategy. The first step is to inform companies within the industry about the games landscape in the Netherlands vis-à-vis the rest of Europe, highlighting also Dutch companies that are willing to collaborate with Singapore companies. Hence, NFIA and MDA will hold an information sharing session in April 2012. Secondly, NFIA plans to meet with companies to better understand their needs and determine how they can help in

“The creative industry has for years been one of the fastest-growing sectors in the Dutch economy”

Adeline Tan NFIA Senior Project Manager matching these Singapore firms with Dutch companies for joint product development and licensing agreements. “Thirdly, if enough local companies would like to explore the Netherlands, the NFIA can arrange for a fact-finding trip for these companies to the Netherlands to meet with Dutch companies who are open to collaborations,” Tan adds. NFIA’s cooperation with government agencies like IE Singapore, SPRING and the various business associations are strong as they share the common goal of assisting local companies, reckons Tan. “Moving forward, we see NFIA’s partnership with Singapore growing from strength to strength as both nations fulfill the hub ambition, Netherlands for the European market and Singapore for Asia. We look forward to working with local companies on their ambitions for the European market,” she concludes. For more information about the creative industry sector and investment opportunities in the Netherlands, contact Ms Karin Rancuret, Area Director or Ms Adeline Tan, Senior Project Manager of the Netherlands Foreign Investment Agency (NFIA) at Tel: 6739 1135 / 6739 1137, email: rancuret@nfia-singapore. com or or visit SINGAPORE BUSINESS REVIEW | APRIL 2012 13


Shayne Nelson

Private banking with Asia’s new rich

by Shayne Nelson Global Head of High Value Client Coverage and CEO of Standard Chartered Private Bank


s Asia emerges as the world’s largest wealth region, the one question foremost on the minds of all private bankers should be this: what does a typical Asian client look like? In Standard Chartered Private Bank – with more than two-thirds of our assets under management originating from Asia – we are seeing a new generation of Asian clients who stand out very clearly from those in other regions of the world. Our relationships with these clients are different. Their expectations and outlook are different, hence they need different things from us. Much of this comes down to demographics. Asia’s high net-worth individuals (HNWIs) – people with USD1 million or more in investable assets – are younger than their western counterparts. 41% of Asia-Pacific’s HNWIs are 45 or under versus a global average of 17 per cent, according to Capgemini and Merrill Lynch. Another important difference is that a greater proportion of Asian HNWIs (63% in the case of our clients) are business owners, mostly first or second generation. They have earned their money the hard way, and are more reluctant to let others manage it, meaning that the private banking model applied for decades in the West may not work for them. Instead, many Asian clients prefer a much more hands-on approach, talking to their bank more often and looking for a faster turnover within their portfolios. Asian HNWIs also tend to be more ambitious – obvious perhaps given the higher returns they will have seen in the past couple of years. We see the same trend among Asia’s entrepreneurs, the region’s future rich. Asian wealth creators tend to be more driven and focused on achieving their professional goals. They are also more interested in buying luxuries such as cars, watches, jewellery and works of art. All this naturally affects what Asia’s swelling band of millionaires needs from private banks. So what should banks do to serve them? For starters, clients who are entrepreneurs typically have much of their wealth tied up in the business. On the one hand, they need finance for the business to grow and prosper, while on the other they need to separate out and protect their personal wealth. A private banker who only offers them investment opportunities with a similar risk and reward profile to their own business, won’t add much value. As I see it, there is a real opportunity now for private banks to engage and evolve together with their clients in Asia, developing a new, differentiated business model that works for clients here, helping them to grow and protect their wealth. There is a need for private banks that understand 14 SINGAPORE BUSINESS REVIEW | APRIL 2012

the local Asian environment, but have the global reach to help Asian clients balance their portfolios with investments outside their domestic markets – into other Asian and emerging markets and high-yielding pockets of the West. Private banks that can cater for greater risk appetites with exclusive opportunities, such as IPOs, private equity and single-manager hedge funds. Private banks that can draw on corporate and SME banking expertise to serve Asian entrepreneur clients holistically – meeting the needs of both the business and the owner. Private banks which acknowledge that the rules of engagement are different in Asia, and develop more relevant ways of serving younger and more entrepreneurial HNWIs. Standard Chartered included – have begun to offer business strategy courses to these future millionaires. While this trend is set to continue, powered by Asia’s high saving rates, increased domestic consumption and younger demographics, market conditions remain tight. Many private banks operating in Asia are experiencing higher cost, lower revenues and a decrease in return on assets, compounded by strong competition and regulatory changes in many countries. This difficult environment calls for private banks to take steps to improve their profitability – carefully choosing which clients and markets to cover, while looking inwards to improve efficiency and control costs. But above all it represents a great opportunity to get up close and personal with Asian HNWIs, growing with them and rethinking the private banking model to meet their needs on every step of their journey.

What should private banks dangle as a comeon?




richard branson

Bringing romance back to the office

T “Any forwardthinking company should think twice about prohibiting office romances. ”

here are many types of family businesses, as I was reminded when Virgin Money recently acquired the British bank Northern Rock; we are in the process of rebranding it Virgin Money. As I traveled around the country, welcoming the Northern Rockers as the newest members of the Virgin Group, the bank’s strong family spirit was evident. Not only did I constantly meet husbands and wives working in the same offices but, in several cases, sons and daughters too. I cannot think of a stronger endorsement than an employee recommending the company to his relatives as a good place to work in. A couple of days after those meetings, I had dinner with an old friend from New York who asked me about Virgin’s policy on office romances. It seems that his 28-year-old son works at a company that prohibits all romantic relationships between employees. The young man was having a miserable time trying to conceal his three-month relationship with a female co-worker. Though they were very prudent while at work, outside the office they had to worry about being spotted together by an office whistleblower. I hadn’t thought about this issue before. Everyone spends more time than ever before in the workplace and, with most first marriages taking place in people’s mid to late 20s, falling in love at the office would seem inevitable, rather than a corporate misdemeanor. To the best of my knowledge, we at Virgin have

never had any problems with office relationships – and we do not prohibit them. My interest was piqued, so I talked to some people at progressive companies and used their advice and our experience at Virgin to develop a more sensible approach to office romance. Employers and employees can use these guidelines to avoid problems without shooting Cupid down. 1. Bring romance back to the office KISS (“Keep it simple, stupid”) would seem to be applicable here. If single employees are told that they are free to have a relationship with any consenting single colleague, then it should be easier to gain their compliance and respect for your company’s policy. Any guideline you put in place should be designed to avoid forcing people to conceal their relationships. That openness will prove to be a win-win for your company and your employees. 2. Who reports to whom? While it is not at all surprising that two people who work closely might fall in love, they should not report one to the other. If a couple finds themselves in this situation, their managers should make other arrangements, adjusting the reporting structure so that this would not be an issue. 3. Try to make it a longdistance relationship While every company and situation is different, managers should keep in mind

that it is likely a bad idea for the couple to work together, especially in a small department. No matter how discreet and sensible the pair might be, too close a working relationship will invite problems. Some physical distance may be good for everyone. 4. Discretion is key One person I consulted said: “They should act like a married couple around the office – no outward displays of affection.” Perhaps a lame joke, but also wise. 5. Keep it offline Couples should not use corporate email systems to send very private messages. One mistake might broadcast the note to the whole company – perhaps things that are much better kept private! Any forward-thinking company should think twice about prohibiting office romances. Rather than implementing rules that (as in my friend’s son’s case) make for distracted and unhappy employees, it would be far better to prepare some “common sense” guidelines for your company. This will help couples cope with the relationships that will inevitably arise in a manner that is helpful to everyone, from the couple’s managers to their colleagues. A great company behaves something like an extended family – cheering successes, finding the upside of mistakes, and getting together periodically to reconnect. Employees who are falling in love are all part of the adventure, and should be celebrated. SINGAPORE BUSINESS REVIEW | APRIL 2012 17


Robert Kleinschmidt 7 tips on how to destroy employee morale


have mostly had the fortune of working for some very good managers/leaders throughout my career, including some excellent Singaporean managers. And I myself have had to lead employees and teams in Singapore, rest of Asia, Europe and the US. One of these difficult situations, which I found myself in, was working for a boss who did all the wrong things when it came to creating a positive, energized, work environment. Yet it was in this very situation that I found myself learning through first hand experience, how NOT to manage and lead others and I firmly believe (or certainly hope) that through this experience more than any others, I have become a better leader myself. So what have I learned? I learned that, as a leader, the best way to destroy employee morale, innovation, and productivity, and to create an environment of high staff turnover is to: 1) Constantly change direction If you want to really demotivate even the best of employees, just keep changing the direction of the company. I’m not talking about changing direction every year, or even every month, but change direction every week for the best results. You will be guaranteed to create frustration and confusion, and your employees will simply throw their hands up in the air and stop work on their projects knowing that next week, they will have to start work on different projects anyway. 2) Criticize everything A great way to kill innovation and creativity in the workplace is to criticize any idea. Better yet, criticize these ideas in front of other employees for an even greater impact. Then be sure to follow this up with how you feel it should be done. After all, you are the boss, and your employees are simply your low level minions, right? 3) Micro-manage activities (while holding individuals accountable for results) A real morale killer is micro-management. If you want a team of poor performers, drive out your best performers by micro-managing everything they do (while frequently criticizing). And to speed up the process, hold them accountable for results too. Your best performers will surely feel as though they are in a no-win situation and start looking for something new. 18 SINGAPORE BUSINESS REVIEW | APRIL 2012

Robert Kleinschmidt

4) Set unrealistic goals Another fantastic way to demotivate is to set goals that are completely unrealistic, without providing employees resources or leeway to drive their projects. 5) Blame employees when results are poor, give credit to outside factors when results are good Surely poor results are not due to your stellar leadership skills so it has to be your employees, so make sure they know this. And when sales are doing great, be sure to explain that this is due to the economy or the results of the work done by the prior employees (who have long moved on to another company). 6) Pit departments against each other Competition is good, right? Then what better way to build a great team environment than to have each department compete against each other? Take employees comments about the other departments out of context and use this to “motivate” the department manager to outperform the other departments. 7) Don’t invest time in in-depth interviews Interviews take too much time and can be tiring so to build a team of poor performers, don’t waste time on finding and hiring the right people. Spend no more than 1 hour with your final candidate(s) and during this time, spend most of it talking about yourself or your company. And definitely don’t waste time calling and personally speaking with the candidate’s references. Soon, you will start building up a reputation as a poor leader and company culture, stopping any good candidates from considering joining your team. Obviously, I’m trying to make a point here because one way to learn how to do something, is to first learn how NOT to do something. If you are in any leadership position, reflect on the above points and challenge yourself on which of the above traits you sometimes exhibit. And commit to improving the one that is most impacting employee morale in a negative way.

