Singapore Business Review by Charlton Media Group

Display to 30 September 2011 S$5.90

Daily news at www.sbr.com.sg

PULLING THE

Debt pin Singapore’s Best Selling Business Magazine

CAN ASIA COPE WITH A CHINA FINANCIAL CRISIS? CHEAP money and a 3-Month negative interest rate

GOOGLE’S SINGAPORE PLANS Why did facebook founder eduardo

saverin invest in adz?

Game Changers: HEADHUNT SCALPING

classified papers

Richard branson: winning investors

What YOU NEED TO KNOW ABOUT ASIAN PRIVATE EQUITY

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

FROM THE EDITOR Publisher & EDITOR-IN-CHIEF Assistant Editor Art Director

Tim Charlton Jason Oliver Niyasuthin

Editorial Artist

Regina Goloy

Editorial Assistant

Queenie Chan

Media Assistant Editorial Assistant ADVERTISING CONTACTS

Kristine Tongson Alex Wong Laarni Salazar-Navida lanie@charltonmediamail.com Alyz Katherine Tenorio alyz@charltonmediamail.com Loren Laylay loren@charltonmediamail.com Rochelle Romero

Hardly a week goes by these days when stocks either fall 20 % only to rally 10 %, based on rumours of sovereign defaults or bailouts emanating from Europe. So given the importance of this issue, your editor spent the first two weeks of August investigating the issue on the ground in Spain, the next big ‘domino to fall’ in the game of European contagion. So as the crowds sauntered out of the tapas bars in San Sebastian late in the evening and made their way down to the magnificent 3 km stretch of beach for the nightly firework show, I couldn’t help but think, on an admittedly overfull stomach, if this is austerity, what will they do when things get really bad ?

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Jaclyn Ganila jaclyn@charltonmediamail.com

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So far no sign of rioting wayward youth, just the sounds of a half a million dollars worth of European Central Bank financed fireworks to entertain the crowds. During the day, I witnessed a lazy demonstration of perhaps 50 disgruntled and clearly unemployable ‘indignants’ strolling along the main road into town, but by evening they too had joined the partying throng in the streets, enjoying more late night drinks and music. The one piece of good news I did spy online during my fact finding trip came from the UK, where the government is now running a budget surplus and paying down debt, thanks largely to increasing the VAT from 17.5 % to 20 % under the conservative government. I couldn’t help but think that Spain, which currently has an 8 % VAT, a socialist government and an election coming up soon, may soon follow suit and then it too would suddenly be posting budget surpluses and paying down debt. But in the meantime, whilst Asia shuddered and worried about Europe’s problems, the rest of Europe continued to do what it has done for centuries. The sun still shone, the food was still on the tables, the apples were just beginning to ripen on the trees and the tourists still flocked. Worry could wait for another day; I was off to the beach. And there is a lesson in that for all of us.

Tim Charlton

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SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011 3

CONTENTS

fIRSt Will you go with google?

FEATURE 34 Hong Kong’s US$11bn private equity problem

The money has been raised, but competing with larger Chinese domestic funds is challenging

INTERVIEW 30 Keppel banking on a clean and

22 Winning investors over

OPINION 20 What you need to know before accepting a job

Published Bi-monthly on the Second week of the Month by Charlton Media Group Pte Ltd, 15B Stanley Street, Singapore - 068734

Keppel banking on a clean and green asia

hong kong ‘s US$11bn private equity problem

FIRST

24 Forever remembered as ‘thy KING’ 40 Goodbye Bill Gates, hello Vera Wang 42 Singapore needs some sexual healing

13 Cheap Money and a 3-month negative interest rate

14 Will you go with Google? 16 Why did facebook founder Eduardo Saverin invest in ADZ?

EVENTS 43 SBR Healthcare conference

green Asia

Ananya Mukherjee sat down with keppel CEO, MR Choo Chiau Beng, to talk about company’s plans.

18 Chinese banks Us$100bn Hong Kong Problem

20 Headhunt scalping classified

REGULAR

papers

28 Numbers 46 Motoring Report 48 Life and Style 50 Last Word For the latest business news from Singapore visit the website

REPORT

www.sbr.com.sg

Agenda PEOPLE | PLACES | EVENTS | OPPORTUNITIES

PLACES

the Nomad group bhd

LONG BEACH SEAFOOD Restaurant

The Nomad Group Bhd, listed on the Main Market of Bursa Malaysia is an integrated provider of Serviced Offices, Hotels and Serviced Residences, aimed at a new breed of mobile and savvy business travelers desiring professional, efficient yet innovative working and living spaces. The Nomad brand although young, is vibrant and is fast gaining market recognition and expanding fast, both in Malaysia and abroad, having established its presence in Singapore, Ho Chi Minh City, Bangkok, Jakarta and Manila. Visit us at www.thenomad.com.my or call us at +603 2775 2828

LONG BEACH SEAFOOD is the Original creator of Singapore’s world famous and best Black Pepper Crab. Established in 1946 at Bedok Rest House, it has 64 years of experience in seafood delicacies. The restaurants’ extensive range of fresh seafood include Live Alaskan King Crab, Australian Lobster, Air flown live Canadian Geoduck, and Live Tiger Sea Mantis. Long Beach is also the one of the first to offer crab de-shelling service for their customers. For reservations call MAIN 6445 8833 Dempsey 6323 2222 IMM 6566 9933 LB UDMC 6448 3636 KING 6344 7722.

Singapore Turf Club Looking forward to embark on a voyage of culinary pleasure at lunch or enjoy a spectacular night after work with friends or business associates, you can adjourn to the chill-out lounge at V (China Square, Level 3). V, a premier hospitality destination by the Singapore Turf Club. The perfect venue for any meet. Please call 6879 1979 or email business_development@turfclub.com.sg for more information. 6 SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011

free export advice from atradius Atradius, one of the world’s largest credit insurers, supports businesses by protecting against the risks of not getting paid when trading on credit terms. It enables businesses to concentrate on future sales without the worry of past debt, knowing that sales are protected. It offers free monthly country snapshots with the issues that are currently impacting the local business environment and default expectations, written by expert underwriters and economists. Download the free reports at www.atradius.com.sg or call us at+65 6372 5300.

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FOR MORE INFORMATION on EVENTS AND ADVERTISING

legal solutions for your business needs Tan Peng Chin LLC (TPC) is a full-service medium sized Singapore law firm which undertakes substantial local, regional and crossborder work in areas of Corporate, Banking & Finance, Real Estate & Conveyancing, Litigation & Dispute Resolution, Intellectual Property and Asset &Wealth Management. Visit www.tpclaw.com.sg to find out more on how TPC may provide legal solutions for your business needs.

News from sbr.com.sg Daily news from Singapore “Touring” around the Lion City most read HR AND EDUCATION

You’re fired: 1,900 workers left jobless in Q2 2011 1,500 workers were retrenched and 400 had their contracts terminated prematurely. According to a release by Ministry of Manpower, the total employment growth moderated in the second quarter this year. Preliminary estimates show that total employment grew by 22,800 in the second quarter of 2011. The gains were lower than the 28,300 in the preceding quarter and 24,900 in the same quarter last year. aviation

Tiger Airways to offer thrice weekly SingaporeDavao flights The first flight to Davao will take off on November 1. According to a release, Davao, the second largest city in the Philippines, has in recent years emerged as a major business, investment and tourism hub. Known as the “melting pot of the Philippines”, Davao is a culturally rich and extremely vibrant city. “We are excited to add Davao to our growing portfolio of exciting destinations. Davao is an ideal destination for travellers who are keen on experiencing both the cultural diversity and natural beauty that the Philippines has to offer,”

The famous low-rise Uber 388 said Stewart Adams, Managing Director of Tiger Airways Singapore. residential property

MCL land sold half of Uber 388 in less than a week But good news for potential buyers as the 95-unit development at Upper East Coast Road remains discounted at preview price of around $1,380 psf on the average. According to marketing agents from Huttons Real Estate Group, selling price of Uber 388 still starts at $600,000+ for a 452 sft one-bedroom unit but MCL Land may soon raise it due to fast take up.

residential property

34% of Singaporeans won’t buy properties due to high prices And 73% of HDB seekers are willing to wait 2 to 3 years to purchase property. PropertyGuru revealed its second quarter 2011 survey results on property market sentiment amongst Singaporeans. The survey shows that home buyers and property investors are less optimistic about property affordability as compared to Q1 2011. 79% of respondents perceive property in all categories in Singapore as expensive, up from 75% in Q1.

Lorem ipsum dolor sit financial services

$374b Countless credit:

Loans in Singapore reached a whopping $374b in June Guess which sector was in dire need of cash and accounted for 56% of the total loans? According to DMG, it was the business sector, with business loans up 4.1% MoM.

markets & investing

SGX will not pay a one-time dividend Muthukrishnan Ramaswami, acting chief financial officer of Singapore Exchange, said the bourse has no plans to pay a one-time dividend and would like to maintain a healthy cash balance going forward. A Reuters report said SGX had cash and cash equivalent of $454 million at the end of its financial year on June 30. financial services

HSBC to cut 25,000 jobs by 2013

Tiger Airlines flying in Davao

8 SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011

And it will exit operations in 20 countries as it looks to save billions of dollars. According to a report, the announcement came as the bank reported pre-tax profits for the first six months of the year of $11.5bn (£7bn), up 3% on the $11.1bn the bank made a year earlier.

News from sbr.com.sg Daily news from Singapore “Touring” around the Lion City most read ECONOMY

“We overcame the odds and transformed our economy”: Prime Minister Mr Lee Hsien Loong said GDP per capita is now almost S$60,000 compared to the S$1,374 fifty years ago. During the EDB 50th Anniversary Gala Dinner, he noted how Singapore was a very different place when EDB was formed half a century ago. The Prime Minister said economic transformation was achieved with EDB playing a key role by attracting billions of investments and projects which created millions of jobs. residential property

Two new private condos worth as low as $600K+ each According to marketing agents with Huttons, selling prices for both developments start from 600K+. The 52unit Jool Suites with sizes ranging from 398-936sf will be sold for $1600-$1700 psf on the average. Average selling price for the 95-unit Uber 388 with sizes ranging from 4521905sf, meanwhile, is $1400psf. All units will be released on their preview dates since both are small developments, said sources. Investment-wise however, marketing agents favor Jool Suites more over Uber 388.

Prime Minister Lee Hsien Loong economy

Mark your calendars: Presidential election on 27 Aug That is if more than one candidate stands nominated for election at the close of nominations on 17 August. The Prime Minister has issued the Writ announcing 17 August 2011 as Nomination Day, and the People’s Association at 9 King George’s Avenue as the place for the nomination of candidates. The Returning Officer is Mr Yam Ah Mee, Chief Executive Director of the People’s Association.

hotel & tourism

Welcome to SG: Tourism sectors get pampered Healthy visitor inflows pushed the hotels & restaurants sector up by 6.4%. The Ministry of Trade and Industry also reported that the “other services” industries -which include arts, entertainment and recreation activities – grew by 5% on a year-on-year basis. MTI said, “Healthy visitor inflows, sustained by the Integrated Resorts and key events such as the Formula One Grand Prix, are likely to benefit the tourism-related sectors.”

Singapore’s tourism on the rise commercial property

1.5% Hammering away: Construction sector grows by 1.5% Thanks to increases in public sector construction activities. The Ministry of Trade and Industry said the sector, on a sequential basis, expanded by an annualised rate of 13.4%.

retail

Singaporeans are not buying it Wholesale and retail trade flatlined compared to a year ago. According to the Ministry of Trade and Industry, there was even an annualised sequential decline of 8.4%. MTI said the flat growth experienced by the sector largely reflected the slowdown in global trade flows during the second quarter. transport & Logistics

Up, up, and away: Transport & storage sector jumps 4.1%

The magnificent Jool Suites

10 SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011

The sector took off due to buoyant air travel demand. The Ministry of Trade and Industry further reported that, on a sequential basis, the sector registered a positive growth momentum of 8.9%. Overall MTI expects the economy to grow by 5 to 6% in 2011.

Hong Kong Business

Singapore Business Review Two business magazines for two countries from one publisher. Think global, read local. Display to 31 July 2011 S$5.90

Display to 30 September 2011

Daily news at www.sbr.com.sg

THE FIGHT FOR

PULLING THE

ASIAN RETAIL

DEBT PIN

Singapore’s Best Selling Business Magazine

HOW DO THE WESTERN RETAILERS STACK UP ?

THE US$100 BN QUESTION IS WILL HONG KONGERS BACKSTOP CHINA’S LOCALLY LISTED BANKS?

DOG FIGHT AT CHANGI :

RICHARD BRANSON:

SIA’S TWO-FRONT BATTLE

WINNING INVESTORS

COZYCOT’S NICOLE YEE

CLP’S HK$ 9 BILLION

ON HER NEW ‘MOOK’

RETROFIT PAYS GREEN DIVIDENDS

RICHARD BRANSON:

GAME CHANGERS:

OUR GALACTIC ADVENTURE

PERKS FOR SME

IS SOCIAL MEDIA

STAFF IS ON THE AGENDA

FAILING TO DELIVER?

HONG KONG IS NOT SO

WHY ARE ASIA’S CORPORATES

GEARING UP NOW ?

INDEPENDENT AFTER ALL

ASIAN HEDGE FUNDS

WHAT YOU NEED TO KNOW

ABOUT PRIVATE EQUITY

SWIMMING AGAINST THE TIDE

JUST HOW BIG IS THE

OFFSHORE RMB

MARKET ANYWAY?

