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Asian art business auction houses zoom in on new collectors


atale of two flows

The low-down on Bitcoin

stalkers now criminals

uber’s x-factor 2014 a record year for apac M&A MICA(P) 244/07/2011 KDM No: PPS1645/3/2008

Crowdfunding big dreams

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Colin Riegels - Partner Banking, Finance & Corporate Lisa Pearce - Partner Investment Funds Shari Hawke - Counsel Corporate & Funds Richard Griffiths - Senior Associate Banking & Finance Zitian Ng - Associate Banking & Finance

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FROM THE EDITOR Publisher & EDITOR-IN-CHIEF Tim Charlton ASSOCIATE PUBLISHER Laarni Salazar-Navida Art Director Jonn Martin Herman Editorial Assistant Queenie Chan Editorial Assistant Alex Wong ADVERTISING CONTACTS Laarni Salazar-Navida

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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: sbr@charltonmedia. com 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. Also out in with online readership of 200,000 monthly unique visitors*. *Source: Google Analytics

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In this issue, we also bring you a comprehensive report on the current trends in the art business in Asia, especially in Singapore and Hong Kong. Our channel checks reveal that in its quest to become a “Renaissance City,” the Singapore Government has been renovating a number of museums while establishing new ones such as the National Art Gallery, which will be completed in 2015. We also found out from industry experts and analysts that 2014 could be a record year for Asia Pacific M&A. China could play a big role, with cash-flush PE houses taking advantage of selling opportunities among state-owned enterprises (SOEs) and buying opportunities among private sector companies.

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**If you’re reading the small print you may be missing the big picture

Singaporeans planning on starting their own Facebook or Google will find this issue a must-read as we delve deeper into the country’s budding crowdfunding market. Its potentials and drawbacks are exposed as more Singaporeans increasingly explore this path to turn their novel business ideas into reality. We talked to Singaporeans who had their projects successfully funded through crowdfunding as well as to several crowdfunding experts here and abroad to find out what future this platform has in Singapore.

24,700 Circulation

Our team of journalists also talked to merchants, lawyers, and the Monetary Authority of Singapore to explore the potentials of Bitcoin - a borderless, virtual currency that was designed to be unregulatable by monetary authorities. Enjoy the issue!

Tim Charlton Singapore Business Review is available at the airport lounges or onboard the following airlines:

Singapore Business Review is available at the following clubs and hotels: American Club Hollandse Club Laguna National Orchid Country Club Raffles Country Club Raffles Town Club RSYC Seletar Club Sentosa Golf Club Singapore Cricket Club Singapore Island Country Club Swiss Club The Tanglin Club The China Club The Legends Fort Canning Park The Pines Club Tower Club Singapore Fullerton Hotel Grand Plaza Park

Royal Hotel Inter-Continental Le Meridien Orchard New Park Hotel Pan Pacific Raffles Hotel The Hilton The Regent Singapore The Ritz Carlton The Swiss Hotel Stamford Traders Hotel Singapore Darby Park And to 16 serviced residences



A toast to the biggest 16 FIRST wine vault in SG

STORY 30 CoVER Business booms and creativity spreads as international

18 ANALYSIS Crowdfunding big dreams

art hubs prosper in Asia




14 Wanted: bankers 14 Expats feel the pinch as SG ranked

22 Singapore’s 10 most successful

24 Genting Singapore eyes expanding

priciest city

15 Uber’s X-factor speeds off

hotel managers aged 40 and under

15 The Chartist: Singapore Banks 16 SBR’s first ever Budget briefing

packed to the rafters

18 JPMAM’s new CEO says clients

to Korea, Japan, United States

OPINION social media PR

18 StarHub glistens in green 20 Why Singapore is hooked on drip

42 How Big is China, really?


Published Bi-monthly on the Second week of the Month by Charlton Media Group #06-09 E, Maxwell House 4 20 SINGAPORE BUSINESS REVIEW | MAY 2014 Maxwell Road

Will a slowdown in portfolio investment prompt emerging Asia to reform and attract FDI?

REGULAR 34 Rankings 36 Legal Briefing


should “re-risk” their portfolios

26 Financial Insight

50 4 ways SMRT can improve its

44 A tale of two flows

Crunching the numbers to calculate the relative impact of China’s growth on the world economy.

38 CMO Briefing 40 CHRO Briefing 48 Feature: Bitcoin in Asia

For the latest business news from Singapore visit the website

News from Daily news from Singapore most read



New valuation rule makes HDB Check out these six new malls slated to homebuyers more vulnerable: PropNex open in Singapore this year The Ministry of National According to Nomura, among major Development, in hopes of new suburban malls scheduled improving the longer-term to open in 2014, UOL’s One KM real estate market stability, has has secured tenants for 80% of introduced a new valuation rule the space as of end-December, which PropNex believes will while SPHREIT’s pipeline asset, put HDB homebuyers in a more Seletar Mall, was about 28% prevulnerable position by possibly committed as of October. As well, asking them to shell out more cash. retail component of Ascendas This effectively makes homebuyers REIT’s (AREIT SP, Buy) integrated more cautious when submittin development at Lavender St. is now offer prices. 20% pre-committed.


Why are office rents suddenly the hottest topic in the property market? According to Maybank Kim Eng, the office REITs segment was recently abuzz with renewed interest from investors after the Urban Redevelopment Authority’s Office Property Rental Index recorded a ~1% YoY increase in rent for both the Central Area and Central Region in both 3Q13 and 4Q13. The uptick came on the back of four consecutive quarters of YoY decline since 3Q12.

MOST READ COMMENTARY 5 classic hiring mistakes Singapore recruiters make BY ADRIAN TAN Recruitment is by far the most difficult HR spectrums to get right. Hiring the next best talent based on an interview that not only is the first time two person meet but also trying to understand each other in a span of 2 hours. Would you get married after knowing your date for 2 hours? That’s why our industry exists, with complimentary industries such as profiling tools providers, job portals, and professional networking sites.


Here’s why salary outlook remains positive for Singapore BY CHRIS MEAD Are you hoping to receive a raise in 2014? If so, there is a chance you will get one as employers in Singapore are expecting to give conservative salary increases this year, according to the 2014 Hays Salary Guide. More than half of employers (53%) in Singapore increased salaries between 3 and 6%, and only 14% offered increases of 6 to 10%. Just 5% of employers gave increases above 10%.

HR after Anton Casey: Is a formal social media policy necessary? BY RONALD LEE The latest person to incur the ire of the Singaporean community is Mr Anton Casey, who posted now-infamous remarks about MRT commuters being “poor people”. He swiftly lost his wealth management job and departed for Perth in a huff. Mr Casey’s is not the first highprofile case in which a social media gaffe went viral to such detrimental effect. And it certainly won’t be the last.

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ITSUPPORT.SG 7-Network was established in 1991 by a team of passionate IT enthusiasts who aim to deliver quality IT products and services to clients., a technology division of 7-Network, develops Sync4DR, an affordable data replication software that is used to backup data, email, database and even virtual servers, all on Windows platform. The company offers affordable offsite replication service, a disaster recovery solution, where data and virtual servers are replicated hourly to an offsite storage hosted at 7-Network. For more information, contact Visit


IFBO Vietnam 2014 International Franchise & Business Opportunities Vietnam (IFBO Vietnam) 2014, held in the country’s major metropolis and growth thrust - Ho Chi Minh City, is an international showcase of franchise brands and business opportunities as its name aptly states. Lucrative business opportunities for the astute entrepreneur and investor will abound. Forge new partnerships and seal business deals this 28 – 30 May, Tan Binh Exhibition & Convention Centre. Register for free admission at

K.G. Tan & Co. PAC is a Certified Public Accounting (CPA) firm comprised of dedicated and competent accounting professionals specializing in audit, tax, accounting, advisory, and other corporate services. In 2013, they were ranked as one of Singapore’s Top 25 Largest Accounting Firms by Singapore Business Review. As a member of Alliott Group, they provide a platform for their clients to globalize their business. They strive to be their clients’ most trusted and reliable partner while delivering value and engaging in every stage of their business life cycle.





With over 30 years of experience, Telstra Global today operates one of the largest and most diverse networks in Asia Pacific. It recognises the region as a true driver of the global economy. Recently, Telstra Global commissioned a pan-Asia executive study, Connecting Countries, looking at how companies and executives are maximising opportunities in the Asian century. Over 4,000 professionals based in Asia were asked to discuss the challenges they face in manage business across countries in Asia and their strategies for success. The full report can be downloaded from http://

The Singapore-based Serrano group of companies has offices in Vietnam and Thailand. The group includes five separate companies involved in ID and various aspects of the production, distribution, installation and sale of furniture, furnishings and interior fit out of residential/commercial projects. We are the sole distributors of Stosa Cucine Italian Kitchens and Pierre Cardin furniture in SE Asia, available for retail and residential/commercial projects. 49 Sungei Kadut Loop SG | Tel: +65 6305-0850




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MARINA ONE Marina One, the upcoming Star project at the Marina Bay area, an integrated development of residential, offices and retail services, is developed by a renowned and strong team. Enjoy this distinguished address and World Class Destination with magnificent landscape, new Financial Business Hub, Marina Bay Sands is nearby. With three awards, it’s sustainable and environmentally friendly design, this is truly a gemstone for business, leisure and stay, the world at your playground. Please contact 9798 4691 or email to know more.


THE MOLUCCAS ROOM As Singapore’s best in serving authentic Indonesian cuisine, The Moluccas Room now offers a deal for beer and sate enthusiasts alike. Diners may now enjoy a 1-for-1 signature sate with every purchase of a bucket of four beers for only $32++. This promo is available daily, from 6pm-9pm. The 1-for-1 sate is subjected to prices of equal or less value and not valid with other promotions and discounts. The Moluccas Room is located at The Shoppes at Marina Bay Sands 2 Bayfront Avenue L1-81. For reservations, call (65) 6688 7367


ambassador IN PARADISE Ambassador In Paradise Resort is designed with a high standard quality and service of a 5-Star Resort nestled directly in one of the finest sand beaches in Southeast Asia, perfectly situated at Station 1 of Boracay, Philippines. A Triple A (AAA) Certified Resort accredited by the Department of Tourism Philippines, with 60 wellappointed, spacious Guest Rooms and a luxurious Presidential Suite. Every room has personalized butlers, private balcony, elegant furnishing, impeccable interior and ensuite bathrooms.

Taking its name from a bay side town in Sydney, Australia, Wooloomooloo Steakhouse is situated in a stunning locale with impressive views of the city. Comprising 6,300 sq ft of wining and dining space, the stylish restaurant promises a memorable dining experience with its premium steak selection, Australian-inspired offerings, as well as an outstanding range of wines and cocktails. The 140-seater restaurant also hones a semi-private dining area that is created using chain link curtains, aiming to provide diners a more intimate spot for private occasions. Address: 2 Stamford Road, Level 3 Swissotel The Stamford, Singapore 178882 Contact Number: 6338 0261 Email:

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WSH CONFERENCE 2014 Themed “Integrating safety and health: Towards a holistic approach”, the Singapore Workplace Safety and Health Conference 2014 is Asia Pacific’s premier platform for industry leaders and policy makers to exchange and learn about sustainable business solutions through a safer and healthier work environment. Held at the Suntec Convention and Exhibition Centre on 7 and 8 May 2014. For more information, visit: www.

YoUr one-stop Build-to-suit SoLUTIonS ProvIDEr United Engineers Developments’ Build-To-Suit division (UED-BTS) provides your company with one stop integrated real estate solutions that is uniquely designed to suit each company’s requirements and needs.






All in all, You name it, We have it. UE BIZHUB EAST


For enquiries, retail Leasing: 6830 8336 Corporate Leasing: 6830 8328 Business Development: 6880 8703 Serviced Offices & Convention Centre: 6830 8338 12 SINGAPORE BUSINESS REVIEW | MAY 2014

Covering an entire spectrum of services for the whole property development process, UED-BTS manages a project from its preconceptualization design and customization stage to the project management and construction phases.

The experiences and expertise possessed by UED-BTS includes FinanceBuild-Operate-Transfer (FBOT), Build-OperateTransfer (BOT), Build-ToSuit (BTS), Public Private Partnership (PPP) and other relevant models for projects in Singapore, Kuala Lumpur, Iskandar, Jakarta, Hong Kong and the South East Asia region.

Esteemed Developer

Since 1912

co-published Corporate profile

UE BizHub Central Phase 2

UE BizHub Tower

Rising trend of BUILD-TO-SUIT Developments Find out how UED-BTS has established itself as a market leader in BTS solutions.


roperty developments adopting the Build-To-Suit (BTS) approach are on a rise, not just in Singapore but also in the region. Mr David Liew, Managing Director of Integrated Facility Management Division, UEL, believes that, with UED-BTS’s extensive experience in BTS properties, “UED-BTS is set to ride the rising trend of BTS developments in the years to come.” He shares in more detail the UED-BTS’s Build-to-Suit experience and a compelling case for BTS. UED-BTS, United Engineers Developments Build-To-Suit, a one stop BTS solutions provider, is formed under the umbrella of United Engineers Group. Consolidating resources from the Group’s 2 SGX-Listed entities (UE Group and UE E & C), as well as its subsidiaries, UED-BTS has grown into a one-stop integrated real estate solutions provider that covers the entire spectrum of real estate development works from pre-conceptualization design and customization stage to the project management and construction phases. UED–BTS offers a range of expertise in Finance-Build-Operate-Transfer (FBOT), Build-Operate-Transfer (BOT), Build-To-Suit (BTS), Public Private Partnership (PPP) and other relevant models.

UE BizHub Concept, the company’s prevailing BTS Business Park Concept, has found its footing at various region in Singapore, namely the UE BizHub CENTRAL,UE BizHub EAST, UE BizHub WEST, UE BizHub CITY and UE BizHub TOWER. UE BizHub CENTRAL Phase 2 in Singapore, UE BizHub MEDINI in Malaysia, UE BizHub CAKUNG in Indonesia, UE BizHub Ho Chi Minh City in Vietnam and UE BizHub Guangzhou in China are in the pipeline ready to deliver in the coming years. One of the earliest BTS projects managed by UED-BTS in Singapore was UE BizHub CITY (formally UE Square), built to house Shell House and its headquarters. Over the years, many other notable Industrial BTS projects were developed for a diverse mix of clientele. Just to name a few, UE Print Media Hub, the first integrated hub for the printing industry and printing-related business, was conceptualized for Print Media Association. UE BizHub CENTRAL, designed to centralize UE Headquarters and its subsidiaries, is housed along

Mr David Liew Managing Director of Integrated Facility Management Division, UEL with Motorola Electronics as the anchor tenant and other reputable multinational companies. UED-BTS has plans to further modernise and expand UE BizHub CENTRAL up to 500,000 sft in phase 2. To date, UED-BTS has worked with esteemed clients such as Estee Lauder in UE BizHub CITY, Cisco Systems & BT Singapore in UE BizHub EAST, Hewlett Packard in UE BizHub WEST, Apple in UE BizHub CENTRAL and Kellogg Brown & Root Asia Pacific in UE BizHub TOWER. Why Build-to-Suit Via UED-BTS’s service to provide a single point of contact, it helps clients to reduce the hassle of coordinating between different contractors and consultants at different stages of the property development process. This allows clients to enjoy the convenience and improved efficiency. Emphasis is given to end user requirements and specifications, with customised solutions that ensure all users’ needs and demands are met and perfect matching of space and its function. BTS solutions provide more efficient space usage, with better coordination of building MEP and ACMV services as well as fire safety services. BTS tenants can expect a building with unique architecture, equipped with state-of-art facilities and technology, which is branded with a strong corporate image.

