Singapore Business Review (December 2016 - January 2017) by Charlton Media Group

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INVESTMENT

IDEASfor2017

DON’T BE CAUGHT SLEEPING THIS YEAR OF THE ROOSTER AND START SITTING ON THESE GOLDEN INVESTMENT EGGS

ATALE OF TWOTOURISTS

WHAT’S UP WITH

EN-BLOC?

NETFLIX AND KILL:

SINGAPORE’S PAY TV MAY BE LOSING THE WAR

CONVENIENCE STORES VS HAWKER STALLS

SLIM PICKINGS FOR PRIVATE EQUITYHOUSES

RANK INGS 2 EN 7 LAR

74 73

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

G GINE ERIN EST G FIR MS 3 ACCO5 LARGE S UNTI NG FI T RMS

SINGAPORE BUSINESS REVIEW | JANUARY 2017 C1

EXECUTIVE EDUCATION

transformation noun \ trăns∙fôr ∙`mā∙shən\ |

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FROM THE EDITOR As we welcome the Year of the Rooster, we bring you investment ideas from the experts to get your portfolios crowing. As with any investment idea though, it’s best to take these ‘golden eggs’ with a grain of salt. We also looked at what’s happening with private equity houses and what the outlook is for 2017. We found out that Southeast Asia is receiving greater PE attention as economies in the region strengthen further, providing optimism amidst a scarcity of local deals. In this issue we also introduce you to the most influential health and fitness buffs in Singapore aged 40 and under as well as the largest accounting and engineering firms in the city-state. We also take you on a culinary journey as we dove deeper into what’s going on with convenience stores and how they might be taking on hawker outlets with their new dining offerings. Enjoy the issue!

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CONTENTS

ANALYSIS

Cheers and 7-Eleven taking 26 Are on hawker outlets?

COVER STORY 10 GOLDEN investment eggs – BEST TAKEN WITH A GRAIN OF SALT – To hatch in 2017

FIRST 08 iPay you now:

RANKINGS

FIRST 20 Is 2017 poised to be better?

Demand for mobile wallets

12 What’s up with en-bloc? 14 A tale of tow tourists 16 10 most influential health and fitness

36 Engineers are tunnelling their way into overseas projects

09 About those bad loans... 10 Netflix and kill: Is pay TV losing?

FEATURE New name, new frontiers: Soaring far beyond Italy

38 Accountants are sought

REGULAR

after now more than ever

22 Financial Insight 40 Legal Briefing 42 CMO Briefing

buffs in Singapore aged 40 and under

Published Bi-monthly on the Second week of the Month by Charlton Media Group 101 Cecil St. #17-09 Tong Eng Building 2 SINGAPORE SingaporeBUSINESS 069533 REVIEW JANUARY 2017

For the latest business news from Singapore visit the website

www.sbr.com.sg

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

HR & EDUCATION

TELECOM & INTERNET

RETAIL

Singaporeans are world’s 6th best English speakers

A new telco is coming: M1, StarHub brace for earnings cuts

Investors wary over Sheng Siong’s upcoming store closures

The 6th edition of the EF English Proficiency Index, which ranks 72 countries and territories based on test data from over 950,000 adults who took EF’s online English tests in 2015, has placed Singapore on the 6th spot. Singapore scored 63.52 whilst the top ranking Netherlands gained 72.16. Netherlands is followed by Denmark, Sweden, Norway, and Finland.

It is going to be doomsday for the two lesser telco giants StarHub and M1 as they face another competitor which will definitely shake up the telco scene. According to DBS Group Research, the new telco will secure 7% revenue share by 2022 once it enters in late 2018, citing the trend in Malaysia after U-Mobile entered the sector in September 2007.

After Sheng Siong Group’s latest 3Q16 results in late October, OCBC Investment Research notes that it has seen a correction in its share price to current levels. The research house acknowledges the concerns on growth ahead and the anticipated store closures next year for its ~41.5k sq ft Woodlands store and most likely, the 45k sq ft store in The Verge.

Upgrade yourself today: The 10 most wanted IT skills in Singapore BY AMOS TAY Our dynamic workforce requires its workers to upgrade their skill sets constantly. With government subsidies and support, improving yourself does not have to be too expensive. Through the SkillsFuture credit scheme, you can access over 10,000 courses available on the SkillsFuture directory. These courses will help you stay up-to-date with the latest technologies and strategies in your industry.

Disruption defines three challenges for Singapore BY MARCUS LOH Singapore’s ability to navigate the challenges of disruption rests on becoming a Learning Nation, and ensuring industry-readiness and re-employability. Disruption is regarded as the new normal. Clayton Christensen in 1995 explained disruption as an innovation that “creates a new market and value network and eventually disrupts an existing market and value network, displacing established market leading firms, products, and alliances.”

MOST READ COMMENTARY The ups and downs of the Singapore shipping and offshore sector BYJUNE HO It seems that every week brings a raft of new ‘bad news’ stories for the Singapore shipping and offshore oil and gas sectors as well as their investors. Swissco Holdings, OW Bunkers, Swiber Holdings, Rickmers Maritime, Ezra Holdings, Marco Polo Marine are all reminders of just how far the markets have fallen, and clearly show how few options companies (and investors) have when things turn bad.

4 SINGAPORE BUSINESS REVIEW JANUARY 2017

co-published Corporate profile

AIA Triple Critical Cover grants renewed confidence even after a critical illness

AIA Triple Critical Cover plan enables the life insured who have been diagnosed with critical illness to move forward with more assurance. Cover addresses a palpable need for the life insured who developed CI to gain sufficient coverage for subsequent CIs. 2 out of 5 want to purchase another CI plan due to fear of lacking coverage when they suffer from another CI, but more than 9 out of 10 (94%) find it difficult to do so, according to the AIA Health Matters Survey 2016. Almost all respondents (97%) also expressed worry that they may be diagnosed with another CI, and, in fact, 3 out of 10 have been diagnosed with more than one CI, showing that their fear of lacking coverage is not unfounded. Zeroing in on recovery

hen you ask Singaporeans who have been diagnosed with critical illness (CI) to share their deepest fears, acquiring another CI will rank high in their nightmare list, according to AIA Health Matters Survey 2016. Advanced treatment and insurance coverage for CIs such as cancer might mean that Singaporeans can live through their first CI treatment, but it inflicts such a brutal blow to their finances that the prospect of a second or third CI becomes terrifying. “The majority of patients are financially unprepared for cancer treatment and are shocked that modern chemotherapy and targetted therapy can cost so much. Besides the physical strain of undergoing treatments, patients also worry about the risk of being diagnosed with other CIs such as heart attack or stroke, and yet another extended period away from work which will worsen their financial situation,” says Dr. Wong Nan Soon, consultant medical oncologist at OncoCare Cancer Centre Singapore. “There is a greater need to help these individuals so they are not only able to fight the illness but, just as importantly, look forward to living life without the worry of being in debt indefinitely,” he adds. Better CI protection This need for better CI protection led AIA Singapore to start offering AIA Triple Critical Cover, a plan with a Power Reset feature which fully restores the CI insured amount to 100% after 12 months have passed from the previous CI claim. AIA Triple Critical

First of its kind in Singapore AIA Triple Critical Cover is a breakthrough for the industry since it is the first time such a coverage restoration feature is offered for all stages of CI, even for early stage CI, according to Ms. Ho Lee Yen, Chief Marketing Officer at AIA Singapore. “AIA Singapore will continue protecting Singaporeans even after they have made a critical illness claim* so that they can look to their future with confidence,” says Ms. Ho. The AIA Health Matters Survey 2016 also revealed that 3 in 4 Singaporeans, upon developing critical illness, will stop working partially or fully. They do this to focus on recovery and bounce back stronger after CI treatment. But financial and health recovery from the first CI may be impeded by the spectre of another subsequent CI, which most plans prior to the AIA Triple Critical Cover will no longer cover. Multiple claims and high coverage Once under the AIA Triple Critical Cover plan, the life insured can make multiple claims* for 104 critical illness conditions across all stages (early, intermediate, and major) for up to 300% of insured amount, provided that it is for a different condition than previously claimed. The 300% of insured amount is AIA’s way of helping Singaporeans cope with the loss of income and other relevant costs associated with CI treatment and recovery, as well as to shield their families from heavy

financial burden. The AIA Health Matters Survey 2016 also showed that more than half (57%) of individuals who purchase CI plans do so to provide financial support for themselves and their families if they were to be diagnosed with CI. Not giving up However, on average, their insured amount is insufficient to protect themselves and their families, AIA found in the survey, because of the high total cost of a CI diagnosis, which includes medical bills and loss of income, amongst other expenses. “In Singapore today, the average insured amount from CI plans will cover us less than halfway through the treatment time required before the condition stabilises, an important gap that needs to be bridged,” says Ms. Ho. “AIA Triple Critical Cover is inspired by and supports resilient Singaporeans who celebrate life and simply don’t believe in giving up.” Additionally, the AIA Triple Critical Cover life plan offers guaranteed cash value. The life insured may choose to hold the plan till maturity at age 100 or discontinue their plan after age 75 or on the 60th policy anniversary, whichever is earlier, to receive cash value even if they do make a CI claim**.” Taking charge of your health to reduce the risk of critical illness Life insured of AIA Triple Critical Cover may also opt to sign up for the AIA Vitality programme which supports Singaporeans on their health journey and also acts as a preventive measure to help reduce their risk of contracting some CIs. AIA Vitality is the science-backed wellness programme in Singapore, which provides the knowledge, tools, and motivation to encourage individuals to take small steps to achieve their personal health goals and get rewarded for their efforts. *Maximum claim limits apply and subsequent claims have to be for a different condition from the earlier claim(s).” ** Cash value received after deducting any CI claim made from the policy.

“AIA Singapore will continue protecting Singaporeans even after they have made a critical illness claim*.” SINGAPORE BUSINESS REVIEW | JANUARY 2017 5

Agenda PEOPLE | PLACES | SERVICES | OPPORTUNITIES

MEMBER OF THE RCMA GROUP

services

OPPORTUNITIES

iSwitch energy

INVEST NORTHERN IreLAND Products and services from Northern Ireland are sold to over 100 countries. The region has built strong, trusted relationships around the world – that’s why we are the perfect partner for global business. Invest Northern Ireland is the main economic development agency for this part of the UK, promoting trade and investment through its network of global offices. To find out more about what Northern Ireland can do for your business, visit investni.com

OPPORTUNITIES

iSwitch is an electricity retailer, licensed by the Energy Market Authority (EMA), with more than 50 years of electricity retailing and trading experience across the Asia Pacific region. Understanding customers’ business needs, we offer attractive electricity plans with flexible payment terms to manage their electricity costs. Simply email your latest monthly electricity bill to sales@iswitch.com.sg, or call 1800 505 9900, to know how you can save more. iSwitch is backed by the RCMA Group, an established participant in the Global Commodity and Energy sectors with an annual turnover in excess of US$1b. CLIENT PROJECT

places

renaissance harbour view hotel hong kong Adjacent to the Hong Kong Convention and Exhibition Centre, the 859-room Renaissance Harbour View Hotel Hong Kong enjoys panoramic views of the Victoria Harbour. Our hotel offers over 1,300 square metres function space including two versatile function rooms namely Oasis and Concord Rooms and nine boardrooms. Superb dining includes the awardwinning Dynasty restaurant that features an array of authentic Chinese specialties whilst Cafe Renaissance offers international food selections.

RCMA GROUP ISWITCH LOGO PROPOSAL

OPPORTUNITIES

kaplan singapore

EASB

Ranked by JobsCentral as the number one Preferred Private Education Institution consecutively in 2012 and 2013, and by AsiaOne People’s Choice Awards in 2009, 2010, 2013, 2014, and 2015, Kaplan Higher Education provides full-time and part-time diplomas, bachelor’s and master’s degrees to individuals looking to pursue careers in various fields. For more information, visit www.kaplan.com.sg

East Asia Institute of Management (EASB) is a four-year EduTrust certified private education institution. We offer Diploma, Bachelor’s Degree, Master’s Degree, and MBA programmes. Major disciplines include Hospitality and Tourism Management, Business Management, Accounting, Banking & Finance, Medical Bioscience, and many more. For more information, visit www.easb.edu.sg

6 SINGAPORE BUSINESS REVIEW JANUARY 2017

visit

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co-published Corporate profile

Business executives gather insights from finance faculty

Why private equity can no longer be ignored

It has evolved from deal making by the ultra-wealthy to an investment option for individuals.

ith market uncertainties growing, many investors and their advisors are taking a closer look at private equity. In fact, this asset class is now attracting a sizeable segment of the economy, and it has an ecosystem that includes not only private equity firms, but banks that cover their debt, individual investors, and companies looking to sell or being approached for a sale. “No one needed to understand private equity 30 years ago,” says Private Equity Professor Bilge Yilmaz at the Wharton School of the University of Pennsylvania. “But today, you can no longer ignore it. Private equity has evolved from deal making by the ultra-wealthy to an investment option for individuals.” Seeing value where others can’t Yilmaz says that with so many people now involved, the bidding can be intense—and the chance of making a costly mistake is great. “You need to be able to see value where others can’t, and understand how a deal is put together. If you’re an investor, you will inevitably have to compete with others, so your ability to do good sourcing and due diligence is key.” Yilmaz has been teaching private equity to Wharton MBA students for many years, providing them an edge that they can put to

use in their first deal. Now, he is bringing the same innovative curriculum to an open-enrollment course for business executives in the four-day program Private Equity: Investing and Creating Value. “We will help participants gain exposure to the strategies that private equity firms use to structure and finance a deal and create value for their investors. They will understand the key drivers in private equity and gain confidence in evaluating investment opportunities,” Yilmaz says. In addition to best practices in and tools for structuring a deal, sessions on due diligence, debt negotiations, and exit strategies will show participants how to get maximum value from their investments. The best way to learn Yilmaz will be joined by other finance faculty and Wharton alumni who are leaders in many areas of the private equity industry. They will share their experiences and discuss their views on the private equity landscape. Outside the classroom, participants will work on deal proposals in small groups, applying what they have learned, using as reference a recent private equity deal. They

Wharton Private Equity Professor Bilge Yilmaz, PhD

will apply the tools that private equity firms use to structure and finance a deal, and show how it will create value. “This is the best way to learn,” says Yilmaz. “You need to experience the life of a deal to appreciate the knowledge and strategies that go into it. I want participants to be able to articulate why they want to own this business.” A deal proposal will be presented to a panel of faculty and alumni who will provide real-time feedback at the end of the program. “This is not just an exercise,” says Yilmaz. “It’s a reality check on what you have learned in the program, how well you can apply it, and what you can do to improve.”

Wharton’s Private Equity: Investing and Creating Value program runs March 27–30, 2017, in Philadelphia, PA. For more information, contact +1.215.898.1776 (worldwide) or execed@ wharton.upenn.edu. Visit: execed.wharton.upenn.edu/finance

“You need to experience the life of a deal to appreciate the knowledge and strategies that go into it.” SINGAPORE BUSINESS REVIEW | JANUARY 2017 7

FIRST More generous employers

With today’s workplace flexibility, circumventing the traditional 9-5 has never been easier. The Ministry of Manpower’s Conditions of Employment Survey 2016 reveals that the proportion of employees working in establishments with adhoc flexible work arrangements (FWAs) increased from 76% in 2015 to 82% in 2016. Similarly, the percentage of firms providing unplanned timeoff or ad-hoc tele-working for their staff to attend to personal matters improved from 70% previously to 77% in 2016. Of the various arrangements, part-time work (35%) remained the most prevalent formal FWA, followed by flexi-time or staggered hours (23%). Meanwhile, unplanned time-off (75%) was more common than tele-working (21%) amongst ad-hoc FWAs. Beyond what’s required According to MOM’s report on the survey findings, more employers were going beyond statutory requirements to provide various leave benefits to help employees cope with personal and family commitments. “Employers were more generous in providing compassionate leave (92%), marriage leave (74%), and study/ examination leave (40%),” says MOM. Meanwhile, resignation rates were lower amongst companies that: (i) offer a larger number of formal flexible work arrangements to their employees; (ii) have a higher proportion of full-time employees on a fiveday work-week; and (iii) have a higher proportion of full-time employees with longer annual leave entitlement. A total of 3,800 establishments employing 1,335,100 employees responded to the survey conducted by MOM’s Manpower Research and Statistics Department. 8 SINGAPORE BUSINESS REVIEW JANUARY 2017

N E M I SPEC xxx has been an increasing demand for mobile wallets There

iPay you now

t seemed awkward at first, as J.D. Power director Gordon Shields recalls it, having to pay using his phone at a supermarket. The checkout assistant confusingly shouted “Apple Pie, Apple Pie” across the store when Shields tried to use the mobile app Apple Pay. Launched in May by Apple and followed in June by Samsung and Android, mobile wallets have been adopted by 1 in 4 Singaporeans but 1 in 3 millennials. Shields says, “As consumers like to have greater transparency over their accounts and prefer quicker access and control, without going through certain hurdles with OTPs or hard tokens, mobile wallets offer a good solution. However, the barriers to usage are multifold, including acceptance level across merchants, perception of fraud or misuse by cardholders, as well as the simple awkwardness for some users when trying the service for the first time.” Contactless payments using mobile phones in Singapore have gained popularity only in 2016 with more than 30,000 retail points enabling payment through apps such as Apple Pay, Samsung Pay, and Android Pay. “We expect overall usage to increase, as people move more to having their cards and loyalty programmes on the smartphone rather than in the physical wallet,” he explains.

