Singapore Business Review (June - July 2017) by Charlton Media Group

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$ALARY SURVEY

• Why middle managers will have to make do with less in 2017 • Check out how much you should be paid

WHERE WILL THE FOREIGN WORKERS SLEEP? WHY EN-BLOCS ARE ON THE RISE CROUCHING PANDA, HIDDEN ROO: GETTING THE HOP ON FOOD DELIVERY BRIEFING: WHAT YOU NEED TO KNOW ABOUT SINGAPORE’S ‘HANGING’ PANELS 77 73

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Our annual Salary Survey revealed that only 22% of employees will experience a pay hike this year, but the raise will be so small it’s almost negligible. Heftier paychecks are on hold for most of Singapore’s workers as employers brave a lacklustre economic outlook this year. With a dearth in highly-skilled talent amidst a candidate-saturated market, firms are taking a more conservative approach in increasing salaries, offering bonuses, and taking in fresh blood. Meanwhile, 2016 has been a rather bumpy year for Singapore’s Venture Capital (VC) landscape, but the uncertainties, experts say, may likely only be a small bump. Find out how Singapore’s VC scene fared last year compared to the rest of the region and beyond, what industry will prove to be the “unicorn” of Singapore’s VC, and how the sector will ride out the rest of 2017. We also looked into the food delivery services sector in Singapore, and found out that there is an estimated $250m dispatched to hungry diners’ homes every year. The market could grow up to $600m by 2021. We spoke to delivery giants Foodpanda and Deliveroo, and other market players to find out how they are battling for long-term sustainability in the city state. Enjoy the issue!

Tim Charlton

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SINGAPORE BUSINESS REVIEW | JULY 2017

CONTENTS

COVER STORY Why middle managers will have to make do with less

REGULAR

18 Stiffening competition could stifle

customers’ wealth

Singtel but dividends still secure

09 En-blocs are on the rise

20 Economy Watch 24 Financial Insight 42 Legal Briefing

10 Foreign workers face bed crunch

44 CMO Briefing

RANKINGS

12 Why the sustainability of the economic growth is questionable

Analysis Crouching Panda, hidden Roo: Getting the hop on delivery

FIRST

FIRST 08 Banks find profit in

Analysis Don’t leave the solar panels ‘hanging’

36 Top business schools gear up

14 Are millennials saving for retirement?

for MBA upgrade in 2017

EVENT COVERAGE 48 See how Bahrain follows

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 | JULY 2017

Singapore’s fintech footprint

For the latest business news from Singapore visit the website

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

HR & EDUCATION

One in four Singapore candidates submit false information

ComfortDelGro’s taxi business to keep struggling until 2H17

Singapore millennials want to retire early: survey

Almost one in four (24.7%) background checks conducted in Singapore in 2016 contained discrepancies. Singapore’s discrepancy rate remains above the APAC average (21.5%), but has seen a notable decrease from 2015.

Although ComfortDelGro’s 1Q17 results came in largely within expectations of analysts at OCBC despite a 2.4% YoY decline in revenue to $972m, it is expected that CDG’s taxi business will still be enduring troubles to come.

According to HSBC, the majority of millennials in Singapore are expecting to retire at 60 – two years less than the overall average of those surveyed. Only 16% of millennials expect to continue working after 65.

FOOD & BEVERAGE

Why ThaiBev is expected to ditch its stakes in Frasers Centrepoint According to UOB KayHian, ThaiBev would ditch its Frasers Centrepoint shares whilst increasing stakes in Fraser and Neave. Meanwhile, the brokerage firm also noted that the group’s goal of having more sources of income outside Thailand remains on track.

TRANSPORT & LOGISTICS

SINGAPORE BUSINESS REVIEW | JULY 2017

TRANSPORT & LOGISTICS

Is SingPost waiting in vain for e-commerce gains? Singapore Post’s recent net loss of $65.2m proves it still has a long way to go in delivering its e-commerce promise. The loss is due to the impairment of its intangible assets for TradeGlobal. According to OCBC Investment Research, SingPost faced setbacks in e-commerce segment.

TELECOM & INTERNET

This chart shows the drastic fall in StarHub’s payTV subscribers If there’s one proof that can show how drastic the fall in StarHub’s payTV subscriber is, it would be this chart from OCBC Investment Research. According to the firm, StarHub’s outlook remains weak as the pressure from over-the-top (OTT) services and piracy on Pay TV are expected to persist.

