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In the year of the dog, don’t get caught barking on the wrong money tree

SINGAPORE’S hOTTEST ACCELERATORS IT’S BOOM TIME fOR vENTURE CAPITAL CO-LIvING IS ThE NEW COOL LIvING IN A fREELANCE WORLD A TALE Of TWO PRIvATE EQUITy MARKETS 80 73

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FROM THE EDITOR About Us

AUDITED CIRCULATION: 24,794 ONLINE READERSHIP: 215,000 monthly uniques through Google Analytics The Singapore Business Review is the highest circulating and best read business magazine in Singapore. Our online readership has an average of 215,000 unique viewers, according to Google Analytics. We won the Business Trade Media of the Year Award at the 2017 MPAS Awards. Do reach out to us if you would like us to tell your story to our readers via print & online advertising or events. Publisher & EDITOR-IN-CHIEF Tim Charlton production editor Genelie Sta.Ana-De Leon GRAPHIC ARTIST Elizabeth Indoy ADVERTISING CONTACT Rochelle Romero rochelle@charltonmediamail.com Angelica Biso angelica@charltonmediamail.com

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Editorial Enquiries: If you have a story idea or just a press release, please email: sbr@charltonmedia.com and our news editor will read it. For a personal message to the editor, put the word “Tim” in the subject line. For Media Partnerships, please email: sbr@charltonmedia.com and put “partnership” in the subject line and it will forward to the right person. Subscriptions email: subscriptions@charltonmedia.com Singapore Business Review is published by Charlton Media Group. All editorial is copyright and may not be reproduced without consent. Contributions are invited but copies of all work should be kept as Singapore Business Review can accept no responsibility for loss. We will however take the gains. Sold on newstands in Singapore, Malaysia, Hong Kong, London, and New York. Also out in sbr.com.sg with online readership of 215,000 monthly unique visitors*. *Source: Google Analytics **If you’re reading the small print you may be missing the big picture   

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As part of our annual tradition, we bring you fresh investment ideas to welcome the new year. It’s the Year of the Dog, and nobody should be left barking on the wrong money tree. We talked to experts, bankers, and investment firms as we rounded up ten promising investments ideas that could help boost your finances this year. For startups seeking for their first round of financing, we also came up with a list of the hottest accelerators to look out for in Singapore. As suggested by the biggest venture capital firms, industry experts and analysts, the list could very well be your ticket to your next big venture this year. There’s also a new kid in the sharing economy block in the guise of co-living spaces. We delved into the world of co-living, as it provides a solution to Singapore’s housing woes whilst opening up opportunities for developers. Meanwhile, our regular financial insight column delved into the private equity landscape in Singapore. PE transactions in the first nine months of 2017 reached US$8.2b, surpassing the whole of 2016, with investment activity rising most strongly in Singapore, Indonesia, and Vietnam in the past 12 to 18 months. Despite the influx of dry powder, this year has also seen a decline in the number of transactions. This issue is packed to start the year right. Enjoy!

Tim Charlton ERRATUM

Singapore Business Review erred in the August-September 2017 issue where we published an infographic “Top 100 most valuable Singapore brands in 2017” attributed to Microsoft Asia Digital Transformation Survey. The proper attribution should have been given to Brand Finance. For the full corrected report, please visit the digital version at www.sbr.com.sg

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CONTENTS

insight A tale of two equities 20 Financial

Cover Story 10 investment ideas to unearth in 2018

FIRST 08 Co-living is the new cool 10 It’s boom time for venture capital

REGULAR

RANKINGS 36 Top engineers underskilled for Smart 38 Singapore’s top accounting

12 Living in a freelance world: Singapore’s growing gig economy

14 Healthcare firms boost AI for ageing 18 Will the new SingPost Centre revive its weakening mail business?

26 Economy Watch 44 Legal Briefing

Nation initiative

for Singapore’s Gen Y

Industry insight Accelerators to look out for in Singapore

46 CMO Briefing

firms are on a hiring spree

EVENT COVERAGE 48 How companies can defeat modern-day hackers

19 Jumbo Group’s China growth strategy

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 2018

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FINANCIAL SERVICES

TRANSPORT & LOGISTICS

MaRKETS & INVESTING

3 in 5 Singaporeans are unprepared for retirement

LTA to freeze number of cars in Singapore roads in 2018

Keppel-KBS US REIT prices IPO for US$0.88 per unit

According to a survey commissioned by BTO with BlackBox Research, three in five Singaporean respondents have declared that they are not confident about having enough money in retirement. Despite the retirement age being 62, about 38% plan to work through retirement, whilst 27% said they will be over 70 when they retire. only 17% of Singaporeans rely on CPF.

The Land Transport Authority (LTA) will stop vehicle growth for cars and motorcycles, or those in categories A, B, and D, starting February 2018. According to LTA, 12% of Singapore’s land area is taken up by roads. Due to land constraints and competing needs, the government finds it difficult to expand the current road network. Vehicle growth rate will be lowered to zero.

Keppel-KBS US REIT, which is 50% managed by Keppel Corporation, has priced its initial public offering (IPO) for US$0.88 per unit. According to an announcement, the manager of the IPO also bought a 9.5% interest comprised 59.71 million units amongst the total. Bloomberg also reported the trust is offering 509.1 million units in total. with a dividend yield of about 6.8%.

Singapore Proptech: Challenging the status quo BY RHONDA WONG Real estate is the largest asset class in the world, worth over US$200 trillion. It is an industry that is traditionally conservative, old fashioned, and largely dominated by wealthy corporations or individuals who are often older in age. Those in this age group had, for many years, been comfortable with the ways that things have been done and, hence, it is no wonder that the waves of disruption in the property industry is only taking shape now.

Forget the past as Singapore escapes the economic trough in 2017 BY ONG KAI KIAT It can be difficult to let go of the past and look forward to the future. After the Global Financial Crisis of 2009, Singapore rebounded with a strong 15.2% growth in 2010 which sizzled down to 2% in 2016. This led to a recent assessment by some observers that Singapore is an economic malaise and would have a weaker 1% growth in 2017. The actual situation cannot be further away from the truth.

MOST READ COMMENTARY Surely Singapore will be Southeast Asia’s first cashless society BY JOE SEUNGHYUN CHO Prime Minister Lee Hsien Loong is right to push for a cashless society in Singapore as a top national priority. I remember one coffee meeting with an official from the Infocommunications Media Development Authority of Singapore (IMDA) earlier this year. I was sharing my opinions on why Singapore is in good position to make that happen. There’s a few key reasons. First, Singapore has great infrastructure already.

SINGAPORE BUSINESS REVIEW | JANUARY 2018

Co-published corporate profile

In July, the firm launched Ascend, an integrated cloud-based accounting, business automation and A.I. analytics solution platform

Nexia TS sets a new standard for professional services Bespoke services and a commitment to digitisation are keys to Nexia TS being the partner of choice for over 90 listed companies.

one are the days when accounting firms relied on a one-size-fits-all system to serve the needs of various clients. At Nexia TS, relentless innovation is the key towards top-notch service. “We aim to be a personal adviser who listens to our clients, thinks on their behalf and helps guide them on difficult decisions,” says Henry Tan, Managing Director of Nexia TS. Established in 1993, Nexia TS Public Accounting Corporation is a proud homegrown firm with a stellar track record. Since its founding, it has achieved a total of 32 IPO listings to-date in its capacity of Reporting Accountant and Consultancy roles. Now, its key clientele includes over 90 public listed companies, for whom the firm provides statutory audit, internal audit, tax or other forms of advisory work. In addition, Nexia TS also serves several multinational companies, non-profit organisations and large private entities. One-of-a-kind technology Despite its success, Nexia TS is definitely not resting on its laurels. To stay competitive, the firm has invested heavily in providing automated solutions to streamline its workflow processes. It has invested into the bespoke Practice Management System (PMS), a customised workflow system which greatly empowers the firm in its efficiency drive. “We believe we are one of the more advanced firms to invest a sizable amount

into an enterprise resource planning system,” says Henry, adding that this has contributed greatly to the firm’s productivity across all business units in terms of automating work functions. “On top of implementing the PMS platform, we have been using Caseware Electronic Working Papers for Assurance, which allows electronic working papers and automatic preparation of financial statement numbers to check against the reports.” Henry added. In July 2017, the firm also launched Ascend, an integrated cloud-based accounting, business automation and A.I. analytics solution platform. “Bolstered with our technical and consulting expertise, Ascend works with leading software partners to leverage on their technological capabilities and their strategic partnerships with leading companies such as IBM Watson, to deliver the best of both worlds to our clients,” commented Henry. More digital innovations are in store for Nexia TS. Henry notes that the firm is also looking into using analytics and technology tools to improve its manual processes in compliance work, as well as exploring a digital client relationship management system. “We are constantly in touch with the uberisation of accounting and advisory business. In such a competitive environment,

Henry Tan, Managing Director of Nexia TS

we have to embark on continuous innovation and rethink of better ways to do things,” Henry says. With its growing capabilities, the firm has also set up subsidiaries in Shanghai, Malaysia, and Yangon to better serve its clients’ business interests in the wider region. It was also one of the early movers into the China market by setting up a local advisory office in 1996 and bringing in Chinese companies to list on the Singapore stock exchange. “Our China practice has provided valuable support to many international corporations looking to penetrate the China market,” Henry notes. “China remains a major market for our firm. Hence, we will ride on the One Belt One Road initiative to continue to assist our clients expand their business interests overseas.”

CONTACT Company name: Nexia TS Public Accounting Corporation Address: 100 Beach Road, #30-00 Shaw Tower, Singapore 189702 Phone number: 65 6534 5700 Fax number: 65 6534 5766 Website: nexiats.com.sg

“We aim to be a personal adviser who listens to our clients, thinks on their behalf and helps guide them.” SINGAPORE BUSINESS REVIEW | JANUARY 2018

Agenda PEOPLE | PLACES | SERVICES | OPPORTUNITIES

SERVICES

OPPORTUNITIES

TAFEP

Seamless Seamless is the key meeting place for this brave new world of commerce. It is a new event built on 20 years of experience – a seamless continuity from Asia’s largest and longest running conference focussed on cards and payments, to a dynamic summit and large-scale exhibition bringing together the converging worlds of ecommerce, retail, and payments.

OPPORTUNITIES

EASB 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

SINGAPORE BUSINESS REVIEW | JANUARY 2018

OPPORTUNITIES

SCCE Over 3,600 compliance professionals around the world have already come to an SCCE Basic Compliance and Ethics Academy to master the fundamentals of managing a compliance and ethics program. The Academy provides three and a half days of classroom-style training, and class size is limited to facilitate interaction amongst the attendees and with the faculty. Learn from experienced practitioners and prepare for the Certified Compliance and Ethics Professional-International (CCEP-I)® exam, which is optional and is offered at the conclusion of the Academy. Join us on 10-13 July for this once-ayear event in Singapore.

visit

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FOR MORE INFORMATION on EVENTS AND ADVERTISING

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

OPPORTUNITIES

kaplan singapore 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

Co-published corporate profile

Breathe new life into your workplace with innovative corporate wellness programmes AIA Vitality’s new study shows that big rewards await firms that take charge of their employees’ health. the key asset for every business. Our team can only be effective if everyone is happy and healthy,” says Dr Low Lee Yong, CEO and founder of MHC Asia Group. The firm came in second in the ranking amongst the city’s healthiest workplaces. “If your co-workers are happy and healthy, your shareholders will be overwhelmingly happy,” he notes.

A growing number of employers perceive employee well-being programmes as a strategic priority.

re your employees often on sick leave or are present but barely functioning? If so, then it’s probably time to roll out a structured corporate wellness programme to reinvigorate your staff. A growing body of research reveals that proactive management of employees’ physical and mental health can produce a range of important business benefits. For instance, the inaugural 2017 Singapore’s Healthiest Workplace Survey by AIA Vitality showed that employees’ lifestyle choices and general health are directly related to business critical outcomes such as a reduction in absenteeism, greater staff engagement and productivity, and a reduction in staff turnover. “Creating a culture of health in an organisation can only be possible when employees and the management work together,” says Ms Carolynn Ang, head of human resources, Asia Pacific, CenturyLink which bagged the top spot in the study as Singapore’s healthiest workplace. The study, which surveyed approximately 1,200 employees across 14 organisations in the region, revealed that the cost of employee absenteeism and presenteeism is approximately $800,000 per year on average for organisations in Singapore. Presenteeism refers to reduced productivity at work; although physically present, employees are limited or constrained by health problems to carry out

their daily activities, resulting in productivity loss. In order to correlate employee health and workplace productivity, the study determined each worker’s AIA Vitality Age. If a participant is particularly fit and healthy, their AIA Vitality Age could be lower than their actual age. However, majority of respondents’ Vitality Age was much higher than their actual age. The average AIA Vitality Age gap in Singapore is 4.5 years, lower than the Asian average of 5.1 years but significantly higher than the gap of 3.4 years for Australian respondents. From an employer’s perspective, a lower AIA Vitality Age gap directly translates to greater workplace productivity. Across all survey participants, the results demonstrate that each additional year of AIA Vitality Age gap corresponds, on average, to 3 additional days of lost productive time per employee per year. The report also showed that a growing number of employers perceive employee wellbeing programmes as a strategic priority, particularly during challenging economic times. Even a small ongoing investment in the well-being of employees can pay big dividends for the business and help to improve the bottom line. “Human resource is

Move it, move it Facilitating healthy habit changes in the workplace can make all the difference to employees’ health. Fortunately, closing the AIA Vitality Age gap isn’t all that hard. “Change can be done in small steps!” said Ms Ang. Employers need to know their employees’ unique clinical and lifestyle risk factors and assesses how they interact with the existing facilities and services offered. The study showed that 100% of employees reported improved overall health after employers organised fitness classes as breaks in the workplace. All of the respondents also indicated that having access to a dietitian or nutritionist helped them take charge of their health. Other interventions include offering healthy food alternatives at the workplace, which 83% of employees considered effective. Employers can also offer clinical screening services, such as blood pressure and blood glucose screening, which was considered effective by 81% of respondents. Creating awareness of programmes offered will ensure positive take-up of interventions from employees, to benefit their health and well-being. “It’s important to listen to feedback from employees, communicate and find creative ways to accede to suggestions,” added Ms Ang. Organisational support is also vital. Even in areas where the employees are less willing to change of their own volition, creating an environment conducive to change and a culture of health within the organisation may provide extra motivation. Singapore’s Healthiest Workplace by AIA Vitality is a survey by AIA Singapore in partnership with AIA Group and RAND Europe CIC.

“The cost of employee absenteeism and presenteeism is approximately $800,000 per year on average in Singapore.” SINGAPORE BUSINESS REVIEW | JANUARY 2018

FIRST CPF RATING: NEEDS IMPROVEMENT

highly priced, and because of our demanding type of mentality, the co-living concept is a necessity,” said Hmlet CEO Yoan Kamalski.

Singapore’s pension system is the best in Asia, according to the ninth edition of the Melbourne Mercer Global Pension Index released in October. It scored a B rating with an overall index value of 69.4, rising 2.4 points from 2016. The city-state beat out China which had an overall index value of 46.5, India (44.9), Indonesia (49.9), Japan (43.5), and Korea (47.1), which are the five other Asian nations covered by the index. Despite its stellar rating, the Singapore pension system still needs some improvement, said Garry Hawker, Asia zone wealth business coordinator, director of strategic research, growth markets at Mercer. “As one of the most developed pension schemes in Asia, Singapore has continued to make improvements through CPF in providing more flexibility to its members,” he said. “The overall index value for the Singaporean system could be further increased by reducing the barriers to establishing tax-approved group corporate retirement plans; opening CPF to non-residents who comprise more than one-third of the labour force; and increasing the labour force participation rate at older ages as life expectancies rise,” Hawker noted. Singapore scored highest in the integrity sub-index at 80.7.

A new way of living Hmlet allows users to find room rentals on a month-by-month basis with a minimum commitment of three months. Rooms have basic necessities like water, electricity, internet, and cleaning & ironing services. Users can apply for membership through a form where they can choose the type and price of the room, the location, their length of stay, the number of people to live with, and even the necessities they want. Right after, the applicants are put through personality matches, so that they can live with roommates they aren’t likely to complain about. According to the website, the cheapest rooms are priced at $900 whilst the premium master’s bedrooms can cost up to $2000 per month. The properties automatically provide services like cleaning and ironing. Kamalski said they will soon add chef services to the lineup of services offered in their spaces. These amenities are just some of the perks of using Hmlet, noted 28year old expatriate Jenni Ukkonen. She also reckoned that the more flexible contracts and the promise of friendly connections in a foreign land convinced her to rent in Hmlet. Since she is currently employed as a community and events associate intern, she’s benefitting from the friendly bonds in the co-living hub. “I have made great friends with all my flatmates and in a way, I feel like I have a family in Singapore now,” she said. “One of the great advantages is. that everything is included in your

Quest for sustainability Globally, Singapore ranked seventh out of the 30 countries covered by the index. Denmark topped the rankings for the sixth straight year. Jacques Goulet, president of health and wealth at Mercer, stressed that countries should address sustainability when considering pension reform.“Increasing life expectancies and low investment returns are having significant long-term impacts on the ability of many systems around the world to deliver adequate retirement benefits both now and into the future,” Goulet said. “These pressures have alerted policymakers to the growing importance of intergenerational equity issues.” 8

SINGAPORE BUSINESS REVIEW | JANUARY 2018

Shared kitchen of a co-living space by Ascott

Co-living is the new cool for Singapore’s Gen Y

very year, millennial travellers are spending more than US$200b, and are set to be the largest spending travel demographic by 2020. “Millennials are highly adaptable and much more willing to share facilities. When they seek out accommodation, it is not just about a room night’s stay, but also about the social experience and being able to plug into the local community,” said The Ascott Limited (Ascott) vice president for Brand & Marketing and Digital Innovation Mindy Teo. As a response, co-living spaces for the travelling generation have emerged and a few have started playing around with the concept. Such was the story of 28 year old Yoan Kamalski and 36 year old Zenos Schmickrath co-founders of co-living technology Hmlet. “I believe Singapore is moving towards this new trend. Many studies show that humans are happier and more fulfilled thanks to the connections and people in their lives, not so much because of money, success or fame. Real estate in Singapore and Hong Kong is

The cheapest rooms are priced at $900 whilst the premium master’s bedrooms can cost up to $2,000 per month.

