2014 | BiZQ | Apr - Jun

Business Quotient / Business / People / O

pportunities

Apr•May•Jun 2014

BUDGET 2014

Taking stock of Singapore’s

economy

EMPOWERING EXCELLENCE

Thinking out of the box

SHOOTING FOR THE STARS

Funding the nation’s space industry

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PTC Logistics’ Chairman Poh

Choon Ann believes in mentoring future

business leaders

EYEING THE CHINA

MARKET

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Chairman’s Message

The first quarter of 2014 has been a busy period for the Singapore Business Federation. We submitted our recommendations for the Singapore Budget 2014 to our members, and shared the results of the SBF National Business Survey 2013/14 as well as the latest SBF-DP SME Index.

The Index, a six-monthly forward-looking measure of SME business sentiments, indicated optimism about prospects for 2014. On the other hand, the National Business Survey showed that our members are increasingly concerned about rising costs and manpower and productivity issues as the Singapore economy restructures.

These findings, backed by extensive engagement by the SBF-led SME Committee of our members and Government agencies, provided the basis for the SBF’s budget recommendations to the Government. The recommendations aimed to create a more vibrant and sustainable SME sector. We included targeted support for SMEs seeking growth, those who are in survival mode, and those in sectors requiring special assistance. We are delighted to have seen considerable alignment with our recommendations in Budget 2014.

SBF is relieved that aside from the S$100 levy increase for unskilled foreign workers in the construction sector,

Calibrating the Budget for Singapore’s Future

there has been no further general tightening of manpower policies. The Federation welcomes the enhanced measures in Budget 2014 to help businesses cope with restructuring and pursue growth. We urge businesses to tap into the extensive schemes and incentives available to them.

On this note, I urge all members to take a closer look at the stories in this issue, as they capture the prevailing mood and opportunities available in our business environment.

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ContentsApr•May•Jun 2014

BiZ Feature

BiZQ takes stock of the economic implications in the latest Singapore Budget.

A Budget Unlike Others16

Economy Watch

Businesses Upbeat about EconomyBased on the latest SBF survey of small and medium enterprises, BiZQ takes a closer look at Singapore SMEs’ more positive outlook.

06

BiZ Voice

Singapore’s Space IndustrySingapore Government says more opportunities are in the pipeline for international companies to work with local players.

10

Commentary

Hiring Trend Sets to Continue This YearMore companies looking to increase headcount, and employees expect pay hike this year, HR surveys reveal.

14

Business Quotient (BiZQ) is the official publication of the Singapore Business

Federation, reaching out to over 21,000 of Singapore’s business elite, chief executives

and entrepreneurs. The quarterly, published in collaboration with SPH Magazines, is your eye on Asian and global business

trends, bringing you up to date on industry developments, the economy, country profiles,

stories about successful companies and the people who lead them.

ABOVE: Transforming Singapore’s industries to achieve higher productivity levels and skills.

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PublisherSingapore Business Federation

10 Hoe Chiang Road, #22-01 Keppel Towers, Singapore 089315, Tel: +65 6827 6828,

Fax: +65 6827 6807, E-mail: [email protected], Website: www.sbf.org.sg

chairmanTony Chew

chief executive officerHo Meng Kit

chief operating officerVictor Tay

assistant executive director(member relations)

Cheryl Kongdirector, corporate

communicationsGerald De Cotta

Publishing AgentSPH Magazines Pte Ltd

group editor-in-chiefCaroline Ngui

group editorJoanna Lee-Miller

editorial & creativesenior editor

Dora Taycontributing editor

Casuarina Pecksub-editor

Annabelle Bokassociate creative director

Jayson Ongart directorWinnie Ong

senior designerMohamed A Rahman

managing directorDennis Pua

general managerChristopher Chan

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Kaz Limaccount manager

Lin Mi’ersenior executive,

client management Neo Pei Shi

publishing servicesteam headAlice Chee

For advertising enquiries, please call+65 6827 6828 or +65 6319 6326

This news magazine is published by SPH Magazines Pte Ltd (Registration No. 196900476M) for Singapore Business Federation (Registration No. ROS138/2002TAP). Copyright of the materials contained in this magazine belongs to SPH Magazines Pte Ltd and Singapore Business Federation respectively. Nothing in here shall be reproduced in whole or in part without prior written consent of SPH Magazines Pte Ltd or Singapore Business Federation. Views expressed in this news magazine are not necessarily those of SPH Magazines Pte Ltd nor the Singapore Business Federation and no liabilities shall be attached thereto. All rights reserved. Editorial enquiries should be directed to the editor, BiZQ, SPH Magazines Pte Ltd, Media Centre, 82 Genting Lane, Level 7, Singapore 349567. Tel: +65 6319 6319, Fax: +65 6319 6227, E-mail: [email protected]. Unsolicited material will not be returned unless accompanied by a self-addressed envelope and sufficient return postage. While every reasonable care will be taken by the editor, no responsibility is assumed for the return of unsolicited material. MICA (P) 119/03/2014. Printed in Singapore by timesprinters, Singapore (Registration No. 196700328H).

In BiZ With

Heading into the China MarketMr Poh Choon Ann, Chairman and CEO of Poh Tiong Choon Logistics, believes in mentoring SMEs and helping them expand.

22

Innovations

3E: Empowering Efficiency & ExcellenceA local company has discovered how thinking out of the box can transform the impossible into new possibilities.

26

Inside SBF

Accessing the Next FrontierSBF’s Africa Business Group heads into new markets in the sub-Saharan region.

28

International Markets

China’s Urban Services on the RiseSBF leads delegation to the 3rd China International Fair for Trade in Services (CIFTIS) in Beijing.

36

SME Resources

Innovation Centre to Help SMEs Adopt TechnologiesA S$7 million Materials Centre of Innovation has been set up to help 450 SMEs adopt new technologies.

39



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Economy Watch

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Businesses Expect Better Sales this Year

Singapore’s GDP growth is predicted to expand to 4.4% this year, a Standard Chartered

economist said recently, and Singapore’s Prime Minister, Mr Lee Hsien Loong, seems to concur with this positive sentiment.

PM Lee said in his New Year message that he expects the Singapore economy to grow between 2% and 4%, and that strong growth is on the horizon for the broader global economies as well.

In early January, the Ministry of Trade & Industry (MTI) announced that the Singapore economy grew by 4.4% on a year-on-year basis in the fourth quarter of 2013, compared to 5.9% in the previous quarter (refer to table: Singapore’s GDP – Quarterly Performance). As a result, the ministry stated that for the whole of 2013, the economy is estimated to have grown by 3.7%. This was in line with MTI’s growth forecast of 3.5% to 4.0%.

Survey on SME outlookMeanwhile, the Singapore Business Federation (SBF) released its SBF-DP SME Index for 2014, revealing that local business optimism is currently at its highest level in three years.

The release of this six-month forecast revealed that Singapore’s small and medium enterprises (SMEs) expect this year to end on a brighter note.

More positive sentiments from Singapore businesses.

next six months.Ms Chen Yew Nah, Managing

Director of DP Information Group, said: “SMEs expect the global economy to continue to grow, albeit at a modest pace. They expect their sales and profits to improve and their businesses to expand during the next six months.”

Mr Ho Meng Kit, CEO of SBF,said: “It is clear that Singapore businesses are riding the tide of a

SINGAPORE’S ECONOMIC GROWTH

4.4%on a year-on-year basis in the

fourth quarter of 2013, compared to 5.9% in the previous quarter.

The Ministry of Trade and Industry stated that for the whole of 2013, the

economy is estimated to have grown by

3.7%in line with the ministry’s growth

forecast of 3.5 % to 4.0%.The Index was compiled with input from 3,000 SMEs on their January 2014 to June 2014 outlook. The respondents came from five industries – business services, commerce/trading, construction/engineering, manufacturing and transport/storage.

Specifically, the overall index for the first quarter of 2014 rose 0.5% to 55.0 – the highest score since the third quarter of 2011 (refer to table: SME Outlook for 1Q-2Q 2014). A score above 50% indicates that SMEs are more positive about their business prospects for the

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more positive global outlook, with our SMEs more confident about their prospects for the new year. SMEs should seize this opportunity for growth by strengthening their competitiveness through innovation and internationalisation.

“As inflationary pressure remains high, small businesses are looking to policy makers to introduce measures to rein in rising business cost and tight labour constraints,” he added.

Positive business sentimentsThe Economic Development Board (EDB) recently released the results of a survey on business sentiments in Singapore, and the survey also pointed to a more positive outlook for the economy.

The EDB survey revealed that companies in the manufacturing sector expected a “positive business situation” in the first half of 2014

on the back of improved global macroeconomic conditions.

Released in late January, a weighted 11% of manufacturers expected business conditions to improve while a weighted 7% foresee deterioration. The survey showed a net weighted balance of 4% of manufacturers expecting a more favourable business situation in the first six months ending June 2014, compared with the fourth quarter of last year.

Stronger growth expectedOn the back of such official data, several economists also echoed the expectation that the economy is headed towards stronger growth this year.

As Barclay’s Singapore-based economist Mr Joey Chew succinctly put it: “It looks like 2014 is going to be much stronger than 2013 for the global economy, so this will definitely support Singapore.”

There is optimism that GDP growth will accelerate. The surprising upside in the US economy at the start of the year and expectations of a stronger Chinese economy have led some experts to forecast growth rates of between 4% and 5%.

Taking such a glimpse into 2014, OCBC analyst Ms Low Pei Han said: “While there are larger global issues – mainly from the developed markets – which will continue to dominate headlines in 2014, we believe that the outlook is slowly and gradually improving.”

Current global issuesThere were several developments which took place in rapid succession in some emerging markets early this year. First, the Argentine peso plummeted by 15% in a single trading day. This was then followed by the selling of financial instruments in Turkey, South Africa and Russia.

Amidst the gust of cold air swirling around the global macroeconomic crisis, China released its Purchasing Manager’s Index (PMI) for January, which reflected slower growth in its manufacturing and services sectors.

One DBS economist told BiZQ that with China being the largest single country export destination for Singapore, there will be a spillover effect due to lower purchasing power and decreased demand for manufacturing goods. Such exports account for about 13% of the republic’s non-oil domestic exports.

“If customers in China are cutting back on their orders, it’ll naturally have a spillover effect on the local purchasing managers. With that, the PMI numbers will not look great,” the economist said.

Looking ahead, there does not seem to be a let-up in this trend, especially since the US Federal Reserve is continuing its pull-back of its US stimulus package. At the time this magazine went to print, the sentiment for the global economy had turned rather negative.

4Q12

3Q13

1Q13

2013

*

2012

4Q13

*

2Q13 Gross Domestic Product

at 2005 Prices

Percentage change over corresponding period of previous year

Overall GDP 1.5 1.3 0.3 4.3 5.9 4.4 3.7

Goods Producing Industries Manufacturing -1.1 0.1 -6.3 0.8 5.3 3.5 0.8

Construction 5.8 8.2 5.5 6.3 5.8 4.7 5.5

Services Producing Industries 1.7 1.2 2.7 5.9 6.5 5.5 5.1

Source: Ministry of Trade & Industry, Singapore

Overall Index (out of 100) 1Q-2Q 2014

Commerce/Trading 56.1

Construction/Engineering 55.3

Manufacturing 54.8

Business Services 55.3

Transport/Storage 54.2

Overall 55.0

Percentage change Q-on-Q (%) ▲ 0.5

SME Outlook for 1Q-2Q 2014

Source: SBF-DP SME Index

SME OUTLOOKOverall Index for the first

quarter of 2014 rose

55%the highest score since the

third quarter of 2011.

A score above 50% indicates that SMEs are more positive about

their business prospects for the next six months.