We expect overall usage to increase, as people move more to having their cards and loyalty programmes on the smartphone rather than in the physical wallet.

A certain way to gauge how fast mobile wallet will gain more traction is by looking at how banks embrace the innovation. OCBC Bank says it has seen over 35% growth in contactless payments for the past year. “It was an easy decision to embrace digital wallets as we want to make this convenient payment method available to as many OCBC customers as possible,” says OCBC lifestyle financing group head Desmond Tan. Ease of adoption For Usman Khalid, Standard Chartered Singapore’s payments head, mobile wallets dissolve friction from payments. “Customers have strongly embraced these platforms as part of their lifestyles, with our customer engagement metrics showing a positive increase. We are also seeing significant growth in customers’ overall contactless spends,” he notes. Meanwhile, Maybank Singapore community financial services head Choong Wai Hong explains, “The mobile wallet is also safe to carry and use. Whilst some consumers may forget to bring their cards or wallets when leaving home, they rarely forget their mobile phones.” Some banks have gone so far as creating contactless ATMs. UOB, aside from launching Asia Pacific’s first contactless payment option via its UOB Mighty app, has promised to roll out 60 contactless ATMs around the city-state by January 2017. It eyes to replace all of its 634 ATMs with NFC-enabled ones by the end of 2018. UOB head for personal financial services Dennis Khoo says the bank even worked with partners to introduce contactless mobile payments at all local MRT stations.

Mobile digital wallets off to a promising start

Source: J.D. Power

FIRST Singapore mortage has been the growth driver for the first 9M

Source: Company data (compiled by Goldman Sachs)

Non-performing loans are hurting banks

About those bad loans…

he only lines on a chart bankers like to see going up are the profit lines. Alas, there is one other line that has been going up with an alarming regularity for the past 18 months, and that is the non-performing loans made by local banks, particularly to oil & gas firms. UOB leads the pack when it comes to its non-performing loans book, which stood at 1.6% at the end of September, and DBS overtook OCBC to reach 1.32% bad loans whilst OCBC had 1.19%. The numbers for OCBC are indicative of the industry, with roughly 40% of non-performing loans coming from the oil & gas

industry, 20% from Chinese-owned state-owned industries, and the remaining 40% from a variety of industries. About the only good news is all of the banks have an excess cushion of capital over the regulatory required reserves, with UOB topping that list with $3b of spare assets – enough to cushion the blow from its bad loans. The biggest change to the local banking market has been in the source of loan growth over 2016. As the big corporates have faced trouble and some even declined lending, it has been home mortgages which have shown the biggest growth.

About the only good news is all of the banks have an excess cushion of capital over the regulatory required reserves.

The next threat to banks’ profits in 2017 may well be the strengthening of the US$. Given Singapore banks’ exposure to the region, Maybank Kim Eng conducted a sensitivity analysis to assess the FX impact on Singapore banks’ profits, where regional currencies (ex-HK$)/ US$ will depreciate/appreciate by 5% and 10% against SG$ a 20 to 30bps increase in credit costs on potential higher provisions from US$ exposure. They found that on aggregate, banks’ profits will decline by less than 2% as the impact of higher credit costs is partly offset by translational gains from US$ strength. “There will be default risks if corporates/customers are not able to repay US$ debt when their domestic currencies depreciate further. In the event of potential higher provisions from US$ exposure, we assess the impact by factoring a 20-30bps increase in credit costs on the banks’ US$ loan book,” the brokerage warns.

The Chartist: Not-so-great expectations for the manufacturing sector A mere 17% of firms expect business conditions to improve, according to the manufacturing sector’s business expectation survey. Whilst 70% of the firms expect things to stay the same, 13% sees deteriorating business outlook. “The general business outlook index (calculated from the difference between the percentage of ‘optimistic’ firms surveyed and the percentage of ‘pessimistic’ firms surveyed, excluding the surveyed firms that expect things to ‘remain the same’) for October 2016 March 2017 improved to +4% compared with the previous survey’s -1% for July-Dec 2016, but this is well below the post-GFC average of +15% posted during Sep 2009 June 2011,” notes Maybank Kim Eng.

Singapore: Industrial production Index

Sources: Singapore Economic Development Board, Maybank-KE

Singapore IP: Growth in YoY and s.a % MoM

Sources: Singapore Economic Development Board, Maybank-KE

SINGAPORE BUSINESS REVIEW | JANUARY 2017 9

FIRST

Netflix and kill: Is pay TV losing?

Survey

Male boss preference

s Netflix choking the life out of pay TV businesses? If the number of users choosing online videos over the usual TV content is anything to go by, the answer may be yes. More than 3 in 4 (76%) connected consumers in Singapore are watching online videos on a daily basis, a survey by Kantar TNS revealed. This is slightly higher than the number of viewers watching traditional broadcast TV (71%) – 18% of these consumers use paid-for subscription online services such as Netflix. These figures bring bad news to Singapore’s pay TV service providers such as Singtel and most especially StarHub, which just lost 11,000 pay TV subscribers. UOB KayHian analyst Jonathan Koh says this has been the telco’s fifth consecutive quarter of shrinking numbers, as management shared that a larger-than-usual proportion of its pay TV subscriber base completed their contracts. It also faces competition from alternative viewing options, such as over-thetop (OTT) video services, which are TV streaming options that can be purchased without a cable subscription. StarHub is obviously badly and directly hurt as its pay TV business makes up 18% of its service revenue. DBS analyst Sachin Mittal says, “Since Netflix entered the Singapore market

Should pay TV providers panic?

in early 2016, the giant telco already saw its pay TV subscribers drop 1.5% q-o-q in 1Q16 due to Netflix’s entry and it eventually ended its ‘TV lite’ promotion.” Lacking local content However, Mittal notes that Netflix does not offer comprehensive local language content and sports content, which is a key driver in the Singapore pay TV market. Analysts from RHB express a similar view. They note that whilst there are concerns that Netflix would cannibalise existing pay TV services of operators such as StarHub, they expect this to be mitigated by the lack of “local, iconic, and live content on Netflix including sports.” Netflix, however, plans to have more localised content.

StarHub is obviously badly and directly hurt as its pay TV business makes up 18% of its service revenue.

Mobile App Watch

DetecThink gives Dora the Explorer a run for her money Math practice is enmeshed in an engaging detective story. Whilst there are a lot of digital entertainment games for children, most lack educational content. A common concern amongst parents is their children spend too much time on digital games and not enough on their studies. Advocating the philosophy of “Learn + Play”, Intellipath Games designed DetecThink – an educational gaming app – to captivate children through an engaging detective mystery whilst integrating math practice seamlessly into the story that stimulates their problem solving and analytical skills. The only way to advance through the game is by completing addition and subtraction problems which progress in difficulty. It is an effective complement to fundamental concepts learned in school.

10 SINGAPORE BUSINESS REVIEW JANUARY 2017

A mix of learning and playing

Grace Chua, cofounder and director of Intellipath Games

A new survey by Randstand finds Singaporeans would rather have a man as a boss over a woman. Randstand’s global Q3 2016 Workmonitor looked at employees’ sentiment around the gender gap, measuring their preferences for a direct manager. It found out that globally, 65% of the respondents preferred a male boss. In Southeast Asia, it saw an even higher percentage of employees who preferred working for a male superior. Respondents in Singapore (76%), Hong Kong (78%), and Malaysia (73%) surpassed the global average by a good margin, the highest globally after Japan (80%) and Greece (80%). Equally rewarded Meanwhile, despite numerous research reports highlighting the continuous pay gap between genders, 79% of employees globally felt that men and women who are in similar roles were rewarded equally. This perception was equally reflected in the region, with respondents in Singapore (81%), Hong Kong (81%), and Malaysia (83%) expressing the same sentiment. Michael Smith, managing director for Randstad Singapore, Hong Kong, and Malaysia, has expressed his concern over the results. “The Workmonitor results show a worrying trend in this region with such strong preferences for having male bosses in the workplace - despite open discussions around the issue of gender equality going on around the world.” He says corporate and government initiatives are just a start. “For real change to take place, the issues around gender equality need to be recognised and mind-sets need to evolve.”

co-published Corporate profile

ECAS Consultants: 20 years of integrated engineering success and growth

With two decades under its belt, this newly rebranded homegrown builder looks toward expansion to meet the region’s robust demand for infrastructure. Now that we have strong roots in Singapore, we can start looking into other areas in our region, especially to countries which are in need of our professional capabilities,” explains Er. Chan, who is also one of the firm’s founders.

Managing Director Er. Chan Ewe Jin

hen one thinks of the engineering business, it is easy to imagine a one-dimension enterprise that deals solely with the main construction process. More successful businesses, however, understand that an integrated approach to the engineering industry is far more effective, especially when it comes to successfully growing and competing in the region and beyond. ECAS Consultants Pte Ltd is one such company, having always nurtured a reputation for reliable project deliveries whilst addressing relevant infrastructure issues in the region. The company has grown to provide a broader range of consultancy services, with capabilities ranging from bridge and road, building, civil, environmental, geotechnical, infrastructure, mechanical, rail, structural, and tunnel engineering. Encouraged by its domestic success over the years, ECAS Consultants is now training its sights outside Singapore and looking to meet the robust demand for infrastructure in the region, managing director Er. Chan Ewe Jin reveals. “Our collective vision is to continue to innovate and provide more efficient engineering solutions to Singapore and other countries as we expand our geographic reach.

continue to undergo professional trainings to develop our skills and capabilities so that we may address the current and future needs of the built environment,” Er. Chan notes.

Staying true to core values Remaining relevant in the engineering industry happens to complement ECAS Rebranding in celebration of 20 years Consultants’ own thrust to develop its This year, ECAS Consultants marks its employees’ skills and adequately train them second decade in the industry as a leading for their respective roles and responsibilities, multidisciplinary engineering firm in with the company noting that “our talent Singapore involved in design consultancy pool is crucial to our business; hence it has services, accredited checking, construction always been our priority to develop our supervision, and inspection in both the professional capabilities.” country’s public and private sectors with a “We give importance to trainings and we rebranding programme designed to refresh and further cement the company’s identity regularly conduct evaluations to check the efficiency and ensure the effectiveness of in the industry. our human resources. It is important for us “We wanted a brand that would address to have the right people fill in critical roles for what we have to offer our clients, and at the every project we undertake.” same time, differentiate us from the bigger Accountability, which is strongly promoted firms. Our values are aspects of our business in the company, is given a premium amongst process that we would like to bring forth employees. “Every employee knows his or her to our clients, and at the same continue role in our success. We encourage everyone to cultivate amongst our employees,” Er. to give their best and share the firm’s Chan says, referring to ECAS Consultants’ success.” time-honoured core values of Excellence, At the end of the day, ECAS Consultants Commitment, Assurance, and Safety. believes that the ideals that fuelled its Despite adopting a new branding identity, success over the years will continue to be the clients can expect the company’s winning company’s catalysts moving forward—both brand of service to remain the same— here and abroad. business as usual, as the saying goes. “Our “We aim to exemplify excellence in every new brand shows that our roots and values have not changed. We still offer a high-quality job we undertake, commitment to deliver beyond expectations, quality assurance, service and we are still committed to every and safety in our practices. By focussing on job, but it also signifies our adaptability to these core values, we are shifting our focus new times and our ability to grow beyond to become more service-oriented and to borders.” prioritising our clients’ needs in our business Meanwhile, as an engineering company approach,” Er. Chan says. embarking on an ambitious expansion programme in the region, ECAS Consultants CONTACT believes in taking steps to harness best Company name: practices not just at home, but also abroad. ECAS Consultants Pte Ltd “As engineers, we have always given Address: 16 Jalan Kilang, #03-01, Hoi Hup great importance to staying current with Building, Singapore 159416 technological developments and innovations Phone number: + 65 6533 6788 around the world. We participate in important Fax number: +65 6536 0229 conferences, fellowships, and discussions with Website: http://www.ecas.com.sg/ key industry players to stay informed. We

“Our collective vision is to continue to innovate and provide more efficient engineering solutions.” SINGAPORE BUSINESS REVIEW | JANUARY 2017 11

FIRST

What’s up with en-bloc?

t is the dream of every property investor in Singapore to get that magic call that the owners are organising an en-bloc sale to a developer and everybody will cash out making a fortune. Unfortunately, for many owners in the current environment, the dreams of en-blocking are just that – with one exception. Privatised HDBs seem to be hot property again for developers looking to essentially knock down old HDBs and replace them with new apartments. UOL/UIC completed their second enbloc of 2016, buying the 175-unit Raintree Gardens in Potong Pasir for $334m which works out at $593 psf. The price is 6% above the previously reported indicative price of $315m, and this was the second en-bloc sale of a privatised former HUDC estate in the year. JLL says the average gross sale price for each apartment owner stands at $1.9m. Shunfu Ville at Bishan was the first en-bloc sale in nine years at $639m or $557 psf. Cushman & Wakefield research director Christine Li notes that even though island wide vacancy rate is at historical high for private residential units, there was still investment demand given the ultra low interest rate environment and lack of alternative investment options such as stocks and bonds. “The improved transaction volume in recent months has encouraged some

developers to take on more land to meet the purchaser demand. Some have turned to the en-bloc market as the government supply for residential has been on the decline given the supply glut,” Li says. A lean patch Still, it hasn’t been smooth sailing for all en-bloc developers. Prior to these two transactions, the last en-bloc of former HUDC estate, now D’Leedon, was acquired by CapitaLand in June 2007. CapitaLand has had to pay extension charges to the government because it hasn’t been able to sell all the units, and as of November 2016 around 10% of the development was still unsold resulting in an additional estimated $5m charge. Seemingly wanting to avoid a similar fate, Heeton sold its iLiv@Grange at an estimated loss of $11m to a group of Singaporean private investors for $95m ($1,623 psf per plot ratio). DBS analysts note the price was 26-30% below the initial asking price of $129-135m in late 2013 ($2.2-2.3k psf). “iLiv@Grange obtained TOP in October 2013 and has paid the 1st QC charges in October 2015, estimated $5.8m. Heeton has not sold a single unit and QC charges will double in October 2016,” adds the brokerage. For DBS, the increasing en-bloc sales implies that developers are hungry amidst

OFFICE WATCH

Coworking as a ‘tribe’ in TRIBE by TEC

The Executive Centre recently introduced TRIBE by TEC, the company’s first dedicated coworking centre, at 51B/52B Circular Road in Singapore. “TRIBE stands for a group of people who shares the same customs, beliefs, and interests. TRIBE by TEC is designed especially to unite promising professional forces and provide them with the workspace and facilities they need to grow their business,” says Yvonne Lim, The Executive Centre’s regional director for Australia, Jakarta, and Singapore. Eschewing the austerity and formality of a conventional corporate environment, the interior design of TRIBE emphasises warmth and vibrancy. The decors feature tribal elements such as masks, dream catchers, and patchworks. The approach is to form a business eco-system bringing individuals and enterprises together through cooperation and competition. 12 SINGAPORE BUSINESS REVIEW JANUARY 2017

Physical indicators

TRIBE by TEC’s open and communal setting

For 2012 to 2015, take-up, completions, and vacancy rates are year-end annual. For 2016, take-up, completions, and vacancy rates are YTD, whilst future supply is for 4Q16. Physical indicators are for the CBD.