Be careful if you find yourselves in this list


Duane Melius How Facebook Timeline can make or break your business

Duane Melius


n 30 March 2012 our Facebook Pages are converted to Timeline, whether we like it or not. What this all boils down to for you is - risks if you are not ready, but great opportunities if you plan ahead. This is a new era for brands on Facebook. We have mapped it out carefully in this guide. Use this as a starting point for a conversation on how to respond. 1. The big splash: Cover photo The cover photo is the first thing people will see when they visit your page, the big chance to make an impact. There are strict guidelines on how it can be used so do check them. Opportunities: The new larger, striking visual can create an impressive impact. The cover photo should be updated regularly to showcase new products and services. Risks: On the 30th March 2012, the page will switch to the new format immediately. If the cover photo isn’t uploaded and activated regularly it will leave the page looking somewhat neglected. 2. Old vs new: Tabs and apps The format for tabs and apps has changed considerably. You may only display a maximum of three apps/tabs on the front page at any one time. Crucially, default landing tabs (commonly referred to as Fan-Gates) no longer work. Opportunities: The increased width of the canvas for iFrames and Apps offers opportunities to create even more visually engaging content. Risks: eCPAs (cost per fan) are very likely to go up as a result of the decommissioned default landing tab. The changes to way tabs are displayed will mean much less visibility for pages with more than three apps. Although existing iFrames and apps will still work most will need to be redesigned or decommissioned. 3. New content formats: pinning, starred posts and friend activity Any post made by a page can be pinned to the top of Timeline and a pinned post will remain at the top of the page for seven days. Starred posts take up double the width of a normal post and stand out beautifully. When someone visits the page, all of their friends’ activity and mentions about the brand are now surfaced to the top of the page. Opportunities: Pinned posts can be used to highlight ongoing campaigns or content of note. Premium

content can be starred, increasing visibility and definition. Seeing friend’s activity can bolster affinity to the page. Risks: If negative mentions are made about a brand on Facebook, they will be easily visible by all of the person’s friends when they visit the page.

Are you on Facebook timeline?

4. The essence of timeline: Milestones Milestones tell the brand/company story in bite-size chunks, along the timeline. They can be added to the page retrospectively. Opportunities: Milestones provide an easy way to tell the “brand story” in a simple, easy to navigate format. Risks: Putting together Timeline properly will take substantial effort and co-ordination. This is probably a hygiene factor for brand pages. There is more impetus on innovative ideas for campaign or product pages. 5. Premium ads: Reach generator At present it is only possible to reach roughly between 5%-15% of fans with any given post on a Facebook page. Reach generator makes it possible to reach a guaranteed 75% of fans. Opportunities: If users engage with your posts, you can increase your EdgeRank affinity score with them, which could possibly lead to increased visibility/ interaction in future. Risks: There is a chance that some users who have not seen or heard from you in a while may unlike the page when they see new sponsored posts. Conclusion Big changes, so now if you haven’t already, now is the time to begin developing a roadmap. SINGAPORE BUSINESS REVIEW | APRIL 2012 19


Good news for Venture?

UOL expands its portfolio

UOL’s burgeoning portfolio revealed With more than three condo and hotel launches slated for 2012, there’s no stopping UOL Group from expanding its portfolio and reaping more earnings.


ccording to DBS analyst Lock Mun Yee, UOL Group’s results were boosted by higher property development revenue, improvement in rental income and hotel contributions, as well as higher dividend income. “The group TOP-ed four projects in FY11 – Duchess Residences, Breeze by the East, Nassim Residences, and Panorama in FY11 while its investment properties are still enjoying positive reversions,” he added. CIMB analyst Donald Chua further notes that overall growth profile remains robust as the group sees 80% of total growth coming from Asia Pacific. And there’s no stopping UOL from expanding its portfolio as it plans to launch more projects this year. OCBC expects the condominium units at the Lion City project and The Esplanade in Tianjin to launch in 2Q12. DBS’ Lock notes that the Lion City development is expected to comprise 244 condos and 19,519sqm of retail space, and is planned to have a child-based theme similar to United Square. And in terms of UOL’s hotel segment, CIMB’s Chua adds that the group will also focus on improving efficiency and yield as its One Upper Pickering Street hotel is slated to be opened in 4Q12. DBS’ Lock also expects four new hotels and serviced suites to become operational in FY12. “As the portfolio gathers operating momentum, we anticipate earnings to benefit from greater operating activity and brand visibility,” Lock said. Going forward, OCBC thinks UOL’s limited landbank would shelter it from residential uncertainty ahead. “Management indicated a cautious view of the market, which is reassuring in our view, and we expect a prudent stance to land acquisitions in FY12,” it added. Worst likely over for Venture Corp Venture Corporation’s FY11 results mostly showed contractions. 20 SINGAPORE BUSINESS REVIEW | APRIL 2012

Revenues declined 9.1% to $2,432.4m and net profit also fell by 16.8% to $156.5m. According to CIMB analyst Jonathan Ng, sales in 4Q11 also fell 10%, marking the third consecutive quarter of contraction. “Sales of all product segments, with the exception of Test and Measurement and retail Store and Solutions and Industrial, contracted yoy,” he added. Kim Eng analyst Yeak Chee Keong notes that the dip in overall revenue was caused by the translation effects of the US$ decline against the S$. “Neglecting this effect, revenue would have fallen by a lower 1.0%,” he added. But despite the disappointing results, OCBC analyst Carey Wong expects Venture to see a better picking from 2H12 onwards as it anticipates improved traction with several key customers this year. Also on a positive note, CIMB’s Ng says cash flows were strong with S$75m of positive free cash flow generated in 4Q, enabling Venture to end the year with more than S$300m in net cash. “As expected, it declared an unchanged final dividend of 55cts a share, translating into a yield of 7%,” he added. According to Wong, the worst is likely over for Venture as it is expected to achieve a net margin of 6.8% this year. However, it is still possible that we may not see much top-line growth given that VMS may continue to focus on lowvolume high-mix business. “As such, we are easing our FY12 revenue forecast down by 1%

Lumpier margins for Sembcorp

and earnings up by 1%,” she said. Sembcorp Marine’s FY12 margins to be lumpier If Sembcorp Marine clinches more fast-track jack-up rigs for 2013, CIMB expects operating margins for FY12 to exceed guidance of 15%. CIMB analyst Lim Siew Khee also believes FY12 qoq margins could also be lumpier than usual as these projects have shorter project delivery timeframe and more intensive revenue recognition. On the other hand, Low Pei Han of OCBC reckons that margins may be lower in FY13 when the new Brazilian yard comes into operation as there could be initial teething problems, and it also pays to be prudent to assume conservative margins for SMM’s first drillship in Brazil. According to OCBC, SMM’s revenue and net profit for FY11 were S$3.96b and S$751.9m, respectively. Nicholas Low of Phillip Securities Research says Sembcorp Marine’s better than expected FY11 results were partly due to a forex gain of S$10m in 4Q11 (versus a loss of S$9m in 4Q10) and higher interest income (mainly attributed to interest on deferred payment granted to its customers) in 4Q11 of $9m. CIMB’s Lim notes that SMM has stronger enquiries vs. 3Q11 across all segments. “We expect Sete Brasil to award the remaining contracts (26 rigs still outstanding including six drillships tendered by SMM) in 2012 to achieve Petrobras’ capex timeline of having the rigs delivered from 2015 onwards,” she added.




What do new approvals of junket licenses mean for Singapore casinos? What are junkets? Junkets are a casino term for an organised trip of high rollers who commit to gamble a certain amount of money for a specific period of time. A junket operator handles either individual or group reservations, provides credit to gamblers, and receives commissions from casinos for their service. Up until now junket operators have been banned from operating in Singapore but that is about to change and the hope is they will bring in high rollers who would have previously gambled at other casinos. The Casino Regulatory Authority of Singapore however decided to call junket operators ‘international market agents’ to more accurately describe what they do. “Licensed IMAs have a role to play in bringing in foreign VIP high rollers to the local casinos. The licensed IMAs will focus on bringing in foreign clientele. They will not be allowed to target locals. As such, the term ‘International Market Agents’ more accurately describes their role. The casino operators have to ensure that only suitable persons conduct the IMA business in their casinos, and that the IMAs do not target locals,” CRA said. Why are they important? VIP gaming revenues are expected to grow once junkets are permitted to operate in Singapore. Junket approvals will help drive growth without additional capacity, says Michael Paladino, Fitch’s lodging & leisure sector head. “Currently, VIP gaming revenues in Macau are roughly 8x Singapore so there is room for sizable growth, although it is unlikely to approach Macau anytime soon,” he added. Muhammad Cohen, Macau Business special correspondent and Asia Times columnist also said that throughout Asia, junkets are an important part of attracting VIPs as casinos can’t duplicate junkets’ overseas outreach efforts and range of services. What do we know about the licensed junket operators in Singapore? The Casino Regulatory Authority of Singapore granted the first-ever gambling marketer licenses in Singapore this March. Resorts World Sentosa got 2 junket licenses approved while 12 others were rejected. According to OCBC, the one-year licenses were issued to two Malaysian international market agents, namely Huang Yu Kiung and Low Chong Aun, and they can only bring in international high rollers. The bank noted that Marina Bays Sands has not endorsed any junket license applications, suggesting that if the other junket operators are approved, GS could continue to maintain a significant lead-time over its rival. Should Singapore relax stringent standards for junket approvals? Macau has over two hundred licensed junket op-

Resorts World Sentosa got 2 junket licenses approved while 12 others were rejected

erators compared to just two in Singapore, which suggests that Singapore is being more stringent in its standards to junket operator approvals. So how much more room is there for more junket operators? Grant Govertsen, Union Gaming Research Macau Limited Finance and IT Center of Macau said that if the only consideration is increased visitation, then it is unlikely that junket standards would be lessened. “However, if the goal is increased tax revenues, then perhaps greater consideration could be given to lowering junket standards. Ultimately, I think only a small number of junkets will be approved, but this should be enough for the Singapore IRs to remain very successful,” he added. What does the future hold for junkets? Jonathan Galaviz, managing director & chief economist at Galaviz & Company LLC said the Singapore government should maintain a very strict approach to the licensing and regulation of junket operators. “It is important for Singapore to maintain its image as a transparent and safe location for tourism and business. Over time, it should be expected that the Casino Regulatory Authority (CRA) will look at further junket applications and determine suitability. Junket licensing has always been a part of the regulatory structure in Singapore since the integrated casino resorts became operational. I do not see a material impact beyond the slightly incremental revenue that the junkets will provide to RWS at this point. However, there is certainly room for approved junkets to grow within the Singapore market, as they develop their operational model. With time (over the next 10 years), the business model of junkets should go away to a more direct relationship management structure between customers (that use junkets now) and the IR’s.“ SINGAPORE BUSINESS REVIEW | APRIL 2012 23


Tim hamlett

tim hamlett Former Editor of Sunday Standard and Associate Professor of Journalism