Singapore’s GDP – Quarterly Performance


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Economy Watch

A glimpse into the futureWhile forward-looking surveys have captured general sentiments, BiZQ took a closer look at several Singapore companies from a cross section of industries to get the real pulse on the ground.

SIA Engineering Group, which announced its latest financial results this February, has warned that its operating yields for maintenance, repair and overhaul (MRO) work will continue to be under pressure because of the uncertain outlook for the global economy in the immediate future.

The company released a statement, saying: “The near-term global economic outlook remains uncertain. Rising business costs, particularly labour cost, present challenges to our operating environment. This will continue to put pressure on MRO yields. The group remains focused on managing costs by pursuing improvements in productivity and enhancing operating efficiencies.”

Executive Chairman Teo Choon Hock of home-grown PS Fasterner, which specialises in the trading of infrastructure and engineering materials, highlighted the “general uncertainty of the world economy, in particular the economies of emerging markets”.

The company reported a drop in revenue and a continued loss-incurring position for 2013, saying

that its performance continues to be affected by competition and pricing pressure.

As a result, Mr Teo said that the group will “focus its efforts on strengthening its position as a quality fastener supplier in the emerging markets, by ensuring that it maintains a comprehensive and well-stocked inventory of products.”

Challenges aheadAnother company from the manufacturing sector that is trying to hold its ground is Surface Mount Technology Holdings.

Senior Managing Director Chan Kei Biu said that despite the positive business sentiment in the current year, “the overall outlook for 2014 remains cautious as there are still concerns on various risk factors like the US tapering of QE3, a possible economic hard-landing for China, restructuring challenges in emerging market countries, and Europe’s possible relapse into recession.”

Looking at the real estate and property sector, Hwa Hong Corp’s Chief Financial Officer Lee Soo Wei said that the residential property market in Singapore faced headwinds throughout the fourth quarter of 2013, due to the property cooling measures introduced by the government and the increasing supply of private residential units.

“The uncertain outlook in the world economy is expected to remain, and returns from equity

investments will correspondingly be influenced by the uncertainties,” said Mr Lee. Exposure to the UK market had not provided much buffer as “the commercial property market outside of London remains weak, and the group expects its investments outside of London to continue to perform in line with the weak market”.

Looking ahead, analysts and economists say that businesses need to remain astute about developments on the ground. For an economy like Singapore’s, constant analysis of China is necessary.

As UBS Global Chief Investment Officer Alexander Friedman put it, “China remains a concern due to its size. Transitioning an economy as large and complex as China’s will be difficult, and any missteps, such as an uncontrolled default on an investment product, could pose a major risk to the outlook.”

In this regard, it pays to keep a keen eye on economic, policy and market dynamics, before deciding the best way to move forward. •

SINGAPORE’S REAL GDP IN RECENT YEARS

Source: Ministry of Trade & Industry, Singapore

GDP YoYGDP QoQ

40%

30%

20%

10%

0%

-10%

-20%1Q08 1Q09 1Q10 1Q11 1Q12 1Q13

Mr Chan Kei Biu, Senior Managing Director, Surface Mount Technology Holdings

“The overall outlook for 2014 remains cautious as there are still concerns on various risk factors like the US tapering of QE3, a possible economic hard-landing for China, restructuring challenges in emerging market countries, and Europe’s possible relapse into recession.”

SPH

–The

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VISITBUSINESSEVENTS.AUSTRALIA.COM/ASSOCIATIONSFOR EVERYTHING YOU NEED TO PLAN YOUR AUSTRALIAN EVENT.

THERE’S NOTHING LIKE AUSTRALIA FOR YOUR NEXT BUSINESS EVENT.

This year we chose Australia for our global congress. It was an easy choice, as Australia’s proximity to Asia gave us the opportunity to attract many new delegates. The program was one of the best in years. New Australian developments in our fi eld attracted a lot of interest and strong international research partnerships were established.

Australia is on everyone’s list to visit, and it lured our highest number of delegates yet. There’s no doubt they’ll be talking about this convention for years to come.

Dr Louise Wong,International Board Member

Big landscapesInspire big thinking

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BiZ Voice

Opportunities for international companies to work with local players.

S ingapore is making further progress in the space industry and there

will be more opportunities for international companies to work with local players in research and development (R&D) projects.

Singapore has currently progressed to the point where it is supporting 11 projects with a total budget of close to S$12 million, since the Office for Space Technology and Industry (OSTIn) was set up last year, said Second Minister for Trade and Industry Mr S Iswaran at the Global Space Technology Convention on Feb 6.

Mr Iswaran said: “The scope for growth is significant. As the local space industry develops, there will be opportunities for international companies to work with local players to co-develop satellite solutions and access growth markets.”

Addvalue Technologies Ltd, a local medium-sized enterprise, is one example. With OSTIn’s support, it is building on its expertise in radio frequency technologies to develop a satellite-based terminal that enables data transfer between satellites in low earth and geo-stationary orbits. This innovation will allow more efficient use of ground networks, and enable timely access to a greater amount of data.

Another development taking place is that between Alliant Techsystems Inc, a US multinational with strong capabilities in space, and ST Electronics. Both companies

recently signed an agreement to jointly develop and market a new class of small satellite buses.

Funding for satellite industryTo grow the space industry, the Singapore government set up a S$90 million Satellite Industry Development Fund which was announced in the 2013 Budget. The fund supports industry development efforts and public-private partnerships in R&D to build up Singapore’s capabilities in satellite technology.

Loop Electronics, which makes specialised radio frequency components for satellites, is one of many small and medium enterprises (SMEs) looking to beef up its capabilities. Managing Director Mr Lim Guan Choon said that they hope to tap into the fund to build test and production facilities, as well as technical capabilities.

According to research and consultancy firm Frost & Sullivan, over 900 satellites are expected to be launched globally by 2020. Its consultants expect the global space

industry to continue growing, supported by rising demand for worldwide information exchange and better connectivity.

Seletar Aerospace ParkThere is also a growing number of local SMEs setting up shop at Seletar Aerospace Park.

To help more of them settle in, JTC Corporation is building two new towers and seven standalone factories which will be ready next year. This is in addition to the existing JTC Aviation One building and eight factories.

About half of the 45 companies that currently operate at Seletar are SMEs.

Mr Johnny Lim, 65, Managing Director of Tri-Wing Aviation Resources Pte Ltd, which provides repair and overhaul services, said:

“Being in Seletar not only allows us to be closer to our customers, which is more efficient, but there is also more potential to secure new business from other tenants based here.”

Currently, Singapore accounts for a quarter of Asia’s maintenance, repair and overhaul output. In 2012, its aerospace sector posted a record output of some S$8.7 billion. •SP

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Mr S Iswaran, Second Minister for Trade and Industry

The scope for growth is

significant. As the local space industry develops, there will be opportunities for international

companies to work with local players to co-develop satellite solutions and to access growth markets.”

Expanding Singapore’s Space Industry

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More Positive Sentiments, say SMEsAlthough hiring trends have slowed, SMEs expect better sales this year.

S ingapore small and medium enterprises’ (SME) business optimism over the first six

months of this year is at its highest level in three years, findings from the latest SBF-DP SME Index for January-June 2014 revealed.

The index score for overall growth expectations in turnover was 5.68, up from 5.60 in the previous study released in October 2013. In terms of profit growth, the index was at 5.48, compared with 5.39 previously.

Citing upbeat growth expectations for turnover and profit for the upbeat sentiments, the index also showed that fewer companies are looking to increase headcount.

The index, which measures the sentiments of Singapore’s local business community, is a joint initiative by the Singapore Business Federation (SBF) and DP Information Group (DP Info).

Based on 3,000 interviews with SME owners and managers, five industry sectors were tracked: business services, commerce/trading, manufacturing, construction/engineering, and transport/storage.

The overall index for this quarter rose 0.5% to 55 (the highest score since Q3 of 2011), indicating that SMEs have a more positive outlook for their business prospects over the first half of this year.

The construction/engineering sector was the only industry which had moderated expectations, from 57.4 in the last quarter to 55.3. This showed that local companies in this industry expected a slight temperance of their business expectations. Construction companies may take on fewer projects given the increase in manpower constraints.

Ms Chen Yew Nah, Managing Director of DP Info, said: “SMEs

Overall index (out of 100)

OUTLOOK FOR 1Q14 - 2Q14F (JAN-JUN 2014)

1Q 1

2 - 2

Q 1

2 F

2Q 1

2 - 3

Q 1

2 F

3Q 1

2 - 4

Q 1

2 F

4Q 1

2 - 1

Q 1

3 F

1Q 1

3 - 2

Q 1

3 F

2Q 1

3 - 3

Q 1

3 F

3Q 1

3 - 4

Q 1

3 F

4Q 1

3 - 1

Q 1

4 F

1Q 1

4 - 2

Q 1

4 F

Commerce/Trading 52.0 55.1 58.2 54.4 53.9 54.6 53.7 55.1 56.1

Construction/Engineering 51.1 48.1 52.1 54.0 54.5 55.4 56.1 57.4 55.3

Manufacturing 47.9 54.1 54.9 54.0 50.8 54.1 54.0 54.6 54.8

Business Services 50.9 54.5 56.6 52.0 51.1 55.3 54.6 55.1 55.3

Transport/Storage 47.0 48.1 51.8 54.0 51.3 54.7 54.0 53.3 54.2

Overall 20.8 52.4 54.4 53.0 51.6 54.8 54.1 54.7 55.0

Percentage change QoQ (%) 0.4 3.2 3.8 2.6 2.6 6.2 1.4 1.1 0.5

expect the global economy to continue to grow, albeit at a modest pace.”

Indeed, the index score registered for business expansion was 6.16, a significant increase from the previous study’s 6.06 reading.

Ms Chew said that the commerce/trading sector is the most optimistic, which indicates that there was an increase in regional trade throughout the first half of this year.

One area SMEs expect to be less active in is making new hires. SMEs surveyed said that they are less likely to increase staff strength over the next six months. The index score for hiring expectations fell to 5.55 from 5.69 previously.

One reason for this may be due partly to “an adjustment to a tighter labour market, where SMEs are struggling to get the best talent, and working on productivity improvements to reduce dependence on labour,” explained Ms Chen.

SBF CEO Mr Ho Meng Kit said: “It is clear that Singapore businesses are riding the tide of a more positive global outlook, with our SMEs more confident about their prospects for the new year.”

He added that SMEs should take the opportunity to strenthen their competitiveness through various measures, such as innovation and internationalisation.

“As inflationary pressure remains high, small businesses are looking to policymakers to introduce measures to rein in rising business costs and tight labour constraints.” •

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BiZ Voice

Local companies need to rediscover their appetite for growth or risk a period of

decline, according to the recent findings of DP Information Group’s SME Development Survey.

The survey, which interviewed 2,708 local small and medium enterprises (SMEs), found that these companies are focused on internal changes such as cost cutting and productivity improvements instead of looking for ways to expand.

There are several indicators showing that SMEs have lost their appetite for growth:● Only 7% of SMEs expect to achieve double digit growth;● Nearly half of all SMEs (44%) expect no discernible growth, and 9% expect their turnover to drop;● Fewer SMEs are doing business overseas (54% in 2012, 46% in 2013);● Fewer SMEs have a business strategy (85% in 2012, 75% in 2013), with one in four having no strategy at all; and● Fewer SMEs are looking for debt or equity financing – a key indicator that they are not looking to fund expansionary plans.

Ms Chen Yew Nah, Managing Director of DP Information, said that years of turmoil and change have left many SMEs feeling timid and risk-adverse.