Source: JLL

a dearth of land bank supply in Singapore, and that they have a more positive outlook in the medium term. This is because these land banks have tighter rules including QC charges in seven years if the units are not fully sold and the en-bloc process will likely be longer. Karamjit Singh, international director and head of residential at JLL, comments, “The collective sale market is slowly turning a corner.” According to the firm, the pick-up in collective sale activity is due to a combination of three factors: the switch in the outlook of the residential market from negative to neutral-positive, the shortage of development sites – whether from the government or private sector, and the strong attributes and realistic pricing of the developments that were sold in 2016. If investing in property used to be a case of caveat emptor, it may now be said it is the developers who need to be aware too.

co-published Corporate profile

Agile and reliable accounting at your service

Helmi Talib & Co is all about delivering a responsive quality service.

ccounting firms are abound in Singapore because of its reputation as an established global business hub. Whilst all accounting firms aim to assist companies with focussing on their bigger goals and strategies, there are those that particularly deliver a professional service that sets them apart from the rest. Helmi Talib & Co, established in 1992, is an accounting firm that does just that. It is a member of the International Association of Practicing Accountants (IAPA), a global association of independent accountancy and business advisory firms represented by 200 firms in more than 70 countries. Helmi Talib & Co emphasises trust as one of its key values. “As a firm, our reputation is built on integrity and honesty,” says Helmi Talib, managing partner of Helmi Talib & Co. “We make every effort to develop a relationship with our clients, people, and community based on trust.” Client-focussed Helmi Talib & Co’s vision is to offer a quality and responsive service. It aims to foster a client relationship built on trust with continued interest in the clients’ business affairs, as well as to provide quality professional service. As a manifestation of this mission, the firm adopted the Singapore Standard on Quality Control (SSQC1) and established a quality control manual in 2010. The quality control manual is updated on a yearly basis. The firm has a weekly management meeting to improve productivity and efficiency by closely monitoring the engagement from planning to issuance of reports. These techniques improve service quality, through the reduction of turn-around time, errors in deliverables, as well as through understanding the needs, interests, and expectations of clients. “For us, responsiveness means going beyond meeting timelines,” says Helmi. “It is to understand and act upon the interests and expectations of clients.” At 24 years and counting, Helmi Talib & Co has hit numerous milestones since it was founded. Amongst its biggest achievements is having an exponential growth in clientele and staff. It has also had an increase in productivity and

efficiency due to implementation of structured Standard Operating Procedures and upgrade of Information Technology infrastructure.

capital, Helmi Talib & Co organises various sports and recreation events that foster interaction, participation, and bonding on a regular basis.

People-oriented Helmi Talib & Co is focussed on the personal growth of its employees. It provides its employees with opportunities to develop their professional and technical competencies. For instance, it encourages its staff to pursue professional accounting qualifications through the “Study Support Program.” Employees under this program will enjoy 100% subsidy on their registration fees, school fees, and examination fees to any one of the following accounting qualifications: Association of Chartered Certified Accountants (ACCA), CPA Australia, Institute of Chartered Accountants in England and Wales (ICAEW), and Singapore Qualification Programme (SQP). Helmi Talib & Co also embarked on the Enterprise Training Support (ETS) by the Singapore Workforce Development (WDA), which aims to equip the firm’s staff with all the necessary technical knowledge and soft skills capabilities that will enhance professional service quality standard to its clients. Mentorship programs are set in place for further staff motivation and development. The firm has successfully organised for a secondment of one of its employees to Price Bailey, an IAPA member firm in the United Kingdom. With the belief of the significance of work-life balance in retaining its human

One with the community Helmi Talib & Co acknowledges its social duty as a corporate citizen and is active in various community initiatives. Each staff member is required to participate in at least one corporate social responsibility (CSR) event every year. These events are organised by the firm in collaboration with various charitable organisations, namely Club Rainbow and Habitat for Humanity. Helmi Talib & Co has also organised multiple donation drives within the firm. Every dollar of the staff’s overall contribution for a natural disaster relief is matched by the firm. The relief efforts contributed to include Haiti Earthquake (2010), Haiyan Typhoon, Philippines (2013), and Nepal Earthquake (2015). In April 2016, Helmi Talib & Co was featured by MediaCorp as a model for how Small Medium Enterprise (SME) can adopt CSR Initiative. Going forward Helmi Talib & Co is optimistic in addressing the challenges facing the industry and is in the process of developing additional technical capabilities that will enable it to deliver a more varied suite of services to clients. “One of our key values is optimism,” says Helmi. “We face the challenges of today with the confidence that tomorrow will be better.”

“We make every effort to develop a relationship with our clients, people, and community based on trust.”

Helmi Talib & Co Partners, Directors, and Senior Managers

SINGAPORE BUSINESS REVIEW | JANUARY 2017 13

FIRST NUMBERS

WORK BENEFITS

The business travellers are not coming like they used to

A tale of two tourists

omething strange is happening to Singaporeâ&#x20AC;&#x2122;s tourism industry that is resulting in increasing tourist numbers yet lower hotel and serviced apartment revenue. By all accounts, 2016 was a good year for tourism in Singapore, with arrivals up 10.3% for the first eight months. One could have expected that hoteliers would have done well out of this tourism boom. After all, hotel room supply increased a mere 4%, so all things being equal there were more tourists chasing fewer rooms. But instead of average hotel room rates rising, they plummeted, by 5.8% to 7.8% depending on which chain. And the serviced apartments didnâ&#x20AC;&#x2122;t fare any better, with revenue per room dropping 2.7% to as much as 12.6%, again depending on the chain, for 3Q16. So what is going on? In a nutshell, Singapore is now a tale of two tourists, one being the business traveller who is just not coming like he or she used to, and then there are the regular holidaymakers. But an additional spanner in the works is that less of the well heeled luxury spenders are coming and more of the budget airline passengers are arriving, and possibly tourists are staying with friends rather than in hotels. 2017 will see yet more new hotels opening, adding an additional 6.1% to total room supply. So how are the major groups viewing the market? 14 SINGAPORE BUSINESS REVIEW JANUARY 2017

CDL Hospitality Trusts told analysts at OCBC that they faced a competitive trading environment due to new hotel supply and softness in corporate travel, particularly for the meetings and conference businesses, as well as Zika and a weaker F1 which hit corporate travel. Bright spots Far East noted the supply of about 2,500 new hotel rooms also put pressure on rates, but the bright spot was serviced residences where average occupancy remained healthy at 90% albeit at slightly lower rates. At the Mandarin Orchard, a decline in hotel room revenue was partly made up for by a rise in F&B consumption. Another interesting change was the relative decline in one- and two-star hotels. For Jan-Aug period, economy tier hotels saw -3.8% growth in RevPAR, whilst luxury and midtier segments seemed most resilient YTD posting 0.0% and -0.8% yoy.

Less of the well heeled luxury spenders are coming and more of the budget airline passengers are arriving, and possibly tourists are staying with friends rather than in hotels.

Hotel supply expected to increase 4.1% yoy in 2016, and 6.1% in 2017

Source: STB, Horwath HTL as quoted in CDLHT 3Q16 presentation

Source: Manpower Research and Statistics, Ministry of Manpower

Business Opportunities - China Distribution

SINGAPORE BUSINESS REVIEW | JANUARY 2017 15

FIRST

10 8

The 10 most influential health and fitness buffs aged 40 and under

ingapore Business Review’s 10 most influential people in health and fitness, aged 40 and under, aims to recognise those who are making the biggest impact in revolutionising how people think about health and fitness. They were determined based on criteria including social reach, research contribution, trends they have set, as well as media coverage. 1 Rhyce Lein, 25, manager, GuavaPass In April 2015, Rhyce, an experienced marketing professional, was asked to join GuavaPass as general manager for Singapore. He has assisted in driving accelerated growth for this health and fitness startup, which is now live in nine countries with over 5,000 members. It currently claims to be the largest fitness community in Asia. 2 Aqilah Norazman, 27, founder, 1-Habit Nutrition Aqilah started Singapore’s first online nutrition coaching and mentoring company, 1-Habit Nutrition, in early 2015. At present, 1-Habit Nutrition has coached over 135 Singaporeans. She also started Asian Meal Prep, a YouTube channel with weekly videos to help people prepare healthier Asian meals. One video entry has garnered over 5,000 views on Facebook. 3 Jasmine Neo, 27, brand ambassador, Active Hive Lifestyle and Wellness Hub Jasmine, the only local cheerleader who has won seven consecutive gold medals in the Singapore Cheer Competition, is the brand ambassador for Active Hive. She has

16 SINGAPORE BUSINESS REVIEW JANUARY 2017

previously shared her personal experiences in overcoming bulimia and binge eating disorder. Jasmine engages her followers on social media and when they meet her during her workouts. Joel Tan, 28, founder, BBOUNCE Joel is a former national swimmer who represented Singapore between 2001 and 2013. He ranked 1st in Singapore in 2008 for 100m breaststroke. In early 2016, Joel founded BBOUNCE Studio, billed as Singapore’s first rebounding studio. It now has almost 1,600 members. He created “Hybrid Rebounding”, considered the first of its kind workout regimen in Singapore, and probably the world. 4

Ian Tan, 29, cofounder, Ritual Gym Ian has served as programme director since Ritual Gym’s formation in October 2012. Between January 2011 and June 2013, he was the owner and head coach of gym Thrive. From January 2010 up to the present, he has served as the strength and conditioning coach for Fight G, billed as Singapore’s first Mixed Martial Arts academy. Ian’s professional Facebook account has more than 63,000 fans with over 85,000 people talking about it, whilst his personal blog has 7,230 monthly unique visitors and 22,140 page views. 5

6 Shawn Watson, 31, founder, Senescence Life Sciences Following seven years of research in a Canadian neuroscience laboratory, Dr. Shawn Watson uncovered a novel

treatment strategy capable of restoring natural decline in brain function associated with ageing. To date, he claims there have been no known, scientifically proven methods to slow, prevent or reverse the progression of brain ageing – making Dr. Watson’s findings one of the biggest discoveries of the last decade. 7 Ho Ki Han, Alvin, 33, founder, FITtener Alvin is a lifelong fitness enthusiast who gave up a comfortable and secure day job as a senior aerospace engineer to follow his passion, and founded FITtener in early 2016. It is a fitness company that serves to innovate and establish comprehensive fitness solutions. To date, FITtener.com has around 260 members on meetup.com, an events-based website. 8 Sammy Phua, 34, owner and head trainer at The System Gym Sammy is a Senior Manhunt 2015 winner and a former national rugby player who once played against the famous Waisale Servi in the Hong Kong Sevens. Sammy came up with The System – a training programme with personalised numerical and resistance load for individuals based on their current fitness level. Gaining the support of his loyal followers, Sammy decided to open his own fitness studio, The System Gym, in December 2014. 9 Elika Mather, 34, health coach and founder, Kitchen by Food Rebel & ElikaFit Elika founded Kitchen by Food Rebel, which is on a mission to improve customers’ health through a recipe of awareness, education, and great food. Elika provides educational workshops onsite, a 10-day nutrition plan, and works with a number of local startups and suppliers to source quality ingredients that can be used in-house to make fresh meals daily. 10 Aimée Barnes, 39, founder/director, Tangram Wellness Aimée is the founder and director of Tangram Wellness, a Singapore-based concierge wellness company providing integrative coaching and personal training services to women globally. She is also a writer and motivational speaker on issues relating to habit change, body image, mental health, and addiction. Aimée is also an amateur physique athlete. She relocated from New York to Singapore in 2010.

Business Opportunities - China Distribution

startups

Game prediction app SportsHero takes fantasy sports to new level

portsHero is Asia’s first real-time fantasy sports app and social prediction platform. The app is the “new incarnation” of FootballHero, which already has over 250,000 users. It allows sports fans to make better predictions on the outcomes of games by harnessing the power of all the other sports fans in its social community with validated prediction results and social sentiment. SportsHero covers football (soccer), baseball (Major League Baseball), tennis, American Football (National Football League), and basketball (NBA), with hockey (NHL) and cricket

(IPL) in development. The app has an average daily engagement time of approximately 10 minutes per user. SportsHero users can predict the outcome of the game using virtual currency, leave to watch the game, and come back to check on the results. Particular emphasis will be placed on local leagues and teams, with a view to building the overall sporting culture and ecosystem in each market. “We’ve observed that when people watch a game, the fun is not only in the excitement of the game but also in being able to predict, from a skills-based intuition, who you think is going to win, or what’s going to happen next,” says Dinesh Bhatia, CEO and co-founder of SportsHero. The app is also a social competition platform where top ranked fans stand to win daily, weekly, and monthly prizes. Fans can interact with fellow sports fans on the SportsHero network in a number of ways to make any game more interesting and competitive. Brands can tap SportsHero to engage its user base, opening official accounts with sponsored content.

F&B app Eunoia helps restaurants save 30 to 40% in monthly operating costs

The dining experience is no longer limited to customers walking in and out of a restaurant, bistro, pub, or any F&B outlet. Chances are, customers will search, book, order, and even pay online through their smartphones. This is where Eunoia comes in. Eunoia provides a digital platform which helps F&B operators manage 18 SINGAPORE BUSINESS REVIEW JANUARY 2017

their business processes – including customer management, inventory, and payment processing – from a single and convenient dashboard in order to earn more revenue. “The name Eunoia means ‘beautiful thinking’ – we strive to bring good experiences through deliberate thinking and action. We believe in alleviating current problems and creating better experiences for everyone in the F&B industry through technology,” says Wee Zihuan (Zwee), founder and CEO of Eunoia. The benefit to customers is clear – it makes dining out more convenient. The benefit to F&B outlets, meanwhile, includes increased traffic, customer satisfaction, and most importantly, cost savings to their operations of around 30 to 40% monthly. Eunoia currently has $800,000 in seed funding, led by Golden Equator Capital.

Biofourmis unveils personalised physio-data analytics platform

The platform, which is the first in the world, pulls data from wearable consumer sensors to give an overview of a person’s health. Biofourmis is the pioneer in people-centric healthcare analytics that uses cognitive technologies to learn an individual’s physiology. It is focussed on building personalised health models leveraging physiological data gathered in real time so that users get personalised and actionable health insights. The startup aims to make healthcare data understandable to people. “If you look at the technology trend, wearable devices and biosensors are proliferating and people/clinicians are leveraging on such new technologies to monitor patients remotely. However, there is a tsunami of data being collected by an individual/ patient (approx. ~100,000 TB of data during a human being’s lifetime) and available technologies use traditional population-based approach to analyse the data, which is mostly inaccurate and may generate false alarms,” says Kuldeep Singh, founder and CEO of Biofourmis. He adds, “Moreover, people are not motivated to comply to these technologies as there is no engagement.” Personalised health models To further help them in their mission, Biofourmis built Biovitals. This data analytics engine builds personalised health models which quantify an individual’s physiology so that adverse medical events can be detected even before any symptom occurs. The engine supports a variety of remote monitoring applications, making it smarter and efficient. Biovitals is capable of performing data discovery, predictive analytics, patient risk-stratification, real-time contextual insights, personalised AI wellness coaching, and data visualisation. “If you look at one of its clinical applications, this technology solves the biggest problem in healthcare – you discharge a patient form the hospital but you are still financially at risk. What do you do next? It prevents hospital readmissions. So this personalised platform can be used for various applications, ranging from remote monitoring of chronically ill patients – or postoperative care – to preventive application, which is the wellness,” Singh notes.

Business Opportunities - China Distribution

SINGAPORE BUSINESS REVIEW | JANUARY 2017 19

economy watch

Important indicators have stabilised in recent months

Is 2017 poised to be better?

