Issue No. 51
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couRtiNg cREDit WhERE it’s DuE
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FROM THE EDITOR While working on this issue of Singapore Business Review, we found out that interestingly, law firms have now knocked off the banks as the heavyweight players in the battle for grade A office space. The lack of growth in hiring among banks and the relaxing of laws to allow international law firms to set up in Singapore spurred the change in the market trends. So how will this affect the rental rates? For our second attempt to rank Singapore’s most important industries, we bring you our top 25 law firm rankings for 2012 in this issue. As the government awarded licenses to 6 foreign law firms this year, do they now have an upper hand over the local law firms? We also probed Singapore’s top companies in hopes of giving you a glimpse of what is happening in Singapore’s ever-busy corporate world. In this issue, you will find that Singapore Airlines’ budget airline threat may be easing, giving Singapore’s queen of the skies some room to reposition itself. But how exactly can SIA do that? On the other hand, UOB has a special challenge to integrate its regional acquisitions and emerge as the true champion regional bank of Singapore over the next two years. The question is, will it make it? We have a lot in store for you in this issue, so start flipping the pages and find the answers to these questions. Enjoy the issue.
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SINGAPORE BUSINESS REVIEW | JANUARY 2013 3
40 ANALYSIS Here’s how Islamic banks can
overcome scale disadvantage
FOCUS 18 COMPANY UOB bets the bank on
12 FIRST an end to the budget threat for sia
FIRST 10 An end to the budget threat for SIA
18 UOB bets the bank on regional plays
11 Exit bankers, enter lawyers
Fierce competition outside Singapore will put the bank through its paces in 2013.
11 New landmarks for old train stations 12 Rising tide floats ships
36 Asian airlines heading for a profit
26 Dealmakers 24 Legal Briefing 48 Life & Style 50 Numbers
OPINION 17 Age is an advantage 44 Is Singapore really the least emotional country in the world?
Published Bi-monthly on the Second week of the Month by Charlton Media Group #06-09 E, Maxwell House 20 Maxwell Road 4 SINGAPORE BUSINESS REVIEW | JANUARY 2013
Cost advantage over rivals deteriorate as currencies continue to appreciate.
40 Here’s how Islamic banks can
overcome scale disadvantage
Find out more about the latest issues in Islamic finance including regulations, Shariah compliance, and the Islamic banks’ severe scale disadvantage vs conventional banks.
For the latest business news from Singapore visit the website
SINGAPORE BUSINESS REVIEW | JANUARY 2013 5
Agenda PEOPLE | PLACES | EVENTS | OPPORTUNITIES
SIXTH SENSE Established in 2001, Sixth Sense is a recognised public relations consultancy agency specialising in PR Consultancy and Marketing Communications services for clients in the Food & Beverage, Hospitality, Arts and Consumer Lifestyle industries. The creative and dedicated consultants at Sixth Sense are apt at crafting strategic PR campaigns and developing marketing communications tools. You can expect a high standard of professionalism, swift execution, prompt delivery and above all a dedication to personalised client servicing. Its current portfolio of clients includes Cold Storage, Guardian Health & Beauty, Goodwood Park Hotel, Carlsberg and Paradise Group. Visit www.sixthsense.com.sg
HOLCIM Growing demand and complexity in construction industry require smarter solutions to provide better foundation for society’s future. Holcim specialises in innovative building materials with 100 years of accumulated expertise in construction industry. The new Centre of Excellence in Singapore aims to further develop application-based innovation and propel the industry towards a more sustainable construction through resource- and energyefficient solutions. Visit their website on www.holcim.com. sg or call them at 6265 1933 to explore opportunities for collaboration.
Nynas’ business is specialised oil applications – using oil to create sustainable value. It is a global technical partner providing customers with a wide range of products for many demanding applications. To date, Nynas has around 860 employees with several production facilities and offices in more than 30 countries. Together with an effective distribution system, this generates a EUR2 billion turnover and history of stable growth. Nynas is a widely recognised brand and a leader in its key markets – the developer and global technical leader of the premium specialty oils market. Learn more at www.nynas.com or contact us at the Singapore office.
new 12-month MBA PLACES
Singapore Turf Club Looking forward to embark on a voyage of culinary pleasure at lunch, or enjoy a spectacular night after work with friends or business associates? You can adjourn to the chill-out lounge at V (China Square, Level 3). V, a premier hospitality destination by the Singapore Turf Club. The perfect venue for any meet. Please call 6879 1979 or email business_ firstname.lastname@example.org for more information. 6 SINGAPORE BUSINESS REVIEW | JANUARY 2013
FOR MORE INFORMATION on EVENTS AND ADVERTISING
NTU’s Nanyang Business School launched a new Master of Business Administration (MBA) curriculum this year to address the needs of the industry today and in the future. Starting August 2013, students will experience a 12-month program that is more strongly focused on leadership, deeper industry application, and with emphasis on corporate governance and sustainability in Asia. Now accepting applications – Round 1 closes 31 Dec 2012 and Round 2 ends 31 Mar 2013. Contact us at email@example.com. sg or call 6790 6183. Scholarships available to select candidates.
SINGAPORE BUSINESS REVIEW | JANUARY 2013 7
Agenda PEOPLE | PLACES | EVENTS | OPPORTUNITIES
Securitas: Protecting Homes, Workplaces, and the Community since 1934 Securitas is a knowledge leader in security. Its 300,000 employees in 51 countries across North America, Europe, Latin America, Asia and the Middle East protect homes, workplaces and the community. Securitas AB has been listed on the Stockholm Stock Exchange, now NASDAQ OMX Stockholm, since 1991. Securitas’ core business is security services which are categorised as specialised guarding, mobile security services, monitoring, and consulting and investigation services in addition to technical solutions. The security services are customised to suit individual customer’s needs, in order to deliver the most effective security solutions.
KVH KVH, Asia’s Information Delivery Platform, is launching state-of-the-art network and data center offerings for businesses in Singapore & Hong Kong in Q1 of 2013. Having established its reputation in serving the exacting needs of the financial services industry, KVH is broadening its portfolio to satisfy the demands of the financial, media, and manufacturing industries. KVH is offering data center, cloud, storage, network solutions, and a range of IT-managed services by leveraging its highly secure, low-latency global network and international POPs that connect across Asia, Europe, and the US. For more information, please contact us at (65) 6590 9008, Email:firstname.lastname@example.org
Hilti, a global company that provides products for the construction and oil & gas industry in Singapore, has received 5 Red Dot product design awards in 2012. The Hilti TE 60 Combihammer with Dust Removal System was named “best of the best” as a comprehensive product system. Additionally, awards were given to their new electric wall saw, cordless drill/driver, cordless grinder, and automatic tripod. The Hilti design team was awarded in 2010 with the highest honorary award in the world of design, “Red Dot Design Team of the Year,” for continuous design innovation.
RESOURCES GLOBAL PROFESSIONALS PLACES
LONG BEACH SEAFOOD RESTAURANT Long Beach Seafood is the original creator of Singapore’s world-famous and best Black Pepper Crab. Established in 1946 at Bedok Rest House along Old Bedok Road, the restaurant has been conferred several prestigious culinary awards and accolades. For reservations call MAIN 6445 8833 Dempsey 6323 2222 IMM 6566 9933 LB UDMC 6448 3636 KING 6344 7722. 8 SINGAPORE BUSINESS REVIEW | JANUARY 2013
FOR MORE INFORMATION on EVENTS AND ADVERTISING
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SINGAPORE BUSINESS REVIEW | JANUARY 2013 9
FIRST started doing. “We attribute the loss to weak global air cargo demand, as customers are focusing more on low-cost transportation alternatives. We estimate SIA’s cargo business will remain loss-making in FY14F,” says Lee. Cargo a segment of weakness Cargo is only 17% of the company’s revenue but its outlook remains bleak right through until 2014. Maybank Kim Eng analyst Bernard Chin notes that due to the depressed cargo segment, the company has decided to remove one of its 13 freighters from service from January 2013 to May 2014 to rationalise capacity. “Despite this move to stem the bleeding, we still see cargo as a segment of weakness in the nearterm for SIA.” Chin adds that SIA’s Budget airline long-haul segment load factor of growth fell 79.8% was exactly at break-even, to just 20%. whilst long-haul passenger yields at SG11.4cts/pkm were the lowest in more than two years. This low record was last seen only during the crisis-hit year of FY3/10. Chin reckons SIA will need to continue promotional fares to22,stimulate November 2012 demand which will continue to Nomura | Singapore Airlines depress yields.
An end to the budget threat for SIA
ingapore Airlines has taken somewhat of a battering over the last five years, stuck between tough economies in the US and Europe and the rise of budget airlines. Yet the latter threat may be easing, giving Singapore’s queen of the skies some room to reposition itself. In 2007, just 10% of flights into Changi were from budget carriers, but by 2011 they accounted for a quarter of all flights. This is now in line with worldwide averages which are 26% - a stark contrast to AirAsia-dominated Malaysia where the number is closer to 50%.
Fig. 5: SIA – Forward P/BV and ROE
Fig. 6: SIA – FY14F earnings sensitivity
1Q08 2Q08 3Q08 4Q08
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 2Q11
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clearly on SIA’s mind. Its budget long-haul brand, Scoot, operates just 4 birds but has 20 more on order at present. Qantas’ decision to switch its hub from Singapore to Dubai and partner up with Emirates also gives SIA some breathing Nomura | Singapore Airlines room to shore up the Aussie market. This was made apparent when SIA Key focus charts acquired a 10% stake in Virgin AusKey focus charts tralia for $135mn. Fig. 1: SIA – Quarterly earnings, passenger and cargo yields Fig. 2: SIA – Quarterly earnings breakdown SIA – Quarterly earnings, passenger and cargo yields There is still a lot of Aussie trafFig. 1: SIA – Quarterly earnings, passenger and cargo yields Fig. 2: SIA – Quart 500fic going to China and other Asian 500 35 500 400countries that cannot effectively be 500 35 300 400 300serviced from Dubai, and SIA could 25 300 300 200pick up a lot of this traffic. Buying 25 100 15 200 100into local airlines to strengthen its 100 15 feeder routes could also be a strategy 5 -100 100 0 Flying budget airlines for the two big markets of India and -100 0 5 Airline Silkair -300 But Singapore has a stronger busiChina. Quarterly pre-exceptional NPAT (S$ mn) - LHS SATS Engineering services Airlin -300 Passenger (cts/RPK) - RHS Cargo Others ness market and SIA does not suffer Certainly SIA has the cash on -500 Quarterly pre-exceptional NPAT (S$ mn) - LHS SATS Cargo (cts/RCTK) - RHS Passenger (cts/RPK) - RHS Carg from the same problems as MAS, so Source:hand - $3.7bn to make such a play Company data, Nomura – estimates Source: Company data, Nomura estimates. Note Scoot numbers included in “Airline” -500 Cargo (cts/RCTK) - RHS the more likely scenario is that it will if the opportunity came up. Source: Company data, Nomura estimates Source: Company data, N Source: Company data, Nomura estimates start holding its own against budget Fig. 3: LCC passenger market share at Changi Airport – now Fig. 4: SIA – Annual passenger and cargo yields – we expect incursions into its market share. Hemorrhaging money at global averages; hence, pace is likely to slow only a gradual recovery Fig. 3: LCC passenger market share at Changi Airport – now Fig. 4: SIA – Annu Annual passenger and cargo yields More encouraging for SIA is the Currently a third of SIA’s seats at global averages; hence, pace is likely to slow only a gradual rec Passenger (cts/RPK) - LHS fact that budget airline growth fell to 30% are to South East Asia and the sub LCC % share - Singapore 40 13 Cargo (cts/RCTK) - RHS 39 just 20%, whilst full service carriers continent where its competition is 30% 13 LCC % share - Singapore 13 25% 38 12 still grew, albeit at 8% this year. strongest with budget airlines. SIA’s 13 37 25% 12 12 Nomura analyst Andrew Lee notes 20% biggest problem is not with pas36 11 35 12 that growth of budget airlines could sengers but with freight. Its cargo 20% 34 15% 11 11 continue to slow or stabilise, partly division, which runs 13 planes, 33 15% 10 11 due to Tiger’s reduced capacity continues to hemorrhage money. 32 10% 10 10 31 expansion plans. Tiger currently has Nomura estimates it will lose a 10% 9 30 10 5% an 8% share of seat capacity, and further $99 million in the first half of 9 5% Singapore is still a business desti2013 and all management can really 0% Source: Company data, Nomura estimates 2008 2009 nation. Defending market share is do is 2007 mothball planes, which2010 it has 2011 0%Company data, Nomura estimates Source:
Source: Company data, N
FIRST sq ft colossus at One north, due to come on line in 2013.
Exit bankers, enter lawyers
n the revolving door of Singapore’s property market it has traditionally been the banks who have been the heavyweight players in the battle for grade A office space. Typically a major bank could be expected to take half a dozen or more floors in a new office building, and slap their name on the tower to boot. But the lack of growth in hiring among banks, and the corresponding lack of new office space required, has left industry watchers scratching their heads and wondering just who will take up new office space. The prime movers CBRE’s Moray Armstrong reckons law firms are now the prime movers in new space take-up in Singapore, spurred by the relaxing of laws to
allow international firms to set up in Singapore. Six foreign firms were granted license in 2008 with a new set to be allowed in from 2013. (See our law firm rankings article on page 32). Increasing office take-up The average office space taken up by a large law firm has also increased from just 10,000 sq ft six years ago to 19,000 sq ft today. Australian companies setting up in Singapore seem to be one source, especially in the minerals, mining and energy sectors. There are also a number of larger companies in the pipeline to set up regional headquarters, which should help. However the trend to seek lower rates by decentralising is set to continue with Metropolis, a 1 million
Rental rates struggling to rise CBRE estimates it will be 80% taken up by early next year vs zero signed up as of November this year. As a result, rental rates in the CBD are struggling to rise above the S$12 psf mark. Maybank Kim Eng analyst Wilson Liew calculates that until 2017 there will be Grade A completions in the Central Business District amounting to 3.2m sq ft of space. Jones Lang LaSalle notes that leasing transactions through 2012 were mainly supported by smaller office tenants taking spaces from 1,000 to 10,000 sq ft, and some CBD clients are looking for cheaper space in the burbs. Raffles Place currently stands with a vacancy rate of 10.3%, so presumably some of these law firms can move in there.
Office space taken up by a large law firm has also increased from just 10,000 sq ft six years ago to 19,000 sq ft today.
Profile of future office demand
Source: CBRE Research, IMA, Oxford Economics
New landmarks for old train stations Come 2017 Singapore will see the rise of two fantastic new landmarks, both of which were a result of the land swap with the Malaysian government over the Tanjong Pagar train station. The Bugis site will be called DUO while the sister site will be called Marina One located at Marina South. The $7b Marina One has already broken ground even before an official unveiling of the full design. It will boast a GFA of 3.7m sq ft, with two office blocks with ~1.9m sq ft of prime office space, two residential blocks with 1,042 units and a retail podium of around 85,000 sq ft in NLA. When completed in 2017, Marina One
will join the likes of Marina Bay Financial Centre and Asia Square Towers 1 and 2 in the heart of Singapore’s New Downtown. The smaller DUO development at Bugis is a $3b development which will comprise 660 prime residential units, 580,000 sq ft of Grade A offices, a five-star hotel and 80,000 sq ft of retail space. Maybank Kim Eng analyst Wilson Liew says the residential units may be launched as early as 1H13, but preleasing of the commercial elements may begin only in late 2016. “DUO will offer prospective tenants a brand new option as the existing schemes in the Bugis area tend to be older, Grade B buildings.”