“SMEs have had to focus on cost-cutting and productivity in order to stay competitive,” she said. “As a result, fewer SMEs are pursuing expansion and pushing for growth.

“Some SMEs lack confidence and fear another international

Pushing for Productivity GrowthLocal businesses lack confidence and mindset to expand, SME Development survey reveals.

economic shock. Others lack the ambition and are happy for each year to be the same as the last.”

With economic conditions steadily improving, Ms Chen said that SMEs need to renew their appetite for growth and expansion.

She explained: “SMEs need to understand that the riskiest thing to do is to stand still. After a period of stagnant growth, the balance sheets of SMEs have weakened and more SMEs are now considered to be high credit risks.”

Changing mindsetsSME leaders have embraced the productivity agenda, with the majority (58%) planning to improve productivity over the next 12 months.

The most common strategy for

MAIN OBSTACLES FACED IN PROMOTING

PRODUCTIVITYLack of manpower with the right attitude and mindset

29%Lack of manpower with the right skills

22%Lack of relevant knowledge and skills

15% Lack of money

12% Lack of time to manage productivity

11% Other variables

11%Source: SME Development Survey

2013 (DP Information Group)

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increasing productivity is optimising their manpower (62%), which includes staff training and redesigning jobs to address the skills shortages within their workforce.

A third (33%) of SMEs will be fine-tuning their business processes, while only one in four (25%) plans to invest in technology or automation to improve productivity.

While SME leaders have embraced the productivity agenda, many SME employees have yet to do so. The biggest obstacle to further productivity improvements are staff attitude and aptitude – 29% lack the right mindset while 22% lack the skills. (Refer to page 12: Main Obstacles Faced In Promoting Productivity.)

Ms Chen explained that without the right mindset, all the tools and training in the world will only yield modest productivity gains.

“Employers must do more to convince their workforce that there are benefits in embracing productivity reforms. It is only by being more productive that employees can expect to achieve increased wages and bonuses, as well as greater job security.”

Last year, the most popular response to cost pressures was to reduce overheads (37%).

This year, the most popular response has been to raise productivity (32%). This shows that SMEs see productivity as part of the solution to rising costs.

Reducing foreign workforceSMEs plan to significantly reduce the proportion of foreign workers they employ from 74% to just 35% in three years’ time.

More than half of the SMEs currently employing foreign workers have plans to stop doing so by 2016.

There were also significant changes in the balance of local and foreign workers employed by SMEs. The number of SMEs who employ a small proportion of foreign workers (10% or less) has increased almost threefold to 33% this year.

The results of the survey revealed

SMEs with workforce comprising foreigners

Source: DP Information Group

80

70

60

50

40

30

20

10

0(%) CURRENT NEXT 1 YEAR NEXT 2-3 YEARS

74 76 76 76 7570

53

35

71

2013 2012 2011

that SMEs would like to replace foreign workers with locals but are finding it hard to hire Singaporeans.

“Fewer local employees want to work for a small SME, believing they will build their careers faster in a larger company,” said Ms Chen.

She said that the costs of employing a local employee are also rising, as larger companies offer wages and benefits that smaller companies cannot match. •

Ms Chen Yew Nah, Managing Director of DP Info

“SMEs need to understand that the riskiest thing to do is to stand still. After a period of stagnant growth, the balance sheets of SMEs have weakened and more SMEs are now considered to be high credit risks…SMEs need to renew their appetite for growth and expansion.”

HEAD START FOR SMES LOOKING TO LEVERAGE EMERGINGTECHNOLOGIESSingapore’s Agency for Science, Technology and Research (A*STAR) has launched a new programme to encourage more local SMEs to leverage emerging technologies to compete effectively.

Over the past five years, more than 700 SMEs have undertaken close to 2,200 projects with A*STAR.

The new Headstart programme grants royalty-free and exclusive intellectual property licences for the first 18 months to local SMEs that collaborate with A*STAR.

The exclusive use of the IP can be further extended on business-friendly terms through Exploit Technologies Pte Ltd, which is A*STAR’s technology transfer arm.

Since September 2013, Headstart has received interest from local enterprises in various industries such as electronics, infocomm, and precision engineering.

Headstart complements the existing A*STAR schemes that provide SMEs with greater accessibility to practical and affordable technology.

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Commentary

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Salaries in Singapore are expected to rise between 3% and 5% this year, according to

reports by two recruitment firms. However, the outlook for hiring in some sectors remains unclear.

When it comes to hiring expectations, reports from global talent solutions firm Hudson as well as the Achieve Group suggest that the situation is not expected to improve in some industries, such as information technology (IT) and telecommunications.

According to Hudson’s Salary & Employment Insights 2014 report, nearly three quarters of the 1,292 employees surveyed last year are looking for new job opportunities, and 86% of them expect an increase in salary this year.

Salary expectation is one of the key drivers affecting many employees’ decisions to change jobs. About 30% of the respondents cited increased salary and better benefits among their most important considerations.

Highlighting the need for better leadership, the report noted that 40% of those surveyed had switched jobs in the past two years, with 68% citing senior staff with poor managerial skills as their main reason for leaving.

Survey respondents also listed some of the qualities they are looking for in their leaders:● Being an inspiration and a role model (28%);

More Companies Looking to Increase Headcount in 1HNine in 10 employees expect pay hike this year, HR surveys reveal.

● Supportive of staff (11.8%);● A wise decision maker and someone who can create a compelling vision (11%);● Someone who recognises good performance (10.5%).

Strong leadership neededMr Andrew Tomich, Executive General Manager of Hudson Singapore, said: “It’s clear that strong leadership impacts engagement, drives productivity, and increases employee retention.

“This is something that should not be ignored, particularly in a climate where there is increasingly high potential for movement within the workforce.”

Hudson’s survey stated that 39.5% of companies expect to increase headcount in the first

quarter of this year, adding to the cost pressures they are already reporting. A majority of employers surveyed said they will be increasing salaries between 3% and 5% this year, with the biggest reason for awarding a pay rise being the retention of high-performing staff.

The most important benefits for employees were flexible working hours (36.9%), increased annual leave (29%) and valued private health insurance (28.4%).

“Those organisations that don’t invest in their workforce, both in terms of remuneration and effective leadership and mentoring, put themselves at risk,” Mr Tomich said.

“We could well see growing separation between successful and less successful organisations, primarily influenced by their attention to and investment in

Employee BenefitsRanking in terms of importance:

1

FLEXIBLE

WORKING HOURS

2

INCREASED

ANNUAL LEAVE

3

VALUED PRIVATE HEALTH

INSURANCE

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correctly resourcing their business and developing their staff.”

A separate report by the Achieve Group found that 37% of companies said that they intend to increase salaries by up to 3%, while 30% said they plan to hike wages by 3% to 5%. Some 3% of companies reported that they would be increasing staff salaries by more than 5%.

Achieve’s report, Hiring Trends Report 1H 2014, stated that 48% of the companies surveyed were looking to hire, and another 48% plan to freeze recruitment. Only 4% intend to reduce their headcounts in the next six months.

Industry outlookThe Hudson report revealed that banking and financial services was the only industry to demonstrate an increase in positive hiring intentions. Hiring expectation in the sector has gone up by 7.4 percentage points to 50%, its highest result since the second quarter of 2011.

According to Hudson, this increase in positive hiring intentions over three consecutive quarters in the banking and financial services sector shows increased confidence in Singapore’s banking sector. It also reflects that Singapore has established itself as one of the region’s leading offshore trading centres for the Chinese yuan, following the recent decision to allow both countries to trade currencies directly.

Within the sector, the report

Last year was a good year for Singaporeans as there was a rise in employment levels for local workers, says the Ministry of Manpower (MOM).

According to its Employment Situation 2013 report, total employment last year is estimated to have increased by 134,900, higher than 129,100 in 2012. It also stated that “higher employment growth over the year was mainly driven by locals, as the pace of growth of the foreign workforce continued to slow amid foreign manpower tightening measures.”

The report said that local employment growth for last year (81,600) was higher than 2012’s (58,700) and 2011’s (37,900), while the increase in foreigners slowed to 53,300 from 70,400 in 2012.

It also highlighted that Singaporeans accounted for 66.2%

of those employed (excluding foreign domestic workers) last December, with foreigners forming 33.8% of the total.

The last quarter of 2013 also saw an elevation in employment levels by 39,200, as compared to the previous quarter (33,100). The rise was likely driven by an increase in hiring for year-end festivities.

The bulk of employment gains, or 92,900 jobs, occurred in the service sector, followed by construction (35,500) and manufacturing (5,000).

Amid the tight labour market, the report also found income growth strengthening in 2013. “The nominal median monthly income from the work of full-time employed citizens (including employer CPF contributions) increased over the year by 7.1% to $3,480 in June 2013, up from gains of 5.8% in the preceding year,” the report said.

Overview of Sectors Hiring in 1H14 Property & Construction

Professional services

Oil & Gas

Industrial Manufacturing & Engineering

Shipping & Logistics

Lifestyle, Retail & F&B

IT & Telecommunications

Health care & Pharmaceutical

Banking & Finance

Percentage (%)

12%

10%

9%

9%

8%

0 2 4 6 8 10 12 14 16

15%

12%

12%

13%

Source: Achieve Group

saw an increase in demand for risk and compliance professionals, with some organisations prepared to pay premium salaries (increases of between 20% and 50%) to professionals who possess both the right skill set and local market knowledge and experience.

Among other industries, hiring intentions have declined compared to the previous quarter, with the most substantial drop seen in the health care and life sciences sector – 17.9 percentage points.

Health care sector hiringAccording to the Achieve Group, Singapore’s health care/pharmaceutical and shipping/logistics sectors are the top two industries looking to hire in the first half of this year. The other sectors that are also looking to hire are property/construction, lifestyle/retail/F&B, and oil and gas.

The demand for staff will persist this year – it will still be an employees’ market – as many companies will be hiring in the first half of the year, although hiring may not be as aggressive as in the previous six-month period.

The Achieve Group’s Hiring Trends Report 1H 2014 surveyed 500 companies in December 2013; participants were primarily executives, HR managers and directors at multinational firms and medium to large enterprises.

Hudson’s Salary & Employment Insights 2014 report survey was based on 477 employers and 1,292 employees. Size-wise, 90.4% of the employers surveyed were medium to large firms, while 9.6% were small firms. ●

MORE EMPLOYMENT FOR LOCAL WORKERS

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BiZ Feature

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BiZQ takes stock of the economic implications of the latest Budget.

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Singapore Budget 2014 was not just another announcement of the country’s annual budget. From large corporations

to small and medium enterprises (SMEs), many businesses were looking at the recent announcements for guidance as to how fiscal policy would be used to steer Singapore’s economic path over the next few years.

Wish list items from the Singapore Business Federation (SBF)-led SME Committee and other business chambers were varied, and many were focused on rising business costs and the recent tightening of foreign labour policies.

Macroeconomic data ahead of the announcement of Budget 2014 were mixed. While Singapore’s gross domestic product grew by a faster-than-expected 4.1%, the economy showed zero productivity growth for 2013.

Many businesses were concerned that the dismal productivity data was a hint that more screws would

BudgetOthers

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be tightened on the economic engine in order to ratchet up the country’s productivity. This is notwithstanding the fact that Singapore is halfway through the restructuring programme (Economic Strategies Committee recommendations) initiated in 2010.

In announcing Budget 2014, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said that the island republic continues to transform its economy to “create higher-value industries and quality jobs for Singaporeans in the next decade and beyond…There is no lack of demand for what Singapore can offer. But we are changing how we grow, in a fundamental way.”

He added that “we must adapt to the permanent reality of a tight labour market, and transform every sector of the economy to achieve higher productivity and skills.”