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SINGAPORE BUSINESS REVIEW | JULY 2017

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FIRST wealth management accounts for approximately 15-20% of UOB’s income, the bank’s wealth management segment has more than doubled since 2010. Krishna Guha, equity analyst at Jefferies, notes that whilst data disclosure is not granular enough, it is interesting to note that revenue margins for OCBC and DBS wealth management are 1.7% and 1%, respectively, and the ratios have been quite stable. “Fee constitutes about 45% of wealth revenue which is higher than those at group level (30-35%). The stable revenue margins suggest that even though wealth revenue has linkages to market sentiment, DBS and OCBC most likely have a good mix of the key revenue sources, namely financing, management/advisory, and market access/transactions,” Guha adds.

Going obsolete

Whilst Singapore has a highly-skilled workforce, some of the workers worry that their skillsets are becoming obsolete. The 2017 Kelly Services and Capita Salary Guide revealed that whilst Singapore workers may be confident of their market power today, uncertain economic conditions, the anticipated rise in overall unemployment to 2.3%, and the steady increase in redundancies since 2010 has given rise to concerns about their future. Around seven in 10 workers mentioned that their top concern is of their knowledge and skills becoming obsolete. This thinking was seen the most amongst IT workers, with 64% of them saying so. Meanwhile, this concern is also apparent in 58% of professionals, managers, executives, and technicians (PMETs), 61% of engineers, and 59% of finance and accounting workers. Gen Y vs Gen X The concern is also higher among Gen Y workers (74%) as compared to Gen X workers (63%) where almost four in 10 workers (37%) cited being more concerned about layoffs. Approximately three in 10 Singapore workers indicated layoffs as their biggest concern. Kelly Services said Singapore’s workers are seeking ways to be as resilient as possible. More than eight in 10 workers (83%) indicated a desire to grow their skill set and recognised that their skills and knowledge will need to continue to evolve and grow. This is consistent across both Gen Y (84%) and Gen X (83%) workers and employees around the globe, with workers in APAC (82%), Americas (80%) and Europe, Middle East and Africa (86%) echoing a similar sentiment. Foo See Yang, managing director and country head for Kelly Services Singapore said whilst industries experiencing high growth are in a better position to provide competitive remuneration, employee engagement and retention goes beyond the employee’s pay packet. 8

SINGAPORE BUSINESS REVIEW | JULY 2017

Singapore banks’ wealth investments pay off

Banks find profit in customers’ wealth

ingapore banks’ efforts to invest in wealth management seem to be paying off quite well, if their most recent financial performance is anything to go by. According to Chia Shuhui, senior analyst at BMI Research, wealth management has a considerable potential for growth and Singapore banks would continue to develop their expertise in this area as strong economic growth in Southeast Asia leads to increased demand for such products. OCBC’s wealth management fee income increased by 50%, which led to a 14% jump in the bank’s net profit in the first quarter of 2017. Wealth management now accounts for almost a third of the group’s total income. Chia also notes that DBS’ net profits were boosted by a considerable growth in wealth management (increasing by 26% y-o-y), with wealth management accounting for 15-20% of the bank’s total income. Similarly, UOB’s profit inched up 5.4%, thanks to the 56.1% increase in fund management and wealth management income. Whilst

Singapore banks are well-placed to capitalise on the growing middle class and the growing demand for wealth management products.

A wealth management hub BMI Research’s Chia reckons that given the large size of the ASEAN market, Singapore banks are wellplaced to capitalise on the growing middle class and the growing demand for wealth management products. “ASEAN’s population of 625m accounts for approximately 8.8% of the global population and consists of a rapidly rising middle class. We forecast ASEAN to grow at an average of 5% over the next decade (compared to the global average of 2.9%),” he adds. OCBC bought Barclays’ private banking business in Singapore and Hong Kong in 2016, and now plans to buy National Australia Bank’s private wealth and retail banking business in these two cities. DBS also acquired ANZ’s wealth business in five markets.

Rising affluence to provide tailwind for demand for wealth management

Source: National sources/BMI

FIRST more than 75% in the last five years — from 13,255 units in 2011 to 3,095 units in 2016.

Is the collective sales market poised for recovery?