“UED-BTS is set to ride the rising trend of BTS developments in the years to come.”

FIRST the country a more expensive place to live in for, say, an Singapore-based expatriate paid in foreign currency, or for a corporate HQ abroad whose earnings are in foreign currency. “The EIU tries to put together a basket of what they think are expatriate costs, perhaps more on the higher end of expatriates. It is quite different from the goods and services consumed by ordinary Singaporeans,” he explains. Daryl Webb, President of the New Zealand Chamber of Commerce in Singapore, echoes this assessment: “The report focused on expat living as opposed to the overall cost of living in Singapore.”

Wanted: bankerS

If you’re a banker and you’re job hunting, now is the perfect time to hand in those CVs, with more than half of banking and capital markets CEOs planning to take on more staff over the year, anticipating headcount increases of at least 5%. Professional services firm PwC surveyed 133 banking CEOs in 50 countries and discovered that the buoyant employment outlook comes from 90% of the respondents being confident that their revenues will increase over the next three years. Most in-demand jobs Toby Fowlston, managing director at Robert Walters Singapore, notes that there has been increased offshoring among foreign financial institutions in Singapore, opting for lower-cost shared service centres in places such as China, Malaysia, India and the Philippines. Restructuring also led to fewer vacancies within foreign banks. “Finance and regulatory change as well as compliance contractors will continue to be in demand in 2014. The increasing regulatory environment also means those with good Basel III knowledge are in short supply,” says Fowlston. According to Audrey Neo, senior manager for banking & financial services at Michael Page, as banks and financial institutions remain on cost cutting measures, hiring activity will be largely restricted to roles in highest demand such as analysts, associates and AVPs. She adds that as Japanese banks move their operations to Singapore, financial services professionals with language proficiency in Japanese will be sought-after. Meanwhile, PwC’s survey further reveals that limited availability of talent continues to be a concern, with 61% citing it as a threat to growth globally.


Are expats hurt by rising costs?

Expats feel the pinch as SG ranked priciest city


ingapore clinched the title of world’s most expensive city this year, although it’s a distinction citizens would rather silence than brag about. That’s because many Singaporeans are starting to feel the pinch as their salaries lag the nation’s skyrocketing cost of living. The Economic Intelligence Unit (EIU) named Singapore the most expensive city in the world in its latest Worldwide Cost of Living 2014 survey, but one high-ranking leader countered that this does not entirely reflect that true cost of living of ordinary Singaporeans.

Expensive for expatriates Deputy Prime Minister and Minister for Finance Tharman Shanmugaratnam says these cost of living surveys are designed to compare the cost of living for expatriates across different cities or countries. In actually determining the cost of living for Singaporeans, he says two factors should be taken into account: the exchange rates and the cost of goods. When these are considered, he advises that a caveat is in order: Singapore is the world’s most expensive city for expatriates. He says the Singapore dollar has strengthened in recent years, making

The EIU tries to put together a basket of what they think are expatriate costs, perhaps more on the higher end of expatriates.

Burden of rising costs But Webb says this does not take away from the fact that the rising cost of living is impacting everyone living Singapore, expats and locals alike. “Kiwis in Singapore are feeling the pinch of rising costs as much as locals. Housing and cars are very expensive compared with New Zealand, and while tax rates are much lower, the perceived economic benefits of being based here have largely been eliminated.” Raffaella Orsini, Secretary General of the Italian Chamber of Commerce in Singapore warns that “Singapore, needs to focus on the end-generation because otherwise it will be a country with no people who can afford to live in because it’s too expensive.” Meanwhile, Chung Ting Fai, Director of Hong Kong Singapore Business Association, blamed rising property and labour prices for Singapore’s rising cost of living.

Ten most expensive cities in the world

Note: WCOL index (New York=100) Source: The Economist Intelligence Unit

FIRST An UberX ride from Clark Quay to Marina Bay Sands will cost only around $11.00 in UberX compared with an Uber ride of roughly $21.00.

Whisk off to your destination via Uber

Uber’s X-factor speeds off


ber, the app which allows people to summon limousines from their pocket, has one major drawback it’s expensive. Enter Uber-X, a new low cost option which costs slightly more than a regular taxi and which hit Singapore’s streets in March. UberX dials down the luxury (a Toyota Corolla might pick you up instead), lowers the premium charges, but maintains the core convenience that ridesharing offers. In a sample price comparison, an UberX ride from Clark Quay to Marina Bay Sands will cost only around $11.00 in UberX compared

to an Uber ride of roughly $21.00 and a taxi would cost around $9. While UberX is still more costly than taking a taxi, Singaporeans may no longer find the price differential between a taxi ride so obvious. But taxi operators do not seem threatened by this new service. “Third party applications are neither complimentary nor competitive as long as the same purpose is delivered, [such as] booking of a taxi,” says a spokesperson from Premier Corporation. In fact, Min insists that they do not discourage

drivers from using Uber and other similar apps as long as they meet government transportation standards. Singapore has 23,000 taxis on the roads and whilst Uber doesn’t disclose the numbers, at any one time there appear to be just a few dozen available cars. Drivers’ bonus Uber is also shelling out the big bucks to lure drivers, who rent a car at around $50 a day. Drivers for Uber-X are paid a bonus $10 for each trip, which Uber absorbs presumably as marketing costs as they try to encourage enough cars to meet user expectations. Getting a taxi in Singapore can be tough in peak times, and Uber does increase rates to try and get more cars on the road, something its taxi competitors can’t do. But still there are times when even Ubers are hard to find.

The Chartist: singapore banks The banking tables have turned for China and Singapore. According to Maybank Kim Eng, since end-2009, China has become an increasingly important lending destination for Singapore banks. The total volume of loans – interbank loans, non-bank loans and trade bills – to the country grew at an impressive 68.7% CAGR during this period. “At the same time, the composition of loans extended to China underwent a significant change. Trade bills overtook interbank loans in 2010 as the primary lending source. Currently, they account for 65% of total loans to China, representing a significant jump from 18% in the pre-GFC era. As a result, China, once a net lender to Singapore, has become a net borrower from Singapore.

Volume of loans from Singapore banking system to China

Source: MAS

Deposits and LDR

Source: MAS, OSK-DMG



A toast to the biggest wine vault in SG


Learning to learn


rance may have its famous caveaux, but Singapore is going one better with the opening of the largest “wine vault” in South East Asia later this year. At a cost of $200 million, the 750,000-sq ft wine vault will be able to hold 10 million bottles. That’s equivalent to 3 olympic swimming pools of wine and it’s open for private individual wine collectors as well as the wholesale wine distributors. The six-storey facility includes a main chamber and a separate area for private wine cellars which can be customized depending on the customer’s needs. The cellars can be accessed through a virtual cellar account, allowing for remote monitoring of stocks, and a platform for easy payments. The facility also offers three temperature-controlled options for fine wines, fast-moving wines and commercial wines. “CWT logistics is the first globally to receive ISO certification and HACCP Certification from TUV Rheinland which distinguishes us from many other players in the wine storage market,” says Loi Yan Yi, Director for Marketing, CWT Logistics.

The Drome Cellars

Though big and promising, the Wine Vault does not seem to threaten other wine storage facilities in Singapore, such as Lock+Store, which is located in the heart of Singapore’s residential areas. It has its flagship Chai Chee facility in the East and its Ayer Rajah Crescent facility in the West. Helen Ng, Chief Executive Officer of Lock+Store, says their proximity to their customer base is what sets them apart from other facilities, including the upcoming Wine Vault. “Lock+Store caters to the needs of individuals who are collecting and storing wine for the first time or who have fewer than 3400 bottles to store,” she adds.

At a cost of $200 million, the 750,000sq ft wine vault will be able to hold 10 million bottles.

singapore business review event

SBR’s first ever Budget briefing packed to the rafters SBR’s Singapore Budget Breakfast Briefing 2014 proved itself bigger than what it was imagined to be. More than 90 people from the accounting, legal, technology, consultancy, fashion, and engineering industries went to the event to learn the key points and implications of Singapore’s Budget 2014. Lee Tiong Heng of Deloitte Singapore, Shanker Iyer of ACCA Singapore and Iyer Practice, and Jacqueline Loke of Rodyk & Davidson LLP discussed how the Singapore Budget 2014 will help reinforce Singapore’s competitiveness as a regional business hub in Asia. The panellists also tackled the role that the Budget 2014 plays in raising economic productivity, especially in the SME sector via policy changes, and how corporates will be affected by the changes in the Singapore Budget. 16 SINGAPORE BUSINESS REVIEW | MAY 2014

Two visionaries believe that there is a need for people to start viewing education in a different light. Rohan Pasari, a double gold medalist from NTU, and Stanley Chia Dingli, a member of the REACH supervisory committee in Singapore, believe that the focus on grades needs to shift towards learning and ‘learning to learn.’ In 2012, they founded a startup that helped students pursue higher education with their entire application process, from understanding their aptitude and their, ‘right fit’ course and university, to helping them create stand-out factors in their applications through essays, resume and interviews. It is backed by private investors Eric Tachibana and Alvin low and currently has $100K total funding.

Gaming mad Gaming addict Keith Ng sold his first software at 18, and later completed his BBM (Finance) and BSC (Information Systems) on a DFS Scholarship at SMU. He believes that gamification and game psychology can make learning more fun and motivating. In 2012, together with three other schoolmates at SMU, Ng launched a platform called “Gametize” to create simple challenge-based games on mobile and web for business objectives such as training and learning. Organizations can now engage and motivate behaviours with fun challenges such as quizzes, photos, and QR code challenges. Simply put, Gametize is the Wordpress for mobile and web games .


JPMAM’s new CEO says clients should “re-risk” their portfolios


eing a relatively new entrant to the Singapore market in 2010, Steven Billiet, J.P. Morgan Asset Management Singapore’s newly-appointed CEO, has set his eyes on the firm’s growth in Southeast Asia. Billiet will have overall responsibility and oversight for the investment management business in Singapore and day-to-day management responsibility for the Funds business. Billiet shared his insights and future plans with Singapore Business Review in this exclusive interview: SBR: What three goals are you focused on? The first goal is business development. Our key focus for 2014 continues to be building out our business in Singapore and establishing it as a hub for Southeast Asia. We are already working in partnership with many of the key sovereign wealth funds and institutions in South East Asia. I am keen to explore more strategic partnership opportunities with asset managers and distribution partners in South East Asia. To do this effectively, we plan to increase resources from 51 (out of which 15 are investment professionals) to 55 by end 2014. Second goal is to focus on investor education. Investor education is key to our mission of helping clients secure a stronger financial future. Our Guide to the

Markets (Asian edition) is an unbiased set of tools to equip investors to make more informed investment decisions. Data on the economy, financial markets and asset classes are updated quarterly and organized in a manner to explain trends and performance clearly and concisely. It has also been extremely well received by our distributors whose product specialists especially appreciate our effort in customizing the Guide for Asian advisors. Over 1,400 clients now receive copies of the guide electronically and in hard copies. The third goal is to focus on investment themes like equities and multi-asset funds. We are positive on equities in 2014, supported by the global economic recovery led by developed markets, a rise in investor risk appetite and an investment landscape that favors risk assets such as equities. Even though there is a growing consensus over the improving world economy, there will undoubtedly be some unexpected events during the year. We believe equities are the key engine for growth over the longer term and the need for clients to consider “rerisking” their portfolios. SBR: What will you do differently in this position? There is a strong foundation that has been

Steven Billiet, Chief Executive Officer, J.P. Morgan Asset Management (Singapore)

established in the past few years and my focus for the next phase of the business will be deepening relationships with distributors over the next two years. This means establishing more of a partnership model with distributors, frequent interaction, understanding their market views, identifying the right gaps and needs in their product offerings and localizing these offerings with more Singapore dollar or Singapore dollar hedged share classes.


StarHub glistens in green Taking a break from the payTV war saga, StarHub gives its customers a glimpse of its ‘green’ office space in Singapore. StarHub Green, which serves as the second home for the telco’s staff since its relocation five years ago, toys with bright colours and wide spaces to produce a relaxed and productive atmosphere among its employees. The space also echoes design suggestions straight from its staff. Chan Hoi San Senior, Vice President of Human Resource at StarHub says ‘’we conducted a survey among our staff to identify which facilities they preferred. This is why we now have a gym, nursing room and even a 100-seater theatre where movie screenings as well as lunchtime talks on self-motivation, wealth and health are held for staff regularly.’’ Paying great attention to detail, StarHub Green also features bright colours, fittings, furnishings, and amenities. 18 SINGAPORE BUSINESS REVIEW | MAY 2014


Mini Theatre

Pantry with pool table


Technology Essentials

Taking the private cloud industry by storm

Find out more about Synology’s outstanding innovations for all levels of business users, from small-medium businesses to enterprises.


he demand for big data storage is growing as fast as the world is innovating. And it’s no surprise either – as people become more mobile, and businesses more and more fast-paced, the need for more sophisticated and flexible private cloud storage solutions is growing just as hastily. And no one is more aggressive in taking advantage of this trend than tech company Synology. The company is dedicated to providing innovative solutions to everything that has to do with private cloud storage needs through network attached servers (NAS). While the company has only been around for less than 14 years, it has already posed a formidable threat to tech giants like Cisco, HP, and IBM as it won in PCMag’s 2013 Business Choice Award for server/NAS systems for small businesses. Synology is indeed taking the industry by storm, and their top line proves it – over the past four years, Synology’s revenues have increased by an annual rate of 50-80 percent, which is a rate of growth characteristic only of the most promising and fast-growing companies in the market. Alex Wang, CEO of Synology, believes that their solid work ethic and immense focus on storage technology is what makes them market-leader-material. “We think being technologically-advanced, user-oriented, and [aspiring for] excellence is what sets us apart from the other competitors. Synology has been dedicated to storage technology, especially software development, for over a decade, which not only accumulates a wealth of experiences in terms of research & design and integration, but also contributes to a myriad of technological advancement,” says Wang. Synology brings outstanding innovations to all levels of business users, including smallmedium businesses (SMB) looking for an all-in-one server, and enterprises in need of advanced, reliable, yet cost-effective storage solution. Outstanding olutions for SMB What SMB needs is a versatile all-in-one server, which not only does a good job in storage and data backup, but is also capable of delivering a myriad of services. Synology’s

NAS is an “all-in-one server”, which means besides data backup, it can also act as a Domain Name System (DNS) server, mail server, or print server. DNS server can be used to host an SMB’s own domain name services, and improve namespace management at no extra cost. It helps users find Internet applications, computers, or other network devices by translating domain names into IP addresses. By being a DNS server, Synology NAS can host multiple zones as well as provide name and IP address resolution services. Synology’s mail server solution allows users to send and receive mail using their own email domains. Various options are available to fine-tune the way emails are handled in your company. The Synology NAS can also act as print server. Simply connect a printer to a Synology NAS and print, scan, or fax from any computer. Users can save money and dramatically increase company efficiency. Alex Wang, CEO, Synology Unparalleled support to enterprises Synology also offers efficient, yet reliable storage solutions to enterprise users, one of which is the full SSD array to provide high speed storage. Synology NAS offers full SSD cache reading & writing support on highend models for significant reduction in I/O latency without crippling your budget.With a small upfront investment, businesses can benefit from significant server performance enhancement. With a small upfront investment, businesses can benefit from significant server performance enhancement. Synology NAS is also compatible with TRIM commands, which are specifically designed to answer these issues by reducing the amount of unnecessary writing actions on your drive. Synology also offers the Central Management System to facilitate management. Through a simple interface, users can use one NAS to manage all the rest, to view all servers’ status, logs, manage privilege policies, and even perform the system update. Synology NAS can dramatically reduce overhead, offering flexibility and convenience for all IT administrators. Furthermore, Synology High Availability (SHA) harnesses an active and a passive server into one cluster, the latter always mirrored to

the former. Should the main server fails, the passive server immediately kicks in and takes over. This will buy IT personnel more time to repair or replace the failed hardware. In the meantime, users can continue to access their files as well as DSM services from the backup server, as if the incident never happened. Paving the way forward Synology’s forward-looking approach to innovation has delivered new product and service offerings that they believe “will push the concept of NAS server steps further, and [will meet] everyone’s future storage needs.” Among these recent innovations include upgrading their OS to DSM 5.0, and a unified storage platform which will enable businesses to develop a more dynamic enterprise with scalable computing, power and storage. They have also come up with Hybrid Cloud solutions, which is their way of competing with public cloud storage services like Dropbox and Google Drive. Synology currently has local offices and support centers around the world to provide the necessary ad hoc approach and immediate support to clients, so as to ensure strong customer service & customer satisfaction in the value chain. SINGAPORE BUSINESS REVIEW | MAY 2014 19


Medtecs aids in 2m deal

More dollars for every click!