All eyes will be on the 30-member Committee on the Future Economy to keep the economy on track in the Year of the Rooster.

n interesting fact about Singapore’s economy is that its data is one of the most volatile in the region, due largely to its manufacturing base which can be expanding one month and contracting the next. This makes it hard to gauge what is really happening, especially outside of the manufacturing or export sector. Still, the numbers painted for 2016 were not good: the services sector contracted for the third consecutive quarter in Q3, and the business expectations index continues to point to modest contraction, notes HSBC economist Joseph Incalcaterra. The one positive sign that we may be at the bottom is that container throughput and bank lending, two important indicators for the economy

The services sector contracted for the third consecutive quarter in Q3, and the business expectations index continues to point to modest contraction.

Can the bottoming out of exports be sustained?

Source: CEIC, Haver Analytics, and Deutsche Bank

20 SINGAPORE BUSINESS REVIEW JANUARY 2017

that reflect trade volumes and financial activity, have stabilised in recent months, he adds. Meanwhile, Deutsche Bank economist Diana del Rosario says the economy posted the worst sequential contraction in Q3 since December 2012. What are the highlights? One of the main growth drivers in recent years has been the expansion in the finance & insurance sector, notes Incalcaterra. “However, to date yoy growth is roughly flat, even assuming a sequential boost in 4Q, compared to 5.4% growth in 2015. Whilst domestic credit and liquidity conditions have stabilised, offshore lending is down, and we expect only modest growth next year (2017).” He says the key revision in Q3

came from manufacturing, where strong electronics output offset the sharp drop in pharmaceutical production and marine engineering. Despite HSBC’s more constructive view on the US economy, business investment may not rebound sufficiently to meaningfully lift Asian trade. Deutsche Bank cautions that domestic lending continued to contract, but at a more gradual pace in September, down by 0.5% yoy against -1.3% yoy in August and -1.5% yoy in July. Industrial production surged 6.7% yoy from 0.5% yoy in the previous month on the back of a strong outturn in biomedical manufacturing and electronics clusters. Singapore’s manufacturing PMI recorded marginal expansion, at 10bps above 50, for the first time in 15 months. The 2017 outlook The MTI released a 2017 forecast range of 1-3%, which is the same as the original 2016 forecast, but HSBC’s Incalcaterra believes that this forecast range doesn’t leave much room for the materialisation of downside risks to growth stemming from weak global demand and the coterminous decline in trade volumes – to which Singapore is particularly sensitive. To keep the economy on track in 2017, all eyes will be on the Committee on the Future Economy (CFE), a 30-member committee made up of representatives from various industries, coordinated by the government. The purpose is to come up with recommendations to help Singapore remain competitive, and Incalcaterra says policy recommendations will likely be incorporated in the FY2017 budget.

Material revision of prelim Q3 GDP growth is unlikely

Source: CEIC and Deutsche Bank

abacus overseas markets are intact and now include franchise and JV possibilities. We expect more concrete developments in this area to provide catalysts in coming months.” China now accounts for 18% of the group’s revenue, up from just 6% in the beginning of 2015. The group is also expanding with a new concept of restaurants catering to that other traditional Singaporean dish normally enjoyed along Balestier Road early in the morning – Bukkete. DBS analyst Alfie Yeo notes Jumbo opened its fifth Ng Ah Sio Bak Kut Teh in Resorts World Sentosa (1,600 square feet) and expanded its Riverside outlet by 50% from 300 seats to 450 seats in 4Q16. But it is in China where the largest opportunities lie, with Singapore almost being a testing ground for new concepts the group can then franchise around the region. The big question is whether demand would expand ten-fold The Jumbo Seafood brand, which comprises five outlets in Singapore and three in Shanghai, was a key revenue contributor for FY16. Seafood in China accounted for 15% Will SingPost’s new 100,000 parcel a day sorting centre deliver, Jumbo of revenue, whilst Jumbo Seafood outlets in or will the facility prove to be money in the bin? Singapore contributed majority of the group’s total revenue. Some other interesting facts t is one thing to plan for the future, also be required for productivity gains as crunched by DBS are the average meal size but another to believe your business SingPost builds up scale. Margins in the for the company at its outlets, with China will quickly expand ten-fold as logistics space are lower than mail, and being more expensive than Singapore. Locally, SingPost must believe with its massive competition in e-commerce logistics has this works out to an average annual revenue $182m investment in a new parcel sorting also been increasing. Of course investors of more than $10m per outlet in Singapore. centre at Tampines. It is a very impressive just want to hear about the profits and Jumbo serves more than 6,800 diners (across building which was opened in the second dividends, and here they have been half of 2016 and employs the kind of disappointed. In order to pay for all the new all restaurant brands) and more than 1.6 sophisticated sorting technology that investments, the company decided to cut its tonnes of crabs each day. the big boys like Amazon use. The most dividend payout ratio, which sent the shares How Jumbo stacks up on profitability impressive fact about the new sorting plummeting 12% on the day it announced centre, which is part of SingPost’s hopeful its weaker Q2 profits. & returns foray into delivering e-commerce ordered parcels rather than bank statements, is its Jumbo opportunities 100,000 parcel a day capacity. Singapore is rightly renowned for having To the casual observer, this may seem one of the largest and greatest selection of immensely impressive, which it is, but restaurants per square kilometre on the when you realise that SingPost currently planet. Yet few would have envisaged that only delivers just over 10,000 parcels a day some of our homegrown brands can not and is under intense competition from only dominate the local scene but turn into other parcel deliverers, one has to wonder regional champions. Jumbo Seafood is one Source: FactSet estimates, Maybank Kim Eng just how quickly they are going to be able such company, and one thing is certain – to increase their business ten-fold. almost everybody likes a chilly crab. Perhaps it was the sight of DHL’s The company turned over $137m in Causes of SingPost’s underlying net impressive new sorting facility which 2016 and netted a gross profit of $15m, profit decline cost $140m at Changi Airfreight with a and has a market capitalisation of almost fully automated express parcel sorting half a billion dollars. But there could be and processing system, allowing it to more room to grow, reckons Maybank Kim process 24k shipments and documents Eng’s Gregory Yap who says the results an hour, that spurred SingPost into its confirmed two things. “First, that Jumbo’s massive capital outlay decision. And earnings in Singapore can be resilient even as OCBC notes, as SingPost builds up in times of belt-tightening due to effective its e-commerce logistics capabilities, market positioning and management of investments will be required, driving labour, rental costs, etc. Second, overseas Source: Company data (compiled by OCBC) up expenses in the near term. Time will expansion and growth potential from

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SINGAPORE BUSINESS REVIEW | JANUARY 2017 21

FINANCIAL INSIGHT: Private Equity

Appropriate targets and investee companies have been hard to find

Slim pickings for private equity houses

PE houses face a scarcity of deals, but many remain hopeful given the high-growth trajectory of Southeast Asia and with international players setting up office in Singapore.

hen you ask private equity (PE) houses why they continue to flock to Singapore despite the dwindling number of deals in the country and in Southeast Asia, they will tell you that the short-term pain is worth the long-term gain. The region is primed for an upswing in PE activity in the coming decades as fast-growing markets become flush with investment opportunities, and a presence in the Singapore hub will ensure they can pounce on those lucrative deals. But, for now, PE firms are rolling with the punches and focussing on a few key plays, from privatisation of listed companies to technology acquisitions. “On a year-on-year basis there has been a marked slowdown both in terms of number of deals that get to completion as well as the number of new deals that PE houses are looking at,” says Tan Choon Leng, head of private wealth practice at RHTLaw Taylor Wessing LLP. “A near universal grouse that we hear from PE houses is the lack of appropriate targets and investee companies, especially in the healthcare and consumer sectors in Southeast Asia.” Tan reckons there has also been a perception of growing instability in the region, citing developments such as Thailand’s succession issue and Malaysia’s financial scandal involving 1MDB, which makes it trickier for PE houses to pick the right deals. There is a lot of “dry powder” in the industry – EY estimating around US$526.6b in September 2016 – but 22 SINGAPORE BUSINESS REVIEW JANUARY 2017

We are seeing a shift in global economic power from west to east as well as the growing middle class population in the region.

attractive deals providing healthy yields are harder to come by, says Bill Jamieson, partner, head, funds and financial services practice group at Colin Ng & Partners LLP. In fact, funds raised for Singapore had been increasing for years, notwithstanding a reverse in the first half of 2016, with many PE funds targetting Southeast Asia and using Singapore as a base for their business. “Despite the strong showing for funds raised, the challenge for many funds is finding the right investments in Singapore,” says Marcus Chow, partner at Bird & Bird ATMD LLP. “Funds are sitting on dry powder but the challenge is nonetheless in finding good internal rate of return (IRR) projects. Going private transactions and delistings from Singapore Exchange remain a growing trend for Singapore. We are acting on one such transaction now,” adds Chow. Privatisation picks up Singapore has seen a spurt of privatisation deals. This year, UOB Ventures backed the $269m privatisation of Eu Yan Sang, which specialises in traditional Chinese medicine. Other recent headliners include Northstar’s S$331m privatisation of Innovalues, and the Warburg Pincusbacked $1.78b privatisation of ARA Asset Management. “These are examples of classic PE plays on profitable but undervalued companies,” says Tan. “So long as the wider stock market remains relatively undervalued, it is

FINANCIAL INSIGHT: Private Equity likely that more such privatisation attempts will follow.” An increasing number of listed companies in Singapore are warming up to the idea of delisting due to taxing requirements and lower valuations, says Evelyn Ang, senior partner at Dentons Rodyk & Davidson LLP. “Singapore listed companies are subject to public scrutiny and are required to comply with numerous listing requirements including rules on public disclosure of material information, requirements for shareholders’ approvals for certain types of transactions and obligations to provide quarterly or half yearly reports to investors,” she says. “Combined with thin trading volumes and depressed valuations of companies listed on the Singapore Exchange (SGX), the option of delisting would and does appeal to founders and controlling shareholders.” Ang cites a Bloomberg estimate that around 13 companies with a combined market value of $4.5b have announced their plans to delist from the SGX in the first half of 2016. This year alone, OSIM International, Eu Yang Sang International, Goodwood Park Hotel Limited, SMRT Corporation and Tiger Airways Holdings Limited delisted from the SGX. Foreign buyers looking to establish a foothold in Asia have led the interest in Singapore listed companies, says Ang. In November 2016, Dutch coffee and tea firm Jacobs Douwe Egberts (JDE) made a cash offer for all shares of Super Group Ltd, which owns the popular Owl brand of coffee, for approximately $1.45b. Ang reckons the acquisition will extend the coffee and tea business of the European billionaire’s Reimann family into Asia. If the foray proves successful, she expects JDE to delist and privatise Super Group Ltd. Southeast Asia’s golden promise Aside from privatisation plays, PE houses in Singapore are also preparing for the shower of opportunities as Southeast Asian economies strengthen further. “This market is definitely receiving greater PE attention than it has in the past and is likely to keep PE houses very busy for the foreseeable future,” says Tan about the Philippines, citing Baring Asia PE’s US$137m investment in Telus International. The Philippine economy expanded at its quickest pace in three years, growing at 7.1% in the third quarter of 2016, making it one of the fastest growing economies in Asia. Tan reckons there are a lot of reasons for optimism in the Southeast Asian PE and mergers and acquisitions industry.

There are some opportunities to pick up acquisitions

Tan Choon Leng

Bill Jamieson

Asia-based private equity & venture capital fund manager views on the key challenges facing them Marcus Chow

Source: Preqin Fund Manager Survey, June 2016 (views for the next 12 months)

Evelyn Ang

Not only are the US elections and its destabilising effects over, but the Southeast Asian market will look relatively more attractive than Europe, which will face continued uncertainty and relatively low growth rates. Other than the Philippines, Indonesia is also attracting PE attention after the completion of its tax amnesty in the first quarter of 2017 and the increase in the number of sectors open to foreign investment. In addition, Jamieson says, “Singapore is the PE hub of Southeast Asia and a hub for PE firms looking to invest into India. Hence, when we discuss private equity in Singapore we must necessarily discuss the investment opportunities in the region.” He also points out that privatisation of state-owned entities in countries such as Vietnam presents “once-in-a-lifetime opportunities” for PE players to invest in. PwC predicts that seven of the world’s 12 biggest economies in 2030 will come from emerging markets, which is why PE houses are ramping up their presence in Singapore. “We are seeing a more active private equity market with more international PE players setting up office in Singapore over the recent years,” says Ling Tok Hong, private equity leader at PwC Singapore. “This demonstrates the keen interest of PE in Singapore and the region, in line with a megatrend – we are seeing a shift in global economic power from west to east as well as the growing middle class population in the region.” Ling notes that with a crush of PE interest in the region and the limited number of deals available, competition is becoming fierce and forcing PE managers to differentiate themselves by demonstrating their ability and track record in creating value. Key sectors Given the increased spending power of the growing middle class in the region, analysts identified key sectors driving activity in PE. These are infrastructure, healthcare, retail and e-commerce, financial technology (fintech), and food & beverage (F&B). The larger ticket transactions were in the traditional engineering, manufacturing, F&B, and logistics industries, including large ticket real property plays, notably in the acquisition SINGAPORE BUSINESS REVIEW | JANUARY 2017 23

FINANCIAL INSIGHT: Private Equity Asia-based private equity & venture capital investors by location

24 SINGAPORE BUSINESS REVIEW JANUARY 2017

Deal search toughens for HK firms Private equity firms in Hong Kong are finding it harder to come by deals with remarkable returns, resulting to some doubling down on overseas bets. Hong Kong and Singapore might be rivals to become Asia’s top private equity (PE) hub, but they are also brothers facing a common dilemma: an increasing shortage of attractive deals. Analysts reckon that the market still presents fantastic, if fewer, opportunities. This has pushed PE firms in HK to partner with Chinese investors and lock down more lucrative deals overseas. “It seems harder to find attractive deals of the right size and investment returns,” says Mark Chan, managing partner of HM Chan & Co in association with Taylor Wessing. “As such, some PE firms may find it tough to keep their investors happy. Having said that, there are still very good, albeit fewer, opportunities in the market.”

Source: Preqin Private Equity Online

of Asia Square Tower 1 by Qatar Investment Authority from Blackrock, says Sheela Moorthy, partner in the Singapore office of Norton Rose Fulbright. F&B businesses continue to receive interest among PE firms, notes Doris Yee, director at Singapore Venture Capital & Private Equity Association, as shown in Standard Chartered Private Equity’s investment into Phoon Huat, a family-owned business and leader in the baking ingredients sector. Similarly, PAG’s investment into Paradise Group, a homegrown restaurant chain with restaurants across Southeast Asia, is expected to help it expand into China. “This is perhaps a reflection of Singapore’s own foodie culture with very high expectations on quality which in turn pushes up the standards of food-related businesses in Singapore,” says Yee. Jamieson adds that there has been a trend towards picking undervalued F&B companies with potential for regional growth such as Viz Branz, F&N, and Super Group. A notable transaction was the investment by Hera Capital and DSG Consumer Partners into Salad Stop!, a local F&B chain with fast-growing regional franchises, and there will likely be more F&B transactions in the local market based on current valuations. Southeast Asia’s burgeoning and increasingly tech-savvy consumer market is also fuelling investments into the e-commerce and fintech sectors. Regional e-commerce retailer Lazada received a US$500m investment from Alibaba, which also bought additional stakes worth the same amount from early investors, including Rocket Internet. On the technology front, meanwhile, there was buzz around the acquisition of Singapore-headquartered and micro-optics and optical sensing leader Heptagon by Austria’s global sensor manufacturer AMS. Valued at approximately US$570m, with a potential earn-out of up to US$285m based on certain 2017 targets, the investment attracted the likes of Vertex, Granite Global Ventures, Credence, and Nokia Growth Partners. “Our clients have been investing private equity into fintech,” says Jamieson. “The support from the government for the development of this sector will encourage more financial investors into this space through Singapore.” There are excellent opportunities as well in the troubled offshore marine sector. “Companies under distress would present some opportunities for PE firms with the right expertise and appetite to pick up some acquisitions at attractive valuations,” says Jamieson.

hong kong view

Ling Tok Hong

Sheela Moorthy

Doris Yee

Overseas deals HK has been one of the largest PE centres in Asia for decades, providing an investment channel for overseas investors into Mainland China. But with the domestic economy slowing down and recent policy shifts, HK-managed PE houses are teaming up with Chinese corporate investors to hunt for overseas deals. “An increasing number of corporate investors are looking for overseas opportunities with a main focus in real estate, including construction, hospitality and infrastructure for sound capital gain and stable rental return,” says Danny Po, AP & China M&A tax leader at Deloitte China. Recent transactions in the PE market reflect this appetite for foreign investments, a trend which has been encouraged by China’s national strategy of outbound investment. Po shares a notable deal involving a China consortium led by a state-backed developer. Together with other PE investors, the consortium invested in a biotech industrial park in South San Francisco with an aim to enhance cooperation between China and the United States on biotech research and development. In another major deal, an Australian investment group backed by a Chinese provincial government and private equity fund proposed a residential development project near Sydney Olympic Park.