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Rising tide floats ships
to deliver strong earnings, but how strong the earnings will be depends on their exposure to spot cargo, particularly on the trans-Pacific trade. The global outlook for trade is now stabilising with America on the mend and Europe only marginally worse. So far this year, according to Container Trades Statistics and Zepol, Asia-Europe cargo volume declined 4.2% to August while trans-Pacific cargo volume rose by a marginal 2%. Next year should be better, so perhaps a case of the calm after the storm.
Rates on the route are up roughly 22%.
Figure 6: Transpacific Contractual Rates vs Spot
Figure 6:longer Transpacific Ratesand vs Spot Figure 7: CCFI t takes a tough ship owner and fighting Contractual for market share Rates Rates Trans-Pacific Contractual Rates vs Spot Rates a good understanding of game capacity discipline remains intact. (US$/feu) (US$/feu) 1,400 theory to lay up cargo ships in According to Alphaliner, idle 3,100 3,100 1,300 the hope that others will do the same tonnage accounts for 3.7% of 2,600 1,200 and freight rates will climb. Yet 2,600 total fleet, which is much Spot better Spot rate rate 1,100 that is exactly what appears to be 2,100 than predictions made during the 2,100 happening in Asia where many ship crisis, so shippers can afford to 1,000 1,600 1,600 owners have simultaneously cut the lay up. “We will see idle capacity 900 1,100 number of ships on the Asia-Europe continuing to edge up from late-Oct 1,100 800 Contractual cargo Contractual cargo leg. 12 on the back of more capacity cut 700 600 600 Danish shipper Maersk aimed programmes,” says Li. 600 Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct 09 10 10 2006 10 2007 10 112008 11 2009 11 11 12 2012 12 12 to cut its fleet capacity 25% in the 09 10 10 10 10 11 11 11 11 12 12 12 12 2004 2005 2010122011 Source: Shanghai Shipping Exchange, UOB Kay Hian last three months to Christmas, and Source: GoodShipping newsExchange, for NOL Source: Shanghai UOB Kay Hian Source: Shanghai Shanghai Shipping Shipping Exchange, Exchange, UOB UOB Kay Kay Hian Hian then other major shippers from the Even the trans-Pacific route to Figure And TP (US WC) Rates CKYH group and the G6 Alliance Figure 8:America AE And TP (US WC) signs Rates of Figure 8: 9: AE Intra-Asia is showing Intra-Asia Rates Rates also announced capacity cuts from (US$/teu (feu)) (US$/teu) (US$/teu (feu)) improvement. This is good news for 3,000 500 10 to 20%. As a result, rates on the 3,000 Singapore-listed shipping companies 450 SH-S'pore route are up roughly 22%. 2,500 Shanghai-US West SH-East Coast such as NOL which West posted 2,500 Shanghai-US Coast a 400 Japan 350 meager US$50m net profit for 3Q12 2,000 2,000 300 Declining capacity tonnage mainly based on old contractual 1,500 250 Lawrence Li, a shipping analyst 1,500 rates it locked in. But with spot 200 1,000 1,000 SH-Korea Shanghai-Europe with UOB Kay Hian, notes that rates Shanghai-Europe climbing and contracts set for 150 100 Asia-Europe capacity tonnage is 500 renewal, it could be smother seas 500 SH-T W 50 SH-HK expected to decline 18% due to ahead for Singapore’s shippers. 00 0 aggressive capacity cuts, and is Li says most carriers turned Oct0909 Apr Apr10 10 Oct Oct10 10 Apr Apr 11 11 Oct Oct 11 11 Apr Oct Apr 12 12 Oct Oct 12 12 Oct 09 Apr 10 Oct 10 Apr 11 Oct 11 Apr 12 Oct 12 a sign that shipping giants are no around in 2Q12 and he expects them Source: Shanghai Shipping Exchange, UOB Kay Hian
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Source: Shanghai Shipping Exchange, Kay Source: Shanghai Shipping Exchange, UOB UOB Kay Hian Source: Shanghai Shipping Exchange, UOB Kay Hian Hian
Figure 7: CC 1,400 1,300 1,200 1,100 1,000 900 800 700 600
Figure 9: In (US$/teu) 500 450 400 350 300 250 200 150 100
50 0 Oct 09
IndoChine flying high
challenges. “Competition is a good thing because it keeps us sharp. It forces me to ask myself, ‘Who are my competitors and can I outrun them, and most importantly, what must I do to prevail?’ The market is constantly mutating and we must mutate with it, move with the market - it is as simple as that.”
Mike Ma, founder of IndoChine, shares some of the secrets to his success.
or a business to survive in the cutthroat restaurant/ bar industry for 13 years is saying something; for it to expand and flourish is truly tremendously significant. IndoChine is one such example. Mike Ma is a true entrepreneur, he personifies the Singapore Story – self-made, cosmopolitan, confident, and at times cavalier. But you can’t be a success without being a risk-taker – and a feel for timing helps too. An Australian entrepreneur of Lao descent, Ma has placed everything that represents him as a person into the development of the IndoChine brand. Each outlet enjoys a common thread of Indochinese décor and cuisine and a stylish deference for the region’s history and antiquities. Nonetheless and amazingly, every outlet somehow remains a wonderfully unique journey into the rich mystique of Angkor and Khmer culture – yet with a thoroughly modern twist. With guests enjoying the fading sunshine and Sirocco-like southeasterly breeze at the new flagship outlet crowning the largest, 58-metre SuperTree at Singapore’s Gardens by the Bay, SBR caught up with the energetic Ma. Just days before the official opening, IndoChine SuperTree’s wait-staff were negotiating an obstacle course of 50 contractors with grinding power-tools, but Ma has been in this position many times, and couldn’t be more relaxed about his exciting new investment. It hasn’t always been easy, Ma’s ridden countless booms and busts, exaggerated in his industry more than most others. “People still need to go out, eat, drink and socialise, even when times are bad – maybe even more so because the going is tough - they just adjust their purchasing preferences,” says Ma. Choosing the perfect spot “A major factor that has assisted our success in good times or bad is our choice of locations; we’ve chosen locations that are not in the centre of hotspots but on the fringe. After choosing the right property, it is imperative to get the basics right: our branding is unique, food is great, and although there’s a common thread, different locations have different culinary themes.” Ma’s survivability comes from his stoic ability to ride the
World’s first revolving outdoor bar and restaurant Conforming to Singapore’s national obsession with “firsts”, the rooftop of SuperTree boasting panoramic views of the massive reclaimed Marina South is the world’s first revolving outdoor bar and restaurant. The rooftop (one spiralling flight above the main bar) is spectacular and is set to hit best bars in Asia lists before too long. Not content with the ambitious SuperTree project and interests as far afield as Hamburg, Ma has entered into hospitality with the launch of IndoChine’s Resort & Villas, Phuket. “Phuket is perfect. There are a dozen daily flights from Singapore, Thai food is great and infrastructure is good. The location of the resort itself is fantastic, it appears to be removed and peaceful yet it is only a seven-minute walk from the nightlife hotspots of Patong.” The resort has everything, mountain views, sunset views, forest, beach and breeze, and is multi-faceted with condominia, studio apartments, boutique rooms and serviced villas. “Reinvention through sustainability is our philosophy,” adds Ma. “So we keep moving with the times and make sure we stay relevant.” SuperTree in particular has a “botanic” gardens feel including a neo-Classical theme designed by the renowned Ming Tan. “We conceptualised a Classical, decadent appearance in the keeping with the Gardens, but also abiding by the rules of sustainability.” At IndoChine there are no endangered species on the menu, furnishings are manufactured with quality reusable materials so as to not add to landfill, and green ‘wood’ made from waste wood and rice husks is used for décor. Ma’s belief in the virtues of sustainability is paying off. Waterfront opened 11 years ago and still appears fresh and attractive. IndoChine Club Street (the building housing it is owned by Ma’s property development business) is a poster-boy for the URA’s world-famous gentrification programmes. “The message is simple - every time you go to an IndoChine, the experience is unique. Elegant, relevant, individual and niche,” concludes Ma, breeze and darkness enveloping the “treetops” of Singapore’s southern coastline. SINGAPORE BUSINESS REVIEW | JANUARY 2013 13
Price-check at Sheng Siong
arring biting dogs, delivering the post should be a simple and profitable business. Like many businesses in Singapore, it is finding that its costs are rising faster than its revenues, and profits are being squeezed. Its latest report card showed that expenses grew by 13% whilst revenues were up by only 9%. It still posted a creditable 7.3% increase in net profit for the third quarter, but operating margin decreased from 28.5% to 28.1%. Short of raising the stamp price, the company will have to find other ways to save cash. It is already moving its customer support to the Philippines and India, and plans to invest in some new sorting machines. What people will be watching is what the company does with its cash pile of $125 million. It has embarked on an acquisitions spree over the last two years, spending $75 million on buying companies such as DataPost, a provider of business printing and mailing solutions. It also raised a further $350 million in bonds back in March which will boost its war chest. But some analysts worry these acquisitions may end up being more of a burden than a boon. Sachin Mittal, an analyst with DBS, reckons that as SingPost does not have a controlling stake in some of the 8 companies it has invested in, the mix may be too widespread. “This may leave Singpost at the mercy of local managements of these companies.” If SingPost has a jewel in its crown, it could well be its property portfolio which some analysts reckon could be sold or redeveloped.
outlets that opened this year and checked out two previously non-performing stores to see if they are now up to scratch. They also sought to verify the claim that “Sheng Siong’s prices are the street’s lowest.” So what did they find on the tours of the fruit and vegetable sections? If you were expecting a couple of old aunties at the checkout with an abacus, you would also be wrong. In the outlets visited by the Maybank Kim Eng team, all dry goods and a number of fresh food items have electronic price tags and barcodes attached, whereas a couple of promotional items have iPad-sized tags. “Offering the lowest prices in Singapore’s supermarket hemisphere, Sheng Siong impresses us with its willingness to invest in technology to improve efficiency.” So what did the canny research team price-check? Two bathroom rolls (not sure if luxury, 2-ply or bargain), two liters of oil, and five kilograms of rice. And the verdict? “It is no surprise to us that Cold Storage products command a 15-30% premium over those from NTUC FairPrice and Sheng Siong. We find that Sheng Siong’s prices for staples are the lowest compared with hypermarket Giant and NTUC FairPrice.
Muddying Sheng Siong’s waters Amidst all the letters and lawsuits surrounding Muddy Waters and Olam, one local brokerage decided to see if all was well in fruit and vegetable land and so paid an undercover trip to Sheng Siong, Singapore’s up and coming supermarket brand. Alison Fok and her bargain sniffing team descended on three
Courting credit where it’s due Now that Terry O’conner and the team have finally gotten the Courts IPO away, raising $137 million in the process, the real work begins of using
the new cash to expand into Indonesia. One magic ingredient in the Courts Asia recipe is its ability to credit finance customer purchases. Courts offers credit facilities to its customers at its Singapore and Malaysia stores via an instalment payment scheme over a period of up to 60 months. The scheme, called the Courts Flexi Scheme, is particularly helpful to customers who are unwilling or unable to make full or large cash payments upfront, or are not able to secure credit from other third-party credit providers under similar terms. This helps boost CAL’s sales. In FY Mar 2012, 9% of CAL’s sales in Singapore and 62% of sales in Malaysia were through credit sales, notes Permada Darmono, an analyst with HSBC. Given the group plans to expand in Indonesia, it can be assumed that credit sales would likely make up an even larger proportion than Malaysia. “In our visits to Courts stores in Singapore, we found that they charge up to 28% p.a. in service charges for the Courts Flexi Scheme as well as processing fees. Around 36% of CAL’s total Group sales in 2012 were derived from credit sales as such it forms an important element of CAL’s overall business.” By providing these services in-house rather than outsourcing them, Parmodo adds that CAL is able to fully retain the fees charged for these schemes which are a key source of profits.
SingPost’s burgeoning costs
The Postman fails to deliver SingPost’s costs are rising faster than its revenues, and profits are being squeezed.
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Check out BHP Billiton’s new HQ in Singapore
HP Billiton’s 21,000sqm marketing headquarters in Singapore was designed by Geyer. BHP Billiton’s office supports greater collaboration, efficiency, operational intelligence, and design relevance for the duration of their 10-year lease. The design empowers local employees by providing a spacious open plan solution that is supported by an extensive selection of well organised communal spaces. There are areas within the project that are shared across the entire organisation for all people to embrace, both in the external-facing areas of the Concierge level and the internal heart of the project, the Padang level. The design team at Geyer comprises around 100 people across 6 studios Sydney, Melbourne, Brisbane, Perth, Singapore, and Wellington.
Photos by Owen Raggett
SINGAPORE BUSINESS REVIEW | JANUARY 2013 15
co-published Corporate profile
Stalled Western economies and Eurozone crisis continue to affect Singapore Singapore payment default rate fails to improve as economy slows.
Michael Frigo, Atradius Country Manager – Singapore
“The latest Atradius Payment Practices Barometer focuses on the key economies in the Asia Pacific.”
ith the latest economic figures showing that vital export markets, particularly in Europe and the USA, are still struggling to make any real progress, it’s of little surprise that our own economy in Singapore recently recorded a contraction of 1.5% for the third quarter, narrowly avoiding a ‘technical recession’. With depressed export markets creating reduced demand and a recent slowing of Singapore’s extensive manufacturing base, there has been talk of whether the Monetary Authority (MAS) should relax its monetary policy and weaken the Singapore dollar (SGD) to make exports less expensive. With all economic information such as this, it’s always important to look behind the headlines and statistics to get a clearer picture of what’s really happening and explore how the economic environment is affecting Singapore businesses. The latest Atradius Payment Practices Barometer focuses on the key economies in the Asia Pacific region and provides one method of exploring the current business environment, looking at payment practices, how companies trade and what issues are present. Singapore payment default rate fails to improve Of all Asia Pacific markets, Singapore recorded the highest export payment default rate of 7.3% and the second highest domestic default rate of 7.0%. This is quite a marked deterioration over the export and domestic
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figures recorded 12 months ago, where they were shown as 4.3 and 4.4% respectively. These current results are also around 2% higher than the individual averages for the APAC region and for North America, while they’re more than 4.0% higher than those reported for Europe. If nothing else, this provides further evidence that export trade has become more challenging, not just for Singapore but also across all major APAC countries. Hong Kong, India, and Australia’s export default rates all fall within a band between 5.7% and 7.1%, which are higher than 2011. For businesses in Singapore, the picture on late payments provides little comfort with 31.3% of domestic and 33.6% of foreign business invoices remaining unpaid after the due date. Of these, 53.5% are more than 16 days overdue. This is slightly higher than the average for the APAC region of 50.1%, with the corresponding average figures for Europe and North America coming in at 47.9% and 50.8% respectively. Slightly better news comes from Singapore’s DSO (days sales outstanding), which at an average of 47.4 days is broadly in line with the 44-day average for the APAC region, while North America and Europe produced respective figures of 42.7 and 48.9. However, when Singaporean companies were asked whether their DSO levels had changed over the past 12 months, more than 35% said that they had experienced an increase, which is almost five times the number of those
that reported a reduction. This suggests that payment delays are not only a common feature across Singapore and APAC generally but they are also on the increase. The effect of delayed payments It would be simple to view these figures as general statistical information, yet the impact on businesses as a direct result of payment delays and defaults can be significant. In addition to the extra costs associated with the collection of late payments, the financial strain and cost of the delayed cash flow and increased capital provisioning can notably affect a business’ performance and that is before the impact of a bad debt is considered. To encourage early payment and reduce credit risk, more than 60% of Singapore companies use payment discounting even though this is not always acceptable to purchasers. This can have the effect of reducing sales if it is not accepted or profitability if a large discount is provided. A more economical solution is the use of credit insurance to help improve cash flow and protect businesses from the risk of payment delays and default and to improve businesses as part of their credit management process. To explore how credit insurance can help support your business, please e-mail me at email@example.com. Also, if you’re keen to find out more about payment practices in Singapore and around the globe, visit www.atradius.sg
richard branson Age is an advantage
“Older employees who have learned how to inspire and lead people, and how to remain persistent and optimistic despite changes in circumstances, will have an edge.”