Why Singapore is hooked on drip pricing


ver tried booking a seemingly cheap airline ticket only to end up paying extra surcharges as you click through the payment process? After all the add-on fees, you then realize that the low initial price only served as a lure to make you pay the total price. This is drip pricing, which the Federal Trade Commission of America describes as a “pricing scheme in which firms advertise only part of the product’s price and reveal other charges later as the customer goes through the buying process.” There are two key factors that enable companies to successfully pull off a drip pricing tactic, says Goh Kim Huat, Associate Professor at NTU’s Nanyang Business School teaching business analytics. The first is that a merchant has to create some customer engagement, and in the case of airlines, this means creating a “very time consuming” online purchase process. “The price is higher than what was originally advertised but because you already put so much time and effort in it, you’ll just pay,” said Goh. The second is that a merchant uses only “radically small” add-on increments compared with the base item, which helps lessen customer resistance. Andrew Wong, TripAdvisor’s regional director of flights, says the airline industry would argue 20 SINGAPORE BUSINESS REVIEW | MAY 2014

that they are providing ‘a la carte’ pricing where the consumer is able to choose for extra services. He adds that the trend for the airline industry has been to ‘unbundle’ the basic service offering, allowing them to advertise a lower basic fare. “Consumers can justifiably be annoyed when airlines include additional non-flight services such as travel insurance or car hire during the purchasing process. Typically, the onus is on the consumer to unselect these products in their basket of items. This might be perceived as additional hidden costs.” Airlines deny drip pricing But airlines counter that the drip pricing assertions do not hold water. A spokesperson for Scoot says, “There are no hidden fees and we are upfront about it. Items such as the airport security fee and government aviation levy are clearly stated and are not included in the base fare.” Meanwhile, a Singapore Airlines spokesperson insisted that they use an adequately transparent fee structure. “Our customers know what they are buying. Our advertised fares and fares found on our website show the full price payable by the customer at the time of sale, inclusive of all taxes, surcharges and fees.”

With a strong background in corporate finance and M&As, Chia Lee Fong headed Rajah & Tann’s team in acting for Medtecs International Corporation Ltd in its recent proposed acquisition of 3,415,432 issued and paid-up common stock in the capital of Medtecs (Taiwan) Corporation.

GYP allots new shares

Danny Lim from the Corporate & Capital Markets Practice of Rajah & Tann acted for Goubuli Group in the proposed placement of up to 300,000,000 new ordinary shares in the capital of Global Yellow Pages Limited to Goubuli Group.

Hwa Hong bids goodbye

The price is higher than what was originally advertised but because you already put so much time and effort in it, you’ll just pay.

A partner in the Corporate Finance & Capital Markets and M&As Practice Group for Rajah & Tann, Soh Chai Lih acted for SGX-listed Hwa Hong Corporation Limited in the disposal of its entire interest in Phratra to Nam Heng Oil Mill Co and Mr Guan Meng Kuan for an aggregate consideration of S$6.56 million.

co-published Corporate profile

Harneys opens in Singapore

Like a falcon in a high-speed dive, Harneys is now at its best, putting its full weight into the action


he leading international offshore law firm has set its eyes on Asia and is now reaping the rewards of its hard work with unprecedented growth and success. “Harneys has been expanding at breakneck pace in Asia recently – we have more than doubled both our headcount and our turnover in Asia over the last two years,” says Colin Riegels, Global Head of Banking and Finance at Harneys. From setting up shop in the British Virgin Islands in 1960, Harneys now has offices across four continents and clients from 189 different countries, providing primarily BVI and Cayman offshore legal advice and fiduciary services. The firm’s recent mandates have included advising cosmetics giant L’Oreal on its HK$6.5 billion takeover offer for all of the issued shares of Magic Holdings International Limited, as well as acting as BVI counsel to COFCO (Hong Kong) Limited on the issue of US$1 billion aggregate guaranteed notes and listing of the notes on the Hong Kong Stock Exchange. Offering offshore legal advice and fiduciary services, Riegels says, “there is no real secret to the success – it is all based upon building teams that provide high quality advice with rapid speed of response.” But he admits it would be unrealistic to expect their operations in Asia to continue growing at such pace. “Nonetheless this is a unique time of flux for the offshore legal and

regulatory environment and the landscape is changing in fundamental ways. This is going to create opportunities – both for Harneys and for its client base,” he says. Eyes on Singapore Industry-recognised professionals with over two decades of experience lead their team in Hong Kong but Riegels says they are now setting their sights on Singapore. Compared to (say) Hong Kong, Singapore is a much less crowded space for offshore law firms, but Riegels is confident of Harneys’ ability to stand out from the crowd in either market. “Much of the work that we do focuses on cross border monetary flows, and Singapore is a lynchpin for capital flows in South East Asia and beyond. A significant number of our high volume clients are Singapore banks, and we are looking forward to the opportunity to improve the ability to service them from within the same city,” notes Riegels. Harneys has a pedigree that the newer offshore firms cannot match. In the British Virgin Islands, Harneys was the first law firm on the ground, wrote many of the laws, and the inaugural Chairman of the financial services regulator is one of Harneys’ former partners. The firm’s Cayman practice is newer comparatively, but it is their fastest growing transactional practice worldwide. “We are winning market share against bigger firms by offering a service which is characterised

Much of the work that we do focuses on cross border monetary flows, and Singapore is a lynchpin for capital flows in South East Asia and beyond.

Colin Riegels, Global Head of Banking and Finance, Harneys by expert responsive service and a lack of complacency – the same values that built our BVI business,” says Riegels. Cross border transactions With many economies in Asia placing well for rapid growth, Harneys sees it as an exciting time for ASEAN countries, especially for Singapore as it is poised to maximize the benefits of regional growth. The firm seems to be always on its way towards where the future is, expanding its services where growth and investments happen. “Pedigree will only ever take you so far – in the modern legal market you have to be able to adapt and capitalise on changing markets,” Riegels says, narrating how they have started recruiting experts on offshore restructuring to address financially distressed SPVs. “So far we are the only offshore firm that has done that, and the new restructuring group is phenomenally busy,” he says. Riegels says they are not the kind of company that shirks away from challenges. “Competition is healthy, but you have to enjoy the challenge of staying ahead of your competitors,” he says. Riegels says it would be “difficult to envisage” the landscape in the next several years but Harneys is looking forward to playing a role in Singapore’s growth story. SINGAPORE BUSINESS REVIEW | MAY 2014 21


Looking into the ‘Golden Years’ Primary source of income after retirement











Singapore’s 10 most successful hotel managers aged 40 and under


dentify who are “on the rise” in the hotel industry and managing hotels ranging from backpackers to luxury five-star.

1 Olivier Lenoir, 40, Hotel Manager, Grand Hyatt: Olivier was Head Chef at Switzerland’s Restaurant de la Tour before making the move to a career in hospitality.

worked with Ritz-Carlton in Shanghai before relocating to Singapore to join Far East. 6 Andrew Donadel, 32, General Manager, Pan Pacific Serviced Suites Beach Road. He guided the property from its pre-opening stages to a successful launch on May, 2013.

2 Koh Yan Leng, 39, Area General Manager, Far East Hospitality’s Downtown Cluster: Yan Leng is a Civil Engineering graduate.He returned to Singapore in 2010 to join Far East Hospitality.

7 Jolene Chong, 31, General Manager, Hotel Re! @ Pearl’s Hill: has worked in the logistics industry dealing with supply chain management and media industry focusing on media sales, prior to joining the hospitality industry.

3 Derik Poh, 38, General Manager, The Plot Hostels: Derik, who has an IT background, was instrumental in transforming an old shop house into a luxury hostel. Derik’s strong leadership enabled Santa United to launch The Plot Hostels in December 2013.

8 Jacquelyn Chan, 30, General Manager, Rucksack Inn: Jacquelyn started with Singapore Airlines as a cabin crew member. Along with Samantha Chan, she started Rucksack Inn, which has expanded from 38 beds to 224 since May 2009.

4 Alvin Kua, 38, Senior Assistant Housekeeper, Swissôtel Merchant Court: Alvin graduated in Malaysia with a UEICS qualification before coming to Singapore in 1995. In 2010, Alvin was headhunted to join Swissôtel as an Assistant Housekeeper.

9 Trinh Tran Chau, 29, Hotel Manager, AMOY by Far East Hospitality: Trinh started her career as a Guest Service Executive or Front Desk Supervisor and worked her way up to Duty Manager and Front Office Manager at The Elizabeth Hotel, The Quincy Hotel, Royal Plaza on Scotts and Amoy within eight years.

5 Christian Wolny, 36, Hotel Manager, Rendezvous Hotel: After completing his A-Levels and one year of service in the German Military Police, Christian started his career in the hospitality industry as an apprentice at Estrel Hotel Berlin. He also 22 SINGAPORE BUSINESS REVIEW | MAY 2014

Singaporean consumers’ life priorities after retirement

10 Gary Puan Kum Fai, 27, Assistant Manager at J8 Hotel: Gary played a lead role in the set-up and commissioning of the new J8 Hotel at Townshend Road.

Singaporeans’ top 10 biggest fears about aging

Nielsen Global Survey on Global Aging, Q3 2013

co-published Corporate profile

Pushing for a holistic approach to Workplace Safety and Health Singapore companies need to be more proactive to achieve excellence in WSH.


ome business organisations may be satisfied with meeting only the minimum workplace safety and health (WSH) regulatory requirements. But that will no longer be enough, argues WSH experts such as Dr. Jukka Takala, Senior Consultant of the WSH Institute, Singapore. A holistic approach – one that effectively identifies problems and reduces risk – should be the target of Singapore companies serious about improving their WSH practices and systems. Dr. Takala argues that there is no time for complacency. Data from the WSH Institute, Singapore, showed that there were 1,523 work-related fatalities among Singapore resident and foreign workforce in 2010, and this is just the “tip of the pyramid” due to the practice of underreporting among firms. “The number of accidents and also healthrelated problems are much higher than the official statistics,” said Dr. Takala, citing a previous Ministry of Manpower study. Latest figures reveal that 1.5% of workers in Singapore had an accident at work during a one-year period, while 6.9% experienced a work-related health problem in the past 12 months. Dr. Takala offered four key recommendations that can help raise Singapore’s WSH

regime. First, companies have to identify their biggest WSH challenges and reduce those with proper interventions whether they are to alienate and reduce exposures to carcinogens in the workplace or prevent falls from high places. The second is returning the letter “H” or Health in WSH. “Accidents are easy to detect and chain of events can be easily reconstructed, but what about non-visible health problems? You have to put more emphasis on long-term health problems. Health problems need to be put higher on the agenda,” he said. Thirdly, government and businesses need to establish better recording systems for both accidents and long-term exposures. “What you don’t know and what you don’t measure are forgotten.” Lastly, Dr. Takala advised Singapore to follow the successful practices and measures taken in other countries. He cited that in the United Kingdom, a study revealed around 8,000 people were dying yearly from occupational cancer. This led said country to establish

“1.5% of workers in Singapore had an accident at work during a one-year period.”

The Singapore Workplace Safety and Health Conference in 2012, themed Changing Landscapes, Shaping a Progressive WSH Culture

Dr. Jukka Takala, Senior Consultant, WSH Institute, Singapore programmes that involve all stakeholders such as cancer prevention societies, and not just government officials and directly involved firms, which arguably led to better outcomes. Dr. Takala’s recommendations will weigh heavily on the minds of Singapore businesses as they transit from merely meeting the minimum WSH regulatory requirements to striving for WSH excellence. Helping them along this path will be the Singapore WSH Conference 2014 that will be held from May 7 to 8 at Suntec Singapore. With the theme, “Integrating Safety and Health: Towards a Holistic Approach,” the biennial conference will bring together more than 700 of the world’s top WSH professionals, leaders and government officials to explore why a holistic WSH approach is becoming increasingly important. Co-organised by the WSH Council, WSH Institute and Ministry of Manpower, the Singapore WSH Conference 2014 will foster interesting discussions as practitioners and businesses share insights and experiences on how this approach is imperative to operational success and contribute to employee engagement, satisfaction and productivity. For more info visit: http:// SINGAPORE BUSINESS REVIEW | MAY 2014 23

FIRST The Analysts’ call

What’s driving the Jeju Island JV?

Place your bets on Genting’s new integrated resorts overseas

Genting Singapore eyes expanding to Korea, Japan, United States


enting Singapore is investing heavily overseas to broaden its revenue base. As its winnings in the Singapore gaming market wanes, Genting Singapore (GENS) is spreading its chips to other regional tables. The integrated resorts developer recently took a big hit in its high-margin mass gaming segment, with revenue plummeting 15% in the fourth quarter of 2013 (4Q13). On a yearly basis, mass market revenue fell

GENS is looking to build new integrated resorts in Korea, Japan and United States. 5%, dragging down net profit in FY 2013 to a disappointing S$464.1m, says Yin Shao Yang, analyst at Maybank Kim Eng. The rising Singapore dollar is partly to blame. Significant appreciation of the local currency against regional currencies has affected not only GENS’s mass gaming business, but also its attraction business, notes Carey Wong, analyst at OCBC. One silver lining for GENS is that its core VIP business – consisting of revenue from mostly Chinese high rollers who bet millions in one visit and accounts for 57% of gross gaming revenue – has held up. “Despite the seemingly negative headlines coming out of China, GENS has managed to grow its VIP market there, hence 24 SINGAPORE BUSINESS REVIEW | MAY 2014

management continues to remain ‘cautiously optimistic’ about its VIP business in Singapore,” according to Wong. Resorts World Sentosa also continued to expand its market share of VIP rolling chip, climbing to 51.2% in FY 2013 from 49.5% in the previous year, and notably beating its rival Marina Bay Sands’ market share by double-digits, says Lucius Wong, analyst at CIMB. Faced with vulnerabilities in its Singapore core market, GENS is looking to build new integrated resorts in Korea, Japan and the United States (US) to pick up the revenue slack. Fitch notes that with the trend of greater liberalization of gaming regulations, casino operators are looking at a number of new markets to meet the demand. In South Korea, GENS plans to erect an estimated $2.2-billion integrated resort on the vacation hotspot Jeju Island, a joint venture with top Chinese property developer, Landing International Development Limited. “Tourists are the target market for the new integrated resort, with the casino to be accessible only to foreigners. The integrated resort will include hotels, residential apartments and villas, a theme park, gaming and other leisure facilities,” says Nandini Vijayaraghavan, director at Fitch Ratings. In Japan, GENS is looking to commence construction as early as 2017, assuming the Promotion Bill, which seeks to legalize casino gaming in restricted areas, is passed this year and it subsequently wins a license. Potential projects are also lined up for Las Vegas, New York City and Miami in the US.