Reputation vs reality


he evil that men do lives after them; the good is oft interred with their bones, as Shakespeare put it. This depressing observation seems to be particularly applicable to political leaders. While the great man is in office as Governor, Chief Executive, Prime Minister, or whatever he is described and regarded in admiring terms, his mistakes, if they cannot be overlooked, are at least serious and heavyweight mistakes. His triumphs are exaggerated. This tradition has been carried to extraordinary lengths in Hong Kong. Extreme contrast Governors and Chief Executives, while in office, are subjected to something close to adulation. Many observers appear to be ready to nominate them for all six Nobel Prizes. This produces an extreme contrast when they leave office. Suddenly the idol’s feet of clay become visible. At this point comments move to the part of the scale between “We knew he wasn’t that good” and “Rubbish!” For those of us who are happy to criticise local leaders while they are still in office, it comes as a surprise: suddenly when they retire we have lots of company. People who were previously nodders (a nodder, a species first identified by P.G.Wodehouse, is a yes-man who is too frightened to speak) become outspoken critics. Still, one expects that after a few years some balance will be established: most of us will recognise that the lost leader was a mere mortal man who did his best and was subjected to a great deal of luck, good or bad. Tun Chee-hwa’s luck This has not happened, though, with Tung Chee-hwa. Of course, he enjoyed the usual adulation while Chief Executive. I recall one particularly grovelling comment: the argument that abortion should not be allowed because the interrupted fetus might otherwise grow up to be “another Tung Chee-hwa”. Also, as usual, he received a good deal of abuse once he was safely out of the way. “Didn’t understand the Civil Service, didn’t understand Hong Kong people (Tung was from Shanghai), didn’t understand what Beijing wanted...” Some of these were unavoidable, but Tung was still unseated in mid-term, so he must have annoyed someone. Anyway, years go by, and Tung now enjoys a respectable retirement. His replacement, Donald Tsang, turns out after the usual honeymoon to have problems of his own. Balanced views would, one might hope, prevail. Tung looked unavoidably dowdy after the flash and fireworks of Chris Patten. He was unlucky with the Asian financial crisis. It was daring, perhaps too daring, to simultaneously alienate the property developers and the large slab of the general population who wanted nothing to do with National Security legislation. But there we are. Everyone makes mistakes. As of late, we had regarded the Tung period as a new Dark Age. This first surfaced in one of Henry Tang’s attacks on C.Y. Leung. Hong Kong people should beware of Mr Leung, 24 SINGAPORE BUSINESS REVIEW | APRIL 2012

they were warned, because he had been behind the 85,000 units-ayear housing target. This had led to negative equity houses worth $1, and “people burning charcoal”. Shortly thereafter there was a letter to the Post, in defense of Donald (Hello sailor!) Tsang and his taste in yacht trips. The writer contrasted Tsang favourably with his (unnamed) predecessor, under whose regime large numbers of people had fled Hong Kong. There seems to be quite a lot of this sort of thing about, particularly from people who would like the next Chief Executive to be the man with Hong Kong’s biggest basement. History abuse This is history abuse. The 85,000 housing target was a sensible choice at the time it was made, when Hong Kong property prices were at record levels and many people were complaining -- as they are now -- that young couples had been priced out of the market. As it happened, the policy was unnecessary. The property bubble was punctured by the Asian financial crisis. But I do not remember any of the opponents of the target saying it was unnecessary because the crisis was just round the corner. Negative equity is a revealing complaint, because this is really a con. Negative equity just means that your flat is worth less than the amount you borrowed to buy it. This is a completely fictional figure as long as you do not wish to move. Your flat is still the same flat and your repayments are still the same amounts. Negative equity is an important life-and-death matter for people who bought flats which they did not intend to live in, like property developers sitting on a few hundred units, or Legco members with a few hobby flats on the side. The heartrending stories (including the dubious suggestion that some people committed suicide) are a smokescreen behind which lurks the familiar plea that government should manipulate the economy so that the value of investments always goes up. As for people fleeing Hong Kong, I remember a good deal of that. It was not caused by despair at Tung’s stewardship of the economy, or revulsion at his rather lustreless leadership style. It was caused by SARS. No doubt there were aspects of the dreaded epidemic which could have been handled differently, but it hardly seems fair to blame the whole thing on Tung. Behind the scenes, I infer, people in the immediate circle of the real estate tycoons are saying things which would hardly stand up to scrutiny if uttered in public. Tung was a disaster because he did not serve their interests, which is the only standard to be applied to Chief Executives. Unfortunately the real estate crowd are in such bad odour that their support for a candidate reduces his attractiveness to everyone else. The best thing the Real Estate Developers’ Association could have done for Henry Tang was to warmly embrace his rival. Politics is a funny game.

“The force is strong in Tun Chee-hwa...”

thought leadership series 1: education

EASB revolutionizes post-graduate programmes With a well-experienced faculty, flexible schedule options for students and a wide range of degree programmes awarded by universities in UK, EASB stays on top of the game.


riven by its vision to be a world-class educational institution, the East Asia Institute of Management upholds its passion for delivering excellent education and producing career ready professionals. Post-grad programmes at EASB EASB enjoys great demand for its postgraduate programmes as proven by its large cohort of post-graduate students. According to Eric Lim, head of school for postgraduate studies, the school offers a very wide range of post-graduate degree programmes, all leading to internationally accredited MBAs, specialised Masters and Doctoral qualifications awarded by established universities in UK, namely Edinburgh Business School, Cardiff Metropolitan University and Queen Margaret University. “Students get to choose from a very wide range of Management and Business-related disciplines, including Strategic Planning, Marketing, Finance and Human Resource Management, Hospitality and Tourism Management, Project Management and Nursing Management and Education,” he added. EASB also offers flexibility for the students through their range of choices for the post-graduate programmes. Students may choose to study on a full-time or part-time-mode, block mode, or distancelearning. One such student who enjoyed EASB’s part-time post-graduate program is Andy Wong, now a deputy general manager at Pico Art International. After sending out queries to other schools, Mr Wong finally chose to enrol at EASB. “I have selected EASB as the course structure, the rating of Edinburgh Business School, the course fees, course duration and modules availability and selection have all met my requirements,” he said. Wong also noted that the structure of the programme at EASB ensures that knowledge is indeed acquired after the completion of the course. Mr Lim explains that academic quality is assured as their post-graduate

courses are taught by well qualified and experienced faculty, registered by both the Council of Private Education as well as their university partners. EASB’s competitive edge Apart from having a wide range of postgraduate degree programmes and a flexible schedule for the students, what differentiates EASB from other educational institutions? According to Dr Tan, Holistic Education Approach framework prepares our graduates to become career-ready professionals who are competent, confident committed and creative and able to be immediate value contributors in business and in society,” he added. EASB employs a holistic education approach, a strategic program that aims to produce confident graduates who are ready to take on their chosen careers. According to Dr Tan Jing Hee, executive director & chairman of academic board, this approach provides a framework for their graduates to receive an all-round, balanced and practice-oriented education to equip them for ready employability. “We take great pains to develop industryrelevant curricula, deploy qualified, experienced faculty and provide a wide range of learning support resources to motivate effective learning,” he added. Having experienced this approach firsthand, Mr Wong notes that it is probably one of the very few programmes in Singapore which will ensure the student to acquire all the necessary knowledge for the programme.”Initially, I found the course pretty tough as I am a working

“Holistic Education Approach framework prepares our graduates to become career-ready professionals”

Andy Wong, Deputy General Manager, Pico Art International

class student. The course is structured in a way that the only assessment for the module is the examination at the end of the semester. This has been quite tough for me in the early stages of the semester however as all lecturers have stressed, time management is the key success to this programme. In fact if we allocate 2 undisturbed hours a day to review and revise, it would be sufficient to tackle the course,” he said. EASB’s unrelenting passion for quality education drives it to provide a professional, efficient and responsive service to students. Mr Wong reckons that his 10 years of working experience was further enhanced with the knowledge he acquired at EASB. He was able to identify his bad work practices and with the training provided at EASB, he was able to correct them. SINGAPORE BUSINESS REVIEW | APRIL 2012 25


Untitled, 1921 by Zao Wou-Ki

Asia’s new artists of 2012

Is Asia set to be home to visual feasts and great galleries?


ay is becoming known as the “crazy art month” in Hong Kong with Christie’s Spring Sales and several major auction houses -- such as Bonham’s, Seoul Auction, United Asian Auctions, and Tian Cheng Auction from China -- vying for international collectors’ dollars. ARTHK12, Hong Kong’s locally grown art fair (soon to become ART BASEL HONG KONG), opens a bit earlier (May 17-21) where 264 galleries representing 37 territories are competing for buyers’ attention. Visual feast New galleries open and bring exciting new art to town almost every month of the year because the buyers are here. Art collecting is a passion, not a reasoned investment, yet it can yield


“Hong Kong is currently the world’s leading art market by auction turnover and there is no tax on the import and export of art”

quite substantial results for savvy buyers. There is some speculation going on, especially in the Chinese contemporary and 20th Century painting fields, which drive up auction prices, but Hong Kong people and visitors are spoilt for choice at art fairs and galleries where they can collect Western and Asian art and antiques, paintings, sculpture, photography, prints, video, and other types of art. Economics always plays a part in the USD$15 billion worldwide art market. With the world’s financial experts focused on what is happening to the economies in Europe and the USA, many investors are turning to art as an alternative, especially when good quality art is on offer. Kevin Ching, Sotheby’s chief executive officer for Asia, says, “We

are offering a better curated though slightly smaller selection this spring. We recognise that worries about the Euro might be hanging over market sentiment at this time, but it doesn’t seem to be affecting Asia as much as other markets. So we respond, as always, by offering the highest quality and rarest pieces because serious collectors are not deterred by external forces.” Owner of the famous Shanghai gallery Contrasts and sponsor of well-established artists and designers, locally born art dealer Pearl Lam says: “Since ARTHK’s first edition four years ago, Hong Kong has been gradually transforming into a contemporary art centre to rival London and New York, attracting both an international and local audience. I am elated by and proud of these changes and want to contribute to this continuing transformation.”

asian ART REPORT Tryst back home So this global socialite and art expert is returning to the city of her birth to open premises in the Central district’s Pedder Building, which already houses international galleries Gagosian and Ben Brown as well as home to Hong Kong’s own contemporary art scholar and long-time curator Johnson Chang and his Hanartz Gallery, which has been going strong for over 30 years. London’s White Cube just opened a space in March and Frenchmen Edouard Malingue and Pascal DeSarthe debuted last year, displaying British and French artists as well as Chinese contemporary painters and sculptors. This year Hong Kong welcomes Galerie Perrotin and its founder Emmanuel Perrotin in May. Leading into the May madness, Sotheby’s holds its spring auction in April, setting the scene and whetting the appetites of the experts by offering a rare Northern Song Dynasty Ruyou jade-like glazed ceramic washer (for brushes) and consummate paintings by 20th Century Chinese artists Zao Wou-ki, Chen Yifei, Chan Yanning and Wang Yidong in addition to the Contemporary Chinese and Indian and Southeast Asian art. At the end of May, Christie’s will hold its mammoth series of auctions, attracting wine lovers, watch and jewellery collectors and serious connoisseurs of the finest Chinese works of art and ceramics, 20th Century Chinese painting and contemporary

works from around the Asia region. Zero art tax churns more fairs Hong Kong Contemporary is a new art fair opening at the Park Lane Hotel concomitantly with the ARTHK12. Fair Director Roger Lin says, “Hong Kong is currently the world’s leading art market by auction turnover and there is no tax on the import and export of art (in contrast to mainland China, where there is a tax of 34% on the sale of any imported artwork). With its shared history with the West, Hong Kong is a place where people from all parts of the world feel equally at home.” Hong Kong Contemporary is associated with Hong Kong Auctions, which will hold a one-day auction during the fair. This year’s Hong Kong art auction started right after Chinese New Year. February 2012 saw the third Asian Top Gallery Hotel Art Fair in HK, which started in Korea five years ago. It invites galleries to participate at fivestar hotels, using the bedrooms on several floors to exhibit the art. First held in Seoul and then Tokyo, Hotel Art Fair organisers must have had the most success in Hong Kong because the fair keeps coming back. It was hosted this year by the Mandarin Oriental Hotel and featured more galleries than ever before. The fair’s fame spread so far that it even attracted art dealers from St. Petersburg, Russia, Myanmar, and Bangkok, as well as many HK, Taiwanese, Korean,

