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making viral ads? The Malaysia Airlines effect spooks tourism
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FROM THE EDITOR About Us
For the past couple of years, we have been overwhelmed by the number of startups which seem to never run out of brilliant ideas that revolutionise their respective markets. This issue features our annual list of Singapore’s 20 hottest startups to watch out for. With initial funding ranging from $112,000 to $11 million, find out which startups are the city’s biggest up-andcoming game changers.
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Tim Charlton ERRATUM
Singapore Business Review erred in its December-January issue (page 33) in quoting Jamie Wong, senior manager, Marketing ASIA, Kelly Services as saying “air pollution is worse in Singapore than in Hong Kong.” The statement should have been “air pollution is worse in Hong Kong than Singapore,” and the quote was from Mark Hall, vice president and managing director, Kelly Services Singapore. For the full corrected report, please visit the digital version at sbr.com.sg
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We also give you a special report on the future of the sports business in Singapore as the $1.3b Singapore Sports Hub has been completed. We spoke to several analysts and they believe Singapore’s bid to become the premier sports mecca in Southeast Asia should gain momentum now that it has the infrastructure to bid for top-tier events. Looks like there’ll be more sporting events to watch out for in the coming years apart from the Singapore Grand Prix.
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STORY 28 CoVER Singapore’s 20 hottest startups to watch in 2015
26 What is the future of the sports
09 Changi air traffic under threat 4,000 agents exit
business in Singapore?
42 CMO Briefing
12 The Malaysia Airlines effect hits
34 Regulatory changes are key
14 What’s gone wrong with restructuring? 16 Singapore’s 10 most sought-after investors aged 40 and under
Published Bi-monthly on the Second week of the Month by Charlton Media Group 101 Cecil St. #17-09 Tong Eng Building 2 Singapore SINGAPORE BUSINESS REVIEW | MARCH 2015 069533
32 Wanted: Lawyers who are
Singapore’s tourism outlook
22 Financial Insight 40 Legal Briefing
10 Squeezed estate industry makes
REGIONAL ANALYSIS Why did the MAS suddenly become aggressive in its policy easing stance?
08 Why banks can count on rising interest rates
Financial insight Market volatility threatens M&A and DCM surge
specialists in niche industries concerns for insurers in 2015
36 SBR holds its inaugural Business
44 What Singaporean investors can
expect from Okinawa’s development
For the latest business news from Singapore visit the website
SINGAPORE BUSINESS REVIEW | MARCH 2015 3
News from sbr.com.sg Daily news from Singapore most read
FOOD & BEVERAGE, RETAIL
Singaporeans among world’s top Valentine’s spenders, survey reveals Couples should be ready to shell out a considerable sum of money this Valentine’s Day. A survey by Groupon revealed that Singapore couples are among the world’s biggest Valentine’s Day spenders, with over one in three respondents expecting to spend between $135 (US$100) and $234 (US$199) on the day of hearts. By comparison, only 19% of Australians plan to spend as much.
Bad timing of launches in 2015 poses big risk for property developers According to OrangeTee Research, many developers have held back new launches and instead preferred to strategise for a launch after February. OrangeTee suggests that developers should try to time their launches strategically to prevent launching into an overly competitive market, with demand expected to be capped due to cooling measures and increasing new supply coming in from new and existing launches.
Developers shying away from oncepopular EC sites Developers’ appetite for Executive Condominium sites was dampened by low sales take-up and a looming oversupply in the EC market. Cautious developers entered distinctly low bids for the past two EC site tenders. A Woodlands Avenue 12 EC site launched recently attracted low bids from seven bidders, with Hao Yuan Investment Pte Ltd topping the list with a bid of $103.79 million.
Where investors should put their money in 2015 BY CHRIS COMER Given the current status of the residential property market both here in Singapore and in China, 2015 will see investors continue to shift towards commercial real estate markets, such as hotel investments, outside of Singapore. Hotel investments are not new to investors, and have been undertaken by business leaders such as Donald Trump and brands such as Ritz Carlton, although with very high entry prices averaging US$1million.
Why Singapore PME should consider to retire early BY VICTOR TEOH More than ten years ago, I had this chat with a client and he asked me if we would be chatting like how we always chatted after we retired. We both shared a common wish: to retire early. The retirement age then was still 55 years old and cost of living in Singapore though was high was nowhere as high as now. So at what age can we stop working in order to live a comfortable retirement life?
MOST READ COMMENTARY Singapore’s financial institutions race to meet the FATCA deadline BY DERREN JOSEPH By now, most–if not all–Financial Institutions in Singapore are aware of FATCA, which was enacted by the United States Congress back in 2010 to encourage tax compliance by US persons using non-US financial accounts. Individual Singaporeans with US green cards (i.e. lawful permanent residents of the USA) have an extra form (Form 8938) to complete each tax season since 2011.
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FIRST this happened was between July 2003 and 2006, when lending rates rose by 2.87% but the deposit rate rose by only 0.02% and even fixed deposit rates rose just 0.19%. Singapore’s banks are in a good position to make money when interest rates rise because 9 in 10 loans have interest rates which fluctuate as they are not fixed, and over half of deposits are in cheque and savings accounts, which history has shown, generally do not see the deposit interest rate lifted. All of these mean bank should have a good year.
best debt payers
Retail SMEs are either seeing better cash flows or they’re facing stricter terms from creditors or both because they’ve been hailed as the most improved debt payers in Singapore in 2014. SMEs in the retail sector have increased the speed by which they pay bills by 21 days – from 63 days at the end of 2013 to just 42 days at the end of 2014. This is according to the Days Turned Cash National Average (DTC) - a tool for measuring the number of days a company takes to pay its creditor. According to Ong Siew Kim, senior general manager of DP Information Group (DP Info), the faster payment speeds may have been forced on the retail industry by creditors and suppliers. “The Commerce-Retail sector has had an uphill battle since the changes to the foreign talent laws in 2013 as they have been forced to wean themselves off cheap labour and find ways to improve productivity. They are also under pressure from increased rental costs.” Delinquent no more According to the same report, there has also been a dramatic reduction in the percentage of retail companies with severely delinquent debts, from 41% to 19%. Severely delinquent debts are bills which are unpaid 90 days after they have fallen due. Again, this reduction reflects the tighter credit controls being placed on retail companies by their creditors and suppliers. Also, the Credit-Related sector, which includes personal and commercial finance providers as well as unsecured money lenders, recorded the largest improvement in payment speeds settling their accounts nine days faster in Q4 than in Q3.
8 SINGAPORE BUSINESS REVIEW | MARCH 2015
DBS MBFC branch self-service banking
Why banks can count on rising interest rates
aking money has been tough for the past couple of years for the hardworking bankers in the Marina Bay Financial Centre. The decline in property sales has reduced the demand for mortgages and ultra low interest rates have made it difficult for banks to make much of a margin on their loans. Instead they had to resort to lending to offshore companies, mainly in China, to fuel loan growth. But relief may be on the way in 2015, when it’s expected that the US will raise interest rates. Low interest rates Typically Singapore interest rates rise and fall in line with the Fed – so, as US rates rise, so will Singaporean rates. The main way banks make money is they take depositors’ money, for which they pay a small amount of interest, and lend it at a higher interest rate, pocketing the difference. With interest rates now so low, that differential, called the net interest margin, is sitting at just 1.7%. The trick banks use to make money when interest rates rise is to increase the interest rate they pay depositors more slowly than the one they charge borrowers. The last time
Singapore’s banks are in a good position to make money when interest rates rise.
Growing loan books Nomura analyst Jaj Singh Bal notes that in the last 20 years, there have been three periods of interest rate hikes, and in all these instances, the Singapore banks turned in a positive performance two to three quarters before the actual interest rate increase. “The sector now trades at 1.26x forward book, 6% below its historical 10-year average,” says Jaj. One thing Singaporean banks can’t bank on is growing their loan book. After more than four years of growing loans in the double digits each month, November 2014 signalled a real drop, with loans increasing by just 9% and mortgages 6%, the lowest since July 2007. Even China, which has seemed to have an unquenchable thirst for Singapore-based loans, is showing signs of lessening demand. According to Sharnie Wong, an analyst with Barclays, the Singapore banks are guiding for high singledigit loan growth rates for FY15, which is a marked slowdown from the 12% CAGR for the past three years in aggregate.
Net interest margins vs short-term interest rates
Source: Bloomberg, companies, Nomura research
FIRST Monthly aircraft movements at Changi Airport
Source: Changi Airport Group, DBS Bank
Growth in air traffic plateaued in Singapore
Changi air traffic under threat
hangi Airport may be about to get a great new shopping mall where the car park used to be in front of Terminal 1, but one thing it won’t need anytime soon is a new terminal. Aircraft movements at Changi have actually started to decline, down over the last six months. This comes after years of heady double-digit growth, and the addition of Terminal 3 and the budget terminal. One reason for the decline, the 28% drop in Chinese tourists last year, may slowly start to turn around. But Singapore’s aviation sector may also need to grapple
with some longer term problems. Losing Qantas, which had its hub for European flights in Singapore before switching to Dubai in September 2012, hasn’t helped. But whatever the reason, growth in air traffic into Singapore as a hub has plateaued, and this will pose a challenge for some of Singapore’s air-related industries, particularly maintenance, repair and operations providers. More expensive labour is also making Singapore a less attractive place for the region’s airlines to fly in for a quick service. Paul Yong, an analyst with DBS,
2012-13 saw aircraft movements grow by just 5%, while the second half of last year saw actual declines.
notes that 2012-13 saw aircraft movements grow by just 5%, while the second half of last year saw actual declines. “Both SIA Engineering, which is a pure aerospace MRO provider and ST Engineering, which derives about 50% of profits from its aerospace MRO division, have reported disappointing results over the last couple of quarters owing to a combination of muted demand growth as well as rising costs of operating in Singapore, especially on the labour front,” adds Yong. Another problem for these businesses is that newer planes, like cars, require much less maintenance than before, further limiting the need for repairs and maintenance to be carried out in Singapore. So while Changi Airport expects its new shopping centre to be the ‘jewel’ in the crown, its mainline aviation related industries are facing strong headwinds.
The Chartist: why Residential property woes will worsen in 2015 Singapore’s residential market is tumbling down a slippery slope, with slowing demand expected to lead to a 15% price crash. New supply completions will spike in 2015-2016, adding pressure to rentals and vacancy rates. The market is still early in the down-cycle with prices only down 3.9% from the peak. According to a report by DBS, the widening spread between HDB resale and private property prices are affecting upgrader afforadbility. DBS cautions that the slower than projected decline in prices could result in a delayed relaxation of cooling measures. Another possible risk could be an external shock to the economy, resulting in a significant decline in the property market.
Vacancy rates and PPI movement
Source: DBS Group Research
Market to see a surplus in housing units in 2016
Source: DBS Group Research
SINGAPORE BUSINESS REVIEW | MARCH 2015 9
Squeezed estate industry makes 4,000 agents exit
ovice real estate agents are the biggest casualty of the property market’s ongoing sales drought. Data from the Council of Estate Agencies show that 3,959 salespersons did not renew their licenses last year, as the number of registered agents crashed to its lowest since 2012. According to ERA Realty Division Director Eric Tng, most of the dropouts are new salespeople who have been in the business for less than three years. “Generally, it is more difficult for a new entrant to gain a foothold in this business. It takes a few years to build up their clientele base to get referral business. With fewer deals and higher marketing costs, everyone’s income has taken a hit. Salespersons now have to put in more time, effort and money to secure a deal,” he says. But cooling measures aren’t the only culprit. Ismail Gafoor, CEO of PropNex Realty, notes that apart from high costs and sluggish sales, property agents have also been hit by the newly formed Personal Data Protection Act (PDPA) and the Do-Not-Call (DNC) list, which has made the jobs of property agents even tougher as
Most of the dropouts are new agents
they have to adhere to more stringent guidelines. “These have made it difficult for real estate agents to survive and many have to turn to other careers in order to survive,” he notes. Agents who leave the real estate industry turned to multi-level marketing or some other jobs with a stable monthly income. “Interestingly, many salespersons will keep their license and wait for good times to return. Meanwhile, they will take up a part time job or do other kind of sales (like MLM) to supplement their income. For those who drop out, most will return to full time employment,” Tng adds.
3,959 salespersons did not renew their licenses last year, as the number of registered agents crashed to its lowest since 2012.
Investor confidence drops to a two-year low Singapore’s retail investors could be experiencing more sleepless nights nowadays, alongside a growth in the expectations of a weaker global economy ahead. The latest half-yearly survey of investor sentiment by J.P. Morgan Asset Management (JPMAM) shows the largest drop in confidence in two years. According to the survey, the J.P. Morgan Investor Confidence Index fell eight points to 113 in December 2014 from 121 in June 2014. While it is still within the confidence zone (100 being the neutral level), it is the weakest since December 2012 when the Index was at 106. In the latest poll, 32% of respondents expect the global economic environment to worsen over the next six months, an increase of 11 percentage points from June 2014, while fewer respondents, 37% from 44%, see the global economic environment performing better. More investors are also bullish on the
10 SINGAPORE BUSINESS REVIEW | MARCH 2015
economy, the outlook on the Straits Times Index, as well as the Singapore dollar which they see depreciating against the US currency in the coming months. Investors are starting to shy away from investments in the home market, possibly influenced by the lacklustre economic outlook, with 53% choosing Singapore asset classes, down seven percentage points from June. More respondents, up four percentage points to 32%, choose to invest in Asian regional assets, while 23% eye Asian single country markets, up two percentage points. Steven Billiet, CEO of JPMorgan Asset Management Singapore, says, “We also observe a shift from pure equity and bond funds to multi-asset funds, affirming our view that investors should reposition their portfolios to mitigate the expected volatility of financial markets and to diversify their risks.”