The world may be globalised, but international business media just doesn’t reach the decision makers and issues in Asia’s top local markets like Hong Kong Business Magazine and Singapore Business Review. With a combined 2-city circulation of over 28,000 copies and more than 60,000 online readers, we have Asia’s top business cities covered from the inside out, not the outside in. For a discussion please email advertising@charltonmedia.com 12 SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011

FIRST

Cheap Money and a 3-month negative interest rate

than offset slower Singapore growth in the medium term.” Singapore banking sector margins, it notes, “are among the lowest in Asia and are now at decade lows.“ Added to which, recent announcements that Singapore would restrict some foreign labour in order to Our Singapore strategist, Sean Quek highlighted in his report, Bracing for slower gro (30 May 2011), that in the wake of Singapore’s post-election secure a better quality of living for policy dilemmas, government will try to strike a better balance between GDP growth and the quality of li standards the majorityhave of Singaporeans. Hence, over the medium term, we ex its for citizens had economists population growth to slow to 1-2% and real GDP growth to slow to about 4%. recalculating GDP numbers and While the rates news may be Figure 12: Singapore real GDP growth (YoY%) they have mostly been revised good for borrowers, the overall down. So with Singapore seemingly picture for Singapore banks is of a headed for a permanently slower slowing economy and compressed economic growth rate, it is natural margins. This means that that the local banks should focus on Singapore’s banks will have to grow their regional plays. through their regional acquisitions Banks in other key markets in which they have stitched together ASEAN earn much better margins over the last five years against the backdrop of receding foreign banks. than in Singapore and are now starting to improve from post-crisis Source: Credit Suisse estimates lows as central banks have started Singapore on the ‘slow’ (2) Singapore remains a low-margin market (and worsening) raising rates. Perhaps instead of Credit Suisse says the local banks Singapore banking sector margins are among the lowest in Asia and are now at dec lows (although partly offsetspare by lower credit Singapore). now depositing cashcostsinin banks, are now at an “inflection point” Banks in other key markets in ASEAN earn much better margins than in Singapore may beto aimprove better tolowsinvest inbanks have started rai with these regional operations are now starting from time post-crisis as central Due to the nature of the monetary policy mechanism (exchange rate based), Singapore’s banks. really ready to take off and “more rates. central bank in Singapore has little control over local interest rates. As a result, SIBO

Singapore banking sector margins are among the lowest in Asia and are now at decade lows

10 9 8 7 6 5

4 Mar-87

Macquarie Research

Singapore banks

Analysis 3M SIBOR is 96% correlated with

Sep-03

Mar-09

Sep-14

5.00

2.25

6.36

2.20

2.15

2.15 2.07

2.10

5.0

4.00

2.05 4.0

3.00 2.00

3.0

1.00

2.0

3-month SIBOR

2.20 2.10

(Danamon in Indonesia a potential target).

2.00 Research Analysts 1.90 Anand Swaminathan

65 6212 3012 1.80 anand.swaminathan@credit-suisse.com 1.70 1.60

1.00

1.50

UOB – After years of painstaking integration in terms of processes and technology, Indonesia and Thailand are readyandto While operations UOB's NIM lags changes in Singapore Fed take rates... off and start contributing meaningfully to the medium-term growth profile of the group. 2011

2009

2007

2005

2003

2001

1.40

US Fed Funds Rate

DBS NIM

Source: Company data, Macquarie Research, August 2011

Fig 3 6.00 5.00 4.00

UOB NIM

2011

2009

2007

2003

2001

2005

US Fed Funds Rate

'0 0

2Q10

19.0

3Q10

4Q10

1Q11

14.3

15 10

18.0 13.3

9.9

2Q11E

0.6

0.4

-15 -20 -25

-0.4 -6.1 -11.4 -18.4 DBS

-19.2 UOB

'01

'02

'03

Source: Credit Suisse estim

Figure 1: Singapore banks core net profit – QoQ growth (%)

2.20

1.40

3-month SIBOR

Singapore banks core net profit –

2.40

OCBC – Malaysia’s steady growth should continue, while Indonesia’s growth should accelerate. With the focus on differentiating OCBC as a wealth management play, Singapore could still remain the main driver of growth in the medium term.

Source: Company data, Macquarie Research, August 2011

2Q11 preview — strong loan growth, weaker QoQ growthincome (%) market-related

2.60

1.60

0.00

Singapore Banks Sector

-5 -10

1.80

1.00

PRE RESULTS COMMENT

2.00

3.00 2.00

1.85

19 July 2011 1.80 Asia Pacific/Singapore 1.75 Equity Research 1.70 Banks / MARKET WEIGHT

Singapore Banks Sector

1.95

Source: Credit Suisse estimates (Aggregated for CS universe) 2.30

0.00

1.98

2.00

3.10

1.90

0.0 TW

3.09

Source: Credit Suisse estimates (Aggregated for CS universe)

5.00

2.00

2.82

US Fed Funds Rate

Source: Company data, Macquarie Research, Augustrate 2011 Fig 2 Historically, DBS's margins have most quickly tracked changes

3.00

1.94

2.79

1.0

Source: Company data, Macquarie Research, August 2011

4.00

1.65

2.23

2.44

1.07

2011

2010

2009

2008

2005

2004

2003

2002

2001

0.00

DBS – With Hong Kong’s turnaround likely to be a slow process, India is the only overseas operation which holds the most promise (but comes with its own macro risks). DBS evidently needs M&A in Malaysia/Indonesia to achieve 11 August 2011 CEO’s ten-year target mix of 40:30:30 from Singapore:South Asia:North Asia

more correlated to the US and European interest rates. Our global economists do expect the US Fed to start raising rates at least until mid-2011, when we expect SIBO potentially start going up as well.

6.0

3-month SIBOR

With the slowing of the economic movement in Singapore, banks have been active on its expansions and operations in other countries.

Mar-98

7.0

6.00

Summary of Singapore Banks

Sep-92

AsianFigure banks—net interest margins (%) Figure 14: Singapore ba 13: Asian banks—net interest margins (%)

Federal funds

Fig 1 3M SIBOR is 96% correlated with Federal funds

2007

The bad news Some interesting research by Macquarie Securities shows that over the last 10 years, the Singapore interest rate has been 96 % correlated with US interest rates. So announcements in August that the US Federal Reserve would keep American interest rates low for the next two years pretty much means that Singapore rates will also stay at rock bottom for the same period. Moreover, with more investors seeking to dump troubled currencies like the US dollar and the Euro and park them in Singapore dollars, there is little need for higher interest rates to attract cash. As a reference point for the strong demand for Singapore dollar assets, the 10 years Singapore government bond has seen its yield fall almost half a per cent to just 1.61 % by from July to mid August, which Macquarie also attributes to institutional investor demand for non US dollar cash investments.

2006

The one fear that keeps many home owners with mortgages up at night is the prospect of a sudden rise in interest rates. Interest rates are at near record lows and in the interbank markets the rates actually have gone negative on the 3 month swop offer rate – which means you actually get charged for lending money to a bank.

OCBC

Source: Credit Suisse estimates

2Q11: UOB/ OCBC better QoQ; OCBC best YoY. Singapore banks report their 2Q11 results starting with DBS on 28 July, followed by OCBC (3/4 Aug) and UOB (12 Aug). Overall, we expect banks’ net profits to decline 7% QoQ (+2% YoY), with OCBC showing the best YoY performance and UOB/ OCBC better QoQ. Overall, loan growth momentum should be strong, net interest margins and credit costs should start to stabilise, but they may partly be offset by weaker capital market-related income. 2

Key things to watch out for. (1) Loan growth – can DBS/ OCBC play catch up with UOB’s strong loan growth momentum, (2) Net interest margins – Will 2Q11 signal a bottom for margins? How much can overseas operations help the Singapore banks’ group NIMs?, (3) Trading income – The 2Q11 US investment bank results suggest a weak QoQ trading income performance. How resilient will DBS’ client flow-driven treasury income turn out to be? (4) Scrip dividend – Will the banks stop their scrip dividend schemes given the better clarity on capital requirements? We think unlikely SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011 in 2011 until banks get more clarity on the ‘supervisory’ and ‘counter-cyclical’ buffer requirements. UOB sector top pick on 12-month view; OCBC could play catch up near

FIRST the forecast.” Note that it is one spreadsheet, hosted on Google’s computers that is accessed and updated by all team members, so no more “lost spreadsheet” syndrome. Indeed, for most of the office suite applications in Microsoft Office, Google offers its own alternative.

Doug Farber

Will you go with Google ?

oogle has officially launched its effort to persuade Asia’s businesses to “go Google” by using the company’s platform for web based email and other communication and collaboration applications. Google Enterprise is a direct alternative to the Microsoft platform, and is entirely based on Google’s servers rather than being installed in a corporate office. Google’s Managing Director for Enterprise in Asia Pacific Doug Farber spoke exclusively with Singapore Business Review to outline the company’s offerings and ambitions in the region. According to Farber, almost everyone is familiar with services like Gmail because they use them personally, and with Google Apps users get the benefits of the same email platform on their company domain. No more archiving or deleting emails. But Google Enterprise is about much more than mail explains Farber “We feel that communication and collaboration are the two key needs of businesses, so Google Enterprise has these at the core. What we are offering is a lot broader than Microsoft office suite as a foundation. Google Apps support

a strong trend emerging whereby people choose to work where they are most productive. Applications no longer have to be accessed through desktops and complex systems that provide access to office-based servers. Users can reach their email and calendar, video chat within email, and collaborate on documents from wherever they find themselves and from whatever device they’re using. All you need is an internet connection and a web browser.” $50 a head The benefits to the organization from making the switch, According to Farber, the benefits from making the switch include no longer needing an on-premise server, needing minimal maintenance and administration, and creating tremendous time and cost savings. “Google Apps users pay US$50 per year per user and that gets them their emails and more all on the company domain.” said Farber. A key feature of Google Apps is that many users can access one document and update it simultaneously. As an example, Farber cites a case where a team leader can “ask the sales members to update the spreadsheet every Friday and then I immediately have

14 SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011

What we are offering is a lot broader than Microsoft Office suite as a foundation.

‘App store’ for business But where it doesn’t, enterprise users can simply buy it from a third party vendor online through the Google Marketplace. Think of it as an app store for businesses. The best thing is that all these applications have been tested and approved by Google and sync with all your existing data and spreadsheets. Farber readily admits that Google doesn’t have “ all the functions” which is why the marketplace exists with “a great ecosystem to build on.” Companies with bespoke applications are also able to integrate them into the Google applications through the app engine, says Farber. So what are the advantages of using Google Apps rather than installing servers and software? According to Farber, the advantages to small and medium businesses are “incredibly obvious.” “You don’t want to spend the first $30,000 of start up capital in your business on servers and software licenses,” he said. “If you were to poll the startups, I would guess that a majority would be on Google Apps.” But Farber says Google is also making significant inroads into middle sized businesses. “ We had a major manufacturer with a large presence in Singapore with 4,500 users on the system, and they have a guy that spends half of his time administering it. One case study in Singapore cited by Google is the real estate firm HSR. “They are the largest property company in Singapore and run through an Agency based model, so all the agents want their own emails. It’s a great unification exercise and allows HSR to have a much more cohesive and collaborative platform across their agents. Also its a government requirement to retain documents for real estate agents for 3 years and that compliance mandate was enough for the CEO of HSR to move across and ‘go Google’”.

co-published

HSBC is retirement for life

HSBC offers priceless financial security

ingaporeans may think they are well catered for in their retirement, but a recent survey by HSBC suggests this is not the case. Despite having one of Asia’s most comprehensive retirement plans in the form of CPF, a whopping 42 % of Singaporeans surveyed by HSBC believed they do not have financial security for their later years. The findings were presented in the Power of Planning report based on online surveys conducted in December 2010 across a number of countries. Data from the survey revealed that only 58% of Singaporeans have financial plans for retirement and HSBC sees this as a significant retirement preparedness gap which needs to be addressed urgently, since the prospects of increased longevity and an ageing population in Singapore may aggravate the situation and adversely affect Singaporeans’ ability to cope with retirement. Other findings showed that the vast majority (75%) of Singaporeans who participated in HSBC’s survey saw financial security as the top priority for a happy retirement, and over half of Singaporeans cited that they are worried about not having enough money for retirement. However 62% of Singaporeans say that they don’t have a retirement plan because they do not have enough money. Mr Walter de Oude, CEO of HSBC Insurance (Singapore) Pte Ltd says ironically, their reluctance to start a financial plan may eventually cost them more money in their later years. So the challenge is in getting

Singaporeans to overcome this mindset that financial planning is going to cost them money, and get them to re-look and plan their finances to include retirement planning as an essential part of their budget. HSBC Insurance offers its best-selling retirement product, SecureIncome, which offers potential yields in excess of 3% whilst protecting one’s capital. It also comes with an unemployment benefit, which addresses a key financial concern amongst Singaporeans. Non-planners need not worry about working out a feasible retirement savings plan, as it does not take much to do so. One can save towards their retirement goals with HSBC’s Life Manager Plus or Growth Manager Plus, both investment-linked insurance plans (ILP), from as low as $150 or $200 per month respectively. HSBC’s Growth Manager Plus is one of the only ILPs which is amongst the handful of ILPs in Singapore that allows 100% of the premium paid to be used to purchase units starting from the first year while providing the needed protection to safeguard your wealth. Time is really the essence when saving for retirement. The earlier you start, the more you can get in time. To illustrate take a male non-smoker, age 35 saves $200 per month in Growth Manager Plus. He will potentially save $145,000 by the time he reaches age 65. This amount will help supplement the funds he has

“When it comes to retirement, slow and steady wins the race.”

accumulated under CPF, thereby providing a more comfortable retirement than if he had only his CPF funds to rely on. Mr de Oude emphasizes the fact that “when it comes to retirement, slow and steady wins the race.” In the latest wave of the survey, HSBC has endeavored to show the value of financial planning by quantifying that people with financial plans have almost twice the amount of assets of people who have no financial plans. While it is intuitive to assume that people who have financial plans will have more money for retirement, no survey has been able to quantify the amount of assets that planners have compared to non-planners. In fact, the survey also quantifies the value of financial advice as it shows that planners, who have sought financial advice have more assets than planners who are self guided in their investments. In doing so, we hope to highlight the value of financial advice and financial planning in clear monetary terms and give tangible insights into why one mustn’t waste any time in planning for retirement and seeking help to do so. Singaporeans who undertook financial planning were more likely than non-planners to associate retirement with positive ideas such as freedom and less likely to associate it with negative ones such as financial hardship. After all, who doesn’t want a more positive outlook and fewer worries about later life? These are priceless benefits anyone can get if only you take that first step towards financial planning.