Bloodline – Big Family: Family No.2 by Zhang Xiaogang

“If the market softens a little, the buyers will pounce. But there is a case of the jitters about the overall picture of the world economy”

and Japanese galleries showing young artists, who were often present, and wonderfully imaginative art.There seem to be more abstract art this year than last year from these artists. A second Top Gallery Hotel Art Fair this year will be in May at the Grand Hyatt and will bring emerging and mid-career artists from all over Asia. As prices are somewhat lower than at the big-name auctions, this fair attracts the curious and the connoisseur alike. Home-boy galleries are not letting any grass grow under their feet either. The exhibitions are becoming livelier and are incorporating more media as they seek larger spaces outside of Central. Just to mention a few: Gallery Exit just opened a large space on the south side of the island, Southsite, along with the Hong Kong New Music Ensemble that will host musical performances, which supplement the fine art shown at the Hollywood Road gallery. Experimental galleries Osage Galleries -- with two locations in Central Soho district, where artist Wilson Shieh lived for a few weeks in March doing his art live and the 15,000 sq. ft. space in Kwun Tong where video, photography, music, and performance art are common -- is one of the more forward-looking,

Sunlight Rock by Wu Guanzhong SINGAPORE BUSINESS REVIEW | APRIL 2012 27

asian ART REPORT daring and experimental of the local galleries. It introduces new artists from other Asian countries as well as encouraging Hong Kong artists to use the huge space to spread their wings and experiment with many forms of media and new curatorial ideas. Newcomer Gallery 3812 that opened last year offers over 7,000 sq. ft. in Aberdeen and displays a wide variety of artists and art practices. Calvin Hui, one of the owners, is also involved with new contemporary spaces on the mezzanine floor of the Harbour View Renaissance Hotel on the east side of the HK Convention and Exhibition Centre, featuring Fabrik -- a wide-ranging, eclectic gallery -- and spaces for several more. Also near Aberdeen at Ap Lei Chau is FEAST Projects, a new-media oriented gallery owned by Philippe Koutouzis who is presenting in May a very exciting convergence performance piece with Rashaad Newsome, an artist from New York whose work covers a multitude of styles such as collage, video, and performance as well as blending hip-hop and heraldry. Newsome consistently explores non-traditional forms of language and expression such as vogue dancing. Contemporary by Angela Li features large-scale photography and experimental artists from Chongqing, and is offering a show by American Tony Oursler in May. Anna Ning, gallery owner and art agent, lets her own taste dictate the exhibition of 20th Century Chinese artists that she favours such as San Yu, Wu Guangzhong, and Zao Wou-ki, and contemporary Chinese artists such as Jing Kewen. Hesitant sellers and buyers Ning said, “I feel that my clients are holding back a bit. The sellers are waiting for the right price, but so are the buyers. If the market softens a little, the buyers will pounce. But there is a case of the jitters about the overall picture of the world economy, at least right now.” These HK galleries are gaining worldwide recognition. Internationally focussed 2P Gallery is run by Pui Pui To who says, “My gallery has made it into the final cut in Art Basel’s LISTE this year. It’s the first HK gallery that has ever made it into this selection, competing against 300 applicants from emerging galleries 28 SINGAPORE BUSINESS REVIEW | APRIL 2012

Wolf Valley by Ai Xuan

“People still feel safer buying art in HK than in China”

around the world, and there are only 10 new slots available per year. Art in Hong Kong is thriving.” More and more young Hong Kong Chinese students are attending art schools at several local universities; mid-career HK artists are gaining global recognition, and independent curators and art agents are popping up from overseas. The feverish art action also attracts dodgy “art consultants,” who are more like salespeople who have left jobs in finance and are hungry to cash in on the art bonanza in Hong Kong by pretending to know something about Chinese contemporary art. Some have less than sterling credentials and are leaving a few shady stories in their wake. HK vs China’s art scene Yet people still feel safer buying art in HK than in China where, according to one art agent in Shanghai, there have been problems about payment

for goods at auctions, manipulation of the market prices of certain artists and categories of art, buying back of consignments by artists to ramp their published prices, and buying artworks at auction for high prices that end up in the offices of important officials, whether real or not. International corporations are coming to the party with awards and prizes. Although many banks, insurance companies, and other big players have hedged their bets for decades by creating corporate art collections, they now want to be seen supporting the arts. Hong Kong again is the venue of choice for the display of sponsorships or the winners of the awards by the Sovereign Foundation, Societe General, Deutsche Bank, and others. The art is out there and Hong Kong is small and efficient enough to allow collectors and art lovers to experience some of the best from around the world with relative ease.


Should investors fear or face the dragon?

The birth of 2012’s dragon ushered weak growth in America, political unrest in the Middle East, and a debt crisis in Europe. Should investors risk getting burned? Roxanne Uy investigates.


ill the dragon burn your beloved cash to the ground, or will it soar with your investments towards profitability? Last year, we brought you investment ideas with the goal of leading you to more informed investment decisions. Now, as the dragon year crawls in, we explore more ideas that could open up lucrative opportunities. Even though 2012 is expected to be unpredictably volatile, Philip Poole, HSBC Global Asset Management’s global head for macro and investment strategy, says there are still attractive opportunities for investors. “Diversification will be critical to successful investing given the volatility and uncertainty that surrounds the outlook for


“Diversification will be critical to successful investing given the volatility and uncertainty that surrounds the outlook for 2012”

2012,” he adds. May the celestial beast bring you good luck in your investments. Idea #1: RMB bonds Offshore renminbi bond is an asset class that is undeniably developing at a rapid pace. The RMB bond market in China is opening up new investment opportunities in what Poole believes to be one of the world’s most rapidly growing and dynamic economies. “Investing in the offshore RMB bond market provides investors with exposure to potential RMB appreciation and portfolio diversification, something that is hard to find in such a highly correlated world. Chinese policymakers are keen to internationalise the RMB, and

the process is already well underway. These bonds look attractively priced in our view at the current time,” he adds. Idea #2: State-owned dollar bonds Indeed, investors in Singapore have a good reason to look to domestic opportunities after the city accounted for a big chunk of the global GDP growth in 2011. Though bond yields have been as low as they are in the West, defensive assets still prove worthy of investment. Hartmut Issel, head of APAC’s Cross Assets Research and head of Singapore UBS Wealth Management Research, advises investors to seek dollar bonds of state-owned Asian issuers as these pay higher coupons than their Western counterparts. These also offer higher yield than the sovereigns without adding a lot more risk. “Investors may also take positions in the Singapore dollar, Chinese yuan, and Indonesian rupiah as these currencies have appreciation potential and, in the case of the rupiah, high yields

TEN INVESTMENT IDEAS as well. Outside Asia, we like the British pound because it is currently undervalued yet backed by improving fundamentals, thanks to the government’s credible debtreduction plan,” he adds. Poole concurs that developed market government bonds look expensive on fundamentals, which then points to higher yields in the future. “They have been supported by safe haven flows. Also, we see little fundamental value in this asset class beyond support from risk aversion, believing that developed government bonds will need to sell off once market sentiment improves,” says Poole. Issel warns investors not to think in terms of good or bad currencies or companies. He notes that quality investments, such as currencies with strong fundamentals or bonds and stocks of well run companies, may be less volatile and thus not keep investors awake at night but they also do not always outperform the broader market. Investors should then think in terms of overpriced and underpriced assets. But this is only the first ingredient; assets can stay underpriced for an extended period, so it is important to identify what might trigger an improvement in fundamentals and when it might occur. “Our call on the British pound is one such example. Investments like this often turn out to yield the highest returns once other investors follow, at which point the investor has to gauge when the asset starts to

look overpriced, and thus prepare to exit. This is a key ingredient to effective investing, but unfortunately one that is often forgotten,” Issel said. Idea #3: Real estate Arjuna Mahendran, head of investment strategy for Asia at HSBC Private Bank Singapore, sees attractive opportunities in select mature markets that show positive fundamentals. He notes that in developed markets, many of the assets that are coming onto the market require a discerning approach as prices have relatively already recovered. “We continue to concentrate on fundamentals, focusing on quality assets in prime locations in select markets. In all sectors, we believe that access and expertise will remain key to performance,” he said. Mahendran warns that investors need to adopt a barbell strategy of aggressively adding to risk asset positions, while maintaining a residual core of defensive assets. “We continue to focus on portfolio diversification and maintain some allocation to safe havens, despite current pricing, as a hedge against a probable correction in riskier assets later in 2012,” he added.

Issel Hartmut

Philip Poole

Albert Cheng

Arjuna Mahendran

Idea #4: Gold Yes, gold. As the global economy faces various financial stresses, the need arises for investors to balance their asset portfolio. And what better way to balance that portfolio than by having safe assets such as gold.

According to Albert Cheng, managing director far east for the World Gold Council, gold acts as a form of insurance to your portfolio as gold prices tend to go up when the value of other asset classes are going south. He cites a research by Oxford Economics commissioned by the World Gold Council where scenario analysis using the Oxford Global Model shows that gold performs well in extreme economic scenarios featuring low inflation, a weak dollar, and elevated levels of financial stress where events may trigger a flight to safe assets. So gold can indeed sparkle despite gloomy economic situations. In fact, in their latest Gold Demand Trends report for 2011, Cheng notes that global demand for gold in 2011 exceeded US$200 billion for the first time and had the highest tonnage level since 1997. These results were driven by two main factors: Asian growth and optimism on the one hand and Western desire to protect assets against uncertainty on the other. “At the World Gold Council, we are certain that long-term fundamentals for gold remain strong, with a diverse and growing demand base, coupled with constrained supply side activity. Looking at Asia, there was a major boost in gold demand from China in 2011. This is a trend that we see continuing over the next year, and it is likely that China will emerge as the largest gold market in the world for the first time in 2012,” Cheng said.