These young ones could be coming on too strong, but their flair for innovation is exactly what companies need to survive. Generation Z, now aged 14 to 19, will be the next generation of workers that today’s employees must start preparing for. A survey by Randstad Workmonitor reveals that only half (53%) of employees in Singapore believe their firm is ready to meet the demands of Generation Z. Jaya Dass, associate director at Randstad Singapore, Jaya Dass, says these figures are concerning as this generation will start to enter the workforce over the next few years. “Employers need to understand the unique characteristics of Generation Z, which is typically associated with coveting greater work-life balance, increased workplace flexibility and more rapid advancement opportunities,” Dass says. Unique expectations The arrival of Generation Z workers will bring with it demands for online collaboration tools and technology platforms. As children born in a technologically-savvy era, Generation Z workers are already very comfortable with technology, enabling them to work well in an office environment that increasingly uses online platforms to manage business interactions and productivity. “Employers can engage the skills of Generation Z workers to provide mentorship to older workers,” Dass adds. According to the survey, 66% of employers in Singapore are actively promoting mentorship.
The Malaysia Airlines effect hits Singapore’s tourism outlook
hile it has been 50 years since Singapore separated from Malaysia and charted its own course, to many international tourists both countries are still viewed as ‘must-sees’ on the one visit. This is especially true for mainland Chinese tourists, who would often fly into Malaysia on Malaysian Airlines before making the trip to Singapore over land. That changed dramatically following the first Malaysian airlines incident, with mainlanders dropping Malaysia – and hence Singapore – from their preferred travel plans. Overall tourism to Singapore fell 3% over the first 10 months of 2014, but mainland Chinese tourists fell 28% last year. With tourism related receipts accounting for 6% of Singapore’s economy, this drop has had a notable effect on the economy, particularly on shopkeepers and restaurateurs. Numbers of Chinese tourists are also on the decline in Singapore due to the banning of so-called ‘zero dollar tours’, where tourists paid nothing to come but were forced to endure hours of visiting outlet shops where they were encouraged to purchase. Will 2015 prove to be any better? Jonathan Galligan, head of Singapore research, CLSA, notes a positive sign: despite Singapore and Malaysia having a highly correlated number of Chinese tourist
arrivals, he had seen a divergence around the middle of 2014 where tourist arrivals have continued to decline in Malaysia, but have increased in Singapore. “Since 2009, tourist arrivals have grown at a 13% CAGR, boosted by the opening of Singapore’s two integrated resorts and a number of new attractions. This has transformed Singapore into the fourth-mostvisited destination globally, but consumer prices have risen considerably in Singapore, making it much more expensive for tourists,” says Galligan. Tourist spending declines Another concern is a decline in the quality and spending of tourists, with per-capita spending by tourists down 11% since peaking in 2011 at S$1,691. This may dip even further to S$1,460. One possible explanation is that many of these tourists are spending (or losing) in the casinos rather than the shops, so net net it may not be as bad as it looks on paper. Another headwind possibly facing Singapore is the opening of new mega fun attractions around Asia – the kind of big ticket items that families will travel for. South Korea and Shanghai will both see openings of Universal Studios, and South Korea, and potentially even Japan, will also see new
A snapshot of Singapore tourism
integrated resorts coming online in the medium term. “Overlay stronger regional competition for tourists with an increasingly expensive Singapore and prospects become bleaker,” adds Galligan. More sporting events may help attract some more tourists, but the days when Singapore was the only country in Asia with integrated resorts and the only option for families wanting to visit a theme park while daddy plays at the casino will soon be coming to an end.
Cool kitchens at Ingredion’s new HQ
Ingredion, an Illinois-based ingredient provider, recently expanded its Asia Pacific headquarters in Singapore. Located in Biopolis, the new headquarters features its Idea Labs facilities and a development kitchen with state-of-the art equipment. The new Ingredion HQ comprises laboratories, a pilot plant, sensory and culinary facilities, as well as an open-plan office area. The entire office space is outfitted with the signature Ingredion brand colours of green, grey and white, with highlights of other vibrant hues. The Ingredion team is proud of their Idea Labs innovation centre which is greatly dedicated to fostering science-based collaboration and problem solving for food, beverage and industrial customers in three key areas: consumer insights, applications and applied research.
12 SINGAPORE BUSINESS REVIEW | MARCH 2015
Open plan office
Idea Labs application laboratory
Idea Labs pilot plant
co-published Corporate profile
Bringing game-changing insight to sales leaders worldwide
Five powerhouse brands merged to form MHI Global, the largest dedicated sales-performance company in the world.
HI Global is the world’s largest dedicated sales-performance company formed by the merger of Miller Heiman, AchieveGlobal, Huthwaite, Impact Learning Systems and Channel Enablers. Harnessing the combined resources and expertise from five customer-focused companies, MHI Global offers businesses globally and across Asia an end-to-end approach to driving customer management excellence and business growth throughout the customer lifecycle. As the largest dedicated sales-performance company in the world, MHI Global provides all of the key components of a multi-dimensional and interdependent sales system, based on the central belief that everything starts with the customer. With its regional headquarters based in Singapore, MHI Global has direct presence across Asia, including Southeast Asia, India, Greater China, Korea and Japan. It offers specialised in-country knowledge with global best practices and best-in-breed solutions that span the entire customer lifecycle to both enterprises and smaller businesses. Expertise grounded on sales research “Each of the five powerhouse brands that have come together to form MHI Global is a market leader in its own right with complementary capabilities in different areas of sales performance and customer management,” said Greg Moore, managing director for Asia, MHI Global. “Therefore, MHI Global possesses the most complete, end-to-end solutions in sales performance and customer management. In addition, our sales-performance and customer-engagement expertise is deeply rooted in research, which is backed by MHI Research Institute, an independent third-party research firm that
provides on-going research and strategic analyses. This allows us to provide proven methodologies and measurable results to help our customers make strategic decisions and gain competitive advantage quickly.” “Organisations in Asia can benefit from our centres of excellence by putting in place a formal set of customer engagement strategies and best practices for their brand so as to enable them to align customer experiences with business impact and address challenges across a socially diverse and connected region,” said Moore. “Our core customer group comprises mostly multinational corporations across various industries as we have in-country presence to support their training needs across Asia. Perspective selling Selling has certainly changed over the years. Buyers now have more sources of information. There are more people involved, and there is a more structured process - all of which make buying a complex, often chaotic, political endeavour. A salesperson’s value today is defined differently. Customers are looking for something they can’t get online, from automated systems, or from uninformed salespeople. When all is said and done, only a salesperson’s integrity, patience, and problemsolving abilities can earn the trust required to carry the day. A sales professional’s ability to provide perspective is a differentiator. Customers want to deal with a true professional who focuses beyond the sale and all the way to the results the customer is out to achieve. It is about having the confidence to open oneself up to a collaborative, solution-solving discussion rather than falling back on scripted or questioning tactics.
“Singapore is home to our Asia headquarters, and is also a vibrant sales and services hub for multinational corporations.”
Greg Moore Managing Director for Asia MHI Global
Sales professionals with perspective make sure the person they are working with has thought through all of the dependencies that will give the initiative a greater chance of success. MHI Global calls this Perspective Selling. Perspective is taking what sales professionals know, think and experience and using it to create their own distinct point of view. It is about converting input into insights, and being smart about the decisions that have to be made in every interpersonal interaction. What’s next “Singapore is home to our Asia headquarters, and is also a vibrant sales and services hub for multinational corporations. We plan to leverage this advantage to aid in our regional expansion in 2015,” added Moore. “With the integration of the five powerhouse brands, we are having a product set that spans the spectrum from skills to strategy, all within an integrated framework called The MHI Global Sales System™, which is a platform for continuous improvement made up by a collection of products and services all centred on organisational lift and not just skill development. This is a very compelling proposition we are bringing to market, and we are looking forward to sharing it with our customers this year.
CONTACT www.mhiglobal.com +65 3158 9511 Gregory.Moore@mhiglobal.com SINGAPORE BUSINESS REVIEW | MARCH 2015 13
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Malaysia ONLY 42 & Australia wereJob satisfied with recent seekers in their(39%) were the least satisfied in experience the 3–5 DAYS GLOBALLY when applying process. for a job. job application Approximately half agree that three to five APAC 3–5 DAYS Malaysia adds Galligan. The focus is now 014 may have marked CHINA daysApproximately is an acceptable for hearing half timeframe agree that three to five back onAustralia the of their application. &days is anstatus acceptable timeframe for hearing on improving productivity, but the final year of the big OF SURVEY PARTICIPANTS APPLIED were least satisfied (39%) in the backthe oninthe status of their application. Job seekers A NEW JOB IN THE PAST YEAR. this is easier said than done3–5 –job application construction projectsFORthat DAYSprocess. Approximately half agree that three to five BALLY Malaysia Singapore is already a highly completely reshaped Singapore’s Employers in GLOBALLY days is an acceptable timeframe for hearing Employers in & Australia productive economy, second backonly on the status of their application. skyline, with the government RÉSUMÉ TYPE CHINA were the least satisfied (39%) in the CHINA 3–5 to the US according to the job Asian taking the lead in holding off areapplication the mostDAYS likely (77%) to have process.
What’s gone wrong with restructuring? %
73 73 73 73
%% 73 % % %
are the most likely (77%) to have a planned approach to guide their new employees and assimilate them into the organisation. Australia was the least likely (51%).
OF PARTICIPANTS APPLIED onSURVEY construction of non-core OF SURVEY PARTICIPANTS APPLIED FOR A NEW JOB IN THE PAST YEAR.
FOR A NEW JOB IN THE YEAR. infrastructure projects to PAST alleviate the tight labour market. LOBALLY OF SURVEY In MayPARTICIPANTS last year they announced APPLIED FOR A NEW JOB IN THE as PAST YEAR. that projects such the new Kelly Global Workforce Index 67% 54% 67% 54% Science Centre, as well APAC Singapore SINGAPORE APAC SINGAPORE PARTICIPANTS APPLIED asOFanSURVEY extension to Gardens on BALLY FOR A NEW JOB IN THE PAST YEAR. the Bay, would be delayed. Not 67% 54% because of a lack of money, but a APAC SINGAPORE lack of workers. Delaying public OF SURVEY PARTICIPANTS APPLIED FOR A NEW JOB INspending THE PAST YEAR. infrastructure of $2bn 67%means 54% 20,000 to 30,000 fewer Kelly Global Workforce Index APAC SINGAPORE y Global Workforce Index foreign workers would be needed. In a speech in April 2014, labour 67% 54% chief Lim Swee Say stated market APAC SINGAPORE lobal Workforcethat Index the labour market is likely to remain tight until 2020.
When submitting an application, electronic methods are now almost
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Tight labour policies Jonathan Galligan, head of Singapore research, CLSA, says Global Workforcetighter Index immigration requirements, particularly on lower end labour, are likely to remain in 2015. “Below replacement fertility rates since 1976 have led to a dependence on foreign labour to grow the economy, but social pressures with the rapid change of Singapore’s population makeup led to tighter labour policies and ahead of the next general election, we do not see these changing,”
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Change in wages vs productivity
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14 SINGAPORE BUSINESS REVIEW | MARCH 2015
to submit applications. 40% SOMEWHAT POSITIVE
easy to understand.
45% DEFINITELY POSITIVE APAC
AVOID THE 43% DEFINITELY POSITIVE SOMEWHAT POSITIVE COMMUNICATIONS qualifications, AVOID THEJob requirements,39% OF NEW RECRUITS COME AWAY WITH experience and salary should be BLACKOUT A COMMUNICATIONS GENERALLY POSITIVE IMPRESSION SINGAPORE
BLACKOUT AFTER JOINING THE ORGANISATION 45% DEFINITELY POSITIVE
40% SOMEWHAT POSITIVE
Timely reponses from employers Make it as easy as possible APAC are vital in helping all candidates AVOID THE Make it as easy as possible to submit applications. 43% DEFINITELY POSITIVE 39% SOMEWHAT POSITIVE understand that they are being
1 COMMUNICATIONS 13
are theapproach most likely tothat have Approximately half agree three to five a planned to(77%) guide universal (91% intheir APACnew and 83% in Singapore). a planned approach totimeframe guide theirrésumés new days is an acceptable hearing Social media and video are still employees and assimilate them intofor the Employers in employees and them into the in assimilate theirof infancy as recruitment back on the status their application. organisation. Australia was the least likelytools (51%).
Productivity Organization. Galligan believes that the more organisation. Australia was the least likely (51%). (used by less than 1 in 10 applicants). CHINA concerning problem for Singapore 3–5 DAYS are the most likely (77%) to have Approximately half agree that three to five a planned approach to guide their new corporates is that productivity daysEmployers is an acceptable timeframe for hearing in employees and assimilate them into the RÉSUMÉ RÉSUMÉ TYPE back on the status ofTYPE their application. gains are not keeping up with wage organisation. Australia was the least likely (51%). CHINA When submitting an application, When submitting an application, growth, which is putting pressure are the most likely (77%) to have electronic methods areare now almost electronic methods now almost (91% in APAC and 83% Singapore). a universal planned approach to guide their new universal (91% in APAC and 83% in in Singapore). on corporate margins. Social and video résumés still employees and assimilate them into the Employers inmedia Social media and video résumés areare still DBS analyst Irvin Seah notes in their infancy as recruitment tools RÉSUMÉ TYPE organisation. was tools the least likely (51%). in their infancy asAustralia recruitment CHINA (used by less than 1 10 in 10 applicants). Below (used by less than 1 in applicants). When submitting an application, that productivity growth continues are the most likely (77%) to have electronic methods are now almost replacement a planned approach to and guide their to languish. It may have declined universal (91% in APAC 83% in new Singapore). employees and assimilate them into the fertility rates media and video résumés are still RÉSUMÉ TYPE by 0.8% in 2014, implying Social average was thetools least likely (51%). inorganisation. their infancyAustralia as recruitment When submitting an application, since 1976 productivity growth of -0.05% (used by less than 1 in 10 applicants). electronic methods are now almost led83%toin a per annum since restructuringuniversal (91% inhave APAC and Singapore). Social media and video résumés are still dependence began in 2010. “This is wellRÉSUMÉ below TYPE in their infancy as recruitment tools When submitting application, (used than 1 inforeign 10 applicants). on the government’s target growth ofby less an electronic methods are now almost labour 2-3% per annum and loweruniversal than(91% in APAC and 83%to in Singapore). Social media and video résumés are still the 1.4% annual growth averaged grow the in their infancy as recruitment tools between 2000-2009,” he adds. (used by less than 1 economy. in 10 applicants).