Founders of co-living technology Hmlet

FIRST

28-year old expat Jenni Ukonen and her roommate at Hmlet

fixed monthly rent. It is something that you appreciate as a Millennial expat,” she said. Co-living is more practical and economical said Carol Chen, 35, CEO and founder of designer dress rental startup Covetella, who also chose to reside in Hmlet instead of a traditional apartment. “I’ve become best friends with some of my housemates and so far I haven’t lived with anyone I didn’t like,” she said, although she admitted there can be some lack of complete privacy and inconvenience when guests visit. Myles Huang, director of research in Asia Pacific capital markets at JLL

said there is “very strong interest” for co-living arrangements among millennials like Carol and Jenni who were born between the early 1980s and early 2000s, as they are more open to the idea of social networking and the sharing economy. “Co-living houses may offer short-term accommodation and host regular events for residents, many of which are students, startup founders or employees, young professionals, as well as artists and creatives,” he said. Co-living has also become popular due to rising accommodation costs in cities like Singapore, which was ranked the fifth most expensive

Ascott is targeting 10,000 units under the co-living space lyf brand by 2020.

city in the world to rent a home, according to U.K.-based property portal Nested. “Many singles, students or young workers find conventional apartments out of their reach because of high rents, deposits and furnishing costs,” said Huang. “Although pricings of co-living space are quite diverse, they are generally more affordable.” Industry giants like Ascott have also responded in a pretty similar view. It has acquired properties under its lyf brand with lyf Funan Singapore in which is expected to open in 2020 and lyf Farrer Park Singapore which will open in 2021. “We are open to both investment and management contracts in markets where we see demand for such coliving spaces,” said Teo. Given this demand, Teo said Ascott is targeting 10,000 units under the coliving space lyf brand by 2020. But Daniel Beck, CEO and founder of co-living.com warned that as more big players join the market, there might be a need for developers to diversify beyond cities and professionals in the gig economy, and competing not only in price but also differentiation. “We need to see someone go for suburbs and exotic destinations,” he said. “ I’d love to see co-living in more remote destinations, getting away from cities, and niche communities such as surfing, skiing, climbing, mixed martial arts and bicycling.”

The Chartist: SingaporeANS Have a healthy hoard of savings With Singapore’s working age population expected to decline starting 2020 and its number of elderly set to boom, the city-state is staring at a gloomy prospect of depressed domestic demand and economic growth. But it has a saving grace: a healthy hoard of savings. “With global trade unlikely to resume its past high growth rates, Singapore will find it difficult to export its way out of a demographic decline,” said Trinh Nguyen, senior economist, emerging Asia at Natixis. “The good news is that Singapore is ageing with plenty of savings.” She said Singapore’s yearly current account surplus reaches roughly 20% of GDP, and local corporates are already deploying these savings to expand overseas in faster growing markets as the domestic economy becomes saturated.

Singapore is ageing with plenty of cash

Sources: CEIC, Natixis

Sinapore faces a demographic time bomb (growth %)

Sources: UN Population Statistics, Natixis

SINGAPORE BUSINESS REVIEW | JANUARY 2018

FIRST Ambassador briefing germanY

Dr Ulrich A. Sante was appointed as ambassador of Germany to Singapore in July 2017. He shared his thoughts on Singapore and Germany’s business relations. “The German economy is well known as an export economy, thriving upon selling German products and services in foreign markets. “German Engineering” is not just a label. It’s the expression of generations of aggregated knowledge and experience, not only in technical fields. And it resembles our permanent quest for excellence.’he noted. Germany has exported goods for approximately €6.7 billion to Singapore, and Singapore goods with a value of more than 5.3 billion to Germany. “The important thing now is to make good use of these relations to participate in the age of digitalisation, “ he said. About 1,600 German companies are present in Singapore, having invested into setting up their Singapore subsidiaries to do business not just with Singapore, but with and in the other states in the region. ”There is an open field for Singaporean investment in Germany. German industry is no longer the behemoth of steel and coal, it is smart industries today, cutting-edge technology for the production methods of the future, and research and development to make sure this future happens,”he said. “I invite all Singaporean businessmen interested in investing abroad to have a look at these opportunities in Germany. One of the justly famous German trade fairs would surely be a good opportunity to do so,”he noted. Much of Ambassador Sante’s career was related to transatlantic and European security and defense issues in Brussels and German Federal Foreign Office in Berlin. He was the head of press and cultural affairs at the German Embassy in Paraguay. He was also appointed as the spokesperson of the German Embassy in Washington.

SINGAPORE BUSINESS REVIEW | JANUARY 2018

It’s boom time for venture capital

ingapore’s venture capital (VC) fundraising is experiencing a gold rush as investors continue funneling their money to the citystate’s burgeoning startup scene. In October alone, VC firms like Vertex Ventures and Vickers Venture Partners completed their biggest fundraising yet with $210m and $230m, respectively. This growing interest in Singapore’s startup scene reflects the appetite for investors to look for opportunities beyond the United States and China, which comprised the lion’s share of VC investments in Asia in recent years. Data from KPMG’s Venture Pulse 2017 revealed that Singapore’s venture investments totalled US$725.3m in the second quarter of this year, boosted by internet company SEA Limited’s US$550m funding round. “Southeast Asia has seen investment activity rise most strongly in Singapore, Indonesia, and Vietnam in the past 12 to 18 months, with notable transactions such as Grab, ARA, Tokopedia, and SEA at transaction values well above what is commonly found in our region,” said Dr. Thomas Lanyi, chairman, Singapore Venture Capital Association. Apart from venture capital, there is also another trend rising in Southeast Asia:

List of deals <US$100m invested in ASEAN in Q1-Q3 2017

Source: Preqin and Singapore Venture Capital Association

corporate venture capital, or CVC. Analysis from SVCA revealed that three of the top five deals this year are CVCs in Singapore: Grab Holdings’ $2b deal, Ara Asset Management’s $1.3b buyout deal, and SEA Limited’s Series E fund.

KPMG’s Venture Pulse 2017 revealed that Singapore’s venture investments totalled US$725.3m in the second quarter of this year.

Rise of corporate venture capital SVCA’s director expressed caution saying that this is a double-edged sword. “Whilst PEs and VCs may find increasing competition from corporates willing to invest at heightened valuations due to perceived synergies, this growing interest of corporate investors from China, Japan, and the US could also pave the exit routes for PEs and VCs looking to divest their stakes,” said Yee. “The rise of CVCs in later rounds of financing is also a boon for VCs in Southeast Asia, typically with limited fund sizes of less than US$100m. and hence may not have sufficient capital to continue support in later financing rounds,” she noted. (For more stories on funding, see page 20)

Mobile App Watch

EZi Wallet offers digital payment systems for F&B chains EZi Wallet is a mobile-to-mobile payments system that digitises any card-based service in a customer’s physical wallet—from reward cards, loyalty points programmes, promo vouchers, to payments via a QR code-based system. It also makes it easy for the store to handle EZi Wallet transactions through a simple point of sale process, whilst also granting a business owner access to real-time sales reports and mobile ordering features. Chang Cheng Group was amongst the first to try out Ezi Wallet when they sought a cashless payment solution for its more than 200 food outlets in Singapore “For Chang Cheng, the initial project involved creating a customer loyalty program, and cashless payment gateway for their brand,” said Ian Lee Thye Guan, founder of EZi Technology. The startup is now busy rolling out its platform solution to the rest of Chang Cheng outlets in Singapore.

Ian Lee Thye Guan, founder of EZi Technology.

Co-published corporate profile

Tracking Expat Insurance’ meteoric rise in 2017

They are focused on delivering insurance protection to expatriates and the globally mobile workforce.

n August of this year, Expat Insurance turned an auspicious eight. Since its beginnings eight years ago, the rise has been meteoric compared with most global markets. For its founder and CEO Danielle Warner, this has seemed like a lifetime in Singapore’s dynamic and ever changing corporate landscape. This last year has been so exciting, says Danielle. ‘Especially nurturing the growth within the Employee Benefits space. There’s such a long way to go here in Singapore. I look back on how far we have come and I get so energized at the prospect of how far we have to go.’ Warner – dubbed as the Power Woman of Protection by the expat community in Singapore – reveals that the insurance industry for her is almost pathological. ‘“Insurance is in my blood, and that has always been the case. My mum, my aunt, my cousin, my husband. It’s all I have ever known. When we moved here 11 years ago, no one knew where to get insured and when they found that I came from an insurance background, naturally they asked me. I recognized that here was a specific market here for protection that was underrepresented then.” Consequently, Expat Insurance was

founded by Warner in 2009. They are a company that specializes in providing professional insurance advice and services to expatriates in Singapore. They are a multiline, independent brokerage that is focused on delivering insurance protection to the expatriate and globally mobile workforce markets in Singapore. Keeping people and partnerships In its early days, Expat Insurance exclusively serviced personal clients, but in the last 18 months, Danielle and her team are now making significant headway within the employee benefits space. Danielle says, ‘The focus really turned toward working with multinational companies that were either setting up or expanding across into Asia and Singapore. Following the 2008 financial crisis, many of these MNCs in the US, the UK, Europe and Australia started to set up companies with Singapore as a base. I saw this as a great opportunity to get involved at the very early stages of these companies coming into Asia and seized the chance to support their insurance needs.’ With her fingers firmly on the pulse of the migration and employment trends in Singapore, Warner has identified the need for employers for attract and retain high quality talent. ‘Being an expat does not come with all of the trimmings that it used to. It’s now about people and partnerships’,

she says. ‘Employees now exist in a culture of entitlement and are hungry for a more engaging relationship with their employer. Employers, on the other hand, are well aware of the potential for their top talent to leave them if they don’t feel valued. Going global For this reason, it is up to employers to come up with attractive and engaging reasons to encourage their employees to stay. That’s why we work with these companies to provide compelling reasons for their people to stay.’ Danielle’s innovative and instinctive response to these developments coupled with the continual growth of Expat Insurance saw the company go global with an exciting partnership with French insurance giant Siaci Saint Honore in April of last year. This partnership gives Expat Insurance unprecedented access to new insurance products as well as further opportunity to provide comprehensive international coverage for the globally mobile. ‘This definitely gives us an edge in this space. We understand that people will begin their journey with us here in Singapore, but our partnership with Siaci allows us to make sure that they will be protected everywhere they go.’ ‘ Looking ahead, I can say emphatically that our business will focus on our continual growth in the employee benefits space.”

“I recognized that there was a specific market here for protection that was underrepresented then. ”

Insurance for Expats by Expats

Danielle Warner Founder of Expat Insurance

SINGAPORE BUSINESS REVIEW | JANUARY 2018

Our international team provides professional insurance advice on a complete portfolio of products

FIRST

Living in a freelance world: Singapore’s growing gig economy

hen Ng See Min, 22, was weighing career options after finishing studies, she chose to become a freelance henna body artist, attracted by the flexibility that the gig arrangement offered and confident that it can be a sustainable job with the right amount of effort put into it. “I don’t like to be confined under the traditional 9 to 5 work arrangement, nor being deskbound,” said Ng. “Freelancing allows me to fully maximise my time according to my different priorities weekly. Freelancing also lowers the chances of being micromanaged.” Ng said one of the perks of freelancing is having control on when to work and play, offering a spontaneity that traditional time-structured employment cannot. She also brushed off worries that the freelance arrangement will not be able to consistently provide for his financial needs. Forty-year old Yukiko Lim also cited the same reason for ditching her 11-year career as a finance and HR manager for freelance make-up services. On average, she earns $4,500 per month. Ng and Lim are just two of the growing number of Singapore’s labour force choosing to join the so-called gig economy. Official statistics suggest that there are about

180,000 freelancers categorised as ownaccount workers, or about 8.3% of the labour force in 2016, said Chua Hak Bin, analyst at Maybank Kim Eng. Meanwhile, the Manpower Ministry estimates the number of gig freelancers “who use internet platforms” is only about 20,000. The freelance work trend is driven by a number of active gig economy companies in the city-state, namely Uber, Grab, Deliveroo, and Food Panda, said Deacons and Corrs Chambers Westgarth in a report. Chua reckoned that a growing gig economy has probably cushioned the negative impact from the downturn in the job market, wherein employment contracted in the first half of 2017, the worst performance since the global financial crisis. “Retrenched or unemployed workers are able to turn to gigs for some supplementary income whilst looking for a permanent job,” said Chua. “Slack in the labour market may not be as large if secondary gig workers are not as anxious to quickly find permanent employment.” Maybank Kim Eng data also suggests that millennials make up for a growing proportion of Singaporeans who are entering the gig economy. About 47% of ITE and 35% of polytechnic graduates opted for part-time/temporary/freelance jobs in

Ng See Min works as a freelance henna body artist

Yukiko Lim ditched her 11-year career for freelancing

2016, more than double the percentage from a decade ago. Millennials on gigs One of them is 27-year old Amber Seah who formerly worked in events and marketing before doing baking gigs for her clients. She noted that freelancing gives her more opportunity to achieve financial freedom compared to being dependent on a monthly wage in a regular employment set-up. “On the positive side, graduates are voluntarily opting for freelance jobs because of the greater flexibility, opportunity, and technological capacity to capitalise on the internet economy. On the negative side, graduates may face less job security, volatile earnings and minimal social security contributions,” Chua said.

OFFICE WATCH

Checkout Whispir’s new Singapore headquarters Communications applications maker Whispir designed its new local headquarters in One Raffles Quay in a way that it fosters contemplative thinking and creativity. The new space is steeped with amenities a creative thinker ruminating ideas all day would appreciate: comfortable couches, bean bags overlooking windows, quiet rooms, and even soundproofed booths. The startup’s local team, including CFO and company secretary Gareth Roberts managed the new office project and enlisted OSCA for creative design to provide an inspiring place for employees to produce breakthrough ideas. “Whispir has a unique culture where design, design process, and innovation are respected and intrinsic elements of what we all do, every day, across all aspects of our business,” said Jeromy Wells, founder of Whispir. “The office is designed to reflect this ethos. It is a space that reflects our broader culture and a space that inspires.” Whisper’s new headquarters is located at One Raffles Quay, South Tower 1. 12

SINGAPORE BUSINESS REVIEW | JANUARY 2018

Soundproof call booths

Entry and break-out area

‘engage humanity’ in Whispir

Living room

Co-published corporate profile

TPC Law strengthens tax law practice More and more companies, financial institutions, and high net worth individuals are discovering the benefits of customised integrated advice and solutions.

Assessor, where the Court of Appeal an Peng Chin LLC (TPC Law), one of the affirmed the Chief Assessor’s application top 25 largest law firms in Singapore, of the 5% method of assessment over the has further enhanced its capabilities hypothetical tenancy method. Hern Kuan by engaging Liu Hern Kuan, to advise on tax also argued Clifford Development Pte Ltd matters to its clients. He was previously v Commissioner of Stamp Duties, a case Principal Legal Officer, then Chief Legal on the meaning of ‘reconstruction’ for the Officer at Inland Revenue Authority of purposes of stamp duty relief, and AQP v Singapore (IRAS) (2000 to 2014), and also CIT, which tackled deductibility of expenses Head of Tax in a major local law firm in from defalcation of funds by managing Singapore (2014 to 2017). He was, prior director of a company. to joining IRAS, a tax manager in PwC and KPMG. Out of court tax dispute settlements Hern Kuan’s practice includes resolving Hern Kuan had, in private practice, managed both criminal and civil disputes with IRAS, to successfully resolve several significant and transactional work involving tax tax disputes out of court. Such disputes planning and structuring, applications for included convincing the Comptroller of tax relief to IRAS and Ministry of Finance Income Tax (i) to allow a multi-million dollar (MOF) on all taxes administered by IRAS. tax deduction claim While at IRAS, he was “The practice of by an engineering involved in providing all and construction manner of legal and tax tax law involves advice to IRAS’ operational providing advice on company, (ii) to allow a transfer pricing divisions, tax law the structure of a adjustment involving interpretation, tax rulings, variety of commercial a US multi-national international matters, audit, and financing corporation and (iii) investigation, criminal transactions and that certain multiprosecution matters, million dollar gains on enforcement proceedings assisting clients the sale of shares are and drafting of tax with tax-related not taxable gains. He legislation. controversies.” had also successfully He had also represented obtained extensions to pay Additional IRAS as lead counsel in civil and criminal Buyer’s Stamp Duty (ABSD) on behalf court proceedings in the various boards of of developers who develop residential review and the Supreme Court. As IRAS’ lead property for sale. The outcomes for these counsel, he argued several landmark Income cases were preferred by clients as these Tax, Property Tax and Stamp Duty cases. Landmark cases Such cases include CIT v AQQ, the first decided case on tax avoidance where a foreign listed company was found to be engaging in tax avoidance; and JD Pte Ltd v CIT, where the Court of Appeal affirmed IRAS’ total assets method for apportioning deductible interest expenses of a listed investment holding company. Another case was CIT v IA, a case on deductibility of borrowing costs in connection with a syndicated loan taken by a property developer. He was also a counsel in T Ltd v CIT, a case on commencement of business for tax deductibility purposes. Also included in his long list of championed cases is City Developments Ltd v Chief

were achieved without having to litigate the disputes in courts. Hern Kuan is also involved in providing tax planning advice that included international tax planning and tax efficient structuring for stamp duty relief. Integrated legal and tax advice Often a business deal has both legal and tax implications and having tax expertise would enhance the services a law firm can offer to clients. The practice of tax law involves providing advice on the structure of a variety of commercial and financing transactions and assisting clients with taxrelated controversies.“ The increased local and international tax capability of TPC Law will allow us to better provide integrated legal and tax advice to our clientele and business partners which include local and foreign financial institutions, property developers and managers, and retail, insurance-linked and private funds. We aim to be our clients’ preferred choice as the legal and tax partner when they do business in or from Singapore,” says Wong Liang Kok, Joint Managing Director of TPC Law.