Estimated dry powder of Asia-based private equity & venture capital fund managers

Source: Preqin Private Equity Online

Business Opportunities - China Distribution

SINGAPORE BUSINESS REVIEW | JANUARY 2017 25

INDUSTRY INSIGHT: Convenience Stores As a result of the new designs, future 7-Eleven stores will need a footprint of at least 800 sq ft. This could mean that smaller hole in the wall convenience stores will be under pressure.

Consumers now have more dining options

Are Cheers and 7-Eleven taking on hawker outlets?

Singapore’s convenience stores now offer premium meals and are trialling self-service checkouts to cope with the debilitating manpower crunch.

he two biggest convenience store chains in Singapore recently launched new technologies to compensate for their staffing needs and increase productivity. 7-Eleven Singapore, which has 438 stores island-wide and processes 9m transactions monthly, is in the midst of launching 7-Connect Kiosk, a self-help machine for quicker and more efficient bill payment. They also employed tap-and-go payment such as PayWave to reduce cash transactions. Store transformations Steven Lye, 7-Eleven Singapore chief operating officer, explains why such improvements are being rolled out. He says, “Understaffing is a constant issue within any retail industry. We are in the process of implementing pertinent services such as a selfservice check out kiosk and bill payment kiosks.” Lye shares that 7-Eleven is in the process of retrofitting its stores to 26 SINGAPORE BUSINESS REVIEW JANUARY 2017

The system eliminates the need for staff to manually count cash at the end of each shift, thereby saving up to 30 minutes each day.

be more contemporary, and new outlets will include dining areas and parcel collection points. “We have also refreshed our stores with a fresh and brighter look. Some of the larger stores also have seating or standing areas for customers to consume their meals in-store,” Lye says. Putting seating areas and tables inside convenience stores is popular in countries like the Philippines where more food is served up, but is relatively new to Singapore.

The ease and woes of automation These moves were no different for 7-Eleven’s rival, Cheers. The store chain’s general manager, Victor Cheong, has opted for the iCash System to streamline the company’s 3m monthly transactions. iCash involves the customer putting cash into a machine and the machine then dispenses change, meaning the cashier never has to touch the money. “This takes the burden of handling cash away from staff, increases accuracy in accepting and dispensing change, which in turn improves customer satisfaction,” Cheong stresses. “The system also eliminates the need for staff to manually count cash at the end of each shift, thereby saving up to 30 minutes each day.” This technology is installed in 25 of their 152 outlets island-wide. Cheers also deployed NETs self-service kiosks that provide convenience to consumers with a wide range of financial services such as bill payments and top‐ups. Through innovation and automation, according to Cheong, service staff are able to lighten their load and at the same time focus on more value-added work such as customer service. “These allow us to enhance the convenience store experience for customers without taxing manpower staff, closing the manpower shortage gap,” he explains. However, there may also be a limit to technology when it comes

Outlets are no longer just about selling items on the go

INDUSTRY INSIGHT: Convenience Stores to convenience stores, with complete self-service checkout solutions like those used in supermarkets harder to implement, argues Euromonitor International research manager Adhitya Nugroho. “Although selfserving counters are becoming more visible in supermarkets/hypermarkets in Singapore, convenience stores have its own challenges to implementing such technology,” he states, citing security as one of the major issues. Cheers has also been busy revamping its service station concept, which started with Esso 14 years ago. Its FairPrice Xpress and Cheers stores at Esso service stations have partnered TCGC Pte Ltd, a consortium of local brands, to provide a new line of readyto-eat meals that are of good quality and value. “We will be looking to also bring this new range of ready-to-eat meals to the rest of our stand-alone convenience stores,” Cheong says. Ready, set, eat: Turning Japanese But it’s in food where the two biggest convenience store chains in Singapore are really changing their offering. With their respective taglines, “Adds more to life,” at Cheers and “There’s always 7-Eleven,” only one thing is running in their minds: How can they attract people who are always on the go? As it turned out, the answer was easy. Euromonitor International’s Nugroho points out that convenience stores in Singapore are following the footsteps of other countries especially Japan, where ready meals mix have gained traction. “Due to higher volume of ready meals sales, the players are able to price their offering to be more competitive with other food service providers such

as fast foods and hawker centres as an alternative place to buy food and beverages, particularly in the wee hours,” Nugroho explains. Although the two convenience store chains are already offering some ready-to-eat meals, it was only recently when they adopted Japan’s ready meals mix trend. Lye shares that his local team is closely working with 7-Eleven’s Japan arm to develop ready-to-eat meals. They launched this line just last October. “They are the best team to advise us on the transition as they have been bringing quality pre-packaged meals to their customers for many years,” Lye says, stressing that the new trend will form a significant portion of their total store sales. Currently, their outlets offer a myriad of ready-to-eat meals in local flavours such as Hainanese Chicken Rice, Braised Duck Rice, Butter Chicken Biryani, and Carrot Cake. “We also have a premium range of Japanese pastas – Spaghetti Al Funghi with Mentaiko, Spaghetti Neapolitan, and Vegetarian Spaghetti. For dessert, we also have a Chocolate Lava Cake which has proven to be very popular. Other items include fresh chilled sandwiches and Japanese onigiri,” Lye mentions. Tapping homegrown brands It is not so different with Cheers, which has partnered with TCGC Pte Ltd in November to provide consumers with convenient and ready-to-eat meals. With the partnership, Cheers is able to offer ready-to-eat meals from The Common Good Company, The Soup Spoon, Udders, PastaMania, and &Will to its 154 outlets across the

Local brands come together to offer a new line of ready-to-eat meals

Stores might just give hawker outlets a run for their money

Adhitya Nugroho

Due to higher volume of ready meals sales, the players are able to price their offering to be more competitive with other food service providers such as fast foods and hawker centres.

city-state. Cheong notes that Cheers is utilising the vacuum skin packaging technology, which ensures preserved flavour and colour, keeps portions fresh and unmixed on the tray, and extends shelf life with no compromise on nutrition. “The offerings serve to change mindsets of RTE meals in the industry as an alternative quality meal occasion, through tapping on state-ofthe-art technology and innovation,” he stresses. As the concept of ready-to-eat meals gains popularity in the city-state, Nugroho thinks having a range of exclusive products to differentiate itself will help attract more traffic into the stores. More so, he suggests that the two convenience stores could also tap into offering freshly brewed coffee, as Singapore consumes one of the highest total volumes per capita for coffee in Asia. “Convenience stores in Singapore could tap into this exciting area by offering value-for-money freshly brewed coffee in the stores. Freshly brewed coffee is quite a common offering in other developed countries such as Taiwan, South Korea, and Japan,” Nugroho says. He also argues that convenience stores need to be able to balance between location and product mix to improve profitability. Commenting further, Nugroho cites advantages of the convenience store format, such as smaller selling space – impacting rent – and less labour-intensive operation. By Kiersnerr Gerwin Tacadena SINGAPORE BUSINESS REVIEW | JANUARY 2017 27

ANALYSIS: INSURANCE

Is the insurance industry struggling?

Innovation shakeup hits Singapore’s life insurance industry

Singaporeans now have more convenient choices to purchase direct and online insurance products, but the industry is grappling with increasing healthcare costs and outdated regulation.

hen FWD launched a fully direct and digital approach to life insurance in Singapore, it was a response to the gaping hole it saw in the traditional agency model predominant in the island. Disruption is rising as a strategy amongst insurance players as Singaporeans become more connected and mobile, and become better equipped to purchase insurance products online and directly from providers. Financial technology firms are also cranking out new tools and business models to improve online insurance products, although the government is rolling out regulation to make sure consumers are better protected as the industry continues to post steady growth. The boom in life insurance also comes with worries over escalating health insurance claims. “We see a general trend that in more developed markets, there 28 SINGAPORE BUSINESS REVIEW JANUARY 2017

The insurance industry lags the banking, travel, and retail industries in terms of adapting to the digital world.

is an increasing appetite amongst consumers to purchase directly, and we are therefore reflecting that in Singapore,” says Abhishek Bhatia, CEO at FWD Insurance Singapore. “With the increased connectivity and mobility that Singaporeans have, combined with their growing preference for online commerce, it seemed like a natural decision for us to choose a direct-to-consumer model.” Plans for the digitally connected Bhatia cited a recent FWD research that shows the insurance industry lags the banking, travel, and retail industries in terms of adapting to the digital world, with only 52% of 600 Singaporeans surveyed thinking that insurance is well adapted compared to banking (100%), travel (92%), and retail (77%). “The local insurance market is predominantly made up of players

with traditional agency channel. Whilst this model might have worked for them, we studied local market trends and identified opportunities we felt we could address better,” says Bhatia of their decision to go with a digital and direct-to-consumer approach. “Singapore is one of the most digitally and mobile connected countries in the world, and we know Singaporeans will continue to appreciate the choice of being able to buy what they need online,” he adds. FWD is planning to invest $500m to grow its presence in Singapore over the next five years and introduce other insurance policies that reflect the needs of modern Singapore, which Bhatia says will be defined by a growing middle class that increasingly understands the value of insurance and financial technology (fintech) firms. “Fintech has helped to drive innovation and digital transformation

ANALYSIS: INSURANCE in the insurance industry,” says Bhatia. “The fintech story in recent years has concentrated on leveraging new technologies and disruptive business models to enable the development of new products and services for previously underserved markets. The same dynamics have been driving change in the insurance industry.” Direct purchase insurance The concept of directly buying insurance has been gaining steam since April 2015 when the Monetary Authority of Singapore (MAS) also introduced the direct purchase insurance (DPI), a class of simple life insurance products sold by companies without commissions and financial advice. “The introduction of DPI by the MAS is an excellent initiative, offering simple, effective, easy to understand products that are perfect for most Singaporeans, especially those purchasing life cover for the first time,” says Bhatia. MAS, in collaboration with insurance industry and consumer groups, also launched the compareFIRST web service (www.comparefirst.sg) which lets Singaporeans compare various life insurance products, including premiums and benefits, to make a better decision before their purchase. Despite the positive developments to enable Singaporeans to purchase insurance products online and direct from providers, many still find the process difficult and daunting. “Whilst the DPI product is simple, the application process is not, which has put many people off,” says Bhatia. DPI and the move towards online insurance products is part of a larger trend of virtual healthcare, especially in Asia where both life insurance demand and technology use are firmly growing. “The increase in virtual healthcare is another interesting trend, with increasing demand for digital technology to deliver healthcare at the click of a button,” says Derek Goldberg, managing director, Southeast Asia at Aetna International. “This is of particular interest for Singapore and other Asian markets, due to the availability and extensive use of technology across the region, as well as the need to meet the

challenges of access to care for a rapidly developing and demanding population.” The life insurance industry in Singapore continues to report steady growth with an 8% increase in total weighted new business premiums for year-to-date third quarter 2016 (YTD 3Q16) compared with the same period in 2015, according to latest data from the Life Insurance Association Singapore (LIA Singapore). Total weighted new business premiums amounted to $2,33m for the first three quarters of the year. In the YTD 3Q16, the industry also recorded an 11% increase to $730.8m in weighted single premiums, with more than three-fourths (78%) comprising of single premium par and non-par products, whilst less than one-fourth (22%) were single premium linked products. YTD 3Q16 also saw a 6% increase to $1,600.1m in weighted annual premium. Approximately 10,000 more Singapore residents obtained additional health insurance coverage, mostly through Integrated Shield Plans (IP) and/or riders, and approximately one in two individuals in Singapore (2.87m lives) are covered by health insurance with total premiums amounting to $1,367m, as of 30 September 2016. “The continuing increase in the number of lives covered by IPs and IP riders shows Singapore residents’ growing appreciation of the necessity for health insurance and the choice of additional benefits provided by IP plans and IP riders,” says Dr Khoo Kah Siang, president of LIA Singapore. Skyrocketing healthcare costs With life insurance coverage climbing in Singapore and a barrage of disruptions that are changing how the industry operates, the challenges of skyrocketing healthcare costs and regulatory changes loom over the near-term horizon. “In as much as life insurers need to play their part, unless collective and specific efforts are made by all the different parties, Singapore will not be able to effectively tackle escalating

Derek Goldberg

Khoo Kah Siang

Abhishek Bhatia

healthcare costs that are beyond the usual incremental increase, and therefore escalating health insurance claims,” says Khoo. The industry-led Health Insurance Task Force has forwarded some key recommendations to reduce healthcare costs while maintaining the quality of care like including the publication of medical fee benchmark. It has also been proposed to include pre-authorisation to provide clarity to the policyholderpatient on the level of coverage they have for treatments before they proceed with any medical procedure. “The purpose of these recommendations is to curb overtreatment and/or over-consumption which, in turn, are expected to mitigate the inflation of healthcare claims,” says Khoo. Goldberg argues that the rising cost of claims and over-utilisation of medical treatment are significant challenges for health insurers in the region at present. “Coupled with the increased emphasis that regulators are placing on market stability and integrity, insurers will need to look to innovative solutions to build a sustainable future,” he says. Goldberg cites the MAS making significant enhancements to its insurance regulatory framework, leading to proposed amendments to the Insurance Act of 2012. Meanwhile, Bhatia reckons the regulatory framework in Singapore is very robust, but he points out that some of the regulations need to be amended to accommodate the wave of disruption sweeping the industry. “Current industry guidelines were framed for a face-to-face business model and might not be fully appropriate for an online or direct distribution model,” says Bhatia.

New business (individual life & health) total weighted premium

Source: Life Insurance Association Singapore

SINGAPORE BUSINESS REVIEW | JANUARY 2017 29

COVER STORY

Investors will be roused into action by the crow of several investment opportunities

10 investment eggs to hatch in 2017 Don’t be caught sleeping this Year of the Rooster and start sitting on these golden investment eggs; but as with any investment idea, these eggs are best taken with a grain of salt.

ith global growth set to accelerate in 2017 and the new United States administration looking to embark on an infrastructure binge, investors will be roused into action by the crow of several investment opportunities. Singapore Business Review rounded up the most promising of the bunch based on investor outlooks, including key sectors like biotechnology that promise solid earnings potential and currency plays that anticipate a stronger US dollar. 1. Healthcare and technology stocks For stock market investors, the healthcare and technology sectors are promising bets in 2017. Most indices climbed higher following the outcome of the US elections, and there is limited potential for indices in aggregate to appreciate further, says Christian Nolting, global chief investment officer at Deutsche Bank Wealth Management. This presents an opportunity to concentrate on income strategies and sector themes. “The earnings outlook remains positive ahead,” he says, noting that Deutsche Bank has upgraded the global healthcare sectors to overweight. “As expected, S&P 500 quarterly earnings are now growing again for the first time on a year-on-year basis since the third quarter of 2015, and the outlook remains positive – although we still believe consensus estimates for 2017 may be too high.” 30 SINGAPORE BUSINESS REVIEW JANUARY 2017

Don’t be tempted to change your asset allocation if your investment goal or risk tolerance has not changed.

