Singapore Business Review (October - December 2018) by Charlton Media Group

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THE PROPERTY ISSUE SKY HIGH RENTALS PUSH F&BS TO CO-SHARE SPACES WILL YOU LET BOTS MANAGE YOUR MONEY? THE DEATH OF AN ACCELERATOR FACTORIES GET A FACELIFT

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FROM THE EDITOR About Us

AUDITED CIRCULATION: 22,265 ONLINE READERSHIP: 215,000 monthly uniques through Google Analytics The Singapore Business Review is the highest circulating and best read business magazine in Singapore. Our online readership has an average of 215,000 unique viewers, according to Google Analytics. We won the Business Trade Media of the Year Award at the 2017 MPAS Awards. Do reach out to us if you would like us to tell your story to our readers via print & online advertising or events. Publisher & EDITOR-IN-CHIEF Tim Charlton production editor Genelie Sta.Ana-De Leon GRAPHIC ARTIST Elizabeth Indoy ADVERTISING CONTACT Rochelle Romero rochelle@charltonmediamail.com Aileen Cruz aileen@charltonmediamail.com Vanessa Austria vanessa@charltonmediamail.com Karisse Coderes karisse@charltonmediamail.com ADMINISTRATION ACCOUNTS DEPARTMENT accounts@charltonmediamail.com Advertising advertising@charltonmediamail.com Editorial sbr@charltonmedia.com

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This issue is packed with a lot of reports on property as we rounded up the hottest issues of the sector today. Experts on the ground revealed that aside from the en bloc frenzy that gripped the market this year, shared economy has been the ‘catalytic saviour’ of the property market this year. Co-working spaces now account for for 4.5% of Grade-A office space in Singapore, which is around 54 soccer pitches in size. But its is the dizzying growth in coworking spaces that has analysts excited, with the sector tripling since 2015. Meanwhile, tech companies are driving the demand for industrial space in Singapore as tech bigwigs like Facebook and Google choose the city to be the next location of their data centres. This year, Johnson & Johnson also launched its new regional headquarters in the Science Park, whilst home appliance manufacturer Dyson has launched a $587m research and development centre in the same area. Moreover, OCBC Bank also built a new S$240m regional data centre, designed to support the operational requirements of OCBC Group entities for the next 30 years. In leisure and entertainment, casino operators in Singapore jockey for a position in Japan as the country opens up its casino market. Over at the startups scene, an accelerator programme recently went bust, which left market watchers asking: what went wrong? This issue also bears the coverage of our recent event, the Hottest Start ups Panel Briefing 2018. We rounded up 29 speakers who agreed that despite concerns of saturation in Singapore’s startup market, there are still a lot of opportunities and the available money is still incredibly high. Enjoy the issue!

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SINGAPORE BUSINESS REVIEW | december 2018

CONTENTS

Financial insight Singapore’s equity offerings up at US$3.8b; bond markets down at US$12.3b

Cover Story Shared economy, en bloc fever fire up Singapore’s property sector in 2018

REAL ESTATE INSIGHT Factories get a facelift amidst Singapore’s industrial property sector transformation

CMY

INDUSTRY INSIGHT

FIRST

REGULAR

08 Banks jump on the robo-advisory

26 Casino operators jockey

42 Space Watch

bandwagon

for position in Japan amidst

56 Legal Briefing

09 Why hackers target Singapore

challenges in Singapore

58 Marketing Briefing

10 Sky-high rentals push F&Bs

28 The death of an accelerator:

Why programmes are going bust

12 Will bots hire your next employee?

in Singapore

14 Are fintech startups hoarding

30 Singapore revs up renewables

capital?

push amidst solar and carbon

tax uncertainties

to co-share spaces

Economy watch

50 Foreigners make up for lack

of local MBA takers in Singapore

EVENT COVERAGE 60 Cracking the code: Secrets from

32 Will the services sector be

Rankings

the economy’s saving grace?

Analysis

the most successful start ups

in Singapore

44 Singapore malls embrace

Published quarterly on the Second week of the Month by Charlton Media Group 101 Cecil St. #17-09 Tong Eng Building 2 SINGAPORE SingaporeBUSINESS 069533 REVIEW | december 2018

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News from sbr.com.sg Daily news from Singapore most read

FINANCIAL SERVICES

residential property

REsidential Property

CPF retains ninth spot in world’s biggest pension funds

Winning tender for Dairy Farm site priced property at $368.8m

216-unit Fernwood Towers up for en bloc sale at $688m

The Lion City’s Central Provident Fund (CPF) finished as the ninth biggest pension fund in the world with its assets hitting $369.6m (US$269.13m) in 2017, a research by advisory firm Willis Towers Watson revealed. Based on the research by the firm’s Thinking Ahead Institute, Singapore remained in its 2016 spot and lagged behind other Asian counterparts.

The Urban Redevelopment Authority awarded the Dairy Farm road site to United Engineers for $368.8m, an announcement revealed. The firm eyes to make the site into a prime development which will include 450 residential units, a childcare centre, supermarkets, food court, and food and beverage (F&B) and retail shops. It has a 99-year leasehold and area of 19,638 sqm.

Fernwood Towers in District 15 will be put up for en bloc sale at 12 September 2018 with an asking price of $688m or $1,540 psf ppr, ERA Realty revealed.The 216-unit freehold development built in the 1990s sits on a land area of approximately 148,963 sqft and is zoned for residential use with a gross plot ratio of 3.0 under the Master Plan 2014.

Epicentre of the East: How Singapore is transforming trade with blockchain BY SCOTT NELSON Amidst heightened efficiency requirements and stringent quality standards, many companies are struggling to adequately finance their supply chain operations to meet the growing global demand. As one of the world’s most innovative and technology-forward countries, Singapore is leading the charge in exploring how blockchain, the same technology underpinning cryptocurrencies like bitcoin.

What businesses need to know about customer engagement in the age of Social Media BY RAEN LIM Social media has developed into a mainstream communications channel, which has given rise to today’s empowered consumer. The business to consumer paradigm has forever shifted and it has massive implications across the enterprise. Today, it is imperative that businesses here watch how consumer behaviour and lifestyles are impacted as a result of algorithms and money.

MOST READ COMMENTARY Why businesses are using lawyers differently in Singapore BY MATTHEW KAY Singapore businesses are facing several significant legal changes on the horizon which will impact how many companies work day-to-day. The first is the both recent and imminent changes to how data in Singapore needs to be stored. There’s been a huge focus on data protection across the world, with the European Union seeing the transformative General Data Protection Regulation introduced last month.

SINGAPORE BUSINESS REVIEW | december 2018

As an employer, you can give strength to our NSmen by coming on board NS Mark, a nationwide accreditation scheme that recognises organisations for showing strong support towards National Service and Total Defence. Your support matters. Begin by implementing NS-friendly policies and practices at your workplace.

Many businesses across Singapore have been accredited with NS Mark. Some have implemented pro-NS initiatives for their recruitment, retention and reward systems. Others recognise NSman employees with a simple thank you note or celebrate their successes and achievements in NS. Regardless of what you are able to do, your support matters.

“ TO SUPPORT NS IS A WIN-WIN SITUATION FOR US. We constantly challenge ourselves to initiate innovative solutions that can help us cope with the constraints we face when our NSman employees are away for duty. Ms Christina Siaw Chief Executive Officer, Singapore Cruise Centre Pte Ltd

“ NATIONAL SECURITY IS A SHARED

“

The defence of our nation is a necessary investment that requires extraordinary contributions on the part of our NSmen. Its returns include the stability our firms and businesses need to succeed and thrive.

ADVOCACY FROM EMPLOYERS & BUSINESSES

“

OUR SECURITY OUR STABILITY YOUR SUCCESS

COMMITMENT AND RESPONSIBILITY.

Our NSmen stand guard for Singapore. It’s time for us to stand in solidarity with them. Get accredited with NS Mark today.

To find out more, contact us at nsmark@defence.gov.sg, or visit www.NSmark.sg today.

As a key pillar of Total Defence, it is in the interest of every company, large or small, to do its part to support NS and safeguard our way of life. Mr Gan Seow Kee Chairman and Managing Director, ExxonMobil Asia Pacific Pte Ltd

Agenda PEOPLE | PLACES | SERVICES | OPPORTUNITIES

OPPORTUNITIES

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Global deliveries, the Nordic way. For years now, delivery companies have bragged about having the biggest trucks, the fastest planes and the coolest ships. But a brave new world needs brave new solutions. For global e-tailers, finding the right way to the market matters more than which truck takes them there. So instead of owning a fleet of planes, trucks and ships ourselves, we’re experts in finding the best possible delivery solution for you. That’s our take on deliveries. No more, no less.

CMY

OPPORTUNITIES

SERVICES

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TAFEP

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The Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP) organises a series of clinics on the Tripartite Standards (TS) to assist organisations understand what the TS initiative is about, so as to help them adopt and implement the various standards that have been launched to date. For more information about the Tripartite Standards Clinics, visit tafep.sg or email ts@tafep.sg.

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SINGAPORE BUSINESS REVIEW | december 2018

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public transport system woes

Singapore’s rail, bus, and taxi system may be the envy of many, but if a recent study by McKinsey is anything to go by, neighboring Hong Kong still rules when it comes to having the world’s best public transport system. Singapore’s public transport system scored 69.2 points, a notch below Hong Kong’s 70.8 points. The study revealed that Singaporeans are particularly unsatisfied with public transport affordability. “Public transport affordability is a sensitive issue, as it is for most residents surveyed in all cities—in the majority of cities, people are not satisfied either by the current situation or by changes in recent years,” the study explained. In contrast, Hong Kong residents are generally satisfied with public transport costs. McKinsey noted that Hong Kong is implementing initiatives to further improve transport affordability by providing a variety of fare promotions for regular users, the elderly, and disabled passengers, the study said. Hong Kong’s rails rule Singapore ranked eighth in terms of convenience, which measures the quality of service provided by cities’ transport systems based on travel comfort, ticketing system, electronic services and transfers. Singapore scored 14 out of 20 for its rail infrastructure, 15 out of 20 for affordability, 12 out of 20 for efficiency, 13 out of 20 for convenience, and 15 out of 20 for safety. Hong Kong beat out Singapore in terms of rail infrastructure (18 points), convenience (14 points), and safety (20 points). “The fundamental dilemma is how to create dense, efficient, and comfortable public transit and keep it affordable without heavy subsidies. Singapore represents a notable example in achieving high results across all dimensions, including affordability,” says Stefan Knupfer, one of the study’s authors.

SINGAPORE BUSINESS REVIEW | december 2018

OCBC’s Roboinvest targets millenials

Banks jump on the roboadvisory bandwagon

ust as anyone could pick a song from digital music services like Spotify, young, tech-savvy investors can also now choose from 28 diverse portfolios of investment options through OCBC’s new roboadvisory service called RoboInvest. OCBC RoboInvest targets younger investors by offering a relatively low initial investment of $3,500. “Customers can choose from equities and exchange traded funds across six markets, constructed based on themes like technology, real estate investment trusts, FMCG companies, property, healthcare and food & beverage,” OCBC said. More banks are jumping in on the robo-advisory bandwagon in Singapore. In August, CGS-CIMB Securities, in partnership with Saxo Bank subsidiary Saxo Capital Markets and WeInvest, also launched a robo-advisory platform called CGS-CIMB eWealth. Like other robo-advisory platforms, CGS-CIMB eWealth uses algorithms to help the regular rebalancing of clients’ investment portfolios. It also requires an initial minimum investment of

In Singapore, assets under management in the roboadvisors segment amounted to US$1.75b in 2018.

A threat to incumbents? Singapore banks’ foray into the robo-investment arena add to the momentum already driven by established players like StashAway, a Singapore-headquartered online investment management company and was the first robo-advisor to receive a full capital markets services license from the Monetary Authority of Singapore. “This is also good news as it will attract more attention to roboadvisors,” said Michele Ferrario, co-founder and CEO of StashAway. He reckoned StashAway’s portfolios are all diversified across asset classes, geographies, types of issuers and maturity. “There are no ‘themes’ to choose for customers. Through our goal-based advisory tool, we see most customers building retirement portfolios,” said Ferrario. In 2018, assets under management in the robo-advisors segment amounted to US$1.75b, and is expected to grow at annual growth rate of 44% to reach US$7.61b by 2022. The number of Singapore users may also climb to about 405,000 by 2022. Meanwhile, CMC Markets sales trader Oriano Lizza believes that banks’ foray in roboadvisory will threaten incumbent participants. “The infrastructure and expertise that the banks already possess will be a threat and their ability to adopt change and move to market first will be a threat to the smaller setups.”

Will banks’ venture into robo-advisory threaten incumbent players?

FIRST Singapore could look at increasing secure server capacity to cope with the growing amount of data.

Preventive measures “The government could also look into separating parts of the IT infrastructure that are not heavily reliant on the internet to operate so that sensitive information could benefit from another layer of protection,” said Joanne Wong, senior regional director for Asia Pacific & Japan at LogRhythm.“Whilst this is not a be-all and end-all solution, it makes remote access into the network much harder for external parties and, thus, creates a defensive shield for these systems,” she notes. Deploying secured information gateways that scrutinise voluminous data passing through networks could also prevent restricted information from leaking out, at the same time block unwanted data from passing through. “In addition to these deterrence measures, CIIs also need to operate on the possibility that a cyber breach can and will happen,” added Wong. “Good cyber hygiene practices, a clear and well-communicated cyber incident response plan can protect Singapore’s critical infrastructure.”

What can be done to protect Singapore’s data?

Why hackers target Singapore

espite being all tech-savvy, Singapore still was not spared from being a key target by high-profile hackers as seen in the massive data breach of SingHealth’s IT system in July. This episode went down in history as one of the most serious breaches of personal data history with records of 1.5 million patients compromised, including those of high-ranking government officials. Analysts warn that this attack may just be the first of many, and plenty of other sectors are potentially

as they can be sold to companies or parties that can in turn monetise the insights and improve on their goods and services,” noted Liew. “Singapore could look at increasing secure server capacity to cope with the growing amount of data being collected and stored.”

at risk. “Insurance companies, financial services, ride-hailing, and bike-sharing are some examples, but almost every single industry which collects data are suspect,” said Kenny Liew, telecommunications analyst at Fitch Solutions. Meanwhile, banks are another highly vulnerable sector, as well as the state-built digital repository platform MyInfo, which allows Singaporeans to automatically key in information for e-forms. “Banks’ data can explain movement, and spending behaviour are highly valuable in shady dealings

The Chartist: How exposed are Singapore banks to property loans? The recent round of cooling measures introduced in July may hit Singapore’s biggest banks, majority of which are exposed to the property sector. In particular, DBS and UOB have more exposure to building & construction at 19.6% and 22.3% of total loans, these charts from UOB Kay Hian revealed. Meanwhile, OCBC and UOB have more exposure to residential mortgages at 27.6% and 27.9% of total loans, respectively. About 21.4% of DBS’ loans are housing loans, whilst OCBC loans are 16.7% in the building & construction sector. Overall, UOB has the largest exposure at a staggering 50.2% on an aggregate basis, followed by OCBC at 44.3%. On the plus side, delinquency for residential mortgages is extremely low and current NPL ratio is just 0.4%, UOBKH noted.

Loans by sector – DBS

Loans by sector – UOB

Others 5.6% Housing Loans 27.90%

General Commerce 12.3%

Source: DBS, UOB Kay Hian

Transport & Comm 4.5%

Building & Construction 22.3%

Manufacturing 7.9%

Professional & Individuals 13.2%

Investment & Holding Companies 6.3%

Source: UOB, UOB Kay Hian

SINGAPORE BUSINESS REVIEW | december 2018

FIRST Ambassador briefing FRANCE

His Excellency, Marc Abensour

Singapore Business Review caught up with France’s ambassador to Singapore, His Excellency, Marc Abensour to discuss the growing business and economic relationship between the two countries. “Singapore is France’s top trade partner in ASEAN and accounted for 44% of our exports ($6.8b) and for 64% of our direct investments ($11.7b) in the region in 2017,” he noted. “Over 1,000 French subsidiaries and 350 French entrepreneurs are established in the city-state, which is home for almost 20,000 French citizens. An increasing number of French companies are opening their R&D and innovation centres in Singapore, which is seen as an ideal place to test their latest technologies and innovations.” 2018 is declared as the FranceSingapore Year of Innovation. “France and Singapore want to deepen collaboration between our innovation ecosystems, highlight and enhance our various scientific and research partnerships, and bolster the researchbusiness-startups continuum whilst also promoting the attractiveness of our countries,” he said. In January, a $10b fund was created to support innovation and to finance disruptive technology innovations in France. The country also offers easy access to a pool of professionals in various fields such as engineering, information technology, and mathematics. HE Marc Abensour is a career diplomat, with professional experience and expertise in Asia affairs and politico military issues. Before being appointed as France’s ambassador to Singapore, he was posted at the French Embassy in Beijing and Washington as first secretary, as well as in Brussels at the Council of the North Atlantic Treaty Organization (NATO) as deputy permanent representative, where he contributed to a process ending up with France regaining its rank within the organisation. 10

SINGAPORE BUSINESS REVIEW | december 2018

Costly rents push F&Bs to co-share spaces

o-working is by now a familiar concept, but now restaurateurs are getting into the game to maximise the usage of space at different times of the day. Take Hua Bee Restaurant in Tiong Bahru, which sells noodles to the day time crowd. When the sun sets, the restaurant transforms into a yakitori bar which is assembled by moving some furniture around. The shared space concept is nothing new to land-starved Singapore who has borne witness to an explosive proliferation of co-living and coworking concepts in recent years but have since gained greater traction in the F&B landscape, observed Edmund Tie & Company. Although hawker centres and food courts are early examples of how the shared space concept plays out in the local F&B scene, ET&Co notes that a number of complementary eateries have been taking it one step further and operating from the same outlet. One Man Coffee, for example, also operates in the same shophouse as Crust Gourmet Pizza Bar at Upper Thomson Road but have different operating hours on weekdays. “Co-sharing will probably be sought after by complementary food trades, which are able to maximise the usage of the space through different working hours or are able to cross sell to each other, creating a win-win situation,” Christine Li, senior director for research at Cushman & Wakefield said. This bodes well for complementary concepts like bars and food outlets such as those in Lucky Plaza where bars that have yet to open allow diners to eat at their space during the day. Beyond shared spaces to serve food, operators are also embracing communal spaces to prepare food through shared kitchens and cooking facilities, noted ET& Co. In 2016, the government provided assistance to eight Indian restaurants who were able to open a shared central kitchen. Ingredients were processed on separate days ensuring that secret recipes remained secret but the greatest impact of

Noodle store by day, Japanese Yakitori restaurant by night

One Man Coffee , for example, also operates in the same shophouse as Crust Gourmet Pizza Bar at Upper Thomson Road but have different operating hours on weekdays.

implementing the shared space concept was on productivity — man-hours were reduced from 90 hours to 24 hours. Massive potential, bigger issues Despite the massive potential, greater adoption of sharing facilities brings with it inevitable issues of encroaching which could easily hurt operations on both ends. More than sharing spaces from which tenants could operate and collaborate, tenants would also have to shoulder the same liabilities. “In a co-share arrangement, the kitchen will be shared, unless 2 different sets of chillers and freezers are employed. If there is a food poisoning outbreak, who does NEA go after? ” said Jemme Teo, manager of Fu Lin Bar & Kitchen which operates two different dining concepts for lunch and dinner. Work permit quota would also have to be given to one entity so partners in a co-share set-up would have to share the quota too, added Teo. “If the combined sales receipt of both partners’ sales exceed $1m, the entity has to be GST registered,” she noted. Co-share tenants that opt to operate in stand-alone retail spaces like shophouses may also cause unintentioned disruption to the other’s business. “So if the other “co-sharer” suddenly shuts down, the master lessor would have to bear the full rent. This could be disruptive for businesses whose business models are based on lower rents due to co-sharing,” added Cushman & Wakefield’s Li. “Whilst the older generation has reservations in sharing spaces, the millennials seem to share everything, anything. Concepts and policies need to innovate to catch up with market trends,” Chua Wei Lin, executive director, regional head of business space at ET& Co said in a report.