hen I was young, my hero was Peter Pan, and he is still one of my favorite fictional characters. After all, who wouldn’t want to be him? He spent his days with a great gang of friends, he went on lots of adventures, and he could fly. While I have no intention of slowing down anytime soon, it would be great to be like Peter, who never got any older. Use the years to your advantage In my experience, older entrepreneurs can use their age to their advantage, both in business and in life. There is no reason at all to slow down. If you are concerned about preserving your creativity, look to some new sources of inspiration – innovative ideas or fresh strategies from other fields, for example, or surprising new technological developments, or art and music you find interesting. I often find that when I take a break to learn about something new, my newfound knowledge can be applied to some of our Virgin businesses, helping us to tackle long-standing problems from different angles. A group that recently inspired me was the band we partnered with to launch our new global music venture, Virgin Live: The Rolling Stones. After spending 50 years together as one of the world’s most popular rock bands, Mick Jagger, Keith Richards, Ronnie Wood, and Charlie Watts are still as keen as ever to get onstage and to work on new songs. Make new friends and keep the old Senior business leaders can sometimes fall into a rut by
working only with the same team of colleagues and advisers they have always trusted, wary of newcomers’ youth and inexperience. If you surround yourself with energetic, like-minded people, no matter what their ages, you will find that great ideas are more likely to flow. One way of expanding your contacts among younger generations is by volunteering as a mentor. A lot of young people are not getting a fair shake when it comes to getting a start in business, so we started up initiatives such as the Branson Centres of Entrepreneurship in South Africa and the Caribbean, and Virgin Media Pioneers in the U.K. I’ve benefitted immensely from our exchanges – these young entrepreneurs’ ideas have been fascinating and transformative. And do not forget to draw upon the knowledge of your wider circle of peers. When a problem comes up, you may find that they have been in similar situations in the past. Feed your motivation Staying motivated is another worry that entrepreneurs contemplating the later stages of their careers have mentioned to me: If you’ve done it all before, what is the point of starting over? I have never found this to be a problem, since there is always another challenge to tackle. If you are having trouble finding an interesting new project, step back and look at your situation in a different light: How can you use this opportunity to make a difference and do good in the world? Are you doing something you care passionately about? If so, you will want to keep on doing it.
Stay active Another thing to bear in mind is the importance of physical fitness – keeping fit will help you to remain a creative, agile thinker. In the past few months my children Sam and Holly and I have completed challenges including climbing Mont Blanc, which is the highest mountain in Western Europe, and taking part in the London Triathlon. And over this past summer, we broke some records for kite-surfing across the English Channel: My son Sam broke a world record, becoming the fastest person to kite-surf across the channel, while I am now the person with the most years to have done so! A bit of action and adventure away from the office can be highly refreshing, reinvigorating your creativity in other areas, including business. Pursue new dreams Finally, many people do not find their true calling until later in life. Some business leaders who have done well at a steady job for many years feel the urge later in their careers to start up on their own businesses. Those who lose their jobs in cutbacks turn misfortune into opportunity and follow up on a brilliant idea that they never had time for before. If you find yourself in this situation, my advice is to go for it! You’ll find that a lot of the skills entrepreneurs need are acquired through experience: real-life, on-the-job expertise. Older employees who have learned how to inspire and lead people, and how to remain persistent and optimistic despite changes in circumstances, will have an edge.
SINGAPORE BUSINESS REVIEW | JANUARY 2013 17
company focus: UOB customer deposits to make these new loans. “It is challenging to see material expansion from here - unless of course there is a material inflow in deposits or the growth comes through non-balance-sheetintensive businesses, such as corporate finance,” adds Sarangi. Maybank Kim Eng analyst Desmond Ch’ng reckons the group is struggling to get enough deposits into its Thailand and Indonesia units to grow its loans. On the issue of funding cost pressure, CIMB analyst Kenneth Ng notes that Malaysia has stabilised but funding cost pressures still exist in Thailand and Indonesia which is reflected in its mildly higher THB and Rp loan to deposit ratios, even as group loan to deposit ratios edged down.
UOB bets the bank on regional plays Fierce competition outside Singapore will put the bank through its paces in 2013.
ingapore’s banks are set for a rocky start in 2013, faced with one of the bleakest outlooks for making money from loans in all of Asia, beaten by only Hong Kong and Taiwan. And for UOB, Singapore’s most ASEAN focussed bank, its main issues are in many ways similar to the rest of the sector, which is how to cope with slowing loan growth and rising liquidity. But it has a special challenge to integrate its regional acquisitions and emerge as the true champion regional bank of Singapore over the next two years. Will it make it? First, a look at the numbers. In the first half of 2012, 29% of UOB revenue came from Malaysia, Indonesia, and Thailand. UOB’s two-pronged strategy through 2015 is to focus on the Chinese SME and Chinese mass-affluent segments as it aspires to be the preferred partner and one-stop 18 SINGAPORE BUSINESS REVIEW | JANUARY 2013
“UOB’s financial results for the third quarter of 2012 show a mixed picture for the bank as net profit rose 36% to $707 million but core revenue drivers remained weak.”
shop for Chinese companies looking to gain access to South Asia, notes CLSA banking analyst Asheefa Sarangi. That is some strategy, but not all are convinced the planning and execution are in place. “In our view, UOB has failed to clearly communicate and quantify the scale of the opportunity it has, as well as contingency plans in case components of the strategy fail. This makes it challenging to evaluate the plan’s financial soundness,” notes Sarangi. One of the biggest challenges UOB faces is attracting enough deposits in the countries in which it operates in order to be able to grow its lending. The bank doesn’t want to loan out more than 90% of its deposits, yet right now it already has 87% of deposits on loan. It faces fierce competition from other banks in many markets and is struggling to attract enough new
Uncomfortable diversion Thailand is proving especially tough for UOB, both to attract deposits and also extract profits. The bank made just $50m, or 2% of its profits from the country in 2011 and has a measly market share of just on 2%. The local banks are very strong, and even Thailand’s strong economy has not helped the bank get any serious uplift. The group has also had to deal with NPL problems and cost inefficiency. UOB is restructuring the business and a new CEO has just been put in place but analysts like CLSA’s Sarangi believe it is challenging to grow when there is the internal instability that often accompanies a material overhaul. “We understand that it has decided to change course and focus on SME’s specifically interested in regional growth, but it is still early days and we are not yet convinced that this strategy will work.” Indeed, in trying to prove itself as a bank capable of helping Thai companies go regional, UOB is at risk of being seen to be doing opportunistic rather than strategic deals, say analysts. UOB’s inclusion in the financing deal for ThaiBev’s second bridge loan in October has left Sarangi concerned. “Assuming its share of the S$9bn loan is 50% or S$4.5bn, this
company focus: UOB represents 3% of the group’s 1H12 loan book. This is a relatively large exposure and does not fit the target market UOB has said it is focusing on. Further, UOB has always concentrated on profitability rather than market share, but we do not believe the small fees on this type of transaction fit that profile. One could even say that the fees are too poor to justify the potential risk. In short, this deal seems opportunistic as opposed to strategic - and it leaves us a little uncomfortable with the diversion,” says Sarangi. Loans slowing Perhaps one reason UOB is taking part in uncharacteristically large loans is that, like the rest of the industry in Singapore, its loan growth is slowing. For 2012 loan growth for UOB slowed to just 9% on the back of lower corporate lending requirements and also Singapore property cooling measures. Maybank Kim Eng’s Ch’ng notes that the annualised growth of 16% in Malaysia is a stark contrast to the industry’s growth of 11% and where UOB has been successful is in its ability to offer local companies and multinationals a more cohesive bundling of services regionally. “The other area which UOB Malaysia remains strong in is the mortgage segment, where it continues to grow at an aboveindustry pace,” adds Ch’ng.
Tough to turn a buck And then there is the issue of profitability on loans actually made. Before all the CDO and structured products, banks made money by having depositors give it to them and paying them a low rate of interest, then lending the same money to customers at a higher rate of interest. The difference between the two interest rates is known as the net interest margin, and in Singapore it sits at an incredibly low 2%. UOB only has a net interest margin of 1.75%. So if it is to keep its profits growing, it needs to accelerate its loan book even more against a backdrop of thinning margins. DBS’ Lim meanwhile reckons that NIM declined from both lower asset yields as the bank trimmed down its securities portfolio and higher deposit costs from Thailand, Indonesia, China, and Singapore. Funding costs in Malaysia, however, stabilised. “NIM is likely to remain under pressure (mainly from deposits) for another one to two quarters. Additional NIM pressure may arise from the need to hold more liquid assets in view of meeting Basel III’s liquidity coverage ratio by 2015. Competition for deposits is likely to remain while there may be a rush to buy more government securities to meet this criterion,” says Lim. And unlike other local banks such as DBS, UOB is not a strong player in the capital markets
“The group’s NPL ratio jumped to 1.64% from 1.41% in 2Q, while its loan loss coverage dropped to 117% from 137% in 2Q12.”
which means it misses out when IPO’s are hot but doesn’t suffer when they are not. On the cost side the bank has maintained discipline, no easy thing to do in Singapore where cost pressures on all companies are immense. Latest figures show almost flat cost-toincome ratio of 41.3%. Dividend pressure Another problem for UOB may be in maintaining dividends. CIMB’s Ng warns that while dividends had a spurt up, it is guided to be unsustainable. He also reckons that though treasury-related gains held up at lofty 2Q levels partly from the divestment of EU securities, its quantum is not disclosed but should be expected to dwindle as UOB’s EU securities portfolio gets closer to fully divested. “By the end of 2014 we forecast surplus equity of S$5.6bn - or S$3.55 per share - and a CET1 ratio of 13.6%. This excess capital is suppressing returns, and if the bank cannot invest it to generate economic returns for investors, it should distribute it to them,” notes CLSA’s Sarangi. But those waiting for a dividend increase shouldn’t hold their breath. UOB has historically run with more capital than it needed so they may not increase the payout over the 10% core capital. And that is something that investors will hope does not happen.
UOB magin trends, falling like peers
Beat came from mostly dividends and treasury-related gains
Source: CIMB, COMPANY
Sources: Cimb, Company Reports
SINGAPORE BUSINESS REVIEW | JANUARY 2013 19
Muthukrishnan Ramaswami SGX President
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SGX President talks of SGX being the fastest trading engine in the world Find out what SGX President Muthukrishnan Ramaswami is planning for the next few years, which include a market that will allow both futures and swaps. SBR: What are the strengths of SGX? Muthukrishnan: We attract customers from all over the world. This includes the US, Europe, Japan and the rest of Asia. We are seen as a safe exchange and people use us to manage risk. We are one of the strongest capitalised exchanges in the world and Singapore is the only Asian AAA rated country. We also have the fastest trading engine in the world. SBR: What new products should we look out for from SGX? Muthukrishnan: We recently bought 49 percent of the Energy Market Company in Singapore which is involved in energy trading and makes the spot price for electricity. We are looking into the energy futures market and possibly one for the liquefied nitrogen gas (LNG) market in Singapore. This is currently based on an official international benchmark. We hope to develop a price benchmark that’s closer to home which will happen over the next few years. We also want a market that will allow both futures and swaps.
“The ASEAN trading link is going to make it easier for an individual in Thailand or Indonesia to invest in other ASEAN companies. While you can already do this today, the trading link will make it cheaper and easier. ” SBR: What is SGX’s stance on making acquisitions? Muthukrishnan: It’s true that through mergers and acquisitions you grow faster. But M&A isn’t a prerequisite for growth. There is definitely a need for capital-raising for companies based in Asia. This will continue to grow and we will continue to grow with that. Some people will not be M&A friendly but may be open for more alliances instead. We are a reasonably desirable partner in Asia when it comes to alliances. We are a bit like Singapore Airlines in that context with its Star Alliance. SBR: What progress is being made with the ASEAN trading link? Muthukrishnan: There are three exchanges now with Malaysia and Indonesia joining us and the aim is to link up ASEAN as a whole. We don’t want to create a single market or currency. The ASEAN trading link is going to make it easier for an individual in Thailand or Indonesia to invest in other ASEAN companies. While you can already do this today, the trading link will make it cheaper and easier. Like with all things that involve ASEAN, it takes time to evolve.
SBR: Does SGX want to be a serious player in the bond market? Muthukrishnan: More companies are issuing bonds to raise capital, especially with the European banks scaling back their lending in the region. From an investor perspective, they are comfortable with Singapore. Our long-term plan is to attract infrastructure bonds and other government’s bonds. SBR: Are the low volumes we are seeing on the SGX the new norm? Muthukrishnan: I sincerely hope not. Most things are cyclical from the tide to the moon. The cycle will turn and we will see a pick-up in equities. It will have to come in the next couple of years. There are 100 big cities in Asia and all need subways, roads and other infrastructure. So companies will need to raise capital for these projects. Capital raising hasn’t gone away. It has just slowed. But it’s true that some of the froth has gone out of the market, so yes for now it’s the new norm. But we will see new forms of growth in different kinds of instruments such as ETFs and fixed income. We are down just 3 percent year-on-year on volumes which compares to about 37 percent in New York. The figure is a lot bigger for the NASDAQ. We did not grow year-on-year but we are not really shrinking. We are flat but I think the growth has to come back. SBR: Why has Malaysia been so successful at attracting such big IPOs? Muthukrishnan: There have been a lot of private entities that have now gone public and this has raised the profile of M&A activity in Malaysia. And they have been willing in that. They could have taken a “we are a protected economy” stance but they are not doing that. They have an open-door policy and are inviting participants in. SBR: Was the failure of Manchester United and Formula 1 to list on SGX a big blow? Muthukrishnan: There were definitely a few bruised egos. With Manchester United there was an issue with multiple share classes and the economic climate at the time. The time was not right to start preaching non-equal rights for shareholders. But we have introduced legislation now to allow for multiple classes of shares. SBR: How is your push to attract more retail investors going? Muthukrishnan: This is a long-term initiative of ours. It seems everyone in Korea is trading but not in Singapore. We don’t expect an immediate improvement but hope to over time. We said to ourselves we don’t do enough investor education, so we are addressing that also. We have started a virtual trading game which has proved successful. SINGAPORE BUSINESS REVIEW | JANUARY 2013 21
GAME CHANGERS consumers benefit from it? For the first time in Singapore’s automotive history, consumers have a VIP Concierge service that gives them a cash rebate of up to $4,500 just to provide them a hassle-free experience of buying and selling a car directly with another consumer. It is like having a chauffeur who pays you to let him drive you around. sgCarMart Connect partners with eight leading financial partners and more than five insurance companies to provide consumers the best rates in Singapore. We also help consumers to perform the vehicle transfer of ownership with the Land Transport Authority (LTA) on their behalf and provide the necessary documentation for vehicle handover. SBR: How is the business doing since operations started early this year? As high COE prices continue to take center stage in Singapore, sgCarMart.com saw a 112% surge in direct owner listings as more sellers choose to cut cost by selling directly to another consumer. That being said, sgCarMart Connect, which was officially launched in March 2012, has already processed over $8 million in auto loans. SCMC founder Jijin Fu
Making easy money out of used cars sgCarMart Connect offers stress-free direct auto-purchase transactions
uying a car from a private seller instead of a dealer often means that the buyer has to arrange for financing himself. In addition, he has to deal with the hassle of sourcing multiple motor insurance quotes and settling the legal ownership transfer of the vehicle himself. sgCarMart Connect has partnered with sgCarMart, which bills itself as the No.1 car portal in Singapore, to launch what they claim as a ‘revolutionary’ suite of free services for direct buyers and sellers of used cars. sgCarMart Connect will provide direct car sellers and buyers an end-to-end direct solution to transact their car directly online, including assisted online listing, vehicle mechanical inspection, sourcing for multiple insurance quotations, sourcing for multiple financing quotations and legal transfer of the vehicle ownership. It claims that it is the first company in Asia planning to offer a consolidated interface to help owners manage their cars’ entire financial, insurance and repair life-cycle for free. The firm was incorporated in July 2011 and officially launched March this year. It boasts of having facilitated over 7 million in direct auto loans in the last 8 months of launch. Singapore Business Review spoke with sgCarMart Connect founder Jijin Fu to learn more about this new initiative. SBR: What is this new offering all about and how will
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SBR: What other services do you plan to offer in the next few years? sgCarMart Connect is also the first company in the region that plans to offer a consolidated interface to help car owners manage the entire lifecycle of owning a car -- from tracking monthly loan installments, multiple quote submission for annual insurance renewals, to finding suitable vendors for car servicing, repairs and modifications. We also provide instant car valuation and car auction facilities. Soon to be launched is the sgCarMart Connect’s flagship platform - Car Nexus 3.0. It’s the combined force of 3 systems. First is the ‘Financial Nexus’, which provides regular updates on your outstanding car loan, installment payment, and refinancing options. It also provides competitive multiple insurance quotes one month prior to insurance renewals. The second one is the ‘Maintenance Nexus’, which provides location detection services on the car repair and servicing workshops nearest you. It also provides promotional rates to annual car inspection and evaluation services, plus information and recommendations on car modification and enhancement. Finally, the VIP Concierge Nexus, which is a lifelong VIP concierge service for car valuation, assisted insurance renewals, and auctioning facilities. SBR: How do you expect sgCarMart.com to contribute in your future growth? sgCarMart Connect is the exclusive finance partner of sgCarMart. sgCarMart is Singapore’s No.1 Car Portal for seven years running. sgCarMart has a traffic monopoly of over 95% of market share in terms of visits and pageviews versus our competitors in Hitwise Top 30. This translates into 2.2 million visitors and 36 million page views monthly with 99% of all car listings in Singapore listed on sgCarMart. With sgCarMart Connect Best Price Guarantee, sgCarMart.com customers can get a seamless experience in directly buying and selling a car as well as the best rates available for car loans and insurance.