No new manpower measuresThe recent Budget made no further announcements on lowering the caps on the supply of foreign manpower into Singapore, and this brought relief to many companies and chambers, especially the SBF.

In response to the February announcement, SBF’s CEO, Mr Ho Meng Kit, said: “SBF is relieved that no major new manpower measures were announced in Budget 2014 to exacerbate the tight labour situation.”

Mr Ho added: “Notwithstanding, rising operations costs and manpower issues continue to be a challenge for businesses.”

Echoing a similar sentiment, DBS economist Mr Irving Seah observed that restructuring Singapore’s economy and fostering inclusive growth has continued to be the focus of the recent announcements.

“New measures were announced to help companies enhance productivity and there was no further tightening in manpower policies. In this regard, Budget 2014 is more carrot than stick for companies,” he commented.

Credit Suisse’s economist, Mr Michael Wan, summarised the latest Budget in the following manner:

“We note that the government still views the overall fiscal policy stance to be expansionary for the macro economy in 2014, with a positive fiscal impulse of around 1% of GDP for FY2014. (Refer to chart: Another year of slightly expansionary fiscal policy?)

“While the expansionary fiscal position partly reflects government transfers to businesses – such as the Productivity and Innovation Credit (PIC) Scheme – that support economic restructuring, it seems to us that parts of it also reflect p.18

structurally higher social and health care spending, with a particular focus on older people.”

Modest deficitAs a result of an estimated S$56.7 billion in total expenditure for the year, there will be a modest deficit of S$1.2 billion – 0.3% of Singapore’s nominal GDP.

The highlight is the creation of an S$8 billion Pioneer Generation Package, to create a socially-oriented and all-inclusive Singapore society.

In addition, the Government has decided to raise the employer Central Provident Fund (CPF) contribution rate by one percentage point for all workers.

SBF’s Mr Ho responded by saying that an increase in employers’ CPF contributions “will not help, and (instead) will impact small businesses as they employ proportionately more older workers.”

However, he stressed that “the government recognises this, and we welcome the one-year cost offset provided for companies in lieu of the increase in employers’ CPF contribution.”

Also announced were a slew of initiatives to support innovation and skills, the use of information

Get

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Mr Tharman Shanmugaratnam, Deputy Prime Minister and Finance Minister

“We must adapt to the permanent reality of a tight labour market, and transform every sector of the economy to achieve higher productivity and skills.”

Another year of slightly expansionary fiscal policy?

Source: Ministry of Finance

% o

f GD

P

5

4

3

2

1

0

-1

-2

-3

% of potential G

DP

5

4

3

2

1

0

-1

-2

-3FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014

(revised) (estimated)

Fiscal impulse (left axis) Output gap (right axis)

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BiZ Feature

SIGNS OF RELIEF72% of SBF members had

hoped that Budget 2014 would contain measures to

1

HELP BUSINESSES DEAL

WITH ESCALATING COSTS

48% anticipated policies that could

2

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TIGHTER MANPOWER

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technology to get businesses to raise productivity levels, and the catalyst of growth for Singapore’s home-grown companies, among others.

Again, Mr Ho’s response to the new incentives was that the SBF was “delighted with the budget measures in support of growth enterprises, as well as the introduction of the SME-centric PIC+ Scheme and the extension of the PIC Scheme for a further three years to 2018.”

Pains of economic restructuringThe recent SME Development Survey revealed that Singapore companies, particularly SMEs, have been experiencing a “difficult transition period of economic restructuring”.

One of the SME Committee’s key observations about the Budget 2014 Recommendations was that Singapore’s competitiveness has been eroded by global conditions while domestically, our economic performance has been dragged down by reduced business efficiency,

Mr Daniel Ho, Director of Taxes, Deloitte Singapore

“The overall sense is that SMEs are the big winners of this year’s budget. The extension of the PIC Scheme, the PIC+ Scheme, and more assistance with financing and overseas expansion should assist SMEs in building capabilities for quality growth.”

Singapore’s Ministry of Trade & Industry announced that the country’s GDP grew 4.1% in 2013. The expansion was greater than what most economists and analysts had expected.

Looking ahead, the ministry said that global economic outlook is expected to improve modestly this year, supported by sustained but slow recovery in the US and Eurozone economies.

In Asia, China’s growth is expected to moderate slightly as the government continues with reforms to rebalance the economy towards consumption-driven growth.

Against this backdrop, the

Singapore economy is expected to post modest growth in 2014. Externally-oriented sectors such as manufacturing and wholesale trade are likely to continue to recover and provide support to growth, in tandem with the recovery in global demand.

However, tightness in labour conditions could weigh on growth in some labour-intensive domestically-oriented sectors.

Overall, the 2014 growth forecast for the Singapore economy is maintained between 2% and 4% (refer to the Economy Watch story for a feel of the 2014 business outlook).

Singapore looks to 2-4% growth in 2014

higher business costs, and inevitable restructuring.

For example, the findings revealed that one in three SMEs indicted cost reduction as a priority, and that one in four SMEs did not have a business strategy for the next 12 months because they were caught up with cost-management matters.

With business costs a rising concern, the SBF National Business Survey 2013/14 cited wages, rental of premises and transportation costs as the top three cost components with the greatest impact on profitability. Government compliance costs were fourth on the list, with one in three respondents citing it as a growing concern.

Prior to the February 21 announcements, the committee said that 72% of SBF members had hoped Budget 2014 would contain measures to help businesses deal with escalating costs, and 48% had anticipated policies that could soften the impact of tighter manpower constraints.

As it turns out, the calls from the business community were heard.

In previous budget announcements, labour policies were successively tightened as the Government steered the economy

towards a productivity-led model. While this goal has not changed, there have been no further announcements relating to new levies, except for a marginal rise in the use of low-skilled workers in the construction sector.

The big PIC-tureWhat came through was a commendable push to support innovations and skills development through the Government’s PIC Scheme, and a push for greater adoption of information technology

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Supporting Businesses Through PIC+Lifelong Learning Endowment Fund by S$500 million, bringing the total fund size to S$4.6 billion.

Adopting Information and Communications Technology (ICT) Solutions to Increase Productivity● ICT for Productivity and Growth (IPG) ProgrammeThe Government has planned for a $500 million budget over three years.

Catalysing Investment in Growth Enterprises● Co-Investment Programme (CIP) Phase II:Under the second phase of the CIP, the Government will set aside up to S$150 million for co-investment with the private sector, to catalyse more patient growth capital for Singapore-based enterprises. The additional capital will be allocated to two new funds: the SME Co-Investment Fund II which supplies equity capital, and the SME Mezzanine Growth Fund which supplies mezzanine capital.

● Enhancement of the Micro-Loan ProgrammeTo spur further lending to young SMEs, the Government will increase the risk that it shares with participating financial institutions for loans to young SMEs (firms which have been registered for less than three years) under the Micro-Loan Programme, from 50% to 70% for two years.

Seizing Growth Opportunities Overseas● Enhancement of Internationalisation Finance SchemeTo further help companies make additional asset investments abroad or fund working capital expenses for secured overseas projects, the maximum loan quantum supported by the Internationalisation Finance Scheme will be raised from $15 million to $30 million for two years.

For more details, visit: singaporebudget.

gov.sg/budget_2014/Business1.aspx

to boost productivity (refer to side story: Supporting businesses through PIC+).

These targeted and calibrated measures appear to be resonating with just about every quarter of the business community.

Credit Suisse’s Mr Wan said that for him, one of the salient takeways was that the Government had decided not to announce further across the board tightening in its foreign labour policies.

“This is an important and also marked departure from previous budgets over the past four years,” commented Mr Wan. “We note that major foreign labour tightening measures were announced over the last four consecutive Budgets.”

He added: “With these more targeted changes, it seems to us that the government, at least for now, is comfortable with the current trajectory of foreign workforce growth, with the expectation that it should continue to moderate over the next two years – particularly in the services sector – with the measures already in place.”

In comments shared with BiZQ,

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As part of Budget 2014, several fresh initiatives that drive innvovation and productivity in Singapore were announced. These are some of the salient points.

Supporting Innovation and Skills ● Extension and Enhancement of the Productivity and Innovation Credit (PIC) Scheme by S$3.6 billion over three Years of Assessment (YAs)PIC Extension: The PIC Scheme, which lapses after YA2015, will be extended for three years (ie YA2016 to YA2018) at the current support level. The expenditure cap for each qualifying activity is combined across the three years, which means businesses can claim enhanced tax deductions of up to S$1.2 million (S$400,000 x 3 YAs).PIC+ Scheme: To help firms that are making substantial investments to revamp their businesses, the expenditure cap will be raised for each of the six qualifying activities from the current S$400,000 to S$600,000 with effect from YA2015. This means that qualifying SMEs that have hit the combined cap of S$1.2 million (across three YAs) can now claim enhanced tax deductions of up to S$1.8 million in qualifying expenditure.

● Extension of Research & Development (R&D) Tax Deductions SchemeTo continue encouraging R&D in Singapore, the broad-based 50% additional tax deduction on qualifying R&D expenditure, which lapses after YA2015, will be extended for 10 years till YA2025. The further tax deduction for Economic Development Board-approved R&D activities, which lapses after 31 March 2015, will also be extended till 31 March 2020.

● Top-up to Lifelong Learning Endowment FundIn line with the long-term commitment to continuing education and training, the Government will top up the


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Deloitte Singapore’s Director of Taxes, Mr Daniel Ho, said that calls by SMEs for more help have been answered.

“More support has been given in these areas of investment: productivity, innovation, adoption of information and communications technologies, overseas expansions, and financing support. The overall sense is that SMEs are the big winners of this year’s budget.

“The extension of the PIC Scheme, the PIC+ Scheme, and more assistance with financing and overseas expansion should assist SMEs in building capabilities for quality growth.”

Ice-ing on the cakeAmong the local companies that will benefit from the Government’s PIC Scheme is home-grown Robofusion Asia.

The company, set up barely two years ago, has tapped into the scheme to buy ice cream

Mr Keith Yong (right), Director, Robofusion Asia, on being a fairly new start-up.

“… cash flow tends to be tight and tax incentives do not really help…The PIC is the only scheme that helps with our cash flow, to tide us through the critical start-up period.”

Jackson Bakery & Confectionary, a traditional bakery in a nascent industry. General Manager Tang Siew Chuan said that the PIC is a scheme that benefits his company, and that its extension is welcomed.

The company announced recently that it will be opening a new factory, and new machinery will be required as part of this growth plan.

“With the opening of my new factory, I will also have a new product line, so the PIC Scheme will help with my expansion plans over the next few years,” Mr Tang said. •

vending robots, each costing about US$65,000 (about S$82,000) each. These robots can accept orders from and deliver food items to customers.

A customer starts by choosing one of four robot characters; this will then trigger the robotic movements, animation effects, music and sounds. The robot will select a souvenir cup, fill it with the ice cream and candy toppings that the customer has chosen, and then deliver it to the customer.

The current manpower shortage in Singapore is making it difficult for companies like Robofusion Asia to employ staff. Hence, there is room for robots to work alongside people in service industries like this, said Director Keith Yong.

As Robofusion Asia is a fairly new start-up, he said that cash flow tends to be tight and that tax incentives do not really help because new companies are usually unable to generate profits until a few years down the road.

Giving a resounding endorsement to the enhanced PIC scheme, Mr Yong said: “The PIC is the only scheme that helps with our cash flow, to tide us through the critical start-up period.”

Another PIC beneficiary is

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Mr Tang Siew Chuan, General Manager, Jackson Bakery & Confectionery

“With the opening of my new factory, I will also have a new product line, so the PIC Scheme will help with my expansion plans over the next few years.”