FIRST

Will bots hire your next employee?

rom making simple chatbots to providing automated evaluation systems, human resources technology (HR tech) are paving the way for the future of work. One such startup disrupting the local HR space is PeopleWave, whose products include a data-driven employee appraisal system and dashboard displaying an organisation’s performance as it aims to capitalise on the growing recognition of the business value of data-driven people management and analytics. “CEOs and HR leaders have long embraced new technology but it’s only now that HR tech is catching up,” says Damien Cummings, Peoplewave CEO. “Marketers are data-driven and sales leaders are using Salesforce but HR hasn’t had the same level of tool, until now.” Over the past five years, capital injections into global HR tech startups jumped from $413m in 2012 to a record $2.22b in 2016, according to market intelligence platform CB Insights.

able to provide actionable insights and make HR more of a business function. “Armed with curated workforce insights, companies are therefore able to make informed decisions on recruitment, employee assessment, workforce planning, employee engagement, and retention,” Cummings says. Much of the interest in adopting HR tech largely comes from the startup sector where manpower and resource are a common issue hampering growth, according to EngageRocket founder CEO CheeTung Leong, whose firm automates the administration and analytics behind employee surveys to analyse employee feedback in real-time. “Generally well-funded startups are early adopters, followed by foreign MNCs, local banks, SME with 2nd/3rd gen owners, local MNCS, and SMEs with original owners in this exact sequence,” echoed Tan. With the ongoing digitalisation of the bulk of HR work, are recruiters at risk of being displaced by chatbots and predictive Playing catch-up analytics too? Analysts believe this will not On the local level, Singapore’s HR tech be the case as much of the recruitment and market trails behind US and other Western employee assessment work is still hinged countries. Cummings says that the industry on the importance of human judgment and is still in the process of moving away from expertise, although Peoplewave’s Cummings compliance-driven tools including payroll believes that the model is likely to be nimbler and leave management towards tools that are and would feature more subscription mobile app watch

Gain access to over 20 coworking spaces for $129 with Workbuddy Even as the number of co-working locations in Singapore has ballooned to more than 200, industry veteran Gaurav Joshi noticed that there was still a large gap in the market for enterprise clients with shifting needs that no single provider can satisfy. This led him to co-found workbuddy, a subscription-based coworking app that gives access to over 20 flexible working space locations across the island from various providers. “We found that there is a critical mass of people in Singapore who need flexibility in their co-working arrangements and there was no apps or services that were servicing.”said Joshi. Users download the workbuddy app, subscribe to either a $129-a-month LITE plan that gives a 5-day monthly pass and access to all available co-working locations or the $299-a-month Unlimited plan, and then proceed to book a space and confirm a date for use. The start-up plans to expand its list to 40 locations over the next few months. “When you have a diverse team with differing needs, signing up with one co-working space might not be a complete solution. Some staff might want a more creative space in Katong whilst others in the heart of town,” said Joshi. The workbuddy app also grants access to a members-exclusive platform which connects them to other business community members as well as delivers exclusive perks and promotions. 12

SINGAPORE BUSINESS REVIEW | december 2018

The workbuddy app

Mox@Katong Point

Peoplewave is one of the startups disrupting the HR space

models, software licence fees, and consulting engagements in the future. “It’s in a company’s best interest to have an all-round approach that does not only include the latest technologies, but also prioritises the human expertise that recruitment consultants provide,” notes Robert Half Singapore managing director Matthieu ImbertBouchard. “There is just no substitute for realworld interaction and human judgements when it comes to finding and securing the right talent.” Although digital recruiters could be used to perform the screening process for a bulk of entry-level jobs, senior roles that attract a niche talent pool cannot be filtered and judged by a bot as such tasks still need the handling of an experienced HR manager. “Within the HR function, firms have been mindful of the extent to which they should automate or digitise this function,” says Shinjika Shukla, associate director, Michael Page Singapore. “In situations such as employee grievances, employee interaction with chatbots may not solve the purpose.”

FIRST NUMBERS

Labour market

Carro raked in $60m in a recent funding round.

Are fintech startups hoarding capital?

ot all startups are created equal, and fintech firms have a particular edge when it comes to bagging big-ticket funding deals. Statistics reveal that despite a massive pool of available capital fuelling the ambitions of homegrown startups, fintechs are more likely to score growth-stage funding rounds than other less fortunate startups who are stuck at seed funding. Later-stage deals have been accounting for a bulk of Singapore fintech funding in the past four years with capital injections over $5m representing nearly half (43.2%) of total fintech funding in 2017, according to Fintech Global. “We believe this is due to the maturing of the fintech sector, where funding is switching towards later stage vendors, who have established the data to prove their potential return on investment.” says Nick Maynard, analyst at Juniper Research.

Source: Ministry of Manpower SG

SINGAPORE BUSINESS REVIEW | december 2018

Catching investors’ eye The fintech fundraising landscape in Singapore is dominated by Payments & Remittances and Cryptocurrencies companies, which raised a combined total of over $250m. The top four ICOs in the country collected $75m worth of funding in the first half of 2018 whilst RegTech has attracted over $25m in the last 12 months, according to Mariyan Dimitrov of Fintech Global.

The fintech fundraising landscape in Singapore is dominated by Payments & Remittances and Cryptocurrencies companies, which raised a combined total of over $250m.

“There is probably a certain ‘hype’ playing currently in fintechs’ favour, and to the detriment of traditional startups. This hype is due to the belief some might have that a fintech is the ultimate technological frontier that will allow to automate, digitise, optimise, and disrupt traditional models,” according to Dimitri Kouchnirenko, founder of invoice financing platform incomlend. One need not look far for notable deals in Singapore’s fintech space after Sea Limited raised $575m in post IPO equity in June, which comes on the heels of an earlier $550m capital injection in May 2017. It joins Tryb Group, who recently scored $30m in private equity investment, and online auto marketplace Carro, which raised $60m in Q2 in notable fintech transactions in the past 12 months. “Singapore has a very vibrant fintech funding landscape,” says Varun Mittal, EY Asean FinTech Lead. “This year, we also saw the first fintech firm listed on the Singapore Exchange; there is also a strong ICO funding activity in Singapore.” “The global aspect of certain segments of financial services, specifically B2B, allows companies to scale up more easily and expand internationally. As such, fintech companies have easier time attracting larger pools of capital to support this expansion and position themselves as leaders,” Dimitrov adds.

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startups

Hyperscale data centre startup AirTrunk secures $845m funding

wo years after launching and having secured big-name investors such as Goldman Sachs and TSSP, Singaporean-based hyperscale data centre startup AirTrunk has set its sights on becoming the leading provider in the Asia-Pacific market with a target investment of between $2.98b to $4.97b over the next few years. AirTrunk designs, builds, and operates hyperscale data centres that store data and information of large cloud services, content, and enterprise customers. The startup raised $845m

for a major expansion of its data centres in Sydney and Melbourne, and across key Asia-Pacific markets. The company said the two Australian flagship facilities, which were opened in the second half of 2018, are set to become the largest independent data centres in the Asia-Pacific region when finished at 90MW and 84MW, respectively. The latest expansion should establish AirTrunk as the largest data centre operator in Australia by deployed capacity, the startup said, adding that it is working on expanding in other key markets such as Singapore, Hong Kong, Japan and India. “Cloud computing will continue to grow, and large cloud and content companies will continue to need data centres that can scale with their needs,” said AirTrunk CEO and founder Robin Khuda of the growth prospects in Asia Pacific. “Large cloud, content, and enterprises are increasingly demanding hyperscale data centre solutions for their large and rapidly growing volumes of data and information. AirTrunk delivers fast and can scale quickly so we can grow with our customers.”

Fintech firm Rate raises US$15m in ICO adds to the US$2.3m it earlier raised in March in its pre-series A round, will primarily fund product development, marketing, partnerships and setting up international offices as part of its global expansion. Rate3 aims to help companies maintain a single unified identity across different blockchains and Singapore-based startup Rate has services, instead of completing multiple raised US$15m in a token sale for its know-your-customer and anti-money blockchain project Rate3. Its co-founder laundering checks.“We see tokenisation and CEO Jake Goh pitched a vision being useful across many different asset of a “tokenised world that is legally classes. This not just includes enabling compliant, interoperable, and scalable.” money to move faster at lower costs, This future, which promises businesses but also other assets such as loans, greater transaction efficiency and lower receivables, stocks, mall vouchers,to costs, seemed to have resonated with name a few,” said Goh. “This will bring key investors, as Rate’s token sale closed added liquidity to these asset classes, in May with US$15m in proceeds from enabling businesses to gain access venture capital firms such as Matrix to capital in a more efficient manner Partners China and Fenbush Capital by selling or borrowing against that founder Bo Shen, as well as crypto previously illiquid asset such as customer investors Node Capital, Kenetic, FBG invoices,” he added. Rate3 also allows Capital and Signum Capital. asset token issuers to connect real-world Goh said the token proceeds — which identities to user wallet addresses. 16

SINGAPORE BUSINESS REVIEW | december 2018

This startup incentivises on-time bill payments

If you’ve ever wondered why there is no reward for paying bills on time, and yet, painful deductions await for missed payments, you are not alone. In fact, it is this very same reason why entreprenuer Danas Njoto thought of starting BillCheap, a bill payments and price comparison platform built on blockchain that aims to reward timely payments. “We realised, there is no incentive in paying bills on time, only penalties when you pay late,” said entrepreneur Danas Njoto, founder of BillCheap. “BillCheap solves this by incentivising consumers through offering rewards and perks for paying bills on time. To sweeten the deal, bills are cheaper if paid with BILLY token.” Users can consolidate their bills for electricity and other services on the BillCheap platform, then pay for them either through traditional methods or with BILLY, a type of utility token. Njoto said BILLY tokens offer 3% to 5% savings on bill payments compared with other methods, and can also be used outside the BillCheap platform to buy products at supermarkets, shops, and food and beverage outlets. The platform itself is free to use for both users and businesses. “We are building the infrastructure where BILLY will be one of the most widely used tokens in Singapore and overseas,” said Njoto, adding that a blockchain-powered platform tends to empower consumers through greater transparency in their financial transactions and service providers. “It enables consumers to get the true ratings and reviews of the selected retailers and help them select a suitable merchant or price plan according to their individual needs.” Healthier cash flow For users that struggle to pay their bills, BillCheap is working on bringing peer-to-peer lending on the platform as well as making it accessible to polyphonic phone users, in line with Njoto’s vision of reaching the large unbanked population in Southeast Asia. “In the countryside of Indonesia, many people must go out to the nearest convenience stores which may be as far as an hour away to pay credit to ensure their electricity is intact,” said Njoto. Aside from pushing for greater financial access in Southeast Asia, Njoto said BillCheap is a boon for small businesses that are having a hard time handling payments. She reckoned the platform can handle payment reminders and settlements, as well as generate analytics to help ensure a healthier cash flow.

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FINANCIAL INSIGHT: capital markets

Deal #1:The LTA’s $1.5b 40-year bond and $900m 30year bond were amongst the longest-dated megasized deals in the Singapore’s DCM scene

Deal #2:SASSEUR REIT’S $300M PROCEEDS remains the biggest equity offering and the only REIT listing in the SGX so far this year.

Singapore’s equity offerings up at US$3.8b; bond markets down at US$12.3b Real estate remains the key driver of Singapore’s equity and debt capital market, but industry experts and observers are seeing the emergence of two new stars: healthcare and technology.

ingapore’s equity capital market (ECM) has been abuzz with activity with companies raising US$3.8b in Q3 2018, according to Thomson Reuters. The expansion in proceeds represents double-digit growth of 10.4% that are also the highest since 2016. This could be attributed to a robust quarterly ECM performance in Q2 which hauled US$2.34b but lost some of its momentum in the coming quarter. “During the third quarter of 2018, Singapore ECM activity declined as proceeds reached US$533.4m, a 77.2% sequential decrease from a strong second quarter in 2018 (US$2.34b), and down 77.0% in proceeds compared to third quarter of 2017 (US$2.32b),” observed Thomson Reuters. In terms of issuances, the number of issuances rose 33.3% YOY to 52 in the first nine months of the year. “The larger equity deals this year have been mainly by the real estate investment trusts such as Mapletree Logistics Trusts and Manulife US REIT, reflecting that investors in the equity capital market remain yield driven,” said Edmund Leong, head of group investment banking at United Overseas Bank (UOB), although he noted that recent global developments in trade have led to challenging market conditions and continued concerns around emerging markets. “This contributed to the 18

SINGAPORE BUSINESS REVIEW | december 2018

During the third quarter of 2018, Singapore ECM activity declined as proceeds reached US$533.4m, a 77.2% sequential decrease from a strong second quarter in 2018.

subdued post-listing performance for new IPOs this year, with only two out of 11 trading above their IPO price.” In a breakdown, follow-on offerings accounted for the lion’s share of ECM proceeds (63%). This was followed by convertibles which managed to snap up 19.4% market share thanks to Sea Ltd’ US$500m proceeds from a fiveyear convertible bond in June which has snagged the title as the largest equity offering so far in 2018. DBS Group leads the ranking for Singapore ECM underwriting with US$931.4m in related proceeds, capturing almost a fourth (24.5%) of the market share. Goldman Sachs follows behind in second place with 16.1% market share and Citi with 12.5%. Meanwhile, Singapore’s bond issuance in Q3 2018 saw a decline, with primary bond offerings from Singaporedomiciled issuers reaching US$12.3b down by 7.1%, according to data from Thomson Reuters. Total bond proceeds by the end of the third quarter of 2018, saw a massive 73% rebound at S$8.8b from the dismal show in the April-to-June quarter at S$2.2b. In September alone, S$3.7b in deals were recorded, mainly from banks and government offices such as the Housing Development Board and the Land Transportation Authority. Bank perpetuals made a comeback in Q3. OCBC, DBS

FINANCIAL INSIGHT: capital markets and HSBC issued perpetuals which were lapped up by investors. Investment-grade bond offerings from Singaporean companies, on the other hand, slowed down, raising $9.5b, which is a 21.3% decrease in proceeds and a 43.7% decline in the number of investment-grade bond issuance. In terms of sectors, financials have captured 73% of the share of Singapore’s bond market and raised $10.5b, which is an 18.1% increase in proceeds compared to the same period last year. The same sector also got 72.7% of the share in total bond proceeds issued by Singaporean borrowers. Luke Pais, partner for EY Singapore and ASEAN M&A leader for Ernst & Young Solutions LLP, noted that both debt and equity markets in the city-state have so far been stable for the first half of 2018, but prospect for the rest of the year for both markets will be mixed. “There is speculation that the large number of debt issues was driven by issuers’ desire to lock in interest rates in expectation of higher rates in the future. There may be some upside risks to this view as central banks continue to manage interest rate normalisation carefully.” Notable deals For Singapore’s equity capital markets, both the recent performance and the pipeline of projects for the rest of the year remain robust. Kuldeep Singh, Citi’s head of markets and securities services for ASEAN, said that given the right market conditions, equities in Singapore could close the year at a much stronger stance compared to last year. “Despite market uncertainty this year leading to a couple of postponed offerings in the first half, the second half pipeline is robust, which suggests that 2018 could still close at or higher than 2017 levels in terms of total Singapore equity capital market volumes, subject to market conditions,” he explained. Earlier in 2018, Bangladesh firm Summit Power International Ltd. told investors it’s shelving a share sale that was targeting US$260m. This came less than two weeks after Bloomberg News reported Malaysian clinic operator Qualitas Medical Ltd. delayed the pricing of its $100m IPO. The first half year, the Citi official added, also ushered healthy follow-on issuance volumes, particularly in the real estate investment trust (REIT) space, with no less than nine transactions successfully priced. “Liquidity and investor appetite for well understood yield products remain strong amidst the rising interest rate and policy cycle,” he said.

Luke Pais

Kuldeep Singh

Tay Hwee Ling

Edmund Leong

Raymond Tong

Singapore equity capital markets - first half volume c omparison

Source: http://dmi.thomsonreuters.com

Meanwhile, some of the notable deals for equity capital markets in Singapore, according to data from Thomson Reuters, include the $355.9m raised as a follow-on issue type by Fraser Logistics & Industrial Trust from its preferential offering in June this year, which is currently the biggest Singapore equity offering in 2018. The over $300m proceeds raised by Sasseur REIT, a real estate investment trust that offers exposure to Chinese outlet malls and a new asset class to investors in Singapore, remains the biggest equity offering and the only REIT listing in the SGX so far this year. Tay Hwee Ling, global IFRS & offerings services leader at Deloitte Singapore, also noted Koufu Group Limited’s listing on July this year, which raised about $74m, taking the spot for the highest funds raised by a company IPO on the SGX this year. Other notable deals, which are all follow-on issue types and under the real estate sector, according to data from Thomson Reuters, include the $248.8m proceeds from Mapletree Greater China Commercial Trust Management in April; the $226.9m proceeds from Keppel DC Reit Management in May; and the $197.2m in proceeds from Manulife US Real Estate Investment Trust in June this year. Singapore bonds: Who’s borrowing where In terms of debt issuance for Singapore’s debt capital market, some notable deals this year, according to Leong, include the $1.5b 40-year bond and $900m 30-year bond from the Land Transport Authority, which were amongst the longest-dated mega-sized bond deals in the Singapore bond market with UOB acting as a joint bookrunner for these two landmark deals. Other notable issuances include CapitaLand Commercial Trust’s $200m 7-year bond, CapitaLand Mall Trust’s $130m 5.5-year bond, and SMRT’s $200m 5-year and $100m 10-year bonds, with UOB acting as sole bookrunner for all of these transactions. Given these sizeable deals, UOB remains as the most active issuer in terms of bond proceeds so far this year, according to data from Thomson Reuters, capturing 17% of the market share worth $2.6b, which includes issuances from its subsidiaries. In April, UOB prices its dual-tranche offshore bond worth $1.2b (a $700m threeyear fixed-rate bond and a $50m three-year floating rate bond), which is considered the biggest bond issuance from a Singapore company so far this year. In terms of bonds underwriting, DBS Group currently leads the pack with $2.1b in related proceeds and capturing 14.9% of the market share. This is followed by Oversea-Chinese Banking Corporation (OCBC) and UOB with 12.5% and 8.1% of the market share, respectively. Underwriting fees for Singaporean bonds issuance, meanwhile, totalled $86.7m, which is a 35.5% increase from the same period last year. Raymond Tong, partner at Clifford Chance, explained that activity in the Singapore dollar bond market has appeared to be resilient in the face of emerging market currency pressures, whilst noting about the evolving nature of the city-state’s debt capital market to accommodate various product types. SINGAPORE BUSINESS REVIEW | december 2018

FINANCIAL INSIGHT: capital market He noted about Pacific International Lines’ first ever switch tender in the Singapore dollar bond market at about $60m towards the end of 2017, which was “an excellent example of the growing sophistication of the Singapore dollar bond market in that liability management is increasingly being used as a tool for bond issuers to optimise their capital structure, rather than simply a last resort in distress scenarios.” Trends, outlook Aside from the continued growth of real estate as the main driver of Singapore’s equity capital market, industry experts and observers are seeing the emergence of two sectors that will likely boost and maintain momentum of the city-state’s equity market: healthcare and technology. Deloitte’s Ling noted that whilst Singapore’ IPO market is driven by REITs and Business Trusts (BT) over the last few years, but the percentage has fallen to just 60% as more listing from other listings are starting to come in. “We see a bullish trend in the healthcare industry. In the last five years, healthcare IPOs have shown an increasing price earnings ration on listing—at between 20 to 30 times earnings,” Ling said. “The post-offering performance of healthcare IPOs has remained strong with an average of24.5% share price return after going public.” Healthcarerelated industries that are listed on the SGX have also consistently delivered strong growth and prospects, according to Ling. Leong noted that there is also growing interests from foreign companies that are interested in tapping the equity capital market in Singapore, not only in REIT and high-growth consumer sectors, but also from technology companies, particularly those focussed on financial technology and medical technology. As for Singapore’s debt capital market, the recent developments in global trade in terms of bond issuance, are pushing investors to be “more discerning in the selection of bonds with buying interest focussing on high-grade issuances” given the current rising interest rate environment. “We expect investment-grade issuers will carry on leading Singapore’s debt equity market,” he said. “As investors continue to focus on quality and yields, we may also see more infrastructure bonds as well as new bonds issued in the form of structured securitisation products.” Tong, talking about possible emerging trends in Singapore’s debt capital market, noted that outside of the government-linked company space, there appears to be an increasing demand on the part of bondholders for improved covenant terms, particularly on more high yield-style incurrence covenant package that would give enhanced protection to bondholders. “This could be an emerging trend from the raft of defaults a few years ago, whereby the increasing sophistication of the market is leading investors to take a more proactive approach in assessing credit profiles, and demanding increased contractual protections from certain types of issuers,” he said, adding that the refinancing wall of Singapore dollardenominated debt, in which issuers decide to tap capital markets to meet obligations, will be a story to watch out for. 20

SINGAPORE BUSINESS REVIEW | december 2018

In the last five years, healthcare IPOs have shown an increasing price earnings ration on listing—at between 20 to 30 times earnings.

hong kong view

A tale of two capital markets

ong Kong’s equity capital market looks on track to have a record-breaking year in 2018 and once again become the world’s largest venue for initial public offerings (IPOs) with expected total fundraisings between HK$200b to HK$250b. However, the same cannot be said for the debt capital market as it has been a lacklustre year with a decline in bond offerings in the first half of 2018. According to Gordon Ng, head of corporate finance at Dentons Hong Kong, Hong Kong suffered a decline, in both transaction value and volume of bond deals given various macro and microeconomic risks around the region and globally. “This downturn has been further compounded by microeconomic factors such as rising defaults from Chinese corporate issuers and restrictions placed by the [National Development and Reform Commission] on overseas financing on Chinese property companies, which account a majority of high-yield deals.” This is significant since an overwhelming majority of the bond issuances in Hong Kong and Asia have been comprised of Chinese domiciled issuers. Most of the deals for Hong Kong originate from issuers in the following industries, according to the Dentons official: financial institutions, real estate, conglomerates—which is a mixture of IT, healthcare, pharmaceuticals, infrastructure, finance, securities, tourism, and property development—and technology companies. Notable deals Hong Kong’s IPO market was dominated by small and medium-sized deals. Some of the most notable deals for Hong Kong’s equity capital market, according to Fong, include the listing of some high-profile names in the technology, media, and telecom (TMT) sector, including Xiaomi Corporation’s $4.7b lacklustre IPO in late June and China Tower Corporation Limited’s jumbo $6.9b flotation in August. For Hong Kong’s debt capital market, James Fong, partner at Bird & Bird Hong Kong noted that real estate/property sector as well as the finance sector continued to dominate. One notable deal, according to him was the $6.4b senior bond offering in six tranches by China National Chemical Corp (ChemChina) in March 2018, with the bond’s proceeds offering used to refinance debt incurred by ChemChina for its $43b takeover of Swiss seed maker Syngentia in 2017.