Nandini Vijayaraghavan – Fitch GENS plans to develop the Jeju resort at an estimated project cost of US$2.2bn (S$2.79bn) in a joint venture with Landing International Development Limited, a leading property developer based in Anhui Province, China. Fitch estimates that the proposed Jeju IR will account for about 10% of GENS’ total assets on a pro forma basis on completion of the project in 2017-2018 and will reduce GENS’ single property concentration associated with Resorts World Sentosa located in Singapore. Carey Wong – OCBC On the call, GENS also shed more light on its recent JV to build an IR in Jeju Island, South Korea. With Jeju being an island resort similar to Sentosa, GENS believes it will be a captive model for those within a 3-hour flight time; this is especially good as mainland Chinese do not need a visa to visit Jeju. As for Japan, GENS thinks that it may still take some time before the bill gets passed and construction of any casino would only start in 2017. In the meantime, GENS will continue to look for opportunities in other places. Lucius Chong – CIMB GENS has started to use its excess capital with the Jeju Island JV. GENS has S$2.3bn in perpetual capital securities on its balance sheet that costs 5.1% or S$118m p.a. The company has a total of S$3.6bn in cash and generates an average S$1bn p.a. in free cash flow. The US$2.2bn JV on Jeju Island will require an estimated US$400m in capital. We are not surprised that management is looking at more opportunities beyond Japan to expand low ROEs [return on equities].


Here’s why company reputation matters Professor Stephen Brammer from the Birmingham Business School says up to 50% of market value is at stake.


Professor Stephen Brammer Faculty Director Birmingham Business School

The Birmingham Business School incorporates the latest research into their teaching. Its MBA and MSc International Business programmes are offered in Singapore via SIM Global Education.

hen you buy a product, do you consider the reputation of the company selling it? Surveys show that people often do. It is no wonder then that the “business” of reputation building and management is flourishing. Professor Stephen Brammer, Birmingham Business School faculty director at the University of Birmingham in the UK, says a quarter to a half of the market value of the world’s leading corporations can be attributed to reputation. Intangible benefits of a firm’s reputation help build consumer trust and confidence, as well as attract employees and investors, he says. Brammer, whose research explores firm-stakeholder relationship and its impact on company performance and reputation, says reputation has become a big business, resulting in the emergence of a “growing cadre of professional corporate reputation officers.” Indeed, there is much to be done. Reputation challenges “Banking fraud, PPI mis-selling, supply-chain issues such as the horse and fox meat scandals, sweatshops in the fashion industry, and product recalls in the automotive sector have undermined public trust in business in recent years and stakeholders are increasingly seeking assurance that firms are effectively led and managed,” notes Brammer. He said this is further complicated by the proliferation of activist groups, as well as new technologies. While social media has become a venue to get consumer feedback, it has also become a tool or new platform where discontented stakeholders are able to share their dissatisfaction. Managing reputation is

challenging work and particular issues remain underappreciated. The persistent fallout from the global financial crisis, fraud, money laundering and other problems have resulted in a negative view of the banking sector while product recalls have always plagued the automotive industry. “Beyond industry, country of origin has recently emerged as an important reputational driver – geopolitical conflict over uninhabited islands northeast of Taiwan has led to severe consequences for Japanese companies doing business in China, many of which have experienced reductions in sales volumes,” Brammer says. Within Asian economies, the pressure to retain a good reputation is worse because building trusting relationships is a key driver of business success. Reputation in Asia Brammer says Asian companies lag their western counterparts when it comes to developing and managing reputational capital. “Poor reputation management approaches at Toyota, Huawei, Kingfisher Airlines, and Olympus have been argued to have cost each company billions of dollars in lost sales and market value,” he says. Such problems warrant a closer look and troubleshooting by Asia’s CEOs and business managers, perhaps requiring a re-education on the key aspects of managing reputation, among others. Brammer is among the pool of scholars tapped by the SIM Global Education (SIM GE) to teach business programs in the country. This July, he will be teaching in Birmingham Business School’s MSc International Business programme (International Business Strategy module) that

is offered in Singapore via SIM GE. He believes that much is to be done to improve prevailing management approaches in Asia. “The Asian context can present significant reputational challenges. For example, Apple’s continuing labour issue at Foxconn and Pegatron, the impact of the Rana Plaza disaster on the reputations of global textile brands, and public health concerns raised in relation to food and pharmaceutical production in China,” he notes. Such examples show traditional strategies in reputation management, says Brammer. Characterised by denial and a refusal to engage stakeholders, these approaches generally fail, especially for firms that lack visibility and control. Rebuilding reputations But all is not lost. While reputation is naturally “hard won and easily lost,” according to Brammer, it may be rebuilt by addressing challenges. He says firms must start to understand and study key aspects to reputation management. “They need to understand that their reputations are multiple and that particular stakeholder constituencies have distinct wants and expectations such that firms need to identify these, and prioritise their responses so as to satisfy them,” he adds. Brammer says stakeholders also often base their perceptions on capabilities or capacities (making good products, offering good service, being financially sound) and character traits of the firm (integrity, ethics, trustworthiness). “This implies that companies need to pay attention to establishing their track record in relation to both these aspects of reputation,” he explains. SINGAPORE BUSINESS REVIEW | MAY 2014 25


AsiaPac M&A will be increasingly defined by bigger-sized deals

What could make 2014 a record year for APAC M&A? China could play a key role in the resurgence of AsiaPac M&A, with cash-flush PE houses taking advantage of selling opportunities.


siaPac M&A dealmakers might have been a bit spooked in 2013, but 2014 is poised for a strong, possibly even record-breaking, rebound. Analysts have noted the more buoyant outlook, especially among larger firms. “Based on the conversations we are having with our clients it will be a strong year for M&A with Asia’s corporate champions continuing to pursue transformational transactions,” says Farhan Faruqui, Head of Corporate and Investment Banking, Asia Pacific at Citi. “We believe we will see a record year in 2014,” says Bob Partridge, Managing Partner, Transaction Advisory Services Asia Pacific at Ernst & Young, noting that the positive outlook for AsiaPac M&A is “quite strong” based on feedback from private equity (PE) 26 SINGAPORE BUSINESS REVIEW | MAY 2014

Farhan Faruqui

Bob Partridge

houses across AsiaPac as well as major market surveys conducted by his firm at the end of 2013. He said PE houses and corporate have large amounts of available capital and hold the belief that the capital markets will return in 2014. The role of China China could play a key role in the resurgence of AsiaPac M&A, with cash-flush PE houses taking advantage of selling opportunities among state-owned enterprises (SOEs) and buying opportunities among private sector companies, says David Brown, Transaction Services Leader, PwC China and Hong Kong. “SOEs are being told that they have to specialize, which will involve, for example, spinning off non-core businesses, which will be a source for opportunity for PE

investors,” says Brown. “Private sector companies in China need capital to grow and private equities are a source of capital. We’ve seen a doubling of PE-led transactions in the past couple of months,” he adds. Aside from PE-led M&A, outbound M&A will also flourish this year as Chinese companies use acquisitions abroad to obtain expertise and technologies, which they can then in turn use to galvanize growth in the slowing domestic market. Analysts expect to see Chinese companies considering targets in the North America and Western Europe regions. “Well-capitalized, large companies are continuing to transact at strong levels, and we see robust outbound interest into North America by Asian acquirers,” says Rob Sivitilli, Head of M&A, Asia (ex-Japan) at J.P. Morgan. AsiaPac M&A inbound activity also has rosy prospects. “AsiaPac will continue to attract strong interest from America and Europe,” says Matt Leong, Executive Director, Corporate

FINANCIAL INSIGHT Finance Advisory at Deloitte Singapore. Bigger is better The tale of mergers and acquisitions in 2014 will see the bigger corporates stepping up as the main protagonists. Larger firms are set to drive most Asia Pacific M&A deals this year, according to analysts and industry insiders, leading the charge with their higher capitals and stronger deal-making confidence. In contrast, smaller companies will adopt a more cautious stance, waiting for the market uncertainty to subside further before braving the M&A arena – an arena that will be increasingly defined by bigger-sized deals. AsiaPac M&A totalled US$510b in 2013, falling 3.3% from the previous year to hit its lowest level since 2009, based on Thomson Reuters data, as dealmaking jitters dragged down activity in the region. “There were a lot less deals in 2013, as small and mid-sized companies in Asia became more conservative with the increased volatility more broadly across emerging markets,” says J.P. Morgan’s Sivitilli. “The decline in volumes in 2013 was caused by the impact of global uncertainty regarding the strength of economic recovery. In addition, many Asia Pacific emerging economies were affected by talk of US Federal Reserve tapering in the second half of 2013. This created a degree of cautiousness on the part of deal makers and it also meant that deals generally took longer to complete,” says Massimo Borghello, Director, M&A Consulting – Asia Pacific at Towers Watson. The AsiaPac region was also kept on tilt by various challenges in 2013, including currency, stock market and political volatility, and swings in raw material input prices, according to Deloitte’s Leong. “Global M&A also fell, so [the decline is] not isolated to Asia Pacific. To some degree it has been attributed to continued valuation gaps between seller and

buyer expectations, particularly as some of the global capital markets reached new record hires,” says Partridge. 2013 advisor rankings Goldman Sachs topped the list of AsiaPac M&A advisors in 2013, based on the Thomson Reuters M&A League Table 2013 rankings, with US$70.1 billion in total deal value, representing a commanding 18.4% market share in the region, across 91 deals. Morgan Stanley came in at second with US$55.1 billion (51 deals) in total deal value to capture a 14.5% market share. Citi placed third in the 2013 rankings with total deal value of US$43.2 billion (43 deals). Citi performed well advising landmark deals in Asia, including the largest completed deal in Asia in 2013: CNOOC’s acquisition of Nexen Inc (US$17.7 billion), which is also noted as the largest ever outbound deal by a Chinese company. Citi also advised the largest deals in India and Taiwan. Meanwhile, J.P. Morgan rose to fifth place as a result of a stronger M&A team dedicated to the securing deals in the region. “During 2012, J.P. Morgan formed a dedicated M&A team for Asia (ex-Japan), and I believe our improved standing in 2013 reflects the fruits of this initiative,” says Sivitilli. While AsiaPac M&A deals might have slowed in 2013, Thomson Reuters reveals that the average M&A deal value for disclosed deals significantly grew to US$81 million from just US$73 million in 2012 – a trend that could be explained by the prevailing valuation gaps, and one that might define 2014. “It suggests that the quality of the deals has increased as investors are trying to find larger (more scalable) businesses,” says Partridge. Key trends, hot sectors in 2014 Analysts have named several industry sectors that will become prime hotbeds for AsiaPac M&A activity, ranging from financial

Rob Sivitilli

Manish Nigam

David Brown

Matt Leong

Massimo Borghello

services to consumer products to manufacturing. “Towers Watson expects to see continued activity by Japanese acquirers in South East Asia. More generally in South East Asia, we expect continued interest in completing intra-regional deals, especially those targeting consumer-related sectors such as financial services and food and beverage. Overall, we expect that by the end of 2014 we will observe a more buoyant M&A market in Asia Pacific,” says Borghello. “Some industry sectors that are likely to be hot are financial services (which tend to have larger deal sizes), agricultural, consumer products and industrial products (‘old school’ core manufacturing businesses, where many markets in Asia continue to provide cost advantages),” according to Partridge. Deloitte’s Leong notes there has been on-going consolidation in the alcoholic beverage segment too, and hence it would be reasonable to expect that we will continue to see further M&A within that segment. Meanwhile, Manish Nigam, Research Analyst at Credit Suisse, points to banks and insurance as likely to remain active in terms of consolidation and also larger Internet companies expanding their presence through acquisitions. He also says to look out for potential M&A activity in the gas sector in Cooper Basin in Australia, the palm oil sector in Malaysia and Indonesia, and in the Asian transport and Marina sectors.

Over the last 10 years financial investors were already involved in 30% of all larger deals

Source: the BLOOMBERG PROFESSIONAL service, Thomson Reuters, Credit Suisse research


ANALYSIS: crowdfunding

Poster of Moonchild, a crowdfunded hand-drawn animated short film made in Singapore

Crowdfunding big dreams Singaporeans try to make it big as crowdfunding capital booms.


n 2011, Yan Yun Chen and Sara Chong began self-producing their stop-motion hand-drawn animated short film called Moonchild. Working under the name Stick and Balloon, the artist duo spent their weekends and free time on the film. They also paid for most of the expenses out of pocket, so the financial burden quickly weighed on the fresh graduates. But the pair stumbled onto Kickstarter, the now popular crowdfunding site, and overnight thousands of dollars poured into their dream project. “We went with a target of $2000, and hit our goal within 24 hours. We never expected so many friends, family, and strangers generously chipping in to our project,” they says. To attract backers – people who pledge money for a crowdfunded project – the artists set up a Please Feed The Animators campaign, which included a video and a rewards system. They managed to raise over $6000 from 82 backers for the duration of the campaign, with the funds going into new computer equipment


Brendan Goh

Kendall Almerico

Nicola Castelnuovo

for visual effects. Two years later, Brendan Goh had an even loftier dream: raise $100,000 to make The Buccaneer, a 3D printer designed for everyday consumer use. But unlike the lucky happenstance with Chen and Chong, the choice of crowdfunding via Kickstarter was a well-calculated move. “It is the lowest cost to market as a proof of customer adoption. The hard part was preparing for the campaign, the long write-ups, laying everything out nicely and the marketing,” says Goh. But the effort was well worth it. The Buccaneer drew in a whopping $1.4 million from 3,200 backers in just a month, or 13 times more than its original target, making it one of the most of successful Singapore-based crowdfunding campaigns to-date. Singaporeans are increasingly exploring the crowdfunding path to make their pet projects, and turn their novel business ideas into reality. In response, the local market is on the cusp of a boom, particularly for rewardsbased crowdfunding.