CONTACT Company name: Tan Peng Chin LLC, Advocates & Solicitors Address: 30 Raffles Place #11-00 Chevron House Singapore 048622 Phone number: +65 6532 1808 Fax number: +65 6534 5433 Website: www.tpclaw.com.sg

Liu Hern Kuan, consultant, and Wong Liang Kok, joint managing director, TPC Law

SINGAPORE BUSINESS REVIEW | JANUARY 2018

FIRST NUMBERS

DIGITAL TRENDS In the WORKPLACE

Loomo features daily routine support for elders

Healthcare firms boost AI for ageing

Source: Dimension Data Asia Pacific

SINGAPORE BUSINESS REVIEW | JANUARY 2018

ingapore hospitals are gearing up as the growing elderly population booms. They are now employing robots to assist in elderly healthcare. Meet ExoAtlet, Ohmni, and Loomo. These robots are some of the latest innovations in the evolving healthcare landscape which still needs to bridge several gaps in quality aged care. Ohmni allows families or caregivers to engage over the internet and check on the elders’ safety, medication adherence, and diet. Geriatric specialists,and doctors can also be simultaneously dialed on-demand to provide services. ExoAtlet provides exoskeletal support to prevent falls and aide elders to maneuver any terrain. Loomo, on the other hand, features daily routine support amongst others. The employment of these AI are needed to boost quality private healthcare. But quality, comes with a price as private healthcare expenditure is expected to continue rising not only as a result of the ageing population, but due to higher prevalence of chronic diseases, rising affluence, population growth, and healthcare inflation. John Cheong, analyst at Maybank Kim Eng, said that the government has boosted spending significantly to cater to the rising demand. Meanwhile, private health expenditure continued to increase, with Raffles Medical as the

Private healthcare expenditure is expected to continue rising not only as a result of the ageing population, but due to higher prevalence of chronic diseases, rising affluence, population growth, and healthcare inflation.

main beneficiary given its lead and its integrated business model. Cheong also noted that growth in the hospital division was driven mostly by local patients, whilst the volume of foreign patients remains flat. Dr. Tan Jit Seng, director, Lotus Eldercare Health Services, said that effective ageing in place requires a NEEDS model, which should either be preventive or supportive. “For it to be preventive, there must be teleremote vitals monitoring, telepresence for isolation and loneliness, and verbal controls of appliances like lighting, TV, and aircon, amongst other things. On the ‘supportive’ aspect, there must be quick access to information for problem solving, teleconsultation, and day to day assessment and monitoring for deterioration and identifying reversible issues,” Dr. Tan added. The robots have already provided solutions to these augmented aged care needs.

Ohmni allows elders to engage with loved ones

Co-published corporate profile

No guts, no glory for Cityneon’s CEO Ron Tan Gigantic is an understatement when describing the growth of 60-year-old Cityneon Holdings.

he ideas and service agency had always wanted to emulate home ground Singapore, which rode on the shoulders of giants to get where it is today, to grow to be successful in the experiential exhibition industry. It is now that giant itself and with partners such as Disney and Universal Studios, Cityneon is currently in a Marvellous position to transform entertainment for a generation of superhero fans with innovative, interactive exhibitions. First launched in 1956 as a family-run supplier of electrical appliances, Cityneon has grown in more than mere leaps and bounds in a new business that leverages intellectual property rights from the major studios to organise exhibitions. The Singapore Exchange listed company (SGX:5HJ) specialises in crafting quality customer and brand experiences in the fields of interior architecture, events, exhibitions and theme parks; and they include the Marvel Avengers S.T.A.T.I.O.N exhibition, Hasbro Transformers Auto-bot Alliance and Jurassic World, The Exhibition. Cityneon’s executive chairman & Group CEO Ron Tan said with technology and the speed of information at our fingertips, especially for millennials who have increasingly shorter attention span. “They no longer want to spend money to visit a static exhibition. Therefore, our shows are immersive attractions where

visitors get drawn deep into the world of The Avengers and explore the origins of their favourite Marvel superheroes,” he said in a previous interview. Cityneon is committed to high excellence, precision and creativity, and is proficient in conceptualising and creating immersive attractions, theme parks and exhibitions featuring state-of-the-art technologies and immersive storytelling. Growing bigger and brighter And the past few years were probably the most gratifying aspect of Mr Tan’s tenure at the helm of Cityneon. Apart from having deepened its relationships with international movie studios and multinationals and governments globally for both its traditional and Intellectual Property businesses, the company’s market capitalisation has grown more than 15-fold from below S$20 million to around S$268 million today. Its share price was S$1.07 when market closed on Nov 21 (2017). In May (2017), Lucrum 1 Investment, an investment holding company controlled by three key directors (Massive, Mutual and Ron Tan) of whom Mr Tan was one. He owns 15.5 per cent stake in the vehicle, bought the entire stake from Cityneon’s major stakeholder Star Media. Lucrum 1 currently holds a 68.95 per cent stake in Cityneon after making a mandatory

unconditional cash offer for its ordinary shares in July, making Mr Tan the single largest individual shareholder with the full control of Cityneon’s businesses. No guts, no glory In the recent announcement, Cityneon is facing a possible cash offer as Hong Kong firm Mutual Power, an indirect whollyowned subsidiary of Teamway International Group Holdings (previously known as Jin Bao Bao), to acquire the shares held by Massive rights, which holds about 76 per cent stake in Lucrum 1. Mr Tan said you need guts to stay ahead of the pack. “We are on the right track to grow, barring any unforeseen global calamities. No guts, no glory,” he said. “It is a marathon we are running, but we are only at the cusp of the game. Perhaps the distance we have run is merely the first 5km. We still have 37km more to run before we complete the whole marathon. But who’s to say we won’t be signing up for another few marathons?” Cityneon is headquartered in Singapore. It has a subsidiary, Victory Hill Exhibitions.

“The company’s market cap has grown more than 15-fold from below S$20 million to around S$268 million today.”

Jurassic World- The Exhibition

Mr Ron Tan, Executive Chairman & Group CEO of Cityneon Holdings

SINGAPORE BUSINESS REVIEW | JANUARY 2018

startups

HR Software startup Peoplewave raises $500,000 in seed round

n a seed round from a series of undisclosed angel investors and HR-aligned companies, HR software startup Peoplewave was able to raise $500,000 in funding. This follows an initial $100,000 pre-seed funding shelled out by founders Damien Cummings and Phil Aldrige. Cummings, who was a former global head of digital at Standard Chartered Bank, saw some pain points in the HR industry, especially in the posthiring process. “Many HR functions make acquiring top talent their utmost priority, which takes focus away from

effective post-hire management. It also does not help that HR teams fail to train line managers how to effectively nurture the same top talent that the former worked so hard to sign,” he said. Peoplewave’s banner product is an onboarding app and a data-driven performance appraisal platform called First 100 Days app. Cummings said it provides a more structured new hire onboarding and addresses the crucial issue of probation periods. A second product is Performance Wave, a datadriven platform that provides greater transparency during performance reviews through the use of a proprietary algorithm, which the company calls “formula of performance.” “Peoplewave was born out of a deep frustration. Many smart and good people have become victims of corporate restructures, biased decisionmaking, or been unfairly treated,” said Cummings. The CEO is hoping that with Peoplewave products already available in the market, the tides will shift to a more attentive onboarding of fresh hires and fairer evaluation of all staff.

Chope secures $13m in recent funding

Singapore-based restaurant discovery and booking platform Chope recently raised $13m in funding backed by Asia-Pacific investment firm Square Peg Capital and joined by C31 Ventures and Moelis Australia, as well as existing shareholders including NSI Ventures, Susquehanna International Group, DSG Consumer Partners, and SPH Ventures. Arrif Ziaudeen, CEO of Chope, said, “Chope looks forward to our next stage of growth with this new capital and strategic partnership. With these resources, we are positioned to invest significantly in our USPs of user experience and customer service, while deepening our reach into our markets across Asia.” 16

SINGAPORE BUSINESS REVIEW | JANUARY 2018

Ziaudeen reckoned more than 1 million diners are using the Chope app to book restaurants. Whilst that is a heartening number, the startup is now seeking to grow its business scope by increasing new product and technology investments, and hiring more staff. This means restaurants can look forward to a more feature-packed, all-in-one Chope platform for their business needs. “We’re looking to tap on the potential to touch numerous other facets of those diners’ user journeys,” he said. “As for the specifics, we’ll share more as the features are released but at high level, it’s about building more ways for users to discover, book, and interact on Chope, better use of the huge amounts of data we have to personalise the experience, and a larger team to better service our clients and users.” Ziaudeen explained that constantly adding utility is a natural extension of Chope’s vision to provide a holistic experience and increasing value to diners and restaurants.

VR Startup woobaVR makes physical showrooms defunct

This Singaporean VR start up helped a Malaysian property development firm to sell 92% of its units through a virtual reality showroom. Berhad Dato’ Ghazi, CEO of Malaysian property development firm Thriven, challenged the team behind woobaVR: they had to help Thriven sell 10-15% of its new development at 1% of the physical gallery cost. woobaVR did far more than that, eventually devising a virtual reality showroom solution that would enable Thriven to sell 92% of units without having to build an expensive physical show unit. Fariz Rashid, CEO at woobaVR, explained that for the longest time, people have relied on showrooms, pre-rendered images, and physical models to assess whether they would purchase property or not. “We look at an artist’s impression or visit a showroom and then try to imagine ourselves living there,” said Rashid of the traditional experience without virtual reality. “Now technology helps to fill this gap, especially for those with a lack of visual imagination. Virtual reality and augmented reality helps buyers and sellers have a new way to pre-experience a space they may want to own or sell.” He argued that virtual reality renders represent the home more accurately than a still image, and the technology provides homebuyers with added customisation and convenience.“Outside of a showroom as well we have the additional functionality of adjusting the themes and overall interior design environment of the property. Certain showroom designs may appeal to certain buyers and that can be deceptive in nature,” he said. “The mobile functionality as well allows them to view the unit at their own convenience as well as share it with other members of the family,” he added. A new standard for visualisation Rashid also noted details on two of its products in the pipeline. The first is an automated virtual reality rendering platform for architects and interior designers, which will be a SaaS model. It is currently in alpha testing stage and the startup is targeting a launch in the first quarter next year. The second is a model for companies to showcase their home furnishings, with a live demo already available for limited viewing. The startup manages to keep prices at a fraction of an interior design or architectural firm’s rendering budget through the use of proprietary automated systems. Rashid was determined to dispel the notion that virtual reality is an expensive technology that only big firms can afford. “You won’t need a high-end PC or expensive head mounted displays like the Oculus Rift to run our content,” said Rashid.

IN A WORLD WHERE ALL BUSINESS IS GLOBAL, SUCCESS IS IN THE DETAILS. Lionbridge combines the language expertise and operational capabilities you need to engage with your global customers.

Professional translation and localization services: Email: asiapacific@lionbridge.com Phone: +65 6508 0616 LFL_Award_OP_130x200mm.pdf

19/7/2017

2:56 PM

FIRST The Analysts’ call

What’s the new SPC mall’s impact?

SingPost’s flagship General Post Office have rolled out new digital innovations

Will the new SingPost Centre revive its weakening mail business?

alking through the newly reopened SingPost Centre, which took two years and $150m to renovate, mall customers find that they quickly turn into digital explorers. They can scan items whilst shopping and pay conveniently in one go at the counter, use a mobile app to track down in which aisle a product is located, and even try out cutting-edge augmented and virtual reality applications. The mall’s technology transformation is part of Singapore Post’s drive to become a modern e-commerce logistics powerhouse and break free from the profit drag of its weakening mail business.

SingPost Centre should contribute $3m of earnings (3% of total), and $13m of earnings (10% of total) for FY19E. John Cheong, analyst at Maybank Kim Eng, noted that the swanky new SingPost Centre delivers a technology-enabled experience and a robust occupancy rate on opening day, even as the mall’s gross retail floor space doubled to 269,000 sq ft and net lettable area to 178,000 sq ft. “It has achieved a healthy occupancy rate of 80.4%, helped by its convenient location, next to Paya Lebar MRT interchange station,” said Cheong. “The mall also highlights SingPost’s embracement of how technology 18

SINGAPORE BUSINESS REVIEW | JANUARY 2018

is changing the retail landscape.” He expects an additional rental income of $22m, which translates to $13m earnings at a steady state of 90% occupancy. For FY18E, he said SingPost Centre should contribute $3m of earnings (3% of total), and $13m of earnings (10% of total) for FY19E. He added that for investors, SingPost’s key value propositions include its move to branch out from a national postal provider into global e-commerce and fulfilment logistics that helps retail customers sell online faster and more efficiently. Low Pei Han, analyst at OCBC, said the new SingPost Centre retail mall showcases a new form of digital shopping experience that shoppers will be keen to try out. “Tenants of the mall, including SingPost’s flagship General Post Office, have rolled out new digital innovations to offer greater convenience, choices, and experiences to consumers,” said Low. “Looking ahead, online e-merchants and offline brick-andmortar shops will also be under one roof.” Sachin Mittal, analyst at DBS, reckoned that in the new mall, the General Post Office features automated services that improve operational efficiency and provides 24/7 access to postal and other essential services. Mall goers even have the option to access SingPost’s largest POPStation of 143 lockers, and SAM kiosks augmented with a selfservice posting box for registered articles. He estimated SingPost’s full rental income distribution will come in FY19, with an estimated $17m rental income in FY19F, or tripling from $6m in FY18F.

Low Pei Han, analyst at OCBC In terms of contribution to rental and property-related income, we estimate about S$17m p.a. (at steady state) from the mall, up from ~S$8m-$9m annually. This compares to SingPost’s total rental and property-related income of S$39m in FY16 before the mall was closed for redevelopment. As of 30 September 2017, committed occupancy was 80.4%. However, the market’s focus is still likely to be on the group’s strategic review over the next few months. Sachin Mittal, analyst at DBS The company has announced that the mall had 80.4% committed occupancy as of 30 September 2017 with major tenants such as Fairprice, Golden Village, and Kopitiam. This is inline with our forecast where we have assumed that the SPC mall will open progressively in 2HFY18F and full rental income contribution for the mall will kick in from FY19. We estimate SPOST’s rental income to rise to S$17m in FY19F versus only S$6m in FY18F on the back of this. We had highlighted in our previous note that in the medium term, the potential divestment of SPC mall could be a catalyst for the stock. John Cheong, analyst at Maybank Kim Eng It has achieved a healthy occupancy rate of 80.4%, helped by its convenient location, next to Paya Lebar MRT interchange station. The mall also highlights SingPost’s embracement of how technology is changing the retail landscape. We expect an additional rental income of S$22m, which translates to c.S$13m earnings at steady state of 90% occupancy. For FY18E, SingPost Centre should contribute S$3m of earnings (3% of total) and S$13m of earnings (10% of total) for FY19E. This is enabling the firm to move away from a highly cash-generative, but declining mail business into a high-volume, high-growth e-commerce logistics one.

abacus

Jumbo Group’s China growth strategy

umbo group may be known for its jumbo chili crabs, but its investors are disappointed with the smaller dividends this year. There was a collective sigh of disappointment: profits slid, costs were rising, and the East Coast flagship was faltering. But looking beyond the restaurant group’s Singapore operations, like in China where outlets were posting brisk sales, analysts found cause for optimism. “The story seems to be the same with Singapore reporting weakness in the bak kut teh and hotpot segments, whilst business at the East Coast Park flagship seems to be slow. China continues to be the bright spot for the group with the three outlets in Shanghai doing well,” said Nicholas Leow, analyst at UOB, KayHian. He reckoned weakness in key Singapore segments stemmed from increased competition. Meanwhile, channel checks indicate the East Coast Park flagship is suffering from crowd cannibalisation after the redeveloped Marine Cove area opened last year, although plans to upgrade certain sites as part of a decongestion drive could bring back lost foot traffic. Alfie Yeo, analyst at DBS, warns of rising costs, which in 3Q17 were higher than expected and led to slimmer operating margins. If not reined in, higher operating costs can stymie Jumbo Group’s growth. “We see earnings growing at a slower pace than consensus. This is largely due our expectations of higher operating cost structure ahead, led by rents and depreciation,” said Yeo. “Apart from operational risks, we see failure to deliver growth in China as a key risk to our earnings growth projection. Singapore’s business is stable whilst the bulk of the growth is driven by China.” The company’s fortunes in the coming years will likely depend on its ability to quickly grow its overseas China business and fine-tune its culinary approach to suit regional tastes, said Gregory Yap, analyst at Maybank Kim Eng. “As in the case of Raffles City Shanghai, Jumbo may have to test and calibrate its menu to suit local tastes in Beijing and Vietnam before it finds success. We note however that Jumbo has established a good track record in Shanghai and we are reasonably confident they can pull it off.” He also foresees potential upside

No. of outlets in PRC

new stores that opened in FY16,” he noted in a comment following the release of secondquarter results. “New stores including the 25,000 sq ft Tampines store, 40,000 sqft Kunming store, and higher margins should continue to drive earnings growth.”

ComfortDelGro pins Hopes on Bus and Rail

Source: Company, DBS Bank

should the company successfully introduce new dining concepts or tweak underperforming businesses such as JPOT, a hotpot dining concept.

Will Sheng Siong scale up amidst stronger competition?