Investors should start loading their baskets with biotechnology stocks, says Nolting. The fundamentals of this subsector remain intact as research and development spending continues to grow. Healthy cash positions and positive earnings will also support biotechnology stocks. Technology stocks can also be great picks in the face of stronger global growth and fiscal spending into infrastructure, which should drive demand, earnings, and stock prices across the sector. 2. US infrastructure sector US infrastructure will be another hot sector in 2017 due to a renewed focus to boost infrastructure spending as outlined in the proposals of president-elect Donald Trump. “We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals,” said Trump in his acceptance speech. “We’re going to rebuild our infrastructure – which will become, by the way, second to none. And we will put millions of our people to work as we rebuild it,” he remarked. Nolting reckons the US needs an estimated infrastructure spending of US$3.6t until 2020, and the markets will be rallying behind this growth story. “Markets are starved for growth,” says Charles Himmelberg, head of global credit strategy at Goldman Sachs. “This is plainly visible in the eagerness with which

COVER STORY markets seized on Trump’s growth-focussed message.” He adds, “It is also our sense that Trump does intend to prioritise an aggressively pro-growth fiscal agenda of tax cuts, deregulation, infrastructure spending, and defense spending.” Goldman Sachs sees the US fiscal stimulus as a welcome growth and reflationary impulse, especially in a weak global growth environment where the scope for lowering real policy rates remains constrained by low inflation and the zero lower bound on nominal rates. 3. Navigate higher yields Whilst higher US interest rates and a lack of alternatives should support global demand for US Treasuries, expectations of higher growth and higher inflation rates may create an upwards pressure on yields, says Nolting. Global growth forecasts seem rosier for 2017. Nolting expects global growth to accelerate to 3.5% in 2017 from 3.1% in 2016. He foresees US growth to pick up to 2.2% in 2017 from 1.5% in 2016, which will likely support labour market strength. In contrast, Eurozone growth is expected to slow to 1.3% in 2017 from an estimated 1.6% in 2016. Nolting reckons Eurozone yields will also rise, but will likely be lower than US yields, with the former being pushed up by gradually increasing inflation, some priced-in political risks not materialising, and expectations of European Central Bank (ECB) tapering. The slower rise in Eurozone yields assumes that the ECB will continue to buy for the time being. The two regions also have differing inflation outlooks with Eurozone headline inflation expected at 0.2% yoy for 2016 and 1.4% for 2017, whilst the US inflation is expected at 1.4% in 2016 and 1.9% in 2017. Given the potential of higher inflation and rising bond yields, investors should adjust their fixed income portfolios, says Zal Devitre, head of investments at Citibank Singapore. “Bond investors should consider shortening the duration of their holdings and should

Christian Nolting

James Martielli

Zal Devitre

Roger Crook

Trade relations with China (and to a lesser degree Mexico) will receive heavy scrutiny under Trump

Sources: UNCTAD, Gold man Sachs Global Investment Research

avoid developed market government bonds. Inflationlinked investments, including Treasury Inflation Protected Securities, are likely to outperform in this environment,” he says. Devitre projects the 10-year US Treasury yield to reach 2.25% by end 2016 and 2.6% by end 2017, as the Fed tightens monetary policy amidst rising inflationary pressure. “Donald Trump’s victory in the US Presidential election has triggered an inflection across multiple asset classes, from equities to fixed income, currencies to rates. Given presidential-elect Trump’s commitment to tax cuts and a large infrastructure spending program, we expect interest rates to continue to rise in 2017, driving the US dollar (US$) higher,” he says. 4. Buy US$ over EUR and JPY The US$ is gathering strength and will continue to rise against both the euro (EUR) and Japanese yen (JPY) in 2017 as the US domestic growth accelerates, opening a chance for US$ investors. “We see further US$ strengthening. We expect the US$ to reach parity against EUR by end 2017 and US$-JPY 115,” says Nolting. “This is in part due to monetary policy divergence.” The US$ has been rising against the EUR since Trump won the US elections, and many analysts say the two currencies could be trading one-for-one in 2017. Nolting reckons the Fed is expected to move “low and slow” with a maximum of three hikes (25bps each) by the end of 2017 to achieve inflation target and “full” employment. Meanwhile, the ECB is anticipated to extend quantitative easing until September 2017, and to announce gradual tapering around mid-2017. Nolting reckons US growth will continue to outstrip European growth. In Japan, the next 12 months will likely see 10bps cut in the policy rate and a further increase in the Quantitative and Qualitative Easing programme. “Diverging growth fundamentals will also drive divergent exchange rates via increasing rate differentials,” says Nolting. 5. Position for strong US$, US growth Whilst strong economic growth will be a positive for US equities, not all sectors are expected to outperform in this environment. Devitre expects cyclical sectors such as financials to shine brighter than defensives such as food and tobacco. He also points to domestically-focussed companies that sell most of their goods in the US to do better than their export-oriented peers. The strengthening US$ will create greater profit headwinds for such exporters. “Given the likelihood of increased infrastructure spending paired with corporate and individual tax cuts, we are likely to see a medium-term boost to US economic growth,” says Devitre. “This economic growth should drive corporate earnings in the United States.” 6. Selective IG bonds for US, Europe, and EM Investment grade (IG) bonds on both sides of the Atlantic and emerging markets (EM) will also draw attention due to their convincing valuations and strong demand. Nolting says the outlook on European IG credit is positive as the SINGAPORE BUSINESS REVIEW | JANUARY 2017 31

COVER STORY corporate sector purchase programme remains a major driver for tighter spreads. Investors are now focussed on volatility in rates and macro risk instead of concerns about the European banking system. “We are also constructive on US IG credit, as spreads are expected to tighten despite possible periods of increased volatility,” says Nolting. “Demand is exceeding supply and valuations remain compelling.” He also retains a constructive view on EM credit given improved EM growth outlook, stabilising commodity prices, positive reform climates in several countries, and a favourable demand-supply picture. 7. Japan equities With modest economic growth in the cards in 2017 and notable improvements in consumer and business sentiments as well as labour market conditions, Japanese equities are starting to become attractive for investors. More importantly, in the near term, a weaker JPY is likely to support Japanese equities, says Nolting, and the economic outlook is brightening due to improving industrial production in the third quarter of 2016 which was slightly better compared to the first half of 2016 and the year of 2015. “Note also that the Japanese economy could prove resilient to US anti-free trade rhetoric: exports to the US account for just 3.4% of GDP. We think that the Bank of Japan (BoJ) will continue with its yield curve management strategy for two implicit objectives – to increase inflation and to provide relief to financial sector earnings,” he explains. Meanwhile, a Bank of America Merrill Lynch report says the sustained JPY weakness is likely to lift US$/JPY to 120. The investment bank maintains its view that weaker JPY bodes well for equities. 8. Hedge with RMB Alongside positioning for a stronger US$, investors should also prepare for a weaker Chinese renminbi (RMB) in 2017, according to Goldman Sachs. “Our forecasts – US$/ CNY at 7.30 in 12 months – call for a depreciation that is well beyond forward market pricing, thereby implying positive gains even accounting for the negative carry. And beyond the usual reasons for wanting to hedge exposure to ‘China risk’, we think it will also hedge the risk of a ‘Trump trade tantrum,’” says Himmelberg. Three main factors will convince investors to hedge with RMB, foremost of which is how China’s management of its currency remains vulnerable to the destabilising effect of sharp devaluations against the US$. “Whilst the Chinese authorities have clearly communicated a shift in focus to a trade-weighted currency basket, thus de-emphasising the signal, it is still the case that the only signal that matters is US$/CNY,” he says. “We think higher fixings still run the risk of encouraging capital outflows as households and firms anticipate a faster pace of depreciation,” explains Himmelberg. “Whilst the shift to a trade-weighted regime makes sense, China has historically had a bilateral exchange rate, which means that fixing US$/CNY weaker is not as easy as it sounds,” 32 SINGAPORE BUSINESS REVIEW JANUARY 2017

he adds. A second factor is that RMB has a “bias to depreciate,” with Goldman Sachs research pointing to an asymmetry in the response of the US$/CNY fix to the dollar. Since March, the US$/CNY fix has risen 0.60% for every 1% rise in the dollar, whilst the US$/CNY fix has fallen only 0.38% for every 1% drop in the dollar. “There is therefore clear evidence of asymmetry in how the RMB responds to dollar moves, which in our minds is evidence of an underlying bias to weaken the currency and supports our bearish view on the RMB,” says Himmelberg. Finally, investors could choose RMB in their quest to find an effective hedge against the key downside risk to the Trump administration, namely if the aggressive effort to renegotiate US tariff and trade agreements ends badly. “Whilst we think Trump will most likely pursue trade agreements that are less radical than his protectionist rhetoric, we nonetheless acknowledge that his negotiations could be more aggressive and hence more risky. China is likely to be a primary focus of these efforts,” he adds. “For one, levying tariffs on Mexico would require repealing North American Free Trade Agreement (NAFTA), which we see as unlikely. Moreover, in contrast to the large bilateral trade deficit that the US runs with China, trade is nearly balanced with Mexico,” says Himmelberg. “We think tariffs on Chinese imports represent the clearest risk of Trump’s trade policy, and we prefer to use the RMB to hedge this risk.” 9. Alternative finance In 2017, alternative finance will step into the spotlight and will further increase in importance in Singapore and the rest of Southeast Asia, promising a sweet investment ride for those that buy into its potential to satisfy SMEs with no access to bank loan financing. “I think alternative finance is a fast developing, big investment opportunity,” says Roger Crook, CEO at Capital Springboard. “The rising interest

Stocks in the healthcare and technology sectors are promising bets in 2017

COVER STORY will grow and it will continue to be a very exciting market,” says Crook. “With the continuous search for yield in this present market, alternative finance enables an investor to diversify their investment portfolio and risks and at the same time achieve good returns,” he adds.

Alternative finance enables investors to diversify their investment portfolio and risks

amongst institutional investors towards alternative finance is an indication that large financial companies will become more engaged in the sector going forward.” He reckons alternative finance is emerging as a mainstream option in Asia that addresses the rising entrepreneurial needs in the region. China, for example, has become the world’s largest peer-to-peer lending market by transaction volume with US$101.7b in 2015, accounting for almost 99% of the total volume in the AsiaPacific region. “Asia remains a lucrative market which is attracting alternative finance options from diverse parts of the world,” says Crook. “Meanwhile, the local market remains optimistic, and will sustain – if not increase – the demand for short-term loans; however it is to be seen what regulatory bodies will do to ensure the prolonged health of the lending space,” he adds. Despite Singapore being the wealthiest country in the region per capita, a recent study by Deloitte highlighted that 40% of local SMEs – which contributes to around 47% of the country’s GDP – didn’t have access to a bank loan. “Whilst SMEs are hungry for capital, banks are not willing to lend as quickly,” says Crook. “The immediate addressable opportunity currently stands at US$3.3t, compared to the already exploited early stage investing market of US$300b.” “Alternative finance is reaching a tipping point from which it will launch into a mainstream financing option and explode in growth rate and high value to become a foundation for global finance,” he adds. Crook reckons that 2017 will see an uptick of entrants in all countries across Southeast Asia, and alternative finance will be attractive for investors because it can help diversify their portfolio amidst these uncertain times. “Whether it’s accredited, institutional, or retail consumers, whether it’s trade, invoice trade financing, whether it’s SME lending, all segments of peer-to-peer

10. ETFs For investors that are looking to build a low-cost, broadly diversified portfolio, exchange-traded funds (ETFs) may be the simplest way to go, says James Martielli, head of portfolio review, Asia at Vanguard. “Many of these products are low cost, offer broad diversification, and are easily accessible with a brokerage account on an exchange,” he says. “As our founder John C. ‘Jack’ Bogle often said, instead of trying to find the needle in the haystack, just buy the whole haystack instead,” adds Martielli. Providing a more general investment strategy, he reckons that predicting which stock, sector, or currency will outperform is always a difficult task since markets are often surprising and unpredictable over the course of a short-term period like a year. But following four timeless principles – goals, balance, cost, and discipline – improves the chance for investment success. “First, start by aligning your asset allocation with your investment goals. As a rule of thumb, the longer your time horizon, the more you should be able to allocate to riskier assets like stocks,” explains Martielli. He says the next thing they do is encourage investors to maintain balance in their portfolio by having a diversified mix of stocks, sectors, countries, and asset classes. Martielli adds, “Costs is one of the few things in investing that you can control. The less you pay, the more of the investment return you keep.” “Finally, maintaining discipline is easy to say, but harder to do in practice,” stresses Martielli. Here is his advice to investors: “Do not be tempted to change your asset allocation if your investment goal or risk tolerance has not changed.”

We forecast continued depreciation of RMB against US$

Sources: Bloomberg, various news sources; annotated by Goldman Sachs Global Investment Research

SINGAPORE BUSINESS REVIEW | JANUARY 2017 33

PEOPLE PROFILE

DBS CIO Neal Cross reveals key branch banking strategies for the future He also talks of plans of creating a digitised banking sphere for consumers.

Neal Cross Chief Innovation Officer DBS

s managing director and chief innovation officer at DBS Bank, Neal Cross is in charge of driving the bank’s innovation agenda regionally. With over 20 years of experience in technology, innovation, and financial services to back him up, he charts the innovation roadmap for DBS to enhance customer experience and better engage customers in the digital landscape. Here he shares his vision of the retail bank branch of the future. Why is digitisation/innovation important for DBS? The pursuit of digitisation and innovation at DBS is focussed clearly on one thing, to be able to improve the kind of experiences we provide for our customers that enable them to live more. However, the manifestation of that pursuit are two very distinct things. For us, digitisation is a recognition of where society is headed towards, with the increasing use of digital technologies. It’s clear that consumers are moving towards more digital experiences as they have access to various devices that allow them to seamlessly access various services. At the end of the day, it’s all about

convenience and that’s why digitisation is important to us, because it is pivotal in transforming banking experiences to become effortless and simplified. DBS’s Digibank is a prime example of this as we wanted to redesign the consumer banking experience, where customers can do all their banking virtually. Innovation though represents a different frontier where our big focus is on innovation management. To us, innovation is a mindset, it’s really not about technology. And that mindset needs to be an inclusive one, which means everyone within the bank should be able to innovate. At its heart, innovation management is about using a set of tools that enables people within DBS to have a common understanding of processes and goals – that is our focus on customer centricity. Having that understanding empowers our people to think outside the box and respond to external and internal circumstances and use creativity to introduce new ideas, processes, and products to address current needs. You’ve won multiple accolades for your digitisation efforts. What is your digital banking strategy? It’s always very reassuring, and encouraging at the same time, to be awarded and recognised by such renowned personalities, who in themselves are highly symbolic to innovation – Steve Wozniak, Sir Richard Branson, and the likes (we were also just recognised as the World’s Best Digital Bank). To put it simply, our digital banking strategy has always focussed on the end-users, our customers. We started to envisage what their future would look like and how digital technology plays a role in that. That’s why we are in the midst of creating a digitised banking sphere for our consumers using sophisticated systems architecture in our backend

technology, which by the way is already driving 99% of interactions with consumers. Through the use of APIs we have been able to turn banking into an experience, rather a transaction for our customer. Integration is key here.

Too many banks have been focussed on trying to integrate technology into their retail branches without truly trying to understand what customers want from a retail branch. Branches should be a place where customers feel like they can spend time as opposed to a place that frustrates them.

How do you picture the retail bank branch of the future? Too many banks have been focussed on trying to integrate technology into their retail branches without truly trying to understand what customers want from a retail branch. Branches should be a place where customers feel like they can spend time as opposed to a place that frustrates them. There will come a time when we see more people coming to the branch for advice as they conduct their transactions online or via mobile. That means redesigning the branch to suit that experience and then identifying how technology plays into that rather than force feeding technology into the branches as is often done now. That has several implications on the way banks operate in the future. For one, the push towards digitisation and innovation means that banks will need to substantiate their own employee journeys so their people are ready for the new kinds of customer experiences consumers desire. That means we will see a lot of retraining of staff as organisations seek to improve employee productivity and raise satisfaction levels (customers and employees). Secondly, we might see the redesign of branches that aim to maximise spaces for interactions as opposed to a usual scene in a branch where we see customers often waiting around. DBS has already introduced SMS queue systems so customers don’t waste their time. What we may see is the increasing growth of digital spaces where banks may primarily operate to engage with customers.