En-blocs are on the rise

hen the year 2016 saw three deals worth over $1b sealed in the residential collective sales market, analysts wondered if the two-year drought season in this sector was finally coming to an end. In May 2016, a unit of Qingjian Realty (South Pacific) Group bought the 358-unit Shunfu Ville in Bishan for $638 m. The sale, however, is pending court decision, but if successfully concluded, JLL notes it would be the largest collective sale in 9 years. The 14-unit Harbour View Gardens in Pasir Panjang

was sold to Roxy-Pacific Holdings in August for $33.25m. This was followed by the $334.2m sale of the 175-unit Raintree Gardens in Potong Pasir to an associate company of UOL Group in October. This wave of deals came as developers turned to the collective sales market to satiate their appetite for land after policymakers cut back supply in the Government Land Sales (GLS) programme. According to JLL, the planned quantum of private homes on the confirmed list in the GLS programme was trimmed by

There are prospects for the collective sales market to follow on the momentum of 2016, but it is unlikely to be exuberant.

A viable alternative Demand for sites in 2017 is likely to remain robust. “With only five sites on the confirmed list in the first half of 2017, many interested parties will still not be able to secure sites and will be compelled to continue bidding for other sites competitively. Under these circumstances, private or collective sale sites would be viable alternatives to GLS offerings,” notes Tan Hong Boon, regional director for capital markets at JLL. “There are prospects for the collective sales market to follow on the momentum of 2016, but it is unlikely to be exuberant. Many developers will be interested in collective sales opportunities but at measured price levels,” he adds.

Annual residential collective sales value vs. URA private property price index

Sources: URA, JLL Research 4Q16

The Chartist: More suburban office spaces will open next year The bulk of office spaces in the pipeline for 2018 will be in suburban regions, a chart from Colliers Islandwide office space supply shows. Around 2.7m sq ft of office space will be up for grabs next year, with suburban office spaces accounting for more than a third of the overall supply. The remaining will be equally shared by core business district and city fringe areas. For this year, the same amount of office space is in the pipeline. More than 90% of these spaces are located in CBD. In 1Q17, there was a net supply of around 0.9, sqft. However, CBD office supply will continue its downtrend which started in 2012, as shown in the Savills chart. In 2011, supply peaked at 3.5m sqft and went down to 1.5m sqft in the year that followed. It is expected to slump to as low as 0.6m sqft before it can post Source: Colliers International a 2.1m sq. ft. rebound come 2021.

Net demand, net supply and vacancy rate of CBD Grade A offices, 2018Q1/2017

Source: Savills Research and Consultancy

SINGAPORE BUSINESS REVIEW | JULY 2017

FIRST Ambassador briefing UKRAINE

Foreign workers face bed crunch

Private residential property rental index, breakdown by region

Dmytro Senik had to move to the Lion City after he was appointed by Ukrainian president Petro Poroshenko to be the Ukrainian ambassador to Singapore. Senik previously served as director general and chief of staff to the Foreign Minister. Prior to that, he served as political officer and congressional liaison at the Embassy of Ukraine in Washington D.C. He also advised the Foreign Minister and Deputy Prime Minister on foreign policy, development of IT, and education reform. Since assuming his duties in Singapore in January 2016, Senik saw a significant improvement in the relationship between the city state and Ukraine. What is the current state of business relations between Singapore and Ukraine? I would call it very promising and optimistic. According to our statistics, the bilateral turnover has increased from around US$51.5m in 2015 to US$83.4m in 2016. Trade has been rising steadily, though volumes are still far from corresponding to the untapped potential of our countries. Where are the opportunities for Singaporean businesses? Shipyards and sea ports management, agriculture, manufacturing, and R&D are some fields where potential is immense. Giants such as Keppel, Surbana Jurong, and others have enormous opportunities in Ukraine, as the Ukrainian Government works on promoting industrial parks and infrastructure projects to make the country a logistical hub and a convenient sea gate on the Black Sea. Any business events that Singapore companies can get involved in? We are currently organising a business forum in Singapore in November, where companies can have a better understanding of the trade and investment opportunities in Ukraine. We are happy to provide more details on the event to interested companies.