Source: Ministry of Trade & Industry

Sectoral Growth Rates of the Singapore Economy

2012 2013

Total 1.9% 4.1%

Goods Producing Industries 1.4% 2.2%

● Manufacturing 0.3% 1.7%

● Construction 8.6% 5.9%

Services Producing Industries 2.0% 5.3%

Wholesale & Retail Trade -1.4% 5.0%

● Information & Comms 6.2% 5.5%

● Finance & Insurance 1.3% 10.6%

● Business Services 5.9% 5.1%

(YoY change)

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PIC Enhancements; More Support for SMEs● Extend PIC for three years to provide continuing support for businesses as they restructure● Introduce PIC+ for qualifying SMEs: Raise expenditure cap for each qualifying activity from S$400,000 to $600,000 from YA2015

Scale Up Adoption of ICT;Three-year ICT for Productivity and Growth (IPG) Programme● Proven ICT solutions: Target to extend these solutions to another 10,000 SMEs● Piloting of emerging solutions: Support 80% of qualifying costs, capped at S$1 million per participating firm● Enabling high speed connectivity for businesses: Subsidise SMEs’ fibre broadband subscription plans of at least 100 MBps and provide support to implement Wireless@SG services on their premises● Facilitating access to fibre broadband: Subsidise up to 80% of the costs of new in-building infrastructure, capped at S$200,000 per building

Industry Transformation through New Industrial Spaces● Support clustering among firms to improve competitiveness● Five-year renewal of the Land Intensification Allowance scheme till June 2020; extended to logistics sector

Investment in Skills and Training● Top up the Lifelong Learning Endowment Fund by S$500 million to to S$4.6 billion, in line with our commitment to continuing education and training

Tax Incentives For Innovation● Qualifying R&D expenditure:10-year extension of the 50% additional tax deduction till YA2025● EDB-approved R&D projects:

IN BUDGET 2014Construction – Targeted Policies and Upstream Measures● Increase levies for basic-skilled workers by S$100 in 2016 to encourage employment of skilled workers● New Market-Based Skills Recognition Framework to help retain workers with better skills and experience● Extend maximum period of employment from 18 to 22 years for higher-skilled workers● Mandate use of productive technologies on selected sites● Increase buildability and constructability scores for private projects on non-Government Land Sales sites

Five-year extension of the further tax deduction scheme till March 2020● Acquisition of Intellectual Property Rights:5-year extension of writing-down allowances till YA2020

MANAGING FOREIGN WORKFORCE GROWTHProgressive raising of levies and lowering of Dependency Ratio Ceilings. To raise the quality of our foreign workforce, levies for skilled and unskilled workers have been differentiated, and requirements for S Pass and Employment Pass holders have been tightened.

In Budget 2014

Foreign worker inflow(excluding construction sector)

60,200

16,800

2013

2011

HELPING BUSINESSES GROW AND

INTERNATIONALISE

The Micro-Loan Programme (MLP) has provided 3,500 loans

to SMEs over the last two years

The Co-Investment Programme (CIP)has catalysed over S$500 million in

investments from private sector players – over three times the Government’s seed funding

IE Singapore provided assistance to more than 26,000 companies in 2013, including

access to S$775 million in trade and financing loans

IN BUDGET 2014

MLP

Raise the Government’s risk share of loans to young SMEs

CIP

Additional S$150 million to further catalyse growth capital for

promising enterprises

INTERNATIONALISATION

FINANCE SCHEME

Double the maximum loan quantum to S$30 million per firm

More support under the GLOBAL COMPANY

PARTNERSHIP PROGRAMME

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Mr Poh Choon Ann, Chairman and CEO of Poh Tiong Choon Logistics Limited, believes in mentoring SMEs and helping them expand into the China market.

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vast opportunities. Having entered the Chinese market in 1981, he brings with him more than 30 years of experience, networking and connections in China.

As the Vice-Chairman of the SBF China Business Group, he shares some of his insights with BiZQ magazine.

You have helped SBF members forge many networks overseas. How do you describe your active support of the Federation’s business development programme for China and North Asia?We entered the China market in 1981 and have been there since. Over the past 33 years, we have accumulated vast amounts of experience and established many networks and connections in China. Such experiences and connections have become important in assisting Singapore SMEs in entering China. There have been proven results, especially in China’s second, third and fourth-tier cities.

As the Vice-Chairman of the China Business Group in SBF, I have also led many high-level Singapore business delegations to various cities in China, Mongolia and the Democratic People’s Republic of Korea. Such delegations are often received by ministers and state leaders.

I lead an average of six to eight business delegations to China a year and attend forums in China and North Asian countries to deliver keynote speeches.

How do you envision Singapore-China trade and investment relations developing?Singapore and China have a close bilateral relationship. They have established seven Economic Councils and jointly developed five National Industrial Parks (Suzhou Industrial Park, Tianjin Eco-City, Guangzhou Knowledge City, Sichuan Hi-Tech Innovation Park, and Jilin Food Industrial Zone).

Mr Poh Choon Ann, Chairman and CEO of Poh Tiong Choon

Logistics Limited, is very committed to the promotion and development of the arts in Singapore. He is currently the Vice-Chairman of the board of directors in Nanyang Academy of Fine Arts.

Honoured as a Patron of the Arts by the National Arts Council, Mr Poh believes that enabling more people to enjoy cultural arts is his contribution towards “helping to build a more harmonious and gracious society in Singapore”.

For his exemplary work as a distinguished Mentor in the Singapore Business Federation’s (SBF) Mentorship Programme, he was also presented with the SBF Distinguished Partner Award in 2012.

Driven by the desire to be compassionate and proactive in promoting corporate social responsibility, he has made significant contributions to many charitable organisations. One is the SBF Foundation, which was launched last November.

Passion and determination are qualities that Mr Poh strongly advocates. He lost his father at the age of five and was brought up by his mother and elder brothers. Determined to be independent and help support his family, he gave up his passion for music in his early years and joined the family business at the age of 14.

That was in 1964. Today, the company has emerged as one of the largest homegrown logistics firms and is listed on the Mainboard of the Singapore Stock Exchange.

Considering how Singapore struggled in its early years before becoming independent in 1965, Mr Poh believes that the growth and success of the company mirrors the development of Singapore. As such, his contributions to society are his way of showing his gratitude to his country.

Mr Poh is also keen to help companies expand into China’s


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For projects like these, we need mutual trust and understanding from both governments and the business communities. SBF, as an apex chamber, is an important connection for the Singapore business community, and we want to continue building a variety of platforms for them, especially to benefit the Singapore-China economic and trade relationship.

I hope that both the Singapore and China business communities will continue to discover and develop new opportunities in the future, especially for small and medium enterprises (SMEs) which make up 99% of registered enterprises in Singapore.

How has your experience helped in your sharing and giving back to the business community?I have been leading the development of Poh Tiong Choon Logistics Ltd for the past 50 years, and accumulated a great deal of management experience, especially in dealing with the relationships within our family business.

The success of our company is evident by our pervasive culture of

“humanity as the roots of harmony in the enterprise, kinship as the origins of harmony in the family”

These core values are the organisation’s greatest spiritual wealth, and have underpinned our success. We will continue to uphold these values for years to come.

Family businesses are unique, and some of this experience has come in handy in mentoring SBF corporate members. I have successfully assisted several SBF corporate members in resolving business continuity and succession planning issues.

The SBF Mentoring Round Table programme has been well-received by SMEs and they appreciate such assistance. I feel very encouraged, and will continue my efforts to assist SMEs.

How do you spend your personal and private time?I am an avid fan of the arts and cultural activities. I am also an amateur composer, conductor and music producer.

I am passionate about the promotion of arts and culture, and believe that culture is the best stepping stone towards an inclusive, harmonious and elegant society. Currently, I am the Chairman of the Poh Tiong Choon Arts Fund, which sponsors cultural and arts activities and helps promote and groom artistic talent in Singapore. •

LEADING THE CHARGE TO CHINAOver the years, Poh Tiong Choon Logistics’ Chairman and CEO Mr Poh Choon Ann had led countless business missions to China. Here is a snapshot of those trips:

(CIFITS) in Beijing. The guest of honour was Signapore’s Deputy Prime Minister and Finance Minister, Mr Tharman Shanmugaratnam.

2012Led the Singapore team to the 6th edition of CIFTIS in Beijing, and also to the 9th China-ASEAN

led a 60-strong business delegation to Zhejiang (Ningbo, Zhoushan and Shanghai), in conjunction with Singapore Day at the Shanghai World Expo.

2011Led a Singapore delegation to the 5th China International Fair for Trade in Services

economic and trade forum.

2010In conjunction with Singapore’s then Senior Minister Goh Chok Tong’s visit to Xiamen and Fuzhou in Fujian Province, he accompanied Senior Minister of State Lee Yi Shyan in visiting Pingtan Island. In August, he

Orchestra to Beijing, Shanghai, Guangzhou, Shenzhen, Zhongshan and Macau.

2009Led a 300-member business delegation to Fuzhou to participate in the Uniquely Singapore exhibition, in conjunction with the cross-strait

2006Accompanied Singapore’s Prime Minister Lee Hsien Loong to Nanning to attend the China-ASEAN Business Investment Summit.

2008In conjunction with Singapore Day in Beijing and Shanghai, he led the Singapore Chinese

Exposition (CAEXPO).

2013Singapore participated in the 16th China Chongqing International Investment and Global Sourcing Fair. The same year, Mr Poh led a business mission to the Shandong Province (Rizhao Linyi, Taian).

Ms Connie Wu, Executive Director, Sunray

Woodcraft Construction Pte Ltd, on having

benefited from one of Mr Poh ’s sessions

via the SBF Mentorship Programme.

“Having participated in the SBF Mentorship Programme, we are now able to resolve issues we once thought impossible. This has given us much more confidence in the company’s future growth. This is especially so with Mr Poh Choon Ann being our mentor; it allowed us to capitalise on his vast amount of life experience, like when he shared with us a different view of longstanding issues that we could not resolve.”

Ms Annie Gan, Managing Director,

Jian Huang Group, on having attended

one of Mr Poh’s sessions on maintaining

harmony within the family and business.

“From Mr Poh, I have gained more confidence in my mindset and improved tremendously in my management philosophy. Since my company is a husband-and-wife business, Mr Poh stressed that both of us must always stay united and focused on the direction of our business in order to conquer problems together. More importantly, by staying motivated, we will be able to promote the standards of our company to a higher level. I must thank Mr Poh.”

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26


Innovations

Thinking Out of the Box

Get

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Empowering Efficiency & Excellence (3E) productivity

improvement programme through the Singapore Business Federation (SBF). It then decided to tap on the generous 90% Singapore Workforce Development Agency (WDA) funding extended to small and medium enterprises (SMEs).

Five of Ardentec’s key staff were trained with essential productivity tools and measures under the Lean Six Sigma framework, including the SIPOC (suppliers, inputs, process, outputs, customers) diagram and the fishbone analysis.

Following the programme’s two-day workshop, the team of five decided to focus specifically on their wafer probing process.

“By going through with the 3E programme, we managed to palpably demonstrate to our staff how many benefits we can obtain,” observed Mr Ho Kok Pin, Deputy Director and Project Team Leader.

He said: “Our people also learnt that by thinking out of the box via a systematic, analytical approach, we can zoom in to the areas that we had overlooked or thought impossible, but were indeed critical factors.

A semiconductor testing company takes its productivity objectives to the next level.

Mr Ho Kok Pin, Deputy Director and Project Team Leader, Ardentec Singapore

“Productivity is a measure of the efficiency of production. It is measurable and quantifiable. We only realise how important productivity is when it is quantifiable by a tangible benefit.”