2 reasons why a subdued office market looms in 2013
xperts unfortunately said that 2013 would be even worse than we thought. While private property prices have reached an all-time high in 2012, the office space sector has been fairly subdued since the markets recovered after the global financial crisis in 2008, says Getty Goh, director of the estate research and investment consultancy Ascendant Assets. Goh expects office spaces to continue to be subdued in 2013 for two main reasons. Firstly, he says, there is ample supply of office space coming up from now till 2016 and based on projections by URA, 262,000sq m of office space is expected to come online by 2013. By the time we reach 2016, about 800,000sq m worth of office space will be available. This, he warns, will inevitably put some pressure on office prices in terms of rental and transaction. Secondly, Goh notes that the office market is more susceptible to eco-
nomic performance as issues such as the European sovereign debt crisis, the sizable US trade deficit, and weakening global outlook are all still there. “All these issues could potentially degenerate to become a full-blown financial crisis in 2013. Hence those who are thinking of buying or renting office spaces will likely stay away in 2013 until there is clarity on how these issues can be resolved,” adds Goh. Nicholas Mak, executive director at SLP International Property Consultants likewise reckons that the average office rentals in Singapore could come under downwards pressure in 2013, especially in the CBD area. “A large supply of about 2.8 million sq ft of new office space is expected to be completed in 2013. Furthermore, the economic uncertainty may cause businesses to be cautious about their expansion plans. As a result, demand for office space could be slower in 2013,” says Mak.
SINGAPORE BUSINESS REVIEW | JANUARY 2013 23
Trading firms now liable for employees’ misconduct The amended Securities and Futures Act puts ‘attributed liability’ into effect
significant provision under the amended Securities and Futures starting October 1 now puts a company liable for cases where its employee engages in market misconduct with the company’s consent or connivance, or where the company has failed to prevent or detect the misconduct because of its negligence. Experts note that while this new provision is one big step forward for a more transparent trading in Singapore, there are just some ambiguities that need further clarification. For the offence to be made out, the provisions further require that ‘consent’, ‘connivance’, and ‘negligence’ be proved. Wong Partnership partner Gail Ong notes that these have been “very loosely defined” in the amended bill. How can consent or connivance of a corporation be established? There are two ways to prove consent or connivance, says Drew & Napier managing director for corporate & finance Gary Pryke. First, where the board of directors or a high managerial agent of the corporation intentionally, knowingly or recklessly engaged in the relevant conduct, or expressly, tacitly or impliedly authorised or permitted the contravention; or where a corporate culture existed within the corporation that directed or encouraged the contravention.
“Offence involving ‘consent’ or ‘connivance’ results in criminal penalties, while an offence involving ‘negligence’ results in the payment of civil penalty only.” How can we know if a contravention is due to negligence of a corporation? In determining whether a contravention is attributable to the negligence of a corporation, Pryke says that the court will take into account two things: First is whether the corporation has established adequate policies and procedures for the purposes of preventing and detecting market misconduct; and whether the corporation has consistently enforced compliance with such policies and procedures. What are the penalties for proven misconducts? According to Ong, an offence involving ‘consent’ or ‘connivance’ results in criminal penalties, while an offence involving ‘negligence’ results in the payment of civil penalty only. Civil liabilities, she adds, may also ensue. Similar provisions have been imposed for 24 SINGAPORE BUSINESS REVIEW | JANUARY 2013
partnerships and limited liability partnerships.
Joo Khin Ng
Should unwitting third parties benefit from an indicted contravening trade? Stamford Law’s Joo Khin Ng says that under the previous legislation, a third party who was not a party to the market misconduct but who benefitted from a contravening trade may make profits or avoid losses as a result of such trades, but would not be liable to disgorge the profits gained or losses avoided even though they resulted from market abuse. The new provisions now introduce a new remedy pursuant to which the court is empowered to order such third party to disgorge, depending on the circumstances, all or a portion of the benefits obtained from the contravening trades. Note however, he says, that the remedy of disgorgement cannot be ordered where the court is satisfied that it would inequitable to do so. What practical measures should hedge fund managers implement to manage market abuse risks? Pryke suggests some practical recommendations based on UK’s experience. According to Pryke, the UK Financial Services Authority issued a guideline in 2007 for hedge fund managers such as building in computerised trade surveillance systems to detect unusual trading activities and maintaining a regularly updated list of restricted securities which employees are not allowed to trade in, and having in place procedures requiring employees to declare and notify the entity of their trading activity, to prevent the trading of securities when inside information is received. He also recommended for regular monitoring of internal controls and procedures by internal committees and/or independent third party auditors; robust procedures for the operation and enforcement of “Chinese Walls” to ensure that employees are only allowed access to information not in conflict with other information such employees possess, and to ensure supervision of inter-departmental or interteam communication by the entity’s compliance committee; and establishing adequate policies and guidelines in relation to the treatment of confidential information. Tapping telephone lines of appropriate individuals and reviewing telephone recordings upon detection of unusual trading activities; regular staff training and workshops on market misconduct tailored to the type of business undertaken by the entity; and conducting regular reviews may also help, he says.
Headhunters deny massive hiring freezes in Singapore
eadhunters reveal the latest hiring trends underlying the unnerving jobs report as the government announced that hiring has slowed and layoffs have increased. Net jobs created were 83,800, which is 1.4% short of the 85,000 seen in the same period last year Singapore Business Review interviewed recruiting agencies if the latest jobs report is a cause for concern. Pan Zaixian, general manager at Kerry Consulting, notes that despite the prospect of a downward trending GDP growth, we should feel very comforted by the unemployment rate of 1.9% which is the lowest in the world. And with the tightening of employment visa rules, the government is focusing domestically by directly targeting Singaporean and resident unemployment rate as opposed to
including non-Singaporeans. Since the recovery of the markets post Gulf War and Sars in 2003, Pan reckons that the Singapore unemployment rate has fallen steadily from the 10-year peak at 4% in 2003 to 2.2% in 2008 before rising to 3% in 2009 on the back of the GFC. Post GFC recovery, unemployment hovers around 2.1% with the latest figure of 1.9% being a new low. Although some employers are being cautious and are taking their time to ensure they secure the right person for the right role, Chris Mead, regional director at Hays, says employers still continue to hire for skills in demand. According to the latest Hays Quarterly Report, many employers prefer to now offer temporary assignments, particularly in the banking sector where budgetary pressure remains. Contract or tem-
â€œPost GFC recovery, unemployment hovers around 2.1%.â€œ
porary assignments where budget can be taken from capital expenditure (instead of operating costs) are seen as a good way to counter the inability to add new permanent headcount. Pang Meng Hock, managing director at Apex Headhunters, concurs and adds companies are still hiring very senior level positions in various industries in Singapore like oil and gas, and retail (furniture, IT, electrical & electronics). Singapore will continue to benefit from the economic and business dynamism in this region, he reckons.
SINGAPORE BUSINESS REVIEW | JANUARY 2013 25
Tan Tze Gay
Yap Lian Seng
Deal makers in the APB-Heineken frenzy
uane Morris & Selvam’s managing director Arfat Selvam has been very busy acting for Heineken in its phenomenal headline-making bid to take over beer mogul Asia Pacific Breweries. Heineken made an offer to F&N to acquire its 39% effective interest for S$5.6 billion in August. On completion of this acquisition, Heineken will launch a mandatory takeover offer of the remaining shares of APBL at the same price of S$53 each, for a total consideration of approximately S$640 million. Though the acquisition of shares in APB was strongly contested by Thai Beverage, Selvam shrugged off all issues and carried on with advising Heineken. It should not be hard for Selvam who has always been at the forefront of major deals involving Singapore’s top companies. She has handled the acquisition of POSB by DBS as well as the merger of Keppel Bank with OCBC. She also looked after the initial public offerings of SIA, NOL, and Creative Technology. Commenting on the deal, Selvam said: “This deal made corporate history in Singapore, in terms of the deal size and intricacies. APB was a much sought after listed beer company by international investors wishing to expand into Asia, especially the lucrative China market and will provide a good platform for Heineken’s growth in this part of the world.”
On the other end of the deal, Stamford Law partner Lean Min-tze has been equally busy advising Fraser and Neave in response to the competing bids by Heineken and Kindest Place Groups for F&N’s shareholding in Asia Pacific Breweries Limited (APB), which culminated in the $5.59 billion sale by F&N of its entire stake in APB to Heineken. Lean has been dedicated to formulating F&N’s strategy and response to the offers by Heineken and Kindest Place in this hot APB/ Heineken deal which was tagged as the No. 3 deal in Southeast Asia in Q1-Q3 2012 by mergermarket. Apart from advising for this beer-bubbling deal, Lean also sits on the board of ACCESS Health International South East Asia, the regional office of ‘a not for profit organisation dedicated to improving access to high quality and affordable healthcare worldwide.’ 26 SINGAPORE BUSINESS REVIEW | JANUARY 2013
But F&N’s stakes at APB are highly coveted as bidders did not stop with only two companies. Yap Lian Seng, Stamford Law’s partner, acted as the lead transaction counsel to TCC Assets’ S$12.53 billion mandatory general offer for F&N alongside Lean. The offer which was initially thought to complicate the chances of success of F&N’s sale of Asia Pacific Breweries Limited to Heineken, was resolved amicably between TCC Assets and Heineken. “There are the added complexities to the deal due to the cast of players involved. The APB-Heineken deal already caught the world’s attention and is still on-going, so it is a privilege for us to continue to advise F&N in the takeover saga – in a deal that is avidly watched, not just by the Singapore market, but also globally,” comments Yap. WongPartnership’s deputy head of the corporate/mergers & acquisitions practice Andrew Ang as well as partners Annabelle Yip and Dawn Law acted for Sakari Resources in the S$1.2 billion mandatory unconditional cash offer made by PTT Mining for all the ordinary shares in the capital
of Sakari Resources. This is the second time that PTT Mining is making an offer for all the shares in Sakari Resources. This offer is at a price of S$1.90 per share. Having been ranked by Chambers Global as among the World’s Leading Lawyers for Business and Chambers Asia Pacific, Ang is one of the leading Singapore practitioners in the area of Corporate/M&A since 2009. Neptune Orient Lines issued S$300 million notes due 2019 under its US$1.5 billion Euro Medium Term Note Programme. Allen & Gledhill’s head of equity capital markets Tan Tze Gay and partner Bernie Lee acted for NOL, including senior associate Wu Zhaoqi. Chambers Global 2011 says Tan “warrants special mention as an expeditious capital markets professional.” Advising companies such as NOL as to Singapore Law may be second nature already to Tan as IFLR1000 2011 tagged her as “one of the best capital markets lawyers in Singapore who knows all the issues and always tries to find win-win solutions for issuers and underwriters.”
co-published Corporate profile
MetaSport runs to success
Find out how MetaSport evolved from offering triathlon coaching services in Singapore to a full triathlon service provider in Asia.
an you tell us how Tribob/ MetaSport started? Tribob was founded by Bob Bowness in 2000 as a small pioneering entity offering the first professional triathlon coaching services in Singapore. In 2004, the company expanded into event management, fully establishing Tribob as a leading triathlon service provider in Asia. What motivated you to start a company focusing on long distance sports? I am from a professional background that (surprisingly) has nothing to do with sport. I was in the luxury good industry (perfume, cosmetics, fashion) for 7 years working for multinationals knowing that at some point I wanted to pursue the entrepreneurship path. My story with Tribob started as an athlete. Having always had a passion for endurance sports, I took up the sport of triathlon and trained with Tribob. Although in its very early years, the business model seemed to have some potential. I made the next step and quit the comfort and security of a well-paid job in a multinational to become one of the owners and managers of a very young company in 2003 with a focus on business development. In 2009, I acquired the majority of the business and rebranded the company, now known as MetaSport. Why did you decide to set up MetaSport in Asia/ Singapore? Keeping MetaSport in Singapore and focusing on the Asia market was an obvious choice: right place right time in the sport industry. In the past 10 years, sport has been growing fast in Singapore partly owing to the Singapore government drive and vision to make Singapore one of Asia’s sport hubs
but also owing to very conducive natural environment and infrastructure. Can you tell us about the recent MetaMan triathlon? Absolutely! A huge success (and not just by my own admission). The MetaMan Triathlon was borne from the thought that there was a gap in the market in terms of long-distance triathlon. With the Ironman brand pulling out of several Asian countries, Southeast Asia athletes had to travel to Australia or Europe to find quality long-distance events to compete in. Because of Singapore’s logistical limitations when it comes to organizing a race that involves a 3.8km swim, a 180km bike leg and a marathon, Bintan presented itself as the perfect host. Not only it is on Singapore’s doorstep but the infrastructure is excellent and the level of support and commitment from our hotel partners like Nirwana Gardens and the Bintan government is outstanding. 46% of the participants travelled from around the world to join the event. The general feedback was that the event was world-class and had a huge growth potential. I could have not asked for more. Are you planning for new events that we can look forward to? We have a few potential new events in the pipeline. The main challenge is assessing the viability of a new concept or event format. The Singapore endurance sport scene has reached a mature stage.