2018 H1: Top 5 sectors - by total fundraising

Source: KPMG

Country report: Germany

Breakfast Briefing at the Singaporean-German Chamber of Industry and Commerce (SGC)

German-Singapore relations accelerate amidst Industry 4.0 In 2017, trade between Singapore and Germany reached US$7.3b.

hen global testing and certification company TÜV SÜD opened its Digital Service Center of Excellence in Singapore in 2016, the company believed that the centre would contribute to Singapore’s Smart Nation vision. Stable economies and positive growth are the top factors for German companies who decided to expand their business in Singapore and in the greater ASEAN region, where various initiatives have been made to liberalise markets and integrate economies. The Singaporean-German Chamber of Industry and Commerce (SGC) revealed in its recent AHK Business Outlook Survey that the general business climate in Singapore and ASEAN remain favourable for German companies. Compared to last year’s 52%, 69% of respondents to the SGC survey in 2018 indicated that their current business situation in Singapore is good. According to SGC, this trend will likely continue until next year, based on the low number of respondents who think that their businesses will not make it. The business climate will be made even more attractive to German 22

SINGAPORE BUSINESS REVIEW | december 2018

Several German companies took the opportunity to invest more in Singapore last year, with Linde launching a S$30m initiative to develop digital capabilities for its plants across ASEAN.

companies, in the lead up to the entry into force of the EU-Singapore Free Trade Agreement (FTA), which will eliminate all tariffs within five years upon its entry into force as well as address non-tariff measures in key sectors. Market liberalisation and economic integration is of high importance for business as it makes the movement of goods and services cheaper and easier. Various initiatives in ASEAN, ranging from the ASEAN Economic Community (AEC), the Regional Comprehensive Economic Partnership (RCEP) Dr. Tim Philippi, executive director, SGC said that 2018 saw greater opportunities for GermanSingaporean collaboration, as the German and Singaporean startup scenes continue to grow and as German companies in Singapore increasingly adopt Industry 4.0 applications. Furthermore, Singapore has maintained its position as a testbed for German companies keen to expand into ASEAN. “Germany is a knowledge base for the manufacturing and technology sector, and this position continues to be the glue that holds Singapore and German relations together. Both countries thrive in the two sectors,

and both continue to collaborate to take their products and services always a notch higher,” he said. Last year, trade between Singapore and Germany reached US$7.3b, with the top import products from Germany being machines and equipment (23,4%); electrical engineering (10,5%); motor vehicles and parts (9,5%); electronics (8,4%); measurement and control technology (6,4%); and other vehicles (6,1%). Meanwhile, the top export products to Germany from Singapore last year were industrial chemicals (46.6%); pharmaceuticals (11.8%); electronics (10.9%); measurement/ control technology (5.7%); and machinery (4.2%). Investments in Singapore Several German companies took the opportunity to invest more in Singapore last year, with Linde launching a $30m initiative to develop digital capabilities for its plants across ASEAN. The hub, Asia Pacific Digitalisation Hub, is located in Mapletree Business City and is the first ever Linde centre of its type outside Germany. Meanwhile, Audi Singapore launched an on-demand rental service in January 2018, the first European car company to offer such a service in the ASEAN region. “Since the founding of the chamber in 2004, the number of German companies in Singapore has increased to 1,700. This is a milestone as the chamber celebrates its 15th anniversary in 2019. Singapore remains Germany’s number 1 export market in ASEAN (€6.9b) and compared to German FDI in Japan which is 13,452 Mio Euro in 2016, German FDI in Singapore is 15,088 Mio Euro” said Philippi. German companies looking for activities to get involved in the city can look into some of the following SGC events: Business Delegation: Energy Efficiency in Buildings; Workshop: Sustainable Water Management; Activities for the German National Tourist Board; and Activities for the State of Hessen.

Country report: germany

German companies boost smart nation push

Schaeffler Group and Sennheiser bank on innovation to bring in the latest mechanical and sound technology to Singapore and ASEAN.

oasting over 100 years in the mechanical and mechatronics fields, Schaeffler Group continues to trailblaze in Singapore as it engages with the latest technology that Industry 4.0 has to offer. Greater interconnectivity amidst the Internet of Things (IoT) has allowed Schaeffler Group to create its own Schaeffler Smart EcoSystem, which comprises all necessary transformational elements from a simple mechanical component to the provision of digital services. Helmut Bode, CEO Asia-Pacific, Schaeffler Group, said that amongst other things, they recognise that Industry 4.0 is an interdisciplinary approach. Without this perspective, companies will be challenged as they do things on their own and produce different standards, missing interfaces, and incomparable and non-transparent services. To prevent these costly challenges, Schaeffler has decided to invest heavily on digitisation, artificial intelligence (AI), smart factories, and robotics, and to create hybrid activities that integrate these various solutions. Bode, a homegrown talent of Schaeffler with 37 years in the company, said that they count on intelligent networks connecting product development, production, logistics, customers, and suppliers. Schaeffler uses a technological base of digitally linked systems that make the most of the options for autonomous production and plants operations, where machines, products and people collaborate directly with one another. Leveraging IoT The Schaeffler Smart EcoSystem features three elements: mechatronic solution, virtual twin, and applications. The mechatronic solution includes sensorised components and actuators as data source while the virtual twin is composed of calculation models and tools and big data evaluation. Finally, the EcoSystem turns up with applications, which are derived from the information collected and processed. “For Schaeffler internally, with the ‘Digital Agenda’ we organize all affected areas under one umbrella - Products & Services, Machines & Processes, Analysis & Simulation and User Experience & Customer 24

SINGAPORE BUSINESS REVIEW | december 2018

Helmut Bode, CEO Asia-Pacific, Schaeffler Group

Currently, Schaeffler Hub for Advanced Value — to benefit and learn — and at the Research at NTU (Nanyang Technological end connect to each other for success. For University) in Singapore — focusses on Schaeffler externally, we partner up with the studying aspects of personal urban mobility right customers and suppliers, for instance and intelligent transportation systems in strategic partnerships with leading cloud which aim to achieve service providers,” local transportation Bode said. concepts that meet In Singapore, the city’s needs,” Bode Schaeffler’s Schaeffler will ramp Mobility for up initiatives in robotics added. At the end of the Tomorrow strategy and e-mobility whilst day, the goal for sets a benchmark collaborating with Schaeffler would be for the city’s various existing and new to derive customer new mobility partners. value from their technology such technological knowas autonomous how, which is a deep vehicles, electric understanding of personal mobility, rolling bearings and systems as well as their electric car sharing, and V2X. The company behaviour under various conditions. Bode has been a consistent leader for electric said that many of these are measurable, but mobility in the city, and they have moved the difference would be in the interpretation their technology exponentially towards of data and the creation of value-added autonomous people movers. Strong government infrastructure, support services for customers. Schaeffler has the expertise to do just that — create reliable and talent pool have allowed Schaeffler to predictions and recommend the best course cement its place in Singapore, and Bode of action. said they believe that the city will be one of The company is expected to grow further the first few countries who will lead in the as they increase their share of the business rolling out of new urban mobility solutions. in Industry 4.0. Within the next three to The company has partnered with one of the five years, Bode said that they will ramp up best universities in the city to come up with a initiatives in robotics and e-mobility while research lab that will transport Singapore to collaborating with existing and new partners. its future as a global center for mobility. Their goal will always be to become the first “Singapore has the resources and the choice of their customers as they both move services of experts and leading companies forward together. that focus on predictive transportation.

Country report: Germany

Martin Low, Managing Director, Sennheiser Asia

ver the past year, Sennheiser has stepped up its social digital marketing efforts in the ASEAN region even as it continues to drive innovation across various digital platforms. The sound giant has highlighted its focus on the customer journey and staying relevant to its clientele in the form of the right products, wherever they are and whatever they do. Martin Low, managing director, Sennheiser, said that the company has been trying to address the challenges put forward by digital disruption alongside the need to keep the Sennheiser Customer Experience enhanced. Shaping the future of audio “Our Singapore office is the regional headquarters responsible for 19 markets in neighbouring countries, predominantly the ASEAN countries. We are responsible for sales, marketing, and after-sales service, and because of our wide coverage, we try to be as efficient as possible by ensuring that our processes are digitised, streamlined, and strategised,” Low added. Sennheiser’s innovations in technology have revolved across consumer audio, professional audio, and business communications, and Low said that all three business segments address different verticals. The company continues to roll out

taken with an iOS device. Meanwhile, the the latest in wireless headphones, featuring company’s best-selling PXC 550 Wireless convenient multi-connection capability and features NoiseGard™ hybrid adaptive noise fitted with technology such as Bluetooth 4.2 and Qualcomm® apt-X™. Most of their newest cancellation technology, an ear cup-mounted touch control panel and voice prompt headphones are capable of 3-way calling support and come with a three-button remote system, and 30 hours of battery with a single charge. Business executives have enjoyed that allows control of music and calls with the PXC 550, especially during periods of ease. frequent travel. “We try to come up with tailor-made audio technology that can meet the demands of our very diverse market. From sound enthusiasts Putting a premium on audio Sennheiser’s advanced technology extends to office professionals to musicians, our customers know that they can trust our brand to the workplace, with products capable of facilitating wireless collaboration across to give them the best customer experience various devices from desktop computers to possible,” said Low. desk phones and mobile Customers phones for maximum can rely on the company’s From sound enthusiasts device flexibility. The focus on to office professionals to company’s TeamConnect the first of its innovation, with musicians, our customers Portfolio, kind, can take meetings some of the know that they can trust anytime, anywhere. latest being our brand to give them TeamConnect HE-1, the first technology can help electrostatic the best. users connect with headphone any device (BYOD) via equipped with Bluetooth or via USB a Cool Class or 3.5mm jack audio cable and supports A MOS-FET high-voltage amplifier. Reputed multiple simultaneous audio channels. as the world’s most expensive headphones “Many companies often invest in good at US$55,000, the HE-1 is handcrafted using best in class materials such as Carrara marble, audio, but in fact, often the audio is made famous from Michelangelo’s sculptures. neglected. It is very common that employees The pristine audio quality is made possible by struggle to set up for an audio conference a a 500-volt tube amplifier and two platinum- call due to dropped calls, intermittent signals, and latency. Sennheiser Business vaporized diaphragms which oscillate Communications audio conferencing between gold-vaporized glass electrodes products were designed to address these Sennheiser also takes pride in its AMBEO common problems. At the same time, Smart Headset, which features Active Noise businesses can expect cost savings if virtual Cancelling and Transparent Hearing, on top online meetings can efficiently replace of special microphones that can capture crystal clear 3D sound to complement videos physical travel,” said Low.

TeamConnect Wireless • Connect with any device (BYOD) • Wireless connectivity via Bluetooth or via USB or 3.5mm jack audio cable • Supports multiple simultaneous audio channels

PXC 550 Wireless • Sennheiser NoiseGard™ hybrid adaptive noise cancellation technology • Ear cup-mounted touch control panel and voice prompt system • 30 hours of battery with a single charge

SINGAPORE BUSINESS REVIEW | december 2018

INDUSTRY INSIGHT 1: Leisure and Entertainment

Eyes on the prize: Casino operators brace for their bid in Japan’s casino market.

Casino operators jockey for position in Japan amidst challenges in Singapore Genting Singapore has started to hire a Japanese team to prepare for the bid.

asino operators worldwide are trying to get the ball rolling in Japan as the country opens up its casino market with the passing of the Integrated Resorts Implementation Bill in July. Singapore’s two casino operators quickly expressed interest in securing a license in what is shaping up to be one of the largest casino markets in the world. Analysts reckoned there

Marina Bay Sands

SINGAPORE BUSINESS REVIEW | december 2018

The Japanese casino market could be worth about $15.8b annually.

is a likely chance that either Genting Singapore, which owns Resorts World Sentosa, or Las Vegas Sands, which owns Marina Bay Sands, will win a license and usher a strong new growth driver in the mediumterm horizon as both operators face respective headwinds in the Singapore market. Going head to head Japanese Prime Minister Shinzo Abe has supported the idea of legalising casinos despite domestic opposition due to the strong tourism draw of integrated resorts, which are comprised of casinos as well as hotels and other entertainment and business facilities. Foreign casino operators reportedly estimated the Japanese casino market could be worth about $15.8b annually when resorts are opened in three cities, which would surpass Nevada’s $11.1b. UOB Kay Hian analyst Vincent

Khoo noted that the two Singapore casino operators are “strong candidates in the integrated resort bidding, given their experience in operating in a highly-regulated casino environment and track record in contributing to the country’s tourism.” Genting Singapore has started to hire a Japanese team to prepare for the bid, according to OCBC Investment Research, whilst Las Vegas Sands is reportedly putting effort into engaging with local officials, businesses, and community groups in Osaka, widely expected to be chosen as the first major city to host a casino in Japan. Top executives from Las Vegas Sands and Marina Bay Sands have also said that they are eyeing as much as $10b in investment in Japan, and that investment in an Osaka integrated resort could even exceed that of Marina Bay Sands.

INDUSTRY INSIGHT 1: Leisure and Entertainment Wei Kiat Ng, analyst at S&P Global Ratings said the liberalisation of the Japanese casino industry is one of the most exciting recent developments for both Singapore operators. “However, we expect the bidding of licences will only commence at earliest in 2019, with licence awards only in 2020.” Softer rolling volume The strong interest in obtaining a Japanese licence and cornering a large new market comes as Singapore operators grapple with challenges in the city-state’s mature gaming sector with about $4.6b of gross gaming revenue in 2017, according to Bloomberg data. Las Vegas Sands, for example posted disappointing results in the second quarter of 2018. Whilst revenue climbed 6.2% to $3.3b, its operating income on a GAAP basis, declined 2.4% to $797m, compared to $817m in the past year. The company attributed the drop to softer rolling volume and win percentage in Singapore, and a $92m write-off of costs related to the tower adjacent to the Four Seasons Macau. Singapore, which accounts for about one-fourth of the operator’s business, recorded $368m of adjusted property EBITDA during the period. Marina Bay Sands’ rolling chip volume decreased by 35% YoY to an eight-year low in the second quarter of 2018, according to a UOB Kay Hian report, which when coupled with a lower win rate, dragged down VIP gaming revenue by as much as 58% year over year. The casino’s core EBITDA tumbled 25.2% to US$368 million with a margin of 52.2%, dropping from 59% in 2017. Prior to the release of Las Vegas Sands’ second-half 2018 results, Fitch Ratings noted in April that Marina Bay Sands’ VIP volume was up 10% whilst mass market volume was slightly down, reflecting the recovery in global VIP volume mostly from China and the highly penetrated mass market segment, respectively. The rating agency said it expects low-to-mid single digit growth in gaming revenues in 2018, assuming low single-digit growth in mass revenue on the back of rising foreign visitation and a continued mid-to-

high single-digit growth in VIP. Despite the recent quarterly decline, Ng nooted that Marina Bay Sands has gained market share over Genting Singapore over the past few years given its more convenient location and status as a Singapore landmark. He said Resorts World Sentosa current market share has fallen to 35% to 40% of total win, down from 50% in 2014.

Wei Kiat Ng

Non-gaming focus Ng was quick to point out though that amidst the market share decline, Genting Singapore has been focusing more on restaurant events, and other attractions “to try to increase premium mass visitation, which will help to sustain its market position.” Genting Singapore registered a 20% jump in profits to $217.19m in the first quarter of 2018, buoyed by bustling VIP rolling volume in the Lunar New Year and high non-gaming revenue. The company said visitations across its attractions exceeded 18,000, with the Universal Studios Singapore and S.E.A. Aquarium particularly drawing in higher visitorship and increased average spend compared to the prioryear period. Ng reckoned that with its large exposure to the VIP market, Genting Singapore is vulnerable to a decline in VIP rolling volumes and win rates. “Hence, we note that Genting Singapore is slowly shifting its focus to lure more mass-market players, which will help to partially offset the volatility of earnings,” he said. A modest growth Genting Singapore will likely see modest growth in gaming revenue of about 3% to 40% over the next two years, according to Ng, with the forecast assuming a steady increase in VIP rolling volumes and a stable flow of visitors. Ng expects the operator’s EBITDA margin to remain healthy in the 38% to 40% range over the next two years, underpinned by a tighter credit policy and other cost-efficiency measures. Looking forward to 2019, Ng held a stable outlook for the Singapore gaming sector, citing a steady flow of visitations of both tourists and

meetings, incentives, conferences, and exhibitions — commonly known as MICE — events in Singapore. Visitor arrivals in Singapore rose to 1.73 million in July, from 1.54 million in June, and the highest monthly reading so far in 2018, Singapore Tourism Board statistics showed. Of these, about 360,000 were from Mainland China, a key market for VIP high rollers, about 50% higher than the 242,000 visitors seen in the previous month. In the seven months to July, visitor arrivals in Singapore increased to 10.93 million, up 7.39% from the prior-year period. Meanwhile, industry observers pointed to a robust line-up of MICE events, including the Industrial Transformation AsiaPacific, later in 2018, that should help sustain the influx of business visitors. No third challenger Fitch Ratings has also acknowledged a low risk that the Singapore government will award additional gaming licenses after the 10-year exclusivity provision ended in early 2017, which could put further pressure on both operators. Ng reckoned the incumbents have little worry about, since a third challenger faces considerable entry barriers. “Despite the recovery in the gaming market, in our view, returns on investment for a new casino in Singapore would not likely be compelling given land availability and competition,” he said. “In the unlikely case of a grant of a third license, we estimate it would take at least three-to-four years before a new casino could be fully completed and opened.”

Genting, Singapore

SINGAPORE BUSINESS REVIEW | december 2018

INDUSTRY INSIGHT 2: accelerators

What went wrong with muru-D?

The death of an accelerator: Why programmes are going bust in Singapore muru-D’s untimely exit raises concerns about corporate reliance of accelerator models.

ccelerator programmes have steadily become a mainstay in Singapore’s thriving startup ecosystem. But just like the firms they nurture, accelerators also struggle to find their niche and ensure their own sustainability as they grapple with the same risk of going bust just like the most promising startups. The sudden closure of the Singapore operations of Telstra-

Startup bootcamp team during Demo Day

SINGAPORE BUSINESS REVIEW | december 2018

Any accelerator trying to sustain itself independently will find it very tough going in this part of the world.

backed accelerator programme muru-D in July 2018 illustrates this point quite well. Backed by Australian telco giant Telstra, the accelerator programme was abruptly shut down mere months after completing its third cohort. Although Telstra did not disclose specific reasons for the shutdown, muru-D Entrepreneur-In-Residence Craig Dixon said in an earlier blog post that the programme’s untimely end was brought about by the “complete reliance on its corporate sponsor.” “I think relying on one sponsor is inherently risky, the epitome of the adage ‘Don’t put all your eggs in one basket.’ A corporate-backed accelerator is unlikely to be core to the C-level strategy and shifting winds from quarter to quarter can mean the end of even the most successful corporate accelerator,” Dixon told Singapore Business Review.

Most of the accelerator programmes in the city state are supported by one corporate sponsor, he added, which may pose a problem as these programmes need to strike the balance between nurturing startups and ensuring that the sponsors are receiving sufficient value for their investment. The role of corporate entities in accelerator programmes have grown in recent years with the share of accelerators in Asia and Oceania planning on generating earnings through corporate partnerships or sponsorships rising from 57% in 2015 to 66% in 2016, according to the Global Accelerator Report 2016. The report added that corporate funding has outpaced noncorporate financing into accelerator programmes after accounting for 52.1% of global capital injections in 2016. Although corporations have proven time and time again that they

Industry Insight 2: accelerators can add significant value to startups, corporate and time-bound priorities may sometimes clash against startups whose disruptive ideas may take some time to gain traction, suggested Hugh Mason of JFDI.Asia. “Firstly, most power and money in a corporation is held by business units who must hit their KPIs next quarter,” said Mason. “So they need off-theshelf, tried-and-tested solutions, not startups that ‘fail fast’ and can only ever show real impact in a few years.” Future-proofing the accelerator The accelerator programme traces its roots to US-based Y Combinator who introduced the cash-for-equity model in 2005 which involves investing seed money in exchange for equity. Over ten years later, the world has seen a proliferation of such programmes to match the number of startups with nearly 600 accelerators in operation around the world that have invested in US$206.74b in startups, according to the Global Accelerator Report 2016. “The growth of accelerator programmes has certainly outpaced the supply of startups in Singapore in recent years with both the public and private sectors funding multiple initiatives,” observed Jupe Tan, managing partner, Asia Pacific at Plug and Play Tech Center. Accelerator programmes focus on providing startup founders with learning opportunities and funding support in addition to giving them an invaluable space to connect with various stakeholders like corporates, government, angel and VC investors, clients and mentors. “Startups at different stages have different challenges, from funding to product development to human capital,” added Tan. “There will always be a role for accelerators to play in terms of helping startups to grow and to identify and plug knowledge gaps.” In fact, a survey by NUS Entrepreneurship Centre notes that nearly half (47.9%) of Singaporebased startups have tapped on support schemes like mentoring, incubation and accelerator programmes for their growth requirements in 2017. “It is critical for Singapore to nurture home-grown accelerators and collaborate with established

international accelerators to enable our local startups to access global resources, networks and markets,” said Michelle Kung, executive director of Business Angel Network of Southeast Asia (BANSEA). Despite their growing importance and patronage in Singapore’s startup ecosystem, accelerators grapple with operational costs of maintaining their programme as they cannot simply wait for exits to fund their operations given the rare and drawn-out nature of exits in generating ROI. An earlier report by Ministry of Trade and Industry (MTI) economists Chia Keat Loong and Reuben Foong confirms this as out of the 460,000 startups formed during 1998 to 2017, only a mere 984 were able to publicly list on the stock exchange a few years after formation or exit through acquisitions. “I believe that in an ideal world a startup accelerator would live off of startup exits. However, since exits from startup investment typically take 3-8+ years (assuming a successful exit) there needs to be a short to medium-term funding strategy,” said Dixon. Such model never quite worked for Mason’s JFDI.Asia whose accelerator programme was widely considered as a pioneer in what was then Asia’s nascent startup ecosystem but eventually shut down in 2016. The company has since remodelled into a corporate venture partner but not before raising $3m and investing in 70 startups. “Like many of our peers outside the USA, we never found a way to recirculate risk capital fast enough to make JFDI a self-sustaining business. In the US, some Techstars accelerators have been able to virtually guarantee that one startup from each of their batches will realise value within 18 months or so after the programme finishes. So the accelerator’s investors get 2-3 times back on their money and everyone is happy to roll the dice again. In Asia, the time to exit is more like 6-8 years and the valuation at exit is perhaps 30% of that it would be in the US. So any accelerator trying to sustain itself independently will find it very tough going in this part of the world,” the firm said in a 2016 blog post.