Mr Walter de Oude, CEO, HSBC Insurance (SG)

CONTACT HSBC Insurance Tel: (65) 6225 1111 Website: www.insurance.hsbc.com.sg

FIRST

Reza Behnam

Why did facebook founder Eduardo Saverin invest in ADZ ?

hen facebook founder and recent Singapore relocatee Eduardo Saverin invested in a small online media company called Adz, the world took notice. So Singapore Business Review sat down with ADZ founder Reza Behnam to talk about why the startup is so hot and how it intends to change its industry. ADZ aims to be a main buying platform for display advertisements on the web, which in Asia is a US$8bn market compared to US$10bn in the United States. Benham says ADZ is starting with Asia, where there are no competing platforms, and in terms of valuation the company could be “worth hundreds of millions of valuation within a few years. If you look at AdMob, they were sold to Google at a ridiculous multiple, but they were sold for $750 million,” said Benham. Unlike search advertising, which is controlled by a handful of dominant players, display advertising is split over a myriad of sites that people visit. The challenge for advertisers is to get their display ads on websites without having to negotiate separate deals with many thousands of

websites out there. Sitting on top of the website owners are what is known as the ad networks, which aggregate a number of websites. But there are now dozens of major ad networks and dealing with and knowing the intricacies of each system is in itself a black box art. Meta Market ADZ hopes to be the meta market of them all, allowing ad buyers to access the major ad networks and ad sites directly through its booking engine . “The search environment did not become as fragmented as you had 3 powerful companies who set the standards,” explained Benham. “But in the display ecosystem it started with publishers building their own sales forces and selling direct to agencies and clients. Then ad networks appeared to aggregate inventory and for a lot of the long tail as well as remnant inventory of the bigger players, and what happened was ad networks mainly use arbitrage as a business model. This left both advertisers and website owners with a complex array of different ad networks to choose and the fact that these were not

16 SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011

knowing what kind of bid you should put in for what kind of audience is what we are working on.

transparent in terms of pricing,” he added. ADZ plans to change this by not relying on an arbitrage model, but instead showing actual prices website owners which to charge for space and taking a mark-up commission. “We want to bring a lot of transparency to pricing where everybody will know what we are making,” said Benham. So how much money is being lost by website owners to the arbitragers and network owners ? “Currently, if you spend money with Google, they take their cut which is assumed to be 60 % to 70 %, and even on search I estimate publishers get 50 cents on the dollar. In display, that number is often lower than 50 %,” said Benham. So is ADZ just another ad network ? Not according to Benham, who said that while Ad networks and ad exchanges are “close to each other, it boils down to the features and functionality of the platform.” Agency focus ADZ is clearly focused at Ad Agencies, who Benham says struggle to keep up with the number of publishers and exchanges and need an overarching tool to manage their digital buys. “We provide direct access from publishers to advertisers so we are focused around agencies and advertisers. There is plenty of inventory out there. The challenge is to find out the objectives of the advertisers with the inventory. A lot of agencies have invested in their own platforms to manage all the ad networks onto which they will place ads,“ said Benham. “But as the number of platforms and exchanges grow, the advertising agencies find they have to keep investing in their platform,” he added. Benham uses the example of an agency wanting to buy ads for a client. “As things stand now, the agency may need to talk with 3 ad networks and 5 publishers, and once you put in variables such as limit, audience, cpm or cpc, that is a lot to deal with. Our platform brings it all together to one integrated site, so the choice is between an ad network that has 20 or 30 publishers and works on an arbitrage network and wont tell you where your ad will run and won’t tell you how much they are paying to the publisher, or us.”

FIRST

Chinese banks US$100bn Hong Kong problem capital in the banks. America by comparison, which has an economy four times larger than China, has a TARP bailout worth only US$780 bn, or half what China may need to raise. It is a scary prospect if it eventuates. Almost every analyst that Hong Kong Business spoke with says there will be a banking problem in China. It’s just that we have no idea how bad it would be. Standard & Poor’s banking analyst, Liao Qiang, said that whilst it may be mathematically correct that NPLs could be that large, it’s unlikely that they would all hit at once. The proposition that Chinese banks could be forced to raise RMB12 tn over the next three years is not a “realistic one,” says Liao, under S&P’s base-case stress scenario. “Currently, we do not foresee a banking crisis in China over the next few years. This is despite all the concerns about potential credit risks stemming from local government financing vehicles, property developers and manufacturers that are vulnerable to overseas demand Current state of the banking system shocks,” he adds. Moody’s banking But let’s look at some facts. China’s analyst, Yvonne Zhang, meanwhile banking system currently has a expects NPLs to rise from current loan book of over RMB60 tn, whilst low levels, but believes that, systemic deposits stand at around RMB100 distress - leading to a banking crisis tn. So China is not in any danger of - is unlikely. “We expect banks to a liquidity crisis, but bad loans may refinance or restructure a fair amount lead it to suffer a banking crisis. of bank loans, and prolong the lossFitch, a ratings agency, told recognition timeline to enable them investors at a briefing in June that in to provision and charge off bad loans similar crises, the level of NPLs can over time. Whether or not the banks be anywhere from the high teens or can successfully absorb the losses Siew Huay a 20% level even more.Liang If one assumes through earnings will depend on the (65) 6232 3851 of NPLs, that would mean that the sustainability of strong economic siewhuay.liang@sg.oskgroup.com Chinese banking system would have growth,” she adds. Thomas Lam to raise RMB12 tn0389 in fresh capital – Instead, S&P projects NPLs to blow China: Banking System (65) 6533 essentially thomas.lam@sg.oskgroup.com wiping out all the current out to 5% to 10% - which would still

In Brief



China’s Credit Growth, NPLRatio Ratio China’s Credit Growth, GDPGDP andand NPL % 35 30

NPL ratio (% of total loans) Loan growth (yoy)



Real GDP growth (yoy)



20 15 10 5

Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11

Source: OSK-DMG, CEIC, Bloomberg Source: OSK-DMG, NAO

Property-related Lending 18 SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011 Personal mortgage loans Land and property development loans



“The latest stress tests by China’s banking regulatory authority suggest that Chinese banks can withstand a 50% decline in property prices”

be RMB6 tn. And the burden of raising more capital would likely fall first on the shareholders of Chinese banks listed in Hong Kong. But if history is any teacher, Chinese banks do have a history of making bad loans. Back in the early 2000s, NPLs were at 20% and it was only through government clean ups and capital raising in Hong Kong that the figure now stands at just 1.5% - a figure that almost everyone agrees as not sustainable.

What is the major apprehension? Of greatest concern is the amount of money being funneled into property Thomas Lam projects.China: According to brokerage System Banking (65) 6533 0389 OSK DMG, official data showed thomas.lam@sg.oskgroup.com that Chinese banks’ lending to theChina’s banking property sector amounted to 25%in(i.e. recent years w China’s Credit Growth, GDP and NPL associated with RMB2.02 tn) of theRatio total new loans the coun issued in 2010 and 19% in 1H11. facilitate rose from 97% of % NPL ratio (% of total loans) These do not include off-balance The excessive c 35 Loan growth (yoy) potential deterior sheet 30 Real GDP growth (yoy) items which some estimated performing loans may constitute about 25% of the total 25 government finan banking assets in 2010. 20  As China seeks 15 The latest stress tests by China’sreliance on inves growth may mod 10 banking regulatory authority suggest hurting the ear 5 that Chinese banks can withstandChinese a banks. 0 50% decline in property prices butWeaknesses in disclosure among the banks’ balance sheets could look mean any potent ugly as other sectors dependent on than reported. Source: OSK-DMG, CEIC, Bloomberg the property market would also be af Official data sho fected by factors apart from possibly Property-related Lending property sector a total new loans i higher mortgage default rate. not include off-b Personal mortgage loanswith so much unsettling news, Still may constitute ab 2, 2011 Land and propertyAugust development loans perhaps it’sloans)(rhs) not surprising thatsome While the NPL Real estate loan (% of total new RMB bn ECONOMIC 900 35%getting cold improved marked institutional investors are 800 than 1.5% curre RESEARCH feet and dumping their30% Chinese bank 700 government clean 25% 600 shares.  Although the late 20% 500 authority sugges The most public among them was 400 15% 300 Temasek Holdings’ exit10% of its stakedecline in in propert could look ugly a 200 both the Bank of China5%and China market would al 100 mortgage default Construction bank in July. 0 0% But they Risk? experience a sh 1q10 2q10 3q10 2q11 may4q10 not be1q11 the last. potentially hurting Liang Siew Huay (65) 6232 3851

siewhuay.liang@sg.oskgroup.com

In Brief

It is often said that if America sneezes, the world catches a cold. Well, America is down with a bad case of the flu but Asia is chugging along nicely, thanks very much, but what would happen to Asia if China’s banking system needed a bailout? This is the scenario that has caused investors to worry about Chinese bank shares listed in Hong Kong as the latter may be forced to raise capital if, as some suspect, China experienced a full-blown banking crisis. Just how big the crisis and how manageable it could be is still a matter of much debate. What is known is that Chinese banks and financial institutions have raised just over US$100 bn in Hong Kong IPOs and have injected more capitals over the last decade, according to figures compiled by Thomson Reuters. And with Non-Performing Loans (NPLs) expected to rise rapidly, it’s a question of when (not if) new money will have to be raised in Hong Kong to plug the balance sheet hole.

Source: has OSK-DMG, CEIC, PBOC China’s banking system experienced rapid credit growth in recent years with much of the expansion of bank lending Risk from Local Government Risk Local credit Government Debt? associated with from state-directed to fund projects thatDebt? facilitate the country’s economic growth. Bank loans, for e.g., rose from 97% of GDP in 2008 to around 120% in 2010. RMB bn Repayment of Chinese local The excessive credit expansion has led to concerns about 3,500 3,238 government debt potential deterioration in banks’ asset quality, particularly nonTotal = Rmb 10.7 trillion 3,000 2,625 performing loans (NPLs) related to real-estate and local 2,500 government financing vehicles (LGFVs). 1,840 As China seeks to 2,000 transform its economy away from overreliance on investment and exports, there is 1,219 also concern that 1,500 994 growth may moderate in the near- and medium-term, thus 801 1,000 hurting the earnings500sustainability and performances of Chinese banks. 0 Weaknesses in corporate governance and information2011 2012 2013 2014 2015 2016 disclosure among some Chinese companies and banks also and mean any potential banking sector risk may be much bigger beyond than reported. Source: OSK-DMG, NAO Source: OSK-DMG, NAO

Official data showed that Chinese banks’ lending to the property sector amounted to 25% (i.e. RMB2.02 tn) of the total new loans issued in 2010 and 19% in 1H11. These do not include off-balance-sheet items which some estimated may constitute about 25% of total banking assets in 2010.



According to the government debt (about 27% of G 46.4% or RMB4.9 While the NAO d bank lending, we biggest exposure perhaps 40% of t policy-lenders. T adversely affecte However, we do result in widespr system as the c support for any tr banks if need potentially be at government deb reportedly resum

OSK I DMG | See importa

coRporate profile

The Rise of the Dutch financial sector

Ms Adeline Tan, Senior Project Manager, Netherlands Foreign Investment Agency (NFIA)

“The Netherlands is known for its high quality financial and business services sector”

The Netherlands helps banks broaden their European operations he Dutch have built a reputation for inter- Dutch business environment as a strategic base national trade over many centuries. This to expand in Europe. has helped develop its economy into one of the most open economies in the European The Holland Financial Centre Union. Second only to Germany, the Nether- The Holland Financial Centre (HFC) is a joint lands is regarded as the strongest country in public/private partnership that aims to develop initiatives aimed at preserving an internationterms of financial stability. The Netherlands is seen as the gateway to ally competitive financial industry in the NethEurope. The central geographical position of erlands. The main objective is to retain existing the Netherlands, its excellent connectivity, a and create new jobs in the industry. Starting up an organisation in the financial well-educated, multilingual workforce, its favorable tax climate and its membership with the industry is relatively complex. To assist startEU and Euro are some of the reasons why more ups, the HFC has developed several facilities. than 6000 overseas-based companies have es- One of these is the HFC Plaza, a center for starting ventures located in the heart of the tablished their offices in the Netherlands. financial center, the Zuidas. It offers full service office space and brings together education, reThe Netherlands as a financial center The Netherlands is known for its high quality search, starters and established companies for financial and business services sector and is less than the current Dutch market price. Another facility is the Financial Markets Ofhome to some of the largest pension funds in fice, offering Dutch and international financial the world. Moreover, the Dutch financial sector is one market parties a single point of contact, enaof the best worldwide in the field of retirement bling quick and effective response to questions management, financial logistics and as a trad- regarding general information about the country’s financial markets. ing venue. The Netherlands Foreign Investment Agency (NFIA) helps foreign companies, including fi- Foreign investments nancial institutions, establish their business in While foreign investments may not rate as high the Netherlands and take advantage of the in terms of the Euro, the number of institutions

opening a European headquarters, representative office or sales department continues to increase. As of December 2010, almost 650 financial institutions were registered in country. Of these, the majority (500) are EU credit institutions offering cross-border services in the Netherlands. The remaining are either a bank with a full banking licence received in the Netherlands or branches of a credit institution. Overseas banks in the Netherlands The involvement of overseas banks in the Dutch banking sector has surged over the last two years. After taking over part of ABN AMRO, RBS Holdings NV became the largest foreign bank in the Netherlands. And the expansion of HBOS and BNP Paribas into the mortgage banking sector and the acquisition by Deutsche Bank of a large portion of ABN AMRO’s commercial banking activities resulted in the dramatic growth of foreign banks in the market. Asian financial institutions in the Netherlands include Bank of China, Industrial and Commercial Bank of China, Tata Capital, Bank of Beijing and Cavanagh Capital.