MetaSport champions accept their awards As a consequence, a lot of events currently on the market are not commercially sustainable. They come and go. The right formula is a strong and differentiated concept, a high level of expertise, a committed headline sponsor, and good government support. We are very pleased with our key Singapore event, the New Moon Khcycle MetaSprint Series, that involves three races combining cycling, running and swimming over the period February to April. In its 6th year in 2013, it is still recording an outstanding growth rate (20% up year-onyear after 2 months of opening). For the 5000 participants, adults and kids, it offers a fun, safe, and accessible entry to multi-sport and short distance triathlon. What benefits can companies get from partnering with MetaSport? The benefits for sponsors are significant. The main one being the emotional bond that such an event create between a brand and the athletes, their families and friends, the spectators, and general public. There is not a single marketing platform that is as powerful. That is the reason for which sponsorship has been growing to the detriment of traditional advertising. The former is more targeted, more effective and can offer measurable sales leads. Event owners need to be dedicated and committed in guiding companies on how to optimize their return on investment through the event.
“46% of the participants travelled from around the world to join the event. The general feedback was that the event was world-class and had a huge growth potential.” SINGAPORE BUSINESS REVIEW | JANUARY 2013 27
BIG ISSUE 1 recent years. In the services sectors, he adds, although several clusters such as hotels & restaurants and retail typically rely on higher lowwage labour, these clusters’ direct contribution to overall GDP is small. As such, Singapore’s cost competitiveness would not be impacted much by the policy as our tradeable sectors are of higher valueadd that tend to attract high wage workers, notes Tan. Undertaking necessary adjustments On the other hand, Ramkishen S. Rajan, a visiting professor at the Lee Kuan Yew School at NUS, reckons Singapore needs to undertake the necessary adjustments. In the past, it has rarely postponed structural adjustments because of cyclical considerations. The relatively low cost of labour for such a high-income country has led to too many labour intensive SMEs and activities. In some senses, he adds that one could argue that inflation pressures were delayed because of the lack of appropriate Rising labour cost pushes Singapore’s inflation rate higher than its peers. restructuring. “As of ccording to DBS, Singapore’s higher cost to consumers, resulting Rajan says REER/RER movements inflation has always been lower August 2012, in higher inflation. Thus, in a bid to over time are fundamentally Singapore’s than the Asia-8 until midrestructure the economy, growth and a reflection of rise in price of 2010 when domestic factors started to inflation stood competitiveness have been affected, nontradables relative to tradables. drive consumer prices up and affected at 3.9%.“ and just when the global cycle is weak,” Historically inflation was more about its overall competitiveness versus DBS adds. As such, DBS says that rise in world price of tradables so peers. This, it says, is evident in the Singapore’s restrictive foreign labour NER/NEER appreciation was an narrowing gap between Real Effective inflow policy may warrant a review. effective tool. Exchange Rate (REER) and Nominal According to Francis Tan, an “However, the problem of Effective Exchange Rate (NEER) in economist with UOB, the process inflation in Singapore today is the last two years as well as faster of lowering Singapore’s structural largely due to a rise in domestic appreciation of the Singapore’s REER reliance on low-cost labour should price of nontradables. Exchange rate versus the average for Asia-8 countries. not be stopped although in the times appreciation is a rather, bluntly, a very As of August 2012, Singapore’s of weaker growth, the pace of turning ineffective tool.” inflation stood at 3.9%, which is well off the tap (for foreign worker inflows) He adds that without a more above Asia’s 2.1% average. should be adjusted to allow businesses effective tool such as interest rates and consumers more breathing space to deal with nontradables prices, Policy-induced inflation to adapt to higher labour costs. the viable option is to encourage High COE premiums and rentals, substitution away from labour while as well as the continued increases in Indicators of cost competitiveness subsidizing the costs in the interim -labour cost, are the key drivers. DBS He adds that labour cost is not the subsidies on productivity-enhancing said that ironically, the bulk of these only factor we should focus on. measures and reduction in some were policy-induced. Tan cites that one indicator of cost government user charges and taxes,. “The tightening in foreign labour competitiveness is the Singapore Wai Ho Leong, Barclays’ senior inflow, in particular, is creating Unit Business Costs. Deviation regional economist, says the significant strain on enterprises between Unit Labour costs (ULCs) government may be willing to adopt and eroding Singapore’s cost and Unit Business costs (UBCs) of a more flexible posture on its earlier competitiveness. The near-term manufacturing since 2009 suggests move to restrict immigration. The impact is higher labour costs, that the increase in UBCs was not due reasons for this re-consideration are compression of profit margins and the to a tighter labour market, but higher strategic, not simply because of the tendency for companies to pass on this industrial property prices seen in current labour tightness.
Should Singapore rethink its tightened foreign labour policy?
28 SINGAPORE BUSINESS REVIEW | JANUARY 2013
co-published Corporate profile
Take care of your heart with Pharmaton CorActive Capsules
Learn more about Boehringer Ingelheim’s once-a-day formulation that supports cardiovascular health and vitality.
oehringer Ingelheim offers a range of nutritional supplements to the market. Pharmaton, a household name across different markets, is the umbrella brand name of such products. Pharmaton Capsules were launched on the international market in 1961, and has since contributed to the global trend towards self-responsible healthcare and remained committed to meet people’s demands for innovative and scientifically based selfmedication products of premium quality. Pharmaton products are unique, balanced formulations of vitamins, minerals and natural extracts tailored to cover specific needs. These products enhance physical and mental well-being as evidenced by scientific documentation and clinical studies. They work in natural harmony with the body by releasing
inner resources to enable people to live life to the fullest and to cope with the challenges of today’s lifestyle. Call for a healthier heart Boehringer Ingelheim recognizes that people want to live longer and feel young at heart even into old age. However, the challenges of modern living pose a challenge to their heart. And when people get older, blood cholesterol and triglycerides, blood pressure and diabetes increase tendentially over the age of 40. Well known risk factors which can negatively affect heart and blood vessels health. Thus supporting and maintaining heart health can help people to stay dynamic and active. Because a strong heart helps keep their energy levels high and let them live life the way they want to.
“The capsules act complementary to nutrition to cover the body’s daily needs of micronutrients in amounts it may not be receiving through an average diet.”
Apart from a balanced diet rich in vital substances and micronutrients, it is equally important to have a regular intake of additional vitamins and minerals. And what better company to introduce such supplements than Boehringer Ingelheim? CorActive Capsules So Boehringer Ingelheim recently launched a unique blend of multivitamins, minerals and omega-3 fatty acids to support cardiovascular health and vitality - the Pharmaton CorActive Capsules. As one of the well-known and trusted brands in the category of multivitamin/ multimineral products, Pharmaton expands its range of effective and easy-to-use dietary supplements with Pharmaton CorActive capsules that are specifically formulated to support and maintain blood vessels and heart health. The modern formula Pharmaton® CorActive combines in one single capsule specific vitamins, minerals and omega-3 fatty acids (EPA and DHA). The ingredients are known to have beneficial cardiovascular effects. The micronutrients in Pharmaton CorActive have been combined in just the adequate amounts to support long-term cardiovascular health. How it works The capsules act complementary to nutrition to cover the body’s daily needs of micronutrients in amounts it may not be receiving through an average diet. These complementary nutrients can help cope with normal age-related cardiovascular health issues. Pharmaton CorActive supports blood vessels and heart health as Omega-3 fatty acids help to limit accumulation of cholesterol and triglycerides in circulating blood and Antioxidants (selenium, vitamins C & E) contribute to reduce oxidative damage related to inflammatory processes in blood vessels. Pharmaton CorActive is manufactured in Switzerland with the high quality standards applied to all Pharmaton products. The once-a-day formulation is available in 30s (S$26.75) and 60s (S$44.94), in Guardian, Unity, Watsons and all leading pharmacies in Singapore. SINGAPORE BUSINESS REVIEW | JANUARY 2013 29
BIG ISSUE 2
What does US Quantitative Infinity mean for Singapore? The new easing program will have tremendous impact in Singapore -- far more than its Asian peers.
nder the new program more popularly known as QE3, the Fed will purchase $40 billion in agency mortgage-backed securities every month until unemployment improves ‘substantially.’ Interest rates are to stay ‘exceptionally low’ through to 2015, even if the economy improves in the meantime, and 2% inflation is now an explicit objective. Experts interviewed by Singapore Business Review see a mild positive impact in the United States economy and by extension, Asia. The impact, they say, may however be particularly significant to Singapore, especially on the property market. The effect on Singapore’s property Alaistair Chan, an analyst with Moody’s Analytics notes that one place in Asia where it may have an outsized impact is Singapore, because of the city’s relatively small size and alignment with global markets. Any impact on Singapore would be generally positive. Clearly, Chan adds that lower unemployment and faster economic growth in the U.S. will be positive for Singapore’s exports. To the extent that Fed action boosts U.S.
30 SINGAPORE BUSINESS REVIEW | JANUARY 2013
“Fed will purchase $40 billion in agency mortgagebacked securities every month until unemployment improves ‘substantially’.“
stock prices, Singaporean stocks’ tight correlation to global growth suggests that they will also benefit, resulting in the usual wealth effects. The effect on Singapore’s property market is more ambiguous. Past episodes of easing have supported the housing market, which is a concern as the government is still committed to reining in price growth, says Chan. Increased stamp duty and increased minimum cash deposits for multiple homes are two such measures, and they can be joined by further measures if the market re-accelerates. Calendar-based commitment As for Thomas Lam, group chief economist at OSK-DMG, the Fed’s large-scale asset purchase program coupled with an enhanced forward guidance is unlike any of its prior policy initiatives simply because of the shift toward an outcome-driven commitment from a calendar-based commitment. Therefore, at least from this vantage point, Lam notes that one should not lump QE3 with prior balance sheet programs nor view the shift in the forward guidance at the September meeting in the same light
as prior changes in communications. Naturally, the open-ended nature of the recent Fed announcements further complicates the analysis of the likely impact on asset markets and the economy. Secondly, he adds that the Fed policy announcements, by attempting to stretch the intended positive effects from unconventional monetary policy, could end up raising the costs of policy actions and potentially increasing the risks to Fed credibility. To analyze the net impact on Singapore’s open economy, one has to figure out both the direct (strictly looking at the spillover from the US to Singapore) and indirect (via other countries closely tied to Singapore) effects from the recent Fed announcements, says Lam. In theory, gauging the former should be less challenging than dissecting the latter; however, in reality, it is still a highly intricate exercise. The start of a chain reaction Lam adds that the oft-mentioned chain reaction from the Fed’s accommodative actions generally commences with some appreciation of the Singapore Dollar vis-a-vis the US Dollar, some degree of compression in Singapore interest rates and uneven gains in Singapore equities. “But the current environment of weaker domestic economic growth and feverish property prices seems generally out-of-whack with the aforementioned spillover reactions from the Fed announcements. The recent Fed actions, all else equal, could possibly cast a more ominous veil on Singapore,” reckons Lam. Bank of Singapore chief economist Richard Jerram reckons that the impact on Singapore will mainly be felt in the property market, and related areas. Singapore is no different from much of the rest of the world in feeling some consequences from the sluggish US economy that has led to the Federal Reserve announcing it will make monthly purchases of US$40bn of mortgage backed securities until the labour market improves, he adds. Any positive impact on exports if the Fed’s policy boosts US growth is straightforward and not unique to Singapore.
Yellow diamonds are a girls’ best friend
igh-valued precious stones like the Yellow Diamond are usually brought to Geneva, Paris or some other European cities known for their elite taste. But why did Vihari Jewels bring the 110-carat gem to Singapore? According to Wealth-X CEO Mykolas Rambus, Singapore is the best place to showcase the Yellow Dragon as this is where the buyers are. Singapore, he notes, has the highest number of millionaires per capita, more than anywhere else in the world. “The Lion City is also the eastern hub for Private banking, and is the place that the globe’s ultra high net worth individuals increasingly transit,” he adds. Meanwhile, Ashok Soman, Luxury Insider’s managing editor, reckons Singapore is a good place to reach out to interested parties from Southeast Asia and India,
for reasons of proximity, security and taxation (aside from GST). He mentions that recent reports put an ever-growing number of UHNWIs here so the choice of Singapore for the Yellow Dragon is not surprising. “I think this effort is more exploratory than anything. Hong Kong is still the place to go in Asia for important precious stones and public offerings. The proof of this is in how many important auctions are held in Hong Kong and how many are in Singapore,” says Soman. Choo Yilin Artisan Jewellry’s founder Yilin Choo also recognizes the issue about which between Hong Kong and Singapore deserves to be the gem’s first stop. The two countries are both leaders when it comes to luxury retailing, but Choo notes that Singapore is much more Western than Hong Kong with regards to business-
110-carat Yellow Dragon. Photo from Reuters “Singapore is the best place to showcase the Yellow Dragon as this is where the buyers are.“
leading and in other aspects. “Maybe Yellow Dragon’s makers thought that bringing the diamond to Singapore would draw in more interest, and spur more talks about the gem.” Now the next question is, who will vie to possess the Yellow Dragon? Rambus predicts that buyers will most likely come from China, Russia, Ukraine, and Kazakhstan given the large and growing numbers of super-rich buyers in these markets. “We might also see a surprise buyer in the industry who bets on long-term appreciation,” he adds.
SINGAPORE BUSINESS REVIEW | JANUARY 2013 31
Singapore’s top 25 LAW firms
Local law firms still lead the pack
Restrictive practice regulations keep international law firms at bay
ive local law firms have topped Singapore Business Review’s inaugural top 25 law firm rankings for 2012 despite the government awarding licenses to 6 foreign law firms this year. Allen & Glendhill ranked first followed by Rajah & Tann, WongPartnership, Drew & Napier, and Rodyk & Davidson. Local firms on the rise Local law firms have dominated the list with only 11 foreign firms making it to the top 25. Together the top 25 law firms employed 3,798 people in Singapore, according to figures compiled by Singapore Business Review. The average number of employees in the top 25 firms was 42. Allen & Gleddhill employed a total of 357 law professionals. The firm, which ended merger talks with Allen & Overy last March, was the legal counsel for CapitaLand in a $5bn Euro medium term note programme and DBS Bank in a $1bn fixed rate subordinated notes due 2023. The legal market in Singapore continued to grow during 2011 thanks to the influx of foreign law firms in the city. 32 SINGAPORE BUSINESS REVIEW | JANUARY 2013
The top 25 law firms employed 3,798 people in Singapore.
According to Rikvin, a Singapore company registration specialist, Singapore’s legal industry has seen an annual growth rate of 10% for the past five years. Data from Bloomberg shows that the number of foreign lawyers in Singapore has doubled over the last four years - from 633 in 2007 to 1,200 at the end of 2011. Rikvin sees these trends continuing with the results of the second round of applications for the Qualifying Foreign Law Practice (QFLP) license set to be revealed over the next three to six months. The QFLP licensing program, which commenced in 2008, has approved six international law firms including Allen & Overy, Herbert Smith and Norton Rose to practice and render services in approved areas such as commercial and corporate law during the first round of applications. New players According to Taylor Root, a legal and compliance recruitment agency, a number of international firms opened offices in Singapore in 2012, including Olswang, LG, Collas Crill, Mayer Brown JSM, Squire Sanders, Withers and Reynolds Porter Chamberlain.