Craig Dixon

Hugh Mason

Jupe Tan

Michelle Kung

To ensure their sustainability, accelerator programmes across the world have been taking a leaf out of JFDI.Asia’s book and shunning startup exits as their main incomegenerating method. In fact, the percentage of accelerators in Asia & Oceania relying on such model fell from 63% in 2015 to 42% in 2016 in line with a downward trend observed in USA & Canada, Europe, Latin America and Middle East. Alternative business models have therefore emerged to dilute reliance on rare exits with accelerators instead charging for mentorship, subletting spaces, hosting events and working with corporations. Despite the invaluable role corporations must play to oil the gears of accelerator programmes turning away from exits, Dixon suggests that this function could be watered down through the presence of multiple stakeholders in order to avoid corporate overreliance that hastened muru-D’s exit. He brings the accumulated experience and lessons from running muru-D as he sets up accelerator programme, Accelerating Asia with fellow co-founder Amra Naidoo — one that aims to fill the gap left by muru-D and go beyond its shortcomings as it leverages on a partnership independent of one particular corporate partner. “We partner with corporates and other organisations to provide innovation consulting services specific to areas that engage with startups. The advantage to this model is that we can diversify our revenue streams and maintain our independence. If one of our partners pulls out, our program will continue,” he said. Sandra B. Sendingan

The Accelerator Business Model

Source: KPMG

SINGAPORE BUSINESS REVIEW | december 2018

INDUSTRY INSIGHT 3: ENERGY

Households will now be able to buy electricity from their chosen retailer

Singapore revs up renewables push amidst solar and carbon tax uncertainties It has trialled the Open Electricity Market and announced a carbon tax, but operational doubts persist.

hen Singapore held the soft launch of the Open Electricity Market in Jurong, it enabled households and firms to buy electricity from their chosen retailer, and in a way represented the promising direction the country was taking in renewables as the initiative is expected to bolster solar power developers that can now reach a wider base of consumers to purchase their green electricity. OEM is expected to be rolled out to the rest of the country from the Q4 of 2018, but programme implementation has seen its share of challenges. In April, Soh Sai Bor, assistant chief executive of the Singapore Energy Market Authority’s economic regulation division, said the agency has banned door-to-door sales or marketing activities at or near residential premises in order to protect consumers from aggressive marketing tactics. 30

SINGAPORE BUSINESS REVIEW | december 2018

Some retailers have resorted to gimmicks, like free electricity and cash rebates.

“We will not hesitate to act against retailers if they engage in dishonest marketing practices,” he said, in response to a public letter claiming the EMA had adopted a “handsoff approach” towards the OEM as retailers begin to jockey for a slice of the electricity market. Retailers pull marketing gimmicks “Some retailers have resorted to gimmicks, like free electricity and cash rebates. This may not benefit customers in the long run, and serve to confuse and encourage wasteful habits. In addition, the retailer who gets the most business may not be the cheapest or the most eco-friendly; just the one with the most marketing savvy,” the public letter read. The OEM hiccups—when taken together with what analysts have cited as larger uncertainties surrounding the country’s focus on large-scale solar systems despite the lack of

physical space and the long-term impact of the looming carbon tax scheme—serve to illustrate Singapore’s growing pains in its drive to become a renewables leader in Southeast Asia. “With the OEM to be implemented across Singapore by the end of this year, solar power developers will be able to tap the residential consumer market to offer green electricity. After 2020, the pace of installation is expected to be even faster; given the target to reach 1GWp capacity ‘beyond 2020,’” said Gautam Jindal, research associate at Energy Studies Institute at the National University of Singapore. The OEM is one of the key projects meant to propel solar power development in Singapore and enable the country to meet its target of 350MW installed capacity, and it has a lot more ground to cover. “Singapore has two years remaining

industry insight 3: ENERGY to reach its target,” said Jindal. “As of the first quarter of 2018, less than half of the target has been accomplished.” However, Jindal noted that the SolarNova programme has already awarded three tenders for a combined 190MWp PV capacity, and will come out with a fourth tender in 2019. The third tender was awarded in June to Sembcorp Solar Singapore, a subsidiary of Sembcorp Industries, which entails building, owning, operating and maintaining rooftop solar systems across 848 HDB blocks and 27 government sites. The project involves a total capacity of 50MWp and covers blocks in the West Coast and Choa Chu Kang town councils. The Singapore Housing and Development Board, which runs the programme with the Singapore Economic Development Board, said the tender was also the largest so far under the SolarNova programme. Sembcorp Solar Singapore expects the construction of the rooftop solar systems to start in the third quarter of 2018 and aims to complete it by Q2 of 2020. As of the first quarter of 2018, the number of grid-connected solar PV installations in the country stood at 2,155, almost double from 1,138 in the year-ago period, EMA data showed. Of these, 734 or one-third were residential installations, up from 374 in the prior year, and the rest were non-residential. Still, Zhi Xin Chong, associate director at PGCR Research, IHS Markit, reckons Singapore’s ability to deploy large-scale solar systems will be constrained by the lack of space. “I think the concept of Singapore moving largely to renewables is wishful thinking. But Singapore can contribute to other parts of the renewable ecosystem.” Chong said Singapore is the financial hub for Asia and renewable energy developments in the region requiring capital raising, legal structuring, urban planning, efficient management of utility infrastructure, all of which are expertise that can be found in Singapore. “Whilst we are unable to physically develop renewables in a large way in Singapore, we can assist in the developments in the region,” he noted.

In July, Singapore’s Minister for the Environment and Water Resources Masagos Zulkifli announced that the country would launch a Climate Action Package, which aims to develop capacity in the 10-member Association of Southeast Asian Nations. The capacity-building programme will cover disaster risk reduction, climate science, climate finance, flood management, and long-term mitigation strategies. Sufficient emissions target? Singapore’s level of commitment to reduce emissions has also come under scrutiny, even as some analysts have argued that it remains appropriate given the country’s geographical constraints and integrated industries. Earlier in April, The Economist Intelligence Unit said that Singapore is “well placed” to reach its commitment under the Paris Accord to lower its greenhouse gas emissions by 36% per unit of GDP by 2030 compared with the 2005 level as well as stabilise them in absolute terms by around that year. The assessment cited long-term plans to promote efficient energy use and the passage of a Carbon Pricing Bill, the latter likely to “go a long way” towards creating industrial incentives in clean energy. On the other hand, the Climate Action Tracker—a consortium of research organisations tracking climate change action—has criticised Singapore’s commitment to lower emissions as “highly insufficient” given the country’s high economic capacity. “Whilst it has considerably expanded its renewable energy capacity, Singapore’s main focus for climate mitigation is now on energy efficiency programmes. However, this will not compensate for the increasing energy demand from the industry and buildings sectors, which will result in rising emissions,” said CAT, expecting its reduction target to lead to emissions in 2030 rising 123% above 1994 levels. In a press query, the National Climate Change Secretariat (NCCS) of the Prime Minister’s Office (PMO) noted that CAT’s methodology on assessing the sufficiency of a

Gautam Jindal

Zhi Xin Chong

country’s climate targets is largely based on various indicators relating to historical emissions, capabilities and development status. “For Singapore, in addition to these factors, our climate targets need to take into account our challenges as a small city state with limited access to alternative energy. We are a low-lying city-state of around 720 km² with no natural resources. We have limited alternative energy options such as geothermal, wind or hydropower. Where feasible, we have taken various steps to reduce emissions from energy production,” it responded. NCCS noted that Singapore now generates over 95% of electricity from natural gas, up from 26% in 2001. “These early policy decisions to switch to natural gas, the cleanest form of fossil fuel, have led to a 4 MT abatement in greenhouse gas emissions. We also price energy at market rates and do not have fossil fuel subsidies, so as to allow market prices to drive energy efficiency,” it added. Jindal concurred and said that Singapore’s targets for emissions and renewables are “sufficient given its national circumstances,” noting the country’s shift to natural gas, the cleanest possible fossil fuel, and waste incineration. “Singapore has limited technical potential for most renewable energy sources and solar PV is constrained by land scarcity and intermittency concerns,” he said, adding that the country’s main industries, such as petrochemicals and pharmaceuticals, are highly integrated. “It’s difficult to introduce energy efficiency measures that may alter tried and tested processes.” Danielle Mae V. Isaac

Market share for electricity generation

Source: OCBC Investment Research

SINGAPORE BUSINESS REVIEW | december 2018

economy watch

Manufacturing slowed down to 4.5% YoY from 10.6% in Q2.

Will the services sector be the economy’s saving grace?

The US-China row will continue to hit Singapore’s manufacturing, but analysts are banking on the steady expansion of the services sector at 2.9%.

he growth of Singapore’s gross domestic product (GDP) clocked in at 2.6% YoY in Q3, a muted one compared to the 4.1% expansion back in Q2. The economic indicator was still mainly backed by the manufacturing sector despite its growth slowdown to 4.5% YoY from 10.6% in Q2. “The lower YoY growth in Q3 2018 was as expected, as early indicators pointed towards a more modest quarter,” RHB commented. “Purchasing Managers’ Index (PMI) has come off its highs, indicating a more challenging external environment.” Singapore’s (PMI) recorded a slip of 0.2 ppt from August to seal a lower expansion of 52.4 in September amidst lower new orders and new exports, slower factory activity and lower inventory level. The manufacturing sector was boosted mainly by output expansions in the electronics, biomedical manufacturing and transport engineering clusters but its semiconductor segment is notably on a downfall as its growth decelerated to 8.2% YoY in August from a 57.5% YoY expansion rate in August 2017. 32

SINGAPORE BUSINESS REVIEW | december 2018

Core inflation accelerated to a better-thanexpected 1.9% year over year from 1.7%.

Analysts believe that the US-China trade tensions will continue to take its toll on the export-dependent industry.“Singapore’s manufacturers, particularly those in the semiconductors segment, are already experiencing slowing growth due to the maturing of the global electronics cycle, and business sentiment is likely to be further dampened by rising trade tensions,” Fitch Solutions said. Amidst their predictions of challenging quarters ahead for the manufacturing sector, analysts were positive that the services sector, could, on the other hand, dampen the toils experienced by the export-exposed industry due to the escalating trade

tensions. Expansion in the services sector kept its 2.9% growth pace with that of Q2 mainly backed by the finance & insurance, business services and wholesale & retail trade sectors. Meanwhile, retail sales dipped 0.4% in August to $3.8b mainly backed by the 10.4% sales increase recorded by petrol service sections On domestic-oriented sectors, RHB noted that a positive contribution from the firm labour market environment should help improve growth in consumer discretionary spending, as it will likely be dampened by weaker external outlook that affects trade-related services whilst modest growth in retail sales points to a softening yet resilient domestic demand. Faster wage growth Apart from the improvement in the labour market, the OCBC Treasury Outlook noted that an expected faster wage growth pace from 2018 to 2019 could further support a strengthened domestic demand. “Note that policymakers tip the Singapore economy to remain on a steady expansion course for the quarters ahead with output kept slight above potential, and a small positive output gap is expected to persist into 2019 which will impart modest inflationary pressures,” they said. However, Alicia Garcia-Herrero, chief economist for Asia Pacific at Natixis said the outlook for Singapore is “relatively poor” on expectations that trade tensions will not be resolved soon. She foresees the country’s economy growing no more than 2% or “probably less” in 2019, noting that the trade war affects all export sectors, except for refinery that will be buoyed by a better outlook for energy prices.

Mean probability distribution of 2018 inflation forecasts

Source: MAS

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cover story

Coworking space operator JustCo took 57,000 sq ft of retail space at Marina Square

Shared economy, en bloc fever fire up Singapore’s property sector in 2018 Dubbed as the ‘catalytic saviour’ of the property market in 2018, there are about 110-120 flexible workspace operating across Singapore, occupying 944,000 square feet of net lettable area.

he sharing economy has well and truly come of age as a mainstream working option in Singapore and is one of the few bright spots in the commercial market. Co-working spaces now account for for 4.5% of Grade-A office space in Singapore, which is around 54 soccer pitches in size. But its is the dizzying growth in coworking spaces that has analysts excited, with the sector tripling since 2015. Colliers International senior analyst JM Tan noted that 2017 was a whirlwind year for the flexible workspace sector, which grew 44% YOY in terms of total real estate Average size of flexible workspace lettings

Source: Colliers International Singapore Research

SINGAPORE BUSINESS REVIEW | december 2018

JM Tan

footprint across Singapore, marking the fastest annual growth in the sector’s history. Once just the confines of small startups looking for a cheap way to look legit and reduce office space, coworking has now been adopted by the largest of corporations. Perhaps the most significant indicator of Singapore’s coworking coming of age was the entry of American giant We-Work, which acquired local operator Spacemob in 2017 and proceeded to quickly shut down the office for a major renovation before reopening with major tenants including HP and e-commerce platform Shopee which took up the entire Ascent Tower. Apart from the obvious technology startup sector its the financial services big guns who are moving fastest into co working, with both HSBC and Standard Chartered. HSBC and Standard Chartered are both taken up large desk counts in flexible workspaces across Asia Pacific, noted Tan. “The insurance industry, where a large proportion of employees may be in the sales agency function an inherently mobile occupation well suited for using flexible workspaces as drop down spaces across the city.” Fintech co-working spaces are also on the rise, with Edmund Tie & Co citing The Open Vault at OCBC a 2,400 sq ft fintech co-working space in New Bridge Road

cover story that focuses on wealth management, credit and financing, insurance, cyber security and artificial intelligence (AI). Contrary to popular belief, more than 50% of co-working memberships are subscribed by MNCs. In Singapore, to prepare for their new co-working space in Paya Lebar Quarter, Lendlease has moved about 100 staff into The Work Project at OUE Downtown. “Cost savings from using a co-working space is the most apparent in the CBD, where savings can amount to approximately 50% as compared to a traditional office space,” ET&Co added. In an interesting twist, online commerce is actually helping fuel the growth of coworking spaces but not just because they are tenants. Shopping malls left empty by exiting shops are now turning their leftover space into coworking space. Spaces, a subsidiary of IWG, took up 35,000 sq ft at One Raffles Place Shopping Mall in March 2018 and JustCo took 57,000 sq ft of retail space at Marina Square in late 2017. “A unique aspect of this space will be its ability to host and launch retail and fashion related events within a mall setting. It also aims to support a business community made up of different industries, which will include the creative industry and fintech companies,” the firm said. This conversion of retail to office space shouldnt come as a surpsise with figures from the URA showing Singapore’s retail vacancy currently stands at 7.3% as of Q2 2018, with approximately 4.8 million sq ft (448,000 sq m) of vacant floor area in shopping malls and retail podiums island wide.

Distribution of flexible workspace stock

Source: Colliers International Singapore Research

Spaces, a subsidiary of IWG, took up 35,000 sq ft at One Raffles Place Shopping Mall in March 2018 and JustCo too57,000 sq ft of retail space at Marina Square in late 2017.

Orchard Road trumps CBD Another change to the coworking market is location. It used to be that offices were all in the CBD and shopping was on Orchard Road, but some of the biggest coworking takeups have been along the latter in 2018. These include 15,000 sq ft (1,400 sq m) by The Great Room at Ngee Ann City Tower B, JustCo leasing some 16,000 sq ft (1,500 sq m) at Macdonald House, and Spaces’ new location spanning 35,000 sq ft (3,300 sq m) at TripleOne Somerset. New to market flexible workspace player, CoCRE8, leased about 4,000 sq ft (370 sq m) of office space at the International Building. Orchard Road is so hit it now accounts for 8 % of all co-work space. “All the above deals marked each respective operator’s CBD flexible workspace distribution (by Square Footage)

Source: Colliers International Singapore Research

first foray into the Orchard Road micro-market,” Colliers International noted.“Looking ahead, we anticipate the growth rate in Orchard Road and Beach Road to be slightly higher than the rest of the CBD, as operators ramp up their presence there from a relatively lower base,” they added. But in a sign the co-working market may be slowing down, the number of grade A office space being used is slowing whilst coworking is shifting to cheaper premises. In 2016 63% of all deals were in Grade-A offices but this has fallen to 33% of all deals in 2018, reflecting the tight availability of suitable floor plates in the CBD Premium and Grade A market at present. This could indicate that peak demand for premium coworking space has been reached or that the type of tenants wanting to co-work are more price sensitive than the large corporations who still are prepared to pay for premium offices. Another possible reason is that many coworking operators insist on exclusivity clauses for their buildings, so as each Grade-A office space gets a coworking space operators others cannot enter. Larger players dominate Whilst the growth of the market is great for would be tenants who are now enjoying deals such , smaller and legacy co-working space operators are facing significant challenges. The largest 7 players now control 63% of the market space available, the equivalent of 35 soccer fields. This leaves the remaining 110 operators fighting for tenants for the equivalent of 18 fields. And it’s not just the raw space and funky walls that are attracting tenants these days. The larger tenants are co-locating food concepts, wellness studios, function rooms, and other amenities in with the space to maximise revenues and attract tenants. “Many landlords are beginning to recognise the importance of innovation and creativity in workspaces and have begun to introduce co-working spaces in their developments,” ET&Co said, citing Collective Works at Capital Tower which is 50% owned by CapitaLand. It is around 22,000 sqft with a mix of private and open spaces designed to encourage collaboration. In addition, there is an integrated media studio with recording facilities. Most at risk are the older style centres with an SINGAPORE BUSINESS REVIEW | december 2018

cover story En bloc fever

Top flexible workspace operators in Singapore (by Size)

En bloc sales flourish in first half

Source: Colliers International Singapore Research

average of 2000 sq ft of space catering to the typical small start-up. They are being challenged by new larger sized spaces offering 50 plus desks spaces and geared to larger corporates who often want their own separate sectio or indeed floor in a centre. In just three years the average size of a workspace lease has doubled from 11,800 sq ft to 26,600 sq ft. This has led to many smaller centres underperforming with utilisation rates as low as 25 % whilst a successful centre should have 90 % of desks occupied. Price competition is also fierce, and its not unheard of for 6 months rent free to be given with a 24 month sign up. AMidst all the foreign competition, one local player, JustCo, is standing out and is the second largest overall with 250,000 sq ft of current and planned space. It will work with Frasers Property Limited and GIC Private to expand into Thailand, China, Japan and Australia. JustCo is also embarking on curating communities for corporates. For example, JustCo will manage the 10000 sq ft Verizon Innovation Community in the Ocean Financial Centre, which is a collaboration with Verizon Communications and will focus on cybersecurity, fintech and digital media sectors. Another United States conglomerate will also work with JustCo to curate and manage two foors of its headquarters in Bangkok, Thailand. The rise of co-working space also presents new challenges to landlords who either view them at worst as a competitor or at best as yet another tenant. But increasingly landlords are realising that to extract full value for their building and the tenant mix inside the coworking space, they need to partner and take on some of the risk of running these centres. Collective Works at Capital Tower is 50 per cent owned by CapitaLand with around 22,000 sq ft with a mix of private and open spaces designed and an integrated media studio with recording facilities. Another example cited by Edmund Tie & Co is City Developments Limited and Chinese coworking operator Distrii who have joined forces to open a 62,000 sq ft tech- driven co-working facility in Raffles Place. This is Distrii’s first overseas location outside of China. Besides office spaces, there is also a multi-purpose hall and a café run by German burger chain Hans imi Glück. The space is equipped with a customised mobile application for members to unlock meeting or conference rooms and share files. 36

SINGAPORE BUSINESS REVIEW | december 2018

Ong Teck Hui

Christine Li

Christine Sun

Collective sales propelled the Singapore property market in the first six months of 2018, but will likely lose some steam due to the newest cooling measures. “The real estate sector in Singapore was uplifted in the first half of the year, with market sentiments running high with the substantial increase in collective sales” from three in 2016 to 32 in 2017 and 40 in year-to-date in 2018, said Ong Choon Fah, CEO at Edmund Tie & Co. “Underlying demand for homes will continue to be relatively healthy, emanating from homeowners of developments that have been sold collectively, although some of this demand may shift to the Housing Development Board market,” she added. New cooling measures will also sideline some of the demand “as potential buyers adopt a wait-and-see attitude whilst some may take to renting properties in the interim.” Many collective sales have gone through, but at least 31 more developments are undergoing the collective sale process. Taking the ABSD into consideration, developers will likely focus on strategic sites which are not too large. Whilst the measures will cool the market, especially considering that many developers have already filled their land banks over the past two years, those that adopt longer-term perspectives may find buying opportunities, Ong Choon Fah said. Christine Sun, head of research at Orange Tee & Tie said that the en bloc fever that began in late 2016 has seen previous record prices being overtaken. The five biggest en bloc sales in 2018, which all closed before the latest round of cooling measures took effect, involved the Pacific Mansion for $980m, Tulip Garden for about $907m, and Park West for about $841m. Whilst the Pacific Mansions’ price tag fell below the historical record of $1.34b set by Farrer Court, the former is so far the largest collective sale for a freehold site. “The hefty price paid by developers for Pacific Mansion is a strong indication that they were confident of the market recovery before the cooling measures,” said Sun. Christine Li, senior director for research at Cushman & Wakefield reckoned the residential market boomed in the first half of 2018, as the en bloc market surpassed $9.9b in transaction value during that six-month period, up from $8.2b in 2017. Also, residential prices have climbed 7.4% and is currently only 3.6% below the previous peak in 2013. Meanwhile, JLL’s Ong Teck Hui noted that in 2018, the collective sales of Park House set a record land rate of $2,910 per square foot per plot ratio.

Biggest en bloc transactions in 2018 Ong Choon Fah

Pacific Mansion

$980m

Tulip Garden

$907m

Park West

$841m

Pearl Bank Apartments

$728m

Goodluck Garden

$610m

Royalville

$477.94m

Makeway View

$168m

Source: Singapore Business Review

Co-published corporate profile

Geo Energy set for blockbuster year after clocking in a stellar 41% revenue rise in Q2 Projections for annual production starting January 2019 is expected to reach 13-15 million tonnes.