They say truth is the first casualty of war, but in Sheng Siong’s case in its battle with Amazon, it seems like dividends have become the first casualty. Building up a war chest is a smart move, according to analysts, but the operator of the thirdlargest chain of supermarkets in the island may be tempted to grab opportunities to build new stores. “Looking ahead, the group will need new stores particularly in key growth and untapped areas to maintain topline growth,” said Jodie Foo, analyst at OCBC, commenting on the Sheng Siong Group’s second quarter results which showed revenues grew 6.8% year-on-year to $201.5m. She reckoned closed tenders also present opportunities to lock in new store locations. “We believe the group is opting to stay prudent and maintain a healthy balance sheet, whilst we do not rule out the possibility of the group purchasing stores in ideal locations,” said Nicholas Leow, analyst at UOB Kay Hian, commenting on SSG’s battle plans. He said the stiffening rivalry in Singapore’s retail scene will push SSG to lower its dividends to 70% from 90% not only this year but until 2019, considering it a “prudent move” to build up a necessary cash buffer. Despite SSG closing its stores at Woodlands and the Verge, Alfie Yeo, analyst at DBS, holds a sanguine outlook for the supermarket chain. “Revenue growth was largely contributed by four

ComfortDelGro (CDG) is definitely feeling the pressure these days from private car hire rivals. Its taxi segment had to resort to rightsizing measures, further reducing its fleet size to just roughly 15,000 taxis. Analysts note that the company is attempting to survive the revenue bleeding from its taxi segment, which posted a 10.7% drop in the second quarter of 2017, whilst waiting for its bus and rail segments to pick up the slack. Andy Sim, analyst at DBS, foresees rough roads ahead for ComfortDelGro’s taxi business. He reckoned fleet size will contract again next year—it is already down by 7.5% and 8.9% from December 2016 and April 16, respectively—and average revenue per taxi to dip by 3% each year. The aggressive expansion of private hire care services will continue to impact ComfortDelGro’s taxi business, with Eugene Chua, lead analyst at OCBC, forecasting taxi revenue to fall 15% and 8% in FY17 and FY18, respectively. Meanwhile, with the opening up of its rail business, DTL3 will break even in the second half of 2018, said John Cheong, analyst at Maybank Kim Eng. The tender results for the Thomson East Coast Line will likely prove favorable for the transport firm, although the contract will not start until 2019, meaning this growth catalyst will only kick in the medium to longer term horizon. Shekhar Jaiswal, analyst at RHB, acknowledges growth potential in the bus segment if Comfortdelgro can expand in key markets overseas. In United Kingdom, the company is now seeking further opportunities outside of London. SGP avg taxi fleet (#)

Source: Company, DBS Bank

SINGAPORE BUSINESS REVIEW | JANUARY 2018

FINANCIAL INSIGHT: PRIVATE EQUITY

Deal #1: Global Logistics Property’s S$16b proposed buyout is poised to be the largest PE deal in 2017.

Deal #2: The acquisition of additional shares in e-commerce firm Lazada by Alibaba was priced at US$1b.

A tale of two private equity markets It was the best of times for Singapore’s private equity landscape with an influx of funds funnelled into the market. But it was also the worst of times for private equity firms who grappled with fewer deals to clinch.

hen Singapore-headquartered gaming and Internet company SEA, formerly Garena, went public on the New York Stock Exchange and raised nearly US$900m, it drew attention amongst private equity (PE) fund managers and raised interest in possibly finding the next so-called unicorns that could emerge in the fast-growing region. Many funds have been strengthening their position in Singapore, seen as an increasingly accommodative gateway hub to Southeast Asia, where deals are expected to shoot up as firms warm up to the PE fundraising route. Doris Yee, director of the Singapore Venture Capital & Private Equity Association, noted that there has been robust growth in terms of capital deployed in Southeast Asia. PE transactions in the first nine months of 2017 reached US$8.2b, surpassing the whole of 2016, with investment activity rising most strongly in Singapore, Indonesia, and Vietnam in the past 12 to 18 months. Some notable transactions from the city-state such as SEA, Grab, and ARA Asset Management at transaction values “well above what is commonly found in our region,” she noted. One of the recent notable deals in the Singapore market is the private bid by way of scheme of arrangement for Global Logistic Properties by a consortium comprising of HOPU, Hillhouse Capital, SMG, which is owned by GLP’s CEO Ming Mei, Bank of China Group Investment, and Vanke, said Bill Jamieson, partner at Colin Ng & Partners 20

SINGAPORE BUSINESS REVIEW | JANUARY 2018

PE transactions in the first nine months of 2017 reached US$8.2b, surpassing the whole of 2016, with investment activity rising most strongly in Singapore, Indonesia, and Vietnam in the past 12 to 18 months.

LLP. This transaction is poised to be Asia’s largest private equity buyout. “The transaction values GLP at S$16b and shows the buyout market is alive and well in Singapore, although the trend in buyouts in Asia generally may be down on previous years,” he said. Jamieson also cited the acquisition of additional shares in e-commerce firm Lazada by Alibaba for close to US$1b to raise its stake in Lazada from 51% to 83%, which he said shows Southeast Asia’s ability to attract attention as a growth market in online services. Singapore should continue to flourish as a nexus for the management of PE deals in the region, especially as the Monetary Authority Total private equity into SEA

Sources: Preqin, Singapore Venture Capital Association

FINANCIAL INSIGHT: PRIVATE EQUITY of Singapore announced its move towards a lighter touch regime for venture capital fund managers in Singapore, said Jamieson. Lots of dry powder Another factor that is driving up deal interest and activity in the region is the large stock of dry powder amongst PE firms, which they are now itching to deploy, said Chunshek Chan, global head of M&A and Financial Sponsors Research at Dealogic. “PE firms have been sitting on top of billions of dollars of committed but undeployed capital for years, and it seems like this year, everyone has decided that they can’t wait anymore,” he said. “We are seeing a record high amount of capital being deployed into leveraged buyouts (LBOs), even though the number of LBO deals has fallen to a multi-year low.” Dealogic also noted that 2017 saw the largest LBO deals on record in Singapore. For the first three quarters of 2017, transaction values amounted to US$2.5b for seven big transactions, as compared to 2016’s figures with a total transaction value of US$920m for 11 LBO deals. Kai-Niklas Schneider, managing partner, Singapore at Clifford Chance, said so-called mega funds are exacerbating the dry powder issue in the region. This has led to very strong asset prices, and he expects this to continue. “The PE evolution in Asia shows a solid shift from growth capital towards more buyouts,” he said. “This shift reflects a natural maturing in the market which is pleasing to see, and reflects the trends we’ve seen in Europe.” Sectors heating up In terms of which sectors are attracting PE attention, Schneider said healthcare, education, and social infrastructure are key areas to watch. He added that there is a strong technology element in Southeast Asia in general, which complements the trends in China. Sebastien Lamy, partner at Bain in Singapore, said the technology space has been heating up in the past quarters, helping drive momentum in 2017. Internet and consumerfocused sectors is also driving deal activity, with the two sectors accounting for more than half of Southeast Asia deal volume from 2015 to 2017 year-to-date. “Local consumer-focused technology champions are amassing significant financial firepower from GPs and LPs alike,” said Lamy, adding that Southeast Asia is looking

LBO deals in Singapore Filing

2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Q1-3

No. 6 6 13 10 14 7 11 7

Sources: Dealogic

Doris Yee

Bill Jamieson

Chunshek Chan

Kai Niklas Schneider

Deal Value by Sector

Sebastien Lamy

Source: Duff and Phelps

Singapore Deal Value USD (m) 136 294 391 321 1,105 280 920 2,564

especially promising due to entrepreneurs becoming increasingly open to PE investors, although there is still a lot of ground to cover in relatively lower penetrated markets like Indonesia. The focus on technology comes as Asian consumers move toward digital, and an exciting sector that PE funds are eyeing is e-payments, said Ay Wen Lie, deals partner at PwC Singapore. “Technology is increasingly cutting out the need for traditional intermediaries and reaching consumers that were previously difficult to access,” she said. “Investing in these technologies can provide opportunities for PEs to create synergies within their existing portfolios or open up new market segments.” The area of e-payments is attracting particular attention due to its potential to offer more efficient and cheaper solutions than what banks in the region currently offer, potentially enabling them to reach the unbanked populations in Asia. “PEs in financial services see this as an opportunity to invest in a profitable business that was previously closed to outsiders. The e-payments technology can also be sold to banks as an add-on or improvement to existing solutions,” said Lie. “PEs that do not traditionally invest in financial services may also be looking at e-payments in order to capture the growing population of digitally-connected consumers. With the great potential for technology to bring value, we expect to see continued interest in this space,” she added. Ken Cheung, partner at Bird and Bird ATMD, noted that investments in the e-commerce and fintech sectors as well as investments in the internet sector are popular in the region, with the latter accounting for a quarter of Southeast Asia’s total deal value last year. “There has been a continued interest amongst PE firms to invest into technology, in particular fintech and high growth technology startups. This is to take advantage of the surge in technological innovation and, in particular, technologies which are disruptive,” he said. Other recent notable deals include the privatisation of ARA Asset Management, which valued the firm at US$1.775b, which was led by the founder and group chief executive, who was leading a group of investors. “The attraction of Southeast Asia is that it continues to grow at a faster rate compared to many other global economies,” he added. “There are enormous opportunities with the region’s rising middle class SINGAPORE BUSINESS REVIEW | JANUARY 2018

FINANCIAL INSIGHT: PRIVATE EQUITY particularly in agriculture, consumer products, retail, healthcare, and education.” But even as Southeast Asia is becoming more attractive for PE investment, Cheung also noted the increasingly picky nature of funds as shown in the decrease in the total number of deals in 2017 compared to previous years, with deal value increasing only because of a number of large cap deals. “Although the competition for transactions is rising, the decrease in number of deals also indicates that PE firms are being more selective in their investments,” said Cheung. Outlook After a strong 2017 so far, Luke Pais, Asean private equity leader at EY, said 2018 and 2019 will likely see a higher deal activity given that PE funds in Southeast Asia have a lot of dry powder in its arsenal. The expected deal acceleration will also be driven by other sources of capital such as sovereign funds and family offices, which are increasingly taking a direct investment and co-investment approach. “Historically, PE accounts for about 10% of the overall M&A deal activity in the Southeast Asian region and we expect this to increase,” said Pais. “The value proposition offered by PEs is now well understood in Singapore and Southeast Asia. Entrepreneurs and businesses are keen to partner with PEs to grow.” He reckoned that Southeast Asia’s entrepreneurs are looking for more than just money, so PE funds are putting focus on demonstrating their industry understanding and ability to add value as they engage in an investment discussion. Stephen Woods, partner at Norton Rose Fulbright, Singapore, observed that Singapore’s strong environment in developing and growing financial technology (fintech) and other startups has led companies to relocate their headquarters to Singapore. He said that a presence in the city-state enables these firms to be in closer proximity to Singapore-based funds, and hopefully in a better position to attract PE investments. But EY’s Pais warned that there is a rising challenge for PEs, and that is to source proprietary deals given the level of competition and dry powder available in the market, which makes valuations more competitive. “The other challenge is how PEs gear up their portfolio against technological disruption,” he said. “Given that PEs are pragmatic shareholders looking to create accelerated value over a 5-year holding cycle, PEs will look at this as more of an opportunity than a challenge. But it is certainly a big game changer.”

hong kong view

PE scene is meaner and leaner

Ay Wen Lie

Ken Cheung

Luke Pais

Stephen Woods

While 2017 saw private equity funds in Hong Kong follow the same trend last year of amassing higher amounts of dry powder, or funds raised but not invested, there is a distinct difference in attitude this year: funds now seem more willing to get their skin in the game, according to analysts, and this has resulted in heated rivalries, recordhigh valuations, and a keener interest in tech-powered efficiency. Competition for deals, which has exceeded $6 billion in HK and grown 50% over the previous five-year average, is getting tighter. With PE firms also now having more money to spend, this has led to larger valuations. Sovereign wealth funds and Chinese technology giants are also attempting to grab a piece of the deal pie, which further complicates an already highly contested deal environment. “There is still a vast amount of dry powder at the disposal of PE funds, which they are actively looking to deploy,” said James Parker, partner at Norton Rose Fulbright, Hong Kong. “We are seeing that competition, particularly for the biggest deals, is being further increased by new entrants into the market like sovereign wealth funds, pension funds, and large Chinese corporations such as Alibaba and Tencent,” he added. Parker warned that with valuations recently hitting record levels, there is a danger of PE funds overpaying for assets and struggling to achieve the levels of exit multiples desired by investors. Sectors and trends Unsurprisingly, large deals in HK originated from the financial and property sectors. Bryan Koo, consultant at Clifford Chance, Hong Kong, said that with asset prices remaining high and combined with the ample dry powder of PE funds in Asia Pacific, it is “very difficult for PE funds to find the right assets and the right price to deploy money.”Bain’s Vinit Bhatia, for his part, said the largest deals were in a range of sectors, from traditional to technology, although interest in Internet and consumerfocused sectors have notably driven deal activities recently. He noted that even though the internet sector has slightly slowed down, it remains a big focus area, which together with TMT and Consumer, now account for more than 70% of deal volume for 2015 to 2017 YTD. “The big question which people are asking is how sustainable the growth is and this will partly depend on how the macro story of Greater China unfolds,” said Bhatia.

LBO deals in Hong Kong

Deal Value by Region X

Hong Kong Filing

Deal Value USD (m)

No.

2010 FY

2011 FY

384

2012 FY

360

2013 FY

125

2014 FY

152

2015 FY

906

2016 FY

1,025

2017 Q1-3

1,809

Sources: Dealogic Source: Duff and Phelps

SINGAPORE BUSINESS REVIEW | JANUARY 2018

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INDUSTRY INSIGHT: ACCELERATORS IN SINGAPORE

TheFinLab team

muru-D Singapore cohort three

PayPal Incubator team with startups

Startup Bootcamp Fintech Singapore team

Accelerators to look out for in Singapore Singapore Business Review talked to industry experts to round up the most promising accelerators in the city.

hen an entrepreneur has an idea for a new business, there • Entrepreneur First (EF) are special programmes that offer mentorship and funding Duration: 3-9 months, 100 individuals per to jumpstart their venture. Accelerator programmes batch are offered for a certain period, with varying areas of focus, and investment/equity stake. Increasingly, this new trend is emerging in Areas of focus: Deep technology, science, the business ecosystem. Straight from leading venture capital firms, engineering here are eight of the most promising accelerators in the city. They are Investment/equity stake: $5,000 per month per founder for 3 months; $25,000 per arranged in no particular order. company after 3 months. Commitment to invest in seed round and Series A funding with EF investing $55,000, • Oracle Startup Cloud Accelerator partner SGInnovate investing $45,000, and Sparklabs giving $40,000 Duration: 6 months, with two-year as capital extension option for the Oracle Cloud credits, 5 to 6 per batch EF (Entrepreneur First) wants to bring outliers together and form Areas of focus: IT teams from individuals that join in their network so businesses can Investment/equity stake: Zero be built together from the ground up. It brings strangers together to investment due to Oracle providing work and establish businesses through programme courses. facilities, expertise, technical advice, and Its notable alumni include London-based startup Magic Pony, cloud services access. a startup that uses machine-learning technology to improve the quality of images and video footages, which was acquired by Twitter Startups can gain access to Oracle Cloud services’ 420,000-strong for US$150m on June 2016. The acquisition is expected to boost global customer network. It believes in a pay-it-forward model Twitter’s live and video services such as Periscope and Vine. where startups are provided key resources to support success For Singapore’s first cohort, notable alumni also include without needing to grab equity. Alumni include farebond.com, a Transcelestial Technologies that raised $2.5m in seed to build a laser data science and analytics firm that provides dynamic price locks communications network using satellites and MicroSec, who raised to hold airfares for undecided travelers; NiYOyo Solutions, a $1.5m working with IoT security. Fintech startup focussed on alternate payment mechanisms. 24

SINGAPORE BUSINESS REVIEW | JANUARY 2018

industry insight: ACCELERATORS IN SINGAPORE •

muru-D

•

Duration: 6 months, 10 startups per batch from 15 country pool Areas of focus: Digital and deep technology startups across all verticals Investment/equity stake: S$75,000 in investment with access to global network of mentors, alumni, investors, and partners including a guided trip to Silicon Valley Backed by Australian telecommunications giant Telstra, muru-D recently launched its third wave of startups where 4 out of 10 were from Singapore, including Carepod, which aims to make travel more pet-friendly, and SUP.AI, an AI-powered messenger and social networking app. Its notable alumni include Apvera, a venture that offers security intelligence services that has raised over $1.6m in seed funding, and sendhelper, a mobile domestic services provider for households. •

NUS Start-Up Runway

Duration: Depends on stage of journey. Areas of focus: Technology-related Investment/equity stake: NUS Enterprise bundles: Startup SG Founder grant of $30,000 with $20,000 cash funding to firsttime entrepreneurs; Lotus-NUS grants $25,000 to social enterprises; NUS Alumni Startup Catalyst is a $10,000 validation grant to alumni; and Overseas Launchpad reimburses up to 70% of approved expenses for expansion to overseas markets. NUS Startup Runway offers a suite of initiatives and activities tailored to support startups at any point of their entreprenurial journey from pre-incubation, incubation, acceleration, to global scaling. They provide incubation support, ideation and validation initiatives, accelerator programmes, access to NUS tech, community and even access to overseas markets. It has nurtured startups like Carousell, Shopback, 99.co and has pioneered Modern Aging Singapore, the first elder market focused accelerator program. •

DBS Hotspot Pre-Accelerator

PayPal Incubator

Duration: 9 months, 3 to 5 per batch Areas of focus: Fintech Investment/equity stake: No specific breakdown of investments, not profitdriven. Selected startups can gain access to PayPal’s expansive list of contacts and capital, a coworking space in Singapore Technology Centre, industry expertise and mentorship by PayPal executives, and access to funding and infrastructure. PayPal Innovation Lab is a strategic initiative to take Singapore to the next frontier in digital commerce and payments, and is not profitdriven. Inaugural batch includes InvoiceInterchange, a P2P invoice trading marketplace named one of the top 40 Fintech companies in Singapore by the Monetary Authority of Singapore (MAS). In March 2017, TenX raised $1m from famous investors such as Fenbushi Capital with Bo Shen and Vitalik Buterin. •

Startup Bootcamp Fintech Singapore

Duration: 3 months, 10 to12 startups per batch Area of focus: Fintech Investment/equity stake: $25,000, 6% equity Startupbootcamp boasts of a global reach that links startups to key information, communities, industries, and investors essential for global expansion. It provides startups access to corporate partners, industry mentors, and its global networks. The accelerator is also a part of Rainmaking, a global cooperative of entrepreneurs whose vision is to create positive change through entrepreneurship, running startups and projects in more than 40 countries. Each year, Rainmaking facilitates more than 1,250 startup events with 100,000 participants globally. Its notable alumni include Jumper. ai, which offers a unified AI interface for payments and transaction for e-commerce shops, and Boundlss, an Australian-based AI health bot that won Best InsurTech Startup of the Year award.