39% SOMEWHAT POSITIVE
OFAPAC NEW RECRUITS COME AWAY WITH 43% DEFINITELYPOSITIVE POSITIVE IMPRESSION 39% SOMEWHAT POSITIVE A GENERALLY SINGAPORE AFTER JOINING POSITIVE THE ORGANISATION 45% DEFINITELY 40% SOMEWHAT POSITIVE INSINGAPORE SINGAPORE AVOID THE APAC COMMUNICATIONS 45% DEFINITELY POSITIVE 40% SOMEWHAT POSITIVE BLACKOUT 43% DEFINITELY 39% SOMEWHAT POSITIVE OF NEWPOSITIVE RECRUITS COME AWAY WITH A GENERALLY POSITIVE IMPRESSION Make itTHE as easy as possible SINGAPORE AFTER JOINING ORGANISATION
half in agree were the leastApproximately satisfied (39%) thethat three to five is an acceptable timeframe for hearing job applicationdays process. back on the status of their application. %
M HIRING TO BOARDING
45 % 45% 45
OF NEW RECRUITS COME AWAY WITH APAC A GENERALLY POSITIVE39% IMPRESSION 43% DEFINITELY POSITIVE SOMEWHAT POSITIVE AFTER JOINING THE ORGANISATION OF NEW RECRUITS COME AWAY WITH
Malaysia Job seekers in &ONLY Australia 42% Malaysia
tofairly submit applications. evaluated and respected.
Oncerequirements, employed, build aqualifications, strong Job 45% DEFINITELY POSITIVE 40% SOMEWHAT POSITIVE
experience and should be AVOID THE it as easy as salary possible 2 to understand. 24 Make to easy submit applications. 1COMMUNICATIONS BLACKOUT Job requirements, qualifications, foundation for retention by providing them a planned experience andwith salary should be approach to on-boarding. easy to understand.
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1 CANDIDATE Timely reponses from employers EXPERIENCE
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be 3 easy to understand. being 42 providing with aand planned fairly them evaluated respected.
FROM HIRING TO experience and salary should foundation for retention byare understand that they ONBOARDING
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approach to on-boarding. APAC
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OF SURVEY PARTICIPANTS APPLIED FOR A NEW JOB IN THE PAST YEAR.
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Source: CLSA, Ministry of Manpower
Source: Kelly Services
Singapore’s 10 most sought-after investors aged 40 and under
ingapore Business Review has put together a list of the 10 most soughtafter investors aged 40 and under, which every startup founder is dying to meet in hopes of securing funding for their business ideas. These young Singapore-based investors, with ages ranging from 39 to 32, are some of those funders our friends in the startup scene have encountered or done business with. One founded an early stage technology seed funding company, while another became a founding partner of an early-stage VC firm. Yet another cofounded a startup advisory and incubation company. 1 Jeffrey Paine, 39, Golden Gate Ventures Jeffrey Paine is a founding partner of Golden Gate Ventures, an early stage technology seed fund based in Singapore. He also started the Founder Institute in Singapore which has graduated more than 70 companies since 2010. Jeff is also a recipient of the Founder Institute Director Award 2012 for “Greatest Ecosystem Impact” Worldwide (Singapore). 2 Wong Meng Weng, 39, JFDI.Asia Wong Meng Weng jumpstarted his career in college, with pobox.com, which bills itself as the first commercial email service. He then moved to Silicon Valley to launch a venture-funded Big Data infrastructure
16 SINGAPORE BUSINESS REVIEW | MARCH 2015
startup. Now back in Singapore, he co-founded the Singapore hackers’ community hackerspace.sg in 2009, and JFDI.Asia in 2010, which claims to be the first Y Combinator-style accelerator in Singapore. 3 Lim Der Shing, 38, JobsCentral & DrWealth Former CEO and founder of JobsCentral Group, Lim Der Shing grew both profit and revenue over a 14-year period. From a 2-man startup, JobsCentral has grown into a leading regional job portal with more than 150 staff in 3 countries. In 2011, he sold the business to CareerBuilder. Der Shing now acts both as an entrepreneur, running JobsCentral, and as an angel investor in 7 startups and 4 VC funds. 4 John Fearon, 36, JF2 John’s earlier professional years were spent in internet marketing and e-commerce, providing consulting and services for MNCs, including Hilton Hotels (UK), HSBC Offshore (Jersey) and Asiarooms. com (Thailand). He found his niche in investing and building a growing number of exciting startups. 5 Christopher Quek, 36, Angels Gate Advisory Christopher is a startup advisor and incubator via Angels Gate Advisory
(AGA) as director and resident mentor. At AGA, Christopher has made over 200 free advisory sessions with startups, 13 of which have been incubated under iJam while he helped other 12 companies to achieve S$2.7m in government grants and follow-on funding. Christopher recently launched Tri5 Accelerator which has an investment arm to invest in startups. 6 Vinnie Lauria, 34, Golden Gate Ventures Vinnie is a founding partner of Golden Gate Ventures, a Kauffman Fellow, and a guest lecturer at NUS. He was rated by the Founder Institute as the highest startup mentor in Asia from 2,500 mentors. He founded the Silicon Valley NewTech meetup, featuring hundreds of startups to a monthly audience with more than 10,000 members. 7 Saemin Ahn, 33, Rakuten Ventures Saemin Ahn is a managing partner at Rakuten Ventures. Prior to Rakuten Ventures, Sae was at Google for 5 years from 2008 to 2013, managing Sales and Business Development for Asia. He has extensive experience in Brand Management and Content Distribution. 8 Alvin Low, 32, Low Capital Management Alvin had a background in publishing and marketing communications before embarking on a foreign service career. He founded Low Capital Management in June 2013 to invest and consult with businesses and family offices, helping to strategically manage their growth complexities. 9 John Tan, 32, 8capita John is an economist by training and an ex-management consultant, who realized that it is more interesting to be doing things than telling people how to do things. He dabbled in business with Frolick, Orita Sinclair, and Saturday Kids before finding his calling in tech. 10 Slava Solonitsyn, 32, Ruvento / HaxAsia Slava Solonitsyn is a managing partner at hardware accelerator HaxAsia and a General partner at seed capital firm Ruvento Ventures. He is a crowdfunding expert and has held senior investment positions in Russia and Singapore.
LawCanvas lets you create legal documents in less than a minute
usiness partners Daniel Leong, 29, and Mark Png, 36, have accounting and technology backgrounds respectively. They both ventured into the legal technology space with LawCanvas, a web service aiming to help businesses create legal documents quickly and easily. Daniel says that it is so easy to use that anyone can create a NonDisclosure Agreement (NDA) in under a minute. “Whether you’re a law firm that produces tons of legal documents on a daily basis, or a small business that does them periodically, LawCanvas delivers automated contracts so that
you spend less time messing around in Microsoft Word and more time with your customers,” he says. Daniel points out that existing legal documents software are often clunky and not intuitive to use because they’re built with a high emphasis on functionality and low emphasis on user experience.That is why LawCanvas puts a premium on good user experience, even making it the core of their product philosophy. LawCanvas has raised S$60,000 from the MDA iJAM grant and Crystal Horse Investments. Currently, they are devoting a lot of time to developing ‘LawCanvas for Enterprise’ – designed to help organizations with a much richer feature-set than what is generally available to their current small business users. They have also been busy securing pilot customers. Daniel said that with LawCanvas, they are really excited to bring modern startup practices towards the legal industry. He also adds that their next steps include staffing up a full technical development team to build the features they have planned, as well as raise the necessary funding to make this possible.
Making organizing events a breeze in just one click
When founders Benjamin Gabriel and Andrew Tan learned that Singapore’s event organization costs are high and inefficient, they discovered that most of it has to do with overlapping and replicated tasks across the multiple desks and levels involved in event planning and decision making. Out of sheer frustration, they created Super 1 which aims to make event organization ‘better and simpler’. Super 1 creates B2B task management and coordination 18 SINGAPORE BUSINESS REVIEW | MARCH 2015
platforms for a variety of business needs. The first system that they have created, currently in beta version, is an events management website that will deliver unparalleled coordination for events organizers, marketing folks and business owners in the region. Super 1 currently has $130,000 for their beta stage and the startup aims to access a further $3 million. The team is also expecting to provide events management capabilities to more than 70,000 events professionals across the region, who run a combined events portfolio worth more than $3 billion. According to Benjamin, they have already shown and gotten feedback as well as the thumbs up from anxious events managers keen to start using the system. Customers can expect the Super 1 site will go live in Q2 this year.
The world’s first bed sensor tech
Founded by Joyce Chee, 25, Darius Sim, 26, and Edoardo Stazi, 24, eVida wants to help busy individuals take care of their loved ones when they are not around. eVida launched its first generation of eBos (Bed Occupancy Sensor) which aims to prevent patients from falling from their beds and developing bedsores. The idea of eBos came to them when Joyce’s grandmother suffered a fall at home, in the absence of a helper. eBos Generation 1, which also bills itself as the world’s first bed sensor technology, is designed to help nurses keep an eye on fall-prone patients in hospital wards. The nurse call system would be triggered if a fall-prone patient attempts to leave his/her bed. The same sensor is used to track the duration before a nurse needs to turn over a bedbound patient to alleviate pressure and prevent bedsores. How it works eBos works by processing data collected from the sensors. Data collected are broadly categorized into two groups: environment and people. Environment data includes temperature and humidity, while people data includes respiratory rate and blood pressure measurements, These data are logged for recognizing trends to monitor home security and the patient’s health status. Advanced data processing enables the system to learn the inhabitant’s routine and preferences. If necessary, emergency services, such as ambulance or police, can be alerted when an abnormality in sensor readings is detected. According to Joyce, eVida’s seed funding is supported by Youth Business Singapore which helped them kickstart their product development. The startup has also secured private funding of S$48.5K with Ideasinc as their major investor. They are also expecting a total of S$660K in funding from another private investor and a government investor. Currently, eVida is working on eBOS Generation 2, with new features including respiratory and heartbeat monitoring, incontinence detection, and potentially a dashboard and mobile app to reflect meaningful information about the user. They also plan to integrate eBos Gen 2 with Z-Wave smart home system for remote home monitoring. Joyce adds that, tentatively, eBOS Gen 2 should be ready for hospital trials by July 2015, and commercially ready for sales by December 2015.
FIRST The Analysts’ call
Will delivery be delayed?
Shipyard assets are in danger
Sembcorp Marine on damage control
f Sembcorp Marine (SMM) hoped to project an aura of calm and normalcy amid the bribery scandal that one of its units has been accused of participating, then it has only partially succeeded. SMM’s Brazilian unit is one of five shipbuilders that have been accused of paying bribes to Petrobras and Sete Brasil officials to secure orders. While some analysts expect the delivery of the first drillship to Petrobras to remain on target (see sidebar) and as work continues as usual with other drillships, there is concern that
including SMM. Given this credit squeeze, SMM could see a delay in receiving payments from Sete Brasil, says Carey Wong, analyst at OCBC. SMM might even have to bear the brunt of order cancellations and related losses if the situation deteriorates. Wong estimates the average contract price for each drillship secured by SMM from Sete Brasil was $800 million in 2012, higher than average at that time due to local content requirements. But given the current demand downturn and increased competition, there is uncertainty as to how much these Analysts agree that the longer the rigs will fetch when sold in the open market. corruption scandal drags on, the more There is an ongoing rig supply vulnerable SMM will become. glut, says Wee Lee Chong, analyst at Nomura, with slower order flow expected as the market takes SMM might receive heavier blows from the time to absorb more than 100 jackup rigs scandal. scheduled for delivery in the next two Even though SMM has refuted the bribery years, representing 20% of existing fleet. allegations relating to Petrobras and further Competition has also intensified with the clarified that it has not been approached for low order backlog of Korean yards and assistance in the probe, there is a danger that emergence of Chinese shipyards in the the overhang plaguing the company might offshore space. persist until the dust settles, says Janice Chua, Analysts agree that the longer the analyst at DBS. corruption scandal drags on, the more More seriously, Brazilian’s national vulnerable SMM will become. Wong says a development bank BNDES has postponed protracted bribery probe could raise risks of a $3.2 billion credit lifeline for Sete Brasil an impairment of yard assets. Meanwhile, for its alleged involvement in the Petrobas Chua says the future oilfield projects may corruption scandal. be deferred and rig orders may even be It is expected that these loans would be cancelled, although she believes the latter used by Sete Brasil for rig payments to yards, risk remains low at this juncture. 20 SINGAPORE BUSINESS REVIEW | MARCH 2015
Wee Lee Chong – Nomura First drillship remains on target for delivery in mid-2015. SMM’s first drillship under construction for Petrobras was unable to enter Brazil for about two months due to documentation-related issues. Management guided at the analyst meeting that this issue has now been resolved and that the drillship will reach SMM’s yard in Brazil this weekend. SMM continues to find ways to mitigate the loss of time and is evaluating the execution of plan B, using more developed yard facilities available now, versus two months ago. As such, SMM is still targeting delivery of the first drillship by June/ July 2015, with the contract clause providing for an extra two months grace. Siew Khee Lim – CIMB The first drillship that reached Brazil in November 14 obtained port approval last week and is on its way to SMM’s yard for completion. We expect the grace period to be extended from the original delivery in June/July to 4Q15, given Sete Brasil’s delayed payment. Carey Wong – OCBC Difficulties in obtaining certain approvals and other matters resulted in the drillship being unable to enter the new yard as scheduled. Given the current situation, it is likely that the drillship is unable to be delivered around June/July as scheduled. Though there could be a grace period of a few months, we believe this would also be a stretch for Sembcorp Marine. The company is currently doing a study to see how to accelerate the construction process.
FY15 on overcapacity reason,” says Eugene Chua of OCBC.
giant’s market cap.