Business Opportunities - China Distribution

SINGAPORE BUSINESS REVIEW | JANUARY 2017 35

Singapore’s 27 Largest Engineering Firms

Government projects are lined up, but the private sector has been quiet

Engineers are tunnelling their way into overseas projects An increasing number of companies are trying to acquire new projects in Southeast Asia amidst sluggishness in the local market.

hangi Airport’s Terminal 5, Jewel Changi Airport, and the Tusa seaport are just some of the infrastructures due to be built less than five years from now. The Hays Quarterly Report for the fourth quarter of 2016 notes an obvious increase in the demand for engineers who are skilled in civil and structural design, electrical design, and mechanical design related to rail. This is amidst government plans to spend $26b on transport infrastructure by 2020. Hays says aside from those with rail experience, tunnelling engineers will also find their services in demand. The healthcare sector, according to Hays, is also a strong market with the new build/extension and upgrade of existing hospitals creating demand for candidates with mechanical design experience. “As a result of this planned work, many employers have moved their staff internally from buildings teams

36 SINGAPORE BUSINESS REVIEW JANUARY 2017

Professionals and organisations with transportation infrastructure experience in Singapore are gaining regional recognition and are increasingly sought-after for overseas projects.

to healthcare/rail/infrastructure works to ensure they can cope,” notes Hays. Randstad concurs, saying the healthcare segment is boosted by the Ministry of Health’s 2025 plan to prepare the country for the ageing population. “Following a regional trend, initiatives and projects have been set in place to decentralise the healthcare system and improve accessibility to healthcare services,” comments Randstad. In terms of hiring preferences, Hays says employers have a desire for permanent hires only, given that most of the projects have a deadline of completion by 2020. “A preference at the moment is to employ local permanent staff. However, contract work will be offered for niche skill set roles where the need is project related,” it adds. Consultancies are said to be setting their sights on overseas projects, amidst sluggishness in the residential and retail markets. Hays says there’s

demand for candidates who have had experience working in the wider Southeast Asia region, citing an increasing number of companies trying to acquire new projects in Southeast Asia. “As government cooling measures are still in place, residential and retail markets remain sluggish with little or no new developments in the local market. As a result, consultancies are starting to focus their attention on overseas projects. With the private sector also quiet, the focus is on government funded public works focussing mainly on railway and infrastructure,” reports Hays. Surbana Jurong, for instance, was recently awarded the contract to design the masterplan for the Hyderabad Pharma City in India’s newest state of Telangana. In 2016 Surbana Jurong also acquired Australia-based SMEC Holdings Ltd. Meanwhile, Randstad says professionals and organisations with transportation infrastructure experience in Singapore are gaining regional recognition and are increasingly sought after for overseas projects. In terms of innovation, BMI Research notes tirst movers in adapting 3D printing to the construction space are likely to achieve significant advantages in terms of precision and waste reduction over market participants relying on conventional construction methods. Surbana Jurong keeps top spot Still the largest engineering firm in Singapore following a merger in 2015, Surbana Jurong tops Singapore Business Review’s 2016 list, followed by AECOM Singapore and Parsons Brinckerhoff. Meanwhile, Surbana Jurong Chairman Liew Mun Leong was conferred the Distinguished Professional Engineer Award 2016 by the national Professional Engineers Board in November. Surbana Jurong has also acquired 100% shareholdings in AETOS from Temasek, expanding its overall service offerings to include safety and security capabilities.

Singaporeâ&#x20AC;&#x2122;s 27 Largest Engineering Firms 2016

Engineering Firm

2015

Total Number of Registered Engineers 2016

2015

2016 Breakdown Mechanical

Civil

Total Number of Staff

KEY EXECUTIVE OFFICER

Electrical

Surbana Jurong

2,789

WONG HEANG FINE

AECOM Singapore

738

BILLY WONG

Parsons Brinckerhoff

raymond lo

arup singapore

300

CHIA WAH KAM

WorleyParsons

290

EDMUND POH

T.Y.Lin International

212

TEH HEE SEANG

Beca Carter Hollings and Ferner (S.E.Asia)

197

TAN KIAT LEONG

MEINHARDT SINGAPORE (INCLUDING MEINHARDT INFRASTRUCTURE)

323

shahzad nasim omar shahzad lee bee wah thomas sit

CPG CONSULTANTS

1997

KHEW SIN KOON

MOTT MACDONALD SINGAPORE

400

YOU FOOK HIN

KTP CONSULTANTS (INCLUDING KTP INTERNATIONAL)

240

YEO CHOON CHONG ALLAN TEO

AURECON SINGAPORE

123

STEvE LIEW

RSP ARCHITECTS PLANNERS & ENGINEERS PTE. LTD.

LAI HUEN POH

CH2M HILL SINGAPORE

TAN NGO CHIAW

ECAS CONSULTANTS PTE. LTD.

130

CHAN EWE JIN

14 18 15

TRITECH CONSULTANTS

WANG XIAONING

15 21

DSCO GROUP PTE. LTD.

JACQUELINE CHAN

BESCON CONSULTING ENGINEERS

CHIN ZEE PING

SQUIRE MECH PTE. LTD.

109

NG ENG KIONG

RANKINE&HILL (SINGAPORE)

113

TAN PECK KHOON

CMP CONSULTANTS PTE. LTD.

CHAN YEW LIANG

DP ENGINEERS

810

TAN YEW CHAI GOH YONG PING

J.M. PANG & SEAH

LEE WAI MENG

SEMBCORP ARCHITECTS & ENGINEERS

lie liong tjen

BLACK & VEATCH (SEA)

hoe wai cheong william yong harry harji

fong consult

130

phang siew kheong

skm (singapore) pte. ltd.

455

424

274

9,055

TOTAL

DATA OBTAINED FROM PROFESSIONAL ENGINEERS BOARD, SINGAPORE (PEB) ON SEPTEMBER 9, 2016

SINGAPORE BUSINESS REVIEW | JANUARY 2017 37

Singapore’s 35 Largest Accounting Firms increased globalisation. EY, on the other hand, launched four centres of excellence in the city-state last March. The firm says the four centres for advisory, analytics, cybersecurity, and manufacturing “represent EY’s commitment to a multi-million dollar, multi-year investment in Singapore.” Max Loh, EY Asean and Singapore managing partner, explains, “Singapore is a strategic gateway to the Asia-Pacific region, underpinned by strong economic fundamentals, trade connectivity, pro-business values, and a strategic transformation vision to be a valuecreating economy.”

Businesses are placing a greater emphasis on accurate forecasting and budgeting

Accountants are sought after now more than ever

As companies seek to take greater control of their expenses to protect their profits, recruitment agency Hays sees growing demand for accountants.

ne of them turned 75 years old in 2016, another welcomed new female partners, and one opened four new ‘centres of excellence’ in Singapore. No wonder they remain on top of Singapore Business Review’s list of the city-state’s largest accounting firms for 2016. Keeping its place at number 1 is KPMG, with total staff of over 3,000. PwC Singapore also did not move at number 2 with its more than 2,700 total staff. EY, also ranked third the previous year, came in close with just over 2,600. 2016 milestones In an interview with KMPG’s internal publication Veritat in celebration of the firm’s diamond jubilee, retired KPMG managing partner Danny Teoh remarks, “Don’t stop believing. Building momentum is the hard part, but 38 SINGAPORE BUSINESS REVIEW JANUARY 2017

Management accountants and financial analysts will continue to be in demand as many businesses place a greater emphasis on accurate forecasting and budgeting.

once that has been built, it has a life of its own.” KPMG, which turned 75 in October, says it audits 50% of the biggest Singapore-based international companies. PwC Singapore, meanwhile, welcomed eight new partners last July – six of them female. They come from different cultures and nationalities: Australia, India, Myanmar, the Netherlands, and Singapore. “As a global network, PwC has always valued diversity and continually aims to create value for the business community by leveraging the power of differences to enhance innovation and creativity,” says Yeoh Oon Jin, Executive Chairman, PwC Singapore. According to Yeoh, these new partners bring with them a vast diversity of experiences, areas of specialisation, and global acumen to meet new demands brought about by technological disruption and

Growing demand for accountants According to recruitment agency Hays, management accountants and financial analysts will continue to be in demand as many businesses place a greater emphasis on accurate forecasting and budgeting. “We expect to see a growing demand for cost accountants, as firms seek to take greater control of their expenses to protect their profits. Candidates who are seeking these more commercial roles will need to demonstrate their ability to liaise and manage internal stakeholders, in order to successfully assist the business to understand the health of their business units,” notes Hays in its quarterly report. Meanwhile, a slowing economy has kept accounting and finance professionals in Singapore on their toes over the recent months, according to Randstad Singapore. “Organisations are under increasing pressure to streamline operations, and disruptive technologies are changing the way the industry functions – including employers’ expectations of these candidates.” Daniel Goh, manager, accounting and finance at Randstad Singapore, says that despite the gloomy forecast, hiring remains strong and they continue to see a high demand pressure for quality accounting and finance talent.

Singaporeâ&#x20AC;&#x2122;s 35 Largest Accounting Firms 2016

Accounting Firm

2015

2016 Total Staff

2015 Total Staff

2016 Accounting Professionals

Managing Partner

KPMG

3,020

2,900

<2,900

ONG PANG THYE

PwC Singapore

2,742

2,579

<2,700

YEOH OON JIN

EY (Ernst & Young)

2,620

2,360

2,270

MAX LOH

Deloitte & Touche

2,300

2,200

<2,300

PHILIP YUEN

RSM

933

931

<933

PAUL LEE

BDO

440

400

FRANKIE CHIA

Foo Kon Tan

325

300

232

KON YIN TONG

Baker Tilly TFW

280

250

255

SIM GUAN SENG

Nexia TS Public Accounting Corporation

230

220

200

HENRY SK TAN

Crowe Horwath First Trust

212

178

<212

TAN KUANG HUI

Moore Stephens

210

200

<210

MICK AW

Mazars

180

170

160

DENIS USHER

PKF-CAP

105

101

SAJJAD AKHTAR

HLB Atrede

ANDREW TAN BENG HWEE

Lo Hock Ling & Co.

PEARLYN CHONG

UHY Lee Seng Chan & Co.

LEE SENG CHAN

CA TRUST PAC

TAN LYE HENG PAUL

BSL Group

N VIMALA DEVI, LIM SIOW JANE

Cypress Singapore Public ACcounting corporation

LOK LAI CHENG

Ardent

TERENCE NG

Ng, Lee & Associates - DFK

<66

JERRY LEE

Grant Thornton Singapore

PETER ALLEN

Robert Yam & Co.

ROBERT YAM FCA

Hawksford Singapore

LEE PEI WAH

RAVI ARUMUGAM

Precursor Assurance PAC (formerly known as K.G.Tan & Co. PAC)

TAN KHOON GUAN

Heng Lee Seng

MICHAEL HENG

Kreston David Yeung PAC

DAVID YEUNG

Reanda Adept PAC

YIN KUM CHOY

Infinity Assurance

KUAH HONG WOON

Helmi Talib & Co

HELMI TALIB

FIDUCIA LLP

WAYNE SOO

3E Accounting

LAWRENCE CHAI

Pinebridge LLP

EDDIE LEE

Prudential Public aCcounting corporation

R RAHUL RAJ

TOTAL

15,005

13,822

14,029

DATA PROVIDED BY COMPANIES. SURVEY PERIOD: AUGUST-SEPTEMBER 2016

SINGAPORE BUSINESS REVIEW | JANUARY 2017 39

Legal briefing

Third-party funding for arbitrations New legislation is seen to raise Singapore’s profile as an international arbitration hub.

he Ministry of Law has submitted for its First Reading in the Parliament the Civil Law (Amendment) Bill 2016 and Civil Law (Third Party Funding) regulation. The bill states that third-party funding (TPF), which had previously been restricted for disputes, will be permitted for international commercial arbitration proceedings. TPF gives the means for a party to litigate or arbitrate without having to spend money for it. The Ministry of Law says introducing TPF in Singapore, which the body notes is a leading centre for international commercial arbitration, will enable international businesses to use funding tools available to them in other centres. It also says this will promote Singapore’s growth as a leading international arbitration venue. The legal experts interviewed for this article also note how TPF can prove to be beneficial to Singapore’s standing in the world as an arbitration hub. What are your thoughts on the proposed changes under the Civil Law (Amendment) Bill 2016 enacting a framework for third-party funding in Singapore, which will give businesses an additional financing option for international commercial arbitration? Eugene Quah, litigation & dispute resolution partner, RHTLaw Taylor Wessing LLP, welcomes the development. “Litigation or arbitration costs are big ticket extraordinary expenses that many businesses are not sufficiently well-resourced to bear,” says Quah. “The changes will open up access to a source of capital previously unavailable in this jurisdiction.”

“The liberalisation demonstrates that Singapore is open to new and novel ideas and willing to introduce and embrace what is progressive to keep up with an evolving business landscape.” Quah also notes that third-party funding can inject a greater degree of objectivity into the assessment of the merits of a party’s claim: “The claimant may have unrealistic expectations of his chances of success, but the third-party funder is a calculated risk-taker and will not fund an unmeritorious claim.” The proposed changes can be seen as a positive development for businesses, says Deborah Barker, managing partner, Withers KhattarWong. “For end users of the arbitration process, the changes will reduce (or even eliminate) the risk that third-party funding arrangements will be relied on as a basis for judicial intervention on the ground of public policy, or as a premise for an application to set aside the award.” 40 SINGAPORE BUSINESS REVIEW JANUARY 2017

Marina Chin, joint managing partner, Tan Kok Quan Partnership, says the bill is part of Singapore’s natural progression as a dispute resolution hub alongside others.

Eugene Quah

Deborah Barker

Marina Chin

It is said that law firms and lawyers will benefit from the increase in international dispute resolution activity in Singapore. What is your reaction to this? Opening the door to third-party funding is likely to benefit law firms and lawyers in Singapore, according to Barker. “Third-party funding is already permitted in the United Kingdom and the United States, and being considered in Hong Kong. Singapore law firms which have alliances with foreign law firms in these jurisdictions will be able to tap into the experience acquired by colleagues and overseas offices in relation to third-party funding arrangements.” Chin agrees: “That this would be a boon to the legal industry cannot be overstated. Cases which may not otherwise see the light of day can now have a real chance of being heard. That such cases are typically for fairly significant claims underscores the impact that funding can have.” For Quah, however, the development will be a challenge Singapore’s local firms will have to rise up to: “Whilst an increase in international dispute resolution activity in Singapore will certainly enlarge the overall pie, domestic law firms will stand to benefit only if they are perceived to be able to fight a case on an equal footing with the large Western offshore firms.” The Ministry of Law says, “Singapore has excelled in the area of arbitration and ranks among the world’s top seats for international arbitration, alongside London, Paris, Geneva, and Hong Kong.” How will the changes, if enacted, impact Singapore’s role in arbitration? The new legislation will make Singapore even more attractive as a seat for international arbitration, notes Barker, whilst allowing it to compete for a larger share of the growing volume of international arbitration cases. Singapore should go ahead with third-party funding for international commercial arbitration or lose parties that choose it for arbitration, says Quah. “If Singapore does not, parties relying on third-party funding may shy away from using Singapore as the seat of arbitration, as funders do not want to be exposed to the risks of not being able to enforce funding agreements.” “The liberalisation demonstrates that Singapore is open to new and novel ideas and willing to introduce and embrace what is progressive to keep up with an evolving business landscape,” says Chin. “Such dynamism is key to what makes a successful dispute resolution hub in the international arena.” Further, Chin notes: “This is not about Singapore alone: strengthening Singapore’s position increases the attractiveness of doing business in this region.”