TBR TBRMine Mine

eo Energy Resources Limited (Geo Energy), one of the largest and most dynamic coal producers in Indonesia, is gearing up for a better performance in the second half of 2018, which will likely top the company’s 41% rise in revenue to $83.2m recorded in the second quarter of this year. This positive outlook is not unwarranted with the company expecting to benefit from the commencement of operations of one of its four mining concessions—PT Tanah Bumbu Resources (TBR)—in June, a healthier projection for global coal prices, and overall production efficiency for Geo Energy’s other mining concessions and internal operations. Majority of Geo Energy’s first half profit has been boosted by robust coal production from PT Sungai Danau Jaya (SDJ), which delivered almost 4 million tonnes of coal, a 6.6% increase from the first half of 2017, and generated an underlying profit of about $28.2m with an average cash profit of $13 per tonne. For Geo Energy’s chief executive officer Tung Kum Hon, the company’s performance could have been more remarkable in the first half of 2018 if the

weather conditions in the mining areas were not challenging. “Our group is encouraged by the continued growth in its business and profitability in the 1H2018, which was contributed mainly by SDJ, thus far. It highlighted the strength of Geo’s business strategy and its ongoing ability to adapt to changing market conditions,” he said. In August 2018, Geo Energy has completed its first shipment of above 50,000 tonnes of TBR’s coal to PT. Sulawesi Mining Investment, part of the Chinese state-owned Enterprise group, Tsingshan Holding Group (Tsingshan); valued at more than $2m. This first shipment represents the start of a strong partnership of Geo Energy towards the fulfilment of Indonesia Domestic Market Obligation (DMO) requirements. DMO is a guideline set by the Indonesian government whereby 25% of planned production is to be set aside for domestic market consumption for all coal producers based in Indonesia to meet its growing energy needs. “We believe the ramping up of TBR’s production in the coming months will be a key growth driver for the group in the next 18 months,” Tung said, noting that for the remaining half of this year, total coal production from TBR is expected to reach 2-3 million tonnes, whilst projections for annual production starting next January is expected to reach 7-8 million tonnes. This is on top of ongoing efforts by Geo Energy to finalise the Life of Mine coal offtake for TBR valued at about $1.2b. Geo Energy has set its targeted total production for SDJ and TBR to be 13-15 million tonnes in 2019 and beyond. Bright prospects This positive outlook is also posting brighter prospects for Geo Energy’s shareholders through its new dividend policy as well as its stature in the coal industry as one of the most valued, transparent, and socially responsible company out there. Tung noted that Geo Energy’s decision to adopt a new dividend policy, which

declares dividends of at least 30% of the group’s profit attributable to the owners of the company shareholders subject to debt covenants and capital requirements for growth and investments, is part of the company’s efforts to deliver and return value to investors. This is in addition to the declaration of an interim dividend of $0.01 per share as of 30 June 2018. “We are committed to deliver dividends that increase over time in tandem with our growth in earnings,” the company’s CEO explained, further noting the strong price outlook for Indonesian coal for the rest of the year that would benefit Geo Energy’s performance. Geo Energy has also benefitted from a strong corporate governance and social responsibility culture in its operations, ranking 35th in the Corporate Governance and Transparency Index 2018 amongst the major blue chips and top companies in Singapore. Tung noted that this recognition is in line with the company’s strategic objective in creating sustainable value in its operations through good corporate governance measures. “We are committed to running our business with corporate social responsibility concepts firmly embedded with our daily operations to protect our people, the environment, and the local communities in which we operate,” he said. “We review and analyse all our business risks and opportunities, looking beyond economic, strategic, and operational factors to include social and environmental considerations.” “The future of coal lies in more efficient coal-fired power plants that emit lower carbons and recycling rather than renewable energy like hydro and solar as these alternatives are still as cost effective as cost in generation power,” Tung concluded. “With emerging economies like China and Indonesia and in ASEAN, coal remains the major source of energy to their economic development. We continue to be optimised and positive on the coal market moving forward.”

“TBR’s production in the coming months will be a key growth driver for the group in the next 18 months.” SINGAPORE BUSINESS REVIEW | december 2018

REAL ESTATE INSIGHT: Industrial Property

Picture of Mega@Woddlands

Factories get a facelift amidst Singapore’s industrial property sector transformation With a glut of industrial space in the pipeline, developers are rolling out tempting amenities and incorporating the latest tech in order to lure long-term tenants.

one are the days when industrial developments were little more than drab gray boxes ruled by manufacturing titans. When MEGA@ Woodlands opened its doors in the first half of the year, the facility illustrated the upheavals in Singapore’s rapidly changing industrial property landscape. The new facility in Woodlands features a gym with shower facilities, as well as a dedicated business centre with several meeting and conference rooms of different capacities. The gym Hot industrial locations to look out for:

One North Changi Lavender/ Kallang Source: JLL, Savills, ET&Co, Singapore Business Review

SINGAPORE BUSINESS REVIEW | december 2018

Science Park 1 Pasir Panjang Tuas

will be comprehensively equipped with cardiovascular equipment and free weights; it also offers a complimentary shower. The facility also boasts a jogging trail and a park connector, together with landscaped pavilions. Out with the old, in with the new Across Singapore, industrial property developers are realising that integrating the latest technology and amenities into their properties are crucial to retain and attract tenants. “Industrial spaces that are older and further away from transportation nodes tend to face greater difficulty in retaining tenants as they may be physically obsolete. Additionally, industrial buildings that do not support the national move towards ‘Industry 4.0; may also be faced with challenges,” says Ong Choon Fah, CEO of Edmund Tie & Company (ET&Co). “The industrial environment has changed over time and will continue to change in the future. As a result, real estate will also have to incorporate such changes to suit the needs of industrialists. In particular, the growth of urban logistics will be a sector that has high growth potential as e-commerce grows exponentially,” Ong adds. Developers are rejuvenating their properties in anticipation of the demand from newer industries. For

REAL ESTATE INSIGHT: Industrial Property instance, AA REIT recently revealed a $13m makeover for NorthTech, its four-storey light industrial building in Woodlands. The project is part of the REIT’s numerous asset enhancement initiatives launched over the past few years, which includes the redevelopment of 30 Tuas West Road and 20 Gul Way. “As firms increasingly adopt Industry 4.0 initiatives such as artificial intelligence, the internet of things (IoT), automation and robotics, we expect demand for higher specification industrial facilities that can accommodate these requirements such as higher power and floor loading capacity to grow. The government’s move to push Singapore up the value-add and value-creation chain e.g. R&D is also expected to contribute to the demand for such higher specification facilities, such as business parks,” explains Adrian Toh, Director, Industrial Sales and Leasing, JLL Singapore. Brenda Ong, Executive Director of Industrial & Logistics Services at CBRE, notes that highly soughtafter industrial properties include ramp-up logistics developments, factories with high power and cooling capacities and integrated industrial developments by JTC. “With the ongoing industry transformation in Singapore, we see more tenants and end users moving towards smart logistics facilities which can cater to their need for efficient inventory management and higher operational efficiency. We also see more interest for sites with longer tenures as it justifies the high initial fixed capital outlay,” she says. Toh warns that changes to Singapore’s manufacturing landscape had rendered some of the older facilities with outdated building specifications functionally obsolete. “At the same time, JTC’s stringent subletting and lease assignment rules, as well as anchor tenant requirements has made it more challenging for third-party facility providers such as developers and REITs,” he says. A millennial twist Apart from high-tech spaces, industrial tenants are also on the lookout for amenities which will help them boost operations as well as attract and retain talent. “Newer industrial spaces that cater to the changing needs of industrialists as they transform and improve their manufacturing processes are also highly demanded. Industrial spaces now include many additional facilities, Capital Values Index

Source: CBRE Research, Q2 2018

Ong Choon Fah

Alan Cheong

such as a gym or childcare facilities to attract talent and cater to the changing business environment of industrialists,” says ET&Co’s Ong. She adds that more information technology and media companies may choose to locate in newer business park developments which offer a wide variety of facilities such as day care and fitness centres. Moreover, a government survey in 2017 showed that there were 470 child care centres located in workplaces, such as commercial premises, government buildings and industrial estates. Amongst is Sherwood Childcare, which caters to the busy parents working at JTC’s bustling high-tech industry in Ayer Rajah. First built in the 1980s, Sherwood Childcare now serves the needs of parents from surrounding neighbourhoods such as Clementi, Dover, and Bouna Vista, just to name a few. The trend of creating livable industrial spaces is also reflected in JTC’s ongoing projects, such as the Jurong Innovation District and the Punggol Digital District. The Jurong Innovation District is a next-generation development that will host smart factories, provide new platforms for innovation, and facilitate cross-industry collaboration. The district will also be a living lab where the latest ideas and technologies will be test-bedded and deployed; catalysing new, cutting edge industry clusters and providing a platform for creation and discovery. Meanwhile, the Punggol Digital District will be a vibrant mixed-use business district which is integrated with the new Singapore Institute of Technology campus. Housing key growth industries such as digital and cyber security, PDD aims to foster strong collaborations between industry and academia, as well as facilitate testbedding and prototyping of new innovations. The district will feature green links to the waterfront, as well as public spaces for the community to gather and enjoy, providing an attractive work-live-learn-play environment. Another trend which is fast becoming the norm is consolidation and rationalisation. “The ‘servicisation’ of the manufacturing industry is increasing the need for more flexible industrial space. In the longer term, the blurring of lines between manufacturing and services would lead to the demand for more flexible use of industrial space,” explains JLL’s Toh. “Recognising this, JTC is test-bedding a multiSINGAPORE BUSINESS REVIEW | december 2018

REAL ESTATE INSIGHT: Industrial Property tenanted building on a site zoned Business 1-White in Woodlands to support manufacturing companies in co-locating their service-driven activities such as R&D and after-sales support alongside their manufacturing operations. It is understood that a wider range of uses will be allowed,” he adds. Under this pilot scheme, the JTC will allow a wider range of uses will be within the property, including industrial-related uses that are closely linked to or provide critical support for the industrial sector. For example, engineering and industrial design activities that are currently not allowed in an industrial development would be allowed in the Woodlands pilot development, given that these activities play a key role in the manufacturing value chain. However, clear-cut commercial and other non-industrial activities will continue to be disallowed within the Business 1 component. “We recognise that business structures and needs are evolving. More manufacturing companies are shifting their business models from production-led to servicedriven activities, or agglomerating their functions across value chains – some are growing their R&D, prototyping, sales/after-sales and other ‘services’-type activities, and do so alongside their core manufacturing activities so that all functions across their product development cycle are well-integrated,” the JTC said in a statement. Another example is the upcoming Trendspace, which will be Singapore’s first high-rise multitenant development for furniture and furniture-

Office supply-demand dynamics

Source: CBRE Research, Q2 2018

More manufacturing companies are shifting their business models from production-led to servicedriven activities, or agglomerating their functions across value chains

related companies. “The clustering of furniture-related stakeholders at Sungei Kadut will allow furniture companies to benefit from resource-sharing arrangements and potential collaborations. As part of the Singapore Furniture Industries Council’s (SFIC) Experience Centre in the building, the development will also feature export showrooms, a training institute, co-working spaces and an atrium space for industry-related events and exhibitions,” says ET&Co’s Ong. Trendspace is made up of large modular factory units. It is located in Sungei Kadut, a region that is well-known as an industrial estate for furniture-related companies. Developed by the JTC, Trendspace will allow companies to share resources, reduce wastage and add value towards each other’s business. Meanwhile, Hong Kong-listed WuXi Biologics, a leading global open-access biologics technology platform company offering end-to-end solutions for biologics discovery,

ON THE MOVE

Tech companies drive demand for industrial space as they build data centres

acebook unveiled its plans to construct a massive data centre in Tanjong Kling this year, the billion-dollar project Standing 11 stories high with a total space of 1.8 million square feet, the facility will be fully powered by renewable energy and will be the first Facebook property to use the a liquid cooling system to minimise water usage and power consumption. Apart from Facebook, one of the biggest movers and shakers in the industrial property scene include Google, which revealed that it is building a third data centre in Jurong West. Estimated to cost $350m, this project will push Google’s total investment in data centres to US$850m following its other facilities launched in 2011 and 2015. Johnson & Johnson launched its new regional headquarters in the Science Park. The complex will house three new key facilities — a Leadership Lab, a Design Lab and a Johnson & Johnson Human Performance Institute. On the other hand, the Design Lab will be Johnson & Johnson’s first outside New York City, and will focus primarily on creating products and solutions that will spur growth of a regional pipeline of products. Meanwhile, home appliance manufacturer Dyson has launched a $587m research and development centre also in Science Park. In addition to setting up the R&D centre, Dyson is also establishing its advanced manufacturing team here to implement industrial “internet of things” technologies both in its production

SINGAPORE BUSINESS REVIEW | december 2018

facilities in Singapore and the region. Dyson’s new centre as well as its advanced manufacturing team will add another 190 jobs, including 160 positions for research scientists and engineers over the next five years. OCBC Bank’s new S$240m regional data centre is designed to support the operational requirements of OCBC Group entities for the next 30 years. It is also cloud-enabled to support the bank in its move towards a hybrid and private cloud infrastructure.

Facebook’s data centre

Google’s Data Centre

Dyson’s new R&D centre

OCBC’s regional data centre

REAL ESTATE INSIGHT: Industrial Property development and manufacturing, will invest $80m and hire approximately 150 employees to establish a state-ofthe-art biologics manufacturing facility in Singapore. The new manufacturing facility, supported by the Singapore Economic Development Board, is the company’s first overseas site in Asia and second site outside of China. Win some, lose some The industrial property market will continue to grapple with increased supply and soft investor sentiment. However, there are some bright spots which will lead the sector in coming months. Apart from high-specification properties, industrial buildings approved for food handling are also among the sector’s biggest winners, says Alan Cheong, senior director at Savills Singapore. “These spaces are located within the food zones. The push by the authorities to up productivity levels in the Food and Beverage sector (F&B) is shifting food preparation activities from on-site to offsite Central Kitchens. These Central Kitchens are now in hot demand by both large F&B operators for in-house food preparation and set-ups that purvey either a general or bespoke product to a myriad of F&B customers,” he says. In fact, data from Savills show that rents for industrial properties with such approved use are firm and, depending on location, can range from $2.50 per sq ft to $3.50 per sq ft per month, much higher than the average $1.14 per sq ft per month recorded for general industrial space. “The market is not all doom and gloom with a narrow spectrum of bullishness found in the food preparation sector,” Cheong noted. “Sought-after industrial properties include ramp-up logistics developments, factories with high power and cooling capacities and integrated industrial developments by JTC. Integrated industrial developments encourage companies to co-locate, which will lower operating costs and boost productivity,” CBRE’s Ong says.“We have also observed a growing interest of e-commerce players for integrated logistics facilities that will increase efficiency, reduce costs and enhance flexibility. Such facilities could offer storage solutions, automated sorting and last-mile services such as self-collection and delivery – all under one roof,” she adds. Total transaction value

Source: CBRE Research, Q2 2018

Adrian Toh

THE VIEW

Will the industrial property market bottom out by the end of 2018? Brenda Ong

Derek Tan

Adrian Toh, Director, Industrial Sales and Leasing, JLL We are optimistic that the industrial property market will likely bottom within the next 12 months, barring any unforeseen external shocks. Moreover, the tapering pipeline supply will allow demand to play catch up. Based on JTC’s data, about 1.2 to 1.3 million sqm of estimated net floor area is expected to be ready in 2018 (assuming 80% to 90% efficiency for the 2H18 supply pipeline), significantly lower than 2017’s net new supply of 1.9 million sqm. In 2019, pipeline supply will fall further to around 0.9 million sqm GFA or about 0.7 to 0.8 million sqm of estimated net floor area (assuming 80% to 90% efficiency). At the same time, the government has taken a measured and calibrated approach in its latest 2H 2018 Industrial Government Land Sales Programme and continue to adopt a demand-led mechanism by placing sites with longer 30-year leasehold tenure meant for developers on the reserve list. In light of the above, we expect vacancy levels to ease going forward. This would lend support to rental uptick within the next 12 months. Brenda Ong, Executive Director of Industrial & Logistics Services, CBRE With the latest round of residential property curbs which came into effect, we expect more investor interest in industrial assets, especially those located on private industrial land. There has also been growing interest in prime sites, attested by the high number of bidders for the Braddell Road site triggered from the Reserve List of the H1 2018 Industrial Government Land Sales (IGLS) program. Whilst the worst may be over in the industrial property leasing market, occupiers remain cautious. The market continues to absorb the spike in supply from 2017. However, the moderating supply of new industrial space is expected to arrest the rate of rental decline. This is expected to stabilize rents over the course of 2018 through to 2019. Derek Tan, Vice President, Group Equity, DBS We believe that the outlook for Singapore’s industrial sector will remain stable in the immediate term and will bottom out from 2018 onwards on the back of abating supply risk. Rental rates have reversed from the downtrend in 2017 to a stable rental status, where rates are expected to increase by up to 3%. However, the recovery is uneven as firms still look to consolidate or downsize their space requirements in order to remain cost efficient. Vacancy rates are expected to follow a downtrend in the future years from the 11% in 2017. SINGAPORE BUSINESS REVIEW | december 2018

EXCLUSIVE: SPACE WATCH

Lounge

Play Area

ucommune Suntec has 300 hot desks

Check out ucommune’s new hub in Singapore

A sneak peak at this new swanky co-working space

ucommune is a sprawling 13,800 sq. ft. facility located at 9 Temasek Boulevard in Suntec City Commercial Tower II.

hen coworking space operator ucommune announced its second space in Singapore, it was fully occupied a month before it officially opened. Entering the space, it is quick to see what had impressed the current occupants that include communication firm IDEA communication and oil & gas consultancy Spemocean: an open landscape, comfortable lounges, and an array of hi-tech features like face recognition and Bluetooth-enabled entry that help deliver personalised service and heightened security. ucommune founder and chairman, Mao Daqing, said machine learning can quickly memorise the behavioral pattern of people, and they have seen its positive impact in facilitating the operation and reducing time spent on administration of the Suntec space, which comprises 300 workstations and a bevy of meeting rooms. “Employees no longer need to clock in or clock out – that’ll be stored in the computer,” he said. “Ultimately, it’ll become a connected space accessible at the fingertip.” Pushing the boundaries on 42

SINGAPORE BUSINESS REVIEW | december 2018

it was fully occupied a month before it officially opened.

what is technologically possible in a coworking space is a key pillar in ucommune’s proposition in an the increasingly crowded sector in Singapore. Mao said the Suntec space is patterned after its coworking space template that incorporates cuttingedge Internet of Things technologies and a proprietary platform designed expressly for “growing SMEs that value operational cost efficiency.” Mao said when he first started ucommune three years ago in China, sharing and collaboration were central to its concept, with technology powering the people and businesses it services. He envisioned each ucommune space as “a collectivelybuilt ecosystem managed through Internet thinking and smart digital platform, resulting in an engaging community that weaves a tight collaborative network” with their industry partners. Aside from basic services, ucommune also offers provides indepth services through its vertically integrated platform U Bazaar. At a rate of RMB 299 per month, it provides access to community activities, amenities and bespoke

services. Mao said the strength of U Bazaar stems from its integration of over 800 service providers on the platform, ranging from IT, legal, HR, accounting to business consultancy, healthcare and media developments. “Our proprietary app provides seamless support that can help members navigate through our service network and quickly locate their business partner – eliminating a lot of the time and operation cost,” he said. Growing this ecosystem is vital to ucommune as it looks to further expand in Southeast Asia, and it is eyeing more partnerships with service partners. “We buy stakes in good companies, but we don’t seek ownership. We want to be partners with them and connect their services to the companies in our spaces,” he said. “As we have more investments of this kind, we will have more services and players on the ucommune platform and eventually, we will have an ecosystem, within which companies can find themselves surrounded by services and partners they need.” The company earlier completed its acquisition of Fountown in October, which represents the fifth such buyout this year after previously acquiring Wedo, Workingdom, Woo Sapce and New Space. Through this growing ecosystem, ucommune has also been able to launch U Bespoke, an offshoot of the coworking provider’s internal design capabilities. “Our cluster of interior and IT designers are actively engaging with corporate members to cater to unique requests such as Fengshui, automated operation and integration of Internet of Things devices,” Mao said. “U Bespoke is our answer to the operating flexibility that is much missed in a fragmented market.” The first unicorn coworking company in China valued at US$1.8b, ucommune covers over 200 locations in over 37 cities around the world as it doubles down to achieve its corporate vision of providing leading workspace solutions. “After all, that’s what we are- an inclusive and open platform where dreamers can collaborate, innovate and make great ideas happen,” added Mao.

AWARDS

FOR MANUFACTURING

EXCELLENCE

20 NOVEMBER 2018 Conrad Centennial Singapore

For more details, please contact: Eleonor Angeles +65 3158 1386 ext 209 eleonor@charltonmediamail.com

AWARDS FOR DESIGN EXCELLENCE

ANALYSIS: RETAIL

Zero Latency enables gamers to roam freely across a 2,200 sq ft space to survive in alternative worlds using virtual reality.