In today’s business environment, companies are facing tough times

with an ever-increasing list of challenges to overcome. Besides a tight labour market, escalating rental and other business costs are forcing companies to rethink their business strategies.

Boosting productivity has always been a key emphasis in plans for shaping Singapore’s economy, and it will continue to be in the coming years.

While some businesses have gravitated towards or are embracing this change, companies such as Ardentec Singapore Pte Ltd are taking their first steps in their productivity improvement journeys.

Ardentec, which provides semiconductor testing solutions, has been looking at possible resolutions to their productivity woes – particularly the lifespan of its magnum probe cards. The cards were wearing out at a lower rate than customers expected.

This not only contributed to reduced productivity but also increased business costs and lowered customer satisfaction.

The 3E programmeWhile searching for a productivity tool programme for its staff, Ardentec learnt about the

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COMPANY TYPE PROCESS/AGENDA PRODUCTIVITY

IMPROVEMENT BENEFITS

Manufacturing of Chemical Products

Production lead time, from preparation of raw materials to final QC inspection

● 65% improvement in average production process cycle time

● Reduction of transportation time

● Reduction of overtime costs

Interior Finishing

Credit note and cycle time reduction

● Credit note processing cycle time reduced by about seven days

● Process wastes eliminated within an average of 40 hours

● Sales team processing more streamlined and continuous

● Number of unique steps in workflow significantly reduced

Retail Employee satisfaction

● 26% increase in internal staff satisfaction

● Standardised and uniformed processes across all branches

● Employees more satisfied with incentive schemes

● Improved cash control and cash balance tallies

This project is only a start. We will apply the skills and knowledge from what we learnt during the 3E programme in our daily work.”

By the end of the six-month programme, Ardentec had seen an 87% improvement in its probe card tip erosion rate, and had also saved about US$70,000 (S$88,600) in material costs.

Mr Ho said that the programme had also helped his team to measure productivity more effectively.

“Productivity is a measure of the efficiency of production. It is measurable and quantifiable. We only realise how important productivity is only when it is quantifiable by a tangible benefit,” he said.

Having supportive “productivity champions” in the company also played an important role in the team’s success. Ardentec’s General Manager, Mr David Hsiao, who realised the need for productivity improvement, said: “Productivity improvement is important and mandatory for competitiveness today. The benefits go beyond ourselves and we are able to pass

cost savings on to our customers. It is an excellent programme that all manufacturing firms should participate in and embrace.”

Increasing overall excellenceThe Economic Strategies Committee (ESC) has set a goal – for Singapore to achieve 2-3% productivity growth over the next 10 years. Businesses will need concrete strategies to implement and execute their productivity growth plans.

In the recent SBF National Business Survey 2013/14, a majority of respondents were looking to train their staff in response to the recent tightening of foreign worker policies by the Government.

Investing in staff training is one way to effectively retain good workers and raise overall productivity, in the face of an increasingly competitive industrial environment.

It was against this backdrop that SBF partnered with the WDA to roll out the comprehensive 3E productivity improvement programme.

Mr David Hsiao, General Manager, Ardentec Singapore

“Productivity improvement is important and mandatory for competitiveness today. The benefits go beyond ourselves and are passed on to our customers.”

3E PROGRAMME SUCCESS STORIES

Since 2012, the 3E programme has helped over 100 individuals become Productivity Managers who are equipped with the right skills and knowledge to drive future productivity and quality improvements.

The programme’s two-pronged approach of classroom training and in-house consultation instils both theoretical and practical knowledge into its participants.

The programme is highly customisable in order to meet the needs of companies across all industries. Case studies of some of its success stories are summarised in the table (see side story: 3E Programme Success Stories).

SMEs can enjoy up to 90% WDA funding, as well as the Productivity and Innovation Credit (PIC) tax incentives, when they sign up for the programme, which can be conducted in both English and Mandarin. •To find out more about the 3E programme

and its workshop schedule, contact SBF’s

Irene Chen (6827-6824) or Sharifah (6827-

6893), or e-mail [email protected].


Name and Date:

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Inside SBF


28

there are few Singapore companies with the right market expertise to tap into the long-term opportunities in Africa.

In light of the continent’s growth and development opportunities, the Singapore Business Federation (SBF) Africa Business Group (AfBG) will be organising several business missions to explore new markets such as Sudan, Malawi, Madagascar and Equatorial Guinea in the coming months.

SBF will also be hosting several high-level government and business delegations from Africa as many look to Asia for developmental expertise and financing. Many see Singapore not only as a regional hub, but also as a partner for many projects.

With this in mind, SBF will also be organising networking and briefing sessions with a focus on third-country partnerships.

Engaging the right partnersIncreasing market access for Singapore companies to the continent has always been a cornerstone of AfBG’s work.

The group has signed several memorandums of understanding with

partners in Tanzania, Ghana and the Ivory Coast over the past year.

In 2013, AfBG successfully lobbied for a visa waiver for Singapore passport holders to the Ivory Coast, and also for the appointment of Tanzania’s Honorary Consul General to Singapore, Mr Teo Siong Seng.

Business Forum in AugustThe third edition of the Africa-Singapore Business Forum will take place in August this year, following on the steps of the successful Africa Asia Oil and Gas Summit that took place in November 2013.

AfBG is also looking

Accessing the Next FrontierSBF Africa Business Group heads to sub-Saharan region.

Africa is the fastest growing region outside Asia today, with an average of 5% GDP growth per annum in the last decade, and about one third of its 54 nations have seen yearly gains in GDP of more than 6%.

The continent is becoming an attractive foreign direct investment destination among Singapore companies. Singapore’s total trade with the continent rose from S$7.7 billion in 2009 to S$13.2 billion in 2012.

Being a relatively new frontier market,

NTU-SBF CENTRE FOR

AFRICAN STUDIES

South-east Asia’s first Centre on Africa Studies will enable public and

private sectors to develop new insights into the

emerging continent by:

1

PROVIDING THOUGHT

LEADERSHIP ON

AFRICA

2

BUILDING CAPACITY

FOR GOVERNMENTS

AND EXECUTIVES

3

BUILDING AFRICAN

HUMAN CAPITAL

4

FOSTERING AN

INTEGRATED

AFRICA-SINGAPORE

NETWORK

Mr Teo Siong

Seng, Managing

Director, Pacific

International Lines

“PIL has been working with SBF for many years now, and we value the support and trust fostered over the years. Being one of the pioneer companies offering shipping services to Africa, the Far East and China, we have gained much local knowledge and built a reputation. We also believe that Africa’s time is now – with a growing population and market opportunities, this emerging market has a huge potential for growth.”

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29

to structure a market immersion programme that will help executives build up their management capabilities for the African market.

Centre for African StudiesSBF and Nanyang Technological University (NTU) recently announced the NTU-SBF Centre for African Studies, the first of its kind in Southeast Asia.

The centre will be launched by June this year.

Located at NTU’s Nanyang Business School, the NTU-SBF Centre for African Studies will provide in-depth insights on African markets through research, workshops and relevant programmes.

The centre aims to build knowledge on business, politics and social economics to strengthen the capabilities of policymakers and businesses for their engagement with Africa.

In the longer term, the centre will also foster

SBF Business Institute helps Members Upgrade Workforce The SBF Business Institute (SBI) is helping Singapore Business Federation (SBF) members train their employees and increase their skill sets. Established under the SBF’s auspices, SBI will help its members and the wider business community to build capabilities and transform towards inclusive and

quality-driven growth as Singapore restructures.

SBI will leverage professional practitioners, certified trainers and successful business mentors to help companies address business challenges by providing training services for their employees. These training programmes

are tailored to upgrade management capabilities and equip employees with the right skills.

SBI is currently offering the following training programmes:● C-Level Essentials● Legal & Compliance Acts● Human Resource Management

● Business Continuity Management● Innovation & Productivity● Finance & Taxation● Business Excellence● Trade Finance● Digital & Information Communications Technology● Overseas Market Engagement

and environmental considerations, cultural understanding, and the creation of mutual value for local communities. The Centre for African Studies will provide guidance and insight to help both South-east Asian and African companies achieve their goals, and benefit from a truly integrated Africa-Asia network.”

Mr Sajen G. Aswani, Group

CEO, Tolaram Group

“Having been involved in Africa for the last 35 years, the Tolaram Group has watched Africa moving forward progressively. We think that a think-tank dedicated to African issues will definitely make a positive impact. We look forward to continuously making meaningful contributions to the economic, political and social development of Africa, where many of us cut our teeth in the business world.”

Mr Kuok Khoon

Hong, Chairman

and CEO, Wilmar

International

“Wilmar is proud to be a founding donor of the NTU-SBF Centre for African Studies. We have been operating in Africa since 2007, and today we are present in 10 countries across the continent. We are bullish on Africa due to its abundant land, human resources and a fast growing consumer market. We would be pleased to share our experience in order to strengthen business ties between Singapore and Africa.”

understanding and closer relations between Africa and South-east Asia.

Five of Singapore’s leading investors in Africa were recognised for their contributions to the centre’s funding.

Indorama Group, Olam International, Pacific International Lines (PIL), Tolaram Group and Wilmar International, had each donated S$1 million to the centre’s endowment fund, and are the founding donors on the centre’s governing board. •

Mr Amit Lohia, Group Managing

Director, Indorama Group

“As south-south partnership becomes increasingly important, we hope this centre will facilitate that bond even further. We are optimistic about the future of Africa and Singapore, which can be an excellent bridge between Africa and Asia. This centre is one unique step towards that direction.”

Mr Venkatramani Srivathsan,

Regional Head for Africa,

Olam International

“It’s widely recognised that Africa needs investment in skills and capability building, expertise and technology

– but it’s clear that what is also sought is responsible development that takes into account economic

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Inside SBF


30

The Singapore Business Federation (SBF), IE Singapore, and the Turkish Ministry of Economy recently held the third Turkey-Singapore Business Forum in January.

Singapore’s Minister for Trade and Industry, Mr Lim Hng Kiang, and Turkey’s Minister of Economy, Mr Nihat Zeybekci, attended the forum. It included a panel discussion on infrastructure opportunities in Turkey, as well as some of the challenges experienced there by Singapore companies.

The forum provided a platform for Singapore and Turkish business leaders to meet, network and gain insights into the economic developments, as well as business opportunities in both countries.

Strategic gatewaySituated at the crossroads of Asia and Europe, Turkey’s strategic location gives the country access to the markets of Europe, the Middle East and North Africa. Between 2002 and 2012, its real GDP grew at 5% annually.

Turkey’s regional and international trade has been flourishing. The country is a leading global producer of textiles and clothing, automotive, iron

and steel, shipping and transportation equipment, consumer electronics, and home appliances.

It has also signed numerous free trade and investment protection agreements with regional partners, making the country an ideal export gateway and business hub.

Robust trade relationsTurkey was Singapore’s 50th trading partner in 2012, with a bilateral

trade valued around S$1.46 billion, according to IE Singapore. This was an increase of 17% compared to 2010.

To further cement both countries’ economic links, Singapore and Turkey are working toward finalising a bilateral free trade agreement (FTA).

There is a growing number of Singapore businesses from diverse sectors who are exploring potential opportunities in Turkey. Examples of successful local companies include Portek International, CWT Logistics, Food Empire, Singapore Technologies, Phillip Securities, Tee Yih Jia Foods, Charles & Keith, and Sitra Holdings.

Mr Lim said: “Given that both Singapore and Turkey are strategic hubs to our respective regions, I believe both business communities can leverage each other’s unique strengths to create win-win partnerships.”