SINGAPORE BUSINESS REVIEW | JULY 2017

ubdividing apartments into small sublets has been a mainstay of the cheaper end of the housing market in Singapore, but has drawn the ire of neighbours who are faced with a lot of people crammed next door. To alleviate overcrowding in apartments, the Urban Redevelopment Authority (URA) decided to reduce the maximum occupancy in private dwellings from eight to six unrelated people effective May 15. Apart from reducing the demand for bunk beds in Singapore, will this have an effect on rents and how hard will it be to enforce? Avoiding nano-apartments Rental volume in April 2017 was 15.8% lower than 4,336 units rented in April 2016. This could be due to landlords subletting individual rooms within their units instead of renting out whole units. “Some of them have installed internal partitioning to create more rooms. There could be instances whereby a 3-bedroom apartment could evolve into a 6-8 bedroom apartment,” says Eugene Lim, ERA Realty Network’s key executive officer. JLL Singapore head of residential leasing Juliann Teo reckons this move by the government is to ensure that the players do not churn out nanoapartments as they do in uber-expensive

Sources: URA, OrangeTee Research

Juliann Teo

Ismail Gafoor

Eugene Lim

Hong Kong. “Over the years, the size of residential properties is trending smaller. The slash on occupancy cap is likely to ensure that overcrowding and its associated hazards do not become a norm,” Teo explains, noting that this will also spur take up for smaller studio unit-types and one-bedroom apartments. Teo added demand for private properties may likely see an increase and could perhaps uplift rents, given that from a mathematical perspective, those housing units with eight occupants would have to displace two to keep up with the limit. PropNex Realty CEO Ismail Gafoor notes that the recently-imposed cap of six is a reasonable number, taking into consideration the smaller sizes of condominiums in recent years. He says private properties are meant to be exclusive, and the occupancy cap will help maintain this exclusivity. Policing the policy changes may prove challenging, but the squeeze on landlords has begun and for tenants they will get to enjoy more space.

Mobile App Watch

See how MyWork links up job seekers and head hunters When Rebecca Chiu realised that there was no proper platform that helped her to source, track, and review the people she recruited in her Thai-tea chain, it drove her to develop MyWork, an app that provides a holistic recruitment platform for businesses. The app allows a business to post and fill a job opening within a matter of hours, with nearly 35,000 job-seekers on the app who are constantly looking for jobs. It also has a jobs bank of over 250 businesses with hourly rates and wages, a reviews and ratings system, and a messaging feature. “Recent improvements to the app include auto-generated pay-slips with the inclusion of employer CPF contribution calculations, as well as a record of the sum total of monthly payments. These additional features are in line with existing Ministry of Manpower and Central Provident Fund MyWork Global team policies,” says Chiu.

FIRST

Why the sustainability of the economic growth is questionable

t may look like the Singapore economy is finally picking up with exports showing robust growth and GDP staying well above expectations. But as far as analysts are concerned, there is not much reason to cheer as these good-looking figures are questionable. “The Monetary Authority of Singapore acknowledged the uptick in external activity in its latest Macroeconomic Review and expects growth in 2017 to be anchored by trade-related sectors, mainly driven by IT-related segments,” says Edward Lee, head of ASEAN economic research at Standard Chartered Bank Singapore. “Nevertheless, the central bank also acknowledged that the pick up in manufacturing activity was driven primarily by the semiconductor and precision industry segments, stating that any recovery in the rest of the manufacturing sector likely remained patchy. We believe this phenomenon reflects a lack of broad-based demand behind the robust growth numbers. We have reiterated this view since the start of the year and remain cautious about the sustainability of such robust performance,” he adds. On the contrary, Zhixiang Su, an economist at Morgan Stanley, believes that there may still be economic reasons

Singapore’s potential GDP growth trends

for Singapore to resume popping the champagne. Potential GDP growth, he says, could average 3% over the 2016-2030 period. Addressing labour force participation According to Su, Morgan Stanley’s estimates are based on the following: they incorporate the Population White Paper assumption that working age population growth will slow to an average of 1.5% between 2016 and 2020 and 1.0% between 2020 and 2030. “However, we assume that policy efforts to combat the slowdown in immigration policy by lifting the labour force participation rate bear fruit. The labour force participation rate increases at a 20Y historical average run-rate, taking it from 67.7% in 2015 (de-trended) to 70.7% in 2030, as the higher dependency ratio, longer mortality, and rising re-employment age urge greater labour participation,” says Su. “This will lead growth in the working population to rise by 1.8% YoY between 2016 and 2020 before moderating to 1.3% YoY between 2020 and 2030 (versus a 20Y average of 2.8% YoY),” he adds. In the near term, Su adds that he sees upside risks to his base case GDP forecast given how the cyclical recovery, driven by improving external demand and manufacturing output, is playing out. “Our