Noble Group trapped in accounting fraud frenzy
A hard-hitting report claims that the commodities giant uses ignoble bookkeeping tricks.
ompanies in Singapore’s commodities industry seem to attract more scathing reports than the others, what with the Olam/ Muddy Waters saga in 2012, the China Minzhong/Glaucus Research issue in 2013, and now, another fiasco is brewing up involving commodities trading giant Noble Group and Iceberg Research. Iceberg Research first accused the group of intentionally misleading credit agencies and investors by “exploiting the accounting treatment of its associates to avoid large impairments and fabricate profit.” Then in another report, the firm said “there is a wide divergence between Noble’s net profit and operating cash flows, brought about by ‘fabricated’ fair values.” In response to all these accusations, Noble asserts that it reports its results in accordance with International Financial Reporting Standards, and that the annual financial statements for 2013 and prior years have been audited by Ernst &
Young who issued unqualified opinions. According to Nicholas Teo, market analyst at CMC Markets, Iceberg’s motivation for this damaging report remains under question, especially considering they have opted to hide behind their cloak of anonymity. Teo recalls that in the cases of Olam and China Minzhong, white knights eventually ‘rescued’ these companies from the onslaught of selling that persisted days after the reports. “Temasek in Olam’s case, while Indofood Agri took Minzhong private. Short sellers may similarly be wary this time round when trading Noble Group. Interestingly, Best Investment Corporation holds roughly 10% of Noble Group. Best Investment Corporation is a government-owned investment firm from China,” says Teo. We have yet to see how this corporate fiasco will turn out, but it’s clear that this issue is far from over and is causing so much damage to Noble Group, with sell-offs wiping over US$1 billion off the commodities
NOL navigate testing times Lower bunker fuel prices may be good news for Neptune Orient Lines, but the gains that may result from this would not be enough to offset a battery of issues that loss-making NOL needs to face head on. Analysts warn that the shipping and logistics company, which has been in the red for three straight years, is bound for rougher waters amid overcapacity in the liner industry and port congestion in the U.S. West Coast. According to DBS, profitability could be elusive in 1Q15 as the problems aggravate. The deployment of larger ships on Transpacific services including a deficit of chassis and rail cars, and a shortage of truck drivers have pushed vessel deliveries farther down the timeline. Since November 2014, union dock workers also engaged in deliberate work slowdowns. “While we think lower bunker price is good for NOL in the near-term, we remain cautious as competitors may make use of lower bunker price to adjust freight rates in the longer term. We also note that NOL now has a leaner fleet with more fuel-efficient vessels (i.e. lower bunker consumption) with no new deliveries expected in FY15. Hence, while the impact from lower bunker costs and lower bunker consumption is positive, it is likely to be offset with depressed yields expected in
Genting looks to mass market Gone are the days when Genting Singapore’s strength were the high rollers willing to risk a huge amount of money on betting tables. With weak VIP volumes, Genting is now shifting focus to attract the mass premium market in Southeast Asia. The VIP hold rate of 2.2% was below the theoretical average of 2.85% and CIMB’s estimate of 3.2%. Rolling chip volume of c.S$15bn in 4Q fell short of expectations as RWS was more cautious in extending credit to VIPs, says Jessalynn Chen of CIMB. “GENS is ramping up marketing efforts and hopes to attract more mass visitation in 2H15, with the Genting Hotel Jurong that will add 550 rooms when it is fully opened in June,” adds Chen. The Asian gaming industry is now hit by slower economic growth and anti-graft initiatives in China, and clearly, Genting Singapore is nowhere near being safe. But while Genting expects bad debt provisions to remain high in the near term, it believes that these will start to normalize due to its more prudent credit policy, says OCBC analyst Carey Wong. Genting is now exploring opportunities in the region, including the development of Resorts World Jeju, which broke ground in February. It will open progressively from 2017 and be fully completed by 2019.
SINGAPORE BUSINESS REVIEW | MARCH 2015 21
FINANCIAL INSIGHT: investment banking
Unstable market conditions will stymie M&A momentum
Market volatility threatens M&A and DCM surge
Singapore M&A has ballooned to US$96.9 billion but market shake-ups should dampen this momentum, along with DCM’s.
f Singapore firms and global investment banks were hoping to further ramp up overseas acquisitions and bond offerings, both of which flourished in 2014, then they would be wise to temper their rosy outlooks in 2015. An anticipated increase in US interest rates later in the year should clip capital raising efforts and slow down activity. “In 2015 there is an expectation of higher market volatility, connected with anticipated US interest rate rises later in the year,” says Nick Gardiner, head of capital markets, Boston Consulting Group of Singapore and the greater Asia Pacific region. “This could cause challenges for firms hoping to raise capital in both the equity and debt markets if ‘emerging markets’ are hit by significant 22 SINGAPORE BUSINESS REVIEW | MARCH 2015
In 2015 there is an expectation of higher market volatility, connected with anticipated US interest rate rises later in the year.
outflows, or the macroeconomic slowdown, particularly in China, intensifies,” he adds. Gardiner says firms may try to time their transactions to beat the US rate rise, which will lead to increased crowding risk for new issues in early 2015. In the Asia Pacific region, Chinese securities firms and provincial banks seeking to raise capital in Hong Kong will be the most vulnerable to this risk given exposures to Chinese property developers, but Singapore should also feel the pinch. Singapore mergers & acquisitions rallied in 2014 more than doubling to US$96.9 billion from the previous year on the back of an attractive funding environment and a push from firms to strengthen their growth with overseas ventures, but the
former catalyst should cool if US interest rates climb in latter 2015. To be sure, there are windows of opportunity. The early months of 2015 will likely see lower benchmark rates in the Singapore dollar bond market, which will provide a provide a favorable condition for new issues, says Elaine Tan, senior analyst, deals intelligence at Thomson Reuters. Although she warns that this could be dampened by investors’ expectation on Singapore dollar’s depreciation against the US currency. Record M&A surge More volatile market conditions should stymie the strong momentum that drove M&A activity to record volume in 2014. Overall Singapore M&A reached US$96.9 billion in 2014, up 131.5% from 2013, setting a new annual record after surpassing the previous record of US$70.4 billion in 2007. Tan says Singapore companies grew increasingly active with their overseas M&A activity, spurred on by a flush of available funds and pursuit of growth outside of Singapore in an
FINANCIAL INSIGHT: investment banking attempt to diversify. Acquisitions by Singapore’s state investment firms, GIC Pte Ltd and Temasek Holdings Pte Ltd, drove outbound M&A volume to US$46.4 billion in 2014, a 181.5% growth in deal value from 2013, the highest-ever annual period for the city-state’s overseas acquisitions. Tan says notable Singapore deals in 2014 include the pending acquisition of IndCor Properties Inc, a US-based real estate investment trust, by an investor group comprised of Global Logistics Properties Ltd and Singapore state-owned GIC Pte Ltd for US$8.1 billion. This is so far the biggest-ever real estate deal involving Singapore on record. Also grabbing headlines last year was the privately negotiated transaction of Mayon Investments Pte Ltd, a unit of the Singapore-state owned Temasek Holdings (Pte) Ltd, involving the acquisition of a 24.95% stake in AS Watson Holdings Ltd, from Hutchison International Ltd for US$5.7 billion in cash. Tan says the Singapore rally in M&A activity and deal sizes mirrored the global comeback of jumbo transactions as dealmakers took advantage of low interest rates and the abundance of cash. Singapore and the rest of the Asia Pacific region seized the opportunity. In fact, the Asia Pacific region’s M&A activity posted its strongest-ever annual period with deal value increasing by 56% to US847.7 billion from 2013. Singapore can thank the reforms in Chinese stateowned enterprises for feeding the fiery resurgence of jumbo M&A deals in the region, says Tan. One particularly outsized transaction in 2014 was CITIC Pacific’s acquisition of the main assets of its state-owned parent, CITIC Group, for US$42.2 billion. Another notable jumbo transaction was Sinopec’s stake sale in its retail unit to investors worth US$17.5 billion. Looking forward, Tan says China’s venture into SOE mixed-
ownership reform may well continue to be a major source of potential deal activity, although there is a question on whether the technology and real estate sectors can sustain their strong performances in what will be a more perilous 2015. Bond offering binge As capital dries up in 2014, it could also prove harder to sustain the bond offering binge seen in 2014. Primary bond offerings in the debt capital market from Singapore issuers reached US$24.6 billion, up 24.8% from 2013, as local companies actively tapped both domestic and foreign bond markets to raise funds. This is the highest annual period since the record level in 2012 (US$31.5 billion). Tan says Singaporean borrowers tapped the US-dollar bond market to raise US$6.8 billion, a 61.5% year-on-year increase in proceeds. DBS Group Holdings grabbed headlines when it priced a twotranche offshore deal totaling US$1.25 billion – composed of a US$750 million fixed rate senior notes and US$500 million floating rate senior note both due in 2019 -- under the DBS Bank & DBS Group’s US$15 billion global medium term note programme. Meanwhile, the Singaporedollar (SGD) bond market reached S$22.7 billion (US$17.9 billion) in 2014, a 27.8% increase from 2013, and the highest period since peaking to S$29.8 billion in 2012. Tan says foreign issuers tapping the Singaporedollar bond market managed to raise an impressive S$5.9 billion (US$4.7 billion), or a 54% growth in proceeds compared to S$3.8 billion in 2013. This is despite the 15.4% drop in the number of SGD bond issuance. Notably, Hong Kong-domiciled issuers remained the most active borrowers raising S$1.8 billion (US$1.4 billion). The outlook is even less optimistic for Singapore’s equity capital markets, which has had an already lackluster performance in 2014. Tan points to how common
stock offerings, which consist of initial public offerings (IPO) and follow-on offerings, that listed in the Singapore stock exchanges dropped 35.3% year-on-year to US$6.9 billion in 2014, as number of new issues fell 28%. This was the lowest annual period since common stock offerings tumbled to US$2.2 billion in 2008. Follow-on offerings showed weakness, tumbling 25.3% year-on-year to US$4.3 billion, as number of issuance fell 40%. Initial public offerings that listed in Singapore stock exchange similarly fell by 47.2% year-onyear to US$2.6 billion, the lowest annual level in terms of IPO proceeds since US$2.3 billion in 2009. In a year of disappointment, not even the largest IPO deal listed in Singapore failed to breach the US$1 billion mark. The Accordia Golf Trust IPO only managed to raise US$802 million in July 2014, according to American Appraisal data. The rest of the top five biggest IPO deals listed in Singapore were underwhelming relative to the region: Keppel DC REIT (US$512.9 million), PACC Offshore Holdings (US$404 million), IREIT Global (US$369 million) and Frasers Hospitality Trust (US$385.6 million). Tan says uncertain market conditions contributed to the tepid IPO activity in 2014. As an example, Universal Terminal decided to postpone the launch of its US$800 million business trust listing, which could have ended up being Singapore’s largest IPO last year, due to the skittish environment.
Any Singapore Involvement Announced M&A Annual Volume
Source: Thomson Reuters
SINGAPORE BUSINESS REVIEW | MARCH 2015 23
CO-PUBLISHED CORPORATE PROFILE
Be dazzled by the distinct charm of Cebu City’s most luxurious hotel
Waterfront Cebu City Hotel and Casino’s GM Philippe Frugère talks about Filipino hospitality, local gaming, and new draws in the Queen City of the South.
estled in the center of the Philippine archipelago is the stunning island of Cebu, home to Cebu City, locally known as the Queen City of the South. Cebu City is a cradle of history and heritage—apart from being a modern center of commerce and trade, it also carries the distinction of being the oldest city in the Philippines. Among the city’s many gems is the iconic Waterfront Cebu City Hotel and Casino, one of the country’s grandest and most luxurious hotels. Singapore Business Review recently flew to Cebu to catch up with Philippe Frugère, Waterfront Cebu City Hotel and Casino’s new General Manager. Frugère is a French national who has over 15 years of experience as a general manager in various luxury and 5-star hotels across the globe. Prior to joining Waterfront, he was General Manager within Sun Hotels & Resorts, a chain of luxury hotels in Maldives and the Group General Manager fir a private owner in the Sultanate of Oman. 24 SINGAPORE BUSINESS REVIEW | MARCH 2015
Filipino hospitality is at the core of Waterfront Cebu’s service. When it comes to hospitality, what do you think sets the Philippines apart compared to its neighboring countries? The Philippines is known not only for its spectacular scenery and rich culture but also for its distinct hospitality. It is a common trait that Filipinos share, and travellers to the archipelago share this one-of-a-kind experience. This world-famous hospitality is our edge at Waterfront Cebu. As a homegrown brand, valued guests who stay at Waterfront Cebu City Hotel and Casino can truly witness and experience our 100% Filipino hospitality and excellent service.
“Cebu in itself is a brand of destination. Our casino is definitely above the competition.”
The Philippine gaming industry has grown by leaps and bounds in recent years, especially with a number of new casinos springing up in Manila. What challenges do these new casinos pose to Waterfront Cebu, and how did you address these challenges? Cebu in itself is a brand of destination. Our casino is definitely above the competition since we are the biggest in the Visayas. With the diverse casino games offered, we make sure that guests have a great time and enjoy our 24-hour service. The Philippine Amusement and Gaming Corportation is also a Filipino brand, and it therefore retains the distinct Filipino hospitality trait. When it comes to organizing events, what are the advantages of organizing it in Cebu as opposed to holding it in Manila? As Cebu’s premier convention hotel, we have a wide range of venues suitable for all types of events. Aside from the
CO-PUBLISHED CORPORATE PROFILE minimal traffic problems in Cebu as compared to Manila, Cebu also has numerous tourist destinations that guests can visit. Apart from attending events, guests can easily take a quick tour around the city. Cebu has a lot to offer its travelers, as it is filled with historical landmarks such as churches, museums, ancestral homes and a lot more. Almost 35% of visitors to the Philippines go to Cebu. For frequent visitors, what new amenities, destinations, or shows can they look forward to in the coming months? We’re redeveloping our convention center, ballroom and we are developing a new state-of-the-art Business Center. We have just opened our new lobby and Groups & Convention Check-in Lounge which is exclusive for groups, conventions and events. This is the first of its kind in Cebu and it is available only at Waterfront. We will also be re-launching our hip and contemporary bar, Treff, by the end of this year. Food in Cebu is known as a hallmark of Filipino cuisine. What can guests of Waterfront Cebu expect when it comes to dining? Any personal recommendations? Our culinary team here at Waterfront Cebu City Hotel and Casino consists of international and world-renowned Chefs. We also constantly come up with new promos at our dining outlets. Among these are UNO which serves delectable international cuisine; Tin Gow which offers authentic Chinese dishes; Mizu which serves the world’s best-tasting Japanese dishes; La Gondola which serves sublime Mediterranean dishes; and Madeleine which offers luscious pastries and desserts. There’s just always something new here at the Waterfront. The Philippines’ latest tourism campaign has been widely successful. How does Waterfront Cebu embody the idea that “It’s more fun in the Philippines”? The amenities inside Waterfront Cebu City Hotel and Casino are so diverse that it will surely satisfy the needs of all guests, no matter how discerning they may be. Our hotel has Duty Free Shopping Center, Victoria’s Secret
Boutique, a 24-hour Casino, 24-hour gym, swimming pool and 9 dining outlets. With all of these offerings and much more, it’s definitely more fun here at the Waterfront! What are your plans for Waterfront Cebu in the coming years? As one of Cebu’s iconic landmarks, we strive to continuously improve our products and services. We are currently in the second phase of renovating the convention area while we will also be updating our Superior and Standard guest rooms in the future. We actually look into the comments and suggestions that our guests give us so we may be able to provide them with better service to continuously improve and exceed their expectations.