“Turkey boasts a liberal investment climate, cost-competitive workforce,

Gaining Insight into TurkeySBF, IE Singapore strengthen trade relations

low taxes and attractive incentive systems. Turkey will certainly promise more growth for businessmen and investors,” he elaborated.

Singapore as an Asian hubFor Turkish companies looking to trade in Asia, Mr Lim explained that Singapore is also a gateway into the growing ASEAN and Asian regions.

Singapore is “part of the ASEAN community and have several FTAs with our Asian counterparts, including South Korea, India and China,” he said.

“With discussions to strengthen these ties through the ASEAN Economic Community and the Regional Comprehensive Economic Partnership, Singapore presents a natural gateway to an increasingly integrated and exciting region.”

Moving forward, SBF aims to initiate more collaboration between the business communities in both countries. •

Mr Lim Hng Kiang, Singapore’s Minister for Trade and Industry

“The country boasts a liberal investment climate, cost-competitive workforce, low taxes and attractive incentive systems. Turkey will certainly promise more growth for businessmen and investors.”

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Inside SBF


32

Inside SBF

which is expected to enter into force in 2015, this marks a significant milestone in the EU’s and Singapore’s bilateral ties.

As the first EU FTA partnership with an ASEAN country, the EUSFTA will liberalise the trading of goods and services as well as facilitate investments.

To encourage Singapore’s business community to capitalise on the EUSFTA when it comes into force, SBF organised a series of Europe-related activities last year to explore opportunities in the region.● Business missions to France, Poland, Hungary, the Czech Republic and Slovakia, in conjunction with Prime Minister Lee Hsien Loong and President Tony Tan’s visits.● EUSFTA Outreach Seminar.

Europe is showing signs of recovery, and this is encouraging news for Singapore businesses that are looking to expand into the region.

Business activity in the Eurozone private sector reached a 31-month high this January. Spain’s economy emerged from a two-year downturn by posting 0.1% and 0.3% growth in the third and fourth quarter of 2013 respectively.

Portugal, on the other hand, saw an increase in investment and household spending for three consecutive months since September last year. This extended the country’s economic recovery into a second quarter.

In the Singapore Business Federation’s (SBF) recent National Business Survey 2013/14, Europe was one of the top 10 overseas markets that SBF members were keen to venture into.

Trade agreementAgainst the backdrop of the European Union (EU)-Singapore Free Trade Agreement (EUSFTA),

Silver Lining in EuropeEurope among top 10 overseas markets, business survey reveals

EU-Singapore Free Trade Agreement (EUSFTA)Singaporean exports to the EU upon the enforcement of the EUSFTA, while the remaining 20% (S$4.3 billion) will qualify in the next three to five years.● Allows electronics, chemicals, pharmaceuticals, machinery and processed Asian food products to enter the EU tariff free.● Facilitation of meat imports from the EU.● Preferential market access and elimination of discriminatory barriers.● Potential increase in Singaporean exports to the EU by S$5.9 billion.● Singapore economy is expected to grow by

Trade in goods & services● Greater market access to the 28 EU Member States, leading to increased business opportunities and a wider variety of goods and services.● The concept of ASEAN accumulation, applied to key exports, allows Singapore manufacturers to count the use of components and parts sourced from other ASEAN member countries as originating content.● Reduced technical and non-tariff barriers through the adoption of international standards.● Removal of tariffs on 80% (S$23.2 billion) of

S$4.6 billion.● Addition of the EU, the world’s largest trading bloc of 500 million consumers, will significantly enhance Singapore’s current network of FTAs covering 18 regional and bilateral agreements with 24 trading partners.

Greater opportunities and investment facilitation● New opportunities for foreign direct investment.● Wider access to government procurement opportunities.

Intellectual property● Protection of intellectual property rights

● Business Horizon Series of workshops on Merger & Acquisition Opportunities in Europe.

SBF will continue to engage the region with several business missions and workshops this year. A high-level business mission to Portugal, Switzerland and Italy is also on the cards. The missions aim to allow participants to gain first-hand knowledge of doing business in these European countries and network with business leaders, decision makers and government officials.

SBF will also hold several EUSFTA sectorial workshops. These are to enable members to engage with experts in open discussions on the technicalities of the FTA. •

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33

BILATERAL TRADE FIGURES BETWEEN SINGAPORE AND EU PARTNERS in 2013Value in Thousands (S$)

The Singapore Business Federation (SBF) has been proactively assisting Singapore companies to venture overseas for opportunities in European markets. In November 2013, it led a business mission to Hungary, the Czech Republic and Slovakia, in conjunction with a state visit there by President Tony Tan.

Mr Ho Meng Kit, SBF CEO, led the mission to the Czech Republic and Slovakia, while the Hungary business mission was co-led by Mr R. Narayanamohan, Vice Chairman of SBF.

The 22-member delegation comprised business leaders and senior representatives from diverse industries including planning and infrastructure, information and communications technology, marine and automotive supplies, logistics, architecture and design, pharmaceuticals, business services, electronics and general

trading. The aim of the mission was to give participants first-hand understanding of the overall market dynamics and opportunities in Central and Eastern Europe, against the backdrop of the EU-Singapore FTA that is expected to come into force by 2015.

The mission also helped the Singapore delegates establish useful business and official contacts.

“Singapore enjoys a warm bilateral relationship with Central and Eastern Europe, underpinned by robust trade,” said Mr Ho.

The delegates attended briefings by the host countries’ ministries and government agencies, and visited several industrial areas and business-matching sessions.

More direct exchangesIn Hungary and Slovakia, SBF and the delegates participated in the Singapore-Hungary Business Forum and

SBF-led Visit to Czech Republic, Slovakia

the Singapore-Slovak Republic Business Forum.

The apex chamber also inked a Memorandum of Understanding (MOU) with the Budapest Chamber of Commerce and Industry to carry out more business promotional activities in trade and investment.

The key provisions of the MOU included direct exchanges of information and the promotion of agreements between Hungary and Singapore business communities on economic and market situations, business opportunities, and technological and industrial cooperation.

In addition, IM Holdings Pte Ltd and Ziegler Ostya KFT jointly inked an MOU to provide a platform for Hungarian companies interested to enter the Singapore and South-east Asian markets.

This is the SBF’s third mission to Hungary and its first to the Czech Republic and Slovakia. •

AIM OF THE MISSION

1

Gain first-hand understanding of the

overall market dynamics and opportunites in Central and Eastern Europe against the

backdrop of the EUSFTA

2

Establish useful business and official contacts

with representatives from Hungary, the Czech

Republic and Slovakia

Germany 20,915,570

France 15,414,051

Netherlands 15,188,154

UK 14,276,363

Belgium 7,636,438

Italy 5,830,409

Malta 2,074,006

Ireland 1,807,839

Spain 1,779,673

Greece 1,697,391

Sweden 1,671,848

Austria 1,566,211

Denmark 1,041,439

Czech Rep 998,875

Hungary 969,333

Cyprus 735,014

Finland 655,679

Poland 575,275

Bulgaria 461,450

Lithuania 213,484

Romania 210,488

Portugal 192,485

Luxembourg 177,377

Estonia 132,844

Slovakia 122,076

Slovenia 93,663

Latvia 70,789

Croatia 48,970

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Inside SBF


34

Dr Michael Pryles, Founder and President of SIAC, honoured with Singapore’s Public Service Medal.

In recognition of his contributions to Singapore, President Tony Tan Keng Yam recently conferred the Public Service Medal (Friends of Singapore) on Dr Michael Pryles, Founder President of the Singapore International Arbitration Centre (SIAC) Court of Arbitration.

Dr Pryles, who is also the former Chairman of SIAC’s Board, is highly regarded internationally by the Chambers Asia-Pacific as one of the two arbitrators most in demand in the region.

The Public Service Medal (Friends of Singapore) is one of Singapore’s most prestigious awards for international business leaders who have contributed significantly to Singapore’s economic growth. It recognises individuals who have promoted Singapore’s interests in both their professional and personal capacities.

Mr K Shanmugam, Minister for Foreign Affairs and Minister for Law, acknowledged Dr Pryles’s dedication to building Singapore’s

capability as an arbitration hub.

He said: “Dr Pryles’ leadership of the SIAC has helped Singapore become the leading Asian centre, as well as one of the world’s leading centres, for international commercial arbitration. We are fortunate to have his unwavering commitment and unstinting support.”

Competence and expertiseDr Pryles said that the award was a great honour and that it “had been a great pleasure working in Singapore to help develop a world-class arbitration centre for the resolution of international commercial disputes”.

“Many people have assisted, including the Board and Court members of SIAC who comprise some of the leading experts in the field of international commercial arbitration and our secretariat,” he explained.

“The expertise, competence and integrity of the Supreme Court were also vital to our success, and provided an

indispensable foundation for our development.”

SIAC provides arbitration services to the global business community. Its arbitration awards have been enforced in countries such as Australia, China, Hong Kong, India, Indonesia, Malaysia, South Korea, Thailand, United Kingdom, United States and Vietnam.

New case filings have increased to 259 new

cases received in 2013, up from 235 received in the previous year.

According to the SIAC, 86% of the new cases filed were international in nature. Parties from 50 different jurisdictions from around the world filed cases at the SIAC in 2013.

Dr Pryles said: “Singapore has now become perhaps the leading place in Asia to resolve international commercial disputes.

“Arbitration is undoubtedly the most important procedure for doing so, but other forms of dispute resolution are being developed. I believe that effective dispute resolution is an essential component for the establishment of Singapore as a leading financial and commercial centre.

“To my mind, Singapore already bears the essential hallmarks of a London or New York in South-east Asia.” •SBF members can visit the SIAC

website at siac.org.sg for more

information on the various types

of arbitration services offered.

General enquiries can be emailed

to [email protected].

“Singapore has now become perhaps the leading place in Asia to resolve international commercial disputes. Arbitration is undoubtedly the most important procedure for doing so.”

Transforming Singapore into an Arbitration Hub

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Eyeing the China Market

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SBF leads delegation to the 3rd China International Fair for Trade in Services (CIFTIS).

billion people. A recent report by HSBC stated that average incomes in China will increase sevenfold between now and 2050, from their current level of US$2,500 (S$3,200).

Mr Poh Choon Ann, an SBF business delegation leader and Vice Chairman of the SBF China Business Group, observed: “China is entering a new phase of economic development. Rapid urbanisation and a growing middle-class have spurred a greater demand for quality services.

“Singapore companies have a proven track record in China, and are well-positioned to add value and contribute to the growth of trade in services, as the sector is liberalised.”

This optimism is reflected in the findings of the recent SBF National Business Survey. Asia

Seizing opportunities in the fast growing regions of China

and South-east Asia, Singapore small and medium enterprises (SMEs) have pressed ahead with overseas expansions to internationalise their businesses for longer term sustainable growth.

Some member companies that the Singapore Business Federation (SBF) spoke with recently have cited the importance of good market understanding, local customisation and branding as key success factors for navigating the complexities of operating in foreign markets.

Expanding to ChinaAccording to the International Monetary Fund’s World Economic Outlook 2012, China is the country that has seen the most significant increase as a location for expansion by SMEs. Almost half the SMEs surveyed were engaged in China, up from one-third in the previous year.

As China continues to rise in economic importance, Singapore SMEs are realising the value of engaging this massive market of 1.35

remains the most popular region among SBF members (96% – refer to table: Overseas Presence By Region). Relative geographical closeness, cultural similarities, and availability of business opportunities have contributed to this result.

In the table on page 38, Top 10 Asian Countries, it can be seen that Malaysia (65%), China (62%) and Indonesia (55%) have remained the top three Asian countries that SBF members are engaged in.

CIFTIS’ focus on urban needsMany Singapore companies are eager to play a role in China’s ongoing urbanisation. In the face of rising demand for various consumer services, many industry experts say that strong growth lies in China’s trade services.