“The crowdfunding market in Singapore is rapidly growing. On the two biggest American rewards-based crowdfunding sites Kickstarter and Indiegogo, there have been more than 100 combined crowdfunding campaigns from Singapore. Many have been successfully funded,” says Kendall Almerico, a crowdfunding expert and CEO of FundHub.Biz. Almerico cites a Singaporean film called The Body that raised $29,050 on Indiegogo and Singapore-based firm Silverline raising $54,001 for its smartphone app. Singaporeans have expanded their choices beyond Kickstarter and Indiegogo to other crowdfunding platforms like Melbournebased Pozible and Crowdonomic. Singapore has been the most active country from Asia using Pozible, said Rick Chen, Co-Founder and Director at Pozible. A total of 472 Singaporeans pledged towards crowdfunding campaigns and 13 campaigns that have originated in Singapore have enjoyed a fair amount of success. “Singapore is a well-trusted and competitive financial hub and has the real potential to become a regional, if not global, hub for crowdfunding. We see a growing trend of larger institutions seeking to harness the power of crowdfunding to engage the startup community and advance their innovation agenda” says Nicola Castelnuovo, the Co-founder and CCO of Crowdonomic. Pozible and Crowdonomic seem to attract larger numbers of campaigners by providing strong support and making their platforms easy to use. Pozible has a dedicated staff member running workshops to mentor campaigners. Meanwhile, Crowdonomic streamlined their campaign set-up process into four simple steps, and gives advice to campaigners on how to effectively market to backers. Equity crowdfunding still nascent But analysts agreed that the country has a long way to go in developing its crowdfunding market, especially for equity based crowdfunding. While popular in the Western countries like United Kingdom and United States, equity financing – where donors receive stock or ownership – is just starting to gain traction in Singapore.

ANALYSIS: crowdfunding But the potential for growth is massive, according to analysts. “Equity crowdfunding can be an alternative funding source that complements channels that have been traditionally relied upon by local startups, such as government grants and loans from family and friends,” says Mohit Mehrotra, Executive Director at Deloitte Consulting. Equity crowdfunding also puts entrepreneurs through a more stringent process, and not all projects are accepted, due to the usually heftier investments involved. “Our current acceptance rate globally is only 8%,” says Daniel Daboczky, CEO of FundedByMe, an equity crowdfund which recently entered the Singapore market. He described a selective application and vetting process that starts with internal evaluations before proceeding to crowd-investor scrutiny composed of three rounds. Equity funding is also on the rise because it addresses a market neglected by venture capital. “In my opinion, venture capital firms have already left a funding gap for the vast majority of earlier stage companies that will increasingly be filled by crowd investors,” says Dara Albright, Co-founder of CrowdNetic, a crowd finance data solutions provider. Challenges for crowdfunding With its high growth potential, the Singapore crowdfunding market needs to be nurtured through a mix of more supportive regulations. “Investor-

friendly regulation is the number one priority that should be embraced by governments everywhere. The ‘crowd’ can and will do a much better job of regulating itself. In other words, enable and then get out of the way,” says Mark Wallace, Co-founder of Seraph, a virtual angel investment group. “For governments that are interested in promoting SMEs and startups, they should create exemptions in regulations that allow for public solicitation of investors via the Web and social media. Capacity building programs should also be enacted to help create skills in Singapore and Southeast Asia to fully utilize this important new form of finance,” says Jason Best, Co-founder of Crowdfund Capital Advisors, a crowdfund investing advisory firm. The Singapore Government should also focus on training entrepreneurs for the gruelling road ahead. “One of the issues that are emerging with crowdfunding for reward is that first time entrepreneurs are inexperienced. They underestimate the technical and commercial complexity of getting products to market. It is becoming very common for crowdfunding-forreward projects to be delayed due to manufacturing challenges,” says Hugh Mason, Co-Founder and CEO of JFDI.Asia. In the end, Singaporeans who dream big may look to crowdfunding as a launching pad, but it is just one of the many roads to riches – and it will

Hugh Mason

Jason Best

John Mullins

Andrew Tinney

Mohit Mehrotra

Rick Chen

Daniel Daboczy

The Buccaneer, a 3D printer successfully funded via Kicksarter

never be a magic bullet for success. “While crowdfunding does offer access to at least some funding for early stage entrepreneurs, many entrepreneurs believe that a lack of funding is what stands between them and entrepreneurial success. Sadly, they are mistaken. Raising funding for a new venture, difficult as it is, is actually the easy part,” says John Mullins, Associate Professor of Management Practice in Entrepreneurship and Marketing at London Business School. Entrepreneurial success “The hard part is developing a product that some set of target customers will want to buy, then getting that product in front of those customers and serving them well before and after the sale. Crowdfunding offers little assistance to these more difficult – and far more important – aspects of getting a new venture off the ground and ensuring its success.” Mullins says entrepreneurs should not be fixated on crowdfunding. In fact, some businesses may work better by using customer funds at the beginning. “It’s a route that Michael Dell and Bill Gates took to start their iconic businesses, as have recent blockbusters like Airbnb in the US and TutorVista in India. More entrepreneurs should understand and follow customer-funded models,” he says. Crowdfunding will also not replace venture capital and angel investing, both of which will continue to serve certain classes of entrepreneurs looking not just for funds, but also expert industry guidance. “Even if crowdfunding becomes an outstanding success, it is unlikely to replace venture capitalists or angel investors. Whilst the crowd may provide a view on a product’s market potential, angel investors and venture capitalists are a critical source of advice on how to make a company successful. The lack of key management competencies can be an Achilles heel for many a budding entrepreneur,” says Andrew Tinney, Partner, Financial Services at KPMG in Singapore. Given this fact, Tinney proposes that tax breaks the Singapore government may be considering for innovation would be better channelled through more formal angel investing or venture capital schemes rather than put towards crowdfunding. SINGAPORE BUSINESS REVIEW | MAY 2014 29

Zhang Xiaogang’s (b. 1958) Bloodline: Big Family No. 3 to be offered at Modern and Contemporary Asian Art Evening Sale,1995, oil on canvas, 179 x 229 cm, Est. US$8.3 – 10.3 million

Business booms and creativity spreads as international art hubs prosper in Asia Art has become big business in Asia with auction houses, fairs and galleries zooming in on the region’s new collectors.


n recent years, Singapore and Hong Kong have seen major investments to develop their art infrastructure. In its quest to become a “Renaissance City,” the Singapore Government has been renovating a number of museums, while establishing new ones such as the National Art Gallery. When completed in 2015, the National Art Gallery will be the jewel in the crown of Singapore’s burgeoning art scene, offering 48,000 square metres of gallery space dedicated to the National Collection of Southeast Asian art, considered to be the best in the world. Meanwhile in Hong Kong, after many delays, the $3.1 billion development of the West Kowloon Cultural District is now underway. When completed it will incorporate 17 major cultural venues, including several performing art venues and the M+ museum. The museum is part of the first phase of the development and is due to open in 2017. It

“When completed in 2015, the National Art Gallery will be the jewel in the crown of Singapore’s burgeoning art scene.”

will house some of the best Chinese contemporary art in the world, having received donations of over 1,400 art works from the collection of Uli Sigg, one of the largest and earliest collections of Chinese contemporary art. Along with these new investments in infrastructure, an entire ecosystem of auction houses, galleries and fairs has been developed to accommodate and promote the tastes of the fast-rising spending power of Asia’s collectors. Booming auctions This month, Bonhams is moving into a larger office space in Pacific Place that, for the first time, give the British auction house the opportunity to have a dedicated salesroom within its Hong Kong office, and it will put that space to good use ahead of the Spring auctions in May. In doing so, it is following in the footsteps of Christie’s and Sotheby’s

which have both in recent years opened similar dedicated spaces that allow them to hold special selling exhibitions, ‘off-season’ auctions, along with talks and other events for their customers. The strengthening of the auction houses’ presence in Hong Kong has been a reflection of their rising turnover in and from the region. In 2013, Christie’s global sales rose 16% to $7.13 billion, the highest sales total of any auction house in the history of the art market, while rival Sotheby’s, which celebrated its 40-year anniversary in Hong Kong last year, also had what its Chairman and Chief Executive Officer Bill Ruprecht described as a “remarkable year” with consolidated sales of $6.3 billion, a 17% increase on 2012. According to Christie’s data, demand for Asian art continued to increase strongly to $940.6 million in 2013, up 42% year-on-year. And while its sales in Europe ($2.1

ASIAN ART REPORT billion) were still double those of Asia’s ($977.5 million)— which now includes auctions in Hong Kong and Shanghai— the increasing importance of buyers from Greater China in the global art market was evident: they now account for 22% of Christie’s global sales, and spent 63% more than in 2012. “With only two auction weeks a year, Hong Kong has risen from a level of sales of $350 million in 2009 to over $900 million in 2013, slowly catching up with London King Street ($1.3 billion) where auctions are held every week! Our strategy and plans should lead to a smaller gap over the coming years,” says Chairman of Christie’s Asia Pacific, François Curiel, in an interview with Singapore Business Review. The emergence of Hong Kong as a key international auction centre on a par with London and New York has been further reinforced by the presence of other auction houses establishing a base there in recent years. Tiancheng International, set up in 2011 by former director of Christie’s China, Wang Jie, has found a niche specializing in jade jewellery, fine Chinese paintings and contemporary Chinese art, while large Chinese auction houses China Guardian and Poly Auction started holding regular auctions in Hong Kong in 2012, a move that has raised their international profiles. “In Hong Kong we are able to reach not only local clients, but also buyers from Singapore, Indonesia, the United States and various countries in Europe,” notes Loretta Lo, Operations Director at China Guardian (HK) Auctions Co. Ltd, adding that having held only three auctions in Hong Kong, it was still too early to speak of general trends but noting, “we were pleased to see sales at each of the auctions exceeded our estimates.” In 2013, China Guardian’s combined sales in Hong Kong totalled $104 million, accounting for roughly 10% of the Beijing-based auction house’s overall sales. In Singapore, the auction business also remains healthy even though both Christie’s and Sotheby’s stopped holding sales there in 2002 and 2008 respectively, moves that at the time helped consolidate their efforts in Hong Kong. Boutique

auction houses, such as Larasati Auctioneers and 33Auction, have been holding regular sales in the city-state, catering mainly to the more niche market of Southeast Asian art. “Apart from 2008-2009 when Asia felt the full impact of the world’s financial crisis, our business in Singapore has been steadily growing at a rate of 10-15 percent yearly,” says Daniel Komala, CEO of Larasati Auctioneers. “In fact 2012 and 2013 had witnessed growth of over 20 percent. Our sales have gone up by three to four times compared with what we achieved when we first entered the market 11 years ago,” he adds. 33Auction has also seen its sales improving, growing turnover from $6.93 million in 2009 to $11.74 million in 2013, according to David Fu, Specialist for Modern and Contemporary Asian Art at the auction house. Komala estimates that the Singapore auction market itself has grown tremendously from a mere $8-12 million back in the early 2000s to some $30-40 million last year.

“With only two auction weeks a year, Hong Kong has risen from a level of sales of $350 million in 2009 to over $900 million in 2013.”

“However, this is just a drop in the ocean compared to what we witness in Hong Kong. The auction market is worth billions of dollars there,” he says, adding that while Singapore has “done well” in Southeast Asia, it remains “definitely 50 years behind Hong Kong in the art auction business.” The biggest sticking point that has slowed growth in Singapore’s auctions has been the current tax of 7 percent on goods and services, that simply cannot compete with Hong Kong’s “zero” VAT, he explaines. The ‘Fair’ Attraction The vibrancy of the Asian art market and the appetite of Asian collectors can be further seen in the growth in the number of galleries in the region, and this is an area where Singapore has managed to keep up with Hong Kong, thanks in part to the support of the government. “In Hong Kong, the growth has been organic and largely reliant on the Mainland market. Singapore started later and the art hub [in Gillman Barracks] was created and stimulated by the government.

Xu Lei’s (b. 1963) Rock Island 2012, Ink and colour on paper, framed 118 x 131cm Est. US$260,000 - 320,000

Zhu Wei’s (Chinese, b. 1966) China China, Aluminum and lacquer paint, 2003 190cm x 96cm x 64cm, HK$700,000

Sanyu’s (1901 – 1966) Potted Chrysanthemums, Circa 1950s, Oil on Masonite, 130.3 x 74.5 cm, Expected to fetch in excess of US$5.1 million

ASIAN ART REPORT Although we work independently, without any government interference, the art hub is managed and overseen by the government.” explaines Sundaram Tagore, owner of the New York-based Sundaram Tagore Gallery, which has outposts in Hong Kong and Singapore. He also pointed out that the smaller auction scene may actually have helped. “There is less activity from auction houses in Singapore and, therefore, the galleries are thriving.” Magnus Renfrew, who heads Art Basel in Hong Kong, points out that while international galleries like Gagosian, White Cube and Platform China, are now calling Hong Kong home, it has been more challenging for many young galleries to emerge due to the “reality of overheads,” notably rents. Another indicator of the growing gallery market is in the mushrooming of many new art fairs across the region, with Hong Kong now boasting the largest international art fair in Asia, Art Basel in Hong Kong. Art Stage Singapore has managed to carve its own niche, attracting over 45,000 visitors this year, up 16% on the previous year, by focusing more on Asian art, in particular that from Southeast Asia. Renfrew noted the art world in Asia has been changing as collectors have also been evolving, making it a prime location now for galleries and fairs to build on the growing appetite for a range of art. “Prior to 2008, most Asian collectors were primar-

“The art world in Asia has been changing as collectors have also been evolving, making it a prime location now for galleries and fairs to build on the growing appetite for a range of art.”

ily relying on the auction houses as a barometer of artistic value: the higher the price, the better the quality. But there is a difference between speculation and investment, and collectors are now seeing the importance of the galleries system that offers the reassurance that an artist is on the right trajectory and will have longevity,” Renfrew explaines. “Auction houses have no responsibilities for the long-term prospects of an artist’s career, while a gallery will be working hard to do the right thing, making sure the artist’s work is placed in the right collections, that his work does not become the object of speculation, placing it with collectors who will not flip it immediately at auction,” he argues. “Collectors like the transparency of the auctions in terms of value and I think the endorsement of auction houses like Sotheby’s and Christie’s does give them a sense of security. But buying at a fair like Art Basel in Hong Kong is also now offering a sense of security and a sign of quality because collectors know the galleries that are represented at our fair have gone through a rigorous selection process through peer review,” Renfrew says, pointing out the fair received 500 applications this year for 245 slots. Reacting to the apparent demand from collectors, new art fairs have developed over the past couple of years, particularly in Singapore which is viewed as an ideal, and secure, location between East and

Chen Yifei (1946 - 2005)’s Morning Prayer to be offered at Modern and Contemporary Asian Art – Evening Sale, 1996, oil on canvas, 200 x 200 cm, Est. US$3.2 – 4.5 million

West. This year, there will be more than ten art fairs taking place in the Lion City, including for the first time two editions of the Affordable Art Fair, that has already proven a useful testing ground for emerging artists in the region and has given confidence to new buyers and budding collectors prepared to ‘take a punt’ on artworks. “The art scene in Singapore is dynamic and growing, and as a result we felt it was time to expand the Affordable Art Fair concept in Singapore based on the demand,” says Camilla Hewitson, the fair’s director, adding that the decision to move from one to two fairs this year was made in response to the number of galleries looking to take part. “We thought it would be better to have a second edition rather than expand our annual fair and risk losing that special atmosphere that we have established, and to make sure that we stay true to the Affordable Art Fair mantra,” she adds. Although some of the same galleries will exhibit in each of the two fairs, most of the artists represented by them will be different, an effort that should help keep fair fresh and interesting. The Singapore art fair scene will this year see two new entrants: the