Emerging markets currencies look under valued PPP1 vs USD Japan

Current FX2 rate

PPP/Current FX (%)

Interest rate differential (%)








-0.15 -0.25




































NB: 1 PPP is purchasing power parity International Monetary Fund (IMF) estimates, Expressed in national currency per current international dollar.Interest rate differential vs US Fed funds rate. 2Foreign exchange rate vs USD.Source: IMF, Bloomberg, as at December 2011 SINGAPORE BUSINESS REVIEW | APRIL 2012 31


Idea #5: Emerging currencies According to Poole, last year’s selloff was a classic risk-off move with investors dumping ‘risky’ assets including equities, corporate bonds, and high-yielding currencies and buying safe and liquidity haven assets like US treasuries, UK gilts, and Japanese government bonds. This safe haven buying supported the associated currencies includ-

“Global demand for gold in 2011 exceeded US$200 billion for the first time and had the highest tonnage level since 1997”

ing the US dollar, the Japanese yen, and the Swiss franc. As a result, these currencies look expensive on fundamentals, particularly in real purchasing power terms. In contrast to the developed currencies, many emerging markets currency valuations look cheap on such real purchasing power measures and also have attractive interest rate differentials relative to the developed world where yields are likely to remain very low, notes Poole. “The currencies that potentially stand out to us include those of

China, Indonesia, Korea, Malaysia, Singapore, Mexico, and Chile. Many of these currencies depreciated markedly in nominal terms in 2011. In addition to getting currency exposure to play this directly, we believe that over the longer term emerging markets currency appreciation should be a key component of investment returns for equity and local currency bonds, and undervaluation of emerging markets currencies provides an important reason to consider emerging markets exposure more generally,” he said.

‘Dim Sum’ bond issuance has surged 700


600 500 RMB bn

Central banks seem to be mesmerised by the opportunities that gold offers as they became the net purchasers of gold in 2011, therefore adding a driving force to the global gold demand dynamic. Cheng noted: “In 2011, on the supply side, mine production increased slightly to a record annual level but this was countered by a small decline in recycling and considerable net purchases by central banks, further illustrating the importance central banks attach to gold. We are still optimistic about the central banks’ positive attitude towards increasing their gold reserves given the current macroeconomic environment.”

400 300


200 100 0

147 56

10 33




Offshore RMB issuance




40 2010


RMB outstanding deposit

Source: HSBC Global Research, as at December 2011

Corporate debt looks attractive 800






500 400








09/11 06/11 03/11 12/10 09/10 06/10 03/10 12/09 09/09 06/09 03/09 12/08 09/08 06/08 03/08 12/07 09/07 06/07 03/07 12/06 09/06 06/06 03/06 12/05 09/05


JP Morgan IG corporate spread Source: Corporate debt looks attractive


Ratio of JP Morgan IG corporate spread over 5yr UST (%, rhs)


BIG ISSUE 1 industries. With foreigners only allowed to make up a reduced percentage of the workforce, employers will need to look at other strategies to help them overcome the local skills shortage -- the up-skilling of existing staff, recruiting candidates based on potential and then offering training, and retaining mature-age workers. Such steps will require planning and investment on the part of employers. There are many sectors such as oil & gas, IT, accountancy and finance, and sales and marketing where foreign workers are needed to ease the existing local skills shortage, and we would welcome any move to increase the foreign worker candidate pool in these areas.

Will Singaporeans finally be preferred over foreign workers? With the policy on reducing inflow of foreign workers, it may be probable. Krisana Gallezo reports.


he latest slew of measures aimed at further tightening foreign labour inflows could be a bitter pill for smaller companies, according to experts. Mark Chew, founder and principal strategist, Giants Learning Technologies This is a response that effectively helps stem the flow almost immediately. However, a longer term view of the challenge must be considered. First of all, we have to recognise the type of jobs that Singaporeans like to do, and those that they shun. An example of industries that Singaporeans would shun would be the construction industry, cleaning, and even the front-end sales industry. By drastically curbing the flow of foreign workers, these industries would be hit, as cost would definitely increase. In an increasingly educated society, Singaporeans had been shaped to look towards becoming PMETs, and naturally shun those jobs that require long hours and jobs with perceived lower salaries. Singaporeans may prefer other industries such 34 SINGAPORE BUSINESS REVIEW | APRIL 2012

“Singaporeans may prefer other industries such as Engineering, IT, Accounting and Finance. ”

as Engineering, IT, Accounting and Finance. However, there is also no guarantee that Singaporeans will be be preferred over foreign workers even with this policy. What must be addressed is the employability factor of Singaporeans. They must be properly equipped to meet the needs of the changing job climate. Placing their educational qualifications aside, the government needs to examine the appropriate matching of Singaporeans’ skills to that of what employers really want. Chris Mead, regional director, Hays SEA Finding good people with the right skills remains a challenge for employers in Singapore. In the past, foreign workers have been vital to overcoming our skills shortage and ensuring economic growth. So the government’s moves to reduce foreign hires in the manufacturing and services industries will naturally see the pool of suitable candidates that employers can consider contract. Already a skills shortage exists in the manufacturing and services

Benjamin Yang, managing director, Balanced Consultancy Overall, the employment rate in Singapore for 2011 seems to be quite healthy at 2% compared with other countries. However, that does not paint the complete picture. We hire foreign talent mostly in two scenarios. The senior executive level and the more entry level or for lower skilled job. For the former, I think it is understandable. For the lower skilled jobs and entry level graduate jobs, these are the areas of concern. It seems that these two segments are where companies look to hire foreign talent when they can look to hire locally. To hire for such positions, hiring foreigners is really more cost-effective. I do not think we should artificially engage in a quota system for foreign talent. This would skew market forces and it might end up causing a shortage in needed talent. Instead, a levy system makes more sense. By needing to pay a levy for a foreign hire, this helps close the gap in terms of expected salary. And yet companies that are in urgent need of talent can also pay that levy to meet their short-term needs. People criticize Singaporeans for asking for too much pay. While that might have some truth, this is also because of the standard of living in Singapore. A foreign hire might have his family located in his home country where standard of living is much lower. A local hire though would need to pay his flat, transport, higher food cost, etc.

BIG ISSUE 2 EK Yap, Director of Sccube, The Apothecary As both a marketing person and a consumer on the receiving end of unwanted phone calls, I would like to differentiate the following which perhaps a blanket DO NOT Call Registry does not make clear. As an existing consumer of a particular product or service from Singtel or, say, a bank or my favorite restaurant, I would not object if the said company called me to inform me of some particular offer relevant to a particular service or product I have consumed. The practice most of us find most objectionable to is “cold calling” from a database which estate agents and insurance companies in particular avail themselves of.

Will unsolicited calls and messages finally stop?

Consumers may be found cheering once the Personal Data Protection Bill takes full effect. Krisana Gallezo reports.


here’s general consensus that any kind of marketing or advertising should be based on consumer preference, and consumers must opt in for messages that they will receive. Jacky Tan, Senior Marketing PR Manager (Asia Pacific), Evorich Flooring Group According to the 2009 Economic Report of former US President George Bush on the effect of implementing the National DNC Registry since 2003, the program has proved quite popular where 72% of Americans in 2007 had registered on the list, and 77% of those say that it made a large difference in the number of telemarketing calls that they receive. Another survey, conducted less than a year after the Do Not Call list was implemented, found that people who registered saw a reduction in telemarketing calls from an average of 30 calls per month to an average of 6.

“While coldcalling may be an effective sales technique some years ago, those days are gone. ”

This effect may be similar in Singapore eventually. However, in my opinion, it might take some time for business providers, telemarketing agency, and consumers in Singapore to adjust with the new implementation of the proposals. There still might be some people who would invest monies on buying customer information and trying to find loopholes on the new proposals. Ng Chong Yang, Business Development Director, Tangoshark While cold-calling may be an effective sales technique some years ago, those days are gone. It is a simplistic and, to a very large extend, crude way of selling (read pushing) products or services to the end consumers through the exploitation of their personal data. Today’s marketing strategies should be about engaging consumers and allowing them to be in control throughout the buying process. They decide when, where, and how to look for, and consume, information.

Gary Chin, Managing Director Singapore (PH, VN & HK), Admax Network Protecting consumers in this age, where privacy has become such a priceless privilege, is necessary. With the level of data that can be obtained from digital platforms, it’s become important for advertisers today to balance their approach between reaching to their consumers with the most relevant message and not being too intrusive. The European Union already introduced a directive requiring all organisations, as of May 2012, to secure individuals’ permission before installing any cookies on their computers. As an ad network, we offer advertisers the ability to retarget consumers across our network. Eddie Chau, CEO & Founder, Brandtology The bill is a good step forward in protecting the privacy of the individual, and the inclusion of the DNC registry would certainly be welcomed by the general populace. For Brandtology, as a provider of Online Business Intelligence services, it would be interesting to see if the PDPA affects online marketers as well. Generally speaking, most social media marketing is Above-The-Line (ATL) so as to reach a wider audience and this is quite clear, but there is direct online marketing that is still quite a gray area in terms of privacy, and I do think this will also become an area of concern. SINGAPORE BUSINESS REVIEW | APRIL 2012 35

legal briefing

What retailers should know about the Lemon Law Proposed changes are ideally aimed at boosting the retail industry, but experts note some ambiguities.


hat’s not so cool about the changes? Under the amended Consumer Protection (Fair Trading) Act (CPFTA), a consumer who has bought non-conforming goods has the right to require the supplier to repair or replace the goods, unless such remedy is impossible or disproportionate in comparison with the other remedies. However, Baker & Mckenzie associate principal Ken Chia notes that, in theory, a disgruntled consumer can already seek to rescind a contract for sale of goods on the basis of common law principles -- breach of contract, misrepresentation, and/or statutory rights like breach of implied condition of satisfactory quality under the Sales of Goods Act. Amendments to the consumer protection bill thus, in a sense, merely ‘codify’ certain rights already available into the law, says Chia. Chia also notes a lot of uncertainty around the acceptable modes of replacement or refund under the amended CPFTA. “For example, would it be acceptable for a retailer to replace non-conforming goods with pre-owned or refurbished items? Can the refund be provided by way of vouchers, and if so, what conditions can be set on the use of such vouchers,” asked Chia. Rajah & Tann partner Lim Wee Hann observes the same, noting that the bill does not make clear what constitutes ‘not conforming’ to the applicable contract and also what consists a ‘refund’ or ‘replacement’. “In this regard, there are retailers that issue vouchers or provide refurbished product and consider these satisfactory ‘refunds’ or ‘replacements’,” said Hann. Chia also highlights some fundamental issues around the coverage of the amended CPFTA. For example, there is a presumption, he says, that goods discovered to be non-conforming within six months of delivery were non-conforming at the time of delivery; this does not imply that goods discovered to be non-conforming after six months are outside the ambit of the CPFTA. On the provision which states that the presumption does not apply where ‘its application is incompatible with the nature of the goods’, Chia says that this has frequently been interpreted as excluding goods with a short shelf life from the scope of the amended CPFTA. “It is unclear whether the provision may apply equally to goods which do not have a limited lifespan but cannot be reused upon return. More pertinently, stating that the presumption does not apply is different from stating that the amended CPFTA does not apply to such goods. If a consumer can prove that a consumable item like food was non-conforming at the time of delivery, is he entitled to the remedies set out under the amended CPFTA,” noted Chia. 36 SINGAPORE BUSINESS REVIEW | APRIL 2012