Rumours of other new entrants continue but Taylor Roots notes that whilst these latest developments point to a very vibrant legal scene, it is worth remembering that the market is still small in comparison to other major markets such as London and Hong Kong. A big red flag, it says, was the proposed merger between Allen & Overy and local firm Allen & Gledhill, which ultimately did not happen. “This could have been the catalyst to a more open legal market in Singapore and further developments of this nature are anticipated. Litigation can still only be practised in local law firms, although Singapore continues to expand as a centre of international arbitration,” it says. “Growth over the last 18 months has been cautious and firms generally only have less than a handful of specific requirements at any one time. The bar continues to be high and only very strong foreign lawyers are able to secure roles here,” it adds. High profile disputes on the rise WongPartnership, which ranked third on the top 25 rankings with 270 law professionals, saw a healthy growth in international and crossborder transactions and an upswing in international arbitration and domestic litigation matters, including high profile disputes. Among the firm’s major deals include ThaiBev’s stake acquisition of Fraser and Neave, named as the largest M&A transaction in Singapore in 2012. The law firm also took part in DBS Group Holdings’ proposed $9.1 billion acquisition of PT Bank Danamon. Drew & Napier, fourth in the top 25 Law Rankings with 233 professionals, also takes pride in its major litigation and arbitration deals abroad. Drew & Napier’s Davinder Singh is named as the first Singapore Senior Counsel to represent a foreign government in a court case abroad. Singh was admitted ad hoc into the Brunei Bar in which he successfully defended the former deputy Defense Minister, Commander of the Royal Brunei Armed Forces and Commander of the Royal Brunei Air Forces in a claim filed against them by a former officer of the Royal Brunei Armed Forces in the Court of Appeal of Brunei.
Singaporeâ€™s top 25 LAW firms
Largest Law Firms in Singapore Company Name
Allen & Gledhill
Lee Kim Shin, Lucien Wong
Rajah & Tann
Lee Eng Beng
Drew & Napier
Rodyk & Davidson
Spruson & Ferguson
Herbert Smith Freehills
Baker & Mckenzie, Wong & Leow
Shook Lin & Bok
Sarjit Singh Gill
Advokatfirmaet Vogt & Wiig AS
Kristin Schjodt Bitnes
Lee & Lee
Kwa Kim Li
Norton Rose (Asia)
Stamford Law Corporation
RHT Law Taylor Wessing
Tan Chong Huat
Allen & Overy
Harry Elias Partnership
Colin Ng & Partners
TSMP Law Corporation
Stefanie Yuen Thio; Thio Shen Yi
Truong Nhat Quang
White & Case
Samuel David Scoles
*The list is based on the information provided by the company or their website. SINGAPORE BUSINESS REVIEW | JANUARY 2013 33
feature: Professional Services
Learn more about Resources Global and UFIT Urban Fitness Find out how these two companies strive for success as a professional services firm and an independent fitness provider.
s more companies shift to being project-based organizations and in a difficult economic environment like today, the demand for experienced consultants working on an interim basis is rapidly increasing. Hence, flexibility and cost-efficiency has become more and more important in the industry. Resources Global, a professional services firm established in 1996, heeds this demand as it offers clients a flexible solution in a cost-effective manner on a local or global basis, with a consistent level of quality. Managing director for Singapore Sebastien Normand reveals, “Our focus is on rapidly bringing hands-on experienced consultants on a project basis to support our clients from various industries and make sure that they will be fully dedicated to them to solve their problems with long lasting solutions.”
Sebastien Normand, Managing Director for Singapore of Resources Global 34 SINGAPORE BUSINESS REVIEW | JANUARY 2013
The ‘inside out’ approach Resources carries a Big Four heritage as it was founded as a division of Deloitte & Touche LLP in 1996 until CEO Don Murray led a management buyout in 1999. Resources then pioneered a new kind of consulting, the “inside out” approach, where consultants work in partnership with leaders and their teams to transfer knowledge, build operational capability and drive change through all levels of the enterprise. The firm also employs
“For its Singapore clients, Resources Global promises unmatched reactivity to quickly find a solution to problems. ”
only seasoned professionals who have an average experience of 15-20 years in finance and accounting, human capital, information management, internal audit, as well as legal and supply chain. Sebastien adds: “With 3000 of them worldwide, we managed to create a reliable, global alternative to the Big 4 for our clients, MNCs in a vast majority. Our consultants partner with our clients in a much more collaborative manner than traditional consulting firms, enabling an optimal knowledge transfer.” Resources Global Professionals in Singapore is focused on Finance & Accounting, Internal Audit and Compliance, Information Management, Supply Chain Management and Human Capital - covering all industries to help clients run their initiatives, either by being part of their project team or through interim positions, notes Sebastien. Unmatched Solutions Resources Global operates in 66 countries through 80 offices and has brought an alternative to traditional consulting firms, with more flexibility and the capacity to answer the local, regional and global needs of its clients. “We have also launched new actions like the Straits Times Resources Governance Index, to assess the quality of corporate governance of companies listed on the SGX,” Sebastien says. The firm also uses Policy IQ, a web-based content management application that helps companies create, organize, track and report on business content. Normand notes that it is used by hundreds of organizations, from small businesses to Global 100 enterprises, to manage content for a single purpose, such as SOX documentation management, or across many areas for multiple tasks. “Our customers are creatively applying policy IQ’s functionality to meet needs of virtually any initiative where they are working to organize information, automate processes or implement oversight and approval,” he adds.
feature: professional services
The strong pressure on rates has been one of the major industry challenges faced by Resources Global. Future plans “We constantly need to emphasize what we bring in our model, i.e. more flexibility, more experience, access to a global network and Subject Matter Experts, global functional coverage,” reckons Normand. The firm is also challenged by its dependence on the local and global economy. But its global footprint helps through a better balance of risks faced in different regions. Moving forward, Resources Global Professionals aims to leverage its existing client base to develop the business and to target new clients from diverse industries especially buoyant markets like Malaysia, the Philippines, and Indonesia. According to Normand, they are planning to develop some of their service lines like Information Management and Supply Chain Management but continue to be a key solution provider for Accounting and Regulatory topics (IFRS/USGAAP conversion, Conflict Mineral, FATCA...). For its Singapore clients, Resources Global promises unmatched reactivity to quickly find a solution to problems, high level of commitment, strong experience, high professionalism, and cost-efficient solutions. In as much as Resources Global pledges for exceptional service to its Singapore clients, UFIT Urban Fitness also offers the same level of exemplary services. UFIT Urban Fitness taking giant strides into 2013 UFIT Urban Fitness Pte Ltd is Singapore’s leading independent fitness provider, offering personal training, Bootcamps, Salveo nutrition, UFAST (intermittent fasting), physiotherapy and sports massage. When founded in 2007, UFIT first offered Bootcamps in the beautiful parks around Singapore. By 2011, 1000 people attended these sessions every month. With a growing client base and having established themselves as the leading Bootcamp provider in Singapore UFIT launched a training studio in the heart of the CBD to cater to the city’s busy professionals. UFIT, owned and operated by four individuals from diverse backgrounds, is a team of 15 top-class nutritionists, physiotherapists, trainers, administration staff and a deep tissue therapist. Heading this team is Darren Blakeley, the original founder of UFIT who holds a Masters in nutrition and exercise
Bootcamp program of UFIT science, and James Forrester, a former England rugby player and current coach of the Singapore rugby 7’s team. Training manager Alex Salihin coached the US Army and Dean Ahmad runs the technical side of UFIT, creating and maintaining its educational program. One year after opening their training facility in Amoy St, UFIT announced it will expand its current space of 2000 sq ft to 4500 sq ft Adding an additional treatment room for physio and deep tissue therapy and introducing an MMA training program under the guidance of four-time Singapore Muay Thai champion Stanley Sim. Meanwhile UFIT’s Bootcamps have gone from strength to strength and now offer 90 sessions a month around the island. Catering to customers’ demands UFIT operates a very different model to the other larger ‘franchise’ gyms in Singapore.
“UFIT’s mission is simple. Fun, tailored training in a dynamic environment. ”
There are no membership fees or longterm contracts. Clients simply pay for sessions by the hour on a pay-as-you-go basis, or packages are available for either personal training or unlimited monthly access to Bootcamps. UFIT ensures clients get a different experience bringing fun and variety through the use of traditional and non-traditional equipment. Trainers employ a friendly and holistic approach not only by imparting their knowledge and expertise, but through introducing their clients to new, functional, dynamic exercises while utilising non-conventional equipment. UFIT strives to be different because it recognises the shift in consumer demand. Individuals want to lose weight, get fit for sport and generally rediscover their lost youth and vitality, while accomplishing these goals in exciting new ways. Gone are the boring traditional machine-based workouts. In are workouts that wake up muscle combinations and range of joint movements which have you moving in patterns that fire muscles and have participants panting for breath and wondering why. UFIT’s mission is simple. Fun, tailored training in a dynamic environment. “Get fit, get to UFIT.” SINGAPORE BUSINESS REVIEW | JANUARY 2013 35
ANALYSIS: ASIAN AIRLINES
Asian airlines heading for a profit margin crash Cost advantage over rivals deteriorate as currencies continue to appreciate.
sian carriers in terms of cost efficiency remain cheaper to operate than European and US rivals but it may only take a few years from now before we see a reversal as the former’s cost advantage continues to shrink over the last seven years. That’s according to HSBC Global Research which have benchmarked the Asian airlines by estimating passenger airline unit costs and comparing these to average flight lengths. Cost inflation According to HSBC, the relative cost advantages that the Asian airlines have so far enjoyed are now being eroded by currency appreciation. It reckons that for non-dollar currency regimes, local currency costs make up 20-50% of operating costs, with most airlines falling towards the
36 SINGAPORE BUSINESS REVIEW | JANUARY 2013
Local currency costs make up 20-50% of operating costs, with most airlines falling towards the upper end of this range.
upper end of this range. Low cost base a decade ago created by weak Asian currencies, it argued, masked process inefficiencies and poor product decisions that are now being exposed by cost inflation. The impact of cost inflation on the airlines is not uniform as it depends on whether competitors have also suffered similar levels of unit cost increases. The case of Singapore Airlines HSBC noted that Singapore Airlines (SIA) was probably the world’s lowest cost premium airline in 2004 and had unit costs lower than rivals such as Cathay Pacific and Emirates, but by 2011, SIA had slipped behind the two. All airlines have benefited from the change in exchange rates over the last seven years. However, Thai and Cathay Pacific have benefited more than
other airlines due primarily to the strength of revenue currencies relative to the cost currencies, said HSBC. Stated differently, as an internationally focused airline, SIA has witnessed the highest cost increase over these seven years, owing solely to currency movements, and this has offset much of the benefits of revenue currency appreciation, it added. Staffing inefficiency HSBC also pointed out that SIA’s product has been relatively spaceintensive, which has increased its unit costs. Finally, SIA’s staffing efficiency has not improved at the same pace as Cathay Pacific’s, which is probably due to the former’s lower capacity growth rates. Cathay Pacific, on the other hand, is a clear winner in terms of relative cost performance in Asia. It has
ANALYSIS: ASIAN AIRLINES enjoyed the benefits of a weak homebase currency, achieved efficiency improvement and constrained wage inflation. Capacity cuts Going forward, HSBC expects some of the ASEAN carriers to face substantial challenges to restore returns over the medium term if Asian currencies continue to appreciate. It seems likely though that Asian airlines will continue to offer discounted fares to lure passengers despite already eroding margins. A December 2007 report by InterVISTAS Consulting titled “Estimating Air Travel Demand Elasticities”, notes that the fare elasticity at the carrier level is -1.5 to -2.5, which means that if a carrier raises fares unilaterally then it is likely to lose pas-
sengers to other airlines on the route In essence, on many international routes to and from Asia and within the region, the environment is highly competitive, and there is plenty of capacity – therefore airlines have little control over ticket prices. CIMB noted that despite macro concerns, passenger demand has remained resilient, although it has grown at a moderating pace. Latest data from the International Air Transport Association showed AsiaPacific carriers saw demand growth of just 0.9%. This is a major slowdown from the 5.8% recorded in June the year before. European airlines benefitting over Asia-Pacific airlines Moreover, compared to the previous month, demand contracted by 1.3%.
Cost per ASK versus Stage length - 2011
Source: Companies, HSBC
Sustained disparity between cargo and passenger growth is unusual
Source: CIMB, AAPA
“Asia-Pacific Airlines (AAPA) suggest that capacity growth rates in 2H12 are likely to decline around 3-4% against ASK growth of 6.4% observed in 5M12.”
IATA notes that European airlines appear to be benefiting more than Asia-Pacific airlines from the recently stronger trade flows from West to East. Passenger load factors of SIA climbed 1% pt in October, the third consecutive month of improvement. Traffic surged 7% yoy last month against a 6% growth in capacity, with loads to the Americas, Europe and West Asia and Africa rising notably. MayBank analyst Bernard Chin however notes that SIA’s long-haul segment load factor of 79.8% was exactly at break-even. More disconcerting, he said was the fact that long-haul passenger yields at SG11.4cts/pkm were the lowest in more than two years, last seen only during the GFC-hit year of FY3/10. Promotional fares to stimulate demand will continue to depress yields going forward. On the other hand, cargo traffic has deteriorated significantly over the last 18 months. According to IATA, the freight market saw a 7.6% decline in demand in July compared to the previous year, the steepest decline for any region, while capacity dipped just 4.3%. Asia-Pacific carriers have experienced virtually no growth in freight traffic since the fourth quarter of 2011. SIA’s cargo volumes declined for the eighth consecutive month in October. Discounted fares CIMB believes that the disparity between the cargo and passenger trends implies that airlines may have been offering discounted fares in an attempt to stimulate demand and suggests potential weakness in passenger yields in 1H12. Additionally, CIMB said that although load factors have stabilised in recent months, forward demand indicators do not suggest a sharp turnaround either. That said, it seems that the Asian airlines are beginning to factor in an increasingly benign demand outlook. However, instead of increasing fares, Asian airlines are more likely to resort to cutting capacity especially on international routes. While planned schedules can be altered, CIMB said that current schedules obtained from the Centre for Asia Pacific Aviation and Innovata for the airlines studied by the Association of Asia-Pacific Airlines (AAPA) suggest that capacity growth rates SINGAPORE BUSINESS REVIEW | JANUARY 2013 37
ANALYSIS: ASIAN AIRLINES in 2H12 are likely to decline around 3-4% against ASK growth of 6.4% observed in 5M12. Fleet efficiency Aside from cutting capacity, another area where airlines can manage rising costs without passing it to consumers is through buying modern and appropriate jets. This strategy, however, raises a number of issues. First, HSBC noted that many Asian airlines simply don’t have the balance sheet strength to modernize their fleet: “This problem is compounded by two factors. Carriers where the book value of aircraft is now at a significant premium to the market value are reluctant to sell the assets as they will recognize significant disposal losses. In addition, some of the aircraft types are now, so unpopular that selling the jets is increasingly difficult.” The second issue is aircraft choice. HSBC argued that a number of the Asian airlines have purchased trophy aircraft such as the Airbus A380 but their long-haul routes are simply too thin to support these jets. “There are two prerequisites for operating an Airbus A380 aircraft profitably in our view. First is to have high density long haul routes with either of the origin or destination airport capacity constrained. If the airport is not capacity constrained, there is the likelihood that a competitor with lower capacity aircraft can operate better frequen-
cies between these markets and may become a preferred choice of flyers. The second condition is scale i.e. having around at least 20 jets of each type in the fleet to yield scale advantages in maintenance and staffing,” said HSBC.
subsidiaries. HSBC argued that this may not be the solution while noting the poor track record of low-cost carrier subsidiaries in Europe and the US highlights the risks of this strategy. “Ultimately, a full-service airline needs to lower the costs of its main line product rather than try and bypass its cost base via a lower cost subsidiary,” it said.