Sources: CEIC, DOS, Morgan Stanley Research

bull case GDP forecasts for 2017/2018 are 2.3%/2.8%. Over the longer term, we think potential GDP growth in Singapore will average 3.0% for 2016-2030, which will still remain at a premium compared to other advanced economies. Our medium-term potential GDP growth estimate is in line with policymakers’ growth target as set out in the Committee on the Future Economy (CFE) report, which stands at 2-3% over the next decade. We elaborate on our potential GDP growth estimate below,” he explains. He further explains that the improving economic outlook would help drive an inflection in home prices come 2018. “Property market bears expect slower population growth, an ageing population, and a structural growth slowdown to weigh on the long-term property market outlook. We disagree and believe home prices will double by 2030,” Su adds.

OFFICE WATCH

JustCo to unveil the city’s largest coworking space The two floors at UIC Building will now house JustCo’s newest and largest interconnected coworking space in Singapore. JustCo’s CEO Wan Sing Kong says this opens the opportunity for entrepreneurs and startups to move into this location and rub shoulders with business giants like Facebook. “Plus it enables the leading corporates to delve into coworking without having to compromise their location,” he says. JustCo’s biggest clients include DropBox, Japanese messaging app Line Corp and U.S. web security firm CloudFlare. There will be three new features in the space. First, the JustCo Venture Lab, which will be a dedicated area offering curated partnerships to early stage businesses like fintech. There will also be two dedicated garage collaboration spaces. These will be Silicon Valley style project spaces for teams to share their ideas and test out prototypes. Lastly, there will be a “transformer room,” a special adaptable area that can be tailored to suit special activities. 12

SINGAPORE BUSINESS REVIEW | JULY 2017

Garage

Quiet pods

Events space

Hot desking

FIRST ARE SINGAPORE’S

The 4th Industrial Revolution is upon us, disrupting how we work, live and play. Organizations need to embrace digital transformation to remain relevant in the new economy.

BUSINESSES READY

NUMBERS FOR DIGITAL DISRUPTION?

DIGITAL GAPORE’S ARE SINGAPORE’S DISRUPTION BUSINESSES READY

The Microsoft Asia Digital Transformation Study involving 118 business leaders in Singapore tells us more.

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SINGAPORE BUSINESS REVIEW | JULY 2017

people believe that employer pension schemes may go bust or be unable to pay out to millennials. In terms of life expectancy and retirement planning, 68% of people, and 64% of millennials themselves, believe the millennial generation will live much longer and will need to support themselves for longer. Although there is an apparent ‘reality gap’ in millennials’ retirement expectations, majority of them have started to plan for their retirement unlike their global peers, where 29% have yet to start. According to the report, 75% of millennials have started saving for retirement, whilst 65% say they have cut back on their expenses in order to save. Over half or 55% are actively seeking information to guide their financial decisions. Millennials are also more financially savvy compared to other generations, with 45% actively moving money around to ensure that they get the best returns.

Source: HSBC

Co-published corporate profile

AIA Diabetes Care: Ensuring a sweeter future for diabetics in Singapore Insurance giant AIA fills in the gap with Singapore’s first diabetes insurance plan. everyone deserves the coverage they need, especially after being diagnosed with a chronic illness,” says Ms Ho Lee Yen, Chief Marketing Officer of AIA Singapore.

Empowering diabetics to live life to the fullest

hese days, it is already quite easy to gain peace of mind and get insured against nearly all types of diseases, thanks to a number of comprehensive insurance packages being offered to the public. But the situation may be less assuring for those afflicted with diabetes. A serious condition Diabetes is considered one of Singapore’s most serious illnesses. According to data from the Ministry of Health, in 2014, 440,000 Singaporeans aged 18 and above had diabetes. This number is projected to balloon to 1 million by 2050.1 Dr Abel Soh, an endocrinologist at Mt Elizabeth Medical Centre, notes that the number of people with diabetes mellitus in Singapore is growing at an alarming rate, with more diagnosed at a younger age. In fact, Singapore General Hospital data reveal that more people are getting diabetes before 40. “To make matters worse, many individuals do not even know that they have diabetes until complications arise,” adds Dr Soh. Diabetics are also at a higher risk of developing other conditions such as cardiovascular issues, blindness, stroke, and even kidney failure. But despite these worrying statistics, only a small number of Singaporean diabetics find themselves properly insured. In order to meet this demand for insurance for diabetics, insurance giant AIA Singapore recently rolled out AIA Diabetes Care, Singapore’s first insurance plan designed for Type 2 diabetics and pre-diabetics. “Dealing with diabetes is a lifelong challenge, and we want to help Singaporeans and their families as they fight their personal battles. We believe