Waterfront Cebu City Hotel & Casino is grandly situated at the heart of the city’s CBD. A convenient 30-minute drive from the Mactan International Airport, the hotel is home to 561 guestrooms and suites, 10 wining and dining outlets, and is popularly known for its superior conference facilities. With a seating capacity of up to 4,000, the hotel’s Convention Center is outfitted with 4 function rooms and 2 grand ballrooms designed to host all event types and sizes. Waterfront Cebu City Hotel & Casino has been nominated The World Luxury Hotel Awards 2015, a recognized global organization providing luxury hotels with recognition for their world class facilities and service excellence provided to guests.
Deluxe Premium Room
SINGAPORE BUSINESS REVIEW | MARCH 2015 25
ANALYSIS: sports industry
The $1.3b Singapore Sports Hub opened in June 2014
What is the future of the sports business in Singapore? Can a new billion-dollar stadium give Singapore the edge it needs to compete for world-class sporting events?
hen you mention Singapore and sports in the same breath, the closest you may get to a reaction is a polite nod from Formula 1 (F1) fans aware that one race in the auto racing championship – the Singapore Grand Prix – is held on the island. But the completion last year of the new $1.3 billion Singapore Sports Hub, a vast modern sports complex in Kallang, hopes to bolster the number of world-class sporting events held in Singapore and the country’s share in the booming $80 billion sports events market. Singapore’s bid to become the premier sports mecca in Southeast Asia should gain momentum now that it has the infrastructure to bid for top-tier events, says Shehzad Haque, managing director at Seasoned Pro, a Singapore-based
26 SINGAPORE BUSINESS REVIEW | MARCH 2015
Singapore is ultimately eyeing a bigger slice of the sports event market which has ballooned to $80 billion in 2014.
firm that organizes sports-related events. “I think the future of sport business in Singapore is very bright. I believe that the completion of the sports hub will really enrich the fabric of the sports industry in Singapore. It’s going to add a new dimension that we never previously had. We’re going to see more worldrenowned stars and teams come to Singapore.” Singapore is already on the map with F1, but Haque thinks that this kind of venue puts the city in a very different league. He adds that this is an important step toward making Singapore a true destination for sports events and fans. The annual F1 Singapore Grand Prix is the crown jewel in the country’s sports events calendar, selling more than 100,000 tickets
and generating more than $150 million in tourist receipts yearly. But beside this event and the Women’s Tennis Association (WTA) Championships, Singapore has not been able to secure a long list of prestigious sports events. Spending heavily on infrastructure, as Singapore has done recently, should go a long way in attracting sports events organizers, argues Haque. Citing the successful model of Qatar, he says there is no reason why Singapore cannot emerge as the preferred sports hub in Southeast Asia with enough investment and promotion. “Qatar is a smaller country with even less people than Singapore. But they spend a lot of money in sports and they have put themselves on the map. I see no reason why Singapore cannot try to emulate that in some way. Certainly within the Southeast Asian region, I feel Singapore is already trying to stand out,” he says. $80 billion market More than the prestige of hosting world-class sports events, Singapore is ultimately eyeing a bigger slice of the sports event market which has ballooned to $80 billion in 2014, growing 7% annually, according to A.T. Kearney estimates. “The sports event industry is a thriving, and more importantly, a growing market,” says Naveen Menon, head of communications and media practice at A.T. Kearney. When adding in sporting goods, apparel, equipment, and health and fitness spending, the sports industry generates as much as $700 billion yearly, or 1 percent of global gross domestic product. And the sports market will only continue growing in the coming years, according to Menon. Revenue of sports events should continue to grow in the next cycle with projected revenue of $90.9 billion by 2017,
ANALYSIS: sports industry an increase of $15 billion between 2013 and 2017, driven mainly by football. Currently, North America dominates overall sports spending, accounting for $266 billion, compared with $204 billion for Europe and $180 billion everywhere else. But notably for Singapore, the share of non-event revenues in the sports market is greater outside of North America and Europe; there, sporting goods and licensed products account for 57 percent of revenues, while others account for 28 percent. “Singapore has been eyeing a share of that market for some time now,” says Menon of the lucrative sports event market, noting that the country has been making moves to raise its profile. Singapore has hosted the F1 race for seven years straight and won the rights to host the seasonending WTA Championships for 5 years, beating contender cities like Tianjin and Monterrey. He says the move to build the Singapore Sports Hub is another step to attract more high-profile sporting events to the city.
Media Master plan Besides serving as a compelling venue for world-class events, the newly built national stadium is part of the country’s master plan to build a thriving ecosystem around quality media content, says Menon, which piles on more pressure for success. “Singapore is on a 10-plus-year path to activate the entire media ecosystem. This includes nurturing creative talent, developing original
content, supporting the preand post-production activities, and building infrastructure for premium quality events,” says Menon. “With sports content being one of the most popular genres among viewers, having a world class stadium that can host big name events will open up opportunities for media houses to create and market relevant content,” he adds. Singapore is betting that this complex planning and synergy building will help it win against regional and global rivals that are also competing to host world-class events. And so far, this has yielded great results, based on analyst assessments. “One of the key reasons behind Singapore’s success story has been the emphasis policymakers in the city-state put on long-term vision and planning,” says Menon. “There is always a ‘master-plan’ behind any initiative and various elements and projects are planned and executed to achieve the one big goal. That is exactly what is happening with the move to build a new billion dollar national stadium. It’s part of Singapore’s push to become a sports hub.” Teething problems But even the most carefully laid plans will need to allow for curveballs, as Singapore has found out the hard way. In the first months of operation, the Singapore Sports Hub encountered issues related to its pitch, with some events being sidelined due to venue
safety and suitability concerns, including the New Zealand Rugby Union cancelling the Maori All Blacks and Asia Pacific Dragons match in November. But Menon downplayed these issues, saying: “Some have raised concerns over the few issues that have cropped up at the stadium in the initial days. I don’t think we should be too worried about these as they are just teething problems that are normal when you launch a sporting arena of this magnitude.” Taking all factors into account, the Singapore Sports Hub has the makings of a world-class sports event venue because of its super quality, veteran leadership and a country’s strong track record in major sports. “The success of any stadium depends on a few key factors,” says Menon. “The first is the quality of design and functionality. On this front Dragages – the construction firm – have done an excellent job.” “The other factor is the quality of events leadership at the stadium. Winning the rights to host an event is just the first step; the more important part is having the right people in place make sure it is success. The Singapore national stadium has a very experienced ex-London Olympics team leading the management.” Menon adds that to to attract fans, one needs to start hosting big-ticket events in major sports. “Singapore has already proven that it can do so and I expect it to add more events in the years to come,” Menon notes.
The sports market’s next four-year cycle will bring continued growth
Source: A.T. Kearney analysis
Singapore Selection vs Juventus - the first football game held at the Sports Hub
SINGAPORE BUSINESS REVIEW | MARCH 2015 27
singapore’s hottest startups 2015
Singapore’s 20 hottest startups to watch out for in 2015
The city’s biggest up-and coming startups offering different products, ranging from the world’s first 3D pen with cool ink to a platform which allows you to transfer money through social network sites.
or the fourth consecutive year, Singapore Business Review brings you 20 of the city’s hottest startups worth watching over the next months. Learn more about them and find out how they shake up their sectors with their innovations. The selected companies started operating from 2012 and continue to strive for success in the industry. These startups managed to make their business flourish from initial funding ranging from $112,000 to $11M. Some were created from the founders’ ideas to make living more convenient, while a few were established out of their own experiences. Startups on the list have been ranked according to total funding generated to date. 1. Fastacash Founders: Shankar Narayanan and Michael Wee Funding: S$11.36M (US$8.5M); Jungle Ventures, Funding the Future, Spring SEEDS Capital, Kewalram Chanrai Group and Golden Oriole Investments 28 SINGAPORE BUSINESS REVIEW | MARCH 2015
Start of operation: April 2012 Fastacash provides a global platform allowing users to transfer value such as money, airtime, and other tokens of value along with content (photos, videos, audio, and messages) through social networks and messaging platforms. The company partners with other companies to bring its technology to end-users. Fastacash has launched its service in markets including India, Vietnam, Russia, Indonesia & Singapore with its partners Oxigen, Techcombank, MOBI.Dengi, and is expected to go live in other markets in the coming months. 2. Carousell Founders: Quek Siu Riu, Lucas Ngoo and Marcus Tan Funding: S$8.8M; Sequoia Capital, Golden Gate Ventures, 500 Startups, Rakuten Start of operation: May 2012 Carousell is a mobile-only solution that aims to provide a communitydriven alternative to Craigslist and Gumtree. In just 30 seconds,
singapore’s hottest startups 2015 Carousell allows users to create free listings to sell their unused and under-used clutter. With limited alternatives in Southeast Asia, Carousell claims to be one of the market leaders in this space. 3. PAKTOR Founders: Joseph Phua, Charlene Koh and Jing Shen Ng Funding: >S$6.68M (>US$5M); Vertex Venture Holdings (Series A with Vertex and Seed + Pre-A from Angels) Start of operation: July 2013 Paktor is a social networking platform/mobile app that helps singles in Asia meet other singles. Billing itself as the first Southeast Asian dating network and the #1 platform in each of the countries it’s in, Paktor has now over 2 million registered iOS and Android users to date. Regardless of what they have achieved so far, the founders say, “We will continue to listen to our users and ensure we provide them with the services they need, to maintain our dominance in the region.” 4. Gentay Communications Founders: Martin Nygate and Daniel Nygate Funding: >S$5M; VC Equity Funding, Japanese and Singapore Strategic Investors including Sim Wong Hoo, founder, CEO and Chairman of Creative Technology Start of operation: December 2013 From a founding father-and-son team, Gentay Communications is a mobile technology company which has developed a revolutionary VoIP app called ‘nanu’ that “connects the next 4 billion mobile phone consumers”. nanu allows users to make free calls on mobile phones, but unlike other free calling apps, nanu doesn’t need a fast network, so it works on 2g and congested networks. 5. ViSenze Founders: Roger Yuen, Oliver Tan, Dr Li Guangda and Dr Chua Tat-Seng Funding: S$5.21M (US$3.9M); Rakuten Ventures, Walden International, UOB Management Start of operation: August 2012 ViSenze is a visual technology company which aims to solve the real world problems and challenges of the visual web, and create new application opportunities creatively. It simplifies the visual web by helping users find things visually without the need for keywords. ViSenze’s uniqueness stems from a novel combination of 4 things: smart visual technology, deep domain knowledge of things, making visual tools easy to deploy, and creative entrepreneurial ideas.
6. Temasys Founders: Tom Prestulen, Bill Lewis and Dr Alex Gouaillard Funding: S$3.34M (US$2.5M); IDA, WebRTC Technology Development Start of operation: 2012 Temasys enables developers and businesses to serve all peer-topeer and group communications through Web Real Time Communications (WebRTC) in browsers, applications, smartphones and internet-connected devices. Temasys’ applications boast significantly higher video quality than other existing chat applications. According to founders, Temasys is able to offer close to HD, or even VGA quality video conferencing at only a quarter of the bandwidth of other telecommunication software applications. 7. 99.co Founders: Darius Cheung, Ruiwen Chua, Anuj Bheda, Saurabh Mandar and Conor McLaughlin Funding: S$2.5M; Sequoia Capital, Eduardo Saverin (Facebook co-founder) Start of operation: 2013 99.co is a company that plans to meet the needs of exasperated house-hunters in Singapore. It aims to make the entire experience of finding, moving into, and living in a new place seamless and hassle free, while keeping living in a new city fun and enriching. With 99.co’s map-based search and presentation of property listings, apartment seekers can see the distance of their prospect units from MRT stations and calculate travel time. It also has 1-click scheduling of viewings for renters. 8. BeMyGuest Founders: Clement Wong and Blanca Menchaca Funding: S$2.25M; Tidesquare Korea, TNF Ventures, Kei Shibata and Kenichi Shibata (founders of travel.jp and hotel.jp), Foo Jixun, Board of Advisor (Managing Partner at GGVC) Start of operation:
March 2012 BeMyGuest empowers tours and activities providers with its free content and booking management technology. Through this technology, tours and activities providers are able to digitalize and distribute their travel content to the entire travel industry, including airlines, hotels, and online travel agencies. BeMyGuest bills itself as the global leader for Asian tours and activities content. BeMyGuest emerged as the winner out of 150+ companies from across Asia at the ChannelNewsAsia Startup Asia competition.