Low-cost subsidiary With their main airlines at risk from rising unit costs, some Asian carriers have established low-cost carrier
Innovata data suggest that ASK growth will decline in 2H12
Source: CIMB, AAPA, CAPA, INNOVATA
38 SINGAPORE BUSINESS REVIEW | JANUARY 2013
A full-service airline needs to lower the costs of its main line product rather than try and bypass its cost base ”
Cost-effective product in SIA In the case of SIA, HSBC believes that establishing a more cost-effective product in Singapore Airlines may ultimately be a better strategy than by-passing this cost base via Scoot. “Long-haul LCCs are not a new concept in Asia, but the track record so far has been poor. In the past, the failure of Oasis and Viva Macau had raised doubts over the sustainability of the LCC model in the long-haul market,” it said while noting exceptions for the survival stories of AirAsia X and Jetstar. Still, HSBC insists on its view that long-haul low-cost model is problematic, offering as evidence the recent suspension of most long-haul flights and the recent heavy losses of AirAsia X in Eurozone areas.
Thought leadership series 2: training & development
3 former deans to teach for the new Nanyang MBA
Meet Professor Hong, Professor Neo and Professor Wee who will impart their extensive Asian expertise and leadership skills to incoming cohort for the Nanyang MBA.
s Asia emerges as the most influential market in the world, more companies come to Asia to explore the growth opportunities, learn about the business practices in the region and most importantly look for talents. The new Nanyang MBA curriculum recently launched by NTU’s Nanyang Business School heeds the call for MBA talents who will go through a more relevant and intensive MBA program that is more Asia centric and puts special emphasis on leadership. With many MBA programs in the market to choose from, aside from an innovative curriculum, top faculty is equally important to bring that learning experience to a higher level. Under the new Nanyang MBA program, incoming students will learn from these expert leaders who all have impressive track record and immense experience as well as knowledge and expertise in the Asian business landscape. Having three former deans teach in this MBA program shows how Nanyang is dead serious in making this MBA program the program of choice, even by employers. A unique learning experience According to Professor Neo Boon Siong, the new Nanyang MBA provides a unique learning experience where students are challenged and taught to apply concepts and principles to real-life business situations, guided by experienced faculty who has deep expertise and industrial experience. “It is more tightly coordinated, enabling students to complete the same rigorous education in a shorter time frame. Nanyang Business School has a repertoire of Asian cases that will be used and a greater emphasis on managing in emerging markets,” says Prof Neo. The new 12-month MBA program is intensive and focused in a cost effective manner without compromising depth and rigor, according to Professor Hong Hai who spent more than 20 year in business before heading for the academia as dean at NTU’s Nanyang Business School. Nanyang MBA has the most internationally diverse group of professors with deep and
Hong Hai, Neo Boon Siong, and Wee Chow Hou, Professors from NTU abiding interest in Asia and an amazing diversity of students from around the world that makes an exciting environment for learning to be leaders in Asia. Professor Wee Chow Hou will teach his ‘signature’ and popular strategy courses such as Sung Zi Bing Fa, the Chinese “Art of War” as applied to business. “We will challenge them to think more creatively and analytically – skills that are even more critically needed for higher level appointment- leadership.” Imparting their leadership skills and Asian expertise With their extensive knowledge and experience in Asia’s corporate world, how do these three esteemed professors plan to impart their expertise to the students? Prof Neo, whose experience includes advising large leading firms like IBM, Microsoft, DBS, OCBC and SIA and also that of the public sector, has seen the needs and demands of these sectors. “I will be bringing my experience into the classroom by sharing insights and examples
“Under the new Nanyang MBA program, incoming students will learn from these expert leaders who all have impressive track record and experience.”
of how concepts and principles are actually implemented in the real business world – the subtle approaches, nuanced adaptations and contextual sensitivities critical to developing intelligent skills necessary in a more complex and dynamic environment.” As such, he reckons that the new MBA curriculum equips the students with thoughtful yet pragmatic approaches and practical solutions to achieve strategic business outcomes by internalizing the principles of leadership. On the other hand, Prof Wee, with his western training combined with an indepth knowledge of Asia , says he intends to make his students look deeply at issues and problems differently, with an Asian focus. Such integration of the best of the east and west in management knowledge and expertise, he adds, is where he can provide the most value-add to the learning experience of the MBA students. As a former CEO and having worked in major firms, Prof Hong Hai concludes that Nanyang MBA’s focus on leadership and Asia means that employers will find that Nanyang’s MBA graduates can hit the ground running early, highly confident in an environment they have become familiar with through their exposure to issues and cases in Asia and equipped with competencies that will carry them to leadership positions as they progress in their careers. SINGAPORE BUSINESS REVIEW | JANUARY 2013 39
ANALYSIS: islamic banking
Here’s how Islamic banks can overcome scale disadvantage
Find out more about the latest issues in Islamic finance including regulations, Shariah compliance, and the Islamic banks’ severe scale disadvantage vs conventional banks.
s the Asian market grows more and more attractive for Islamic banking and financing products, even international banks are looking to tap this market already. No less an institution, Goldman Sachs is reportedly planning to issue Sukuk bonds, and improbable as it sounds, Ireland has begun talking about its ability to be an Islamic banking centre, according to data from Australian banking research and advisory firm East & Partners. The firm notes that currently, there are US$1.1 trillion in Shariah-compliant assets worldwide, up 33% in 2010, and that value is expected to grow by as much as 15 to 20% this year. “There was a record US$43 billion in sukuk issuance in the first quarter of this year, doubling the same period in 2011,” it adds. Some established banks, such as Standard Chartered, HSBC and the Singaporean and Malaysian majors, are already well placed to take advantage of this opportunity, notes East & Partners. It adds that Switzerland’s
40 SINGAPORE BUSINESS REVIEW | JANUARY 2013
“There is US$1.1 trillion in Shariah-compliant assets worldwide, up 33% on 2010, and that is expected to grow by as much as 15 to 20% this year.”
Bank Sarasin is also pondering entering the high net worth Malaysian market with Islamic product. With a rapidly growing market that catches the attention even of big international banks, issues on regulations arise. Is there a need to impose more globally consistent regulations for Islamic banks in terms of liquidity management and financial reporting? Regulations on Islamic banking Syed Alwi Bin Mohamed Sultan, managing director and head of Islamic finance for Asia Pacific at BNP Paribas Malaysia Berhad, reckons the calls for regulations for the Islamic banking industry have come about due to the differences of opinions of scholars in different jurisdictions. But it is important to first recognize that Islamic banks operate within localised domestic financial systems and come under the regulatory purview of the domestic regulator. The need to regulate such decisions then resides with the local regulator. He also notes that Islamic banks
are an essential part of the global financial system and must be regulated under a consistent and similar regulatory framework as the conventional industry, otherwise it will be open to arbitrage abuses. “The calls for a consistent treatment of products have only been an issue in very recent times because Islamic finance has proven to be a viable financial solution within the global financial system. Therefore, this is a positive development within the Islamic finance industry as it has gained the recognition of the market players,” he adds. Over the past two decades, entities such as the Accounting and Auditing Organization for Islamic Financial Institutions, International Islamic Financial Market, and Islamic Financial Services Board have been established to ensure the development of the Islamic banking industry in a consistent manner within global banking standards. On the other hand, Badlisyah Abdul Ghani, executive director
ANALYSIS: islamic banking and chief executive officer of CIMB Islamic notes that what is needed is for Islamic finance to be regulated in the same manner as conventional finance. “We should aim to have as much as possible a consistent regulatory framework in the same manner that we are trying to achieve in conventional finance, but it cannot be at the expense of making the industry rigid and less dynamic than conventional finance,” says Badlisyah. Shariah compliance Adil Ahmad, former CEO of Kuwait International Bank, says there are ways that lead to a more uniform Shariah compliance over time. He notes that at the moment, Islamic banking assets (totaling approximately US$1 trillion) account for approximately 1% of the world’s total banking assets. Practitioners, regulators and supporters of Islamic banking want this percentage to increase over time, and for Islamic banking to have a position in the financial world at least commensurate with the percentage of Muslims in the world. “For this to happen, the various current clusters of Islamic banking like South East Asia, South Asia, the Middle East and Europe/America will have to move towards standardization and harmonisation of global Islamic banking suite of products and services, so that they are interchangeable across the various geographies. This is what, I believe, will lead to more uniform Shariah compliance over time,” says Ahmad. BNP Paribas’ Syed, meanwhile, has a different view and believes perfect uniformity may not be possible nor desirable as Shariah is the divinely ordained blueprint of human conduct that branches into faith, worship, ethics, socio-human relations, economics and finance. From these divine sources, he notes, Muslims have derived the Islamic law, or Fiqh, which represents the human comprehension of the divine revelations. Differences of opinions are then natural and inevitable. “Therefore, achieving perfect uniformity may not be possible nor is it even desirable. What we must strive to achieve is greater harmonization among the differences of opinions of Islamic scholars. This, I hope and I believe, will be achieved with greater
success as the Islamic banking industry grows in maturity,” says Syed. CIMB’s Badlisyah concurs and reckons that every jurisdiction will have different laws of the land, legislations, financial regulations, market conventions, customs, cultures and outlooks in life depending on society, and all of these will influence how Shariah is applied in any financial transaction. He adds: “Although there will never be uniformity in the application of Shariah, there is and will always be uniformity of Shariah because everyone follows the same Shariah, which is the Quran and Hadith. The question of whether Shariah compliance is more or less uniform is irrelevant as it is 100% uniform.” Growth drivers But regulations and uniformity issues aside, what will be the key drivers for continuing the growth in Islamic finance? According to Badlisyah, the key driver would be the existence of an enabling and effective legislative, regulatory, legal and Shariah governance framework for Islamic finance. Kuwait International Bank’s Ahmad notes that while the sterling growth in Islamic banking over the last decade has been primarily due to the rise of the consumer banking segment--whose rapid growth has been fuelled by new products such as Shariah-compliant credit cards, auto finance, and housing finance--Islamic banks will have to offer a progressively broader suite of products and services. He reckons that Islamic banks face a severe scale disadvantage vis-a-vis conventional banks, and
Badlisyah Abdul Ghani
Syed Alwi Bin Mohamed Sultan
this inhibits their efforts to provide a bigger range of banking products and services in a cost-effective manner. “For example, the largest Islamic bank in the world has total assets of approximately US$60 billion, while there are over 25 conventional banks each with assets in excess of US$1 trillion. Most Islamic banks also operate primarily in a single country, whereas many conventional banks have broad and deep operations in multiple countries.” The right question BNP Paribas’ Syed, on the other hand, reckons that if Islamic finance is to sustain continuity, change is a prerequisite. Islamic banks will need to change to the needs of their customers, technologies, products, economy and many other drivers of opportunities towards identifying new sources of profit. “Growing affluence of Muslims and society, increased supply of liquidity, a need to diversify allocation of funds and capital, growing sophistication of investors and consumers, loss of loyalty of customers to single banking relationships, liberalization of financial regulations allowing cross border flow of liquidity, etc. The question is not what the drivers of growth are but how we manage these drivers to achieve sustained growth,” says Syed. From what we know now, Islamic finance definitely offers a whole new platform for banks and clients alike to grow. As East & Partners notes, Islamic banking could also mean opportunity for local institutions which are close to their communities and are well-placed to tap into the growth.
SINGAPORE BUSINESS REVIEW | JANUARY 2013 41
country report: Nordic
This is how Nordic companies Securitas and Nynas excel in Singapore Find out how security services company Securitas and specialty oils provider Nynas brought their rich Nordic heritage and worked their way to success in Singapore.
ecuritas started as a local Scandinavian security company in 1934 but it has now grown to a global security services provider with 300,000 employees in 51 countries. Securitas has been successful in penetrating Asia. It is now present in Cambodia, China, Hong Kong, India, Indonesia, Sri Lanka, Taiwan, Thailand, Vietnam, and of course, Singapore. Azlee Maidin, Country President for Securitas Singapore, reckons that for Securitas, this geographical expansion represents an opportunity to better reach customers with operations in more than one region, exposure to newer and more challenging markets which makes way for developing service offerings that proactively anticipates and adapts to everevolving market dynamics. “The key to our success lies in working
Azlee Maidin, Country President for Securitas Singapore 42 SINGAPORE BUSINESS REVIEW | JANUARY 2013
closely with our customers, utilizing our innovative skills and devoting our efforts in identifying and suggesting solutions that can improve security in a cost-efficient manner for our customers,” notes Azlee. Securitas in Singapore Almost 85% of Securitas’ Singapore business revenue is generated from specialized guarding services provided to the Commercial and Industrial sector. In Singapore, Azlee notes that Securitas provides a wide range of security services which include specialized guarding, mobile patrols, alarm response, remote monitoring, ATM frontline maintenance
“Securitas has been successful in penetrating Asia.”
security escort services, and security for the MICE industry. Securitas has been protecting commercial & industrial buildings, financial institutions, government installations, the healthcare sector, technology hubs & science parks, residential properties and events. “While our core business is specialized guarding we add a multitude of services such as risk analysis and investigations, factors that in combination with technology and specialized guarding provide a high value combined solution for our customers. This enables us to advise our customers on highly complex security issues or crisis situations,” he adds. Securitas has been graded “A” by Singapore Police Force and is ranked among the industry leaders. “We continuously invest in technological knowhow and share global best practices to increase the quality of our services. Securitas, all over the world, mirrors the same business ethics and values, and works uniformly in terms of service delivery. We do not distinguish customers by their business size and deliver, with consistency, effective security solutions tailored to customer needs,” says Azlee. Acquisition as a strategy Globally, Securitas acquired 19 companies in 2011, one of which was Chubb Guarding Services, Singapore. Azlee reveals that acquisition is a key element of Securitas’ strategy to strengthen the company’s competence and approximately half of the free cash flow they generate is allocated to acquisitions. The acquisition of Chubb Guarding Services was significant for Securitas’ foray into the Singapore market. “In Singapore, Chubb has been providing innovative security and fire safety solutions for 40 years now. It only made good business sense to amalgamate the four decades of local industry know-how of Chubb with close to eight decades of knowledge leadership of Securitas, get a stronger foothold in the industry and be able to provide better custom-made security solutions to our clients,” adds
country report: nordic
Azlee. Given the evident benefits of acquiring a company like Chubb, does Securitas have any plans to acquire any Singaporean or Asian company in the next two years or so? Azlee says Securitas will continue to explore and evaluate the market for favourable opportunities and will not hesitate acquiring a company should they see potential. “Acquisition, as you know, has always been a strong lever for our growth within the region. Through our acquisition activities, we seek to strengthen our service offerings, accelerate innovation and meet customer demands more rapidly,” he notes. Securitas’ global standard Securitas has grown from being a local Scandinavian security company to a global security services provider with a presence in 51 countries. Its size, combined with its long heritage and experience, allows the company to specialize and build industryspecific knowledge and reduce risk for its customers. Securitas gives utmost importance to what it considers as the company’s greatest asset - the employees. While they work hard to secure peace of mind for Securitas’ customers, Azlee thinks it is important to offer them some security of their own so they offer all employees competitive wages, fair working conditions and stable employment that they can expect from a global company. Apart from Securitas, another company with a Nordic heritage also found its own niche market in Singapore and succeeded at that. Nynas, a specialty oils company, discovered how it can flourish in Asia by exploring and addressing the growing demand for oil in the region. Nynas’ specialty oils Instead of utilizing mineral oil as an energy source Nynas focuses on utilizing the special characteristics of oil in numerous application areas. Nynas products are found everywhere in society – in road surfaces, insulation for electrical transformers, car tyres, lubricants and printing ink, for example. Many of our products have a long life length exceeding 25 years. This specialisation distinguishes Nynas from most other oil companies, which are bigger and mainly use oil as an energy source in the form of petrol, diesel and other fuels. However, it should be said that we are also big – in some cases the
Mr. Pascal Verhoie, Regional Director Asia for Nynas global leader – in the specialty product areas in which Nynas operate. The success story Nynas has changed considerably since its foundation in Sweden over 80 years ago. The company began life as a Swedish oil company, manufacturing everything from petrol and diesel to heating oil and lubricants, but is now an international group with focus on specialty products in specific markets. A high degree of refining is crucial to create the specialty oil solutions required by the industry. Nynas operates refineries in Europe and the Americas. In combination with an extensive global supply network it meets global demand. Investments are continuously made to meet market demands. A new sulfur recovery unit in the Nynashamn refinery in Sweden was for example inaugurated on November 17, 2012. Pending competition approval from the European Commission Nynas will also take over parts of the Shell refinery in Hamburg, Germany and convert it into a specialty oil refinery to meet demands
from the global market – increasing the production capacity for specialty oils with close to 30%. Burgeoning oil demand The growing demand for specialty oils, especially in Asia, is coming from the increased electrification of the world. An industry where Nynas has a leading position as provider of insulating oils to transformer manufacturers and utilities. “For us it is important to be close to our markets – we do not only speak chemistry and have a deep understanding of our customers’ application areas. In most cases we also speak the local language. Creating a close, even personal, relationship with our market is appreciated and makes us different,” says Pascal Verhoie, newly appointed regional director for Nynas Naphthenic business in Asia.