CONTACT Liat Towers #13-01 541 Orchard Road Singapore 238881 Tel: +65 6739 1137 Fax: +65 6737 1940 Email: tan@nfia-singapore.com Website: www.nfia-singapore.com

GAME CHANGERS

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SBR: How did the idea for a weekly jobs newspaper kick off? Jamie: The idea popped into my mind while I was looking at the different industries in Singapore and although the media industry is dominated by the incumbent, certain segments like the classifieds section looked interesting. With the free print phenomena catching on globally and seeing how it had worked in the UK, we felt that it could be viable to setup a free recruitment publication. This was against conventional wisdom as it seemed that employers were moving online. However, we felt that if we were able to provide a targeted recruitment print platform supplemented by a basic jobs portal in a cost effective manner, it would remain an attractive option to advertisers. This hunch proved correct as we are able to offer employers and recruiters a branding and recruitment platform that targets middle to senior level professionals. SBR: Why did you choose print? Joann: Despite being labeled as a sunset industry, we believe that print is alive as it has certain advantages over online. Being a free print publication, we were able to play to the strengths of both by providing clients a tangible platform for talent attraction and branding whilst at the same time reaching out to targeted readers with a free publication. The print has enabled us to establish HeadHunt as a credible player in the recruitment market and to create a strong brand name for ourselves. Currently, the print run in Singapore and Hong Kong is 26,000 and 25,000 copies respectively and the distribution points are 250 and 600 in each. With the print in place, we 20 SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011

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were able to launch into the competitive online recruitment space and create a niche for ourselves amongst working professionals. SBR: How as the business grown through the Global Financial Crisis? Joann: It has been a challenging and rewarding journey thus far. In the beginning, it was tough as we only had a product mockup and a vision to share with clients. It is only after several pitches that we had our first breakthrough from a client that is still advertising with us today. They saw our vision and were able to understand the value of advertising on HeadHunt. Once the first copies were launched, it was easier to share with clients as now they were able to visualise HeadHunt and see how we distribute to our target audience. On an average, the number of ads per issue now is about 75-90 middle to senior management roles. Our greatest challenge came in the form of the global financial crisis. We had a double whammy as recruitment almost came to a standstill and clients were cutting back on discretionary advertising expenses. Despite the slowdown, clients continued to use our platform. This continued support reinforced our business model and spurred us on. SBR: What’s next? Joann: Encouraged by their success in Singapore, clients have been asking us to expand to Hong Kong since 2009. After analyzing the market, we realised that although Hong Kong has quite a few free recruitment publications, there was a gap as none of them targeted the middle to senior level professionals. Together with the feedback and support of our platinum partners in HK, we launched our first issue in June 2011. SBR: Are the two markets different from each other? Jamie: As we only launched HK in June 2011, it’s a bit preliminary to comment on the differences between the two markets but based on my personal observation there are more similarities than differences in terms of executive profiles, career aspirations and job openings advertised.

opinion

What you need to know before accepting a job Managing Director RecruitPlus Consulting Pte Ltd

Adrian Tan > Things have escalated to an employee courtship As the war for talents continue to heat up in Singapore, many organizations are becoming more creative in their approach to fill up their vacancies. It is no longer just about the job. It became everything else. Things have escalated to an employee courtship. Creating employer branding, making applicant feel special, allocating expensive floor space for swanky chill-out areas in the office are just the tip of the iceberg. As a job seeker, you need to peel away the layer of marketing barrier to get to the core

of the position. Ultimately it is the job that matters so here are five questions to ask your prospective employer before taking that leap of faith. 1. How would you describe a typical day in this position? A job description is adequate in illustrating the entire requirement of the position. However many of them doesn’t provide an insight in the actual weightage of each responsibilities and how frequent each of them would occur. Having a first-hand insight will provide a clearer picture of what to expect when you are in the job. 2. Who would my co-workers be and what are they like? Unless you are joining a new start-up, chances are you will be working with new co-workers. Putting diverse people in the same room and conflict is bound to arise. But having clearer expecta-

tions and understandings can provide better preparation and know the kind of characters you will be facing eight hours a day. 3. What do you like about this company? What keeps you here? Everybody works for money but it is the rest that comes along with it that make one chooses their current employment. Knowing what it is will provide insight to the company’s actual beliefs system. And you just need to match them against yours to see if they are a good match. 4. What are the main challenges associated with this position? In all roles, there are people who made it and there are those that didn’t. You want to make sure you are not in the latter. A good idea of the challenges would let you assess if these are within your capability to take them on.

Swiss quality also stands for innovation. Ensuring your success with global mailings.

Swiss Post offers you cross-border mailing options to make your business even more successful. You can count on us for daily mail, direct mailings, newspapers, magazines and small consignments. With our flexibility, innovativeness and reliability we are your partner for international mailings. Further information available at number +65-6748 4484 or at www.swisspost.com.sg

Excellence delivered.

opinion

richard branson Winning investors over

Y “You must be well prepared, with all the facts at your fingertips.”

ou have a terrific idea for a product or service that will change a sector or industry. You painstakingly assembled the data, determining how best to target potential customers and build on their interest. A few key players are ready to join your team. But before you can launch your business, you need to find an investor so you can buy equipment, rent office space, pay your staff and kick off a marketing campaign. What’s next? Many people in this situation come to me for advice, specifically asking how to interest Virgin in their business plan startup. The process isn’t at all mysterious. Many entrepreneurs contact us via our website, virgin.com. We receive hundreds of business ideas every month, which we record, log and classify. The best ones are reviewed and researched, and a small number make it through to our investment professionals, who take a more forensic approach to business than the detectives on “CSI: Crime Scene Investigation.” Turn ideas into business What if they like your idea? If you’ve seen the BBC television program “Dragons’ Den” or an equivalent reality show where entrepreneurs pitch ideas to investors, then you know what’s next at Virgin and many other private equity and venture capital groups: The idea is stripped down to its essentials by our top team who meets almost every week to review the latest ideas. So that our own vested interests don’t blind us to new opportunities, nobody on the committee runs a Virgin business on a daily basis, but all

22 SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011

the members work closely with the chief executives who run our businesses and sit on many of our boards. If an idea has potential, you may find yourself invited to pitch your plan to the team led by Virgin Group chief executive Stephen Murphy. You must be well prepared, with all the facts at your fingertips. That’s where the comparison with television ends – unlike some of our TV counterparts, people from our top team are not at all rude. They may ask some very tough questions and will rigorously examine your business plan to see if there is a profitable business in the making. If there is, it is more likely you will be asked to attend further meetings so that deeper questions can be answered. The team meets several times before a final decision is given. They assess your business’ potential, whether it fits with the group’s ambitions, strategy, and of course, brand values, and what the possible returns and profits will be. They look at spending plans, income forecasts and the marketing budget, and they pinpoint when the company is likely to break even. They work out what sort of stake the Virgin Group should take, and look at exit strategies – will it be a sale, or a flotation on a stock market? Above all, they look at the key managers who will be running the business. This is the holy grail for us, because your employees will make a great business idea work. I do not attend the meetings – the team members don’t like my interruptions and interference. They call me Dr. Yes – a parody of the wonderful James

Bond movie “Dr. No.” You see, I have an ace up my sleeve. If I believe in your business idea, I can be quite persuasive in getting people to accept my point of view. If I like your idea but the team has concerns, I usually ask them to find solutions to the problems they’ve identified. I can be very persistent. Before we developed our mobile phone business, I asked the team every week: ‘Why aren’t we in this yet?’ My colleagues didn’t want to launch Virgin Blue, either, but in the end they came around. I never push an idea to the senior team lightly – but, as I’ve said, I usually go with my gut instinct, and will sometimes disregard volumes of painstaking research. I would love to be able to say that every ace I’ve played has turned out to be as successful as Virgin Blue. But I can’t – which is why this makes my senior colleagues at Virgin very, very nervous! Should we decide to go ahead with you, we will take a stake in the company and then look for a return on that investment over a period of about three to five years. In return, the new company gets the full range of Virgin’s expertise – and I’ll agree to help raise the profile, make key introductions and offer any suggestions that I can. And if you are turned down by Virgin or any other venture capital concern, remember that persistence is key. If your idea isn’t right for one investor, another may see its potential. So if you find yourself in this situation, dust yourself off and learn what lessons you can, then make your next call.

www.turfclub.com.sg

at the Singapore Turf Clubâ&#x20AC;&#x2122;s premises, where your ideal event becomes a reality. With state-of-the-art audio and visual equipment and a cosy ambience, guests get to feel at home as they network. From networking sessions and training workshops to corporate team building programmes, rest assured that we have the perfect fit for your event.

For bookings or more information, please contact: Ms. Lisa Tan Phone: 6879 1979 Email: business_development@turfclub.com.sg

SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011 23

HONG KONG VIEW

Tim hamlett Forever remembered as ‘thy KING’

e live in a rolling barrage of comments on the internal affairs of the News of the World, deceased, phone tapping as a reportorial technique, who showed what to whom, the ethics of reporters paying policemen for stories (when they pay everyone else) and the martial arts skills of Wendi Deng, the current Mrs Murdoch. It is perhaps a measure of the fear which the raucous Rupert still commands that nobody has dared to ask one obvious question: should a man in his 80s still be running a public company? This is a good question to ask in Hong Kong because it seems that our local mega firms share one characteristic with the old Soviet system of government: nobody retires. They may, as they get more older and tired, distribute the care of the details among their heirs and successors. They may devote more of their time to philanthropy and good works. But it seems that basically the Big Boss remains in control until the steering wheel is wrestled from the clutch of his dead hands. Occasionally, there are muffled sounds of suppressed discord when said Big Boss pursues some idea with more public spirit than profit in it. Even more rarely, we get a public performance of the kind staged by Stanley Ho’s family. Quite what was going on there still eludes most of us but it seems someone was trying to nudge Stanley off the throne and failed. We may note at this point that the idea of the boss having a job for life is not as revolutionary as it may seem in these days when most of us get a gold watch and an MPF cheque at some predetermined point in our lives. The Pope has always worked on this basis. On the whole, if the occupant of Saint Peter’s throne was going gaga, the church has generally managed to conceal it quite well. The job for life has always been a characteristic of monarchy and the Queen, who must be about the same age as Mr Murdoch, but shows no sign of retiring either. Monarchs have not always been as successful as Popes in escaping the ravages of time, at least publicly. History is full of examples of Kings, and occasional Queens, who stayed in office despite decrepitude, insanity, and indeed dementia. Still, nobody supposes that the boss of a Hong Kong company is God’s representative on Earth -- except possibly the boss himself. Why do they want to go on forever? Partly, no doubt, there is the fear of King Lear. In the Shakespeare play the King retires, leaving his kingdom divided between two sons-in-law and stipulating some residual privileges for himself. The two married daughters turn on their now powerless father, and revoke his privileges. The faithful daughter whom he spurned comes to the rescue at the head of an invading army, and as tends to happen in Shakespearean tragedy, all the characters you met at the beginning of the play are killed. This is not an encouraging story for rich fathers, but we are not living in Renaissance Italy. The retiring leader does not have to fear ambitious assassinations. The retiring Rupert, or his local counterpart, could make arrangements which would ensure his continuing ease and prosperity, without relying entirely on the filial feelings of his off-spring.

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

And yet they go on and on, still presiding personally over the wheeling and dealing, still shooting the occasional admiral to encourage the others, still pontificating annually to the minority shareholders. Mr Murdoch’s empire shares with many Hong Kong corporations a complex structure which ensures that outsiders take second place to the ruling dynasty. Clearly, there is a hunger here which does not decline with age. It may be too simple to say that Mr Murdoch still enjoys buying newspapers, or that his local counterparts still enjoy erecting ugly over-priced towers of tacky flats, but that is their game. Probably they would want to do it even if it didn’t pay. Indeed there have been suggestions that Mr Murdoch’s continuing appetite for newspapers owes more to romance and habit than to any lingering prospects of print profit. Aiming for more than power and success I suspect there is more to it than greed and habit, though. When a tycoon reaches a certain age, he does not wish only to be rich. He wishes to be respected, even loved. This is in many ways a harmless, even helpful, stage in his development. When I was a football reporter, it was noticeable that most of the directors of football clubs tend to come from rather disreputable backgrounds. The more famous and prestigious the club, the more likely its chairman was to have made his fortune in wholesale butchery or second-hand cars. Every university in Hong Kong has numerous buildings named after people you never heard of, or people you heard of in rather unlovable ways, who wished to leave their names on something more interesting than a tombstone and a succession of company reports. The great pioneer of this kind of personal sanitation was, I suppose, Alfred Nobel, who is now remembered not as a merchant of death but as a great Prize. His modern counterpart is perhaps Bill Gates, who we may suppose would rather be remembered for eradicating polio than for flooding the world with flawed software. Mr Murdoch, maybe, feels he still has some unfinished business to take care of. Business people of a certain brusque kind honour his role in knocking the print unions on the head. Rabid conservatives will thank him for Fox News. The rest, alas, tend to think of him as the man in whose newspapers no respectable fish would wish to be wrapped, as one columnist put it. But I am not hopeful that this can be fixed. A good reputation is like your first million: you have to really want it badly. Local tycoons seem to do better at salvaging their reputations with a burst of generosity and a building or two. Still, they would do well to consider the merits of retirement before they find the daughters hovering round with lawyers, scripts and TV crews. There is a time for every purpose under heaven, as the old song has it, and that includes a time to pack it in. Life after bosshood need not be empty. The recipients of your generosity will welcome visits. The government, if you behave yourself, will appoint you to advisory bodies. You can play with your grandchildren. And you will not have to wonder how many people sitting round the boardroom table are waiting hopefully to read your obituary.

24 SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011

I am to rule forever!

SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011 25

PROPERTY

Top residential transactions LOCALITY

PROJECT NAME

WOODHAVEN OCR BELYSA OCR THE MILTONIA RESIDENCE OCR SEASTRAND OCR SIMS EDGE RCR TERRASSE OCR FORESQUE RESIDENCES OCR THE WOODS OCR AUSTVILLE RESIDENCES OCR THE MINTON OCR EIGHT COURTYARDS OCR HEDGES PARK CONDOMINIUM OCR THE CANOPY OCR H2O RESIDENCES OCR THE INTERWEAVE RCR BUCKLEY CLASSIQUE CCR NIN RESIDENCE RCR SUITES @ BRADDELL OCR VIBES @ EAST COAST OCR NV RESIDENCE OCR WATERVIEW OCR 21 RICHARDS OCR ELEVEN @ HOLLAND CCR WATERFRONT GOLD OCR D’LEEDON CCR VACANZA @ EAST OCR FLAMINGO VALLEY OCR FLORIDIAN RCR OKIO RCR WATERFRONT ISLE OCR THE FORESTA @ MOUNT FABER RCR THE LAKEFRONT RESIDENCES OCR THE VUE OCR CENTRO RESIDENCES OCR SILVERSEA RCR THE INTERLACE RCR THE VIRIDIAN RCR THE WATER EDGE RCR WATERFRONT KEY OCR TWIN PEAKS CCR 10 SHELFORD CCR SOLEIL @ SINARAN CCR THE GREENWOOD (PHASE 5) CCR 38 I SUITES RCR AURALIS OCR REFLECTIONS AT KEPPEL BAY RCR SKYSUITES @ ANSON CCR THE URBAN RESIDENCES OCR ASCENTIA SKY RCR CANBERRA RESIDENCES OCR CLOVER BY THE PARK RCR ESPARINA RESIDENCES OCR ISUITES @ PALM OCR JARDIN RCR LAVERNE’S LOFT OCR LINCOLN SUITE CCR PRIVE OCR THE CASCADIA RCR THE PEAK @ CAIRNHILL I CCR VIENTO RCR 283 STUDIO CCR BEACON HEIGHTS RCR Source: Urban Redevelopment Authority

DEVELOPER

Tampines Court Pasir Ris EC Pte Ltd Hoi Hup Sunway Miltonia Pte Ltd Precious Sand Pte Ltd Macly Equity Pte Ltd MCL Land (Serangoon) Pte Ltd Wincheer Investment Pte Ltd Chappelis Pte Ltd MaxLee Development Pte Ltd Peak Garden Pte Ltd Yishun Gold Pte Ltd Tripartite Developers Pte Ltd MCC Land (Singapore) Pte Ltd Impac Holdings Pte Ltd BS Tanjong Katong Pte Ltd City Developments Limited Qianjian Realty (Serangoon) Pte Ltd

Oxley Niche Pte Ltd Oxley Module Pte Ltd Hong Realty (Private) Limited Sim Lian (Tampines One) Aurum Land Pte Ltd Clydesbuilt (Holland Link) Pte Ltd FCL Peak Pte Ltd Morganite Pte Ltd Hoi Hup Sunway Property Pte Ltd FCL Estates Pte Ltd Orwin Development Ltd Tiara Land Pte Ltd FCL Peak Pte Ltd Hoi Hup Realty Pte Ltd Keppel Land (Mayfair) Pte Ltd Giant Land Pte Ltd Eunos Link Technology Park Ltd Marina Green Ltd Ankerite Pte Ltd Orion-One Residential Pte Ltd Pinnacle Development Pte Ltd FCL Peak Pte Ltd Cove Development Pte Ltd Adam Properties Pte Ltd Riverside Investments Pte Ltd Golden Development & Astoria Park

Sustained Land Pte Ltd Sino Tac Holdings Pte Ltd Keppel Bay Pte Ltd Arcadia Development Pte Ltd Wee Hur (Paya Lebar) Pte Ltd Winpride Investmet Pte Ltd MCC Land (Singapore) Pte Ltd Sim Lian (Bishan) Pte Ltd FCL Compassvale Pte Ltd I Development Pte Ltd YHS Dunearn Pte Ltd Asimont Holdings Pte Ltd Phileap Pte Ltd Punggol Field EC Pte. Ltd Boonridge Pte Ltd T G Development / TEE Development

Endo Properties Pte Ltd Urban Development Pte Ltd St. Michael’s Development Pte Ltd

26 SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011

PROPERTY TYPE Strata-Landed Exec Condo Non-Landed Non-Landed Non-Landed Non-Landed Non-Landed Strata-Landed Exec Condo Non-Landed Non-Landed Non-Landed Exec Condo Non-Landed Non-Landed Non-Landed Non-Landed Non-Landed Non-Landed Non-Landed Non-Landed Non-Landed Strata-Landed Non-Landed Strata-Landed /NonLanded

Non-Landed Non-Landed Non-Landed Non-Landed Non-Landed Non-Landed Non-Landed Non-Landed Non-Landed Non-Landed Non-Landed Non-Landed Non-Landed Non-Landed Non-Landed Non-Landed Non-Landed Strata-Landed Non-Landed Non-Landed Non-Landed Non-Landed Non-Landed Non-Landed Non-Landed Non-Landed Exec Condo Non-Landed Non-Landed Non-Landed Non-Landed Exec Condo Non-Landed Non-Landed Non-Landed Non-Landed Non-Landed

TOTAL UNITS NO. OF LAUNCHED UNITS IN IN THE PROJECT MONTH 337 311 315 0 410 200 473 230 78 78 414 100 496 22 93 50 0 540 0 1145 0 654 0 501 0 406 0 521 109 169 25 64 50 219 33 33 81 117 0 642 0 696 31 31 82 82 0 361 0 1715 0 473 0 393 0 336 0 104 0 561 0 141 0 629 50 50 0 329 0 383 0 1040 108 108 0 98 0 437 0 462 0 69 0 417 0 54 0 120 0 56 0 1129 0 360 0 47 3 373 0 320 0 616 0 573 0 64 0 140 0 44 0 175 0 680 0 536 4 52 0 48 7 7 0 212

MEDIAN UNITS PRICE SOLD ($PSF) IN IN THE MONTH THE MONTH 981 155 700 153 877 149 879 120 1329 77 974 52 1112 41 475 35 713 28 905 27 794 25 875 25 653 23 957 22 1432 19 2047 18 1170 17 1255 15 1399 15 845 13 888 13 1246 11 1050 11 927 11 1536 10 1081 10 1270 9 1769 9 1503 9 1037 9 1894 8 1248 8 1227 8 1309 7 1575 7 1119 7 1514 7 1372 7 1061 7 2699 7 1477 6 1766 6 1038 6 1445 5 1421 5 2188 5 2372 5 1276 5 1364 4 803 4 960 4 751 4 1151 4 2013 4 1155 4 2022 4 702 4 1243 4 2810 4 1268 4 1690 3 740 3

GLOBAL NETWORK SINGAPORE

SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011 27

numbers

To buy or not to buy? How to utilise spare cash after covering essential living expenses - Hong Kong

How to utilise spare cash after covering essential living expenses - Singapore

Source: Nielsen

Digital media matters 70% more

Southeast Asia internet penetration 67%

38%

SEA AVERAGE (38%)

33%

31% 21%

Singapore

Malaysia

Philippines

Thailand

Source: Nielsenâ&#x20AC;&#x2122;s inaugural Southeast Asia Digital Consumer Report.

Digital marketing budget up to 30% of total

Base: All marketers (N=321)

Indonesia The following are various types of media channels. How would you describe their role in your marketing communications plan for 2011?

Most effective medium in the next 3 years? Base: All marketers (N=321)

SOCIAL MEDIA

How much of your marketing budget do you expect to spend on digital media?

What is going to be the MOST effective medim in the next 3 years?

For more information contact: Nielsen, Margaret Lim (margaret.lim@nielsen.com); Synovate contact Tim Hill (Tim.hill@synovate.com)

28 SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011

Co-published corporate profile

Will Your Cloud Weather The Coming Storm?

Cloud Security: A new security paradigm

loud computing has been compared to the early proliferation of electricity. Homes, businesses and towns did not want to produce or rely on their own source of power. They began connecting into a greater power grid, supported and controlled by power utilities. Along with this utility connection came time and cost savings, in addition to greater access to, and more reliable availability of power. Similarly, cloud computing can be beneficial for both service providers and enterprises. Through it, enterprises can achieve significant benefits such as flexibility through outsourcing of software and hardware, greater efficiency in IT spending, and more choices for computing resources. New security risks Virtualization is a key building block and enabler of cloud computing. This is because virtualization technology eliminates the old “one server, one application” model and enables multiple virtual machines to be run on each physical machine. This enables corporate datacenters and cloud service providers to improve the efficiency and availability of their IT resources and applications, which leads to the benefits of cloud computing. However, virtualization introduces new and powerful security risks to cloud computing that cannot be addressed by traditional security solutions alone. Cloud computing introduces these new security risks: • Inter-VM (virtual machine) attacks – traditional network security devices have no visibility to inter-VM attacks • Resource contention – anti-virus scanning and signature file updates on each VM can put

excessive load on the host • Instant-on gaps – Dormant VMs may not be kept up-to-date • Complexity of management – proliferation of VMs leads to increased complexity in consistent security policy enforcement • Vulnerability exploits – attacks on system and application vulnerabilities that are unprotected as IT support is unable to keep up with the patches for different types of operating systems, applications and virtual machines A new security paradigm for the cloud Security needs to be changed to support cloud computing. The old methods of traditional security are not good enough to thwart new forms of threats in the cloud. The key solution to this problem is: the host server or endpoint must protect itself. Adapting your security perimeter and applying security mechanisms as close to the virtual machine as possible will deliver optimal protection while maintaining the performance and flexibility of your virtualised servers. This VM-centric focus allows customers to achieve security without significant impact to their cloud infrastructure. Applying comprehensive security mechanisms at the VM enables virtual machines to become self-defending against the increasingly sophisticated attacks launched by professional hackers. Trend Micro provides an agent-less approach that integrates

“Security needs to be changed to support cloud computing. The old methods of traditional security are not good enough to thwart new forms of threats in the cloud.”

at the hypervisor level, which can ensure all virtual machines are protected. Customers can access their applications that can be located in the datacenter or in the public cloud. With the hosts being able to defend itself, all corporate servers are protected, whether in the private, hybrid or public cloud. Additionally, cloud encryption technology, available from Trend Micro, will enable your data to be moved around the cloud safely and confidentially. . The encryption keys are unique and controlled by customers themselves so that data is secure even in a multi-tenant cloud environment. Here are some best practices and recommendations for virtualization and cloud security: • A virtualization-aware solution and approach that offloads security functions to a virtual appliance will prevent resource contention and excessive load on the host servers • An agentless-approach to improve VM performance and reduce management complexity • A security solution that integrates with the hypervisor (e.g. VMware vSphere) for inspection of inter-VM traffic and file activity within each VM • Eliminate the need for scanning of clean baseline images to increase efficiency of host • Improve virtualization ratio to maximize cost saving benefits • Use virtual patching to protect system vulnerabilities before patches are available or applied Enterprises that are seeking help to support their cloud security initiatives should also ask their vendors these key questions: • As virtualization is a key enabler of cloud computing, does the security solution support the latest security APIs from virtualization platform vendors such as VMware? • Do they have solutions that manage and protect tablets, smartphones, and other consumer devices in the corporate environment? • What is the vendor’s cloud-client architecture? How do they leverage cloud computing to deliver more effective protection against new threats such as virtualization attacks and Advanced Persistent Threats (APTs)? The transition to virtualization and cloud computing will create security lapses and vulnerabilities. and it necessitates customers to work closely with a security partner to provide effective security during all stages in the transition. This vendor should offer a strong track record of host-based security and present a thoroughly-considered vision of the future. Ken Low CISSP GSLC - Senior Manager, Asia Pacific Enterprise Security, Trend

Mr Choo Chiau Beng CEO, Keppel 30 SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011

CEO interview

Keppel banking on a clean and green Asia Ananya Mukherjee sat down with Keppel CEO, Mr Choo Chiau Beng, to talk about the company’s plans. now, I will say, Kazakhstan is the most difficult because projects in the oil sector have been delayed by the government. So, you have a situation whereby you have people, you have facilities, but projects are running out. We have to work with the government and see how we can re-deploy or downsize the operation there. In Kazakhstan, the projects are delayed and people end up not having work, so you really have to re-deploy people. We believe very much in “win-win”. We and our customers must win. We and our suppliers and vendors must win. So I say, “compromise” is really not the right word to use. We always try to achieve win-win outcomes in our business relationships.

Keppel FELS constructs offshore rigs in Singapore Ananya: What are the biggest challenges Keppel faces today while exploring and establishing itself on foreign shores? Mr Choo: In a very volatile business environment, we have the uncertainty in the US regarding the budget. We also have a situation in Europe where we have sovereign debt crisis in more than one country, so the business environment is very uncertain. In Asia, while we have growth, governments in Singapore and China are concerned about the high property prices and have made attempts to soften the rise. And all these uncertainties are bad for business. However, our strong area has been the offshore and marine businesses, wherein the oil price hikes caused by the growth in supply projected not to match the growth in demand in energy. It enabled us to have a strong business for building new jack-ups, new semi-permissible tenders, and other equipment for the offshore oil and gas business.

“We build condominiums; we build office buildings, apartments, mixed use developments, in cities as well as in new townships.”

Ananya: Are you planning more businesses in China? Mr Choo: China is a huge growth engine and the urbanization requirements are huge. Millions or hundreds of millions of people will move from the countryside to the city in the next ten years. And because of the overcrowding of existing cities, there is a need for new townships, new cities to be built. And this has to be environmentally sustainable. It means that water, as a scarce resource, has to be reused and treated properly before it gets dumped into the rivers. The energy must try to achieve low carbon footprint, energy conservation has to be there. And all kinds of alternative energy must be looked into to see how you can reduce the carbon footprint. Transportation in new cities has to be organized in such a way that more people can walk or cycle or take public transport rather than driving their own cars. And this is a challenge because in these places, when people get richer they prefer to drive their own cars. We are in this phase we call sustainable evaluation in China. We build condominiums; we build office buildings, apartments, mixed use developments, in cities as well as in new townships. Currently we have a project which we are supporting as a G2G project between the Singapore government and the Chinese government to develop an eco-friendly city outside Tianjin. We call the project Tianjin Eco City. What we see going forward is that if we can make this a commercially viable proposition, this this can be replicated in China and even other places. Of course the key is political will. The governments must want to do it. And then commercially, it must be viable.