SINGAPORE BUSINESS REVIEW | MARCH 2015 29
singapore’s hottest startups 2015 9. Inverted Edge Founder: Debra Langley Funding: S$2.14M (U$1.6M); NRF, Incuvest and Accel-X Start of operation: October 2012; Launch date: April 2013 Inverted Edge is an omnichannel retailer for independent contemporary fashion and lifestyle product designers. “We place an emphasis on identifying internationally ready, high quality and globally relevant labels from around the world, complementing these collections with hand-picked special collaboration capsules,” says the founder. Inverted Edge claims that they are one of the few e-commerce entities in the region that are omnichannel in their approach, pursuing a strategy that offers an integrated online and offline experience to their customers. “ 10. PIE Founders: Pieter Walraven and Thijs Jacobs Funding: S$2M; Venture Capitals and Angel Investors; Koh Boon Wee (Credence Investment), Wavemaker Labs (VC part of DFJ Network), Digital Garage (Japan-based VC), Peng T. Ong (Monk’s Hill Ventures, Match.com, Interwoven (IPO) & Encentuate (IBM)), Porter Erisman (Ex-Global VP, Alibaba.com), Pieter Kemps (Sequoia Capital, former Director VC relations, Amazon AWS), Chris Evdemon (Partner, Innovation Works, investor PropertyGuru), Jacques Kemp (Ex-CEO, ING Asia) Start of operation: January 2014 Pie is chat for work. With billions of people using messaging to communicate with friends and family, companies are still to catch up on this massive global trend. Pie jumps in the gap with a secure, friendly, and work-focused messaging solution that integrates with popular modern business software offerings like DropBox, Box, and Google Apps. Pie is available on all popular platforms: iOS, Android, Web and OS X. The Pie team was called “the best engineering team in Asia” by the Amazon AWS engineering director. 11. TabSquare Founders: Anshul Gupta, Chirag Tejuja and Sankaran Sreeraman Funding: S$989,000; Get2Volume, National Research Foundation Singapore (NRF) Start of operation: May 2012 TabSquare aims to change the way customers dine out. It provides consumer engagement solutions to improve restaurant profitability and customer dining experience with a customized digital menu on every table, which is integrated into the restaurant’s kitchen and billing systems. TabSquare now services cus30 SINGAPORE BUSINESS REVIEW | MARCH 2015
tomers in over 200 locations in 5 countries (Singapore, India, Indonesia, Japan and the US) with plans to rapidly expand to other South and South-east Asian countries. 12. OurHealthMate Founders: Abhinav Krishna and Dr Akash Kumar Funding: S$800,000; LeoTech Services, JFDI, NUS Ventures, Angel Investors Start of operation: January 2013 OurHealthMate is an NRIfocused startup which allows migrant workers take care of their family’s health by connecting payers, patients and physicians. The two products launched by the company are OurHealthMate Booking and OurHealthMate ClinicLinc. The OurHealthMate Booking portal allows migrants to find, book, and pay doctors on behalf of their loved ones. Expats also receive monthly feedback from the doctors about their family’s health. OurHealthMate ClinicLinc, on the other hand, helps doctors to digitalize their patient’s records online and access them from anywhere. It is fully secure and follows all medical data regulations. OurHealthMate users can choose from a network of 10,000+ doctors and 1,000+ centers in 300+ cities in India. 13. CreoPop Founders: Andreas Birnik and Dmitry Starodubtsev Funding: >S$600,000; 500 Startups, HAX Asia, Ruvento, Angel Investors Start of operation: 2013 CreoPop bills itself as the world’s first 3D pen with cool ink. According to its founders, CreoPop has no hot parts, no melting plastic and no unpleasant smell. It uses light-sensitive ink, cured by ultraviolet light from diodes surrounding the nozzle. CreoPop can be used with a wide variety of different inks including various colors, elastic ink, magnetic ink, glow-in-the-dark ink, temperature sensitive ink and body paint ink. CreoPop is a finalist for hottest startup at SXSW 2015. 14. The Stakeholder Company
Founders: Terence Lyons and Jerome Poudevigne Funding: S$600,000 + organic growth funded; Hera Capital, Red Dot Ventures Start of operation: 2012 The Stakeholder Company (TSC) develops data-driven mobile and web applications, which enable understanding and effective management of some of the most complex stakeholder environments and issues globally. TSC’s i3 system provides enterprise customers a solu-
singapore’s singapore’s hottest hottest startups startups 2015 2014 tion for mapping, monitoring, analysing and visualising stakeholders, relationship networks, interests, trends and issues for better business outcomes. 15. Gametize Founders: Keith Ng, Damon Widjaja and Brenda Nicole Tan Funding: >S$500,000; Crystal Horse Investments, Mercatus Capital, NRF Start of operation: February 2012 Gametize is a gamification technology and consulting company which makes use of game psychology to help brands and organizations engage their target audience, in fields such as marketing, learning, and training. Gametize allows anyone to create simple challenge-based games on mobile and web for business objectives such as training and learning in just 5 minutes. 16. Scrollback Founders: Aravind Ravi-Sulekha and Gaurav Srivastava Funding: S$500,000; Jungle Ventures, NRF, Crystal Horse Investments, Singapore Angel Network, Roland Turner, Angel Investors Start of operaTION: September 2013 Scrollback tap into the potential of social networks in communities by hosting chat rooms for online communities. Scrollback, which claims to be a “complete rethink” of what forums should be, also keeps archived contents. According to founders, most chat room services throw away their content (the archives) because it is hard to navigate and not search engine friendly. Scrollback, on the other hand, uses artificial intelligence (ML and NLP) to understand, categorize and optimize chat archives for browsing and for search engines. 17. Kungfu Math Founders: Derrick Koh and Foo Pau Choo Funding: S$500,000; Angel Investors (which includes Christopher Quek from Tri5 Accelerator), iJam Start of operation: December 2012 Kungfu Math bills itself as the first Singapore Inc. gamified math learning portal created to enthuse students to deepen their understanding of mathematical concepts and sharpen their mathematics problem solving skills through gameplay. At Kungfu Math, children can practise math and have fun at the same time. According to founders, Kungfu Math can also be used when teachers in school are too busy to regularly assign online homework; they can use the portal to assign practice exercises for their students.
18. Lockerfellas Founders: Derrick Wu and three other entrepreneurs Funding: >S$360,000; ACE Start of operation: March 2014 Lockerfellas introduces My Laundry Box, a smart laundry locker platform that works with an app. Aimed at solving laundry woes, My Laundry Box claims it is pioneering several ‘firsts’ in the laundry industry and to be the first of its kind of service in SEA. It combines a smartphone app with a proprietary collection and distribution system. With My Laundry Box app, customers can even pay for their laundry bill directly without having to go to the laundry shop. Customers can also arrange for pick-up and delivery through the app. 19. AdHocSpace Founder: Melverick Ng Funding: S$260,000; Alacrity Capital Start of operation: April 2012 AdHocSpace bills itself as the first portal in Asia which manages corporate training space booking from end-to-end automatically and electronically, from receiving the enquiry, to quotation generation, invoice generation, calendar management and even payment management. AdHocSpace aims to help venues market their unused spaces to companies who require spaces for their events. In just two years, AdHocSpace has grown to have over 35 venue partners which yields more than 60 rooms available for rental.
20. museCrowd Founder: Nancy Lai Funding: S$112,000; Ying Hwee Investment, Alacrity Capital, Angel Investor Start of operation: July 2012 museCrowd bills itself as Singapore’s first business-sourcing platform where companies who require jobs to be done can post a project for suppliers to bid through a tender/bidding system. The platform started due to lack of a centralised platform for businesses to connect with one another. Suppliers were “cold calling” companies that were not really interested in their services. Similarly, companies that needed help with some projects were having difficulties searching for suitable suppliers for the jobs. museCrowd aims to be the connecting platform for both companies and suppliers, where companies can source for suppliers. Recently, museCrowd relaunched their platform with the full suite of chargeable features to improve the entire bidding system. New signups will now have a 2-month trial of the premium subscription plan worth $49.90/month. SINGAPORE BUSINESS REVIEW | MARCH 2015 31
Singapore’s 25 LARGEST law firms
What can these lawyers with their briefcases steal?
Wanted: Lawyers who are specialists in niche industries Find out why most employers seek candidates in the mid-level range.
acancies at Singapore’s top law firms and in-house legal teams are still very much at their peak. However, this is not necessarily good news for freshly graduated lawyers. “We are seeing an oversupply of fresh law graduates in the job market as they were not signed onto the law firms after completion of their training contracts,” says Evelyn Lee, manager, financial services and legal at Robert Walters Singapore. The Singapore Business Review sought the insights of the industry’s top hiring insiders and the verdict is in – specialization will be a key theme for legal hiring in Singapore this year. A drought in specialists As hinted at in Lee’s earlier statement, a key hiring trend within Singapore’s legal industry is a preference for specialists.
32 SINGAPORE BUSINESS REVIEW | MARCH 2015
Law firms are still hiring within the range of 3-5 year’s PQE as experienced lawyers are sought after.
More specifically, “law firms are still hiring within the range of 3-5 year’s PQE as experienced lawyers are sought after,” says Lee. Ben Cooper, head of legal and compliance - Asia Pacific at GRMSearch, says that regulatory knowledge of specific or niche industries is highly sought after in the industry, and that this trend is likely to continue. “This is especially true in financial institutions, especially in relation to funds and derivatives or structured products,” adds Cooper. Lee echoes this sentiment, adding that “there is a particular demand for telecommunications, media and technology (TMT) lawyers.” Chris Mead, regional director at Hays in Singapore, explains why most recruiters prefer to hire a mid-level candidate over training a more junior one. According to Mead, “most employers, both in house and practice, seek candidates
in the mid-level range. Candidates at this range have significant experience, require little training and have yet to become too ‘expensive’.” He adds that firms and legal teams simply do not have enough time and resources to devote to training fresher lawyers. Aside from the need for more specialist knowledge, hiring within the industry will likely be driven by growing industry presence. Mead believes that hiring will be especially robust from prominent international law firms who are looking to grow their presence locally. “We anticipate seeing a surge of joint legal ventures in the market this year, with many international firms hiring Singapore qualified lawyers in preparation for such change,” says Mead. Other areas where hiring could further increase include intellectual property, TMT, and employment. Who made it to SBR’s list? Allen & Gledhill has once again topped Singapore Business Review’s ranking of the 25 largest law firms in the city based on total number of legal professionals. Data compiled from individual company surveys and media reports show that Allen & Gledhill is ahead of its closest competitor Rajah & Tann in staffing numbers by 11 legal professionals. RHTLaw Taylor Wessing, which has climbed its way up two positions, reported 17 additional professionals. According to Tan Chong Huat, managing partner at RHTLaw Taylor Wessing, their market is no longer just Singapore. The firm enjoys referrals from their international network of Taylor Wessing firms worldwide. While the top 5 firms didn’t shake up their spots, this year’s list welcomes the new entrant, Holman Fenwick Willan, on the 25th spot with 36 total number of professionals.
Singaporeâ€™s 25 LARGEST LAW firms
The 25 largest law firms in Singapore Company Name
2014 LEGAL PROFESSIONALS
2013 LEGAL PROFESSIONALS
Managing Partner/ SG HEAD
Allen & gledhill
Rajah & Tann
Lee Eng Beng, SC
Rachel Eng and Ng Wai King
Drew & Napier
Davinder Singh, SC
Rodyk & Davidson
Philip Jeyaretnam, SC
RHTLaw Taylor Wessing
Tan Chong Huat
Stamford Law Corporation
Baker & McKenzie.Wong & Leow
Shook Lin & Bok
Sarjit Singh Gill, SC
Lee & Lee
Kwa Kim Li
Deborah Barker, SC
TSMP Law Corporation*
Stefanie Yuen Thio and Thio Shen Yi, SC
Allen & Overy
Norton Rose Fulbright
Harry Elias Partnership
Herbert Smith Freehills
Colin Ng & Partners
Tan Min-Li and Lisa Theng
Kelvin Chia Partnership
ATMD Bird & Bird
Tan Kok Quan Partnership
Kannan Ramesh, SC
Latham & Watkins
Tan Peng Chin
Wong Liang Kok and Lim Jo See
Holman Fenwick Willan
*Obtained from their websites and/or media reports.
SINGAPORE BUSINESS REVIEW | MARCH 2015 33
Singapore’s 30 largest insurance firms
Insurers urged to initiate product innovation
Regulatory changes are key concerns for insurers in 2015 This is why 2015 could be a make-or-break year for some insurers.
he year is already shaping up to become a banner year for the insurance industry as many changes are set to unfold. For the big picture of what’s to come for the industry, Singapore Business Review gathered the insights of the country’s top insurance firms. Key areas of concern for this year are broadbased regulatory changes, as well as needed initiatives in product innovation. Regulation still active Although the Monetary Authority of Singapore (MAS) has already introduced gamechanging regulations, regulatory compliance, especially to certain amendments, will still play an active role this year. Among the regulations introduced by the MAS, “the Financial Advisory Industry Review (FAIR) and the
34 SINGAPORE BUSINESS REVIEW | MARCH 2015
Changes such as the Web Aggregator will mean changes to the life insurance landscape in Singapore.
Risk-Based Capital 2 Framework (RBC2) are among the most impactful regulatory changes,” says Lance Tay, CEO of Tokio Marine Life Insurance Singapore. One of FAIR’s most important changes will be the introduction of the Web Aggregator. As a spokesperson from AXA Life Insurance Singapore explains, the Web Aggregator is a system that allows consumers to compare prices and features of Life Insurance products and Direct Purchase Insurance, and all Life Insurers in Singapore will be mandated to comply. According to AXA, changes such as the Web Aggregator “will mean changes to the life insurance landscape in Singapore.” While the consensus seems to be that these impending regulatory changes will be major, whether they will be positive or negative
remains unclear. Peter Huber, CEO of Zurich’s Life Business in Singapore, however, believes the changes to be generally positive: “Given the complexity of the financial industry, we embrace such initiatives which simplify products, enhance accessibility, reduce costs and improve services for our customers.” Insurance firms in Singapore are just as accountable to their customers as they are to the MAS, if not more so. And for the year ahead, several professionals believe that product innovations are necessary to meet the changing tastes of potential customers. For instance, AXA points out that consumers now prefer products with more of an investment focus, rather than a savings or protection focus. This is largely the reason why new sales were flattish last year, according to AXA. Despite the noted change in consumer tastes, Tay believes that focusing on protectionbased products is still immensely important. “This is because the aggregate underinsurance gap of Singaporeans is S$462 billion, and on average, the Singaporean working adult is underinsured by 3.7 times his annual income.” Indeed, the industry is expected to face demands on multiple fronts in the year ahead. Who made it to the top 30? AIA Singapore topped the Singapore Business Review’s ranking of largest insurance companies in the city according on their 2013 total assets. Data compiled from Monetary Authority of Singapore show that AIA Singapore, classified as composite insurer – offering both general and life insurance products – is ahead of its closest competitor NTUC Income Insurance Co-operative by 1.69b. The Great Eastern Life Assurance Company has the highest total assets amongst all the life insurer companies and ranked third overall.