“Nynas focuses on utilizing the special characteristics of oil in numerous application areas.” SINGAPORE BUSINESS REVIEW | JANUARY 2013 43
Is Singapore really the least emotional country in the world?
One more time now, with feelings
recent survey that spread around Singapore faster than the news of a free gift event at Tangs said that Singapore was the least emotional country in the world. Ironically Singaporean residents reacted with fury and great emotion! The Gallup survey reported gleefully in places like pro-western brand Bloomberg was not only flawed, it was clearly just a means to an end for people writing a negative story about Singapore. Bloomberg tried to tie in supposedly long working hours in Singapore with emotion and also happiness. They have little to do with each other. Bloomberg’s article took the survey results and made mass assumptions that sounded like out of touch American Republican who rails against the Chinese ultimately making themselves look foolish. “Fun city it ain’t” it says when reporting the story! Hello, have they actually been here? Fun city it is, every day of the week in fact! More so than many a city in the USA, that’s for sure. There are more people out in the sun and warmth in Singapore every day of the week till all hours enjoying eating and drinking with friends than anywhere in the US where many places shut down when darkness falls. Are meetings with friends and work colleagues not emotional occasions when you connect and enjoy life? If you’re happy in your work and you work long hours, you’re increasingly happy! You could actually argue that being less emotional (were it true) was actually a positive asset when it comes to effectiveness at work. No emotions means rational and focused decision making. It could explain the productivity of the nation if we did indeed live amongst a Vulcan nation of unemotional
44 SINGAPORE BUSINESS REVIEW | JANUARY 2013
by Chris Reed
Spocks’. Emotion does not equal happiness. The most emotional country in the survey was supposedly the Philippines and everyone seems to want to leave there and come here or go to Australia! Do countries like the US and UK produce more emotional people because they don’t have to work as hard because they have that safety net of welfare? No. They produce more emotional freaks for deranged daytime TV shows who use emotional wrecks and showcase their emotional weaknesses for all to see on car crash TV that other unemployed emotional wrecks empathise with before shooting up (exaggeration I know but you get the picture!). I wonder whether there is also a cultural anomaly with the report. Many Chinese Singaporeans don’t like to reveal emotions of any kind. The whole losing face syndrome that can drive Western business negotiators to distraction is all about not showing emotion and not showing that you wish to decline to do business with someone but dare not say for fear of losing face. This survey’s questions will have led to many answers being neutral so as to save face on what they really felt, giving the wrong impression of the country. One local academic put the lack of emotional engagement down to the fact that Singaporeans “are taught to keep going and not make too much of a fuss”. Were that even true however that is surely an admirable quality and not a negative one? It even comes from the whole English “stiff upper lip” determination to not show weakness or...emotion! Keep calm and carry on being the marketing slogan of the year across much of the economically depressed Western world. I’m not sure where the English came in this survey but since they obviously came lower than Singapore they must have all lied on their survey! You should see Singaporeans on National Day Another academic quoted in Bloomberg’s biased and wholly one-sided report slamming Singapore said that he had “been to concerts where people don’t even applaud as much as they should.” I would say that having been and enjoyed many concerts in Singapore where the crowd of expats and Singaporeans have gone loopy with excitement that he must have been going to some bloody awful concerts! However I think that the whole survey produced a false report. Singapore is indeed a very passionate and emotional country. Just look at all the online comments and arguments to see that. Look at the passion for family and pride for the military.
How Singapore’s 4G adoption compares with US and Korea
he prospect of Singapore receiving a universal 4G network has been on the cards with widespread use of smartphones and with the launch of iPhone5. DBS Vickers however argued that 4G penetration in Singapore may only hit 8% in 2013 and 20% in 2014 despite the widespread 4G network. These projections, DBS explained, are based on experience in countries like the US where 4G penetration reached around 9% after 18 months of launch, while in Korea, penetration hit 17% after 13 months of launch. It added that 4G network coverage and handset availability are the two most important factors but 4G is not priced at a premium in the two countries. According to Ken Ang WeiYu, an analyst with PhillipCapital, the 4G penetration in Singapore would be higher than that in the US and
Korea as the availability of popular 4G compatible handphones, together with the large percentage of postpaid users with their contracts due for renewal would likely drive up adoption rates for 4G. However, major hurdles may include maintaining a high quality of 4G service. “Should the speed be slower than user’s expectation, due to higher than expected adoption or very high traffic, this may deter users from purchasing a 4G compatible phone or from using the 4G service,” adds Ken. Iain Johnston, an analyst with New Street Research, concurs and notes that the rate of 4G adoption will be faster than the US, given the sensible decision to launch at the time of Apple’s iPhone 5. “With a small market that is smartphone savvy and tech literate, with a high level of data usage already evidenty in Singapore,
“4G penetration in Singapore may only hit 8% in 2013.“
achieving the rate of growth implied by the Korean number is not out of the question,” adds Johnston. But OSK-DMG analyst Jeffrey Tan Jing Keat warns that while 4G adoption in Singapore will probably come in between both the U.S and Korea, the key is educating data users and pricing data appropriately to mitigate some of the value destruction seen across 3G networks. “There is somewhat lack of compelling factors to drive immediate take-up of 4G as most subscribers would be fairly happy with their current 3G data plans.”
SINGAPORE BUSINESS REVIEW | JANUARY 2013 45
A Trio of Tantalizing Tastes
International cuisines made extra indulgent -- from season’s best Mediterranean to quintessential English to gourmet Mexican.
Lolla 22 Ann Siang Road, Singapore 069702 Simple small plates, finest ingredients, seasonal produce with influences of the Mediterranean is what Lolla’s is all about. The cozy 13-seater restaurant has created quite a stir at the ever-popular -Club Street district. Where food is the hero, Lolla and its chefs are determined to only serve the present season’s interesting offerings. Some highlights on the menu include Tuna Belly ‘Chutaro’ tartare, Cinco jotas Jamon Iberico and the Sea Urchin Pudding, the most popular dish on the menu. With a no reservation policy as of now, get ready to wait it out at Lolla for one of the dining bar seats, you can also look forward to the 22-seater communal table.
Keong Saik Snacks
49 Keong Saik Road, Singapore 089153
15 Duxton Hill, Singapore 089598
Bringing in a blend of local and British café culture is Keong Saik Snacks. Serving good ol’ snacks in a Chinese cultural enclave, and paying tribute to quality and invaluable remake of quintessential English culture. Part brainchild of Michelin Star chef Jason Atherton, his third venture in Singapore is all about celebrating iconic food from around the world that include famous English dishes such as Fish and Chips to the D-I-Y Tuna tartar, and the famous zesty Jason’s Very Hot Dog. For those with a sweet tooth, the piping hot Doughnut with Cinnamon with decadent vanilla Chantilly on the side will provide you with a very satisfying option.
The newly opened establishment at Duxton Hill is the casual, vibrant, Mexican, taqueria bar- Lucha Loco. Serving up authentic gourmet taco’s and Mexican street food, while the bar offers a selection of some of Singapore’s finest tequilas and fresh fruit maragaritas. Perfect to satisfy your craving for authentic Mexican food, the menu contains a cariety of Ceviches. Appetisers, gourmet tacos and mains that are recommended to share. The casual restaurant turns into a party venue later at night, with guests sipping on some of Lucha Loco’s famous cocktails.
Recommended by QUINTESSENTIALLY LIFESTYLE, the world’s leading luxury lifestyle group with a 24-hour global concierge service. Contact singaporebusiness@ quintessentially.com. 46 SINGAPORE BUSINESS REVIEW | JANUARY 2013
New home launches below $1000 psf becoming rare
roperty experts anticipate a new price benchmark for mass market condos. According to Knight Frank, prices of new mass market homes launched in September 2012 are mostly above $1,200 psf, reflecting increased prices in Outside Central Region (OCR). It thus claims that new private home launches with prices below $1,000 psf are becoming rare nowadays and mostly found in Pasir Ris (Flora Drive) and Hougang areas. Is it really so? Alan Cheong, director for research & consultancy at Savills Singapore says successful bids for the past couple of government residential sites in the suburban areas have breakeven prices ranging from $800 psf to a high as $1,200 psf. Developers who are building on these lands cannot under normal market conditions be expected to launch these projects merely at breakeven levels. Therefore, he reckons it is not a tall order to expect mass
market condominiums to be priced at $1,200 psf and continue rising beyond this if such trends persists. But PropNex Realty CEO Mohamed Ismail disagrees and says that â€œbased on the recent mass market project launches (OCR) like Parc Centros that was sold at median resale price $924psf, Parc Olympia sold at $870psf while Riversails sold at $849psf, we do not think $1,200psf is going to be the new benchmark for mass market condominiums.â€? He notes that only these properties near MRT will command the $1,200psf price tag while mass market private properties in the outside central region near amenities will still command $1,000psf - $1,050psf. Nicholas Mak, executive director at SLP International Property Consultants says property prices are increasing but the property launch price does not depend on location only, but also on other factors such as the land tenure.
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LIFE & STYLE
A toast for the best wine glasses With the party season in full swing, there’s sure to be plenty of tippling to be done. Make your toasts with one of these wine glasses. Riedel Crystal Wines, Unit 01-02/03, Valley Point 491 River Valley Road Singapore 248371 Riedel really needs little introduction – this Austrian glass manufacturer has been as big a name in modern oenology as any vineyard, redefining the way people drink wine. Riedel pioneered the concept of different glass shapes and sizes to bring out the unique characteristics of each grape varietal: from the balloon bottomed Burgundy, to the slender stemmed Loire, to the tulip shaped Sauternes. Fusion Stemware http://www.wineenthusiast.com/templates/ fusionwineglasses.asp Touted as the world’s most break-resistant stemware, the eponymous Fusion of European crystal with ultra-strong magnesium makes for a glass that is both handsome to behold, lightweight and durable. The shatterproof glasses are a worry free option for occasions where acrylic is not an option, but neither is breaking out the family heirlooms. Lucaris
Tools Of The Trade Store , 896 Dunearn Road 01-01A Singapore 589472 Lalique & James Suckling 100 Points Wine Glass
333A Orchard Road, #01-16 Mandarin Gallery, Singapore 238897 Internationally renowned wine critic James Suckling knows wines. And few know crystal better than Lalique. This exemplary partnership of expertise have created a “beautiful yet functional” wine glass that marries the exquisite craftsmanship and eye for beauty that have defined Lalique’s work, with the exacting specifications of a wine tasting veteran: a classic form with a frosted rib stem, and a sensual, substantial feel in the hand.
Lucaris is an expression of the emerging Asian wine market, a world-standard range that incorporates Asian traditions with cutting-edge Western techniques. Lucaris brought in the detailorientated German designer Martin Ballendat to produce a stemware for sophisticated palates that is aesthetically appealing and durable : the lead-free crystal manages to be both paper thin and exceptionally strong, is resistant to sudden temperature changes and is dishwasher safe. Seletti Glass from Sonny
Order via Proof Living Ion Showroom, Ion Orchard #03-15, 2 Orchard Turn, Singapore 238801 These eccentric Italian-made glasses are sure to stand out from the crowd with their weirdly warped bubbling surfaces. Blown by mouth, Seletti sees the imperfections of form as beauty in their own right, a natural artifact of the manufacturing process. The borosilicate glass is also tremendously resistant to thermal changes. Recommended by QUINTESSENTIALLY, the world’s leading luxury lifestyle group with a 24-hour global concierge service. Contact firstname.lastname@example.org.
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Singaporeans slammed with more workload
Meet SG’s unhappiest workers
ingapore Business Review are happy with our jobs. But JobsCentral is not likely to believe us when we say that as their recent Work Happiness Indicator revealed that workers in the editorial/ translation line of work are the least satisfied of all workers by job function with the lowest Work Happiness score of 54.2 points. The five job functions with most unhappy workers are
editorial/translation (54.2) merchandising/purchasing (54.8), administrative (57.7), finance (57.9), and customer support (58.9). A total of 3,299 respondents took the 2012 JobsCentral Work Happiness Indicator Survey and 22.5% of the workers ranked salary as the most important attribute of a job while work-life balance matters most to 13.4% of the respondents.
Increasing the workers’ salary may be deemed as one of the most widely used strategy for companies to improve productivity. But a survey by recruitment firm Robert Half revealed that Singapore companies are actually relying on a simple tried and tested method of improving their productivity – getting your employees to do more with the same resources. The companies prefer tapping their existing staff to improve productivity than investing in technology and infrastructure or motivating staff with greater pay. The survey revealed that 49% of CFOs in Singapore said their companies achieved additional output from their team without providing
additional resources. This was followed by 44% who gained productivity improvements through investing in technology, and 38% who employed more permanent staff to increase output. But Stella Tang, Director of Robert Half Singapore warns of the dangers of having overworked employees. “If you over work your employees too much they may leave, and take up a position with a more staff-friendly firm, or look to move overseas.” She adds that the push for employees to do more with the same resources works well when employees are motivated by regular honest and open communication, rewards and recognition, and flexible working arrangements.
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Techie Singaporeans take up more gadgets Nielsen Consumer Confidence Index, Singapore (Q3 2010 to Q3 2012) business to grow in 2012
Mobile activities: an essential part of daily life
TOP 5 MARKETS OF MOBILE ACTIVITIES USAGE
Source: Copyright © 2012 The Nielsen Company
Cut back on household expenditure items
Source: Ipsos PAX Q3 2011 to Q2 2012. 10 markets excluding Tokyo.
Singapore leads the way in technology device ownership
Source: Copyright © 2012 The Nielsen Company
Paying extra for quality is worthwhile
Laptop/ Notebook Computer
Source: Ipsos PAX Q3 2011 to Q2 2012. 10 markets excluding Tokyo. Source: Ipsos PAX Q3 2011 to Q2 2012. 10 markets excluding Tokyo.
For more information contact: Ipsos, Tim Hill (email@example.com); Nielsen, Ellen Cuijpers (firstname.lastname@example.org) 50 SINGAPORE BUSINESS REVIEW | JANUARY 2013
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Published on Jul 19, 2013