Ananya: How are you addressing these challenges? Mr Choo: We have to be very active in the market. We have to be very “pro-customer.” We have to anticipate their requirements, and be very agile to deploy our resources. Our shipping at Singapore and in other regions have been very active. Shipping in Brazil and the U.S. has been very active. In our property business, we have to be conservative. We don’t gear ourselves too much. In infrastructure business, we have to look for where the opportunities are and in the current situation whereby urbanization has been proceeding rapidly and there is a need to be more conscious of the impact on the environment. So we’re looking for the right opportunities. So, the challenge is to find the good people all the time to deploy in these areas. Ananya: So in all these countries that you have been working in, which is the most difficult country to establish yourself in? Mr Choo: Each country presents different set of challenges. Right

Mr Choo Chiau Beng, CEO, Keppel SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011 31

OPINION

mark wadsley 6 signs your top talent is about to quit

t is the moment every manager fears; the one when your top performer knocks on your office door and asks if you can talk privately and then hands you their resignation letter. With the economy back on track and Singapore’s labour market the tightest it’s been in ten years, finding replacements for top talent is harder than ever. As a business leader you have to be on the lookout for signs if your top people want to leave and act before they do. So are there any early warning signs that should make you prick your ears up and be alert that your talent is thinking of quitting? Yes, and here are some of the top ten. The first sign is that if your talent takes the same days off each week, they are likely to quit. When people create a regular habit to take off the same time each week and with a higher frequency, it is an indicator that something is wrong. It could be something personal to them but then again, they might be considering to leave your company, and might as well have interviews with other companies. Either way you need to address this by having a conversation. The second sign that a talent wants to leave your company is when it applies internally for a role. If you run analytics based on tenure, seniority achieved, pay and reward, you will find it. This is a sign that they are unhappy with what they are currently doing, and they are looking around. The third sign is when a behavioral change occurs. It is when somebody who is fully engaged suddenly becomes disinterested. Lack of interest is the number one sign. Pretty soon productivity decreases and they stop delivering - they gossip more and time spent away from their work stations increases. They are always at the coffee machine or downstairs, and the lunch break increases from an hour to an hour and a half. You will also notice a passive-aggressive response or antagonism when you are asking for input. It’s more like a child crying out. You need to quickly deal with this person and re-engage them or they can, like the proverbial apple, start to rot the rest of the barrel. The fourth, and perhaps counterintuitive sign is when it asks for a pay raise. This shows they are considering their worth in the market and you have undervalued them. Money represents 5 % of the job when somebody is happy. But otherwise, it represents 95 %. If people feel they are being fairly paid, they will be looking for respect and recognition. But the minute you unfairly pay them it becomes everything. Asking for a pay raise may indicate there are deeper problems

32 SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011

with their attachment to work. The fifth sign is when your talent is always too busy to talk. People don’t want to engage because it’s face saving. People don’t like confrontation so they will avoid it. So beware the staffer who looks for opportunities to not engage or talk. The sixth sign is when it is sad. Half of people won’t tell you why they are sad and half will. But either way it has the same outcome - they will leave. Keep communicating. Unless you engage in a conversation with someone, you cannot do anything. Don’t beat yourself up, you can take the horse to the water but you can’t make it drink. So how do you go about fostering “open dialogue” instead of waiting for the yearly appraisals to know what your talent is thinking? To start, you need an environment where they feel they are free to engage in an open dialogue. Most companies react to the symptom by yearly appraisals. But you need townhalls and company intranet for sharing of ideas. Facebook shows that people want to have community sharing so if you don’t have an internal company ’facebook,’ you need one. Do you take time to win hearts and minds? Townhalls, or just a simple ‘hi, how are you’? If you don’t create continuous dialogue with your employees how will you know if they want to quit? Here is a great line to use with someone you feel is displaying one of the signs. Simply ask them:” Do you have something to tell me ?” If someone has something to hide, and you are shooting in the dark, it is amazing how many people respond by divulging a secret. It’s human nature that people want to tell the truth; very few are truly Machiavellian. And finally, If you are trying to keep someone working with you who has already resigned, you shouldn’t bother. But you should have read the warning signs. If you want to know the other four signs email me at markwadsley@gmail.com and I will be glad to share them with you as well as strategies for recruiting and retaining talent.

mark wadsley

“Dont wait for the ‘It’s been a great learning experience, thanks, im leaving you’ letter”

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SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011 33

FEATURE

Hong Kong’s US$11bn private equity problem The money has been raised, but competing with larger Chinese domestic funds is challenging as Isabelle Ulanday reports

rivate equity funds in Asia are overtaking those in the west in terms of growth, but challenges remain, especially in China where a string of accounting scandals has many foreigners wary of investing. Meanwhile, many Chinese banks and other locally funded groups are stepping into fund ventures where previously western firms would have dominated. This is creating a difficult and increasingly volatile market for investors who are caught between not being ripped off and missing out on the action. Making things harder are the high valuations many investee companies are seeking, making returns for private equity firms slimmer even as their fund sizes increase. Once again, too much money seems to chase too few deals. According to research by Asian Venture Capital

“Renminbi funds are small, poorly structured and managed.”

34 SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011

Journal, private equity fundraising passed $14 billion last year, up 116% from 2009, and accounted for nearly half of the total fundraising in Asia. Private equity investment in China came to $19.9 billion in 2010, up 41.3%. “It is difficult to talk about Hong Kong’s private equity industry without talking about China – the two are so interrelated. Most China-focused funds and fund managers investing from offshore are based in Hong Kong, ” said Tim Burroughs, managing editor of Asian Venture Capital Journal. Rising valuation concerns “With so much capital available in China – particularly for local, Renminbi-denominated funds – there are concerns about rising valuations. These concerns are largely focused

on the growth capital or pre-IPO segment of the market. On one hand, there is intense competition for deals; on the other hand, entrepreneurs see the strong performances of Chinese companies listing domestically or in the US and therefore ask for more money from potential investors. For other parts of the market, for example early stage or restructuring deals, are less populated,” he added. According to Burroughs, there are certain parts of China that could offer better deals. “It’s also worth noting that other parts of China – away from major coastal cities – might deliver better value deals, but the less mature the private equity market, the harder it is to do business. Another important point is that many domestic Renminbi funds are small, poorly structured and managed, and only in the market for pre-IPO deals that are perceived to deliver high returns in a short space of time. The expectation is that, once the capital markets calm down and public market exit multiples on investments fall, many of these domestic funds will disappear. More established players with strong track records, settled investment teams and a longer-term perspective would remain.” Jon Parker, partner at KPMG China, said activity in the Chinese market has been picking up in the past few months. He noted that there had been a significant pick-up in the China market over a number of months, as it looked like PE houses and sellers seemed to be getting closer on expected valuations. “We have seen this taking place in financial services, consumer markets and infrastructure, including property, and we expect this to continue in the near future.” The $29bn question More deals will need to come, and soon, with private equity firms in Hong Kong and China sitting on $29.4 billion of uninvested funds. So just how big is the private equity market in Greater China? According to report by research firm Preqin, as of March, 2011 China had 127 private equity firms headquartered in the country, whilst there were 80 fund managers headquartered in Hong Kong and just 24 in Taiwan. In terms of funds raised over the last 10 years and dry powder avail-

FEATURE able to fund managers, China is the most prominent country. In the past decade over USD 31.1 billion has been raised by fund managers based in China and they still have an estimated USD 18.5 billion in uninvested capital. By comparison Hong Kongbased private equity firms raised over USD 29.2 billion in the same time period and are sitting on an estimated USD 10.9 billion of dry powder. Private equity firms headquartered in Taiwan raised nearly USD 1.6 billion in the last 10 years and have an estimated USD 489 million in available capital. Hong Kong-based Baring Private Equity Asia is the most active fund manager based in the Greater China region in terms of capital raised in the last 10 years, having raised nearly USD 4.7 billion in this period. The firm recently held a final close on USD 2.46 billion for its Baring Asia Private Equity Fund V, which exceeded its target of USD 2 billion. China-based Hony Capital is the second most active fund manager based in the Greater China region in terms of capital raised in the last 10 years, having raised over USD 3.9 billion in this period. Europe falling While the size of Asian deals is rising as fund sizes increase, this stands in stark contrast to American and European firms which have found it difficult to grow, according to Amanda Janis, senior editor of Private Equity International, a trade publication. She noted that firms focused on emerging markets are commanding a larger slice of the private equity fundraising pie, with Asia-focused fund managers leading the charge. “The firms making this year’s PE Asia 30 list have collectively raised just under $81 billion in the past five years, representing an increase of nearly a half a billion dollars for the second year running. That’s an impressive feat given fundraising conditions have remained challenging at best since the onset of the global financial crisis. By comparison, the capital raised by the 50 largest firms globally, as tracked by Private Equity International PEI 300, has been decreasing each year since 2009 by about 5%,” she added. According to Janis, one visible trend is that General Partners from

Hong Kong have been collecting most of the capital, outperforming fund managers from the Middle East and North Africa. “One of the most striking trends evident from examining this year’s ranking was the changing of private equity capital centres. While fund managers focused on the Middle East and North Africa (MENA) continue to be responsible for the bulk of capital raised by PE Asia 30 firms, commitments to MENA managers have been decreasing over the past three years while capital collected by Hong Kong-headquartered GPs has been on the rise and seems set to eclipse MENA.” The capital raised by both Hong Kong- and mainland Chinabased fund managers – together accounting for nearly $33 billion of the PE Asia 30 cumulative fundraising total this year – making it clear that investors are clamouring for access to investments expected to capitalise on Asia’s, and in particular China’s and Southeast Asia’s, projected macroeconomic and demographic trends, noted Janis. Dodgy accounts If raising funds for investment in Asia is the easy part, investing it wisely against a backdrop of questionable accounts and shady profit figures is causing some concern in the industry. Simon Luk, a partner from Winston & Strawn LLP, focused much

Amanda Janis

Jon Parker

Simon Luk

“The firms making this year’s PE Asia 30 list have collectively raised just under $81 billion in the past five years.”

on foreign capital in Chinese private equities. He said,“Foreign capital, clearly, has a given requirement and perspective. When they make investments, they want transparency and western style management. They want to change the culture, so that’s really the challenge. When foreign capital comes in, there are certain requirements since it’s a different culture and the management is not the same, so that makes it difficult.” “If there’s one main problem, clearly it would be due diligence and it relates to the accuracy of accounting, revenue and profits. This is one of the main issues right now. In the past, it was the organization. We don’t know if it’s properly organized and available for foreign capital injection and that requires a lot of analysis about the current M&A rules,” he added. Luk notes that foreign investors prefer a foreign holding structure, but that has its own disadvantages. “With a foreign holding structure, there is transparency and everything else you can look for in a foreign company. But it may not be that easy. At the moment, what attracts a lot of attention are probably the ones involving IT. You can either make a lot of money from it or none at all. So that industry may attract quite a bit of attention; however, it would be difficult for other traditional businesses like manufacturing, because export is declining and the world economy is not doing well,” he said.

MAJOR PRIVATE EQUITY DEALS IN HONG KONG AND CHINA Date

USD Million

Jun-2010 3,800

Kuwait Investment Authority, Qatar Investment Authority and Temasek Holdings (Singapore) committed to be cornerstone investors, subscribing to a 2.87% stake in Agricultural Bank of China, a Chinese commercial bank, specialising in the agricultural sector, for approximately USD 3.8 billion.

Apr-2010 2,274

The National Council for Social Security Fund (China) invested RMB 15.52 billion for a 3.7% stake in The Agricultural Bank of China. The bank has a dual-listing in Shanghai and Hong Kong.

Oct-2010 1,200

Kumpulan Wang Persaraan (Malaysia) and Kuwait Investment Authority invested USD 1.2 billion for a 4.06% stake in the AIA Group, a Hong Kong-based insurance company carved out from AIG.

May-2010 1,100

Goldman Sachs Asia, GIC Special Investments (Beijing) and China Guardian Auction won the bid to acquire a 15.6% stake in Taikang Life, a Chinese life insurance company, from French insurance company AXA. Goldman Sachs Asia took a 12% stake in the investee.

Jul-2010 1,099

Bank of China Group Direct Investment (Hong Kong) invested RMB 7.5 billion for a 14.45% stake in Jin Yu Ru Railway Tunnel Holdings, the management, operation and construction company for the Shanxi Mid-South Railway Tunnel Project, a Chinese railway which connects coal mines located in Shanxi, Henan and Shandong Province.

Sep-2010 1,000

GIC Special Investments (Singapore), KKR Investment Consultancy (Beijing), TPG Capital and Great Eastern Holdings (Singapore) acquired a 34.3% stake in China International Capital Corporation, one of the leading Chinese financial institution from Morgan Stanley. SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011 35

Legal briefing 2

The rise of Asian arbitration institutions Hong Kong takes the lead to “one system” for arbitration as Singapore continues to operate a dual system

rbitral institutions such as the Hong Kong International Arbitration Centre (“HKIAC”) and the Singapore International Arbitration Centre (“SIAC”) are now highly regarded as leading centres for international commercial arbitrations in Asia. They are even preferred by international businessmen over European and North American arbitration institutions. These developments have been systematically encouraged by progressive measures put in place by countries like Hong Kong and Singapore, and there are new rules that have come into force in Hong Kong that warrant attention. The New Ordinance On 1 June 2011 a new arbitration Ordinance (Cap. 609) (“the new Ordinance”) based on the UNICITRAL Model Law of International Commercial Arbitration was passed by the Hong Kong Legislative Council. The most significant change introduced by this new Ordinance was the abolition of the dual system for international and domestic arbitration. It created a unitary system which now applies to all arbitrations, whether domestic or international, which have the seat of arbitration in Hong Kong. Parties to international arbitrations have discretion to choose some of the provisions (opt-in provisions) which under the old Ordinance were only applicable to domestic arbitrations. Examples are the provisions regarding a default number of arbitrators, and provisions regarding the determination of “Under the new Ordinance there will preliminary questions of law. be minimal court interference.” Under the new Ordinance, there will be minimal court interference. Tribunals will have additional powers to grant interim injunctions and to make both preliminary and interlocutory orders. Significantly, under the new Ordinance, the Hong Kong Courts also have powers to grant interim injunctions even where the seat of arbitration is not Hong Kong, so long as the arbitration proceedings relate to an arbitration whose arbitral award is likely to be enforced in Hong Kong. Further, parties are prohibited from disclosing any information in relation to the arbitration proceedings to any third party. This is the standard of confidentiality that parties want in international arbitration. For this same purpose, the new arbitration Ordinance provides that any court proceedings commenced under an arbitration agreement are to be conducted in closed court. There is also another important provision in the new Ordinance which, while 36 SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011

saurabh BHAGOTRA Lawyer, Zaiwalla & Co.

being of a somewhat unusual nature, will appear to be common sense to the contesting parties. The appointed arbitrator can act as a mediator during the course of the arbitration proceedings, and if the matter does not settle by mediation, no objections may be raised if the same person continues to act as an arbitrator. Arbitration in Singapore Commercial arbitration in Singapore is divided into domestic and international regimes. The international regime is governed by the International Arbitration Act, while domestic arbitration is governed by the Arbitration Act 1953. Singapore International Arbitration Centre (“SIAC”) commenced operation in 1991, and its rules are based on UNICITRAL Model law and the rules of the London Court of International Arbitration (LCIA). On 1 July 2010, SIAC published its 4th Edition Rules, making some significant changes to the previous rules. The new expedited procedure requires the Tribunal to make an award within six months of the date of its constitution (if parties so agree) for any reference the value of which is below SGD 5,000,000 (US$4,049,445). SIAC can appoint an emergency arbitrator to assist any party which requires any emergency/interim relief. Conclusion Today, both HKIAC and SIAC are regarded as highly professional and reputable arbitration institutions. In terms of cost, HKIAC is the first choice for many commercial business houses. HKIAC offers an unmanaged option (where the role of the institute is limited) which is cheaper than the managed option. HKIAC aims to keep interference of the institution to the minimum. HKIAC does not charge a separate fee relating to counterclaims and under its unmanaged option, parties are free to negotiate the fees of an arbitrator. This is not possible under SIAC, which only offers a managed option. The changes introduced by the new Ordinance in Hong Kong are not intended to revolutionise arbitrations but rather to reinforce the concepts on which arbitration is based i.e. to make it a more user friendly and adaptive process, and to allow maximum liberty to the parties to mould practices and procedures to suit them, within the given framework of the institution. Especially now that a unified code has been introduced in Hong Kong, doing away with the dual system, it will become easier and more practical for foreign lawyers and arbitrators to understand and apply the rules. Saurabh Bhagotra is a Lawyer at leading arbitration law firm Zaiwalla & Co, London.

SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011 37

SHIPPING

The fourth wave of shippers in HK A lack of funding from Europe and US is creating opportunities for local ship owners, but what about profitability ? Martin Rowe Managing Director, Clarksons As an industry global shipping faces significant challenge presently; freight rates for deep sea tankers, bulk carriers and containerships are all under significant pressure having already survived three years of marked volatility. On top of this, owners face worries over issues such as piracy and new environmental legislation leaving many scrambling to balance the books and drive their businesses forward. At the end of Q3 2010, Clarkson Research estimated that approximately USD 200bn of the new build order book was still unfinanced. In the past 9-10 months things have since moderated; many vessels have been delivered, cancelled and a significant quantity (in excess of 30pct of the order book) delayed. However, on top of financing the new building fleet repayment of existing debt is an additional headache. For example, at the beginning of 2011 Evercore Partners (a US restructuring consultancy) calculated that US public listed shipping companies are due to pay back around USD 15bn of their loans between 20112014. To put this into perspective, not far short of half of those companies will be obliged to pay make more than their existing market caps between now - 2014 and which will swallow up close to half of EBITDA for these companies just to service their existing loans. All the preceding waves of shipowners sought and found “safe harbour” here in one form or another, be it physical, political or regulatory. Now a fourth wave of ship-

SHIP broker

Ship Owner

Martin Rowe

Tim Huxley

Surinder Singh

owners is descending upon Hong Kong, one whose safe harbour of choice is financial. Many overseas shipowners who have sound business models today find themselves short of ready capital as traditional sources of ship finance such as European banks and Wall Street have lost much of their maritime appetite. Since the majority of shipping’s demand-growth today is in Asia it’s therefore logical that its supply-growth be funding in this area as well.

new ships are delivered, earnings continue to be put under pressure, but equally important, the shipyards become even more anxious to fill their declining order books and new building prices are on the slide. Not only is this having an impact on asset prices for existing ships, but at some point owners will get tempted to start ordering again because a new ship looks cheap. The vast expansion of shipbuilding capacity seen over the past few years, particularly in China, is going to be with us for many years to come so we will need to see some spectacular sustained trade growth just to absorb what is already on order, let alone what might come in the future. Shipping has usually used the scrapping of older ships to help the self-correction process, and this year, it is already seeing a healthy increase over last year’s scrapping levels. By the mid point of the year, 166 dry bulk carriers totaling 11.3 million tons deadweight had been scrapped, and expectations are that the full year total will reach 25 million tons deadweight. But with new ships totaling that amount being delivered each quarter, the dry bulk

fleet will grow by 13 per cent this year. Finding employment for that extra capacity is going to be very tough.

Tim Huxley CEO, Wah Kwong Maritime Transport Holdings The industry is facing earnings at below operating costs, a vast overhang of new ships still to enter the market, and the ever present threat of piracy in the Indian Ocean. The bulk shipping industry is certainly not heading off for the summer with a spring in its step. There is no problem with demand for both bulk carriers and tankers. Trade growth, once again driven by China, remains robust, but the legacy of the ordering binge in the boom times up to 2008 continues to haunt the market. As these

38 SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011

Ship manager

Surinder Singh General Manager, Far East Shipmanagement Ltd The Hong Kong Shipping industry is mainly concentrated on the dry bulk sector where it enjoys the benefit of being at corridor to China. Although there has been a large number of old tonnage scrapped, new tonnage released this year still continues to cause overcapacity with markets/ freights not lifting itself up to the expectation worldwide. This year, the new building orders have gone up, though surprisingly the market still continues to be so inconsistent. Eventually, there will be a growing demand, especially in commodities and minerals. Due to the financial markets slump of 2009-10, the new buildings were cancelled or postponed and deliveries of 2010 was carried forward to 2011 and hence, there was more new tonnage released this year but as above , situation stands much variable and with more tonnage available.

SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011 39

OPINION

Anthony Coundouris Goodbye Bill Gates, hello Vera Wang

n the last 12 months, we have seen a rise in the number of creative entrepreneurs starting up businesses in Singapore. Fezzi, Smaato, ThoughtBuzz, SMS Dome, Chalkboard and Yoose, to name just a few. This week I learned of two others Little Voice Game, which is launching a Facebook game, and MyCube, which ambitiously plan to compete with Facebook. In the US and Europe, entrepreneurs have shown us how a combination of creativity and business sense have generated millions of dollars in wealth for owners and shareholders. Catherina Fake was an art director at Salon.com before becoming the founder of Flickr. Kevin Rose was in TV production before he founded Digg. The common fallacy that mathematics, science and a personalised number plate (‘CASHMAN’) are the ingredients for success in business no longer holds weight. As our economies decentralise and management structures in organisations flatten, fewer straight ‘businesspeople’ will be needed to get the job done. “The business world is now more unpredictable. There are fewer answers found buried in case studies. Businesspeople need to think and experiment, and come up with original ideas. It is creative people who have the critical thinking to solve problems that are positioned to make great entrepreneurs,” says Anthony Coundouris, marketing director of Futurebooks. In the past, a lack of business sense and infrastructure kept creative people at bay. Creative types were farmed by businesspeople who exclusively controlled a network of contacts and logistics to sell their products and services. This is no longer the case. ‘Managers’ are being bypassed because they no longer wield as much control. This part of the value chain has been flattened. Simultaneously, creativity has moved up the chain. Examples include music artists selling their tunes on MySpace, visual artists selling their work on Etsy, and graphics designers working freelance projects from Elance. Creative people have more bargaining power at the IPO table, and are consulting in the boardroom. Titles like Director of Innovation and Chief Creative Officer are not uncommon. “In fact I think people who are not thinking about how they can become creative are in danger of becoming obsolete. The ‘struggling artist’ is about

40 SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011

Anthony Coundouris Business Operative, Futurebooks

to be replaced by the ‘struggling manager’,” says Anthony. This idea is supported in Daniel Pink’s A Whole New Mind, where Daniel claims that right brain people (creatives) will rule the future. However, creativity and a flattened value chain alone is no guarantee of success. Venture capitalists want a sound concept and revenue model, but they also want to work with entrepreneurs who are investable. Here are two indispensable qualities to look for in entrepreneurs. Google frugal The Google guys, Larry Page and Sergey Brin, were forever scrounging for old computer parts to build the servers needed to index the entire internet. This frugality gave Google a competitive edge, it still maintains today its enormous, but inexpensive computing power. Google’s server farm is bigger than Microsoft, which is why Google is able to come out with so many free products. Creative entrepreneurs need to show VCs they can use initiative to turn dust into gold. Dogged determination “Never give up,” said Donald Trump, the entrepreneur from New York who built a real estate empire. Thomas Edison was said to have tried one thousand times before perfecting the light globe. He’s quoted as saying “I have not failed. I’ve found 1,000 ways a light bulb will not work.” If it wasn’t hard, someone else would have already done it. Without passion and belief in the mission, the entrepreneur will not weather the storm. The enormous sacrifice of personal time, wealth and probably health will beat them before their idea sees the light of day. Ideas are not enough. A successful entrepreneur is an athlete who possesses the maturity, discipline and physical strength necessary to cope with the unexpected problems that arise. It’s a good time to be a creative entrepreneur.

“The employment market is still looking sharp and will continue to be tight… before you jump, make sure you can differentiate the facts from what is on the brochure.”

SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011 41

OPINION BY Chris Reed Chris Reed Partnership Marketing, Singapore Airlines, Tiger Beer

Singapore needs some sexual healing

ingapore is one of the most familyoriented countries in the world, resulting in lower fertility rate and thus, lesser natural population. It’s not that Singaporean’s are off sex, they’re just off sex that leads to babies. Singapore has one of the lowest fertility rates in the world. It basically loses 1.5% of its Singaporean population every year. If it wasn’t for the ever increasing number of foreigners, (especially, ironically, the Chinese that make up 20% of the country’s total population), then the population would not only have shrunk but would also not have enough people to sustain its fantastic economic growth and to top in Asia as among the world’s super economies and dynamic city states. Singapore’s low fertility rate hit the headlines since the country’s CENSUS released the statistics. The fertility rate dropped to 1.16 – an all time low. In the year 1983, records show that the total fertility rate (TFR) was 1.61. It remained steady for the year 2000 with 1.6. A continuous decrease of the TFR was been seen within the period of ten years—from 2000 to 2010. From a TFR of 1.6 in 2000 it dropped to 1.26 in 2004 and 1.16 in 2010. The decline in TFR has alarmed Singapore’s government. There are various reasons why Singaporeans are not so much indulged into having sex. Like many Asian countries that are very family-focused, young Singaporeans usually live with their parents until such time that they either get married or they become millionaires. (you need to be a dollar millionaire to be able to own a flat/house in Singapore!). Singaporeans view.... and they would rather.... than have that much needed privacy. It’s therefore not an especially conducive environment for intimacy with your partner when your parents are downstairs or just next door.! This is why the “staycation” has been invented in Singapore. A bit like the Japanese “love hotels” Singaporeans regularly stay in hotels in Singapore to get that much needed privacy, space and break from their family. It’s a great source of income for Singaporean hotels who position themselves as an all inclusive romantic location for couples wanting to have some “alone” time. It’s also partly a selfish attitude that is found 42 SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011

more and more in western countries too. Instead of sex, Singaporeans are more inclined to spending a great deal of their money on shopping for luxury goods and branded items and hanging out with friends. There’s no time for babies. There are more luxury malls in Singapore per population than anywhere else in the world. The government though are seriously looking into this growing problem and are looking at initiatives to help reverse the trend and encourage a baby boom. In the recent election, many Singaporeans complained that there are too many foreigners already in the country. When they were told by the Government however that they then have to produce more babies to make a difference, it caused some interesting discourses. In my opinion, I think that there must be a series of aggressive strategic brand partnerships among various brands ranging from hotels which cater for those romantic Singaporean staycations to producers of wine and candles, cinema and travel agents for those romantic weekend getaways. Moreover, Singapore needs to have cheaper housing and adults in their 20’s and 30’s must be encouraged to leave their homes - something that they are reluctant to do due to cultural and financial reasons.

“

The government clearly need to tell their young people to go and have more sex….on them!

Healthcare Insights Conference 14-17%. Mr. Singh also explained why Asia is an attractive market for clinical trials. He cited the PRTM “Trends in Asia outsourcing survey” 2010 and said that companies select Asian markets for commercial presence, fast development, and access to patients. Integrated Health Informations Systems CEO Chong Yoke Sin said that while IT channels will eventually have to change, the value of IT remains to be above the healthcare needs. To cope, Dr. Chong suggested ‘future-proofing the industry through standardisation.’ She also mentioned about the need to replace outdated classification at clinical documentation systems with new ones to improve the services to patients. Hwang Chi Hong, director for medical affairs at Alexandra Hospital, talked about business strategies in healthcare which highlights quality and patient safety as he cited a report which revealed that in an annual basis, significant number of patients were harmed in hospitals. According to him, traditional methods the importance of a company’s market of training and re-training when things go access or the process whereby a company wrong does nothing to improve the situagets therapy to market and ultimately tion. Systems reliability within an organizareaches the patient. Equally important as tion is the key, he said. To achieve this, one well according to him is patient’s healthcare has to perform quality work all the time and access or the degree by which an individual exercise the ‘doing the right thing for every can obtain his needed medial patient every time’ principle. services to preserve or imconference was attended “medical costs The prove his health. by more than 80 top level exSimranjit Singh, director of and labor cost ecutives in the healthcare instrategic planning with Asia constraints dustry which included health Quintiles East Asia mean- limit Singapore care providers, pharmaceutiwhile focused on pharmacal companies, policy makceutical industry as it faces to be a medical ers, consulting companies, hub.” growing. He also said that medical devices and equipthe Asian pharma market ment manufacturing compawill exceed USD 120 billion by 2012 and the nies, and healthcare IT solution providers. CAGR 2010-2014 for Asia Pacific will be at

SBR Healthcare conference

arious strategies and innovations are emerging in the Healthcare industry in the name of improving the quality of living and saving lives. So for healthcare professionals to be equipped with the necessary leadership and management skills to steer their enterprises forward, the inaugural Healthcare Insights Conference was held last May 31 at Hilton Hotels Singapore. The speakers from top healthcare providers delivered 20-minute presentations on various topics followed by a panel discussion. Callum Bir, director for Healthcare & Life Sciences Practice lead for SE Asia in Deloitte Consulting talked about ‘disruptive innovations’ such as the rise of social networking sites and smartphones that challenge the industry to transit from patient-oriented care to consumer model of care. According to Mr. Bir, 20% of all new phones sold is smart phone and there are 2% apps on healthcare. However, there is a limitation on care delivery on the phone. Moreover, data governance, ownership, and regulatory frameworks still need to be worked out. Medical tourism was the core of Dr. David Teo’s presentation, medical director for Singapore & Malaysia International SOS. Although Singapore receives an average of 200,000 foreign patients every year, Mr. Teo mentioned rising medical costs and labor cost constraints as few reasons that limit Singapore to become a medical hub. Rudi Papsch, managing director at GFK Healthcare Asia, talked about the state of healthcare in Singapore. He emphasized

SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011 43

The Island of the Calm Our contributor visits Palma Mallorca and discovers why it’s a hit destination with royalty, celebrities (and writers)

“T

here are few places on this earth where one could find such complete repose, when tired out by this busy world,” wrote painter-writer Santiago Rusinol, referring to Palma Mallorca (also known as Majorca) in his book “The Island of the Calm”. 100 years later, his words still ring true. My visit to Majorca left me yearning for more. Idyllic and peaceful, it was an escape far from the Blackberry-wielding crowd. Measuring 80 kilometres from one end to the other, it is outstanding for its diversity. With 550 kilometres of coast, here you will find some of the Mediterranean’s most beautiful coves, beaches and scenery. The island’s beauty is often overshadowed by its famed reputation for package holidays. What most don’t know that is that Majorca is also the chosen holiday playground of the rich and famous –from the King & Queen

of Jordan to the late Princess Diana to Kate Moss and Jamie Oliver. Founded as a Roman camp upon the remains of a Talaiotic settlement, the turbulent history of the city saw it subject to Vandal sackings during the fall of the Roman Empire, then reconquered by the Byzantine, then colonised by the Moors (who called it Medina Mayurqa), and finally established by James I of Aragon. With an average annual temperature of 17.9° C, and 300 days of sunshine a year, it is no wonder millions flock to Majorca each year. In June 2011, in a bid to woo the tourism dollar, the Spanish Tourism Board and Singapore Airlines (SIA) signed a Memorandum of Understanding (MOU) to commit funds through the year to support advertising and promotional campaigns, as well as familiarisation programmes for trade and media to promote tourist traffic to Spain, by way of SIA’s flights between

44 SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011

“Idyllic and peaceful, it was an escape far from the Blackberry-wielding crowd.”