•

The FinLab

Duration: 3-month programme, 10 teams per batch with 8 weeks of bootcamp and workshops Areas of focus: Fintech Investment/equity stake: DBS and NEST offer 3 months free support, with warrant system allowing both to potentially invest in startup after programme. $25,000 (US$18,000) with zero equity.

Duration: 100 days, around 10 startups per batch Investment/equity stake: $120,000 in cash and services such as exhibitions, networking, and office space for 6 months; post-programme support; convertible note with a valuation cap • Areas of focus: Fintech, SME and commercial banking space, regulatory technology, data analytics, AI and machine learning

The startup, which offers a collaborative working space, fields a lineup of executive mentors including Adam Lawrence, managing director for IBM Global Financial Services; Gina Heng, CEO of Marvelstone Group; and Alex Hutchinson of Deloitte Digital, among many other industry experts that will help startups grow their brand. Its notable alumni include Inncee and SushiVid.

A joint venture between SGInnovate and United Overseas Bank Ltd, The FinLab enables selected companies to access mentorship and entrepreneurship support from both private and public sectors as well as a wide network of contacts. This carves out a path to faster business growth and easier entry to larger markets in Asia. Alumni include Transficc, Turnkey Lender, Tookitaki and HelloGold. SINGAPORE BUSINESS REVIEW | JANUARY 2018

economy watch with the goal of providing more awareness and travel information to mainland Chinese tourists, which represent 18% of all visitor arrivals last year, and is the second-largest foreign tourist group behind Indonesians, according to BMI Research.

The tourism rebound is helping fuel a broader economic recovery in recent quarters

Boom time is back as Singapore’s economy surges

Manufacturing remained as the main driver of growth, but a comeback from the tourism sector gave the economy a much needed boost.

n mid-October, the Ministry of Trade and Industry released advanced estimates for the Singapore economy, indicating a 4.6% expansion for the third quarter of 2017—the city-state’s highest growth pace in more than three years. The estimates beat market expectations and not only assured markets that the upward momentum in manufacturing and services was not a fluke, but also revealed a key trend supporting Singapore’s recovery trajectory: tourists are flocking back to the country. Still, analysts warned that beneath the blaring headlines of impressive growth in exports and tourism, the domestic economy will likely remain subdued. “The tourism sector appears to be reaping benefits from the government’s continued efforts to develop the sector and this is likely to be supportive of growth over the coming quarters,” said BMI Research. The research firm noted that visitor arrivals have been steadily increasing, and hitting multi-year highs such as the 1.63 million in August, topping the 1.62 million posted in July 2016. “We expect the government’s 26

SINGAPORE BUSINESS REVIEW | JANUARY 2018

Maybank Kim Eng raised its GDP forecast to +3.2% in 2017, from +3%, and +2.5% in 2018, from 2.4%.

continued programmes to continue to attract more tourists, and ongoing initiatives to improve the nation’s connectivity through the further development of Changi Airport should be positive for tourism,” said BMI Research. Singapore launched a new tourism campaign slogan, Passion Made Possible, which positions the citystate as a more unique destination in Asia. The city-state’s tourism agency also recently signed a Memorandum of Understanding with China’s Alipay in an effort to woo mainland Chinese tourists. The two companies have agreed to cross-share relevant content about Singapore on various platforms,

Manufacturing surge The tourism rebound is helping fuel a broader economic recovery in recent quarters, driven mainly by a manufacturing surge, that has led analysts to upgrade their growth outlooks. In response to the marketbeating performance, BMI Research has upgraded their real gross domestic product (GDP) forecasts for both 2017 and 2018 to 3.2% and 3.0%, respectively, from 2.2% and 2.5% previously. “The manufacturing sector will remain the main driver of growth, whilst still-strong tourism figures will lend additional support,” said BMI Research. Manufacturing continues to be the primary growth catalyst for Singapore in the third quarter of 2017, recording the fastest pace since the first quarter of 2011. More notably, manufacturing drivers have broadened beyond economics, including to precision engineering and biomedical manufacturing, said Chua Hak Bin, analyst at Maybank Kim Eng. After the advanced estimates in the third quarter were released, Maybank Kim Eng raised its GDP forecast to +3.2% in 2017, from +3%, and +2.5% in 2018, from 2.4%. “Manufacturing growth will likely moderate from the spectacular pace, but remain at a healthy rate,” said Chua. “Services will contribute a greater proportion to growth, as the recovery broadens to the more

3Q17 GDP Surges by +4.6%, Fastest Pace Since 1Q14

Source: CEIC, Ministry of Trade & Industry, Maybank Kim Eng

economy watch domestic-oriented sectors and manufacturing cools off.” He also expected Singapore to upgrade its full-year GDP growth to 3.0% to 3.5%, from the current 2% to 3% range, in mid-November when the finalised third-quarter GDP is released given that growth has been averaging 3.3% in the first three quarters. The construction sector remained the weakest link in the Singapore sector in the third quarter, contracting 6.3%, pulled down by weak private sector activity, although Chua forecasted that construction growth will likely turn positive in 2018 on the back of stronger private sector works stemming from resurgent property sales. Green shoots for property? In the third quarter, the services sector also quickened its growth pace to 2.6%, an improvement from 2.5% in the second quarter, and there is a likelihood that this could be revised upward, aided by renewed property sector strength. “We think that services growth is coming in stronger than the flash estimates and will be upgraded when the finalised figure is out in November,” said Chua. “We think business services growth may also be stronger, given surging private residential sales and an upswing in the property market.” One sign that the seeds of recovery have been sprouting in property is that private residential price index in Singapore rose 0.5% q-o-q in the third quarter, the first time prices have increased in four years since the Monetary Authority of Singapore (MAS) tightened macroprudential policies, pushing down prices of private units, noted Jingyang Chen, economist at HSBC. “The rebound in prices of private properties confirmed our view that the recovery in property is gathering pace as the supply-demand imbalance normalises,” said Chen, expecting the growth of private residential prices to turn positive in the first half of 2018 due to tightened supply and robust demand. “Growth in Singapore continues to benefit from the improvement in global trade and the tech cycle underway in Asia since the end of 2016.

However, as we have noted many times previously, the improvement in exports has not fully passed through to the domestic economy,” said Joseph Incalcaterra, chief economist at HSBC. “But green shoots for the property market are starting to emerge, albeit at a gradual pace.” He expected the two-speed economy in Singapore to gradually improve next year on the back of a gradual recovery in the housing market, where new supply has peaked, optimism is rising and pent-up demand has boosted recent property launches. “Even so, the improvement in the domestic economy will be gradual,” said Incalcaterra. Alicia Garcia Herrero, chief economist at Natixis, said growth will be more even in 2018, compared to this year where, so far, externaloriented sectors fared better than domestic ones such as private consumption. “A weak real estate market and subdued sentiment dragged demand [in 2017],” she said. “In 2018, we expect the real estate sector to find firmer ground, which will support a boost of private consumption.External sectors should continue to perform well, bolstered by higher oil prices and ongoing trade recovery,” she said. Challenges ahead On the medium-term horizon, Singapore’s growth in the coming years will be capped as domestic demand support remains limited and the city-state faces demographic challenges, said Juliana Lee, chief economist at Deutsche Bank. She cited how Singapore’s fertility rate has remained well below the replacement rate of 2.1 for more than four decades, at 1.2% in 2017, which is forecasted to trigger citizen population shrinkage from 2025 and a working age population decline from 2020, based on a Population White Paper (PWP) published in 2013. “The PWP referred to various policies to boost Singapore’s population, accompanied by infrastructure spending and construction of affordable, good quality housing, amongst others—a

Private residential index prices rose for the first time in four years, signalling an incipient recovery in the market

Source: CEIC, HSBC

In 2018, we expect the real estate sector to find firmer ground, which will support a boost of private consumption.

boon for construction investment,” said Lee. “However, due to the popular sentiment against more liberal immigration policies—to be clear though, Singapore is one of the most open societies in the world—the government refrained.” In tandem with the pressures of an ageing population, Singapore is grappling with weak wage growth, which was limited to 2.4% in the second quarter. These factors, including the heavy indebtedness of households, have weighed substantially on private consumption, according to Lee. “Whilst labour market conditions have improved recently, the slack that had previously accumulated will take time to be fully absorbed, and wage pressures are thus unlikely to accelerate in the near term and other non-labour costs such as commercial and retail rentals will stay subdued,” said Selena Ling, analyst at OCBC. “Even on the property front, the MAS view is that accommodation costs will continue to dampen headline Consumer Price Index in 2018, albeit to a lesser extent than this year, whilst the positive contribution of private road transport costs will fall as previous administrative measures dissipate,” she added. Ling reckoned that the window for the adjustment on any monetary policy introuced by the MAS remains open in April and October 2018, it is still depending on how the economic and price stability picture evolves over the next six months. Although she noted that G7 central banks “are increasingly jumping on the policy normalisation bandwagon.” SINGAPORE BUSINESS REVIEW | JANUARY 2018

cover story

Investors should continue to favour equities over fixed income

10 investment ideas in 2018

2018 is the Year of the Dog but it doesn’t mean you have to bury your assets under the ground to save its value for later. Instead, unearth these investment ideas and learn the hacks on how to grow them.

he incoming year is not likely to be as smooth as 2017 from a markets perspective. Volatility will probably rise from current very low levels and risky asset prices may not rise as fast as they did in 2017, noted Christian Nolting, global chief investment officer and global head of DPM, Deutsche Bank Wealth Management. “Domestic political risks remain in the US and Europe, as well as geopolitical risks around the world.” But global economic growth, Nolting added, will continue to pick up, and will reach about 3.8% in 2018. “We remain broadly optimistic,” he noted. Singapore Business Review rounded up the most promising investment opportunities and listed some life hacks to guide investment decisions based on investor outlooks and conversations with industry experts and observers. These range from focusing on the potential of technology to provide solid returns to the importance of understanding diversity and balance in investments. The usual caveat applies, here at Singapore Business Review, we don’t have a crystal ball and merely gathered ideas from the experts. If we have a crystal ball, we’d give up publishing and just be professional investors. Nevertheless, here are 10 investment ideas to bark at in 2018. 1. Equities Equities will continue to be a preferred investment option, according to Ricky Tang, product manager, multi-asset, 28

SINGAPORE BUSINESS REVIEW | JANUARY 2018

As equity valuations are not cheap, returns are likely to come from earnings growth rather than multiple expansions in the future.

Schroders, as the global market continues to stabilise and pile on the upward trajectory seen over the last 12 months, giving plenty of reasons for stock investors to cheer for next year. “Equities remain our preferred asset class, which should continue to deliver positive returns in 2018,” he said. “As equity valuations are not cheap, returns are likely to come from earnings growth rather than multiple expansions in the future.” Nolting also shared that at a general level, investors should continue to favour equities over fixed income, with equities expected to continue providing opportunities in 2018, even after this year’s gains. At the time of writing, for instance, the MSCI AC World had hit 68 record highs in 2017, the most on record. “But earnings growth will be key, as price/earnings and other valuation multiples start to move down from elevated levels. With generally lower returns likely than in 2017, selectivity between sectors and between geographies will be important in 2018,” the Deutsche Bank’s Nolting said. Earnings of global equities are expected to grow at 7% in 2018, with global financial services firm Credit Suisse also saying that the continuing bullish outlook of financial markets—particularly that of the US—will spill over to next year. For instance, S&P 500 will likely rise 13% by year-end 2018, according to the firm’s latest market strategy report. This positive outlook on global

cover story equities growth, according to Tang, is supported by the strong cyclical environment of steady growth and subdued inflation pressure. “Within equities, we believe better opportunities lie in markets with cheaper valuation and stronger growth potential,” he said. This is echoed by Arthur Kwong, Asia Pacific head of equities for BNP Paribas Asset Management, particularly noting the well-performing Asian equities since January as a good condition for what’s to come in the next 12 months, although a slight moderation is expected towards the end of the year. The cushioning factor is mainly driven by earnings revisions and currency appreciation, more so than higher valuations. Dr. Jasslyn Yeo, global market strategist at J.P. Morgan Asset Management, said in a statement that whilst equity valuations are high, they expect these instruments to stay elevated for some time, with preference to cyclical and financial sectors. 2. Technology In this day and age of everything digital and innovation, it is not a surprise that banking on technology—from stocks, shares, crowdfunding, etc.—continues to be a hot investment opportunity year in and year out. Brendan Mulhern, global strategist for Newton Investment Management, said that sharing in the growth story of technology startups and groups that pushes the boundary of technology in the market space is an example of a smart investment decision. “The potential disruption created by this trend, creates great opportunities for new businesses and existing ones that adapt to the new openings,” he said, adding that technologies should branch out beyond the consumer sector for it to reach its full (earnings) potential. “As the potential corporate applications of these innovations become clearer, there is broad scope for companies to reverse this trend [on focusing on the consumer sector alone],” Mulhern reckoned, citing companies including Microsoft, Cognizant, and SAP—all of which provides enterprise technology and consulting services—could be a starting point for people looking for technology companies to invest in. Nolting also added that there should be a keen interest and following on the tech industry in Asia that’s ripping through silos and records every single year, given that majority of the hardware—and increasingly software—in today’s tech markets are coming from the continent. Real GDP growth comparison

Source: FactSet, OECD, J.P. Morgan Asset Management.

10Y Bond yields from a Japanese investor’s perspective*

Source: Bloomberg Finance L.P., J.P. Morgan Asset Management.

Christian Nolting

Ricky Tang

Arthur Kwong

“We remain keen on technology and also on Asian emerging markets, in part due to its tech component— but economic fundamentals are also likely to support equity markets in this region too,” he said. “Asian equity markets seem likely to outperform most developed markets next year. We have an existing High Conviction Idea on Chinese equities.” 3. Materials, industrials, and financials Beyond technology, however, there lies several sectors that are making a comeback. Robert Rountree, global strategist, Eastspring Investments, said the long ignored cyclical sectors of materials, industrials, and financials are swinging back into favour, especially in Singapore where the finance industry remain robust and resilient amid movements in the global economy. “Remove the technology stocks, which rallied strongly, and good to deep value is to be found elsewhere in both developed and emerging Asia including Japan,” he said. “As valuations in these sectors are still mostly low, there is plenty of potential upside.” This bullish outlook for all three sectors have been steadily gaining ground over the last few quarters, although their strong performance remains overshadowed by trendier momentum on sectors like information technology. Bloomberg’s Global Market Asia Index, for instance, shows significant year-to-date growth on financials at 18.48%, industrials at 23.61%, and materials at 25.85% for the rest of Asia. 4. Emerging markets Perhaps one of the most enduring economic stories over the past decade is the economic rise of developing Asia, and betting on this trend will remain to be a smart investment decision for 2018. Kwong noted that Asian equities have outperformed larger markets globally this year, particularly with the performance of China, South Korea, and India. Florence Tan, head of advisory – strategy & multichannel communications at Citi, shared that whilst uncertainty over the next US Federal Reserve Chairperson and faster than expected US rate hikes could lift market volatility, corrections in emerging markets can be viewed as opportunities given the robust global growth outlook and attractive valuations. SINGAPORE BUSINESS REVIEW | JANUARY 2018

cover story economic, social, and political stability,” said Kwong. “Stability in China should allow for a stable year for Asian equity markets.” Tan also shared that the Chinese government’s willingness to institute reforms and institutional changes have been showing results. “Key emerging markets including China has shown far more structural reform progress than many investors expected this year,” she said.

EM currencies vs. U.S. dollar

Source: J.P. Morgan Asset Management.