ASIAN ART REPORT A “Qilian” Limestone “Bridge” Scholar’s Rock Qing Dynasty, 18th Century Est. US$128,000 – 192,000

Modern Indonesian artist S. Sudjojono’s Pasukan Kita Yang Dipimpin Pangeran Diponegoro (Our Soldiers Led Under Prince Diponegoro) (Est. in excess of US$2.5 million)

The “Liu Yun Xie” Root Wood Scholar’s Rock, Qing Dynasty, 18th / 19th Century Est. US$38,000 – 64,000

Milan Image Art (MIA) Fair, which selected Singapore as its first international outpost and will launch its inaugural edition there 23 to 26 October, and the Singapore Art Fair (Me.Na.Sa Art), a new boutique fair aiming to focus on emerging artists from the Middle East, North Africa, and South and Southeast Asia, to be launched 27-30 November. Changing tastes While Western collectors’ appetites for Chinese art shows little sign of waning, collectors from China and Southeast Asia are increasingly

venturing out of their own “comfort” zone, buying art from countries other than their own, though they are more drawn to well-established names than contemporary works, much as Japanese collectors were back in the late 1980s. “Femme Assise en Costume Rouge sur Fond Bleu” by Picasso and “Untitled” by Jean-Michel Basquiat were both purchased by Chinese collectors last year at Christie’s New York for $8.3 million and $29.2 million, respectively, according to Curiel, while in February, a Chinese collector acquired “Abstraktes Bild” by Gerhard Richter for $32.5 million at Christie’s London, and another was the under-bidder to the $11.5 million “Black Hair” by Domenico Gnoli. “Chinese collectors have become increasingly active in non-Asian categories and we expect this to continue as they have more opportunities to learn about these

“The art and auction markets have never been so attractive and approachable for potential buyers all over the world.”

sectors through our exhibitions and lectures,” Curiel says. Most encouraging for galleries, fairs and auction houses has been the emergence of new buyers. Firsttime buyers represented 30% of all bidders at Sotheby’s sales globally last year, while a similar percentage at Christie’s in Hong Kong were new buyers, increasing to 50% for Christie’s sales in Shanghai. The rapid increase in disposable income amongst Chinese entrepreneurs is being clearly reflected in the number of new collectors wishing to acquire artworks and luxury items, but the strong sales numbers are also due to the auction world becoming more accessible thanks to technological innovations such as online bidding, internet only auctions and e-catalogues. “The art and auction markets have never been so attractive and approachable for potential buyers all over the world,” Curiel says.

Singapore’s 25 largest hotels occupancy rate for 3Q2013, and later closed the full year at 98.7%.Wilson says that more luxury brands are expanding their presence at The Shoppes at Marina Bay Sands. These brands include Bulgari, Cartier, Dior, and Miu Miu Versace.

Find out what’s new at Singapore’s biggest hotels

Mandarin Orchard Singapore and Grand Hyatt Singapore unveiled additional rooms while other large hotels underwent major make-overs.


ingapore’s 25 largest hotels maintained their rankings in 2014 with no changes in their respective number of rooms, except for Mandarin Orchard Singapore and Grand Hyatt Singapore. Data obtained from CBRE show that Mandarin Orchard Singapore remained in third place with the number of rooms rising to 1077 from 1051 in 2012. The hotel’s manager Danny Wong revealed that there are on-going asset enhancement initiatives. At the end of 2013, it added 26 guestrooms and refurbished 32 guestrooms. This year, the hotel will renovate 398 guest rooms in phases. Grand Hyatt Singapore is still in ninth place with 677 rooms, 15 of which are new. Grand Hyatt Singapore marketing


Mandarin Orchard Singapore remained at third place with number of rooms rising to 1077 from 1051 in 2012.

communications manager Indrani Bit shared that the hotel completed remodelling works in its Terrace Wing in Q3 of 2013 and event space on Level 2. Remodelling works for Level 3 are expected to be completed in 2014. Top of the rank Since opening in 2010, Singapore’s largest hotel Marina Bay Sands with 2561 rooms has experienced a high demand across all aspects of its property. Ian Wilson, SVP of Hotel Operations, says that Marina Bay Sands received 40.3 million visitors, a 5% increase from 2012. “We concluded a recordbreaking 2013 with over 70 trade shows held at the Sands Expo & Convention Centre, in comparison with 51 shows in 2012,” says Wilson, adding that the hotel also saw a record high of 99.8% hotel

Renovations To keep up with the competition, other large hotels also underwent major renovations. Fairmont Singapore, ranked seventh, embarked on a comprehensive improvement project which started in August 2013 and is scheduled for completion in May 2014. The improvement focused on specific upgrades to all of the hotel’s 371 North Tower guestrooms, the lobby, and the debut of a chic bar, Anti:dote which opened in late 2013. According to Orchard Hotel general manager Riaz Mahmood, the hotel’s pillarless Orchard Grand Ballroom was given a grand makeover, with new carpeting, wall décor and audio systems in 2013. Mahmood also says that the hotel just opened its refurbished Fitness Studio and newly renovated Swimming Pool with jacuzzi and rainshower. Orchard Hotel Singapore landed at 10th place. Twelfth placer Ritz-Carlton, Millenia Singapore unveiled its newly-renovated Club Lounge in September 2013. Designed by Burega Farnell, the lounge features luxurious details such as custom-tailored furniture and hand-woven carpets complementing Indonesian teak wood flooring and Italian marble. Following productivity improvement with the implementation of PMS Integration– integrating of Opera and online bookings, Singapore’s 24th largest hotel Riverview Hotel will start renovations of all guest rooms and kitchens in 2014. According to Michelle Tham, PR & advertising manager of the hotel, all the six guest lifts and three service lifts will also be completely overhauled.

Singapore’s 25 largest hotels

The 25 largest hotels in Singapore 2013 Ranking

Company Name

No. of rooms 2013 2014

Hotel rate (approx. in SGD)

GENERAL MANAGER Head of Hotel Operations


Marina Bay Sands





Ian Wilson


Swissotel The Stamford





Tom Meyer


Mandarin Orchard Singapore





Danny Wong


Carlton Hotel Singapore





Tracy Ng


V Hotel Lavender





Charles Goh


Pan Pacific Hotel Singapore





Scott Swank


Fairmont Singapore





Tom Meyer


Shangri-La Hotel, Singapore





Reto Klauser


Grand Hyatt Singapore





Willi B Martin


Orchard Hotel Singapore





Riaz Mahmood


Furama Riverfront Singapore





Lily Chan


Ritz-Carlton, Millenia SINGAPORE





Peter Mainguy


Peninsula Excelsior Hotel





William Wong


Grand Mercure SINGAPORE Roxy





Klaus Gottschalk


Marina Mandarin Singapore





Kurt Wehinger


Grand Copthorne Waterfront Hotel





Winston Reinboth


Traders Hotel, Singapore





Clifford Weiner


Ibis Singapore on Bencoolen





Pierre-Etienne de Montgrand


Parkroyal on Kitchener Road





Gary Moran


Mandarin Oriental Singapore





Christian Hassing


Holiday Inn Singapore Atrium





Sam Davies


Royal Plaza on Scotts





Patrick Fiat


Conrad Centennial Singapore





Mark Moanoy


Riverview Hotel





Shirley Wong


Swissotel Merchant Court





Rainer Tenius





*The list is based on the information provided by CBRE, confirmed and verified by companies. Published hotel rates are as of March 2014 ** Average hotel rate

legal briefing

Stalking now criminalised in Singapore A fine of up to $5,000 or a 12-month imprisonment await violators.


ver received countless threatening messages on a daily basis from a persistent stalker? Or had somebody bombard you with verbal abuse in a public place? Ever had an unwanted visitor constantly loitering near your house causing you fear and distress? If your answer is yes to any or all of these questions, then you’re one of the many victims of harassment who now have reason to rejoice with the recently passed Protection from Harassment Act 2014. Bullying, stalking, imposing unwanted communication, or even worse, sexual abuse are all forms of harassment some Singaporeans may have experienced inside and outside of the office. Minister for Law, Mr K. Shanmugam, admitted that laws in Singapore against harassment were inadequate. What is the new law about? The Protection from Harassment Act 2014 was passed by the Singapore Parliament on 13 March 2014, and will come into operation upon notification by the Minister. Melvin Chan, head of litigation & dispute resolution at TSMP Law, notes that the Act re-enacts existing laws under the Miscellaneous Offences (Public Order and Nuisance) Act which criminalise harassment. The Act defines harassment as “any threatening, abusive or insulting” words, behaviour or communication made “by any means.” Writing in the Stamford Law Chronicle, litigator

“A major loophole in the Act is its limited enforcement powers...” Adrian Tan points out that, for businesses, the Act empowers the court to order the removal from publication of false statements of fact about any person. In that regard, Tan notes the court is also empowered to act against persons whose names are unknown, as long as those persons may be identified by a unique identifier. KhattarWong’s IP & Technology Practice notes that companies also need to take the lead in establishing ground rules and avenues in the workplace for employees to report any form of unacceptable behaviour by co-workers, in order to protect their employees from harassment. “It is also in their interest to prevent such disputes from escalating and resulting in unwanted adverse publicity generated by complaints of such a nature getting an airing in the Courts,” it adds. What’s new about it? Loitering outside the victim’s home, or sending the victim frequent and multiple messages or gifts when 36 SINGAPORE BUSINESS REVIEW | MAY 2014

Melvin Chan

Adrian Tan

Derek Kang

Lionel Tan

requested not to do so, are now punishable and can constitute a new offence of unlawful stalking (which may include cyber stalking). Lionel Tan, partner at Rajah & Tann, says, “This may lead to moderation of online behaviour and hopefully reduce instances of cyberbullying. Victims of unlawful stalking, which can also occur online, would have recourse to stop such disturbing behaviour and return normality to their lives.” What will be the punishment for violators? Penalties for the various offences range from a fine not exceeding $5,000 to imprisonment for a term not exceeding 12 months. Derek Kang, a partner at Rodyk & Davidson, says even though offences under the Act are relatively minor, the police are now empowered to make arrests of suspected offenders without warrants. “They can then be prosecuted in the Magistrates Courts and dealt with as per any other crime,” he adds, noting that the Act also has extra-territorial effect, meaning that offenders who harass victims in Singapore, as well as offenders in Singapore who harass victims overseas, are subject to the jurisdiction of the Singapore courts. What are the remedies for the victims? Chan says the common law tort of harassment is abolished and replaced with a statutory tort for which a victim may bring civil proceedings for damages. Through self-help remedies, victims can apply directly to court for Protection Orders and Expedited Protection Orders to require offenders to stop their conduct and/or attend counselling or mediation, or to remove harassing publications. “Victims of false statements can also apply for court orders to direct the publication of notifications to bring attention to the false statements and to the true facts. The processes for doing so are intended to be simple, so that victims need not appoint lawyers to act for them. The offenders’ real names also need not be known,” adds Kang. What are loopholes in the Act? Lawyers concur that a major loophole in the Act is its limited enforcement powers, especially against anonymous and overseas offenders. “For the Singapore courts to exercise jurisdiction over an overseas offender, the offender has to be brought within jurisdiction. It will be difficult to extradite an offender to Singapore for such relatively minor offences,” says Kang. “Nevertheless, it is a step in the right direction in setting the tone that harassment, anti-social behaviour and stalking will not be tolerated,” concludes Rajah & Tann’s Tan.


CMO Briefing

The marketer’s new kiss of death

Why boredom kills brands– and what you can do to avoid the same fate.


he last thing any marketer wants to do is to bore their consumers. Unfortunately, the rise of digital media has brought with it the age of short attention spans. In this day and age, scrolling down is the new kiss of death. Fortunately, there is a way out, but only a few great brands have successfully managed it. Kulwinder Singh, Director for Global Marketing and Communication at Synechron, tells the story of Coca-Cola’s “Invisible Vending Machine” for V-Day 2014. The breakthrough? Coke found a way to make a vending machine visible only to couples. The ‘invisible’ machine dispensed personalized coke cans to couples who interacted with it. (As if being in love wasn’t enough of a reward already!) Simon Kahn, CMO at Asia Pacific Google, cites another example; fashion superbrand Burberry’s “Burberry Kisses” campaign. Burberry invited people to pucker-up in front of their webcams. When they did, Burberry virtually dressed them with a shade of Burberry lipstick. The campaign generated 100,000 virtual kisses in just three months. So what are these brands doing that your brand isn’t? Experiential Marketing: making sense through the senses The brands that successfully captivate the millennial consumer understand the fundamental change occurring in the industry. They use a type of marketing that “focuses on experience and not exposure… on relevance and involvement and not just reach,” says Veetika Deoras, Head of Brand Marketing and Corporate Communication at Tata Capital. In other words, they deploy experiential marketing. Experiential marketing involves getting consumers to actually ‘experience’ a campaign as


Aside from groundbreaking creatives, planning is also pivotal to a strong campaign.

opposed to just disseminating information; to get your point across through the consumers’ senses. This is what Coca-Cola did with their invisible machine, and what Burberry did with its lipstick. Why does it work? Sensory experiences trigger memories, and memories trigger emotions. Thus, to make a lasting impression, you need to engage your consumers’ senses. This is the basic logic underpinning experiential marketing, as explained by Dr Makarand Upadhyaya, member of the Chief Marketing Officer (CMO) Council, a global network of top-ranking corporate marketing decision makers. Although this is nothing new, it has taken on a new twist with the advent of the digital age. Kahn spells out the difference between then and now: “Many people still think of experiential marketing as high-touch, non-scalable and thus, only appropriate for premium products and narrow [segments]. Through digital marketing, however, brands can create immersive experiences that can touch millions of people at the same time.” From audience to advocate The ultimate goal of experiential marketing is to make brand advocates out of your audience. A brand advocate is someone who broadcasts your brand’s message for you, and even enhances that message according to their experience of your campaign. Making brand advocates out of your audience means giving them an experience that will drive them to initiate advocacy on their own. And doing this means creating an experience worth sharing to their networks. The best part about it is its win-win nature: your consumers get to have fun while your brand gets exponential traction (read: sales!). Singh cites data from ID (a UK-based Experimental Marketing Agency) saying that 64% of consumers who have interacted with an experiential campaign are bound to share their experience with at least one other person. So what’s the formula for a great campaign? Deoras explains that “experiences have to be ultracreative, based on strong insight, with a strong product tie-in and customisable and yet potential crowd-pullers.” Aside from ground-breaking creatives, planning is pivotal to a strong campaign. Dr Upadhyaya recommends “developing an inventory of sensory impressions for the brand and identifying the most pertinent ones.” Creativity, careful planning, and distinctiveness are crucial to success. This cannot be emphasised enough, as experiential marketing is a double-edged sword. Chris Reed, CEO at Black Marketing, warns that “if the customer touch points are negative… then the customer reaction will be equally negative. That would then lead to negative word of mouth and negative sharing in social media.” Ultimately, no two experiential campaigns look alike, and there is no fool proof formula.

co-published Corporate profile

Serrano succeeds with style and substance Discover how Serrano relied on quiet confidence to reach world-class success


ower-hungry businesses often get caught up in the minutest details of branding, networking, etc. that they often fail to see the bigger picture. Building a respected brand isn’t always about who’s most glamorous, or who’s the loudest. Often, a solid business model and top-notch work ethic are more than enough. Case-in-point: Serrano Holdings. Being the winner of the Singapore Prestige Brand Award - Established Brand in 2013, Serrano Holdings knows all about what an award-winning business is made of. Serrano is a Singapore-based interior fit-out company. It is a regional market leader in the industry, with over a hundred projects completed in multiple locations not just in Singapore, but in countries such as Vietnam, Myanmar, Thailand, and Indonesia. The company is also engaged in furniture manufacturing and retailing. It is the exclusive distributor of European furniture brands like Pierre Cardin and Stosa Cucine in Southeast Asia. Serrano has been around for two decades and, in that time, has won countless local and international awards for its service including the BEI Asia 2013 Regional Category Top Winner Award, the ASEAN Business Award for Growth (large company category) and the Singapore Furniture Manufacturing Gold Award. When asked what it takes to be a multi-awarded business, Sean O’Hara, Serrano’s General Manager replies, “we didn’t become a multiple awardwinning company overnight…it was the culmination of 20 years of consistent hard work.” Building a foundation of trust Being a B2B company, Serrano has little options to get the word out on its business. “Our target audience is very specific and we prefer a more targeted approach in brand development rather than a broad brush approach [which adds little value],” says O’Hara. Thus, the company has had to rely on letting its service speak for itself. True enough, the quality of their service

Executive Director Mr. Johnston Chia receiving the Singapore Prestige Brand Award – Established Brand has spoken for itself in grand ways. “We strive to build stakeholder loyalty through quality products and services,” O’Hara adds. Serrano is the genius behind some of the most celebrated interior fit-out works in the industry. The company has consistently been involved in award-winning projects including those which have received the BCA Construction Excellence Award 2013, and the BCA Universal Design Award 2013, among others. Most importantly, Serrano has been able to cement its formidable track record with a mindset of Integrity, Virtue, and Action. “It may sound very cliché, but the fact is we are really proud of all our projects, big and small. We consider all our clients major clients and all our projects high profile.” Consistently outperforming their clients’ expectations, Serrano is sure to add more high-profile projects to its extensive portfolio. Such culture of excellence is the secret to its long-

“We didn’t become a multiple award-winning company overnight…it was the culmination of 20 years of consistent hard work.”