Ken Chia

Lim Wee Hann

How would the proposed changes affect retailers? With the proposed changes, businesses dealing with consumer goods would need to give careful consideration on keeping and maintaining proper records or documentation to establish that the defects did not exist at the time of delivery of the goods. Chia shares that staff should be trained to handle customer complaints and to identify products that may have been tampered with. Retailers also, he says, will have to scrutinise their exchange or return policies to ensure that such policies conform with the amended CPFTA. “Retailers may also have to review certain promotional tactics or business models that are currently used against the new legal landscape introduced by the amended CPFTA. For example, it is customary for certain businesses to require their customers to waive their right to a refund in return for a lower price. Similarly, it is common for retailers to hold sales promotions during which goods sold are not eligible for exchanges or refunds. The validity of such terms would be questionable under the new regime since parties are not allowed to contract out of

“It is unclear whether the provision may apply equally to goods which do not have a limited lifespan but cannot be reused upon return” the provisions of the CPFTA,” he added. On the bright spot, Mr Hann says that the law in general will assure consumers, local and tourists alike, that the products they buy are of good quality and/ or performance. This, he says, will in turn boost the image of Singapore’s retail industry and foster good business practice among retailers. Are there additional costs to retailers? It cannot be denied that retailers will be faced with certain additional costs once the amended CPFTA comes into effect like the costs incurred in sending goods for repair, including postage, labour, and parts. Mr Chia notes that the cost impact may potentially be significant, particularly for big-ticket items like cars given the corresponding amendments to the Hire Purchase Act. However, such costs, he says, can be minimised by ensuring that the retailer has the necessary back-to-back arrangements with its supplier, and can look to the supplier for repair and replacement of non-conforming goods.


analysis: Cash Management

RMB set to beat USD as the main currency for cross-border trade

The internationalisation of RMB is providing banks with opportunities to enhance their cash management structures in the face of a USD liquidity shortage — but does a shortage really exist until now? Find out as Roxanne Uy investigates.


he Asian banking industry has been facing the challenges of USD liquidity shortage for quite some time, and the cash management sector is one of the most badly hurt. But bankers seem to be optimistic as they believe the crisis is soon to be over. You may ask, “How is it so?” According to Ravi Saxena, Citigroup’s managing director and Asia Pacific trade head of global transaction services, the US liquidity shortage is a recent phenomenon that became acute around early Q4 and he believes that liquidity is actually coming back into the system. “Obviously when liquidity is tight, customers benefit; they are long on cash because they get better yields. But on the flip side, they also pay more  on their borrowing. When liquidity is tight, banks need to pay a little bit more on the liability side and that would have some ramifications on the cash management business. However there is 38 SINGAPORE BUSINESS REVIEW | APRIL 2012

“...with the internationalisation of RMB, corporates are increasingly looking to redenominate their cross-border trade flows into and out of China into RMB”

also the natural hedge provided by the Trade business,” he adds. DBS’ global transaction services head of sales Ken Stratton is also optimistic on the issue of liquidity. He notes that though some banks are encountering challenges accessing USD customer balances to meet their USD-based trade finance funding needs, the USD liquidity shortage is not really hurting many banks’ cash business as much. “Despite all of the issues around the fluctuating USD, and even with the significant increase in RMB trade flows, the dollar still represents the main currency in which international trade is denominated,” he stresses. But John Laurens, HSBC’s head of global payments and cash management, believes that despite the USD being the principal currency for cross border trade, the RMB is now playing a big role in international trade and finance. And with the internationalisation of RMB, corporates are in-

creasingly looking to re-denominate their cross-border trade flows into and out of China into RMB. “This is providing them with opportunities to enhance their offshore regional cash management structures to include their RMB positions, or to use the emerging offshore RMB bond and debt markets in Hong Kong for funding,” he adds. Asian banks take up the slack But regardless of currency, trade finance in Asia still promises to be a haven of greater opportunities for the banks. With reports of many European banks exiting trade finance, Asian banks are stepping up and are taking up the slack. DBS’ Stratton recognizes that a number of European banks are re-looking their trade portfolios and their trade sales resources based in Asia. “Feedback is that they are focusing on their core clients, and directing funding and relevant trade

analysis: Cash Management resources accordingly. This has created some great opportunities for the Asian banks, and margins are increasing in tandem,” he adds. Citi’s Saxena concurs as he notes that while terms have definitely tightened in the last couple of months, Asian banks are stepping up and taking part of the slack. “When you look at trade finance, ultimately you’re financing a client’s working capital. And while the natural currency does tend to finance cross-border trade in US dollars, some Asian banks can also meet the requirements through their local currency financing. There are some sectors where the pinch feels a little bit more. But I think as a whole, I don’t believe that there is any problem of large proportions. Yes, it is an issue, but I think there is capacity being made available,” he says. Cash and trade integration As the banking industry gets more and more interrelated and internationalised, Asian banks will definitely have to strive for better cash and trade product sets. And most of the banks see the integration of cash and trade as the key for greater efficiency and better service. HSBC’s Laurens acknowledges that clients are looking for greater advisory support from banks to improve their financial processes. And whilst the delivery of traditional payments and collection services, whether through trade or cash product sets from banks, remains important, clients are looking for service enhancements beyond the normal movement of cash. Laurens also shares that HSBC is increasingly being asked by these clients to provide similar payments, collections and financing services to their customers or suppliers to further enhance the integration process within the supply chain. “This trend is in line with an overall shift in the value proposition of Transaction Banks. To be effective in today’s world, their orientation needs to move to the integration of cash, trade, foreign exchange and short term credit to meet the corporates’ need for working capital management and the effective harnessing and management of their liquidity,” he says. Citi has also integrated its cash and trade business for almost 5 years now. According to Saxena, they were able to better manage their balance sheet

through integration. “If you just take one business, let’s say cash, it generates liabilities. And then consequently these liabilities need to be deployed to really earn the returns, and that is the trade part of the equation. In terms of just optimizing the balance sheet and managing it, it is very helpful that you have the businesses together to support clients,” he adds. The integration also results in further synergies in payments and payables financing in terms of integrating with the clients and workflow management. So how many banks have actually been successful at integrating cash and trade? DBS’ Stratton reckons that great momentum has been made on delivery channels, and many now offer consolidated cash and trade offering, with single sign on capabilities and data threading. “On the sales front, there has been some success, but there is still a long way to go. Sales people are getting much more comfortable asking questions to unearth opportunities outside their main area of expertise. But once the opportunity becomes more complex, they are still looking to the subject matter expert to iron out the deal,” he says. Managing balance sheets Apart from better products and services from banks, investment in Asia is also dependent upon the companies’ ability to show profit margins and potential growth. Asian companies therefore face the increasing need to manage their balance

“Investment in Asia is also dependent upon the companies’ ability to show profit margins and potential growth”

Ken Stratton

John Laurens

Ravi Saxena

sheets directly. HSBC’s Laurens notes that the growth and profitability story amongst Asian markets is driving increased focus and investment into the region. Although the uncertainties in 2012 may result in a slowdown, given the rising power of the Asian economies, the longer term trend is growth. “As the financial centre of gravity for many companies moves from West to East, the need to increase management control and visibility in the region increases. Corporates are either establishing regional management and financial centres in Asia, as critical mass makes these economically viable, or are building out existing regional HQ/ treasury centres,” he explains. Citi’s Saxena also shares that clients are increasingly recognizing the benefits of decentralizing some financing decisions. Post-2008, there was a fair degree of pressure in terms of capital and liquidity. You could technically raise financing here in Asia cheaper than  in other markets. “So my view is that  while the capital centres of the world are widely interconnected, there are  still certain pockets where you can get benefits in terms of  competitive financing , and  this can be leveraged by clients.  If you are a global organization, you can leverage that to your advantage. That is a competitive advantage that we, at Citi, can offer our clients, given our global network in over 100 countries and in 17 markets in Asia,” he says.



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FCL Peak Pte Ltd








BBR Kovan Pte Ltd








MCC Land (Singapore) Pte Ltd








Morganite Pte Ltd






Source: Urban Redevelopment Authority




Investors’ appetite shifts to strata offices Should you make the move from residential to office property investments this year?


trata-titled industrial and commercial projects saw increased investment demand in 2011 as investors shifted their focus away from residential projects, given the fear of additional policy measures for residential property. According to a study from R’ST Research, a total of 477 strata office units were transacted in 2011 which was more than the 471 units reported the previous year. Ong Kah Seng, director of R’ST Research, says the active buying interest for strata offices in 2011 was partly driven by the private residential cooling measures implemented in January where investors favored non-residential properties which do not come with measures like sellers’ stamp duty. In terms of the total value of strata offices transacted in each year, 2011 had seen about S$1.13 billion, or 3.4% higher than S$1.10 billion of strata offices transacted in 2010. On top of increased sales activity, Mr Ong explains that the increase in value of strata offices transacted was partly due to a run up in prices of strata offices in 2011 of 7-12%. Colliers International research director Chia Siew Chuin shares the same view, adding that the demand for strata-titled offices was largely driven by the low interest rate environment as well as business occupiers who prefer more control over their premises after being displaced or who will be displaced from their existing locations as their office buildings are being torn down for re-development. HSBC senior property analyst for ASEAN Pratik Burman Ray meanwhile notes that in terms of

“In 2012, we expect investment demand to cool down, given a slowing economy and risk of recession” investment quantum, strata-titled industrial projects and certain commercial projects, depending on size, are well suited for investors who would otherwise focus on residential property for investments. These could be high net worth individuals, he says, as well as smaller-sized private equity funds. According to Mr Ray, investment demand remains strong for such projects, especially given low interest rates. He cautions, however, that it is unclear at this stage whether there will be sufficient end-user demand relative to supply. “With slower economic growth expected this year and in the medium term, end-user demand could weaken, which in turn could affect investment demand for such properties.

Krisana Gallezo Senior Reporter

No. of Strata Office transactions

Sources: URA Realis, R’ST Research

What to expect in 2012? Although strata offices should see continued encouraging investor interest, experts believe that it is set to moderate in sync with economic slowdown in Singapore and more subdued overall property sentiments. “In 2012, we expect investment demand to cool down, given a slowing economy and risk of recession as well as increased risk that the government may expand its policy measures beyond residential to industrial, in particular strata-titled industrial, and strata-titled commercial properties,” said Mr Ray of HSBC. Mr Ong, meanwhile, stresses that while strata offices are considered different property market from the single owner office building market as the occupants’ profiles are different, the economic slowdown can affect both large, international companies and small businesses, especially given that economic moderation is expected to be fairly broad-based. As a number of smaller businesses which are occupiers in strata office buildings depend on larger organisations for businesses, the business challenges faced by the larger companies leading to cautiousness and cost cuttings can impact the bottom line of smaller companies, he says. According to Mr Ong, some strata office buildings will favor businesses of selected trades or industries, and buyers keen on properties in the subject building should strive to have an understanding of the business performance of such industry clusters so as to understand the strength of the tenant demand base. However, investors may continually shun residential properties, particularly for foreigners and some permanent residents who have to pay ABSD.