STAYING FOCUSEDA three-pronged

strategy for SMEs to sustain business growth

INTERNATIONAL

EXPANSION

DRIVING INNOVATION

BRAND CREATION

China’s economy is proving resilient in the face of a volatile global economy. According to The World Bank, the strength of the Chinese economy lies in its stable fundamentals, huge consumption growth potential, and sustained urbanisation.

Singapore companies in China are also confident of the Chinese economy

– it has remained a top investment destination for them in recent years.

In response to such demands, Singapore will be participating in the 3rd China International Fair for Trade in Services (CIFTIS) from May 28 to June 1 in Beijing this year.

CIFTIS serves to raise the profile of participating companies and provide invaluable opportunities to build an efficient network of potential business services partners, not only from China but also from different parts of the world.

As an international platform for negotiation and transaction, CIFTIS aims to advance the service industry and trade in services though high-level seminars, business talks, exhibitions and themed days. The event is hosted by the Ministry of Commerce of the People’s Republic of China and the People’s Government of Beijing Municipality.

SBF, supported by Singapore’s Ministry of Trade and Industry (MTI), is organising Singapore’s participation at the event. The theme of the Singapore National Pavilion

p.38

2013 2012

Asia 96% 94%

Europe 22% 22%

Americas 20% 21%

Middle East 18% 21%

Oceania 12% 14%

Africa 9% 10%

Source: SBF National Business Survey

OVERSEAS PRESENCE BY REGION

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36, 38 InternationalMkts AB.ed.AB.indd 36 03/04/2014 09:20



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there, including Hyflux, Ascendas, DBS Bank, YCH Group, Rajah & Tann, RSM Chio Lim, Nanyang Polytechnic, NTUC LearningHub and Sino-Singapore Guangzhou Knowledge City.

CIFTIS organisers said that total turnover reached US$78.69 billion last year,

is “Enhancing Service, Enriching Experience, Liveable and Sustainable Cities”. Its decor will be focused on the following six service sectors: Urban Solutions and Environment Services, Professional Services, Financial Services, Educational Services and Skills Training, Tourism, and Logistics.

Last year, the second edition of CIFTIS was attended by more than 1,300 exhibiting enterprises from 117 countries and regions, with 138,000 registered attendees; contracts were signed for 415 projects.

SBF led a 150-strong Singapore delegation to CIFTIS last May, and the participating companies were from diverse industries such as urban solutions, logistics, and education and skills training.

Some 27 Singapore companies and business associations showcased their expertise in services at the Singapore Pavilion

Focus of theSingapore Pavillion

1

URBAN SOLUTIONS

& ENVIRONMENT

SERVICES

2

PROFESSIONAL

SERVICES

3

FINANCIAL SERVICES

4

EDUCATIONAL

SERVICES & SKILLS

TRAINING

5

TOURISM

6

LOGISTICS

China has passed a new trademark law that becomes effective from May 1, 2014.

The new law includes some important changes to the trademark application and appeal processes, and require trademarks to be registered and used “by the principle of honesty and credibility.”

In addition, there are several notable provisions designed to improve

trademark enforcement in China.

This new trademark law will have a significant impact on Singapore businesses.

According to Mr Ma Yu, Director/Chief Representative, Patent Attorney (UK, SG) at Cinda Singapore Pte Ltd, “Many Singapore companies face difficulties with and are anxious about registering their trademarks in China due

China’s new Trademark Law to the lack of protection from squatting or hijacking.”

He said: “These issues are specifically addressed in the new law. While this new legislation may not prevent trademark hijacking completely, it is definitely good news to most companies.”

Enforcement issuesIntellectual Property enforcement is another issue most foreign companies face. The new law marks a positive

For further clarification

and information on CIFTIS,

readers and SBF members

can contact Ms Anne Tng

at [email protected].

TOP 10 Asian CountriesSource: SBF National Business Survey

0 10 20 30 40 50 60 70 80 90

MALAYSIA

CHINA (incl. Hong Kong)

INDONESIA

THAILAND

VIETNAM

INDIA

PHILIPPINES

JAPAN

TAIWAN

KOREA

Percentage (%)

65

55

4141

39

36

33

28

26

6262

70

59

47

43

37

36

24

24

64

56

4242

42

37

30

25

23

232020

87

201320122011

up 30.9% from 2012 when the fair was launched. The figure included US$10.89 billion in international trade in services. •

move in strengthening trademark enforcement in several aspects, including the definition of infringement, assessment of damages, infringer’s duty of disclosure, and others.

“This overhaul of the trademark registration process will make it more efficient,” explained Mr Ma. “Companies can generally expect successful registration of their trademarks in a much shorter time, and probably at a lower cost.”

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Innovation Centre To Help SMEs Adopt Technologies

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A S$7 million Materials Centre of Innovation (MCOI) has been set up to help 450 SMEs over the next three years adopt technologies to create new products and business opportunities.

The centre has been operating since September 2013, and researchers there have been working with SMEs to help them understand the complex technology behind new material development in offering solutions or creating new products for commercialisation.

The centre is located at A*STAR’s Institute of

Materials Research and Engineering (IMRE).

“Due to the nature of our research and development, and our ability to customise and adapt a material to different functions, IMRE will be a strong partner to help give SMEs the flexibility to adapt their products to compete better and respond quicker in today’s fast-paced technological environment,” said Dr Leong Yew Wei, Centre Manager of the MCOI.

He explained that the centre is able to showcase a whole range of materials

technologies to SMEs by demonstrating how the use of innovative materials can provide added value to their products and processes.

One company which has benefited is HVS Engineering, an automated maintenance solutions provider. Researchers at the MCOI helped HVS adopt a new material that allowed it to serve new sectors like petrochemicals and oil and gas, as well as power stations.

HVS provides maintenance solutions for pipelines and building systems and its Managing Director, Mr Alex Chow, said that the new business opportunities could add S$50–100 million to its revenue over the next five to 10 years.

He explained: “Innovation like that with new materials coming on a continual basis will certainly help our growth going forward.”

Mr Chow said the company made use of Spring Singapore’s Innovation and Capability Voucher to finance the project with MCOI.

Minister of State Mr Teo Ser Luck said at the centre’s launch that SMEs need to improve productivity and move towards higher value-added activities as the Singapore economy restructures.

He said: “The Government has supported the setting up of Centres of Innovation to help SMEs with technology innovation.

“SMEs can tap on these centres to develop new

SME Resources

New product creation and technology adoption are key to helping companies compete effectively.

CENTRES OF INNOVATIONThe Centres of Innovation (COIs) provide laboratory facilities, technology consultancy and training courses, and assist SMEs in testing and developing their technological projects. Each COI has a different speciality. ● Centre of Innovation for Electronics (Nanyang Polytechnic)● Centre of Innovation for Supply Chain Management (Republic Polytechnic)● Food Innovation Resource Centre (Singapore Polytechnic)● Environmental and Water Technology Centre of Innovation (Ngee Ann Polytechnic)● Marine & Offshore Technology Centre of Innovation (Ngee Ann Polytechnic)● Precision Engineering Centre of Innovation (SIMTech).

product concepts, build prototypes, and test-bed new applications.”

There are six other COIs in Singapore, located in various polytechnics and A*STAR’s research institutes.

These centres have worked on 1,800 projects which have benefited more than 2,700 companies.

The centres are focused on food innovation, marine and offshore technology, environmental and water technology, precision engineering, electronics, and supply chain management. •

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SME Resources

If you have any views, comments or suggestions about BiZQ or other SBF events, we want to hear from you. Please send your contributions to:

The Editor, BiZQ MagazineSingapore Business Federation10 Hoe Chiang Road#22-01 Keppel TowersSingapore 089315.

Or email us at [email protected].

LETTERS FROM OUR READERS

SME WorkshopsComplexities in Simple Practical Corporate TaxMay 15

SBF Seminar Room 2,

Keppel Towers

The Inland Revenue Authority of Singapore (IRAS) is currently administering the Corporate Income Tax (CIT) Rebate. Companies will be granted a 30% CIT Rebate capped at $30,000 for three years, from YA 2013 to YA 2015, to help relieve rising costs.

As corporate tax compliance gets more complex, this workshop will help participants understand how to comply with their tax obligations and file their corporate returns on time.www.sbf.org.sg

Indonesia Labour LawMay 30

SBF Seminar Room 2,

Keppel Towers

Companies that intend to enter Indonesia’s market or are already operating in Indonesia need to observe the country’s employment regulations.

Members are encouraged to attend this workshop to acquire a good understanding of the various provisions of Indonesia’s labour law. Indonesia is also the first country in Asia to endorse all eight International Labour Organization (ILO) Core Conventions concerning the fundamental rights of workers.www.sbf.org.sgSP

H L

ibra

ry

significance of cultivating a safe and healthy culture at

the workplace, and have a clearer idea how to prepare for and endorse their companies’ WSH policies.

www.sbf.org.sg

Upcoming EventsInternational Business Fellowship (iBF) Executive Program to MyanmarJuly 6-12

Yangon

Myanmar is now becoming one of the world’s most sought-after countries, ready to open up and woo foreign investors in its construction industry.

Sign up to learn the basics of doing business in Myanmar. This five-day intensive executive programme includes lectures, site visits and networking sessions.For more details, e-mail

[email protected] and

[email protected].

MORE HELP FOR SMESThe Innovation & Capability Voucher (ICV) has been expanded to support SMEs in implementing business and productivity solutions.

The Singapore Government recently announced that an additional S$10 million has been set aside to fund the enhanced scheme.

Beginning March 2014, with the enhanced ICV scheme, SMEs can look forward to more support with which to put their business improvement plans into action.

The scheme will expand the scope of the ICV beyond consultancy services, to supporting the implementation of solutions in the four capability areas of innovation, productivity, human resources development, and financial management.

The enhanced ICV will enable SMEs that want to implement solutions to meet their business challenges, but face resource constraints, to take their first step towards capability upgrading.

With the change, SMEs can implement solutions from these categories:● Equipment & hardware● Technical solutions● Professional services● Design & renovation.

Under the existing ICV, each SME is currently eligible for eight vouchers. Each SME may apply for a maximum of two vouchers to implement its chosen solutions with. •

Making Strategic Decisions on Capital ExpenditureJune 3

SBF Seminar Room 1,

Keppel Towers

Capital expenditure decisions deal with the investment of funds in fixed and current assets, and what the returns on such investments will be over the next number of years. The decision process is important because of the substantial amounts of money involved, and the impact that such decisions have.

This workshop provides participants with an understanding of long-term decision making, and the constitution of capital expenditure.www.sbf.org.sg

bizSAFE Level 1 for CEOsJune 4

SBF Seminar Room 2,

Keppel Towers

This workshop provides senior management with a better understanding of the Workplace Safety and Health (WSH) Act and its subsidiary regulations (Risk Management Regulations and Guidelines on Risk Management).

Participants will gain an understanding of the

Upon approval

Please sign:

Name and Date:

039, 040 SMEresources.indd 40 03/04/2014 09:14

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TWF_BiZQ_275x205_R1.pdf 1 11/7/13 5:07 PM

Keppel Corporation Limited1 HarbourFront Avenue #18-01 Keppel Bay Tower Singapore 098632

www.kepcorp.com

40,000 Keppelites in over 30 countries are contributing towards shaping a sustainable future through our businesses in Offshore & Marine, Infrastructure and Property.

Passion and discipline drive us to deliver solid results year on year, and emerge stronger through every challenge. We will fortify our strengths and competencies, harnessing human, knowledge and financial capital to shape Keppel’s future.

2014 | BiZQ | Apr - Jun

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