Business Opportunities - China Distribution

CMO Briefing

n the age of social media, where virtually everyone with access to the Internet has a social media account, it is easy to think that it is the best way to reach consumers. However, don’t forget about email. According to the Radicati Group, a market research firm that provides quantitative and qualitative research on email and social networking, amongst others, the total number of worldwide email accounts was 3.9b in 2013, and projected to reach 4.9b by 2017. That’s a whole lot of email accounts, to put it mildly. No wonder email marketing is still deemed strong. Three marketers give their thoughts on email marketing, trends and threats surrounding it, and its future.

personalised messages,” adds Lim. When it comes to trends, one of the biggest is email remarketing. “Shopping cart abandonment is the bane of the online retail industry, but a sequence of carefully timed emails will recover between 10-30% of them,” shares Nicholas Kontopoulos, global vice president of fast growth markets marketing, SAP Hybris. When a consumer ditches his shopping cart, for example, brands can use cookies to track that and remarket to the consumer through email. “By remarketing with a more relevant and timely offer, such emails are more likely to get opened. They’re going to get clicked. And they’re likely going to lead to better sales conversion rates,” says Kontopoulos. “Email is the currency of the web, and I think it’s safe to say the majority of us who are online probably have an active email address. What’s also unique about email is that it is the only constant in a multichannel society and has a long history of stability,” he adds. Kontopoulos notes further that whether you use email marketing before, during, or after customers purchase something from you, the goal is not to bombard them with more emails. “The goal is to send them the right message at the right time; the most valuable content right when they need and want it.” Consumers want to feel valued and are looking for unique and individualised experiences every time they interact with their favourite brands. “It means understanding customers all the way from the first touch as an anonymous visitor through to a well-known customer identified with multiple emails, devices, social, and cookie identifiers,” says Kontopoulos. “Brands must also bring their business processes and customer information (including data from external sources) together on one core platform,” he says. Kontopoulos adds that the full picture and the ability to act on it in real-time are paramount to understanding the customer and taking the experience to the next level.

Still relevant Email marketing should never be disregarded in the development of marketing strategies. “Email marketing still forms an important part of marketing tactics, as it serves to inform, and maintain touch with customers, both in B2B and B2C scenarios,” says Kenneth Lim, CMO, Alpha7 Consultancy. The only difference in today’s context, he shares, is that email marketing is increasingly being operated by marketing automation platforms like HubSpot, which can be customised based on the recipient’s preference and topics of interests. Therefore, junk mail and spam scenarios have been greatly reduced, improving customer satisfaction. “Email marketing will remain as one of the most effective communications channels with customers and prospects for a long time to come,” says Lim. He notes that there might be a reduction in usage. “Messages could be communicated via social media channels, leaving email marketing to convey

Timing is key The rise of online messaging and social media may seem to undermine the value of email marketing, but the real challenge lies in delivering the right piece of content to the right target audience at the right time, regardless of the delivery channel, says Janie Lim, APAC Marketing Director for Digital Media, Adobe. “Email marketing is but one of the myriad of channels that marketers need to pay attention to. In the journey ahead, customer experience will be the key differentiator for companies looking to excel. Beyond channels, marketers will need to look into customer experience as a key priority, connecting experiences across every touchpoint to deliver consistent, engaging, and meaningful content,” says Lim. She adds that this requires businesses to have a good understanding of their customers – who they are, and what drives them to the brand. “With the right data analysis and customer insights, email marketing will continue to flourish in the years to come,” says Lim.

Email marketing is not about to go away In our hyperconnected world, email marketing’s impact should not be discounted.

42 SINGAPORE BUSINESS REVIEW JANUARY 2017

The real challenge lies in delivering the right piece of content to the right target audience at the right time.

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retail banking forum: Singapore

FARAAZ ALI, ANZ: “Fintechs also find it easier to disrupt the payments space where there is little to no regulation. In this area, the banks usually take on a more collaborative approach and look for a fintech partner to do business with.”

LIEW NAM SOON, EY: “It’s more than just a technical solution, it’s actually a lot of work to make a digital initiative successful. A lot of work needs to go into looking at the processes around it, the operating model, and the sponsorship from the very top.”

Singapore banks urged to look into methods of collaboration with fintechs

How do banks know which ones to work with, which ones to invest in, and what strategy to implement?

comparatively stable financial sector is not enough to make Singapore immune to shocks when it comes to the speed and volume of innovation from within and outside the industry. Bankers in the city-state might need to work even longer hours as they determine the best strategies for weathering droves of digital disruption. “It’s more than just a technical solution, it’s actually a lot of work to make a digital initiative successful. A lot of work needs to go into looking at the processes around it, the operating model, the entire organisation, the sponsorship from the very top,” Liew Nam Soon, ASEAN managing partner, financial services at Ernst and Young (EY) Solutions LLP, said at the Singapore leg of the Asian Banking and Finance Retail Banking Forum held last May 2016 at The Westin Singapore. Innovation is a mere slice of the pie; banks are compelled to take a

44 SINGAPORE BUSINESS REVIEW JANUARY 2017

The varied tastes and contexts of customers are motivating Singapore banks to invest more into technology and data.

deeper look at data for any customer insights that could help develop a more specific and improved digital platform. Liew added that solutions must be meaningful enough for businesses with varied focus, especially in the ASEAN region where financial markets have different levels of maturity from a client’s perspective as well as a regulatory regime perspective. Strategic partnerships Singapore has positioned itself well in the region’s fintech space, and its lead is attributed to the existence of support infrastructure and the ease of doing business in the city. Singapore Life, one of the biggest and most recent entrants into the market, is showing that fintechs can dominate any frontier without the usual challenges that mainstays experience. Banks have nonetheless jumped in on the fintech bandwagon,

and have themselves launched their own fintech accelerators and incubators. Liew shared that a lot of the fintechs in the city and the region are very creative, but would need strict monitoring on the way they handle customer data and manage risk. The Monetary Authority of Singapore (MAS) has been very focussed on defining the regulations and putting out consolidation papers to determine how fintechs fit in the city’s operating environment. Singapore fintechs have begun occupying several jurisdictions, two major ones of which are the online investment advisory space and the lending space. Faraaz Ali, head of consumer products, Asia at ANZ, added that fintechs also find it easier to disrupt the payments space where there is little to no regulation. In this area, the banks usually take on a more collaborative approach and look for

retail banking forum: Singapore Regional is now the name of the game, especially as the ASEAN financial sector is growing into a very robust, thriving, and more integrated marketplace. From left to right: Singapore Business Review editor Tim Charlton, EY’s Liew Nam Soon, and ANZ’s Faraaz Ali

a fintech partner to do business with. It is also not enough for banks to hire a chief strategic officer and let him do all the dirty work. According to Liew, bank employees must also feel empowered to work for innovation. “There are so many fintechs. One of the challenges for banks is who to work with? How do they spot who will be successful over time? So, what’s the strategy to take? Do they collaborate? Do they invest? This is something that requires a different set of skills from those of the traditional banker. Another element to look at is the method of collaboration,” Liew added. Digging into the data The varied tastes and contexts of customers are motivating Singapore banks to invest more into technology and data, but recent investments have not been enough to hit some of the sweet spots. Many customers do not fit nicely into previously identified moulds, and some have very different buying and selling behaviours. “There’s a lot of transaction data that is available in banks’ systems. To be able to monetise it, it is really important to extract the right customer insight from that data. That’s the ongoing challenge for many banks. It’s gotten more sophisticated. It’s important to look at the right insight; whether you will offer this kind of loan or investment. It’s easier said than done,” Liew shared. Another major challenge for banks is to integrate different front-ends and extract from the back-end without the unnecessary residual information from legacy systems. This issue has driven a lot of businesses into creating

infrastructure service-oriented architecture that allows the extraction of meaningful data. “Analytics are taking us into far more insights into customer behaviour: how to interact with the customer, whether to cross-sell or upsell, and understanding what is happening in the network,” said Dereck Raymond, vice president for software solutions at Diebold. Enter refurbishments Ali emphasised that despite the high use of online banking among Singaporean customers, the branches will definitely not go away soon. He said that Singapore’s position as a financing hub has made it the perfect place for people to park their wealth. This, however, does not mean that banks will remain the way they are. “In terms of the makeup of the branches, we have been experimenting with this for the last three to four years – to make the branches more attractive. Put in kiosks, displays, that allow customers to undertake communication. Depending on the niche, banks should do away with cash and digitise a large number of transactions,” Liew said. As a way to maintain and popularise their brand, Singapore banks have already hit the road with a number of pop-up branches, a concept which follows the food-truck model. A popup branch goes directly to where the crowds are and provides basic services for customers on the go. With regard to communicating well with customers, Raymond added that banks should also look into the relationship between specific banking

devices such as ATMs and the banks’ clients. He said that ATMs are now moving away from being a device that merely dispenses cash and provides balance inquiry into something that is far more friendly and understanding of who the customer is and from which segment he comes. Business mediation might also see more developments as banks move towards becoming more friendly to individual investors within the SME sector. The high risk associated with SMEs have driven banks to put the sector at bay, but the innovation that they bring is making bankers think twice. Ali said that it will take a different mindset to approach this and that banks might turn to peer-to-peer lending in order to cater not just to businesses, but to individual investors as well. Neighbouring narratives Regional is now the name of the game, especially as the ASEAN financial sector is growing into a very robust, thriving, and more integrated marketplace. Banks who wish to expand their footprint cannot implement blanket business models or produce a single digital platform for all the countries in the region. The economies of these countries remain inextricably linked, but major trends in the sector vary from country to country. For instance, Singapore is quite high on the use of online internet ATMs, and its city-state structure is vastly different from that of archipelagic Indonesia, where online internet remains low and mobile penetration is skyrocketing. Thailand, on the other hand, is moving away from a tight regulatory environment into a more innovation-friendly one, whilst neighbouring Cambodia and Vietnam find lending and repayment growing hand in hand. One thing is clear, customers all over the world are inevitably moving towards digital banking. Banks therefore need to continuously rethink the way they do business, and for now they are all in a race to collaborate with social media platforms and implement contactless payments whilst keeping their branches attractive and up-to-date. SINGAPORE BUSINESS REVIEW | JANUARY 2017 45

FEATURE: LEONARDO HELICOPTERS can bring us new techniques, new modelling approach, and we bring the experience.” Mauro Moretti, Leonardo CEO and general manager, described the agreement as an exciting opportunity to expand Leonardo’s scope of activities in Singapore.

Leonardo’s family of new generation helicopters

New name, new frontiers: Soaring far beyond Italy

Leonardo Helicopters, maker of the world-renowned AgustaWestland fleet, is spreading its wings further by collaborating with a Singaporean university.

aking inspiration from Leonardo da Vinci – a symbol of innovation, research, and creativity – Italian company Finmeccanica ushered in a new era by changing its name to Leonardo in 2016. What used to be a holding company of independent businesses is now one company integrated and organised in divisions with a focus on high-tech products and services. The Helicopter Division, which is able to manage the entire helicopter development and production cycle, has plants concentrated in Italy, the United Kingdom, Poland, and the United States. Beyond these domestic markets, Leonardo is keen to fly to new heights. The Singapore ‘seed’ In May 2016 Leonardo signed an agreement with Nanyang Technological University for a research collaboration. The partnership, Leonardo’s first in Asia as previous collaborations were with 46 SINGAPORE BUSINESS REVIEW JANUARY 2017

When you go to Singapore and want Leonardo to be recognisable there as a helicopter manufacturer, you need to be there.

academic institutions in Europe, aims to facilitate sharing of talents and know-how to develop engineering and industrial capabilities. Luca Medici, head of research & technology at Leonardo Helicopters, told Singapore Business Review, “I see it as a cross-functional fertilisation between us and Asia.” When asked whether the deal is a sign of Asian expansion with the possibility of putting up a plant in Singapore, Medici likened the collaboration to a seed. He said, “When you go to Singapore and want Leonardo to be recognisable there as a helicopter manufacturer, you need to be there.” Medici commented further that it’s a win-win situation. “We go to the university and try to invest our future there, taking advantage of the work they can provide and at the same time transferring to them our capability and expertise.” Daniele Romiti, managing director at Leonardo Helicopters, echoes the sentiment. He said, “Universities

‘Think Customer’ ethos Leonardo is proud to say it is not only a rotary-winged manufacturer, with its through-life approach making the big difference. The Division provides all associated services needed to operate the helicopters – support, training, maintainance, and integration in specific environments and areas. In Sesto Calende where they have the main training academy for pilots and engineers where they use state-of-the-art simulators as well as real aircraft, the company also has a 24/7 fleet operations centre. In addition, there are regional support centres, training academies, and satellites around the world to assist customers in different continents. Paolo Petrosso, head of Italy training operations, said, “We recognise that we are now a global company and our products are flying all over the world, so going closer to the customer is essential to maintain that competitive advantage.” He explained how training is part of through-life support, with a helicopter purchase being ‘almost for life’ as the aircraft lasts 20, 30-plus years. Petrosso said, “Training is a fundamental element of the relationship our company has with the customers because it’s not only about technical knowledge but it’s also about the safety of the flying crew. That’s the key element of our strategy – customer service and training – is to ensure that our products are operated at the highest safety standard.” For him, being seen as a product that is safe and equally effective is the best marketing tool Leonardo can have. Leonardo Helicopters has more than 1,400 customers served in 105 countries by over 12,000 people, with a fleet of about 5,000 helicopters around the world. By Terry Gangcuangco

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OPINION

ANDREA NG

Behind Singapore’s food narrative

ome time has passed since the Michelin Guide for Singapore was debuted. Some said it’s a recognition of the island’s cultural heritage, whilst some didn’t care whether the stars descended or not. Whatever it is, it is undeniable that food is deeply ingrained in the Singaporean cultural DNA, and is a personal subject for most Singaporeans. To understand the ever-evolving foodscape of Singapore is to grasp the Singaporean psyche. From the deeply local delights of Singaporean hawker cuisine to the swanky international restaurants with celebrity chefs congregating here, and to all the in-between cafes, and restaurants attempting to establish their own independent flavours and personalities – Singapore is proclaimed the island of flavours, and the home of food lovers. Anywhere in Singapore you will see long snaking queues for food. Singaporeans are also infamous food travellers and hunters. For anyone attempting to enter this captivating island of food dynamism or to understand its consumers, it becomes ever more crucial to acquire a deeper appreciation for the impact of cultural tradition, and evolution of lifestyle values. As Michelin continues to leave its ‘food-prints’ around the island food tracks, what sits behind the ever-changing foodscape? Time frames the food narrative It is said eating is a national pastime for Singaporeans, a national obsession. Rational beings or not, emotions play a large role in consumer decisions. If food is about time, then memories and nostalgia in search of that ‘good old flavour of my childhood/past/60s/etc.’ continue to shadow the food narrative. There is a slew of food bloggers in Singapore dedicated to the hunt for ‘local love’, mourning for lost culinary art, prompting queues of people scurrying to try it before it disappears. From young hawkers taking over the declining trade, to questions about ‘should the chili crab be the national dish?’ – all point to a society that is deeply conscious of preserving and protecting its collective memory amidst the globalising current. Deeply aware of the rapid transformation of the urban landscape, Singaporeans will increasingly continue to prize food outlets which help them assert and express their Singaporean identity, and understand the increasing penchant for the ‘local’. Social foodscape From big home dinner parties where immediate and extended families gather, to TV home dinners as life gets busier, to eating out as ubiquitous and 48 SINGAPORE BUSINESS REVIEW JANUARY 2017

BY ANDREA NG Cultural Trends and Insights Consultant at Join the Dots

commonplace, the social and emotional aspects of dining cannot be ignored. Food is affection, it also serves as a common language. Technology is set to change the ways people eat, and social eating has taken new forms through social sharing. Singaporeans share food experiences online, and seek information of new food hangouts online. Engagement with food goes beyond just the basic human necessity, but drives self-expression, adventure, and entertainment. This social sharing broadens the Singaporean psyche of ‘diedie-must-try’, and many food businesses are realising the importance of how online has reshaped the ways food is experienced and shared. This in part has fuelled experimentation and exploration, leading the wave of innovation in the food and dining scene. Multiculturalism in gustatory exploration At the heart of it all, is the multiracial make-up of the Singapore society that conditions the Singaporean consumers to an openness to different palates. Singaporeans are one of the most well-travelled people in the world, where exposure to global experiences are crucial in the desire to try new things. With broadening palates and expectations of ‘food-paths’ setting onto the food capital, Singaporeans are increasingly looking to satisfy their insatiable desire for new flavours and food experiences. From the salted egg yolk fad, to waffles and churros that spur on those endless long queues, prove that the Singaporean consumer is looking to travel through his or her taste-buds. Concurrently, the multi-varied palate of the Singapore foodscape is one that Singaporeans hold with pride. As much as innovations and global experiences enter the island, essence of Singaporeanness through food travels globally.

Online has reshaped the ways food is experienced and shared

50 SINGAPORE BUSINESS REVIEW JANUARY 2017