Singapore investors eyeing on strata offices


analysis: Asian Luxury

Lorem Impusum

Asian luxury sales soar despite the global economic crisis Statistics shows that a crunch does not mean a plunge in splurging.


011 may have been a terrible year for the European economy, but it was a great one for the continent’s purveyors of posh. Sales growth was at the highest in over a decade with major brands posting an average of 20% increase, according to an HSBC survey. Perhaps all that Prada and Gucci needed was to settle frayed nerves. Misery loves luxury Of course Asia continued the charge with a sales growth of 35%. But the Americans and Europeans were not far behind, posting luxury sales growth of 24% and 12% respectively in 2011. Even the Japanese, hit by the dual ravages of a tsunami and radiation scare, managed to find time to stock up on emergency rations of Louis Vuitton and Chanel, with sales in the land of the rising sun up 4% over the year. Misery may love company, but miserable people seem 42 SINGAPORE BUSINESS REVIEW | APRIL 2012

“First-time buyers still account for 65% of sales of luxury brands in China.”

to love luxury. Even 2012 is expected to be a good year for the branded luxury goods industry, with HSBC analysts expecting sales to grow by 10% this year, tapering off to 9% in 2013. Even this would be a good performance given that the long-term industry growth rate is around 7-8%. Some brands are more exposed to Hong Kong and China than others, and buying practices are also quite different in European markets. Coach, a US fashion retail, actually has more men buyers of leather and accessories in China, where the ‘man bag’ and ‘man pouch’ are still in vogue. This differs vastly from Japan where the majority of Coach outlets are in the women’s handbag section, and where men are presumably not so keen on man bags. Luxury retail sales in Asia Overall 2012 should see luxury retail

sales in Asia slow from 35% in 2011 to 20%, reckons HSBC’s Erwan Rambourg, adding that China should continue to be a strong spot. But there are nuances. In the mainland, the number of people who can afford luxury goods will grow at a slower pace, but the number of people who actually buy will continue to increase, thanks to the expansion in distribution. Of particular interest is the fact that for many Chinese, this year may be the first time they step up and buy a luxury good. First-time buyers still account for 65% of sales of luxury brands in China. But if sentiment in China does take a hit, it could be the watch retailers who suffer the most, mainly because men are the main buyers and they can go without a new watch but they always need to buy their wives a new Louis Vuitton, plus a Prada for the mistress. Aaron Fischer and Mariana Kou,

analysis: Asian Luxury analysts with CLSA, note that luxury goods look set to be the fastestgrowing consumer category in China over the next five years, with a 25% Cagr against general consumption at 11%. “Luxury sales in Greater China represent 10% of the global market sales. If we include sales to Chinese tourists abroad, we estimate Greater Chinese consumers to account for 15% of global sales. But we are only at the start of this golden opportunity. Given rising incomes and supportive social factors, we expect Greater Chinese customers to account for 44% of global luxury sales by 2020.” This implies a market size of €74bn by 2020, they reckon, making China the largest domestic market in the world. Including travel spend, Greater Chinese demand is expected to account for 44% of the global luxury goods market. Fischer cites a Hurun Research which shows that mainland Chinese millionaires are 15 years younger than their overseas peers. As expected, the vast majority live in the coastal regions and top-tier cities. Beijing, Guangdong, and Shanghai are home to 48% of China’s millionaires. The number of individuals with more than RMB1,000 million has increased at a 50% annual rate from 24 in 2000 to 1,363 in 2010. Mainland Chinese make time for luxury During the global financial crisis of 2008, high-end watch sales took a dive, and Swatch recently mentioned it had witnessed lower growth rates for the higher-end of its portfolio in mainland China. According to Swatch CEO Nicolas Hayek, midrange brands did better than high-

end brands. Hayek notes that the group’s January/February sales to the end-consumer in Mainland China were 50% for Longines, 57% for Tissot, and 14% for Omega. In Mainland China, Hayek thinks that the group’s high-end brands could grow at 9-10% in 2012 and the rest of the portfolio at “high double digit rates”. So far, watch sales in Hong Kong and China are holding up. Swiss watch exports for January 2012 showed no signs of a slowdown for Hong Kong and China while the rest of the world is slowing. One example is Hengdeli, the largest retailer of watches in China with a 50% market share. The company reported strong post-Chinese new year sales, with exports up a third in Hong Kong and China in January compared to 16% globally. Of course, many watches are bought by mainland Chinese in Hong Kong. According to CLSA’s survey, Oriental Watch, a large dealer of Rolex and Tudor in Hong Kong, believes that Chinese customers accounted for about 50% of its FY10 HK$3 billion group turnover. At Emperor Watch & Jewellery’s flagship store in Tsim Sha Tsui, more than 85% of customers are from mainland China. Even in the Central business district, the company estimates that 70% of their customers are mainlanders. Luk Fook believes 50-60% of its business in Hong Kong comes from Chinese tourists, and the jeweller opened new shops in Hong Kong in early 2011. Trinity, which operates luxury menswear brands including Cerruti 1881 and Gieves & Hawkes, also finds 60% of its customers in Hong Kong coming from China. Mainland Chinese still spend more

“Luxury goods look set to be the fastestgrowing consumer category in China over the next five years.”

on luxury products outside of China than domestically. Research firm Bain estimates the Chinese overseas luxury market at RMB87 billion, which is 27% larger than the RMB68 billion spend domestically. Many large department stores in Japan, Europe, and the US have hired Mandarin speakers to ride on this trend. First time buyers dominate One reason for the strong growth in luxury watch sales in China is that many are buying for the first time. Rambourg notes that up to two-thirds of consumers purchasing luxury products in China are new to the brands they buy. He takes the view that the proportion of clients who are “new to a brand” is greater with brands that have lower price points like Rado, Mido, Longines, and Tissot, compared with Omega and other brands with higher price points. “We believe that consumers who are able to afford higher price points are more ‘travelled’ and exposed to negative headline news. These weigh on sentiment and influence their decision to postpone a purchase and wait for a better psychological environment. The access segment is also less vulnerable to the ‘guilt factor’, wherein buying a USD1,500 watch is less of a statement than buying a USD50,000 watch,” Rambourg notes. According to CLSA, some 24% of people that they surveyed, who earn around RMB41,976 per year, said that they would be willing to spend more than RMB50,000 on a watch. The survey also revealed that Chinese consumers are willing to pay extra for luxury. As one businessman said, “A price tag of more than one

Luxury customers by age

Source: China Reality Research

Depressed? Depressed?Luxury Luxurybrands brandssuggest suggestshopping shopping as therapy. SINGAPORE BUSINESS REVIEW | APRIL 2012 43

analysis: asian luxury million yuan a bottle -- that does more than show off your wealth, it shows you have good taste.” Not everyone may agree with this, Fischer notes. “The businessman often pays more than RMB30,000 for a bottle of wine to entertain guests. In October 2010, three bottles of Chateau Lafite’s 1869 vintage sold for a record US$230,000 each in Hong Kong, at 28x Sotheby’s top estimate. Fine wine prices increased 40% during 2010.” Niche buyers Fischer adds that there are some luxury products that are not as popular in other countries but are highly interesting to Chinese customers. “For example, a pack of premium puerh tea from the 1980s was sold at RMB13,440 in a 2009 auction, which is almost RMB40 per gram. Another pack that was ultra premium and believed to be more than 80 years old was sold at RMB504,000, or RMB1,800 per gram. Antique furniture is also popular among the Chinese rich. Hainan rosewood, in particular, is very prestigious and a set of four chairs was recently sold at RMB17.7 million and a six-column bed frame fetched a record of RMB43.1 million.” The gift segment of the watch market may be in for a hit if the economy slows, notes Rambourg. But corporate gift giving, or Guanxi, drives high-end purchases more than sales of the likes of Rado, Longines, and Tissot. “If real estate deals are scarce and government officials change at year-end, we see that gift-giving will slow down, at least temporarily. Our estimate for Greater China is that sales growth for Omega and aboveprice points will be in the high single

Come on, Vogue. Let your money move to the music. “Luxury makers have the advantage of earning higher margins on sales in Asia, up to four times markups, compared to an average of 2.5 times in continental Europe.”

China consumer expenditure Cagr growth (2010-15CL)

Source: Euromonitor, CLSA Asia-Pacific Markets


digits/low double digits only, while lower-priced brands could still grow comfortably in the high 20s, if not more on the back of middle-class expansion and higher wages,” he adds. CLSA’s survey estimates that 16-17% of Chinese consumers bought luxury goods as gifts. Where is the money coming from? So, where is China’s luxury growth coming from? According to CLSA’s survey, of the 340 consumers in 65 Tier 1-3 cities and 31 luxury store managers, 53% of consumers surveyed in Tier 1-2 cities spent RMB10,000 or more on luxury goods in the past 12 months, compared with 39% in Tier-3 cities. “On average, among all the consumers we surveyed who have made luxury purchases in the past 12 months, each spent RMB16,674. On average, they spent 10-12% of their total household income on these items. This underlines the high propensity to spend on

luxury goods in China.” Given the growth in all Chinese cities, it is not surprising that other luxury brands are continuing in their China rollout strategy. They argue that if you can sell a pair of shoes to just 0.1% of one billion Chinese buyers, you will still make a lot of money. One such shoemaker is Tod’s, which has ramped up its Asian footprint from 9% sales in 2008 to 18% in 2011. Even so, it sits well behind other fashion brands who average 30% of their sales in Asia. Tod’s today is one of the fastest growing brands in China, and grew by more than 50% in 2011. The group will open 20 more stores in 2012, mainly in China, and wants to have 100 stores in Asia over the longer term, up from 50 by the end of the year. Luxury makers have the advantage of earning higher margins on sales in Asia, up to four times markups, compared to an average of 2.5 times in continental Europe, notes Rambourg.

For those who shopped oveseas: where did you make the luxury purchases?

Source: China Reality Research

Regional EConOmy Briefing: THAILAND Contributions to GDP growth, by expenditure

Should investors wade in the waters?

Floods ravage Thailand’s economy The 2011 deluge drains hope on the economy’s ability to rebound. Krisana Gallezo reports.