High quality products are a matter of pride

Serrano’s 27,000 square metre factory standing reputation as a top-tier industry player. The company has taken on a proactive role in its growth strategy through regional expansion, and vertical and horizontal integration. It has a strong presence in Singapore, Vietnam, and Thailand, and is currently expanding in Malaysia, Cambodia, Myanmar, and the rest of Southeast Asia. Serrano is definitely on its way to becoming the undisputed market leader in the entire region. Expanding its retail business is also in the works, where the company is especially eyeing Vietnam and Cambodia. SINGAPORE BUSINESS REVIEW | MAY 2014 39

CHRO Briefing

Top 2 strategies for retaining staff

Retaining talent takes more than deep pockets.


ecruitment is an expensive process that many global businesses are keen to control. Citing a study by HR professional body CIPD, Regus estimates the cost of an employee leaving at £4,625 (S$ 9,812), rising to £5,000 (S$10,608) for managers and professionals. With more than a third of businesses reporting employee retention a priority what measures should businesses be prioritising to slash hiring costs, attract and retain top staff? Singapore Business Review was able to speak with two of the speakers of HR Summit 2014 , which will be taking place this April in the city and will be attended by various HR professionals from all over Asia. They shared their views on sure-fire ways to keep talent. 1. More targeted approach According to Ute Braasch, COO and HR head, Corporate Solutions Asia Pacific, Jones Lang LaSalle, a company’s approach to retention needs to take into consideration the fact that the motivations for employees to stay with a firm can vary significantly across individuals, countries and professions. “It is not one single strategy that stands out for me, but I look at it as ‘horses for courses’. Over the years, I have seen many organizations make the mistake of deploying a scatter gun of text book retention strategies in the hope that “some may stick”. While this approach typically does yield some success, there is no guarantee that it will positively impact those that the company is most keen on retaining,” she says. Braasch recommends a more targeted approach, based on a deep understanding of the drivers of attrition of different employee groups within the organization. “A few years ago, we were faced with an attrition challenge in a particular part of our business here 40 SINGAPORE BUSINESS REVIEW | MAY 2014

Relationships with colleagues and their manager are the key reason why employees stay with the company.

in Asia. Conventional wisdom suggested that employees in this location and function were leaving primarily for higher salaries, so management was quick to suggest a review of our compensation plans. However, our root cause analysis, which included a thorough review of exit surveys, focus groups, HR metrics and engagement survey results, revealed that compensation was not a driving factor at all. Instead, we found that a number of problems in our recruiting and onboarding processes were driving the attrition we were experiencing downstream,” she says. As a result, Braasch says that their firm was able to tailor the response to the specific needs of this group of employees and the underlying issues. “Not only was this approach highly effective, with attrition in this team dropping substantially within a year, but it was also a lot less costly, as we were able to focus on the 2-3 areas that really made a difference, as opposed to deploying the broad, standard suite of retention tools,” she adds. 2. Active engagement Singtel group director Human Resources Aileen Tan, notes that identifying retention strategies for such a large company with a diverse workforce of more than 21,000 employees in 22 countries spanning four generations is a challenge. As such, Tan says that their engagement survey every year includes questions which ask employees why they joined SingTel and what keeps them at the company. “We found that employees joined the organisation because the role was interesting and they could see a path for development and growth. Other factors that were important were the reputation and success of the company and its leaders, as well as having a progressive culture that was known to lead and shape the market,” she says. According to Tan, relationships with colleagues and their manager are the key reason why employees stay with the company. She adds that work/life balance and corporate social responsibility (CSR) are also increasingly important while providing future career opportunities and advancement continues to be a strong retention factor. “SingTel’s employee value proposition “Connect & Grow” was based on these attraction and retention drivers. “We have numerous activities to ensure employees are connecting with colleagues and leaders across the organisation through our CSR activities, town hall meetings, networking sessions or by blogging on our intranet site, Espresso. As one of Singapore’s largest employers, we are able to offer exciting opportunities for employees to grow their career both locally as well as overseas,” she says. “We know that priorities can change, so SingTel will continue to find new ways to support our employees as they “Connect & Grow” to create amazing experiences for our customers and their own careers,” she adds.


China will likely exceed the US’ imports this year

How Big is China, really?

Crunching the numbers to calculate the relative impact of China’s growth on the world economy. By Frederic Neumann, Economist, HSBC


ell, big. So a slowdown would clearly matter for the world. But amid the flood of data and rapid-fire analysis that is thrown about, it is easy to lose sight of the relative magnitudes. We therefore compiled a few, handy findings putting China’s growing economy in perspective. And yes, it’s big. Even if growth on the Mainland slows to 7.4% this year, China will still add almost twice as much dollar demand to the world economy as the United States. Put differently, Chinese growth would have to tumble to 4.25% (rather unlikely, in our view) to simply match incremental US demand. Even when looking at imports, China will likely exceed the US this year, although a big chunk of this will be in the form of commodities. The good news is that because of its larger size, even slightly slower Chinese growth will still add plenty of extra juice


Even if growth on the Mainland slows to 7.4% this year, China will still add almost twice as much dollar demand to the world economy as the United States.

to the world economy. The bad news, of course, is that a wobble on the Mainland would shake things up elsewhere. GDP growth Let’s stick to the four largest economies: the US, China, EU and Japan. In 2003, a marginal change in China’s GDP growth hardly mattered, adding or subtracting barely USD16 bn (swings in Japan’s growth at the time mattered 2.5 times as much). The EU, incidentally, mattered exactly as much as the US. Forward to 2013: a 1ppt change in Chinese growth now adds to (or deducts from) world demand roughly USD90bn (or 1.8 times Japan’s contribution). Note that currency swings (and added membership) also mean a given change in EU growth matters more today than the incremental demand contribution by the United States. Still, a 1ppt acceleration in US growth would

provide twice the increase in spending of an equivalent pickup in Chinese growth. Put differently, if China, say, slows from 7% to 6%, the drag on world demand would be offset if the US accelerates from 2% to 2.5%. For the US, our chief economist, Kevin Logan, expects growth of 2.3%, while for China, HSBC’s chief economist, Qu Hongbin, forecasts 7.4%. On these assumptions, China’s contribution to world demand will roughly be twice that of the United States. Even if Chinese growth were to slow to 5% (again, not our view, but let’s talk hypotheticals), the Mainland would provide more incremental demand than the US over the coming year. Impressive enough. But there is an obvious hitch. The degree of openness varies from one economy to the next. So we need to refine our approach a little to gauge how much growth in the G4 actually benefits the world through rising imports. Imports Many of China’s imports ultimately feed into exports that end up in other G4 markets. To account for this, we halved the relevant ratio for China (in effect assuming that only 50% of China’s imports are consumed locally). The marginal impact of a given change in growth is much smaller for China than for the EU or US (although larger than for Japan). With GDP growth of 7.4%, Chinese imports should grow by roughly USD80bn, some USD20bn larger than either for the EU or the US. Growth on the Mainland, in fact, would have to tumble to 5% this year for incremental Chinese import demand to fall below that of the United States or the EU. The bottom line? China needs to keep humming, or US and EU growth would need to step up meaningfully to make up the difference. Yet data visibility has been poor on all fronts of late. No wonder, then, that markets have been a tad nervous.


REGIONAL ANALYSIS 2: foreign direct investment outflow of Japanese capital; b) portfolio inflows will unlikely exit the region at once as growth remains firm; and c) most emerging Asian nations have adopted measures to mitigate the negative spill-over of capital flow volatility. Perhaps most positively, with easy money reduced, policymakers will now finally confront the structural bottlenecks that are holding back growth potential.

Not all foreign capital injections are created equal

A tale of two flows

Will a slowdown in portfolio investment prompt emerging Asia to reform and attract FDI? By Trinh D Nguyen, Economist, HSBC


merging Asia has received strong capital inflows in recent years. Thanks to astonishingly accommodative monetary policy in the developed world, from 2009 to 2012 the region received a net foreign capital injection of USD1trn – 484% higher than the total capital inflows in the previous four years combined. By country, India received 30% more capital inflows, of which portfolio investment rose to USD93bn versus USD40bn during 2005 to 2008. Indonesia’s capital inflows rose a staggering 1,840%, with USD37bn and USD39bn in the form of portfolio and foreign direct investment, respectively. But not all foreign capital injections are created equal: sticky foreign direct investment (FDI) is generally more beneficial to economic development. Portfolio inflows that are motivated by growth and interest rate


While ‘hot’ inflows will not be as rapid as in previous years, we do not expect a severe credit crunch in emerging Asia in 2014.

differentials, without directly improving productivity, can disturb the recipient’s economy through: a) undermining exportcompetitiveness by putting upward pressure on the currency; b) fuelling a credit boom that stokes asset bubbles; c) delaying structural reforms of key growth bottle necks; and d) increasing volatility in financial markets and growth prospects when flows ebb. In Q3 2013, the inflow of portfolio investment fell significantly due to improved economic conditions in the developed world and concerns about growth prospects in the region. But a mass exodus did not occur. While ‘hot’ inflows will not be as rapid as in previous years, we do not expect a severe credit crunch in emerging Asia in 2014. The reasons are simple: a) FDI inflows into emerging Asia will continue to rise thanks to regional integration and higher

The devil is in the detail One of the big game-changers for capital flows into emerging Asia in 2013 was not just the beginning of the end of quantitative easing by the Fed, but also the unprecedented monetary easing by the Bank of Japan. There were sharp net capital inflows to Japan, a divergence from being a net capital exporter to the rest of the world. Net capital (portfolio, FDI, and others) inflows slowed in emerging Asia, with the sharpest reduction in India, Malaysia, the Philippines and Thailand. The depreciation of most emerging Asian currencies, underperformance of their equity markets and slowing growth momentum sparked concern that a further reduction of portfolio inflows would cause a severe growth slowdown. The concerns are not without grounds – net portfolio inflows increased sharply from 2009 to September 2013 in countries such as India, Indonesia, South Korea, Malaysia, the Philippines and Thailand. But a drastic reversal of flow did not occur in most economies. In fact, Indonesia attracted a roughly equivalent amount of inflows from January to September of 2013 as in the two years prior. A decomposition of the flows suggests that the pull factors in many emerging Asian countries remain strong, especially in Southeast Asia. While countries such as Indonesia, China and the Philippines should see their GDP growth rates slow in

REGIONAL ANALYSIS 2: foreign direct investment 2014 from 2013, we expect most of these economies to resume strong growth rates in 2015. The growth differentials remain large between emerging Asia and the developed world, and we forecast growth to accelerate in 2014 and 2015. For example, we expect the Indonesian economy to slow to 5% in 2014 after government officials implemented measures to reduce oil subsidies and hike rates to cool an overheating market. But with Indonesia’s mediumterm growth potential unlikely to be impeded, our economist, Su Sian Lim, expects the 2015 growth rate to be around 6%. In Southeast Asia, especially Indonesia, the Philippines and Vietnam, strong demographics coupled with gradual reform momentum to boost investment spending and tackle structural bottlenecks will add to long-term potential. The regional integration story continues to unfold, and we expect the ASEAN Economic Community to be implemented by 2015, increasing trade, capital and service mobility within the region. In fact, FDI into Southeast Asia rose in 2013 by 2.4% and emerging Asia was the top FDI destination in the world. What the rise of FDI inflows tells is the continued commitment in the growth of the region by foreign investors as well as within the region. China is also increasing its investment in Southeast Asia, with outward investment to Thailand, Indonesia and Vietnam rising

While we think emerging Asia will likely receive less portfolio inflows than before, the reshuffling of portfolio investment will also likely be less volatile in 2014.