Singapore’s 30 largest insurance firms
The 30 largest insurance firms in Singapore INSURANCE COMPANY
TOTAL ASSETS 2013
NTUC INCOME INSURANCE CO-OPERATIVE
THE GREAT EASTERN LIFE ASSURANCE COMPANY
PRUDENTIAL ASSURANCE CO. SINGAPORE
THE OVERSEAS ASSURANCE CORPORATION
TOKIO MARINE LIFE INSURANCE SINGAPORE
SWISS LIFE SINGAPORE
HSBC INSURANCE SINGAPORE**
ALLIANZ SE, SINGAPORE
ASIA CAPITAL REINSURANCE GROUP
AXA LIFE INSURANCE SINGAPORE
SWISS REINSURANCE COMPANY
MUENCHENER RUECKVERSICHERUNGS GESELLSCHAFT (Munich Re)
TRANSAMERICA LIFE (BERMUDA) SINGAPORE
FIRST CAPITAL INSURANCE
AXA INSURANCE SINGAPORE
IAG RE SINGAPORE
AIG ASIA PACIFIC INSURANCE
EVEREST REINSURANCE COMPANY
ODYSSEY REINSURANCE COMPANY
INDIA INTERNATIONAL INSURANCE
ROYAL SKANDIA LIFE ASSURANCE, SINGAPORE
ZURICH INTERNATIONAL LIFE SINGAPORE
MSIG INSURANCE SINGAPORE
THE TOA REINSURANCE COMPANY SINGAPORE
FRIENDS PROVIDENT INTERNATIONAL SINGAPORE
TOKIO MARINE INSURANCE SINGAPORE
SCOR GLOBAL LIFE SE SINGAPORE
*Data compiled from insurance company returns submitted to Monetary Authority of Singapore. **Data for general business of HSBC Insurance for 2013 is not available.
SINGAPORE BUSINESS REVIEW | MARCH 2015 35
SBR holds its inaugural Business Ranking Awards
ingapore Business Review set out to recognize the country’s trailblazing professionals at the inaugural Business Rankings Awards 2014 held at the Shangri-La Singapore. The awarding ceremony, attended by nearly 100 executives, recognized companies which made it to SBR’s objective rankings of leading firms by size across all major industries in the city. SBR’s publisher Tim Charlton presented the awards to participating firms, which included Rankine & Hill, the 13th largest engineering firm; Ong & Ong, the 6th largest architecture firm; JCU Singapore, the 3rd largest MBA provider; CPG Consultants, the 3rd and 4th largest architecture and engineering firm; Design Link Architects, the 13th largest architecture firm; and ERA, the largest real estate agency. Restaurateurs • Dylan Ong and Joshua Khoo of Saveur • Indra Kantono of Jigger & Pony and Sugarhall • Grace Chia and Bernard Toh of The Missing Pan • Jez Lim of BLVD
Dr. Easwaramoorthy Rangaswamy of Amity Global Business School
Trinh Tran Chau of Amoy Hotel by Far East Hospitality
Nelson Yap of Benjamin Barker Aust Pte Ltd
Jez Lim of BLVD Pte Ltd
Tan See Chee of CPG Consultants
Chong Nan Hing of Design Link Architects Pte Ltd
Lawyers • Jun Ho of Wikborg Rein Singapore • Ben Rose and Robert Driver of Norton Rose Fulbright • Tan Choon Leng of RHTLaw Taylor Wessing • Jeremy Chase and Mark Robinson of Herbert Smith Freehills • Daniel Chia of Stamford Law Professors • Dr. Easwaramoorthy Rangaswamy of Amity Global Business School • Yu Kang Yang, Trevor (Ph.D) of Nanyang Technological University, Nanyang Business School • Meijun Qian of National University of Singapore • Yaozhong Wu of NUS Business School Hotel Managers • Gary Puan of J8 Hotel • Derik Poh of The Plot Hostels • Jolene Chong of Hotel Re! @ Pearl’s Hill • Olivier Lenoir of Grand Hyatt Singapore • Trinh Tran Chau of Amoy Hotel • Christian Wolny of Rendezvous Hotel Singapore by Far East Hospitality Advertising Executives and Marketers • Gary Teo and Fairil Yeo of VML Qais • Madina Kalyayeva, Sharon Siew Hui Fen and Miguel Martinez of Grey Group • Charina Widjaja of DFW Creative Pte Ltd 36 SINGAPORE BUSINESS REVIEW | MARCH 2015
Jack Chua of ERA Realty Network Pte Ltd
Olivier Lenoir of Grand Hyatt Singapore
Madina Kalyayeva, Sharon Siew Hui Fen & Miguel Martinez of Grey Group Joshua Khoo & Dylan Ong of Saveur Pte Ltd
Grace Chia & Bernard Toh of The Missing Pan Yaozhong Wu of National University of Singapore Charina Widjaja of DFW Creative
Bernard Toh of The Missing Pan
Tan Choon Leng of RHTLaw Taylor Wessing
Derik Poh of The Plot Hostels
Meijun Qian of National University of Singapore
NTT Singapore Team
Jolene Chong of Hotel Re! @ Pearlâ€™s Hill SINGAPORE BUSINESS REVIEW | MARCH 2015 37
Dale Anderson of James Cook University
Daniel Chia of Stamford Law Corporation
Gary Puan of J8 Hotel Pte Lrd
Goh Teck Sin of Rankine & Hill (S) Pte Ltd
Indra Kantono of Jigger & Pony and Sugarhall
Kang Yang Trevor Yy of Nanyang Business School
Robert Driver & Ben Rose of Norton Rose Fulbright
Rankine & Hill delegates 38 SINGAPORE BUSINESS REVIEW | MARCH 2015
Design Link Architects delegates
Winners of people ranking lists
SINGAPORE BUSINESS REVIEW | MARCH 2015 39
How new regulations help pharmacies Two proposed regulations seek to better regulate the advertising and sale of therapeutic products, but it benefits not only consumers but also retail pharmacies as well.
larmed by the rising misinformation on therapeutic products on forums and convinced of the power of self-policing, the Singapore government is proposing two sets of regulations that will more tightly regulate the advertisement and sale of therapeutic products known as the Health Products (Advertisement of Therapeutic Products) Regulations 2015 and Health Products (Licensing of Retail Pharmacies) Regulations 2015. What are the most notable changes in the advertising of therapeutic products? What are their implications? A major change in the proposed Health Products (Advertisement of Therapeutic Products) Regulations 2015 is to expressly prohibit registrants or licensees of therapeutic products from holding discussion forums on their corporate websites and social media platforms. “From a public interest perspective, this reflects the regulator’s concern that these platforms may inadvertently provide inaccurate anecdotal information about therapeutic products,” says Andy Leck, managing principal, Baker & McKenzie.Wong & Leow. Businesses will also benefit. Leck notes that the proposed advertising regulations for therapeutic products will dispense with the requirement for
“This change to a self-regulating regime is a necessary response to the new technological environment where therapeutic products are being sold through online platforms.” medical advertisement permits, which he considers a positive change since self-regulation of advertising will help reduce the regulatory burden on companies when launching and promoting these products. The requirement was removed since therapeutic products, under the proposed regime, will no longer be considered as medicinal products but rather health products. As such, therapeutic products will be regulated under the Health Products Act. “This change to a self-regulating regime is a necessary response to the new technological environment where therapeutic products are being marketed and sold through online platforms. A self-regulating regime gives the industry the freedom to supply information and produce advertisements for therapeutic products provided such information and advertisements fall within the ambit of the prescribed rules and guiding principles,” says 40 SINGAPORE BUSINESS REVIEW | MARCH 2015
Lim Wee Hann
Jonathan Kok, partner, RHTLaw Taylor Wessing. Kok argues that the self-regulating regime is an improvement on the current regime where the Health Sciences Authority regulates the advertising and promotion of therapeutic products through a permit system, which he deems to be redundant in the age of mobile devices and easy Internet access. “This signifies a move away from a top-down, regulator-focused approach to advertising towards a more industry-focused, self-regulating regime,” says Lim Wee Hann, head, mergers & acquisitions at Rajah & Tann Singapore. The pharmaceutical industry will be empowered to produce health product-related information that will enable the public to make more informed choices, while still preserving adequate regulatory oversight, all while reducing regulatory burden and costs for the industry as a whole. Another positive is that the proposed changes will consolidate what has been criticized as a fragmented Singapore regulatory regime, and better align the regime with international best practices, says Sheela Moorthy, partner at Norton Rose Fulbright. “The consolidation of the regulatory regime will, in our view, address these concerns and make the regime easier to understand in a single piece of legislation.” What are most notable changes in the licensing of therapeutic products? What are their implications? The proposed Health Products (Licensing of Retail Pharmacies) Regulations 2015 will remove the requirement to apply for a Poisons Licence for the wholesaling of therapeutic products, as well as introduce new regulations on the provision of telepharmacy services by retail pharmacies, says Kok. Under the proposed regulations, it will be a condition for a holder of a pharmacy licence to obtain the Health Sciences Authority’s approval before the holder may provide telepharmacy services in and from its retail pharmacy. Kok says these proposed changes will not likely have any significant impact on the operation of retail pharmacies. This is because the process for the grant of pharmacy licences will remain largely the same, aside from the new requirement that applicants must satisfy eight conditions before a pharmacy licence can be granted. In fact, compliance costs may potentially be reduced for certain businesses that deal solely in the distribution and warehousing of finished therapeutic products containing a listed poison, says Leck. But he notes that providers of telepharmacy services will need regulatory approval, and must ensure that they have in place the necessary technological set-up and capability, adequately trained personnel, and written procedures.
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What’s the secret to making viral ads? Singapore creatives and marketers reveal their preferred approaches to this mysterious craft.
hen the husband-and-wife team of Ryan Tan and Sylvia Chan began filming YouTube videos in late 2012 as a hobby, they did not know that by their third comedy skit they would become a viral ad production duo. The pair has been consistently pushing out viral videos for multinational brands and government agencies in their top branded YouTube channel “RyanSylvia” – their “Top 10 Criminals in Singapore” in collaboration with Singapore Police Force recently garnered 1.5 million views – but if you ask them how they do it, they would reluctantly attribute their success to a three-point approach. A viral video needs to be “funny, fresh and relatable,” says Sylvia Chan, director at Night Owl Cinematics, but she is quick to add a disclaimer: even an ad oozing with these magic ingredients can still flop. “It cannot be guaranteed,” says Chan when asked if there is foolproof way to create a viral ad. Other advertising professionals and marketers echo Chan’s sentiment: making a viral ad is not as exact as following a recipe and expecting fantastic results every time. Instead, there is a crucial but volatile X factor – the audience.
The ability Avoid overused messages to create a For marketers to increase their chances of hitting connection the right note with their audience, a great guideline with the is to stay away from messages that have been consumer is overused, says Robert Yap, executive director at Singapore Environment Council. Yap says that when the common his organization set out to create a viral ad that factor would shock viewers about the 800,000 tons of food waste generated in Singapore in 2013, it veered away between viral from the serious slant used by many environmental ads. 42 SINGAPORE BUSINESS REVIEW | MARCH 2015
pollution ads and rather took a leaf from the scene in the Titanic movie. “Viral ads are usually designed to be catchy or shocking to attract mass attention,” says Yap, so the organization gave this “cheeky twist” to their campaign. Establish an emotional connection A stale delivery will not likely yield much of a reaction from an audience, but even more so if the message flies over their heads. “An ad that is edgy, funny, or emotional and keeps a consumer engaged has a better chance of going viral,” says Radhika Angara, chief marketing officer at Fastacash. If Angara were to be asked to choose between two factors – novelty or emotional connection – the latter would be the more important determinant of viral success. “The ability to create a connection with the consumer is the common factor between viral ads,” says Angara. “The connection can vary – it could bring out feelings of nostalgia, touch a sentimental chord, make a person laugh, or surprise a person. The ads may be funny, or sentimental or shocking, but they all connect with the target.” Ads that strike an emotional connection with their audiences can compel people to share the link to their social and messaging networks, which then enables the reach to grow exponentially and buzz to take a life of its own. For Helen Ng, CEO and CMO at Lock+Store, marketers should embrace the erratic nature of viral ad creation, and focus on the factors that they can control. “Social media campaigns that go viral tend to spontaneously capture the popular imagination at a particular point in time,” says Ng. “There is no formula for spontaneity but the objective is to surprise and delight.” In the case of Lock+Store, surprise and delight comes in the form of cute animals. In 2011, the brand launched a postcard series for the Society for the Prevention of Cruelty to Animals featuring abandoned animals posing on Lock+Store storage boxes. It got picked up in local media and the public response to the fundraising initiative was enthusiastic, says Ng. Marketers warn, though, that a viral ad cannot be oversimplified to merely cute photos of babies, animals and celebrities. While videos with these elements generally receive a higher click rate online and on social media, according to Chan, it can be argued that for every baby-animal-celebrity video that goes viral, a thousand others stay in obscurity. At the end of the day, these content are best used as tools working under a tightly crafted audience strategy to ensure maximum impact and message retention. “What’s more important would be ensuring that the key message is transmitted to your target audience. The marketing campaign would not have achieved its purpose if the audience does not recall the key message behind the campaign,” says Yap.