Singapore and Barcelona. SIA currently flies to Barcelona from Singapore seven times a week. With the MOU, SIA customers can connect to the Spanish cities of Bilbao, Madrid and Majorca on codeshare partner Spanair. Famous attractions Even with Majorca’s teeming city streets, and its commitment to commerce, its old-world charm and history still remains. Highlights of Majorca include Bellver castle, which has been standing for more than 700 years. Bellver – ancient Catalan for ‘lonely view’ was built in the 14th century for King James II of Majorca, and is one of the few circular castles in Europe. Used as a prison throughout the 18th to mid-20th century, it is now one of the main tourist attractions of the island, as well as the seat for the city’s History Museum. Another tourist attraction is La Almudaina Royal Palace. Almudaina (meaning fortress in Arabic), was plundered and burnt, reconstructed, and then changed again. King James II began its transformation to the Levantine Gothic style and the pal-

life & style ace became the headquarters for the Kingdom of Mallorca. Aspects of the palace include the King’s Palace, the Queen’s Palace, the Throne Room, the Royal Chapel and the courtyards. “To Whom Else, Deia” For the most scenic views of Majorca, head to the northwest village of Deia, a 40 minute drive from the airport. Nestled in the mountain range of Sierra de Tramuntana, and the Mediterranean Sea, it boasts peaks as high as 1,500m above sea level. Deia is most famous for housing English poet Robert Graves for a blissful 45 years. The small coastal village was the setting for some of his important prosaic works such as “I, Claudius”. He also dedicated a book to the area, titled, “To Whom Else, Deia”. It was here that Robert Graves entertained Hollywood starlet Ava Gardner who wrote that living in the mountains of Deia caused her “such unbelievable pleasure and satisfaction that nothing in [her] life could be compared to it”. The crowning jewel of Deia was the hotel we were fortunate enough to stay at – La Residencia. Consistently voted as one of the best hotels in Europe, it was nestled on a winding road between the mountain and the sea, dotted with cosy villages and olive groves. La Residencia was converted from manor houses, and the buildings retain as much of the original features as possible, seamlessly blending Majorcan architecture, with beautiful fittings and finishings. Star-gazing Formerly owned by Sir Richard Branson, and now owned by OrientExpress Hotels, La Residencia has become a discrete escape for Hollywood stars and royalty such as the Duchess of Kent, the King and Queen of Norway, Hollywood stars like Gwyneth Paltrow, Pierce Brosnan, CatherineZeta Jones, and musicians such as Rod Steward and Bruce Springsteen. Each of its 67 bedrooms has its distinctive Majorcan touch, and features paintings of local artists. The luxury suite, which we stayed in was far from the ordinary. With a bedroom, a living room, a kitchen, our very own pool, a dining room, a bathroom for two, a patio, two TV sets (no fights for the remote control here!), and our chambermaid who

From left to right: View of the Mediterranean sea from Deia; El Olivo; Almudaina Royal Palace loved leaving presents behind, our suite was a dream come true. Definitely a highlight for anyone who needed inspiration was the study desk overlooking the magnificent view, with white clouds gently grazing the mountain tops. Scooters, donkeys & rubber duckies La Residencia offers everything you can imagine from a hotel – from its own professional beauty therapists, to resident sculptors, and Vespa scooters. Nature enthusiasts will love that La Residencia has its own donkey refuge for donkeys to accompany guests on a nature trail. Each corner of the property was immaculate, and the staff made extraordinary effort to remember details about each resident. There were also heartfelt personal touches like

“Each corner of the property was immaculate, and the staff made extraordinary effort to remember details about each resident.”

fresh fruits and flowers replenished daily, hand-written notes to tell us when the maid will arrive for the day, and by the giant bathtub…the quintessential rubber ducky. And just like every bathtub needs a duck, every award-winning hotel needs a top restaurant. El Olivo, voted one of the best restaurants in Spain in 2010, and also a recommended restaurant in Michelin Guide Spain, is another feather in La Residencia’s hat, and cements the hotel experience as being simply unforgettable. Someone once said, “No one needs a vacation so much as the person who just had one.” With my memories of Majorca – sun filtering through the heavens, cloud-tipped mountains, beautiful weather, the blue horizon, and the friendly locals … I couldn’t agree more. SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011 45

MOTORING REPORT

hroughout its production history, the SLK has been wowing the market with radical innovations. For example, in its first generation in 1996, the SLK stunned the public with its vario-roof. In a few seconds, the car could be changed from a roadster to a hard-top coupe. In its second generation, the SLK began to comfort customers with its AIRSCARF, a system that wrapped warm air around the head and shoulders of occupants. This extended the “top down season” greatly: you could drive comfortably with the top down in December. Now, in its third generation, the SLK makes its debut with another stunning and hi-tech innovation -- the panoramic varioroof can be switched to light or dark at the touch of a button. At the spectacular launch of the SLK at the Convention and Exhibition Centre, Dr. Claus Weidner, Chief Operating Officer of Mercedes-Benz Hong Kong Limited, said: “The new SLK embodies the role of the trend-setter like no other car. I am convinced that, with its passionate design, its high-quality interior and its modesty at the filling station, it will continue to provide an enormous amount of fun on the road.” SLK: The Unending Innovation SLK continues to give ‘road-lovers’ more and better options to love the outdoors. The continuous innovation of SLK offers satisfaction at its finest. New lines of the SLK make it even more roadster-like. You have a higher front grille, allowing a longer bonnet. The cockpit is set slightly farther back and the rear end is shorter and more sporty. The interior is surprising. You naturally expect a roadster to have a small cockpit, but you find it easily accommodates two full-size adults. Tremendous care has been taken to match refinement with function in the interior. As always, the meticulous craftsmanship is eye-catching. Next most notable feature is the multi-functional sports steering wheel. It has a flattened lower section and a thick leather rim, for better grip and handling. Note: the leather is sun-reflecting. That means the sections covered by leather do not heat up so quickly. The cabin again features ambient lighting, but this time it includes a red colour tone. And, here is where the MAGIC SKY CONTROL comes in. You have three alternatives for your roof. First is the familiar varioroof, which opens or closes in seconds. Next is the panoramic vario-roof with tinted glass. Third is the first-ever panoramic vario-roof with MAGIC SKY CONTROL. This means you can make the roof totally transparent, in effect creating a top-down experience, even with the top up and all windows up. Or, you may switch the roof to dark mode, for shade if you are parked, or cruising slowly in bright summer sunshine. Power With all this talk of comfort and refinement, let us not forget that the new SLK is also a rampant rocket when it comes to performance. The top-of-the-range SLK BlueEFFICIENCY V-6 engine generates 306 horsepower out of 3,498 cc., which can take you 46 SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011

Super roadster Mercedes-Benz outdo themselves with the third generation of their modern classic SLK, writes Roger Boschman

from zero to 100 km/h in 5.6 seconds. The manufacturer mentions the top speed as 250km/h. Actually the top speed is much higher, but is electronically governed to 250km/h. If you drive on the autobahn at over 250, a rev-limiter cuts your power. I understand this is an understanding with the German government, in return for there being no speed limits on major highways in Germany. Meanwhile, as you drive along, enjoying the summer breeze with the SLK top down, rest assured you are also saving the planet. The BlueEFFICIENCY engines are using up to 25% less fuel than previous models. For more information about the new SLK, visit our website at www.zungfu.com.

First-ever panoramic vario-roof with magic sky control; multi-functional sports steering wheel; sun-reflecting leather; top speed: 250 km/h; BlueEFFICIENCY V6 engine that generates 360 horsepower out of 3,498 cc SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011 47

LIFE & STYLE

Cool Watch Boutiques in SG Make a sartorial statement with Quintessentially’s guide to cool watches and where to find them in Singapore. ToyWatch

2 Orchard Turn ION Orchard #B1-14 Singapore 238801 Whether you love them or hate them, ToyWatch has gone viral. Seen on the wrists of many Hollywood celebrities, including Oprah Winfrey, Madonna, Jessica Alba, Katie Holmes and hordes more, ToyWatch is slowly becoming a must-have item amongst tastemakers everywhere. The brand’s signature oversized plastic aesthetic is inspired by high design pieces which make them surprisingly irreverent treats. CVSTOs Boutique

333A Orchard Road, #01-14 Mandarin Gallery, Singapore 238897 The Swedish brand’s standalone boutique first opened its doors last year. Founded in 2005, CVSTOS has quickly risen to become the timepiece brand to watch. Meticulously crafted, each watch demonstrates the ideology behind the brand - that of performance, efficiency, elegance and precision. The philosophy is especially apparent in a groundbreaking idea termed CONCEPT-S, a pioneering strategy which drives the brand’s excellence in the watch making world. Get yours soon - CVSTOS watches are fast becoming the timepieces du jour with a cult-like following worldwide. Passions Watch

Malmaison by The Hour Glass

270 Orchard Road, #01-01 Knightsbridge,Singapore 238857 Malmaison by The Hour Glass is the prominent watch retailer’s newest store, and possibly their most luxurious outlet yet. Located along the swanky Knightsbridge belt in Orchard Road, the boutique boasts a winning combination of both classic and avant-garde timepieces and an exquisite miscellany of authentic luxury items, from Pierre Corthay’s bespoke men’s shoes, jewellery from Aurelie Bidermann, to Frederic Malle perfume and candles from Cire Trudon. The pièce de résistance is its eclectic décor, which includes antiques which have been painstakingly sourced from the four corners of the globe and the from the owners’ personal collection, a variety of taxidermy animals and an in-house assortment of the coolest coffee table books 48 SINGAPORE HONG KONG BUSINESS BUSINESS REVIEW | APRIL|2011 SEPTEMBER 2011

109 North Bridge Road, #02-20/21/22 Funan Digitalife Mall, Singapore 179097 Passions is a treasure trove of pre-owned luxury watches and a favourite amongst watch aficionados in Singapore. Expect a mix of vintage timepieces from all eras, first edition collectibles that are no longer in production and sold-out rarities that can’t be found anywhere else. Owner Jonathan Tee’s arsenal of watches has been carefully sourced from around the world over decades. The reliable go-to place for serious collectors and industry insiders, Passions will undoubtedly be the spot where you find you next rare timepiece.

Recommended by QUINTESSENTIALLY, the world’s leading luxury lifestyle group with a 24-hour global concierge service. Contact hongkongbusiness@ quintessentially.com.

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SINGAPORE BUSINESS REVIEW | JANUARY 2011 49

Last word EMMA sherrard matthew

Royal Revelations China’s new millionaires donning a taste for royal styles In China, the emperors are suddenly popular again. In the last five years, there has been a sharp increase in imperial scholarship in the Middle Kingdom, with academics at leading universities writing a record number of books on the emperors and their achievements. This might seem strange in a country where the emperors, who ruled for over 2,000 years, were reviled until quite recently. Mao Zedong himself wrote an extensive number of critiques of the emperors. This imperial revival started because it has become acceptable in China to criticize Mao, but only at the obscure edges of his thought. The “critique of Mao’s critique” of the emperors has allowed academics to focus on the cultural achievements of the imperial system, leaving aside some of its more barbarous features. There is an interesting link between this “imperial revival” and the boom that the luxury goods industry has enjoyed in China. “China is developing a new aristocracy who believe that their wealth is, in part, a gift of fate,” says Daniel Jeffreys, the editor in chief of Quintessentially Asia magazine. “The emperors ruled by mandate of heaven and had an extremely luxurious lifestyle because of this blessing. China’s new millionaires see their wealth as a similar kind of blessing and are actively looking at ways that will keep them on the good side of fate.”

“China is developing a new aristocracy who believe that their wealth is, in part a gift of fate.” In the early days of China’s new economic ascendancy, the millionaire class largely talked about their wealth as the result of hard graft. They dressed humbly, even after they had banked their first billion, and they did not buy many luxury goods. The new wealth class is more interested in the role of fate and making a display of their achievements, although in a more subtle way than new millionaires in other developing countries. 50 SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011

“Unlike the Russian oligarchs, China’s new aristocracy tends to steer clear of vulgar displays of opulence,” says Nic Rosen of Vivum Intelligent Media, who is making a documentary about China’s super rich for the BBC. “In a sense they are making their new money into old money - buying art, travelling widely, buying property and sending their children to private schools and universities in Britain or America.” China’s new generation of millionaires know that the “best emperors” were also those who were closest to Confucian values, especially those that stressed humane behaviour and righteousness. China’s new aristocrats are beginning to explore philanthropic ventures. In this quest to be “good millionaires” it’s unsurprising that many wealthy Chinese entrepreneurs are finding inspiration in Britain’s royal family. The British royals have survived great turmoil by exercising a pragmatic approach to government that is remarkably Confucian in nature. The Confucian principles say that royal rulers must have elements of perfection, mystery, continuity and generosity and the British royal family has all four. For new millionaires in China who crave continuity of wealth, it must be tempting to see the survival of Britain’s royals as a sign that, in the eyes of heaven at least, they are doing something right. And thus they look to emulate aspects of the royal lifestyle – for example take the explosion of polo (the sport of kings) in China. There is nothing surprising about this – Chinese people have deeply embedded in their consciousness the notion that bad kings will be fated to lose everything – and that “bad millionaires” will suffer in the same way. With no emperors of their own to use as role models, it’s natural for the new aristocrats to turn elsewhere and where better to look at. Don’t be surprised if, in matters of luxury, China’s new aristocracy increasingly embraces products that have a royal connection. Emma Sherrard Matthew is the CEO of Quintessentially, the world’s leading luxury lifestyle group with a global concierge service. For more information visit www. quintessentially.com, call +852 2540 8595 or email hongkongbusiness@quintessentially.com.

52 SINGAPORE BUSINESS REVIEW | SEPTEMBER 2011