“Emerging market equities continue to trade near a record 40% valuation discount to the US,” she said. “In Asia, 6.5% yields of local currency Indian bonds are among the most attractive in the region, supported by the country’s longer term economic turnaround.” This is an important opportunity for investors in Singapore given the country’s strategic location at the heart of Southeast Asia—and the rest of Asia—where most of the growth is happening and will continue to blossom from. From sectors like technology, manufacturing, industry, and finance, there is a wide array of investment opportunities to choose from. This is on top of the region’s burgeoning startup scene, which opens up more investment opportunities for more localised and sophisticated commodities. Newton Investment Management’s Mulhern, however, said that there is little guarantee that flows into emerging market assets over the last 18 months will stick around if global financial and economic conditions start to deteriorate, particularly next year. “It is likely that global growth and global financial conditions have peaked, which we believe warrants a reduction in emerging market assets over the next year,” he said. Deutsche Bank’s Nolting also noted that on emerging markets, it’s better to focus on equities over fixed income. “On fixed income, we have grown increasingly cautious during 2017 as corporate spreads have rallied to close to our 12-month targets. I don’t think that we are likely becoming markedly more optimistic on this asset class in 2018,” he said, adding that there may obviously continue to be interesting areas in this asset class, particularly within emerging markets debt (which should benefit from a continued pick-up in economic growth combined with generally low levels of inflation) but this may not be the place to focus your investments in. 5. China China’s spectacular economic growth is tapering off, with growth continuing to average 6% to 7% over the last few years compared to 14.2% growth domestic product (GDP) growth rate a decade ago. However, experts are still saying that banking on Chinese industries and activities remains a smart investment decision to make, especially when the country now plays such a big role in the modern global economy. “Increased rigour in risk mitigation ahead of topleadership changes in Q4 are crucial for Beijing to preserve 30

SINGAPORE BUSINESS REVIEW | JANUARY 2018

Brendan Mulhern

Robert Rountree

Dr. Jasslyn Yeo

6. Japan Japan’s lacklustre economic performance over the last couple of years, after becoming a developed economy many decades ago, may have erased it from the map of investment opportunities or put aside. But Rountree shared that Japan equities is providing a window of opportunity once again. With investors still seemingly fixated on the success or otherwise of Abenomics, with the equity market falling and rallying on the ebbing and flowing of the confidence tide, Eastspring Investments’ Rountree said that investors are missing the tremendous improvements that are taking place at the corporate level—pushing Japanese companies to have some of the world’s best cash earning yields. “Stronger cash flows are allowing Japanese companies to repay debt, raise dividends, and, more recently, to also embark on share buyback schemes,” he said. “Japan was not immune from the run to safety fears that impacted the rest of the world several years ago. Thus, Japan’s cyclicals look very attractive especially the financials. Unlike elsewhere, Japan’s technology stocks still look attractively valued.” 7. US$ to regain some shine The US dollar was a mixed story in 2017. At the start of the year, there were reasonable expectations that the US dollar would make further gains on the back of a recovering US economy, further rate hikes from the US Federal Reserve, rising inflation, and President Trump’s pro-growth policies. However, a combination of crowded dollar positioning, falling US inflation, a lack of progrowth policies from the White House, and better global growth compared to the US economy has underpinned dollar weakness this year. Coming from this position, Mulhern shared that going into 2018, there is a strong case that the dollar has scope to appreciate. “The decline of the trade-weighted

Global equity market correlations

Source: Factset, MSCI, Standard & Poors, J.P. Morgan Asset Management.

cover story for Asian local bonds.”

Global government bond net supply

10. Diversity and balance As with any investment opportunity and decision, there is a saying that we shouldn’t put all our eggs in one basket. There is a need for diversity and balance on the kind of investment opportunity we’re grabbing, whilst balancing the risk that we expose ourselves into. According to Rountree, with bond’s long term rally finally petering out, investors have been running towards both higher risk bonds and definitely equities in search of higher returns. “The trick is in balancing these two factors,” he said, adding that in 2018, we expect to see a further run into both higher risk and duration bonds— despite the possible rise in interest rates—and into equities. In terms of investment behaviour, Yan Pu, head of portfolio review for Asia at Vanguard Investments Hong Kong, revealed four investment philosophies that would give investors a better chance of success: set an investment goal; build a balanced portfolio; stay disciplined; and be mindful of the investment cost. “Vanguard believes that cost is one of the few controllable factors in today’s dynamic market. Every penny you save in cost will eventually contribute to the return of your investment portfolio,” she said.

dollar over the first three quarters of 2017 was the largest on record. On this basis alone, further declines are likely to be limited,” he said, adding that the US dollar is poised for further gains with global economic momentum likely to have peaked and the US Federal Reserve poised for further hikes. Nolting also mentioned that the U.S. dollar has recently recovered against the euro and yen and he thinks that further U.S. dollar strengthening is possible. 8. Diversify to EUR and CAD Despite the bullish outlook of Mulhern regarding the US dollar, Tan shared that the American currency has peaked, with Citi expecting it to move lower given the persistent current account and fiscal deficits and rising net external debt. Historically, multi-year rallies of the US dollar have also been driven by different factors, from having a very strong US economy, the occurrence of a technology boom, and the underperformance of economies elsewhere in the world—none of which are currently happening. “Citi’s preferred currencies in 2018 include the euro and the Canadian dollar,” Tan said, explaining that the euro is expected to be supported by attractive valuations, a large current account surplus and the cyclical recovery in the eurozone, whilst the Bank of Canada is expected to raise interest rates again given strong output and labour market activity. 9. Bonds Although global central banks are talking about pulling back from the quantitative easing programs, the growth in liquidity is unlikely to reverse any time soon, according to Rountree. The US Federal Reserve has started to withdraw money as bonds on its portfolio mature, but not only is the pace slow, but it has also signalled it will inject cash into the system again should it make a policy misstep. Where the US Federal Reserve goes, others will follow. “The case for holding bonds for yield thus remains intact but that yield is to be found in the higher risk and longer duration bonds. On this basis, US high yields and Asian bonds (both local and US dollar) look attractive,” he said. “Asian local bonds look attractive as the US dollar is expensive and should weaken on a longer-term trend basis. Rising interest rates, however, could generate spurts of US dollar strength which could provide buying opportunities

Florence Tan

Yan Pu

Bonus: Sectors likely to silently make gains in 2018 As a bonus, we’re adding some more sectors that may likely provide investment gains, according to Deutsche Bank’s Christian Nolting. These are infrastructure, cybersecurity, global ageing, and the millenials. “These secular trend themes have done well yearto-date and are intended to complement shorter-term ideas in a portfolio. As recent cyberattacks have shown, cybersecurity is a rapidly growing problem which will demand substantial private and public spending to counter. Opportunities could also be provided by merger and acquisition activity in the cybersecurity sector as it grows and consolidates,” he said. Nolting concluded by saying that infrastructure will also require major spending in the coming decades, particularly in the emerging markets. “Global ageing has impacts well beyond healthcare, for example, on insurance and other financial services. The spending patterns of millennials are already a focus for investors, given millennials’ interest in consumer technology and lifestyle spending,” he said.

US dollar performance

Source: FactSet, J.P. Morgan Asset Management; Bloomberg Finance L.P., U.S. Federal Reserve

SINGAPORE BUSINESS REVIEW | JANUARY 2018

ANALYSIS: FINTECH

Customers can locate nearby ATMs through a digital virtual assistant

Fintech boom in banks

Singapore’s biggest banks are donning their new digital weapons through chatbots, apps, and AI-powered digital banking services. Singapore remains a top global fintech hub, alongside London, according to Deloitte. UOB Kayhian noted that currently, there are more than 400 fintechs operating in Singapore, many whom chose to set up their regional HQ here. Meanwhile, the MAS has committed also committed $225m to support the Financial Sector Technology & Innovation (FSTI) Scheme over the next five years. Needless to say, Singapore’s banking industry has benefitted the most in the city’s fintech boom. DBS has launched mobile-only Digibank in India and Indonesia. OCBC has experimented with using AI to handle home loan enquiries, wealth management advisory and regulatory compliance. UOB Kayhian identified two fintech business models, namely, competitive, which directly challenges incumbent banks, and collaborative, which enhances their positions. Those in the latter gathered more traction. Investment in collaborative fintech companies increased 138% as fintechs increasingly view incumbent banks as potential partners. As a result, banks have also seized the opportunities by collaborating and investing in fintech companies. 32

SINGAPORE BUSINESS REVIEW | JANUARY 2018

Amongst fintech companies, those within the banking & payments subsector took the lion’s share at 54%.

Amongst fintech companies, those within the banking & payments subsector took the lion’s share at 54%. DBS has redesigned its IT infrastructure, leveraging on big data, biometric and AI to make banking simple and seamless for customers. Customers are serviced by an AIpowered virtual assistant created in partnership with Kasisto, a spin-off from the creator of Siri. The virtual assistant is able to handle 80% of customer requests without human intervention while the balance 20% of customer requests go to live chat sessions. UOB Kay Hian said that the upgrade has acquired 1.5 million new customers and 450,000 savings accounts.

Emma has responded to over 39,000 queries

Rise of the robo-advisors DBS also developed iWealth for its wealth management business. Through this, users conducted banking transactions, accessed researches and analysis, and managed and traded a portfolio of stocks and funds. A mobile platform was launched in 1H2017. In January, OCBC launched Emma, an AI-capable chatbot. OCBC reported that the bot was able to answer questions on home and renovation loans with a total debt service ratio (TDSR) calculator. OCBC recorded that more than 10% of chat sessions have been converted to home loan sales prospects. The bank also launched the algorithmbased robo-advisor that guides clients in their investment journey. Clients first complete a questionnaire, which determines their risk profile and investment goals. Thereafter, clients are advised to invest in one of five portfolios of ETFs and a thematic basket of stocks listed on the NYSE and NASDAQ. The platform will monitor the chosen portfolio and conduct regular rebalancing of an investment portfolio. OCBC also tapped AI and machine learning to combat money laundering and terrorism financing. Its software detected suspicious transactions by assessing broad parameters. Meanwhile, UOB launched its UOB Mighty app which allows contactless payment for Android phones, which was made to Malaysia and Thailand this year. It also leveraged social messaging apps and injected into them its fund transfer app called UOB MyKey. From UOB KayHian

Country report: Finland mentioning established firms such as KONE, Nokia, Wärtsilä, Neste, and Marinetek who have local operations in the Southeast Asian nation.

Finnish Business Council, Team Finland and SF100 Singapore organised the second “Finland – Singapore – Facing Common Challenges” Dialogue Series

Singapore and Finland’s strong digital ties boost trade There are 170 Finnish companies that are currently registered in Singapore.

n September, Singapore’s Minister of State in the Prime Minister’s Office and Ministry of Manpower Sam Tan’s visit to Helsinki to meet senior Finnish officials reaffirmed the support for the early ratification of the European Union-Singapore Free Trade Agreement that would see healthier trade and business relations between the city-state and the eurozone. Aside from this event, the Suomi Finland 100 events, a commemoration of Finland’s 100th year of independence, also saw over 100 Finnish organisations and entrepreneurs visit Singapore, which further boosted technical and skills cooperation between Finnish and Singaporean businesses. For Arttu Salmenhaara, chairman of the Finnish Business Council, relationships between the two progressive countries have never been better. He noted that both Finnish and Singaporean buyers and sellers understand the importance of high quality of products and services, as well as the meaning of deep technology competence. “Singapore and Finland share similar mindset and way to do business in many industries and also in government

Finland’s export to Singapore totalled $298 million last year, with more than half consisting of machinery, equipment and modes of transport, as well as manufactured goods, chemicals, IT hardware, and electronic products.

level,” the Finnish Business Council chairman said. Finland’s export to Singapore totalled S$298 million last year, with more than half consisting of machinery, equipment and modes of transport, as well as manufactured goods, chemicals, IT hardware, and electronic products. Imports to Finland from Singapore, meanwhile, amounted to S$158 million, with 80% comprised of machinery, equipment, and means of transport. Deeply rooted connections Currently, there are 170 companies with Finnish major ownership that are registered in Singapore, whilst less than 20 Singaporean-owned companies are registered in the European country. Salmenhaara noted that beyond finance including payment of fiscal duties, Finnish companies contribute knowledge and technology know-how through local partnerships and collaborations. “Larger Finnish companies operating in Singapore have a lot of training and development programmes for all their employees that contribute to the development of the work force, for example, in the area of digitalisation,” he said,

Mutual benefits For Salmenhaara, there is both a practical and economic underpinning why Finnish companies should look at setting up shop and start to have a presence in Singapore—the city-state is a “coordination node” and a gateway for expansion given the vast market potential in Southeast Asia, India, and the greater Asia-Pacific region. “Singapore is a great first market in the region while developing channels towards large markets nearby,” he said. This bodes well both countries’ expertise and established experience in developing digital solutions and openness to digitalisation and innovation. Digital solutions for different verticals are a big opportunity, according to Salmenhaara, adding that verticals with good traction, at the moment, include healthcare and wellness, education and learning, maritime and ports, housing and infrastructure, as well as traffic and mobility. “Finland is well known for its ICT excellence,” he said, adding that this complements to Singapore’s voracious support of digital innovations and encouragement of startups entering the market through financial and policy support. However, the relationship is not a one-way highway. Salmenhaara shared that Singapore can be considered a good access point for Finnish companies looking at entering Asian markets in Southeast Asia and beyond. Finland can also be a great entry point for companies and corporations who would like to engage and expand in Nordic markets and the rest of the European Union. This is on top of the rich and unique technological experience that Singapore can share to Finnish and other European companies. SINGAPORE BUSINESS REVIEW | JANUARY 2018

Country report: finland

Propelling global logistics to greater heights Cargotec is using big data, VR and state-of-the art technology to shape the global logistics industry.

hen it comes to providing smart cargo handling solutions and services, Cargotec is the undisputed leader in its field. The company, which is headquartered in Helsinki, Finland, is a pioneer in shaping an intelligent and sustainable cargo handling business for the benefit of its many clients. “Our cargo handling solutions and services make global trade smarter, better and more sustainable. As leaders in ports, on roads and at sea, our business areas Kalmar, Hiab and MacGregor have a unique position to optimise global cargo flows and create sustainable customer value,” says Mika Vehvilainen, CEO Cargotec. Cargotec is listed on the Helsinki Stock Exchange and operates in over 100 countries worldwide. It has offices in 45 countries, with over 11,000 employees. It has a long history pioneering new innovations, and the impressive results speak for themselves. For instance, Cargotec has rolled out fully automated terminals, software solutions and stowage planning systems to help solve the estimated €17 billion inefficiency in the container logistics value chain. “We are

Peter McLean, Senior Vice President of Kalmar Asia Pacific

SINGAPORE BUSINESS REVIEW | JANUARY 2018

Mika Vehvilainen, CEO of Cargotec

Kalmar Asia Pacific. “We developed the first taking into use technologies like robotics, industrial straddle carrier in the 1940s, virtual reality tools and artificial intelligence and the first RoRo tractor in the 1970s. To to develop state-of-the-art products and meet the need for more efficient container services. Our XVELA solution enables handling, Kalmar commercialised the terminals, carriers and operational partners first generation of reachstackers in the to work together to better communicate, 1980s and, a decade later, introduced the coordinate and synchronise their operations. first container handler for rough terrain We use latest technologies and focus a lot operations. Our first steps in terminal on developing our internal efficiency so that automation were taken more than 20 years we can deliver the best possible service to ago,” he adds. our customers,” says Kalmar’s Vehvilainen. “CARGOTEC operates integrated solutions Cargotec’s offer a wide range global network is in over 100 countries positioned close worldwide. It has offices of indispensable to customers, in 45 countries, with over benefits. Its solutions help offering extensive 11,000 employees. ” optimise terminal services to ensure operations and continuous, reliable improve port capacity by increasing and sustainable performance according operational predictability and ensuring to customer needs. Through its different high and consistent productivity. Kalmar’s business areas, Cargotec has an overview services allow the real-time view of all and a unique position to look at the whole operations. cargo handling value chain. “Our promise is summed up in five words: making your every move count. We are Kalmar: Making every move count unique in our ability to enable seamless Kalmar is an independent business area integration of different terminal processes. within Cargotec. The company, whose With these innovations and many others, history stretches back over a hundred we revolutionised the cargo and container years, provides cargo handling solutions and handling industries. And with our passion, services to ports, terminals, distribution combined experience and deep knowledge centres and heavy industry. of the industry, our aim is to exceed “Innovation has always been at the expectations again and again,” McLean says. heart of our business – we’ve consistently In 2015, Kalmar and Navis introduced the revolutionised container handling solutions industry’s first integrated automation for the benefit of our customers,” says solution, Kalmar OneTerminal, that combines Peter McLean, Senior Vice President of

Country report: finland

Peter Cederholm, President of Bromma

software systems, equipment and services for seamless deployment. At the end of 2016, Kalmar had more than 5,700 employees in 30 countries worldwide. Bromma’s commitment to quality Bromma is one of Kalmar’s many divisions. Its key product is the spreader, or the “gripping” device of a container crane. Bromma was the company to introduce the telescopic spreader—a gripping device adjustable to fit different container sizes –in 1967. Since then, it has been the leading supplier of crane spreaders in the world. While a spreader is often delivered as part of a new crane installation, it plays such a crucial role that port operators pay particular attention to ensure that they are getting the most reliable spreader. Thanks to its expertise, Bromma is a trusted partner of container handling terminals in ports around the world. Its global client base also includes crane manufacturers. “We have delivered crane spreaders to 500 terminals in 90 nations on 6 continents, and Bromma spreaders are in service today at 97 out of the world’s largest 100 container ports,” explains Peter Cederholm, President of Bromma. Bromma’s world-class spreaders are built through a rigorous manufacturing process which utilizes only the best quality

materials. Apart from its renowned product, of shipping. “Currently, these innovations include our progress and participation in Bromma is also committed to continuously the development of autonomous shipping. supporting its customers. “We have the Furthermore, we are using virtual reality to largest and most wide-spread support train ship operators to be more efficient organisation in the market. We provide onsite technical support and can offer training and safer and optimising on-board cargo systems to ensure in local languages. that container ships We have a life“We have delivered can carry maximum long commitment crane spreaders to 500 payload,” Roozendal to support our says. Apart customers. terminals in 90 nations from developing This is our key on 6 continents.” softwaredifferentiator,” supported and says Cederholm.To remotely-controlled operations, MacGregor further solidify its position as the market is also developing and offering technology leader, Bromma has invested in intelligent that enables operators to switch from technology to minimize downtime. “If a traditional, heavy steel rope to fibreproblem occurs we can provide on how to rope systems that maximise ship crane’s fix the problem as fast as possible. Even capabilities. “We develop and innovate in better, we have technology that can predict close cooperation with our customers and future problems, enabling the customer to other key industry stakeholders. We are prevent the problem from occurring in the first place,” Cederholm notes. Bromma has a constantly looking at various current and future technologies to be applied for the headquarters in Singapore. benefit of our customers operations,” notes Roozendal. The company is strengthening its MacGregor: The future with smart tech position in new segments like the renewable MacGregor’s solutions make the sea more energy sector, where it can apply its existing accessible, safe and reliable. MacGregor portfolio and capabilities. MacGregor has a creates value for shipbuilders, owners headquarters in Singapore. and operators in the offshore and marine industries through innovative engineering CONTACT solutions and services for handling marine cargoes and offshore loads. “We have a strong track record in Company name: developing and delivering systems and Cargotec CHS Pte Ltd/ MacGregor Pte. Ltd. solutions which maximise the safety, Address: 15 Tukang Innovation Drive efficiency and eco-efficiency of our Singapore 618299 customers operations at sea and are Phone number: +65597 3888 committed to preserving our innovative Website: www.cargotec.com roots,” notes Michel Roozendal, President of MacGregor. The company is leveraging emerging technologies to shape the future

Michel Roozendal, President of MacGregor

SINGAPORE BUSINESS REVIEW | JANUARY 2018

ENGINEERING SURVEY talent pool has shrunk, and consequently, competition for the best talent has become tighter. Challenging economic conditions are also a factor in setting higher expectations in terms of skills and quality of work. Price cuts in order to compete are not the way to go, as they only create unsustainability in the long term. Firms are encouraged to take the more tedious route of training their employees and creating a culture of innovation within their ranks.