Event coverage: the great Okinawa Trade Fair
Learn more about Okinawa’s booming trade sector
What Singaporean investors can expect from Okinawa’s development Find out how the city’s 40% tax cut for new businesses is expected to lure investors.
hen Singapore businessman Alfred Ang was planning for business expansion in Southeast Asia, Japan was amongst his top considerations. Ang has been visiting Japan for 20 years, and he has always considered Tokyo, Osaka, Nagoya, and Kyoto to be the most conducive cities for business and development. He only viewed Okinawa to be a beautiful beach destination, but his attitude changed in 2013 when he met officials from the Okinawa Prefectural Government who were very active in beefing up the international logistic goods network of Japan’s southernmost prefecture to boost investments and tourism. Ang is the managing director of Rosen International, a supplier of Asian products such as kitchen wares and table wares, as well as healthy lifestyle products to hotels, restaurants, and airlines. He was 44 SINGAPORE BUSINESS REVIEW | MARCH 2015
“The Okinawa Prefectural Government is also supporting buyers financially to attend promotional events. ”
amongst hundreds of businessmen in Asia invited by the government to meet with suppliers in Okinawa in preparation for the inaugural 2014 Great Okinawa Trade Fair which was successfully held in November last year. He has since visited the island four times in order to attract customers interested in buying Okinawa products. “I found it a good venue to look for new supplier, new products, and new customers,” he said. Ang notes that they are benefiting from the reduced costs as a result of support from the Okinawa government. “For example, for every 300 kilos of cargo for exports, the freight cost is reduced to 110 yen per kilo from normally 300 yen per kilo,” he says. He adds that the Okinawa Prefectural Government is also supporting buyers financially to attend promotional events. “The government covers up to 50% of our cost as long as we have 50% Okinawa
products to promote,” he says. Rosen International recently exhibited at JCS Japan Fair held at Orchard last October. “The government has been trying to promote Okinawa products for the past 5 years. They are helping us keep the pricing competitive. We expect the Okinawa government’s support to continue in one or two years, or else what we have started won’t materialize,” says Ang. The Great Okinawa Trade Fair On a trip to Okinawa, Japan, for the inaugural Great Okinawa Trade Fair, Singapore Business Review (SBR) caught up with Keida Kimio, director, International Logistics and Commerce Division, Department of Commerce, Industry and Labor, Okinawa Prefectural Government, to talk about the region’s booming trade sector. The trade fair has become one of Japan’s largest international food
Event coverage: the great Okinawa Trade Fair “It only takes around 5 hours for goods to be transported from Okinawa to Singapore, versus 7 hours from Tokyo to Singapore. This is not common knowledge, even among Japan locals.”
business meeting sessions of its type, based on appointments made in advance. The participants include 200 exhibitor companies from throughout Japan and 161 buyer companies from 16 countries and regions. Singapore is the second largest participating country with 17 Singapore buyers, only slightly behind Hong Kong with 19. China is in third place, with 16 firms. Kimio says that the government has been promoting Okinawa as an international flight logistics hub for the past five years. “Okinawa’s major strength as a trading hub includes the fact that it is located in the vibrant southeast region of Asia. It is also the central point of Asia. Traders from Japan to Asia can make most of the location. It is a place where you can get almost anything from Japan,” says Kimio. According to Kimio, international cargo flies from Okinawa to 8 Asian cities 6 times per week. Within Japan, one can also fly easily from Okinawa to other places in the country. Kimio notes that there are currently 19 domestic flights inside Japan, from only 3 or 4 flights just five years ago. This year, some airlines have also started flying from Okinawa to Singapore following a deal between Singapore Changi Airport and the Okinawa Prefectural Government to establish new direct routes. A project office staff member adds that Okinawa has a 24-hour custom check for goods, allowing next-day delivery of goods – but unfortunately, most people do not know about the advantages of trading through Okinawa. “Okinawa’s [being] near the coast helps. It only takes around 5 hours
for goods to be transported from Okinawa to Singapore, versus 7 hours from Tokyo to Singapore. This is not common knowledge, even among Japan locals,” he says. According to Kimio, most of the products currently transported through Okinawa are IT devices from all over Asia. Second in line are food products from Japan. Tuna is exported mainly to Singapore, along with sea-grapes and peanut tofu. Kimio adds that the government is investing in and offering financial support to logistic facilities. To encourage companies to set up operations in Okinawa for both local and overseas markets, Kimio says they receive a 40% corporate tax concession. When they also set up their factories in Okinawa, the government provides financial support through subsidies, provided they meet certain conditions. “We will keep doing this for 8 years,” he says, adding that one Japanese firm is setting up facilities in Okinawa for Halal products. In April, the government will be opening a Singapore office to lure more inbound tourists and investments from Singapore, as well as to promote export products. Currently, the Okinawa government has offices in Shanghai, Hong Kong, Beijing and Taipei. Its Singapore office will be the first in South East Asia. Kimio says that Singapore is an important market to Okinawa because it is only 4 hours away. Singapore firms are mainly investing in food products. According to Ang, prices for Okinawa products are slightly cheaper than other products, but one of the challenges businesses are facing at the moment is that they cannot yet
sell them in supermalls in Singapore due to the high risk. “Okinawa products are not yet popular because there is currently lack of knowledge about them. I think it will take time to gain the trust of the market,” he says. Interviews with local businessmen SBR also spoke with local businessmen at the Trade Fair, who also highlighted the support they receive from the government, mostly in financial terms. Okashigoten, famous for Okinawa’s own beni-imo or purple sweet potato-flavoured tart, receives support for its promotional activities abroad. “The government covers 90% of our promotional cost abroad,” says Mitsuru Oshiro, sales director at Okashigoten. “We tried to do it all by ourselves two to three years ago, but it was very difficult and costly,” he adds. Okashigoten is conducting several food tastings in Singapore and Hong Kong. Oshiro says that the major challenge right now is keeping their prices competitive amid high tax rates. Yoshikatsu Yamakawa, CEO of ‘Shikuwasa’ farm company Katsuyama Shikuwasa, says that they are receiving 60% financial support from the government for purchasing and upgrading their facilities. Shikuwasa is a citrus fruit which is native to Okinawa. Yamakawa adds that they are currently investigating exporting their 100% extracted juice products to Taiwan as a trial market. Report by Krisana Gallezo; Photos by Lovelyn Labrador
Delegates at the Great Okinawa Trade Fair
SINGAPORE BUSINESS REVIEW | MARCH 2015 45
Analysis: mas’ policy easing
MAS lowers SGD NEER policy slope
Why did the MAS suddenly become aggressive in its policy easing stance?
HSBC says it’s more than just concern about the domestic inflation outlook owing to lower oil prices.
he MAS announced an unscheduled change of policy, stating that the slope of the policy band within which the SGD NEER is managed “will be reduced, with no change to its width or the level at which it is centred”. This is the first unscheduled Monetary Policy Statement since October 2001. The MAS justified this surprise decision in light of the strong decline in oil prices over the previous months, impacting the central bank’s inflation outlook, which it cut for both the core and headline measures in MAS’ statement. This is exacerbated by a change in the MAS’s expectations concerning the pass-through of higher wage costs to consumer prices by domestic businesses, which it now expects to occur in a more measured manner. Growth Concerning growth, the MAS main46 SINGAPORE BUSINESS REVIEW | MARCH 2015
tained the same outlook on global conditions, stating that the pace of growth will be uneven. However, it changed the phrasing concerning the impact of global growth on Singapore’s economy. Specifically, compared to the October MPS, it omitted the phrase that the improvement in global demand should “support” Singapore’s external-oriented sectors. This is contrasted with the previous phrasing: “the continued improvement in global demand should provide some support to the externaloriented sectors of the Singapore economy, such as manufacturing and trade-related services.” In the statement corresponding to its surprise decision, the phrasing changed to “looking ahead, the mixed outlook for the global economy will continue to weigh on the external-oriented sectors while the domestic-oriented sectors should stay broadly resilient.” We believe
“The MAS justified this surprise decision in light of the strong decline in oil prices over the previous months.”
that this phrasing is important to contributing to the justification of a softer appreciation of the currency, seeing that global conditions are “weighing” on Singapore’s exporting industries (note that manufacturing encompasses 20% of GDP), and hence impacting competitiveness. In recent weeks activity data showed that growth in 4Q was a bit softer than we and consensus were expecting. The advance estimate showed 4Q growth at 1.6% q-o-q saar (bbg: 3.1%) which brings 2014 GDP to 2.8% compared with our forecast of 3.0%. Note, however, that industrial production data released this week showed growth coming in higher than the MTI estimated, implying that the full year number may be revised upwards to 2.9%. For 2015, the MTI’s 2-4% forecast was maintained in today’s MAS statement. The inflation outlook is the under-
Analysis: mas’ policy easing “The MAS expects headline and core both to ease in H1 before rising in H2 as global oil prices recover.”
Oil prices expected to remain low in 2015
lying driver of today’s reduction in the slope. Specifically, expectations have changed dramatically with the tumbling oil prices compared to when the MAS last met in October. The decline in oil prices has led to sharp declines in broad import prices. Inflation Concerning the pass-through from the restructuring, the MAS maintained that “while the underlying cost pressures stemming from a tight labour market have remained; the pass-through to consumer prices has to date been slightly weaker than anticipated.” This echoes the phrasing in the December CPI statement when the MAS alluded for the first time that the pass-through of higher wages is not as seamless as the central bank itself earlier expected. It changed its phrasing to expect an “uneven” pass through in coming months. Given that energy prices are
included in MAS-style core inflation, the measure moderated to 1.5% over the past two months – somewhat below MAS’s previous forecast of 2-3%. While we accepted that lower oil prices would have a significant disinflationary impact, we did not believe this alone would warrant a sudden change in policy given that there may be some food inflation in coming months due to disruptions in regional food supplies, as well as the fact that services inflation has been steady. Moreover, with the possibility that retailers eventually pass through some costs to consumers as margins erode over time (even if slowly and unevenly), there is a chance that the impact of higher wages is still to materialise. This led us to expect core CPI to remain in the 1.5-2.0% range in the months before the upcoming April meeting. In addition to the drop in oil prices,
there was also the impact of additional medical subsidies as a part of the Pioneer Generation Package, which led to a one –time reduction in healthcare prices, impacting core CPI. However, we think a crucial factor in the change in the inflation outlook is due to a more implicit acknowledgement by the MAS that the slower growth environment will limit how much pass-through of wage costs can occur. Headline CPI is now expected to come in at -0.5 to +0.5% (+0.5 to +1.5% previously) while core is expected to be 0.5-1.5% (from 2-3% previously). The MAS expects headline and core both to ease in H1 before rising in H2 as global oil prices recover. However, the central bank expects oil prices to remain low in 2015 and going forward expects them to stay much lower than the USD93 from last year. Implications It is well known that Singapore’s monetary policy stance is first and foremost an inflation fighting tool. The current stance was calibrated to guard against the expected inflationary impact of the restructuring process. However, it started becoming clear to us in 2H14 that this pass-through was not happening to the degree many, including the MAS, expected. Seeing that this has been one of the central premises of the entire monetary stance, it is perhaps because of this change in expectations that the MAS is now comfortable with a change from this policy stance. Note that this policy was first adopted in the April 2011 MPC meeting. More recently, the decline in energy prices contributed strong disinflationary pressure to economies around
Inflation outlook has softened according to MAS forecasts
The SGD NEER has dropped towards the bottom
Source: CEIC, HSBC
SINGAPORE BUSINESS REVIEW | MARCH 2015 47
Analysis: mas’ policy easing the world, resulting in several central banks adopting an easing bias. This has perhaps led to concerns that Singapore’s exports – both in goods and crucially in services as well – would feel competitive pressure, especially from other Asian economies. We believe the picture is somewhat complicated, seeing that productivity growth (which the restructuring process has been trying to increase) is somewhat stronger in the externaloriented industries. The issues facing external-oriented industries are largely structural, such as wage differentials. Given our inflation forecast, which shows core inflation staying firmly over 1.0% in 2015, and expectations for growth in 2015 to be relatively steady from 2014, we do not believe further easing is necessary at April’s meeting, based on economic fundamentals. However, there is a risk that this is a start of an easing cycle, with a further moderation to a flat slope, or even a widening of the policy band. The MAS was far more aggressive in its policy easing than we had expected and the market was clearly surprised by its announcement, with USD-SGD rallying around 150 pips
“The urgency and the magnitude of the decision reflects more than just concern about the domestic inflation outlook owing to lower oil prices.”
MAS lowered slope to lowest lovel since GFC
Source: CEIC, HSBC
Higher currency forward points
Source: Bloomberg, HSBC
48 SINGAPORE BUSINESS REVIEW | MARCH 2015
Core inflation expected to stay over 1%
on the initial headlines, while the SGD NEER fell initially by around 1.1% according to our model. Our estimate of the NEER is now trading around 0.7% above the bottom of the band. We believe the SGD NEER will fall to the lower bound of the band before the April MPS, as the market will speculate that this is not a one-off easing decision, but the start of an easing cycle. There is a risk that the MAS could ease further in April, by flattening the slope again (to a 0% slope), via a recentring of the band lower, or by widening the band. This decision means the MAS wants to open up room for outright depreciation in the SGD NEER in 2015. A 0.5% slope implemented today, assuming no other changes in band parameters in the rest of year means the SGD NEER can depreciate 1.3% from where it was trading at end-2014. Had MAS left policy unchanged in 2015, even if combined with a drop in the SGD NEER to the lower bound, the SGD NEER can only at best manage zero percent appreciation in 2015. Had MAS waited till April 2015, the maximum depreciation would be 1%. We believe the urgency and the magnitude of the decision reflects more than just concern about the domestic inflation outlook owing to lower oil prices. We believe MAS is more concerned than it let on about the global economy and disinflationary forces.
Indeed, the timing and backdrop of the recent decision is somewhat reminiscent of events in H2 2011. In August 2011, the Singapore’s money market rates (SOR) fell into negative territory, similar to what happened in Switzerland. At that time, both markets saw large inflows due to strong demand for safe haven assets amid the European debt crisis. After failing to deter inflows, the SNB introduced the EURCHF floor in September 2011, and MAS lowered the policy slope (from 3% to 1%, by our estimates) in October 2011. One key difference between these periods lies in Singapore’s weaker economic fundamentals today. First, the core inflation outlook for this year (at 0.5-1.5%) is lower than what the MAS was projecting for 2012 in its October 2011 MPS (1.5-2%). Second, economic growth is also likely to be more subdued this year (2-4%) than projected in 2011-12 (3-5%). Third, the SGD is even more overvalued today than in 2011 as rapid REER appreciation (engineered in part by MAS policy) over the past few years has not been matched by productivity gains (which have been dismal). As such, we believe the new slope setting is likely to be lower than the 1% slope MAS shifted to in October 2011. By Joseph Incalcaterra, Economist, HSBC Global Research