Thios spurred concerns about the mass exodus of accumulated portfolio investments in the region

Source: CEIC, HSBC

sharply in recent years. Japan has historically been a key regional player, with FDI outflow rising even further thanks to a large injection of cash by the BoJ. We expect FDI inflows into Indonesia, Vietnam and the Philippines to continue to expand in the coming years, thanks to flush liquidity in Japan, diversion of trade out from China and stronger growth prospects in Southeast Asia. China, as it beefs up structural reforms, should also attract a surge of FDI into wholesale and retail, accommodation and hotels, as well as the banking sector. In 2013, from January to September, these sectors had double-digit growth rates in FDI inflows. Less volatile reshuffling While we think emerging Asia will likely receive less portfolio inflows than before, the reshuffling of portfolio investment will also likely be less volatile in 2014. With the Fed commencing the end to quantitative easing in December 2013 and the BoJ committed to its goal of reflating Japan, the international capital market might turn out to be less uncertain in 2014. In 2013, by the end of September, the net portfolio inflows to Japan surged to USD204bn by end of September 2013 to take advantage of the Nikkei rally. This story will likely continue to unfold in 2014 with flows into Japan likely slowing, albeit only marginally. This means that while the pace of inflows to emerging Asia will slow in 2014, a sharp reversal of fund flow is unlikely. Most emerging Asia GDP growth rates will likely accelerate in 2014 and continue to rise further in 2015. The still-strong growth rates in these economies, in contrast to tepid growth in Japan and the EU, should keep investors committed to staying put. Finally, and perhaps most importantly, most emerging Asian economies have built up a defensive ring of macro-prudential measures to manage liquidity and flows since the 1997 Asian Financial Crisis. While exchange

rate policy has become more flexible, measures are in place in most emerging Asian economies to mitigate the negative spill-overs of portfolio inflows. For example, the Philippines adopted a limit on real estate lending at 20% to prevent an asset bubble building. Altering the composition of flows While empirical studies have shown mixed results on the net effects of capital management measures on capital flows, there is evidence to suggest that these tools can alter the composition of flows. Gregorio, Edwards and Valdes (2000) found that flows can lean towards longer maturities with macro-prudential measures in Chile, and Magud, Reinhart and Rogoff (2011) found that foreign currency restrictions are effective at discouraging borrowing in foreign currencies. Obviously, a net capital injection is positive for emerging Asian economies, especially Southeast Asia and India, where investment levels are short of what’s needed to keep up with population growth and development. While portfolio inflows slowed in Q3 2013, a massive exodus did not occur. In the short term, while dampened portfolio investment inflows will drag down growth in vulnerable economies such as India and Indonesia, it has a silver lining of forcing these economies to confront with much-delayed structural reforms. Without easy ‘hot’ money superficially to boost assets and consumption, emerging Asian economies will have to boost productivity, which is more sustainable but requires reforms to improve institutions, infrastructure and labour market conditions, including better demand for jobs and higher quality education. These are the types of reforms that will boost the appeal of the region to stickier capital that is more conducive to growth – FDI. While Q3 2013 seemed like the worst of times, perhaps it was also the beginning of the best of times to come. SINGAPORE BUSINESS REVIEW | MAY 2014 45

post-event feature: E&O

E&O rides on increasing demand for luxury residences

With the biggest high-net-worth population growth rates being recorded in Asia Pacific, the state of Penang in Malaysia has been one of the hotspots for luxury residences.


he world’s richest may have dumped their riskier investments in the wake of the 2007 global financial crisis, but they have stayed fiercely loyal to one particularly alluring asset: Branded luxury residences. Knight Frank data show that high-net worth individuals (HNWIs) have been increasing their exposure in residential property investments in recent years, more than any other wealth investment option, including offices, retail and hotels. Branded residences have been the apple of the super wealthy’s eye, outperforming their non-branded counterparts and the entire residential property sector as a whole. Branded residences may carry higher price tags that average 31% more than non-branded equivalents and rack up more expensive service charges, yet they remain irresistible 46 SINGAPORE BUSINESS REVIEW | MAY 2014

“Branded residences may carry higher price tags that average 31% more than non-branded equivalents and rack up more expensive service charges.”

to HNWIs due to their luxurious services and world-class designer amenities. “By fusing the best of hotel and other services into a residential template – this innovation attracts buyers who are looking to buy into the latest trends,” said Liam Bailey, Head of Residential Research at Knight Frank. “The benefits and convenience of the service offer is prized by buyers to the extent that they are happy to pay for the higher service charges associated together with the uplift in headline capital value,” he added. The demand for prime property, especially cross-border transactions which tend to favour branded residences, has benefited from the recovery in the fortunes of the world’s wealthy since 2009. With the biggest high-net-worth population growth rates being recorded in Asia

Pacific, the region has been one of the hotspots for luxury residences and the state of Penang in Malaysia, enjoys such attention. SBR and E&O In light of the growing demand for branded residences in the region, Singapore Business Review (SBR) partnered with Eastern and Oriental (E&O), a premier lifestyle property developer in Malaysia, for the Penang Property Outlook Briefing 2014. E&O’s country manager Aileen Han and senior sales manager Jeremy Chee talked about E&O, their latest developments and offering in Penang. E&O is listed on the Main-Board of Bursa Malaysia. With a series of exclusive addresses in Kuala Lumpur and Penang, E&O has established its reputation as a premier lifestyle property developer. E&O is

post-event feature: e&O now expanding its property portfolio to areas such as Iskandar Malaysia, as well as further afield with its maiden international foray in Central London. In Penang, E&O’s master planned seafront development Seri Tanjung Pinang is one of the most soughtafter residential addresses among locals and expatriates, home to over 20 nationalities. Quayside Seafront Resort Condominiums is the first in the region with a 4.5 acre private waterpark and neighbours Straits Quay, the first festive retail marina on the island. E&O’s core business of property development is supported by a cachet of complementary lifestyle elements. In the hospitality domain, E&O is best known for its iconic heritage hotel from which the Group proudly derives its name - the landmark Eastern & Oriental Hotel in George Town, Penang as well as the Lone

Pine Hotel, the first to operate along Penang’s Batu Ferringhi beach. World-class waterfront community Touted to be the finest on Penang Island, E&O’s Quayside Seafront Resort Condominiums is the latest gem in Seri Tanjung Pinang. Sited on 8.5 hectares of the most prime section of the master-planned development, Quayside accentuates family fun with an impressive water park for residents’ exclusive use – at more than one hectare, the first of its kind in Malaysia. Following the success of Quayside, E&O will be launching the Andaman Edition 18 East sea-fronting condominiums. With its outstanding location and world-class suite of facilities, the Andaman Edition 18 East is an extraordinary development that will be a challenge to replicate. Every detail – from its concept, location and furnishings right down to

“In Penang, E&O’s master planned seafront development Seri Tanjung Pinang is one of the most soughtafter residential addresses among locals and expatriates.”

a purchaser’s return on investment – exudes exclusivity at its best. On a land-scarce island like Penang, this exclusive abode provides residents a sweeping vista of the Andaman Sea, the Penang city skyline, surrounding hills and the recreation park. It has a good price appreciation potential in view of the completed world-class facilities being sited on prime land. As an exception to the norm, potential buyers of Andaman Edition 18 East will have the opportunity to view and assess the development’s fully completed common facilities and recreation areas, which include an outstanding 1,300 square metre twostorey clubhouse as well as 1.4 km of jogging and cycling tracks within a 2.8 hectare park area. The completed facilties and built common areas showcase the robust product standards and quality that potential buyers of Andaman Edition 18 East stand to own.


FEATURE: bitcoin in asia

Virtual currency Bitcoin growing in popularity

The low-down on Bitcoin

Find out how this wildcard currency is shaking up Asian markets.


espite living in the age of digital technology, many people still don’t know what to make of Bitcoin – what to expect of its future, whether it’s a good thing or a bad thing, or whether governments should finally step in and regulate the currency (assuming they’ll be able to). Bitcoin is a borderless, virtual currency that was designed to be unregulatable by monetary authorities. Although its use is arguably still in its infancy, it has gained popularity in certain circles, and has even garnered the attention of several regulatory authorities in Asia. One of the reasons why certain merchants and businesses are choosing to recognize Bitcoin as a legitimate and acceptable means of payment is the low transaction costs associated with the currency. “With nets and credit cards payments costing 2-3%, the narrow profit margins of our retail business get even smaller. With Bitcoin, we pay almost next to nothing,” notes Martin Arm, a spokesperson of Singapore-based firm Apple Corner which specializes in Apple computing


Bitcoin payments give more privacy and anonymity, [which is] something which customers value when purchasing a privacy service.

and electronics. Privacy is also a big driver for the continued and growing use of Bitcoin among participants in the virtual market, as well as the ‘real world’ market. “[Our customers] needed an anonymous payment method to keep their information private with a privacy service such as ours,” says Uzair Gadit, Co-founder and Director of PureVPN, a firm which offers secure virtual private network connection setup and anonymity for personal use. A spokesperson for Hong Kongbased IT firm BlackVPN echoes this sentiment: “Bitcoin payments give more privacy and anonymity, [which is] something which customers value when purchasing a privacy service such as BlackVPN.” For other businesses, the mere fact that the currency is growing in popularity is enough reason to recognise it as an acceptable mode of payment. Benjamin Lee, Co-owner of Sarnies Café in Singapore, says that one of the biggest benefits of adopting Bitcoin is “the added marketing for very little

effort. [It will also] attract the early Bitcoin adopters to come and check out the café and this will probably grow.” In Hong Kong, trading platform ANX unveiled the first Bitcoin ATM, allowing users to convert cash to Bitcoins in 15 seconds. The other side of the coin Of course, adopting Bitcoin has not come without challenges, especially with fore-running businesses who chose to adopt the currency early on. Some of the major issues associated with the use of the currency are “trust, security, and price volatility,” according to Arm. “For Bitcoin to progress, users need trustworthy respectable exchangers and availability of security-solid wallets. Huge price swings among exchangers are due to market inefficiencies.” BlackVPN’s spokesperson echoes this concern, saying that “storing their bitcoins safely [is a major issue]. The recent Mt. Gox and other large failures have highlighted how vulnerable Bitcoin can be.” For others, the mere infancy of Bitcoin is also a major issue. Jana Zilcayova of Ensof Photography confirms this, saying that “It’s still not super user-friendly, I have to admit. But with the [Bitcoin vending machines] and

FEATURE: bitcoin in asia new services showing up all the time, I think it’ll get better and better.” So far, we’ve only introduced the face-value pros and cons of recognising Bitcoin from the perspective of businesses who choose to adopt it. However, in the greater scheme of things, Bitcoin as a regulatory and legal issue is taking on a character of its own. According to a spokesperson from the Monetary Authority of Singapore (MAS), “Virtual currencies are not legal tender and are not recognised by MAS as an official medium of exchange or as a form of securities. MAS does not regulate Bitcoin, including its purchase, sale or use, whether online or via other means such as physical vending machines. Businesses and individuals who choose to accept virtual currencies in exchange for goods and services or to transact in them should be cognizant of the risks and nature of virtual currencies.” Hong Kong’s government also echoes this general stance, saying through a spokesperson from the HKMA that, “Like many other jurisdictions, Hong Kong at present has no legislation directly regulating Bitcoins and other virtual commodities of similar kind. However, some other laws and regulations might apply and it would be advisable for anyone wanting to set up a Bitcoin exchange or operate a vending machine to seek their own legal advice. In addition, under existing laws in Hong Kong legal punishment can be imposed in response to the illegal act of theft,

fraud and money laundering involving Bitcoin.” Are Bitcoin users left out to dry? To be clear, it is (generally) not illegal to use Bitcoin in everyday transactions. “With the exception of Vietnam, the use of Bitcoins is generally not illegal in Asia,” says Marcus Tan, Associate Director at Stamford Law in Singapore. “Most countries in Asia just have not yet put the laws and regulations in place to deal with the legality of Bitcoin or other forms of digital currency.” Although Tan believes that the use of Bitcoin in Asia is not yet as widespread to warrant any alarm, several issues have already raised concern over the legal community. One of those issues is the volatility of Bitcoin’s value. Tan notes, “One of the principles behind the development of Bitcoin was to limit its supply to ensure it retains value. However, coupled with the absence of regulation in the Bitcoin marketplace, the shallow supply makes it susceptible to price manipulation. This type of manipulation has seen wild fluctuations in the value of Bitcoin in recent times, which could limit its practicality for use as a currency.” Another issue surrounding the controversy of Bitcoin is the fact that it has been used to conduct crimes of sorts. Jonathan Kok, Partner at RHTLaw Taylor Wessing, notes that “It has been reported that Bitcoins have been used for money laundering or cybercriminal activities.” Tan elaborates. “Some

Martin Arm

Jonathan Kok

Marcus Tan

Benjamin Lee

Jana Zilcayova

Martin Arm

Uzair Gadit

Bitcoin: a legal and regulatory minefield?

of the key attractions of Bitcoin are the decentralisation of control and anonymity it offers. Anyone can start buying and selling Bitcoins without divulging personal information to governmental authorities with one of many Bitcoin wallet software and apps today. Unfortunately, these features also make it attractive for illicit transactions as it becomes difficult for authorities to trace the transactions and conveyance of value. In addition, without regulated entities acting as banks for Bitcoins, is it possible in practice for courts and authorities to freeze or recover Bitcoin wallets/accounts even if the criminal activities are discovered?” Addressing Bitcoin’s misuse On the positive side, there are existing regulatory frameworks that can address the misuse and abuse of Bitcoin and the individuals who choose to adopt it. Kok notes that, “In Singapore, we have legislation to deal with such criminal activities (whether using bitcoins or some other method of operation). We have the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (“CDSA”) that criminalises the laundering of benefits derived from corruption, drug trafficking and other serious crimes. The CDSA is administered by the Commercial Affairs Department (“CAD”) and the CAD regularly reviews the list of offences in the CDSA to extend to a wider range of money laundering activities. We also have the Terrorism (Suppression of Financing) Act (“TEFA”) which criminalises terrorism financing and allows for the seizure and confiscation of property related to terrorist and terrorism purposes.” The main point, as far as regulatory concerns are involved, is that the potential abuse of the borderless currency can be mitigated under several existing legal frameworks. However, the fact that monetary authorities all over Asia refuse to recognize the currency as legal tender and, therefore, regulate it, there is no definitive legal protection for users of Bitcoin so that Bitcoin adopters will have to be conscious of the fact that they are absorbing the risks associated with the use of the currency. SINGAPORE BUSINESS REVIEW | MAY 2014 49



4 ways SMRT can improve its social media PR


To manage social media well, companies need to use it as a two-way communication tool with their direct consumers. There must be interaction between the brand and the customer. Many companies use social media as a one-way communication tool to broadcast their media messages. However, social media does not work this way. If we want to fully optimise social media to our advantage, we need to interact with our customers. Hence, it is important to have a social media team to answer every single customer’s comment on social media in a prompt, friendly, and professional manner.

L+I+F+E is the key!


ost of us commute to work, school, and other places via public transport every day, so it is important for me as a consumer to provide feedback on how we can improve our current public transport service. I am not an engineer, so I cannot comment on the technical aspects of the train system. However, I wish to comment on how SMRT can improve its social media public relations to further enhance order the removal from. 1. Listen There is a difference between hearing and listening. Hearing is the process of perceiving sound produced by any sound source in the environment, while listening is the process of deriving meaning from organised sounds. Listening requires more concentration and leads to learning. What this means is that there is a meaning behind every customer’s feedback when they comment via social media. Not all the customers who are unhappy about your company will leave feedback on your company’s social media sites. 2. Interact Social media is a very effective word-of-mouth marketing and communication tool today. It is something that, if managed well, can greatly contribute to the company’s branding image and reputation.


3. Follow Up Replying to the customers’ feedback is half of the game. Following up with the customer’s feedback till a solution is found or consensus is reached is the other half of the game. Following up with customers involves making promises to them. It will give companies a chance to regain trust and confidence from their customers again. This can include small promises such as promising customers that your company will call them back by the next day. Another important thing to note, especially on social media PR, is that the company has to follow up on the public as well. What it means is that, if the company is not able to follow up with Customer A’s feedback, then the public that witnessed this may perceive that this company has failed to take the responsibility of following up with Customer A. 4. Empathize The best way to understand our customer is to empathize with them. Put yourself in their shoes. We have to ask ourselves that, “If I were the customer, how would I feel if I had an unhappy experience with the company?” The recent incidents of train delays affected commuters from various walks of life. Students were late for exams. Working adults were late for work and appointments. And what if a commuter had a plane to catch and he or she missed the plane due to the delay? By putting ourselves in our consumers’ shoes, we can understand and communicate with them better. Things will then come out for the better naturally. Empathy is therefore an important quality for any company.

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