Aurecon is helping Mauritius plan and build their first light rail system

Top engineers underskilled for Smart Nation initiative Improved training is needed amidst wave of new projects and developments.

ingapore Business Review’s ranking of the largest engineering firms in the city-state reveal that hiring activity from big firms counterbalanced the smaller firm’s staff reductions with the total number of engineering professionals at 375, just one personnel higher than last year’s 374. Surbana Jurong remains the largest firm with the total number of engineers at 94 and total staff at 2,985. Their headcount ballooned by 34% from 70 registered engineers in 2016, following the merger reported earlier this year with KTP Consultants. AECOM Singapore remains second despite experiencing a decrease of four engineers. Meanwhile, CPG Consultants jumped five spots from eighth to third as it hired 10 more engineers. This pushed WSP Consultancy down one spot to fourth with 25 engineers compared to last year’s 33. WorleyParsons saw the biggest decline in headcount slashing 44% of its 25 engineers in 2016 down to 14. They slipped 6 spots from clinching last year’s 4th spot down to 10th for this year. 36

SINGAPORE BUSINESS REVIEW | JANUARY 2018

Despite huge demand for talent from public sector projects such as the Mega Port at Tuas, Changi Airport Terminal 5, and MRT’s Circle Line 6, skilled engineers are not enough in number to carry out the planned innovations.

The rise of artificial intelligence, robotics, high-tech assembly lines, drones, 3D printing, autonomous vehicles and transport systems, and augmented reality are also requiring engineers to upskill. The demand for engineering skills has evolved such that it requires not only people who know the trade from history but who are also well versed in the age of big data and analytics. Underskilled workforce Despite huge demand for talent from public sector projects such as the Mega Port at Tuas, Changi Airport Terminal 5, and MRT’s Circle Line 6, skilled engineers are not enough in number to carry out the planned innovations. To address this challenge, some of Singapore’s top engineering and construction firms have been trying to increase the number of highly-skilled engineers in their talent pools. Over the past year, Surbana Jurong welcomed 24 new engineers, whilst CPG Consultants and Aurecon Singapore hired 10 and two, respectively. Steve Liew, country manager, Aurecon, Singapore said that the city’s engineering

Digital divide Singapore’s transformation into a Smart Nation needs a simultaneous transformation of its engineering labour force. According to Edwin Khew Teck Fook, president, The Institution of Engineers, Singapore (IES), there is a greater emphasis on deep-skilled training for engineers and technicians to build a futureready, deep-tech engineering workforce. Liew said that digital disruption is the biggest change their firm has ever encountered, grappling not only the company, but more significantly its clients. For him, the question that needs to be constantly asked is how to commercialise the opportunities presented by digital disruption whilst keeping themselves relevant as engineers and as a business. “A significant change is brought about by technological disruptions that have intensified the need for engineers to innovate. This trend has picked up pace especially in industries such as fintech and deep-tech engineering systems, as Singapore strives to remain a leading global financial and hightech manufacturing centre in Asia by harnessing technology and sharpening its innovation edge,” Fook added. With the onslaught of major digital developments, cybersecurity is also expected to become a major issue for stakeholders. Firms are anticipating the introduction of Singapore’s Cybersecurity Bill in 2018, an event that will push the engineering sector to raise their cybersecurity standards in order to benefit greatly from digitalisation.

ENGINEERING SURVEY

National Center for Infectious Diseases, one of the major projects of CPG Consultants

Fook said that Singapore has seen the creation of tripartite collaborations such as the Built Environment SkillsFuture Tripartite taskforce aimed at bringing together industry, government and the Institutions of Higher Learning (IHLs). “We send our bright young engineers every year to university campuses to share his passion and career journey. Through this, we hope to attract more graduates from engineering faculties to join engineering as a career,” Liew said.

Singapore Institute of Technology is now offering degree programmes in Sustainable Infrastructure Engineering and Telematics to train more engineers in modern transport engineering to advance our transportation infrastructure.

public bus transport, the Land Transport Authority (LTA) and other partners, including IES, introduced new certification for bus technicians in order for them to be more professional and competent. “These technicians and technical professionals will be registered by IES and placed put on a pathway whereby their certificates will be recognised regionally in ASEAN and in time, converted to professional qualifications akin to engineers,” Fook added. Despite challenges in staffing, firms continue to clinch significant Education first projects as the economy tries to Meanwhile, universities are also stabilise. catching up to the trends. Fook said Aurecon’s two additional engineers that IES is seeing more engineers are a result of the company winning trained in sub-disciplines and sizeable new projects in data centres specialist fields such as aerospace and universities. Liew added that engineering, biochemical engineering, this is also part of their strategy pharmaceuticals and mechatronics in to maintain a steady number of the workforce. engineers for its clients. In particular, “IHLs are also developing more curriculum and programmes beyond electronics, mechanical, civil and chemical engineering to support our evolving economy. For example, the Singapore Institute of Technology is now offering degree programmes in Sustainable Infrastructure Engineering and Telematics to train more engineers in modern transport engineering to advance our transportation infrastructure,” Fook added. Furthermore, Singapore also needs to prize its technicians, who are a key group in the engineering value chain. Fook said Singapore has seen a growing need to train and certify these technicians with Surbana Jurong’s land reclamation project for Pasir Panjang initial efforts already launched by the government. To support efficient

Aurecon has been successful in its infrastructure advisory project with the Singapore government, to help Mauritius plan and build their first light rail system. The project, which has progressed to the design and construct stage, is in line with the firm’s strategy to design better futures and make a real difference in the communities in which they work. Build, build, build Aside from Aurecon, other firms are also seeing more projects in the pipeline. According to Wong Heang Fine, group chief executive officer at Surbana Jurong, the company continues to ink contracts for multidisciplinary projects across diverse sectors not only in Singapore, but in the entire region. “Our new projects include collaboration with Vietnam’s Phu Long on masterplanning, coastal engineering and project management, engineering design services for the Yangon-Mandalay highway, a new fresh food distribution centre for NTUC, and a housing township project in Yunnan, China,” Wong said. “2018 will be an exciting year for engineering. Mounting pressure for Singapore to fuel its economic growth will open up many opportunities for engineers and the high tech industry to contribute and be successful. Engineering will remain a key enabler to establish and underpin the growth of future technologies which will control the way we live, work and play,” IES’ Fook said.

SINGAPORE BUSINESS REVIEW | JANUARY 2018

Engineering SURVEY 2017

Engineering Firm

2016

Total Number of Registered Engineers

2017 BREAKDOWN

2017

2016

Mechanical

Civil

Electrical

Total Number of Staff

Key Executive Officer

Surbana Jurong

2,985

WONG HEANG FINE

AECOM Singapore

750

BILLY WONG

CPG Consultants Pte. Ltd.

1913

KHEW SIN KHOON

WSP Consultancy Pte. Ltd.

RAYMOND LO

T.Y.Lin International Pte. Ltd.

212

KENNY LIM

Arup Singapore

300

CHIA WAH KAM

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

221

LEE ANG SENG

Meinhardt Singapore (including Meinhardt Infrastructure)

294

SHAHZAD NASIM OMAR SHAHZAD LEE BEE WAH THOMAS SIT

Aurecon Singapore

137

STEVE LIEW

Mott MacDonald Singapore

333

YOU FOOK HIN

WorleyParsons

290

EDMUND POH

RSP Architects Planners & Engineers (Pte) Ltd

330

LAI HUEN POH

DSCO Group Pte. Ltd.

JACQUELINE CHAN

ECAS Consultants Pte. Ltd.

189

CHAN EWE JIN

Tritech Consultants

WANG XIAONING

CMP Consultants Private Limited

CHAN YEW LIANG

Black & Veatch (SEA)

133

WILLIAM YONG

Rankine&Hill (Singapore) Pte. Ltd.

TAN PECK KHOON

TOTAL

375

374

DATA PROVIDED BY COMPANIES AND SOURCED FROM PROFESSIONAL ENGINEERS BOARD SINGAPORE. SURVEY PERIOD: SEPTEMBER-OCTOBER 2017.

SINGAPORE BUSINESS REVIEW | JANUARY 2018

Engineering SURVEY

Get to know Singapore’s up and coming engineers aged 40 and under

ingapore Business Review reached out to the top engineering firms in the city and we asked them to put forward names of the up and coming talents in the engineering sector. They are ranked according to age. 1 Lam Siew Ping, 29, Rankine & Hill Lam’s engineering philosophy is rooted in the belief that it is important to fully understand every development’s requirements from both the architectural and M&E perspectives to tailor the best solutions and atmosphere. Her award winning portfokio include one of Singapore’s most iconic Catholic structures, the Church of St. Alphonsus or the Novena Church, the highly awarded 7-storey mixed-use institutional project Heartbeat@Bedok, and the Wisma Geylang Serai, designed to house various government agencies whilst sporting a distinct local character, which won the Green Mark Platinum 2017 award.

Lok Wai Loon, 35, Surbana Jurong Lok brings with him over a decade of professional experience as a structural and civil engineer, with remarkable specialisation in precast design. His professional experience covers design in residential housing projects in Singapore including the structural design and construction of public housing development such as Bukit Merah RC40, Bukit Merah 53, and Dawson C3. In addition to high-rise buildings, he is also proficient in designingtemporary earth retaining structures and steel structure.

his belt for DSCO Group, focussed on electrical engineering design for data centres. He is currently the project lead for a number of major projects in Singapore and regionally, data centre construction projects for Singtel and Digital Realty Trust, which were awarded with BCA Green Mark for Data Centres Platinum. He also completed projects with NCS, Agency for Science, Technology and Research (A*STAR), VISA Worldwide, iCAP and Clariden Leu. 6

Ooi Poh Hai, 38, Surbana Jurong Ooi’s career development involves engagements with engineering consultancy firm of Meinhardt and Mott Macdonalds which had seen him complete the geotechnical design for challenging underground excavation projects and foundation systems for high rise buildings in difficult ground conditions, such as the Reflection @ Keppel Bay, OUE Bayfront, One Shenton Way amongst others.

Kelvin Chen, 34, Aurecon Singapore Chen is a go-getter in the world of engineering in Singapore, having been awarded by the Association of Consulting Engineers Singapore (ACES) as 2017’s Young Consulting Engineer of the Year in the mechanical engineering category. Since joining Aurecon, he has delivered projects for a variety of clients including Amazon, Bose, Google, Johnson & Johnson, Lloyd’s of London, Nanyang Technological University, and Resorts World Sentosa. He also worked on projects in Indonesia, Myanmar, Vietnam, and New Zealand.

Aaron Foong, 37, Surbana Jurong Foong firmly believes that a good structural design goes hand in hand with good architectural design. This philosophy is evident in The Scotts Tower (TST) project, showcasing a unique engineering feat—the transfer of 30 floors of superstructure above the frame onto four slanting mega columns. He is currently spearheading the first phase of the new Singapore General Hospital campus project.

Lim Boon Keong, 38, DSCO Lim has almost 10 years of experience under

Zhang Yaodong, 40, Surbana Jurong Zhang’s expertise range from structural and geotechnical engineering, to coastal development and reclamation. Some of the projects he managed include the mega project of Tuas Terminal Phase 1. He is also the supervision QP for some land reclamation projects such as the Jurong Island Westward Extension and Tuas Western Coast. He has provided consultancy services involving deep excavation, earth retaining wall, tunnelling, slope stability, and deep foundation. SINGAPORE BUSINESS REVIEW | JANUARY 2018

ACCOUNTING SURVEY

Ong Pang Thye, Managing Partner, KPMG Singapore

Singapore’s top accounting firms are on a hiring spree 2017 saw the need for flexibility and innovation in the accounting profession.

espite shedding twenty employees, KPMG remains the biggest accounting firm in Singapore with a 3,000-strong team. PwC follows at a close second with 2,800 total staff, up from last year’s 2,742. Unsurprisingly, the 3rd and 4th firms are EY and Deloitte with 2,760 and 2,300 employees, respectively. The twelve largest firms of last year retained their spots, but the thirteenth largest firm this year came as a surprise. RT LLP almost doubled its staff number from 62 in 2016 to 120 today. Deloitte also saw to fit that its regional staffing would be adequate to cover the entire region. Whilst the numbers remained the same in Singapore, the number of Deloitte employees in ASEAN doubled together with the firm’s regional revenue. “With different countries at different stages of growth, and with our clients’ needs being different for each country, our talent has spread out and grown across the region,” said Philip Yuen, chief executive officer, Deloitte Southeast Asia and Singapore. Max Loh, Asean and Singapore managing partner, EY, said that major global developments such 40

SINGAPORE BUSINESS REVIEW | JANUARY 2018

KPMG remains the biggest accounting firm in Singapore with a 3,000-strong team. PwC follows at a close second with 2,800 total staff, up from last year’s 2,742.

as China’s Belt & Road initiative will eventually spur growth, hence accounting firms must seriously consider physical presence as well as strategic staffing in the region. Lack of skills Despite the growing demand for accountants in the region, a survey by EY and CPA Australia revealed that 150 accounting professionals in Singapore expressed weak confidence in their present skill set. According to them, strategic thinking is the top skill required these days, and their training and experience are no longer adequate to meet future job demand

such as statistical analysis and data mining. According to Ong Pang Thye, managing partner, KPMG Singapore, the breadth and depth of experience offered by digital talents will enable to provide their clients with an international and regional perspective in addressing present challenges. For KPMG, this means hiring more international talent whilst keeping its core workforce Singaporean. Loh said that in 2017, EY grew to about 250,000 people across 151 countries and new hires reached up to 65,000, with 25% being experienced hires and more than 10% being alumni or what the firm calls boomerangs--people who worked for the firm, left, and came back. Meanwhile, Deloitte announced that it has increased its global workforce by 8% from 2016, greatly benefitting its major office in Singapore as well as its markets in the ASEAN region. Rise of the data scientists In terms of the expectations for accounting professionals, hiring managers have begun prioritising curious and creative individuals who are confident not only in using established technologies, but in easily working with emerging ones. Loh said that business acumen, professional skepticism, an analytical mindset and the ability to interrogate large data sets will also be critical to an accountant’s present and future success. “Finding individuals who fit this profile is no easy task. Hence, the accounting sector will need to diversify its recruitment to attract different

KPMG plans to hire more international talent whilst keeping its core workforce Singaporean.

ACCOUNTING SURvey

Philip Yuen, Chief Executive Officer, Deloitte Southeast Asia and Singapore

skillsets, such as individuals from science, technology, engineering and mathematics disciplines,” Loh added. Lee Fook Chiew, chief executive officer, Institute of Singapore Chartered Accountants (ISCA). noted that with more than 32,000 members in diverse roles across different industries, the sector in 2017 welcomed 1,000 accounting professionals from diverse industries as its new members. Singapore’s recently launched Financial Services Industry Transformation Map (ITM) by the government will help facilitate pervasive innovation and technology adoption across the sector and equip

the financial sector workforce with new skills and competencies. The ITM is also expected to create 4,000 new jobs in the financial services and fintech sectors annually. “We enable our members to broaden their skills sets and deepen their expertise via specialisation pathways, such as the Financial Forensic Accounting qualification, and courses in cyber security and data analytics to help them stay relevant,” Lee said.

Max Loh, Managing Partner, EY Asean

Lee Fook Chiew, Chief Executive Officer, ISCA

Evolution of work EY’s belief in this strategy enabled it to deliver new services and solutions like people advisory services, operational transaction services, law, digital business transformation, analytics, cybersecurity and advanced

The ITM is also expected to create 4,000 new jobs in the financial services and fintech sectors annually.

manufacturing. Furthermore, firms outside of the Big Four are also observing new trends in terms of staffing. Sim Guan Seng, managing partner, Baker Tilly TFW LLP, said that they have been seeing an increase in interest among fresh graduates to explore a career with Global 10 firms outside of the Big Four. “We have been successful in attracting such graduates in the last 2 years to join us. I see this trend to continue. The challenge is for the mid-sized firms to live up to the expectations of these new recruits,” Sim said. 2017 is also significant for accounting firms in Singapore, as it marks the first year of implementation and regulation of the Enhanced Auditor Reporting standards (EARs). Auditor’s reports now contain more insightful information in the form of key audit matters (KAMs) which enhances transparency amongst auditors as it enables investors to focus on critical areas including key accounting and audit issues in the financial statements. One year into the implementation of the EAR standards, ISCA’s survey revealed that nearly two thirds of audit committees (63%) and investors (60%) said that EARs gave them moderately to significantly deeper insights into how their auditors conducted the audits. The city’s new revenue recognition model is also expected to change the existing revenue recognition policies as well as pose challenges to businesses with long term contracts or contracts with multiple performance obligations.