Retail’s saving grace: Singapore malls embrace activity-based tenants Gyms, health centers, and virtual reality arcades are estimated to occupy 50% of the island’s retail mix.

ith e-commerce sales in Singapore expected to hit $10b by 2020, embattled mall operators are fighting back by increasingly making room for service and lifestyle tenants whose shopping experiences cannot be simply replicated from within a screen. In recent years, malls across the island have witnessed a rapid proliferation of activity-based tenants including health and fitness hubs, culinary centers, crafts workshops and virtual reality arcades with Savills Singapore estimating that activity-based tenants could easily occupy around 50% of a mall’s floor area with less than 300,000 sqft of net lettable area. Malls that have prominently adopted a list of activity-based tenants in their retail mix include Velocity@Novena Square whose bigtime sports tenants include Adidas and Asics as well as OUE Downtown with tenants on the block including

SINGAPORE BUSINESS REVIEW | december 2018

Absolute Cycle, Boulder Movement, Haus Athletics, Still Boxing, and Sweatbox Yoga, according to Ong Choon Fah, CEO and head of research and consulting of Edmund Tie & Company. On the other hand, United Square Shopping Mall in 101 Thomson Road is positioning itself as a kid’s learning hub through its spacious nursing rooms, colour-themed levels and detailed play features, noted Alan Cheong, senior director, research consultancy at Savills Singapore. The trend towards activity-based retail is perhaps more prominent in prime shopping belts such as when amusement center Fat Cat Arcade recently opened in Bedok Djitsun Mall whilst Korean carom billiards bar Thirsty4Balls opened at The Cathay along Orchard Road, according to an earlier report by Colliers International. “Experience-based tenants are

Activity-based tenants could easily occupy less than 300,000 sqft of net lettable area.

valuable for malls,” according to Simon Ogilvie, executive chairman of Tomorrow Entertainment who brought virtual reality social gaming space Zero Latency to Suntec Singapore last November. Banking on their premium entertainment experience, Zero Latency enables gamers to roam freely across a 2,200 sq ft space to survive in alternative worlds including one dominated by a horde of zombies. Since its launch late last year, Ogilvie claims that the store has seen over 18,000 customers and counting. The strong market response to activity-based tenants could be analysed in stark contrast to embattled fashion retailers who have been forced to exit the market under the weight of heating competition. Within this year alone, Singapore has seen the consecutive exits of clothing brand Gap who closed down all its

ANALYSIS: retail

Bikers at Velocity@Novena Square, Source: Bikezilla

stores in Suntec City and VivoCity along with Banana Republic who waved the white flag for its Paragon and MBS outlets. American Eagle Outfitters also shuttered down its Suntec City and VivoCity outlets to add to the growing list of brands brought to its knees by online retail. It comes as no surprise that malls across the world have been steadily shunning the outdated model of cash in exchange for goods and deploying more engaging retail concepts in an effort to enhance the shopping experience, observed Ong. “Traditional retail malls are under pressure to attract and retain sustained foot traffic, and Location Based Entertainment (LBE) venues are filling that need,” echoed Ogilvie. In addition to experiential gaming, landlords are also leasing to a number of service and lifestyle shops like medical and dental clinics, nail and hair salons, beauty treatment space, events stores and pop-up shops in an effort to refresh tenant mix and lure footfall, observed Ong. “Over the years, malls have also transformed from a shopping area to a third place, where people hang out and socialise,” she added. “The constant change of space use in the mall also incentivises shoppers to return to the mall on a more frequent basis to check out the new offerings and experiences.” The Orchard Road Business Association (ORBA) which represents the many business interests along the prime retail belt, also launched the Work Great on A Great Street campaign through the partnership of health and fitness

partners like Amore Fitness, New Vogue Dance Group, KpopX and ABC Cooking Studio Singapore to deliver health and fitness programmes in the precinct. “Through this initiative, Singaporeans will come to see Orchard Road, not as just a great shopping destination, but also a lifestyle hub for health and wellness,” Mark Shaw, chairman of ORBA said in a statement. However, Cheong notes that the trend may not necessarily be limited in Orchard Road. “I would think that activity based tenants thrive in non-Orchard Road malls. The rents in prime Orchard Road malls are too high to afford any meaningful climbdown to accommodate activity based tenants. Thus, the conditions for an activity based theme to work will be that the malls should be located outside or at the fringe of Orchard road and they are either small to mid-sized, say not more than 300,000 sq ft.” Bright spots In addition to activity-based retailing, analysts observed another growth engine of Singapore retail in the F&B segment which continues to account for a large part of tenant sales. Against the growing affluence of residents and cultural importance of food, F&B businesses will continue to be one of the sector’s bright spots. “Singapore is known for being a food city and many landlords of shopping malls are bringing in a variety of F&B tenants to attract consumers,” Ong explained. “Landlords will attract more new-to-

In addition to experiential gaming, landlords are also leasing to a number of service and lifestyle shops like medical and dental clinics, nail and hair salons, beauty treatment space, events stores and popup shops.

market brands so shopping malls will be able to differentiate themselves from others.” This is evident in recent F&B expansions including Filipino french fries stall Potato Corner which launched its first Singapore branch at 313@Somerset and Chinese fast-food company Liang Sandwich Bar who has unveiled plans to open outlets in VivoCity and Raffles City. “Other F&B chains are expanding their business in Singapore to cater to the many food preferences of residents. This can be seen in the case of Tiong Bahru Bakery, which opened its fourth outlet at Holland Village. Additionally, other F&B chains are returning to Singapore. For instance, Miso ramen noodle chain, Bishamon, will be resuming its operations at Suntec City after a four-year break. American fast food eatery, A&W, will also be returning to Singapore,” observed Ong. F&B segments could take up to 40% of spaces for malls competed two to three decades ago whilst relatively newer retails paces can accommodate around 35% to 38% of such tenants. Retail podiums with sizes at or below 100,000 sq ft of net lettable area that are located in Grade A CBD offices can house up to 90% for F&B purposes. Moving forward, Singapore landlords are expected to focus on activity-based and F&B tenants to curate the entire mall experience, added Ong. “It is sustainable for the foreseeable future because landlords and operators here have no practical alternative. The novelty may wear off, but the lingering fear that a normally decked out retail mall would suffer a quick death may steer landlords back to the activity based concept,” Cheong said. Sandra B. Sendingan

Zumba activity at Velocity@Novena Square, Source: BQ.sg

SINGAPORE BUSINESS REVIEW | december 2018

SPECIAL REPORT: PROPTECH

DBS’ home loan solution

Will big banks’ fully digital home loan solutions threaten proptech players? The landscape could be rewarding to banks as shown by OCBCthat boosted home loans by $200m.

ingapore’s big banks are dipping their toes on proptech by launching fully digital home loan solutions that aim to make home-buying accessible in just a few clicks. In August, UOB announced that it teamed up with four property agencies—ERA Realty, Huttons Asia, OrangeTee & Tie, and PropNex Realty—as well as online proptech firm SoReal Prop to launch a fully-digital home loan solution. Services under UOB’s solution include Singapore’s first bank-backed property valuation tool, a banker and buyer matching service called GetBanker, and an online instant home loan approval service. “As UOB finances more than 30% of all new property sales in Singapore, we understood first-hand from our property partners and homebuyers that they wanted certainty and simplicity in property transactions,” said Jacquelyn Tan, UOB’s head 46

SINGAPORE BUSINESS REVIEW | december 2018

OCBC’s OneAdvisor saw traffic of more than 110,000 from 53,000 unique visitors. These visits resulted in over 1,200 leads alone.

of financial personal services in Singapore. UOB is not the only bank to wet its toes in the growing puddle of proptech, as DBS and OCBC got in the game earlier than UOB. Banking on your property needs In January, OCBC Bank launched its homebuying-slash-ownership platform called OneAdvisor. It currently has “affordability” advice, which calculates price as well as down-payment and stamp duty amongst other services such as property listings, and explanations for regulatory rules for homes. Notably, OCBC had secured $200m of home loans through OneAdvisor alongside its chatbot for home and renovation loans called Emma (launched January last year), OCBC Bank’s head of consumer secured lending Phang Lah Hwa revealed. “OCBC’s OneAdvisor saw

traffic of more than 110,000 from 53,000 unique visitors. These visits resulted in over 1,200 leads alone from OneAdvisor,” she added. Meanwhile, DBS had launched in July a property marketplace that has listings from both agents and owners. It partnered with listing platforms EdgeProp and Averspace to provide some 100,000 listings and will soon include listings from SoReal. The site has a financial planner that also helps first-time buyers determine their affordability price range based on CPF and cash deposits, facilitate paperless transactions, and get in touch with service providers for utilities, digital home solutions, and even cleaning and moving services. According to a research in June commissioned by UOB, 80% of homebuyers polled wanted an online property valuation that they could depend on to calculate the loan quantum they would need

SPECIAL REPORT: PROPTECH

Phang Lah Hwa

100,000 listings can be found in DBS’ platform

to purchase their desired property. “However, many online ones are only estimations and are not used for home loan applications in Singapore as banks usually have their own panels of recognised professional property valuers,” UOB’s Tan added. A threat to proptech startups? With these big banks’ slow but giant strides towards proptech, should proptech firms feel threatened? After all, the landscape in both Singapore and the Asia and Pacific region is still filled with budding startups. JLL revealed that in the region, 179 proptech startups raised $4.8b— more than half of the world’s total of $7.8b—from 2013 to June 2017. Keff Hui, a broker from Mortgage Supermart, said the impact should be minimal. “Proptech is the fusion of property and technology whilst home loans are complements of it. On property standalone, the purchasing considerations of buying a property is multifaceted and offers plenty of opportunities for tech solutions to enhance and bridge the gap,” he said. “A fully digital home loan platform could help it to streamline processes, reduce manpower cost, improve processing turnaround, and possibly avoid and reduce some competition whilst offering consumers an alternative additional application channel for the banks,” Hui added. A slightly different viewpoint came from Michael Cho, founder of proptech startup UrbanZoom, who thinks banks’ initiatives are great news for consumers. “This isn’t just merely a case of tech being used as an enabler, this to me signals a real mind shift of

well-resourced financial institutions willing to embrace innovations and the risks that come with product experimentations,” he said. UrbanZoom focusses on predicting the price of a home in a certain time period, called a ZoomValue, by having its AI algorithms analyse data points. The company claims its home price predictions have an overall median error of less than 3%. Its platform also shows owners the sales listings nearby as well as past transactions and comparisons with other blocks. Moreover, Cho said that young startups like them are not likely to fail because of competition but because of a failure to execute. “So, in that sense, I don’t feel ‘threatened’; if anything, I actually think that they could be great partners to us as they show an increasing appetite to adopt cuttingedge technology, which is a core focus for us at UrbanZoom,” he added. The proptech advantage Moreover, proptech firms said they have a competitive edge over banks trying to get into the technology. For Hui, banks could be limited by regulations as well as proptech firms’ dimension and scope of the range of services and solutions. “Banks are in the business of lending. Technology, consumer experiences, and many of the other property buying and sales processes are not of the banks’ core business and competence,” he said. “Whilst we have recently seen one bank trying to branch into the property business directly as a bank, a quick use of its website simply

Jacquelyn Tan

Keff Hui

Michael Cho

Lewis Ng

shows a weak half-hearted portal and provides absolutely no comparison to existing similar platforms.” For Cho, it’s the speed that counts. “Banks operate in a highly regulated environment, with many additional mission-critical concerns such as security issues, which limit their ability to ‘move fast and break things.’ I don’t think tech alone can be a sustainable differentiator for startups though since banks have the financial resources to hire the technical talent,” he said. “What will allow a startup to stand out is its ability to experiment with new business models at speed,” Cho added. PropertyGuru, the largest listing of homes in Singapore and one of the first proptech firms to ever exist, has been operating in the city for 11 years and has seen multiple entrants enter the online property space almost every year. “We have over 70% consumer market share and the most listings at any given point of time in Singapore,” said Lewis Ng, PropertyGuru Group’s chief business officer. During the length of its stay in the landscape, PropertyGuru has absorbed lessons in proptech by investing in solutions. “We realise that in addition to the quantity of listings, what’s important to property seekers in Singapore is also the quality of those listings—and the tools added for the property seeker to evaluate those listings easily. We have invested most in data and technologies to enhance the quality of those listings backed by machine learning solutions,” Ng said. Danielle Mae V. Isaac

Proptech investment heats up in Asia Pacific

Source: JLL

SINGAPORE BUSINESS REVIEW | december 2018

SPECIAL FEATURE: EDUCATION

Are you ready to take that postgraduate degree?

Three distinguished education providers discuss how to choose the right programme and how having a postgraduate degree is crucial to career advancement.

bachelor’s degree is no longer sufficient to stay ahead in today’s increasingly globalised job market. A postgraduate degree provides an invaluable edge and makes a candidate stand out in a sea of similar resumés. But how does one choose the correct postgraduate programme?

relevance of both the skills/competencebased curricula students learn and the teaching delivered by our lecturers and trainers,” explains Dr. Andrew Chua, principal & executive chairman of EASB. “We are working with the industry through their respective ITMs (Industry Transformation Maps) and associated Skills Frameworks (SFW) to produce work-ready graduates EASB: Grooming future-ready students who will have the competence, confidence, through digital learning commitment and creativity to be immediate East Asia Institute of Management (EASB) value contributors to industry and society,” is committed to preparing its students to Dr Chua said. become leaders in the rapidly changing As one of the leading private education professional landscape. To keep its students institutions, EASB offers a comprehensive up to par with latest suite of undergraduate and “EASB’s trends, EASB is postgraduate programmes working with industry competitiveness stems that are future-focused partners to develop from marketplace and developed in a comprehensive consultation with industry, knowledge and curriculum which will across major disciplines employmentequip its pupils with of Hospitality & Tourism readiness of its new skills appropriate Management, Business graduates.” for future jobs. Management, Accounting, “We are using Banking and Finance, SMART learning & teaching technology to Business Information Systems, Marketing, increase the efficiency, effectiveness and HR, Allied Health Sciences, Psychology, and many more. EASB has a long track record of excellence and competence. It started in Singapore in 1984 as in Informatics Software, which specialised in IT training. In 2001, it transformed into a full academic institution under the name East Asia School of Business. Then, in 2005, it rebranded into the East Asia Institute of Management. EASB’s competitiveness stems from marketplace knowledge and the employment-readiness of its graduates. “Our Holistic Education Approach (HEA) ensures that students learn industryrelevant skills and competences. We work with industry to review our curricula on an on-going basis. Our students are taught by a team of well-qualified, experienced and committed teaching faculty. Many possess Masters and above qualifications with many years of industry experience. Further, our new blended learning methodology helps to effectively achieve learning outcomes through combining classroom learning with experiential learning,” Dr Chua noted. Dr Andrew Chua EASB’s global character is evidenced by principal & executive chairman of EASB its long-established university partners 48

SINGAPORE BUSINESS REVIEW | december 2018

in the United Kingdom, namely, Heriot Watt University -Edinburgh Business School, Aston University, Queen Margaret University, and Cardiff Metropolitan University. “We remain committed to nurture, produce and empower our graduates and students who possess what we regard as the four Cs of professional success -Competence, Confidence, Commitment and Creativity, built around the theme of ‘Creative Learning in the Digital Age,’” Dr Chua said. SIM Global Education: A tradition of unmatched quality and success An immersive international education is crucial to the success of business leaders, and SIM Global Education (SIM GE) knows only too well that a quality MBA is indispensable in today’s globalised workforce. As the global education arm of the Singapore Institute of Management, SIM GE offers overseas academic programmes through its partnerships with various established universities, including the University of Birmingham, The University of Manchester and the University of Warwick from the United Kingdom. Founded in 1964 under the initiation of the Economic Development Board, SIM GE has consistently been the top choice of students seeking higher education. For eight consecutive years, SIM GE has been voted as among the Top 3 Best Private Institute in the annual AsiaOne People’s Choice Awards, and it is also ranked as amongst the top five most preferred private education institutions for postgraduate degrees in the JobsCentral Learning Survey 2015. SIM GE has about 19,000 students and over 150,000 alumni. With a track record of over 20 years in Singapore, the Birmingham MBA is amongst SIM GE’s most distinguished courses. “This programme allows students to develop skills to work anywhere in the world with opportunities to learn, do sharings and network with fellow peers to deepen their understanding of modern business practices in various industries and sectors,” says Ho Soon Eng, Director of Higher Education, SIM Global Education. “The Birmingham MBA seeks to provide students with the insight, ambitions and skills to shape advanced and

SPECIAL FEATURE: EDUCATION for students. Kaplan’s commitment in catering to life-long integrated learning is evident in its three entities: Kaplan Higher Education Academy, Kaplan Higher Education Institute, and Kaplan Learning Institute. Kaplan Higher Education Academy offers Kaplan: Reaching new heights through full-time diploma, bachelor’s and master’s diverse programme choices degree programmes, whilst Kaplan Higher Kaplan offers courses in niche areas that Education Institute offers part-time are equally vital to the economy and diploma, bachelor’s and master’s degree society, such as business law, childhood programmes. Kaplan Learning Institute studies, counselling, health services offers professional accounting and financial management, information technology, cyber forensics, and psychology. The Kaplan training, and skills development such as WSQ-funded courses. Together, these School of Postgraduate Studies offers entities form one of one of the most “Kaplan offers more largest private comprehensive than 30 post-graduate the education institutions range of programmes to cater in Singapore, spanning programmes to cater to different to different individual’s more than 140,000 individual’s interests and industry sqft across Kaplan City Campus @ Wilkie interests. needs.” Edge and @ PoMo. The school’s “A postgraduate degree will enhance myriad postgraduate programmes include employability as you are equipped with MBA, Executive Master’s, Specialised Ho Soon Eng, director of Higher Education, specialist skills and industry expertise Master’ s Degree and Graduate Certificate SIM Global Education to succeed in the future economy. The programmes. To date, it has over 30 postgraduate job market has been increasingly sustainable business strategies. It provides graduate programmes for higher learning. competitive with many Bachelor’s Degree the global and Asian perspectives of “Anyone thinking about undertaking holders therefore getting a postgraduate business management and practice; as well studies with Kaplan first spends time with qualification will give one the added as opportunities to debate and exchange a dedicated course consultant who has an competitive edge to stand out from the views on genuine business issues through extensive knowledge of the programmes crowd,” Johnson says. case studies, presentations, dissertation,” we offer and is able to match the potential notes Ho. student with the programme that is right “It provides a strong student-teaching for them,” says associate professor Rhys faculty engagement through conventional Johnson, Chief Operating Officer & Provost. teaching and online consultations via WebEx “Our courses are available in a variety of e-platform, and allows high flexibility to learning modes (weekly classes, blockcope with work 100% online) in “With a track record teaching, and personal order to cater to different of over 20 years commitments,” she needs. We partner with a in Singapore,the adds. “Birmingham number of highly ranked MBA graduates will partners to ensure our Birmingham MBA is gain the confidence, amongst SIM GE’s most graduates receive a quality skills, tools and good distinguished courses. ” education that will be business acumen to well recognised as they manage the different fundamental aspects forge their careers. For example, Monash of business across various industries in the University, our partner for Education is global context, accelerating their careers one of the top ranked in the world in that with existing employers or create potential discipline, Griffith is 11th in the world for change.” The effectiveness of the rankings for nursing, UCD and Northumbria Birmingham MBA is proven by the success of hold AACSB accreditation.” its graduates. Over 65% of the Birmingham Kaplan prides itself on providing worldMBA graduates in Singapore graduated with class education through global partnerships merit or distinction in 2017. The Birmingham and cutting-edge technology. Kaplan has Business School boasts a triple-crown pioneered the Synergy Pod—a one-of-aaccreditation by AACSB International, kind classroom which were built in mind to AMBA and EQUIS for providing high-quality encourage teacher-student discussions Rhys Johnson, Chief Operating Officer education and outstanding learning. and peer-to-peer collaboration, providing a & Provost, Kaplan Singapore “The interaction with classmates from dynamic and interactive learning experience various industries and backgrounds helped to widen my perspectives of business management and provided great networking opportunities,” says Ho Howe Tian, business director, Envision Energy.

SINGAPORE BUSINESS REVIEW | december 2018

MBA PROGRAMMES SURVEY

MDIS, in partnership with the University of Sunderland in London launched new tracks focussed on human resource and supply chain management.emerging from the tie up between the Management Development Institute of Singapore and the University of Sunderland.

Foreigners make up for lack of local MBA takers in Singapore MBA providers are struggling to attract local students, but renewed interest from Vietnam, India, and China buoy the industry’s performance.

he performance of Singapore’s MBA programmes is slowly picking up pace this year after a slight decline in 2017 as student enrolment in the country’s top business schools increased by around 0.71% to 3,531 student intakes from about 3,506 last year. This is on the back of new MBA programmes opening this year, including a couple of new tracks focussed on human resource and supply chain management emerging from the tie up between the Management Development Institute of Singapore and the University of Sunderland. Renewed interest was observed from international students, particularly from China, Vietnam, and India, after a significant slump of about 10% to 20% in the first quarter of 2017. Meanwhile, local student intake still remain subdued. Rounding up the largest MBA programmes and providers this year, Singapore Business Review named INSEAD as the top ranking in this year’s list with its 10-month accelerated MBA programme attracting 1,039 student enrolments in 2018. This is followed by the 50

SINGAPORE BUSINESS REVIEW | december 2018

Computational design techniques are increasingly changing the way how we work. These techniques include BIM automation and VR/AR technologies.