Generous benefits The plan provides “access to diabetes complications insurance for those who need it the most, but find it impossible to obtain – by ensuring hassle-free underwriting, immediate underwriting decision, and no extra premiums”, says Ms Ho. She also adds, “With AIA Diabetes Care, we hope to equip individuals with the tools to successfully manage their condition, and also give them the added peace of mind from knowing that they are adequately covered. Ultimately, our aim is to empower Singaporeans and their families to live longer, healthier, better lives.” AIA Diabetes Care provides key benefits for its policyholders, firstly by guaranteeing easier access to protection and coverage for five key diabetes-related complications – blindness, kidney failure, stroke, heart attack, and coronary artery by-pass surgery – with guaranteed level premiums that remain unchanged throughout the whole policy. Policyholders may also opt for an add-on protection with Cancer Cover, providing additional protection for early or intermediate stage cancer and major cancer. As a type 2 diabetes, you can still continue to live a fulfilling life by leading an healthy lifestyle through eating healthily, exercising more and losing weight, going for regular screenings, stop smoking and reducing alcohol in-take2 - A 1% drop in HbA1C levels lowers the risk of diabetesrelated complications significantly – such as amputations by 43% and microvascular complications by 37%. To motivate positive behavourial change, AIA Diabetes Care features several AIA Vitality enhancements that rewards you for each healthy choice you make, however small. AIA Vitality members are able to enjoy up to 15% discount on future premiums, discounted health screening

packages, and access to a healthy eating programme based on their Vitality Nutrition Assessment3 - A value unseen in any other insurance package. “We want to score against diabetes through protection, improvement, and prevention,” says Ms Ho. A powerful plan “As it is a chronic condition, I know of individuals with diabetes who struggle emotionally and financially, having to deal with the consequences of the disease,” says Dr Soh. According to Ms Ho, the rollout of AIA Diabetes Care is rooted in AIA Singapore’s strong belief in the success of private-public partnerships, especially in the area of healthcare. “We strongly believe that there is a significant role the private sector can and should play in this national movement to support the numerous government-driven initiatives such as the recently announced enhancements to screening subsidies to curb diabetes in Singapore,” she says. Ms Ng Ying Ying, a teacher with diabetes, recalls, ”As a type II diabetic, any diabetesrelated condition would be excluded from new insurance policies as a pre-existing condition. This meant that if I wanted to purchase additional coverage, my premiums would be very high or my existing condition may even be excluded. There were also no available insurance plans offering sufficient coverage for type II diabetes to begin with.” She is delighted that AIA Singapore is championing this cause with AIA Diabetes Care to give people easier access to protection and financial security. https://www.nrdo.gov.sg/docs/ librariesprovider3/default-document-library/ diabetes-info-paper-v6.pdf?sfvrsn=0 2 http://www.straitstimes.com/singapore/ health/how-to-reduce-risk-of-diabetes 3 Source: BMJ 2000;321:405, Association of glycaemia with macrovascular and microvascular complications of type 2 diabetes (UKPDS 35): prospective observational study, http://www.bmj.com/ content/321/7258/405 1

“With AIA Diabetes Care, we hope to equip individuals with the tools to successfully manage their condition, and also give them the added peace of mind.” SINGAPORE BUSINESS REVIEW | JULY 2017

startups

EatPlayLive offers a lifestyle that goes beyond just dining

atPlayLive is Asia’s premier lifestyle app offering exclusive dining, entertainment and leisure experiences. With an array of premium perks and privileges from more than 100 merchants and partners in Singapore alone, members can enjoy offers and deals ranging from fine dining restaurants to luxury spas and bespoke lifestyle offerings. “What sets EatPlayLive apart from some of the dining apps in the market currently, is that we offer an entire lifestyle that goes beyond just dining,” says managing director Julie Renyard.