The 2011 Thailand floods’ damages were expected to affect the GDP, but not to the point of staggering growth at 0.1%. This is much lower than the government’s forecast at 1.5%. Not surprisingly, the biggest decline on GDP by expenditure came from net exports after the floods severely damaged a significant number of factories in key manufacturing areas. According to RBS estimates, the trade balance subtracted a hefty 5.9% from overall GDP growth, as exports plunged by over 15% sequentially. OSK-DMG Economics Research comments that the floods had a greater negative impact on the economy than previously expected. “We had expected private consumption to hold up and the government to accelerate its spending to mitigate the factory closures and weak exports,” says OSK-DMG economist Leslie Tang. Consumption unfortunately fell by 4% QoQ. RBS also admits that there was a significant ‘shock’ element behind the decline in Q4 GDP. Nevertheless, it points that cyclical weakness was also already evident prior to the flood when export momentum had been slowing since 2Q11, as had investments. “In fact the contraction in investment in Q4 marks the second straight quarter of decline. Then there is consumption, which for the better part of 2011 was already drifting sideways (in level terms) prior to the floods,” says RBS economist Su Sian Li. Government’s ambitious forecast Despite sharp economic deterioration in 2011, the government remains optimistic that a growth of 5.5-6.5% could be achieved this year. In fact, it believes that 7.0% is even reachable. Economists, however, say otherwise. “We are not as optimistic as the Thai government. We think that for growth to hit the top end of the growth forecast and beyond, there has to be discernible strength in exports. This is unlikely given the uncertain external environment currently,” says OSK-DMG’s Tang. Tang however notes that government spending for the rebuilding efforts which started in Q1, as well as favorable base effects, could support the economy this year. “We also think the


Bank of Thailand can further cut its policy rate to support the economy, though this would have to be weighed against greater inflationary pressures that could arise from the rebuilding efforts,” she adds. More worries The OSK-DMG forecast of 5.2% growth in 2012 is below the government’s projection range. RBS, meanwhile, thinks that while a ‘technical recovery’ is possible in the first half -- as plant and equipment will be replaced and workers will be re-employed to operate them – there are more worries as the broader economic cycle tends to dominate, especially in the absence of strong fiscal efforts to boost the economy. “Parliament has approved a widening of the THB50 billion budget for FY12 to THB400 billion. But in absolute terms, as well as a percentage of GDP, this is still a smaller net outlay compared with FY11 (-3.6%of GDP, vs -3.9% for FY11),” says Su. Also, other off-budget measures, including a proposal to allow BOT to issue THB300 billion in soft loans to commercial banks, THB350 billion of flood recovery/water management programs, and the establishment of a THB50 billion disaster insurance fund to help firms secure flood insurance, are in RBS’ view. The goal is to still too ‘politically tangled’ and/or too longterm to make an immediate difference to the current economic environment. Fitch Ratings also shares the same view, adding that pre and post-flood fiscal loosening could narrow the fiscal buffers that the Thai sovereign can deploy against future shocks. “More broadly, the orderly handover of power following the July 2011 elections was reassuring. But, like fiscal policy, the political risk which was behind the ratings downgrade in 2009 (that took Thailand’s Long-Term Foreign Currency IDR to ‘BBB’), remains an important ratings driver and will be monitored closely,” Fitch Ratings notes, adding that that the economy will only grow by 4%. RBS tagged the government’s forecast as ‘highly ambitious’ as it maintained its projection at 2.9% growth. “The data so far is not great – there is a rebound underway, but we remain well off pre-flood levels in terms of activity and confidence,” says Su. She adds that in December, the central bank’s private consumption index bounced 1.7%mom after sliding a cumulative 5.6% from August 2011. Meanwhile, consumer confidence increased for a second month in January, albeit at a slower pace and still at a two-year low. Also, as of December, no recovery was seen in BOT’s private investment index. SINGAPORE BUSINESS REVIEW | APRIL 2012 45



he new Mercedes Benz B-Class was unveiled in Asia this March. The car is scheduled to be one of the first to be produced at Mercedes’ brand new plant at Kecskemét in eastern Hungary with an investment of €800 million. The B-Class has been a huge success in the world. The B-Class heralded a new market segment, attracting more than 700,000 customers worldwide. In Germany, where the largest B-Class market resides, sales rose by 5.6% in the first half of 2011 prior to the launch of the new model at last year’s Frankfurt motor show. The second-largest market for this model is, not surprisingly, China, where sales rose a staggering 46.8% in the first eight months. Enhanced features The new B-Class features a newly developed four-cylinder gasoline engine with direct fuel injection and turbocharging, a new dual clutch transmission, and advanced assistance systems. At the model launch, Chief Operating Officer of Mercedes-Benz Limited Reiner Hoeps pointed out that, “No model change in the history of Mercedes-Benz has ever seen so many new developments introduced in one fell swoop.” Although the exterior appearance has changed little, there are vast improvements under the skin. The new model is slightly lower in its overall height but offers more space inside. The latest B-Class sits a full five centimeters lower on the road than its predecessor; the seat height in relation to the road has been reduced to make it easy to get aboard. However, as a result of numerous customers’ requests, the seating position is a little more upright. Headroom has also been improved. All these modifications give the B-Class far more rear legroom than even an S or E-Class Mercedes-Benz. Overall, the latest B-Class is more agile and efficient but remains ultra-comfortable and particularly spacious for a model in its class. Performance and economy The new four-cylinder engine is a 1.6 liter turbocharged unit that delivers a healthy 156 bhp (115 kW), which offers a benchmark 0-100 km/h time of a respectable 8.6 seconds, while the top speed is a heady 220 km/h. Maximum torque is 250 Nm, produced at the low engine speed of just 1,250 rpm, with fuel consumption rated in Europe at just 5.9 liters per 100 km. Another first in this class is the advanced seven-speed, dual-clutch transmission. The gearbox is extremely compact, particularly variable with regard to adaptation of the engine speed, thanks to its seven gears. It also features an electric oil pump, for start/stop capability and shifts ratios without any interruption in tractive power, combining the benefit of an automatic with the efficiency of a manual transmission. Further convenience is offered with the active park assist and speed-sensitive power steering. Safety features Mercedes-Benz’ advanced brake assist system increases the pedal pressure in an emergency. There is also the latest electronic stability program and a tirepressure-loss warning device. Passive safety includes front airbags for driver and front seat passenger, as well as head and thorax bags, while full-length air curtains protect all occupants. Optional rear side bags can be specified if desired. In addition, there is the unique ‘drowsy’ awareness system which can alert a driver if his car begins to drift lanes; a useful add-on if traveling long distances, particularly at night. Another standard feature is the Collision Prevention Assist, which monitors the road ahead and gives visible and audible warnings if the car approaches another vehicle or object at an unusually high speed. It means, in reality, that rear-end shunts can be avoided or at least the consequences mitigated. 46 SINGAPORE BUSINESS REVIEW | APRIL 2012

On the highway Driving the new B-Class makes you feel that you are very close to the front of the car. It makes for excellent visibility. Power from the engine is immediate with no perceptible turbo lag, while the sevenspeed transmission can be left to its own devices or the driver can operate steering wheel-mounted shift buttons. Although the engine is reasonably powerful, this is no sportscar; it is though a comfortable, yet competent five-seater that is probably the best in its class.

The fast and secure Speed meets safety in the new Mercedes Benz B-class writes Jeff Heselwood

When the A-Class was launched in 1997, questions were raised about its passenger safety, owing to the limited frontal area. Mercedes Benz was quick to point out that in the event of a head-on accident, the engine and transmission were designed to go beneath the car and not into the passenger compartment. Much the same is true of the B-Class: the safety cell of the B-Class is infinitely safer than many other vehicles in this class and probably at par with several larger sedans. Slightly bigger in overall dimensions than the A-Class, the B-Class is without doubt a solid, versatile machine with few direct competitors.



Upgrade your travel style

Bring panache back into jetsetting with slick suitcases and holdalls that contain as much style as substance in their design. Globe-Trotter Cumulus, 501 Orchard Road, #02-14 Wheelock Place, Singapore 238880 - 67333486 An icon of timeless English style, Globe-Trotter has trotted around the globe with some of the most famous English personalities of the 20th century. It had accompanied Scott of the Antarctic on his ill-fated adventure, climbed to base camp at Mount Everest with Sir Edmund Hilary, escorted Winston Churchill during the war, and honeymooned with the future Elizabeth II in 1947. Today, Globe-Trotter continues to be her majesty’s choice of case, along with many travellers who appreciate the careful construction of the cases; its leather handles and corners are formed over a five-day process. Available at around HKD 11,500 and 33-inch at HKD 13,500. Samsonite No. 6 Raffles Boulevard, 02-281 Marina Square, Singapore 039594 - 63367728 Samsonite surely needs no introduction for today’s jetsetters. The brand prides itself on its unrivalled strength (whatever the condition of your hair may be). On the edge of innovation, Samsonite’s famous hard shell suitcases are pressure-formed out of temperatureresistant, highly impact-resistant plastic or polycarbonate for a strong, lightweight, and always handsome finish. Their spinner wheels rotate 360°, making for easy wheeling in all directions. Durability extends to their fabric ranges too, such as the new Herios collection in heavyduty ballistic nylon with waterproof DuPontTM Teflon® coating. Prices range from SGD 390 to HKD 520. Williams British Handmade Created with the finest leather and materials, the luggage from Williams British Handmade are clever, irreverent, and completely indiscreet. Each piece from the brand is either limited edition or entirely bespoke, making it quite unlikely to find anything else that resembles your suitcases on an airport conveyor belt. In a world that values quantity over quality, sheer volume over quality, Williams British Handmade is a much-needed throwback to a tradition of artisanal craftsmanship. Check out the delightfully quirky Corner Suitcase, priced at GBP 3,200. Rimowa 2 Bayfront Avenue, #B1-148 The Shoppes at Marina Bay Sands, Singapore 018972 - 66887104 This German company established in 1898 comes with all the engineering excellence you might expect. They offer travellers a range of elegantly contoured luggage in hardy aluminium or hi-tech polycarbonate (a lightweight material originally developed for aviation), with much of the production still done by hand. Other innovations include their patented Multiwheel® systems, which glide with the unsurpassed smoothness of an Olympic figure skater across most surfaces. Available in four sizes from a carry on at HKD 4,180 to a 30” case at HKD 4,880. 48 SINGAPORE BUSINESS REVIEW | APRIL 2012


2 Bayfront Avenue, L1-50 The Shoppes at Marina Bay Sands, Singapore 018972 - 63043507 Mulberry, best known for its Brit chic eclecticism, also houses a sizeable collection of covetable luggage and holdalls. With timeless silhouettes, stellar stand-out prints, and an (occasionally) idiosyncratic palette of prints and colours, the brand gives you travel gear that is unconventionally quirky and luxurious at its best. The beautifully textured Scotchgrain trolley is available at SGD 1,990.

Cordlife Singapore is



Consumers worried over recession Top global concerns

A recessionary mindset is growing among consumers around the globe

Source: Nielsen Q3 Global Consumer Confidence Index (refer appendix for Nielsen Global Consumer Confidence Survey methodology)

Source: Nielsen Q3 Global Consumer Confidence Index (refer appendix for Nielsen Global Consumer Confidence Survey methodology)

Southeast Asian consumers are planning for the future

Source: Nielsen Q3 Global Consumer Confidence Index (refer appendix for Nielsen Global Consumer Confidence Survey methodology)

Hong Kongers demand for better digital cameras

Sources: PAX Q3 2009 to Q2 2010; 10 markets excluding Tokyo PAX Q3 2010 to Q2 2011; 10 markets excluding Tokyo

Trends showing strong pickup for hot items

Source: 10 markets excluding Tokyo.

Singaporeans enjoy some time off

Sources: PAX Q3 2009 to Q2 2010; 10 markets excluding Tokyo PAX Q3 2010 to Q2 2011; 10 markets excluding Tokyo

For more information contact: Nielsen, Deanie Sultana (; Synovate, Fion Cheung ( 50 SINGAPORE BUSINESS REVIEW | APRIL 2012



Singapore Business Review  

Apr May 2012