National University of Singapore with its various MBA programmes with 685 students, most of whom are taking up NUS MBA and NUS Executive MBA tracks. The top 5 list is rounded up by S P Jain School of Global Management with 256 students, around half of who are taking the Master of Global Business degree; Nanyang Technological University’s business school with 235 students; and the Management Development Institute of Singapore with 232 enrolled students. “More people are looking at upgrading their educational standing in recent years as a bachelor’s degree becomes basic these days,” explained Ignatius Teo, head of school at MDIS Business School, adding that a lot of professionals consider getting higher education degrees as a career boost. “In 2017, the MBA market has shown a decline in the number of students applying for the courses. We have witnessed the MBA graduates that come from the local market is reduced. However, it may have factors affecting that decrease,” said Prateek Nayak, Southeast Asia regional head of Amity Global Institute. “The

positive part is the international market like Vietnam, India, China, etc. increased the interest in studying in Singapore, but still the local market is showing interest as learning is never ending.” Of the total number of student enrollees in Singapore’s top business schools this year, around 64% are considered full-time students with the remaining 36% comprised of individuals studying part-time, according to data by Singapore Business Review. Whilst some institutions saw significant increase in student intake year-on-year like the MBA programme of Nanyang Technological University (around 69% growth), a number of programmes like the MBA track from the Anglia Ruskin University through the Amity Global Institute has been discontinued whilst the one from James Cook University in Singapore has experienced a 35% decline in student enrolments this year. Zeroing in on Big Data The rise of new MBA programmes and other higher education tracks in Singapore as well as the expansion of existing ones are illustrative of the fierce competition that top business schools in the citystate are involved in. “It has been a dynamic and fast-moving year in the Singapore MBA landscape,” said Brian San, PSB Academy’s vice president for strategy and communications. “We have seen a number of new launches, which is great news for students who can now enjoy a wide array of worldleading programmes directly in Singapore.” An emerging trend in the MBA and higher education landscape in Singapore is the increasing focus on technology and innovation, data, and skills specialisation— not just as a focus of study but also as a response to the evolving needs of the current job market. “Technological innovation is the most critical part of the present era with recent examples of Big Data and Data Analysis, which is increasingly being demanded in the market by employers,” Nayak

MBA PROGRAMMES SURVEY explained. He cited as an example the launch of a new course called Master of Science in Data Science for Business, in partnership with the University of Stirling in the UK, which helps current and prospective business leaders and managers with a detailed working knowledge of data analytics who are able to blend data analysis, business acumen, and advanced management skills. Another trend is the demand for more specialised programmes that are targeting the development of more specific skills that can be learned in a shorter, more compact timeline as well as provide students with enough technical capacities for a specific line of work, for instance, financial management, capital markets, or business development. “We have noticed that there has been a greater move towards specialised programmes recently. In line with the government’s push to make programmes more skills-based, we also see a greater popularity of shorter executive programmes that include a specialisation in niche sectors of business,” San said.

top of the traditional discussions on management theories and strategies inside the four corners of a classroom. San noted that this trend is of a more pragmatic sense as students are looking to incorporate themselves in a faster and more effective way on the real issues and challenges that they may encounter in their chosen field of work. “Along with the demand for specialisation and regional exposure, MBA hopefuls are also more interested in being hands-on as part of their learning process—for example, more business simulations, project work, and direct connections to the industry—that simulates realwork environments and experiences that they can apply directly to their careers,” he explained.

An emerging trend in the MBA and higher education landscape in Singapore is the increasing focus on technology and innovation, data, and skills specialisation— not just as a focus of study but also as a response to the evolving needs of the current job market.

Business author and educator Dale Beaumont, founder of Bizversity, noted that degrees conferred by traditional educational institutions may not exactly anymore be the golden ticket professionals covet for success in today’s corporate world. Need for options “When it comes to career development, up until now, the options have been quite limited. Whether it’s through online search, reading textbooks, or spending an upward of $40,000 to do an MBA—90% of which is theoretical, out of date, and doesn’t necessarily transfer practical skills in to the real world—it all comes at a cost,” he said. “That’s why we built Bizversity, a multipurpose built learning platform that offers individuals a world-class business education from the world’s best teachers, in a way that is fast, personal, affordable, and accessible.” Currently, the app offers its over 60,000 users worldwide opportunity and access to explore over 80 different business-related topics including SEO analytics, financial planning, and strategic marketing, among others, presented through on-demand, “how to”-styled training videos. “A large percentage of our users come from a business background, so having an application that is not only accessible and convenient, but also engaging in the right areas of learning and knowledge distribution, has shown to be a huge success within our user feedback,” he said.

Rise of new disruptors Along with the rise of new MBA and higher education programmes from traditional brick and mortar educational institutions, alternative providers of educational materials and skills development trainings in more unconventional ways have also popped up, thanks to technology and Partnerships, real-world experience innovation. In August, INSEAD and The Bizversity, a new platform that Wharton School of the University provides individuals a new approach of Pennsylvania announced the to business education through a renewal of their strategic alliance until personalised programme “without June 2021. This allows for the two the need of ever having to undergo institutions to continue combining further postgraduate business their resources to offer students across studies,” have been making a case the globe world-class management for alternative corporate learning. education, whilst opening up a more global access to top-notch business knowledge from its six campuses— Philadelphia, San Francisco, Beijing, Fontainebleau, Singapore, and Abu Dhabi—for students, faculty, and executives worldwide. “Tomorrow’s business leaders must have global reach and be part of a worldwide business education and knowledge network. The alliance enhances the global perspective of our management research and education,” Gavin Cassar, research director of the INSEAD-Wharton Alliance at INSEAD said in a statement. MBA and other graduate students have also been seeking a more hands-on, real-world experience as Bizversity, a new platform that provides business education through an app. part of their business education, on

SINGAPORE BUSINESS REVIEW | december 2018

MBA PROGRAMMES SURVEY MBA Programme

Provider/Local Partner

Total Number of Students 2017

Anglia Ruskin University - MBA

INSEAD MBA

James Cook University MBA

James Cook University Singapore

Bangor University (UK) MBA in Banking & Finance Bangor University (UK) MBA in International Marketing Hull University Business School Executive MBA

Manchester Global Master of Business Administration Nanyang Executive MBA Nanyang Fellows MBA Nanyang MBA Nanyang Professional MBA Nottingham University Business School MBA Rutgers Executive MBA S P Jain Executive MBA

Manchester Business School, S.E. Asia Centre Nanyang Business School, Nanyang Technological University Nanyang Business School, Nanyang Technological University Nanyang Business School, Nanyang Technological University Nanyang Business School, Nanyang Technological University School of Postgraduate Studies, PSB Academy Rutgers Business School Asia Pacific S P Jain School of Global Management, Singapore

Head of Singapore Office/Dean Easwaramoorthy Rangaswamy

Jesline Wong

Sam Choon Yin

1,055

1,039

Ilian Mihov

311

202

Dale Anderson

254

213

Lim Bee Ing

Tan Joo Seng

Siriwan Chutikamoltham

135

Goh Kim Huat

Lewis Lim

Sam Choon Yin

Joseph Schaffer

Dr. John Fong, CEO & Head of Campus (Singapore)

S P Jain Global Master of Business Administration

S P Jain School of Global Management, Singapore

Dr. John Fong, CEO & Head of Campus (Singapore)

S P Jain Master of Global Business

S P Jain School of Global Management, Singapore

126

Dr. John Fong, CEO & Head of Campus (Singapore)

Strathclyde MBA

YMCA Education Centre

166

162

Sydney Business School, University of Wollongong MBA

School of Postgraduate Studies, PSB Academy

"Joe Heng "

Sam Choon Yin

S3 Asia MBA with Fudan University, Korea University & National University of Singapore The NUS Executive MBA (in Chinese) The NUS Executive MBA (in English) The NUS MBA The NUS MBA Double Degree with Peking University The NUS MBA Double Degree with HEC Paris The NUS MBA – PhD The NUS MBA – Yale Master of Advanced Management UCLA – NUS Executive MBA University of Birmingham MBA University of Northampton - MBA University of Sunderland (UK) MBA University of Newcastle, Australia MBA University of Sunderland (Human Resource Management) (UK) MBA - New University of Sunderland (Supply Chain Management) (UK) MBA - New

-Data obtained From the mba providers

Amity Global Institute Management Development Institute of Singapore Management Development Institute of Singapore School of Postgraduate Studies, PSB Academy INSEAD

2018 NOT RUNNING ANYMORE

SINGAPORE BUSINESS REVIEW | december 2018

National University of Singapore

Bernard Yeung

National University of Singapore National University of Singapore National University of Singapore National University of Singapore National University of Singapore National University of Singapore National University of Singapore National University of Singapore SIM Global Education Amity Global Institute Management Development Institute of Singapore School of Postgraduate Studies, PSB Academy Management Development Institute of Singapore Management Development Institute of Singapore

118 80 295 4 5 9 4 81 140 133

140 96 297 7 13 5 3 73 140 181

Bernard Yeung Bernard Yeung Bernard Yeung Bernard Yeung Bernard Yeung Bernard Yeung Bernard Yeung Bernard Yeung Ho Soon Eng Easwaramoorthy Rangaswamy

111

Jesline Wong

Sam Choon Yin

Jesline Wong

MBA PROGRAMMES SURVEY Total Number of Students Full Time NOT RUNNING ANYMORE

Part Time NOT RUNNING ANYMORE

Minimum Cost (SG$)

Duration

Full Time

Part Time

NOT RUNNING ANYMORE

22,562.58

1,039

202

*Fees apply to all Singapore residents (Singapore Citizens, Permanent Residents

213

40 25 90

12 months

28 months

62,000

NA "71,585 (US$52,368)

NOT RUNNING ANYMORE

"35,952 including GST (Domestic)* *Fees apply to all Singapore residents (Singapore Citizens, Permanent Residents and all pass holders excluding Student’s Pass)”"

"68,168 (including GST)"

75,000

25 NA

12 months

16 months

1.5-2 years

14 months

95,000

35 NA

132,327 (EUR84000) "37,236 including GST (International)

and all pass holders excluding Student’s Pass)" NA

Part Time NOT RUNNING ANYMORE

32,356.80

35,952 including GST (Domestic)*

Number of Intakes Per Year

Full Time NOT RUNNING ANYMORE

12 months 65,000

12 months

1 18 months

65,000

18 months

33,384

24 months

75,000

14.5 months

35,310

18 months

12 months

16 months

40,000 inclusive of GST

24 months

25,873.00

28 months

126

162

64,000.00

16 months

NA NA 197 7 13 5 3 NA

NA NA 62,000 44,000 44,000 62,000 44,000 0 23,540

120,000 100,000 62,000 44,000 NA NA NA 157,325 32,528 16,050

NA NA 17 months 24 months 20-24 months 17 months 24 months NA

138

140 96 100 0 0 0 0 73 140 43

1 year

24 months 15 months 24 months 36 months NA NA NA 15 months 24 months 1 year

1 1 1 1 2 1 1 1 4 3

25,250

23,946.88

12 months

18 months

28,890.00

16 months

25,249.62

23,946.88

12 months

18 months

25,249.62

23,946.88

12 months

18 months

incl. accommodation" "63,245 (US$46,267) incl. accommodation"

SINGAPORE BUSINESS REVIEW | december 2018

MBA providers SURVEY MBA Provider

MBA Programme

Head of Singapore Office/ Dean

INSEAD

INSEAD MBA

Ilian Mihov

Total Number of Students Full Time 1,039

Part Time GRAND TOTAL

National University of Singapore Business School

S P Jain School of Global Management, Singapore

S3 Asia MBA with Fudan University, Korea University & National University of Singapore The NUS Executive MBA (in Chinese) The NUS Executive MBA (in English) The NUS MBA The NUS MBA Double Degree with Peking University The NUS MBA Double Degree with HEC Paris The NUS MBA – PhD The NUS MBA – Yale Master of Advanced Management UCLA – NUS Executive MBA S P Jain Global Master of Business Administration S P Jain Executive MBA S P Jain Master of Global Business

Nanyang Business School, Nanyang Technological University

Management Development Institute of Singapore

Bernard Yeung

Bernard Yeung Bernard Yeung Bernard Yeung

197

Bernard Yeung

Bernard Yeung Bernard Yeung

13 5

Bernard Yeung

Bernard Yeung Dr. John Fong, CEO & Head of Campus (Singapore) Dr. John Fong, CEO & Head of Campus (Singapore) Dr. John Fong, CEO & Head of Campus (Singapore)

73 GRAND TOTAL 99 31 126 GRAND TOTAL

Nanyang Executive MBA

Tan Joo Seng

Nanyang Fellows MBA Nanyang MBA Nanyang Professional MBA

Siriwan Chutikamoltham Goh Kim Huat Lewis Lim

25 90

Jesline Wong

Bangor University (UK) MBA in Banking & Finance Bangor University (UK) MBA in International Marketing University of Sunderland (UK) MBA University of Sunderland (HR Management MBA and Supply Chain MBA)

140 96 100

40 45 35 GRAND TOTAL 0

Jesline Wong

0 GRAND TOTAL

Manchester Business School, S.E. Asia Centre

James Cook University Singapore

Manchester Global Master of Business Administration

Lim Bee Ing

James Cook University MBA

Dale Anderson

213 GRAND TOTAL 202

0 GRAND TOTAL

School of Postgraduate Studies, PSB Academy

Nottingham University Business School MBA Hull University Business School Executive MBA Sydney Business School, University of Wollongong MBA The University of Newcastle, Australia MBA

Sam Choon Yin Sam Choon Yin

75 28 23

Sam Choon Yin Sam Choon Yin

60 Grand Total

YMCA Education Centre

Strathclyde MBA

Joe Heng

162 Grand Total

SIM Global Education

University of Birmingham MBA

Ho Soon Eng

Amity Global Institute

University of Northampton, MBA

Easwaramoorthy Rangaswamy

140 Grand Total 43

-Data obtained from the MBA PROVIDERS

SINGAPORE BUSINESS REVIEW | december 2018

138

MBA providers SURVEY Minimum Cost (SG$)

TOTAL 1039

Full Time 132,327 (EUR84,000)

Duration Part Time

Full Time 10 Months

Part Time

Number of Intakes Per Year 2

1039 51

64,000

16 months

140 96 297

62,000

120,000 100,000 62,000

44,000

13 5

44,000 62,000

20-24 months 17 months

44,000

24 months

157,325

17 months

24 months 15 months 24 months

1 1 1

24 months

36 months

1 2 1 1

15 months

685 99

" 52,368 USD incl. accommodation"

31 126

12 months 35,310

"46,267 USD incl. accommodation"

2 18 months

16 months

2 3

256 40 25 135 35

95,000 75,000 62,000

65,000 65,000

12 months 12 months

14 months

18 months 18 months

1 1 1

1.5-2 years

235 46

22,562.58

12 months

22,562.58

25,250

23,946.88

12 months

18 months

“68,168 (including GST)”

1.5-2 years

"S$37,236including GST (International) S$35,952 including GST (Domestic)* *Fees apply to all Singapore residents (Singapore Citizens, Permanent Residents and all pass holders excluding Student’s Pass)"

"“S$35,952 including GST (Domestic)* *Fees apply to all Singapore residents (Singapore Citizens, Permanent Residents and all pass holders excluding Student’s Pass)”"

12 months

16 months

24 months 28 months

6 9

28 months

12 months

232 213 213

202

202 75 28

33,384.00 32,356.80

23 60

25,872.60 28,890.00

16 months

186 162

40,000 including GST

24 months

32,528

24 months

1 year

162

140 140 181 3531

23,540

1 year

SINGAPORE BUSINESS REVIEW | december 2018

Legal briefing

New bill lodged to attract global wealth It aims to shun inconvenient rules which plague investment funds so that it’s easier to incorporate locally.

ingapore is pioneering a specialised corporate structure to attract more investment funds to set up shop in the city-state. Under the Variable Capital Companies (VCC) Bill, fund managers are afforded greater operational flexibility to solidify Singapore’s position as a full-service international fund management centre. Through the passage of the Variable Capital Companies (VCC) Bill, fund managers will be able to experience greater operational flexibility to solidify Singapore’s position as a full-service international fund management centre. “The VCC Bill is an extremely positive development for the fund management industry in Singapore,” said Amit Dhume, partner from CNP Funds Practice. “This will provide fund managers with greater operational efficiencies and further strengthen Singapore’s position as an attractive wealth management jurisdiction.” A specialised structure Under current regulations, investment funds are incorporated under the Companies Act (Chapter 50). The regulations under this law impede the normal operations of investment funds such as the flexibility to pay dividends and redeem shares as well as the ability to consolidate certain administrative functions.

Will Singapore succeed in attracting more of the world’s millions?

Amit Dhume

Analysts are confident that the proposed law will bring tremendous benefits to the local asset management industry. “Companies incorporated under the Companies Act work fine for operating business ventures (such as commodity trading, hotel operations, consulting companies etc.), but do not have the requisite features required for operating an investment fund,” Dhume explained. For instance, routine asset management activities—such as the return of capital to shareholders either by way of capital reduction or redemption of shares—involves various procedures under the Companies Act, including the execution of solvency statements by all directors. “This may be beneficial from the perspective of a normal operating business, but causes impediments in operating an investment fund. Flexibility to return monies to investors quickly and efficiently is important for investment funds. This is an especially important aspect for open-ended funds (i.e. investment funds that allow investors to frequently subscribe for and redeem shares),” Dhume noted. Kai-Niklas Schneider, partner at Clifford Chance, explains that the new corporate structure offered by the bill is beneficial for investment funds domiciled in and managed by fund managers in Singapore. “This expands the fund vehicle options available to fund managers in Singapore and addresses the limitations of using a Singapore incorporated company. The VCC will also be 56

SINGAPORE BUSINESS REVIEW | december 2018

Kai-Niklas Schneider

able to benefit from Singapore’s extensive network of tax treaties and tax exemption schemes available for onshore funds in Singapore, which is an attractive proposition for investors and managers,” he said. “A VCC that will be incorporated under the proposed VCC Act will be permitted to issue and redeem shares at net asset value without undergoing any lengthy administrative procedures,” Dhume said. “This would reduce the need to deal with multiple service providers. We have already started to receive queries from foreign fund managers who are interested in the proposed VCC structure and are contemplating having a presence in Singapore so that they can manage funds that would be VCCs,” he added. The Accounting and Corporate Regulatory Authority (ACRA) will act as the registrar of VCCs and administer the new Bill, except for the antimoney laundering and counter-financing of terrorism obligations of VCCs which will be overseen by the MAS. “The VCC will also have the flexibility to incorporate separate “segregated portfolios” or “cells” within a VCC that will be able to house sub-funds. Each sub-fund will be permitted to have different investors and investment strategies. There will be segregation protection available for each sub-fund and the assets and liabilities of each sub-fund will be ring-fenced, such that the creditors of one sub-fund will not have recourse to the assets of another sub-fund,” Dhume explained. “Unlike existing fund vehicle options, the VCC will not require additional structuring in order to access Singapore’s tax treaty network. The VCC also addresses the limitations of the Singapore incorporated company by permitting a flexible capital structure, ensuring confidentiality of shareholders and allowing segregation of portfolios,” noted Schneider. He added that the VCC is a welcome addition to the structuring options available to Singapore fund managers. “Fund managers considering structuring options for their next investment fund should consult with their legal advisors regarding the VCC as an option,” Schneider says.

Co-published corporate profile

The Kaplan Advantage: Forging the best minds to respond to the demands of the future economy Its relentless pursuit of excellence allows its students to enjoy top-notch postgraduate programmes. sure that Kaplan is able to offer a portfolio of degrees that align to the Industry Transformation Maps which form a roadmap for the economic future of Singapore. Postgraduate studies form a central pillar of Kaplan’s future strategy,” Johnson says. “A postgraduate qualification will enhance employability as you are equipped with specialist skills and industry expertise to succeed in the future economy,” said Johnson. For instance, Kaplan’s partnership with the Royal Holloway University of London launched Masters of Science in Entrepreneurship and Innovation this year to respond to the growing demand from entrepreneurs seeking to apply technical expertise in business management.

Kaplan’s Synergy Pods

echnology is redefining learning, and Kaplan is at the top of its game when it comes to providing revolutionary solutions to improve student experience. Innovation and transformation is part of Kaplan’s DNA, and it has heavily invested both in providing the best postgraduate postgrammes and in creating The Synergy Pods, also known as Classrooms of the Future. “Disruption has become prevalent across different sectors, particularly in education and this has redefined innovation in learning,” says Associate Professor Rhys Johnson, chief operating officer & Provost. “The Synergy Pods are created to be innovative yet practical and fully interactive, providing a visually stimulating and immersive learning environment.” Designed and built to deliver the best possible postgraduate learning experience, every Synergy Pod is a comprehensive blended learning platform that combines effective classroom learning methodology with online resources to enhance every student’s learning experience and engagement. These modern classrooms were built in mind to facilitate teacherstudent discussions and peer-to-peer collaboration, providing a dynamic, interactive and immersive learning experience for students. Kaplan also leverages on technology to deliver a purely online business course in the form of Executive Master in Leadership,

Constant transformation At present, it offers a range of courses including accounting, banking and finance, business management, information technology, engineering, counseling, education and health services management. “Through our Academic Board and Kaplan A tradition of excellence Industry Advisory Boards, we constantly Kaplan began its Singapore operations in review our programmes and curriculum to 1989, when it launched under the name ensure they are robust and relevant, mapped of Asia Pacific Management Institute. against the Industry Transformation Maps The institute was acquired by Kaplan by the Ministry of Trade and Industry Incorporated in 2005. Since then, Kaplan Singapore so that our students can benefit has grown from strength to strength, to be career-ready and be relevant to meet adding a diverse range of options for higher the industry’s manpower needs of today education programmes. These options and the future.” Johnson shares that Kaplan include programmes offered in partnership is looking to deliver programmes such with renowned universities, and corporate as Doctor of Business Administration in and individual skills development courses. addition to more than 30 existing post“We partner with a number of highly ranked graduate programmes now. partners to ensure our graduates receive a “In addition to the mainstream quality education that will be well recognised postgraduate programmes such as as they forge their careers,” Johnson notes. business and management, we also see Amongst Kaplan’s many international the increasing demands for specialised partners are Birmingham City University, Masters in the areas of engineering Griffith University, Monash University, management, leadership, entrepreneurship, Murdoch University, Northumbria University, health services management, counselling, The Royal Holloway University of London, education and international law,” Johnson RMIT University, and the University College notes. “Aligning ourselves to the current Dublin. All of these universities are highly economic development plans and the drive ranked and globally recognised. to ensure Singaporeans are gaining the skills “We continue to seek out new university that will be in demand in the new economy.” partnerships and programmes to make Strategy and Innovation (E-Learning) in partnership with Murdoch University, empowering students with the ability to learn and collaborate with global peers and lecturers.