SINGAPORE BUSINESS REVIEW | JANUARY 2018

Accounting SURVEY 2017

Accounting Firm

2016

2017 Total Staff

2016 Total Staff

2017 Accounting Professionals

Managing Partner

KPMG

3,000

3,020

<2,900

ONG PANG THYE

PwC Singapore

2,800

2,742

<2,700

YEOH OON JIN

EY (Ernst & Young)

2,760

2,620

<2,700

MAX LOH

Deloitte & Touche

2,300

<2,300

PHILIP YUEN

RSM

954

933

<954

PAUL LEE

BDO

460

440

418

FRANKIE CHIA

Foo Kon Tan

290

325

260

KON YIN TONG

Baker Tilly TFW

290

280

260

SIM GUAN SENG

Nexia TS Public Accounting Corporation

242

230

218

HENRY SK TAN

Crowe Horwath

230

212

<230

TAN KUANG HUI

Moore Stephens

215

210

<215

MICK AW

Mazars

195

180

170

DENIS USHER

RT LLP

120

RAVI ARUMUGAM

UHY Lee Seng Chan & Co.

107

LEE SENG CHAN

PKF-CAP

105

101

MICHAEL CHIN

HLB-Atrede LLP

ANDREW TAN BENG HWEE

Lo Hock Ling & Co.

LO WEI MIN, PEARLYN

Audit Alliance LLP

BERNARD LEE

CA TRUST PAC

TAN LYE HENG PAUL

BSL Group

N VIMALA DEVI, LIM SIOW JANE

Cypress Singapore PAC

LOK LAI CHENG

Ardent

TERENCE NG

Grant Thornton Singapore

RODGER FLYNN

Robert Yam & Co.

ROBERT YAM

Hawksford

LEE MENG TENG

Precursor Assurance PAC

TAN KHOON GUAN

Heng Lee Seng LLP

MICHAEL HENG

Kreston David Yeung PAC

DAVID YEUNG PAC

Reanda Adept PAC

YIN KUM CHOY

Infinity Assurance

KUAH HONG WOON

Helmi Talib & Co

HELMI TALIB

3E Accounting

LAWRENCE CHAI

Fiducia LLP

WAYNE SOO

Pinebridge LLP

EDDIE LEE

TOTAL

15,346

14,917

DATA PROVIDED BY COMPANIES. SURVEY PERIOD: SEPTEMBER-OCTOBER 2017. *DATA RETAINED FROM 2016 REPORT

SINGAPORE BUSINESS REVIEW | JANUARY 2018

Accounting SURVEY

Singapore’s promising accountants aged 40 and under

ingapore Business Review showcases innovative and industry-leading accountants under the age of 40. They are ranked according to age. 1

Lawrence Chai, 32, 3E Accounting Throughout his career, Lawrence Chai was progressively involved in the audits of listed and non-listed companies of various industries, as well as in business advisory work including due diligence reviews for both local and overseas companies and special investigation engagements. Lawrence has started his own accounting firm, 3E Accounting Pte. Ltd., in 2011 and 3E Accounting International Network. 2

Chua Soo Rui, 32, CA Trust PAC Soo Rui is an audit partner at CA Trust PAC. In her 12 years in CA Trust PAC, she has gained valuable experiences and exposures to audit and assurance, taxation, and investigation engagements. She has managed IRAS tax audits and was the co-lead consultant of several Spring Singapore supported business consulting engagements. She is a graduate of Temasek Polytechnic (TP) where she mentors undergraduates by giving career guidance. 3

Charlene Chai, 36, Ardent Charlene started her professional career 13 years ago in audit and business advisory. She joined Ardent when it was a newly set up firm . Together with the 3 like-minded co-founders, she helped to grow Ardent into a multi-disciplinary, awardwinning practice. Charlene became a partner at age 32 and manages a diversified portfolio of clients. She is a co-lead in the firm’s recruitment and takes a keen interest in the development of young professionals. 4

Serena Yong, 36, Deloitte Serena, an Audit & Assurance partner based

in the Singapore office of Deloitte Southeast Asia, believes strongly in talent development and mentorship. Specialising in servicing clients in the financial services industry, her key clients include some of the world’s largest global financial institutions that have operations in Singapore and the Southeast Asian region. In 2017, she mentored two female undergraduates from the Nanyang Business School. 5 Jessica Wahjudi, 36, Hawksford Jessica is the assistant manager of the Accounting & Tax team in Hawksford Singapore. Jessica’s role involves providing accounting and tax services to clients and providing advice relating to financial reporting and tax matters. She also manages the teams’ accounts allocation/assignments and designate relevant executives to each client. 6

Aylwin How, 37, Deloitte Aylwin is an Audit & Assurance partner at Deloitte Singapore and Southeast Asia, specialising in providing assurance and advisory services to financial institutions such as banks, broker and securities dealers, and commodity trading companies, operating in the Southeast Asian region. He holds part-time instructor roles at NTU’s Nanyang Business School and the Singapore University of Social Sciences. 7

Timothy Braun, 37, Grant Thornton Timothy, an Audit partner at Grant Thornton Singapore, has worked within the Grant Thornton network for over 14 years. He joined the Singapore practice as a US Secondee in 2011 as part of a highly selective international rotation programme, and has been an

integral part of building the firm. His clients include both local and multinational companies, specialising in US-based companies with operations in Singapore and Asia Pacific. 8

Joshua Yan, 38, Deloitte Joshua oversees all talent matters including hiring, retention and development for the Deloitte Financial Services Industry team in Singapore. He is an Audit & Assurance partner at Deloitte Singapore and Southeast Asia specialising in banking and securities in the financial services industry. His key clients include top local and regional companies and financial institutions. He also serves a number of global financial institutions and MNCs with operations in Singapore and Southeast Asia. 9 Yeoh Swee Yen, 38, EY One of the youngest women to be made a partner at EY, Swee Yen primarily provides audit, regulatory, and accounting advisory services to clients in the Wealth and Asset Management industry. She has worked with EY globally in major financial centers including Singapore, New York, and Dublin. She also provides mentorship to a number of professional women in accounting and is an advocate for working mothers under the EY Professional Women’s Network. 10 Elis Tan, 39, RSM Elis is director of Transfer Pricing at RSM, with a notable domestic and international track record. Her experience as the Asia-Pacific head of transfer pricing at an MNC, coupled with her tenure at a Big 4 firm in China, and the tax policy division of the Ministry of Finance, allows her to consider transfer pricing issues from multiple perspectives, and give clients practical solutions to effectively manage their transfer pricing obligations in Singapore and overseas. Elis actively supports transfer pricing education, including conducting pro bono courses at the ISCA. SINGAPORE BUSINESS REVIEW | JANUARY 2018

Legal briefing

Regulating Singapore’s robo-advisers The sudden boom in robo-advisory has prompted the MAS to consider regulating robo-advisory services.

n March, OCBC Bank, one of Singapore’s three biggest lenders, partnered with local financial technology firm WeInvest to launch robo-advisory services for investors. The bank said robo-advisory is no longer an industry buzzword, and its entry—along with the recent influx of other robo-advisers like StashAway, Bambu, and Smartly.sg—prompted the Monetary Authority of Singapore (MAS) in June to begin consultations on how to regulate robo-advisory services. Legal experts explained the consultation paper looks not only to create an appealing regulatory framework for robo-advisers, but also to protect Singaporean investors. What are the key points in the consultation? MAS sets out the licensing and regulatory framework applicable to digital advisers, proposes further legislative amendments to facilitate the provision of digital advisory services in Singapore, and sets out its expectations on how the unique characteristics and risks of digital advisory services should be addressed, said Stephanie Magnus, principal, corporate & securities practice group and head, financial services & regulatory practice at Baker McKenzie in Singapore. The agency is proposing two key processes to facilitate the provision of digital advisory services, said Magnus. First is to relax the corporate track record requirement for retail fund managers, possibly waiving requirements to demonstrate a minimum fiveyear corporate track record in retail fund management for digital advisers whose agents have relevant collective experience in fund management and technology. MAS also proposes to waive the requirements for certain portfolios that are heavily comprised of exchange-traded funds (ETFs) as well as digital advisers that go through an independent post-authorisation audit on key risk areas after its first operating year.

The requirements to demonstrate a minimum five-year corporate track record in retail fund management for digital advisers may be waived.

Second is to grant case-by-case exemptions from the requirement to collect full information on the financial circumstances of a client. “The MAS is prepared to grant exemptions from such requirements to fully-automated client-facing tools—or digital advisers with no human adviser intervention in the advisory process—advising on traditional ETFs if appropriate safeguards are put in place to filter out unsuitable clients and reduce risk of misbuying,” said Magnus. In examining the current regulatory regime, the MAS has noted that the legislation needs to be reviewed to 44

SINGAPORE BUSINESS REVIEW | JANUARY 2018

Smartly.sg is is one one the the robo-advisory robo-advisory platforms platforms that that launched launched in in 2017 2017 Smartly.sg

ensure that the safeguards remain relevant, said Siddhartha Sivaramakrishnan, partner at Herbert Smith and Freehills. Providers of digital advisory services would need to put in place adequate safeguards in order to manage the new technology risks associated with the algorithms and the online tools that such providers rely upon. Stephanie Magnus

Siddhartha Sivaramakrishnan

Kim Kit Ow

What legal safeguards is MAS looking to put in place? Specifically, robo-advisers are expected to put in place a robust framework governing the design, monitoring, and testing of algorithms; hiring employees with competencies and expertise to develop and review the algorithm; and ensure these algorithms continue to perform as intended through the use of regular compliance checks and other policies and controls. MAS is also seeking feedback on the extent to which the robo-adviser should disclose its algorithm to clients, including circumstances under which its algorithm may be overridden or its service suspended, and any adjustments to the algorithm, to protect clients in situations of actual or potential conflict of interest.With regards to accountability, MAS expects that the board and senior management of robo-advisers will be responsible in observing and maintaining these safeguards, and ensuring that their companies nurture a sound risk-management culture and environment. How should the proposals be viewed? The MAS proposals look to promote better access to digital advisory services and must be seen as a positive development as it keeps up with global trends, said Kim Kit Ow, partner, banking & finance group at Bird and Bird in Singapore. “To the extent that the requisite safeguards are built into our regulatory infrastructure, there is no reason why such an initiative should not be seen as a progressive step in the right direction,” she said. “We expect to see more developments in this space and we look forward to see how Singapore’s approach towards digital advisory services will evolve.”

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marketing Briefing

Need for speed: UX goes AI in 2018 User experience (UX) will be shaped by AI-led digital solutions in the digital marketing world.

hen Qualtrics commissioned a survey in user experience (UX), it found that four in five customers in the Asia Pacific (APAC) region would immediately switch brands upon poor UX. As online engagement increases and digitalisation sweeps Southeast Asia, customers are finding more about the best brands and online platforms available for their specific needs, posing a huge challenge to marketers and their firms’ digital solutions. Benny Chow, chief marketing officer, Firefly Photography SG, said that a firm’s UX strategy must be able to provide users with a seamless, frictionless digital experience across many channels and platforms that can be readily aligned with users’ day-to-day activities. “Today’s consumers are tech-savvy, smart, and constantly looking for instant gratification. Users now look beyond quality content, which is why UX elements such as the interface, usability, and speed hold significant weight. A brand is highly likely to lose potential business if it does not provide a seamless and pleasant UX,” added Clara Low, marketing manager, Quorier. Where UX meets AI With more companies embracing artificial intelligence (AI) and robotics in their operations, marketers must be able to come up with a UX strategy that can easily adapt to the fast-paced world of digitalisation. From booking a taxi app through Siri to discovering the best restaurants through a chatbot, users in APAC, particularly in Southeast Asia, are fast seeing the growth and innovation in AI-led digital solutions and digital marketing. Qualtrics also found that almost half of users in Singapore and Hong Kong would be satisfied dealing with an organisation staffed by AI. Marketers have in fact gone beyond that user expectation by directing UX to be more response-based. Chow added that digital marketing will soon be all about responsiveness, wherein chatbots and platforms are not only quick to respond, but are also highly-reliable and accurate in their answers.

SINGAPORE BUSINESS REVIEW | JANUARY 2018

Furthermore, marketers must be able to understand the user experience for new products, websites, mobile apps, and prototypes. According to Foo Mao Gen, head of Southeast Asia, Qualtrics, marketers must make informed decisions by testing various aspects of product design; discover, optimise, and evaluate the genuine UX; understand each user interaction prior to conversion; and nail the design and experience early in a product’s life cycle.

Digital marketing will soon be all about responsiveness, wherein chatbots and platforms are not only quick to respond, but are also highly-reliable and accurate in their answers.

Benny Chow

Clara Low

Foo Mao Gen

“Millennials in Southeast Asia are becoming a key target demographic for marketers. They are amongst the fastest in the world to adopt mobile technologies. Crucial to a customer experience program is the ability to collect feedback from consumers through multiple mobile customer touch points. Once this feedback is collected, marketers need to be able to respond to consumers in realtime. With this generation being accustomed to the norm of instant feedback, if the brand is not responding within the same day, they may lose them to their competitors,” Foo added. Seamless integration Marketers are also expected to seamlessly integrate payments in their UX strategy. Chow said that just by making payments easier through one-time pins and less “progress bars”, firms are already maximising their UX. Low of Quorier added that marketers should note that UX is also highly visual, hence they must be ready for trends such as moving graphics, typography, short clips, bold and loud content, and optimised navigation tools. “Consumers are changing the way they research and buy products. Hence, organisations should be clear about possible obstacles, sources of motivation, or what drives satisfaction. Consistently tying journey performance, instead of one-off interactions, to actions, will help organisations deliver a more personalised customer experience that in turn will encourage loyalty and repeated purchases,” Foo added. The connection is clear between a company’s UX strategy and its ROI. In fact, UX strategies in digital marketing have become a prerequisite for brands in order to keep up with, if not exceed, user expectations. However, marketers and their firms should not be impulsive in rolling out solutions. Foo said by performing specific UX research, marketers are able to understand, evaluate, and optimise customer experience, thereby saving time, money, and effort from developing the wrong product.

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Event coverage: 2017 NetEvents global Summit

MK Palmore, Dr Ronald Layton, and Michael Levin spoke at the Opening Keynote Session

How companies can defeat modern-day hackers

Find out who the hackers are, what they want, and how your company can prevent the next cyberattack that could cost you billions.

he recent data breaches and cyberheists across the world unmasked one of the scariest enemies of private and public entities alike: cyber criminals. And if the progression of the recent attacks are anything to go by, we can only expect these perpetrators to become even more sophisticated and aggressive over time. This was one of the topics discussed at the 2017 NetEvents Global Press & Analyst Summit in San Jose, California held on September 27 to 29. In one of the keynote sessions, MK Palmore, information security risk management executive at the Federal Bureau of Investigation San Francisco, said the most prolific computer network intrusion activities throughout the world are those motivated by financial concerns. He said the attackers who do it with almost 100% anonymity are “mostly self-taught males aged 14-32 years old who have access to the dark web and to a limitless amount of information.” What’s more alarming is the fact that these attackers, particularly in the financial sector, all know each other. Ronald Layton, deputy assistant director at

SINGAPORE BUSINESS REVIEW | JANUARY 2018

When you look at the analysis and the pathology of how malware gets on a system, you’re going to find that the major percentage comes from clicking on an email attachment.

the US Secret Service, said, “They all are collaborative, they all use Russian as a communications modality.” He added that the technological sophistication and capability of threat actors have increased. “The toolsets that you see today that are widely available would have been highly classified 20 years ago. Sophistication has gone up exponentially,” he said. So with these threats looming, how can companies prevent the attacks? Michael Levin, former deputy director of the US Department of Homeland Security, said it all boils down to the basics of security. “We’re hiring new people and putting them in important roles, but we’re not telling them what they can and cannot do. Many organisations do not want to take the time to educate their people. It’s about time that every institution starts figuring out a way to educate people to protect themselves,” he added. Layton concurred and said organisations pay a lot of attention to what the ‘bad guys’ will use to further their own illicit gain without checking if proper internal barriers are in place. “Convenience is the new nicotine, and the new caffeine

is curiosity. When you look at the analysis and the pathology of how malware gets on a system, you’re going to find that the major percentage comes from clicking on an email attachment. Human factors and the psychology of cyber is something we must pay attention to. One way to counter this is through cyberhygiene,” he noted. This message, whilst simplistic, is not being followed by businesses. “When you go through information security training, there are basics you are taught about protecting systems. We always find that there’s some gap in coverage in security that boils down to the fundamental issue of security protection. We’re talking about simple things such as patch management, audit and log management, security and vulnerability assessments, or buy-in from leadership and management,” Palmore said. Strengthening cyberdefence Enterprises can do three things to up their game against cybercriminals, according to Palmore. First, there has to be a commitment from the leadership to invest in cybersecurity. Second, they have to practice the information security fundamentals, and lastly, they have to engage in information sharing. “As a business, you do not see the entire cyber threat landscape. You have to plug yourself into an intelligence apparatus,” he added. In the private sector, Levin said the concept of encryption is an important piece of the puzzle. “One of the things we see all the time is people send emails with very sensitive information. This is why we are seeing more organisations encrypting their emails. So as the crooks get more sophisticated, the private sector needs to be more sophisticated,” Levin said. He added that it is equally important for firms to establish a practice that creates a sense of community for security. “If you can create that sense within the organisation, you’ll see a better result,” he said. By Roxanne Uy

RECOGNISING MOST OUTSTANDING LISTED, INTERNATIONAL and LOCAL the

COMPANIES in SINGAPORE To ﬁnd out how your company can nominate and be recognised for next year’s awards, contact

JULIE ANNE NUÑEZ julie@charltonmediamail.com +65 3158 1386 ext 221

SINGAPORE BUSINESS REVIEW | JANUARY 2018