“Innovation and transformation is part of Kaplan’s DNA.” SINGAPORE BUSINESS REVIEW | december 2018

marketing Briefing

Is location-based marketing the best way to target customers on the go? Marketers can drive nearby consumers to visit their shops and better understand their offerings.

hen Terence Mak saw that brick and mortar stores were beginning to lose their shine against online retailers, he thought of a way to help the “left behind” players keep their businesses going. His idea was to come up with an app that helps customers locate spaces real-time — spaces that would provide them a value-added experience compared to the experience of just swiping for goods on their phones. Location-based marketing has garnered increased attention over the past year, as brands continue to look for ways to attract customers on the go. WhereisWhere now has 2,500 retail locations across Asia, including 1,500 retail locations in Singapore, since late February this year. According to Mak, founder and CEO, WhereisWhere, their company enables offline businesses to reach nearby consumers and effectively launch promotions to attract and keep them. “Location-based marketing platforms like WhereIsWhere are designed for merchants to create and better self-manage and differentiate their product and services, which drive nearby consumers to visit their shops and better understand their offerings. This strategy allows offline businesses to build a substantial number of followers, in turn, increasing the likelihood of repeat customers. Along with the capability to promote new products in the market more effectively, merchants can leverage location-based marketing to update customers on new offers in nearby outlets and build a loyal customer base,” Mak added. Strategy for retail giants Elsewhere across the globe, location-based marketing has become quite the norm, as brands like Target in the United States employ platforms like YouAppi to help them reach the right customers in the perfect regions and the right zip codes. Moshe Vaknin, founder and CEO, YouAppi, said that their platform is being used by big brands like

Terence Mak

MosheVaknin

Benny Chow

Cheryll Cheah

Retailers can target nearby mobile customers by leveraging location based marketing.

SINGAPORE BUSINESS REVIEW | december 2018

Amazon and Google to acquire customers to their app business. YouAppi has also attracted popular brands in Southeast Asia such as Shopee, a factor for the platform to extend its global footprint in the region by opening new offices in Singapore. “They come to us, and they give us their targets and what they’re looking for. For instance they want customers in Singapore, Manila, or Jakarta. Sometimes they want to drive customers to specific locations, like big malls, so we look for users that will have a good chance to become shoppers. So it’s not just the location, but we also ensure that these users will purchase. First of all, find users who will become shoppers, and match their location to the brands,” he said.

This strategy allows offline businesses to build a substantial number of followers, in turn, increasing the likelihood of repeat customers Vaknin said that YouAppi currently has 1.5b profiles around the globe, which their clients will have access to depending on the preferences and locations of these profiles. According to him, their platform is the first comprehensive 360 Platform for premium mobile brands, designed to increase acquisition and retention of highvalue customers. Meanwhile, other brands have yet to find a place for location-based marketing in their businesses. Benny Chow, project and marketing manager, Firefly Photography Pte Ltd, said that their business currently operates on an appointment-based model that is done digitally. Many times, their brand also goes to the client’s desired location, something which Chow describes as more productive. According to him, location-based marketing is more relevant for businesses that target walkin customers. Cheryll Cheah, sales and marketing executive, Quorier, said that their logistics company’s service is available online, and that they do not have a physical location specific for deliveries, unlike retail stores. Nonetheless, they are looking into leveraging location intelligence to prompt couriers to pick up parcels when they are in certain locations, so that it helps them save time and petrol. “The outlook for location-based marketing looks promising, with offline businesses realising its potential to enhance their ability to reach nearby consumers, drive in-store traffic, and launch promotions for attracting and retaining customers — all at a fixed price. In Asia, 5 million merchants and around 4.55 billion consumers will benefit from this disruption,” Mak said.

Management Excellence Awards 2018

RECOGNISING THE EXCEPTIONAL BUSINESS

LEADERS AND LARGEST COMPANIES IN

SINGAPORE For more information, please contact: Julie Anne Nunez +65 3158 1386 ext 221 julie@charltonmediamail.com

Event coverage: HOTTEST START UPS PANEL BRIEFING

Cracking the code: Secrets from the most successful start ups in Singapore Singapore Business Review brings in the bigwigs of the startup ecosystem--from top venture capitalists, accelerators, large startups and emerging gazelles.

hen The Fifth Collection’s founder Nejla Matam-Finn pitched the idea of a platform for buying and selling preloved clothes in Singapore, everybody thought the idea was crazy. They thought that nobody would buy second hand apparel in a highly developed city such as Singapore. Despite protestations, Matam-Finn went with her gut and now The Fifth Collection is raising another round of funding after having raised $1.4m during the first round. Top-billed by successful startups such as Hmlet, InstaREM, and StashAway, Singapore Business Review’s Hottest Startups Panel Briefing 2018 discussed the latest trends in the ecosystem with the crème de la crème of all the startups featured in the magazine’s 20 Hottest Startups in 2018. The city’s most trusted investors also weighed on how aspiring techpreneurs can begin, how they can propel their business forward, and how they can find the funding that is appropriate for them. As with The Fifth Collection, any startup begins with a small idea. Ned Phillips, CEO and founder of robo-advisor Bambu, said that the market is flooded with ideas, but that those who aspire to build their own startups should know how to execute an idea and make it profitable. With the rapid development of technology 60

SINGAPORE BUSINESS REVIEW | december 2018

The market is flooded with ideas, but that those who aspire to build their own startups should know how to execute an idea and make it profitable.

and the ever changing preferences of consumers, startups can be sure that the market in Singapore will always have room for new ideas. Deemed as a gateway to the larger Asia-Pacific region, Singapore is still far from having a saturated startup ecosystem, despite concerns that it could be overcrowded already. Phillips said that a saturated market is where there is no opportunity left. According to him, there are still a number of people who are not yet represented in the market and the available money is still incredibly high. In addition, Dmitry Voronenko, co-founder, Turnkey Lender, said that Singapore is a good place to expand to India and China, as there are not only many niches, but also different layers that budding startups could explore. Navigating the startup maze Ten years ago, startups in Singapore would sprout and wither immediately in the absence of structures that would support their growth. As the city became more dynamic and more friendly to them, Singapore has seen an unprecedented growth in the numbers of individuals and teams coming over to set up their small tech businesses. With new technology, funding options, and competition bombarding startup businesses at increasing

Event coverage: HOTTEST START UPS PANEL BRIEFING rates, their leaders must be adept at knowing how to adjust their strategy and stay above water. Whilst there are definitely more startups today than ever, the reality is that many of these startups are not successful at all. Kiren Tanna, co-founder and managing director, ZEN Rooms, said that over the past years, they have learned how to leverage particular functions and make the best of what each of their teams have to offer. As ZEN Rooms enjoys a physical presence in many Southeast Asian countries, it also ensures that the teams in these countries are working to the best of their ability. “So for example customer service, we started off in Indonesia, and we moved now to two centers, one in the Philippines handling English and one in Indonesia, handling all Bahasa because that is still a big market for us. Customer service, tech team we have across Thailand and Vietnam, marketing and business intelligence as well as pricing and revenue management and the more analytical functions in Singapore,” Tanna said. Regardless of the services that a startup offers and the stage it is at, branding remains to be a crucial ingredient for survival in a highly competitive environment. Ashley Kee, founder, Bandboo, said that whilst insurance is not a sexy sector, their company managed to go past sustainability and become credit positive. According to her, after concluding Series B, startups should have more or less an idea what venture capitalists are looking for and that is growth. “Ninety-percent of company startups fail because of poor product market fit. If a product has failed because of half baked technology or a poor product, there’s nothing you can do about it. It’s best that we shut that down. We will go to a new idea. It’s a case by case basis, worth reinvesting, but a majority of them deserve to be six feet under the ground,” Kumaran Pillai, chief executive officer, Apple Seed Venture Accelerator said. Kee added that as a startup grows and tries to go through various rounds of fundraising, VCs would want to know whether a startup is fixing what needs to be fixed and constantly developing their tech teams. “Regarding the speed of Asia versus the States, I think we are in an amazing part of the world right now. I think Asia is one of the markets that is offering one of the most amazing opportunities, more than the States. I think it requires companies that can actually adapt themselves much faster to different cultures and different countries,” said Yoan Kamalski, co-founder and CEO of Hmlet. Culture as an asset Meanwhile, Elena Ionenko, co-founder, Turnkey Lender said that from the very beginning, their startup has absorbed this global trend of going online and becoming e-lending. She said that they have spent a lot of time building their architecture and technology so they could cross borders and go to different countries and markets. When Apple Seed Venture Accelerator first started in Singapore, they started looking around at the landscape. They observed that most of the investors were investing in companies that had topology, so they made a conscious decision to build a team with a big strategy to invest in culture, the biggest asset in Asia.

Branding remains to be a crucial ingredient for survival in a highly competitive environment.

Kamalski said whilst startups can learn a lot of lessons from the US and elsewhere, other countries have other cultures, and most of the references are much more Western. If a company is customer driven, it will definitely prioritise the cultural criterion. According to Kamalski, finding a niche is the first step. Getting Singaporeans to use one’s products is another hurdle. In their experience, Singapore has a different culture from its neighbours, who have no problem living in a closeknit community, the goal of Hmlet. For those who wish to expand to other countries, growing their business will perhaps require them to study the lay of the lands they set foon on. “Just in ASEAN alone you will find multiple languages and cultures. If you take a single country alone, like say Indonesia, thousands of islands and not all of them identify as the same culture, even though there is a rising middle class, it can be quite challenging for companies.” Following the money As venture capital funds become increasingly competitive for startups to acquire, crazy rich Asians in the form of family offices started entering the venture capital space to fill in the gaps. According to Voronenko, family offices are sprouting all over the region in countries such as Indonesia and the Philippines, wherever successful startups exist. He said that they could indeed be good for business and that the tech business could be good for them as they move away from traditional investments. Hari Sivan, CEO, SoCash, said that it is always hard to raise funds, but the good news is that the options are increasing along with the funding methods. Sivan said that back then, VCs rarely participate in the angel round, but that is now happening for many upcoming startups. Matam-Finn said that their first round happened after they were discussing with an angel investor, who spread the news around about their idea until other investors became interested. For Matam-Finn, this has worked more for them than the idea of an initial coin offering (ICO), which has become more popular in Singapore in recent years. Phillips of Bambu said that he also believes that ICOs could work in the future with distributed ledger technology, but as of now, he opts to raise funds in other

Panel session 3: The evolving role of accelerators in the startup ecosystem

SINGAPORE BUSINESS REVIEW | december 2018

Event coverage: HOTTEST START UPS PANEL BRIEFING

The event was attended by over 150 delegates

ways as ICOs do not allow him to get to know his investors well. Clemen Chiang, Ph.D., CEO, Spiking, said that if startups know how their investors invest their money, they will become smarter with the way they do business. “Doing an ICO is never easy, even last year when people told me it was easy, it was not. We spend three months, four months, preparing for the ICO, the founders are sleeping less than 4-5 hours a day, travelling more across the world, if I have to do it all again, I might not. VCs bring the sanity back to the market,” said Gaurang Torvekar, co-founder & CEO, Indorse. Despite Singapore being a close third after the US and Switzerland as “ICO-friendly” markets, startups must be careful to join in on the ICOs craze lest they discover it costly and unnecessary. In fact, one of the primary misconceptions of an ICO is that it costs next to nothing.

Dr Ser Wah Oh, founder Whizpace, said that there should be enough demand to do an ICO, otherwise there would be no need for a startup to force itself to do it. “I’ve been looking at whether a specific program makes sense for ICOs, and we decided not to do it because two reasons, I didn’t find a way that made sense of token owners, and I’ve been talking to companies that have done ICOs and my question is always to understand whether we want to do it. And second reason, we are a company in the business of building trust, and I didn’t want to breach that trust by doing something that was not really clear yet,” said Michele Ferrario, co-founder and CEO, StashAway. On the other hand, ICOs have also worked for many startups in Singapore, especially for those who are closely working in the blockchain space. Dimitri Kouchnirenko, director & co-Founder, Incomlend, said that their company has actually considered growing through ICOs, or VCs. According to him, their conclusion is that the ICOs are perfectly geared for companies which are project-based, and which are really starting to do something. However, for VCs, one has to make sure that one has a profitability model and a business model, or something that shows that the startup can be profitable in the future. “Singapore in terms of ICOs is a very friendly market. Good visibility, this is one of the factors of success for ICOs in Singapore. ICOs will continue to grow, they will be a favorite. At present, 60% of startups are doing them and in the future 90% of startups will go through ICOs, but not all will succeed, it will be based on their technology,” Kouchnirenko said.

What happens next?

Mergers and acquisitions seal the endgame for Singapore’s graduating startups

ingapore businesses that have achieved enough scale to graduate from the startup scene have been steadily maintaining the trend towards M&As as their main exit route instead of going public like their counterparts in US and China, proving that acquisitions continue to be the main growth engine of startup exits in Southeast Asia. Such was the path shunned by budget hotel network startup ZEN Rooms who earlier raised US$15m from South Korean hotel app creator Yanolja Co. in exchange for a significant strategic stake with the right to acquire 100% of ZEN Rooms in the future. “For ZEN Rooms we evaluated the IPO briefly but found it still very cumbersome and low liquidity option such that a Corporate with Yanolja exit was a much better. Further with such a transaction we are able to benefit tremendously from the synergies with Yanolja and grow much faster as a result, something that is not possible with an IPO,” said Kiren Tanna, founder of ZEN Rooms. A minimum of 250 M&A’s are expected to take place in the region each year from 2020, reflecting a 500% increase in M&A exits from the number expected in the 2015 to 2020 period, according to an earlier report by venture capital firm Golden Gate Ventures. The report added there have only been 11 tech IPOs in SEA in 2005 to 2016 whilst there have been 127 acquisitions over the same period as the VC firm pointed out that there have been 145% more

SINGAPORE BUSINESS REVIEW | december 2018

M&As than flotations in the past ten years. The explosive growth of new institutional funds and a shift towards later-stage funding also bodes well for startups seeking that one extra push towards their well-deserved endgames.“I believe the issue here is Singapore lacks a domestic market. Homegrown startups usually do not have the opportunity to scale to a level where an IPO is necessary and a cost effective mean of raising money,” said Jackie Lam, co-founder of startup research platform Oddup.

ZEN Room’s Uppala Villa Spa Umalas

Event coverage: HOTTEST START UPS PANEL BRIEFING As to whether VCs can do enough due diligence to assess a market or a product, experts agree that it is not all black and white. Voronenko said that they consult a lot of customers, talk to individual contractors, assess the market themselves, but that these are not the usual case. Phillips said that due diligence, when too much focus is placed on it, may be a waste of time. “Projections do not define success, no matter what your budget and KPIs are and your market size is. The chance that you are going to have accurate forecast of numbers is unlikely. I really do think that it’s about reality. You have an idea, and if you spend six months thinking about whether there is a market for it, you call a thousand people, run an app, that’s what validation is,” he added. Perfect partnerships Whether deciding to go with a corporate investor or a VC or another type of funding, startups can learn more from accelerators with a bottom-up approach and who allow them to explore opportunities relevant to them. Michelle Woo, programme head, Oracle Startup Ecosystem, said that there are a lot of structured curricula and type-based programs across the industry, and said that these do not really work. According to Woo, it is important to have more of a partnership-based program for startups that will make them realise that they are the accelerator’s business partner. This setup will take time to work, especially in larger organisations, but Woo said that attitudes change eventually and the relationship will be more at ease in this manner. “For us, we focus a lot on helping our startups get to customers. Every accelerator runs differently, for us it’s really about access to a large market, 400,000 customers, 8,000 in Asia. We are very realistic in a sense that we ask, this is the expected timeline, we know it’s going to take your resources, is it the right opportunity for you? It’s a very honest conversation that we’ve taken through this,” Woo added. For Pillai, accelerator programs in Singapore are different compared to other countries with accelerator cohorts. According to him, Singapore is a very unique with higher interest in cryptocurrencies, compared to London where the regulatory environment and the verticals are also different. “In terms of their interest, in London obviously there’s a huge interest in terms of intelligence and machine

Panel session 1: Is the Singapore startup ecosystem saturated?

Good visibility, this is one of the factors of success for ICOs in Singapore. ICOs will continue to grow, they will be a favorite. At present, 60% of startups are doing them and in the future 90% of startups will go through ICOs, but not all will succeed.

What’s trending?: Turning trends into profitable businesses Startups that catch trends before they even come are at a huge advantage, and will surely find ways to turn these trends into profit. Rhonda Wong, CEO, real-estate startup ohmyhome, said that one of the key signs that can be seen in startups that are not growing fast enough is that the solutions they are providing are not trending. “After a short time people are not keen anymore. We foresee that the solution we provide will continue to evolve and continue to be needed throughout the market,” she said. For The Fifth Collection’s Matam-Finn, having been in operations for five years now, they have seen all the trends out there and have been building their company towards profitability based on their observations of the market. Timeless trends One trend that never goes away is Singapore’s attractiveness to foreign talent. Apple Seed Venture Accelerator’s Pillai said that plenty of the successful companies in Singapore are foreign companies. According to him, many of them already have a system in place from where they come from or where they have other offices. Whether it’s fintech or adtech, there is always a lot of foreign talent concentrating in Singapore. However, most startups are not content to just stay in Singapore. Many of them make the city their jump-off point to other countries in the region, where more markets could be created and where competition can also fuel more growth. Several startups at the Panel Briefing have physical presence in countries beyond Singapore, such as Indonesia, Malaysia, and Thailand.“Growth is being able to anticipate trends and climates, for the scalability, for us we’ve been highly lucky because our business is highly scalable. After we started within a few months, we decided to open in other countries: Vietnam, Thailand and Malaysia. It’s true that we didn’t stay in Singapore although we still have a lot of growth in Singapore,” said Alexia Sichere, co-founder and general manager, Try and Review. SINGAPORE BUSINESS REVIEW | december 2018

Event coverage: HOTTEST START UPS PANEL BRIEFING other aspects that will make a difference in the growth of the business. “So first of all, when we talk about micro gazelles it’s the scalability issue. And I would like to think that a lot of time some startups have a lot of difficulty scaling this, because the problem that they’re solving, the solutions that they’re providing, is not, a big enough problem, maybe a problem in Singapore, but not a problem elsewhere. For us, we think about the main issues that people are asking in transactions are the same across the entire world, there is no difference in how difficult it is to transact, on how costly it is, and how time consuming it is,” Wong of ohmyhome said. For Leong, the common thread for unicorns in Singapore is that they have effectively been able to access markets outside of Singapore. Singapore may already be a very juicy market, but in order to reach the scale that a startup needs, it cannot stay put. Leong said that the biggest hurdle would be to crack the code to expand regionally, be it in Indonesia, China, or India. At present, competition against China remains stiff due to their 996 culture or the 9am-9pm, six days a week culture, which is not the same culture in Singapore. Try and Review, a company that focuses on usergenerated content, said that their regional expansion came with one of their very first clients in 2016, Unilever. According to Sichere, Unilever came to them asking to run the first pilot in Vietnam, where they initially had no platform and process in place. They decided to try to apply the process in Singapore to Vietnam, translated the website to Vietnamese, and got a financer to do that job and run a few Facebook ads. Eventually, Try and Review got a few testers and were able to launch their service very well. Now, the company has been able to roll out across all the Southeast Asian countries through the help of a client. Prajit Nanu, co-founder & CEO, InstaREM, said that while Series B funding is a very important complicated, and crucial stage, Series A could affect the time of young startups more. This is the stage where gazelles can spend a lot of time in contemplation about the type of funding they would want to receive, the preparations they need for the next steps ahead, and the direction they want to take. It is the entire business plan and vision, and whilst these may sound as mere projections, they may actually play one of the most central roles in the success of the company.

Panel session 5: ICOs versus VCs

SINGAPORE BUSINESS REVIEW | december 2018

THE VIEW

Workforce management: The crucial role of team dynamics

Nonetheless, there is no fixed formula for the best founders. While PhDs sound attractive and intimidating at times, many startups have succeeded with founders who do not exactly have a lot of years spent in education.

Whatever technology, strategy, or market a startup wishes to engage, there is one thing that will be crucial to the entire process: the team. Depending on the priorities of the business, a team may be configured and reconfigured and may experience constant change. Kineret Karin, founder, ImpacTech, said that finding the right team can make a difference. As an accelerator company, ImpacTech mentors and tries to help failing startups find a way and figure out the platform to help them.Many startups become too excited as they start, and they hire big people immediately without carefully thinking about the contributions that these people could bring to the table. Kumaran Pillai, CEO, Apple Seed Venture Accelerator, said that what startups need is a concentration of skills and skill sets as they benchmark human resources against the competitor. “A year later, you might need to bring a marketing guy on board, two months later a financial guy on board, so you need to keep changing that particular mix over time. So yes it’s alright to look for a team, but the team configuration changes over time, this is something that the founder has to do, we can help you with that configuration,” Pillai said. Anshul Gupta, co-founder, Tab Square, said that a startup team is an evolving structure based on what the business needs. For instance, The Fifth Collection started with a team based in Singapore, and now they are outsourcing tech talent from India, where there is a lot of expertise. Founders also play an important role in the success of a startup. “At first you have founders to build your company, at the C Stage, the founder’s background, expertise and their education is a sure sign of potential success to us. We have founders who have years of research, who have PhDs in a specific field, we have founders that have spent years in an industry, and when we put them together, product managers with creators, 80% of them are able to fundraise money for the C round,” said Elise Tan, head of funding, Entrepreneur First. Nonetheless, there is no fixed formula for the best founders. Whilst PhDs sound attractive and intimidating at times, many startups have succeeded with founders who do not exactly have a lot of years spent in education. Tan said that 50% of their cohort do not have PhDs, but most would have masters degrees. For instance, they have a CEO who is doing extremely well building regenerative AI technology. He has work experience in LinkedIn and Google, but does not have a PhD.