“We have carefully curated an upmarket collection of perks and privileges that offer a complete lifestyle experience.” She says that the app includes deals that offer between 20% to 50% off the total bill, and these offers are available through the week and not just on weekdays or low peak periods. And for those who want to live it up, they have bespoke packages that let you take a helicopter flight over KL, take a Lamborghini out for a drive, cruise on a yacht, or get a pampering treatment at award-winning spas. The app is available in Singapore, Indonesia (Bali) and Hong Kong. It will also soon be available in Malaysia, Thailand, Philippines, and South Korea and with just one subscription, members can enjoy the privileges across the region. “From the coolest cafes, celebrity chef fine-dining restaurants, to pampering treatments at awardwinning spas as well as luxury yachts, helicopters and supercars at your disposal, we invite you to Eat, Play and Live as much as you like, at the places of your choice, with just a tap on your mobile phone,” says Renyard.

Homage is the ‘Uber for in-home care’

Homage is a web and mobile platform that provides on-demand caregiving to the elderly in Singapore. It combines curated and trained caregivers with smart technology that helps make the entire caregiving management process hassle-free. “At the heart of Homage is making sure our seniors can have the option of remaining in the comfort of their own homes as they age. It’s something we want for ourselves, family members, and friends, and we wanted to build the best type of service out there that can take care of that,” says Gillian Tee, cofounder and CEO of Homage. Whether it’s respite care to give the

SINGAPORE BUSINESS REVIEW | JULY 2017

main caregiver a break or longer-term continuous care for dementia patients, Tee says the team behind Homage wants to be able to provide a holistic home-care solution. She notes that finding and coordinating good quality care is hard, so she wanted technology to remove all the inefficiencies of managing care and matching the best caregiver to each unique care recipient. Each care professional goes through a rigorous selection process involving a background/reference check, CPR certification, tuberculosis screening, certified caregiver training for the nonnursing trained, in-person interviews, and onboarding sessions conducted by Homage’s clinical care operations staff, physiotherapist, and nurse manager. The current acceptance rate at Homage is less than 10%, which Tee says indicates they keep their quality high in a way that they know they can trust their own parents with their care professionals.

Check out Aerospring Gardens’ vertical greenery system

Aerospring Gardens is the manufacturer of a patentpending vertical aeroponic gardening system, designed for urban home gardeners who want to grow their own herbs, leafy greens, and vegetables in limited space. This garden employs water rather than soil to cultivate a diverse range of vegetables and greens, thus growing upwards instead of outwards, explains Nadine Keller, co-founder of Aerospring Gardens. Designed and manufactured in Toa Payoh, Singapore, this vertical gardening system allows you to grow up to 36 different edible plants and vegetables in limited space, says Keller. “It self-waters and requires little maintenance. It’s easy to set up and every pole includes little plant seedlings so that there is a garden from day one,” she says. The system includes everything one needs to start growing hydroponically. One just needs a balcony or outdoor space that enjoys a few hours of sunshine and a power plug. From hobby to business Aerospring Gardens was founded by couple Keller, 40, and Thorben Linneberg, 46, both having originally come from corporate backgrounds. Keller left a promising corporate career to join Linneberg in setting up Singapore’s first urban growstore. “The business was borne out of the desire to grow our own food at home and it started out purely as a hobby, there wasn’t any intention to start a business,” says Keller, adding that gardening was a surprising stress buster for her, whilst Linneberg enjoyed inventing and building his own hydroponic system. “As more and more of our friends and acquaintances saw and tasted what we were harvesting on weekends, they egged us on to develop the product further and turn it into a business,” says Keller. She says that because they supply seedlings with every system, they have provided over 20,000 herb, vegetable, and fruit seedlings to all of Aerospring Gardens’ customers. “For the first 6 months, this was done in our living room and the grow lights we had to use for the nursery illuminated our apartment purple. We could spot our unit from afar,” she shares. Aerospring Gardens has commenced exports to selected countries and plans to launch an indoor system with lights in the next 12 months. The future of food is at stake and conventional approaches to agriculture need to be addressed, says Keller. “There is nothing fresher than homegrown and teaching someone how to grow their own is a gift we feel keeps on giving,” she adds.

Co-published corporate profile

This innovative fintech firm is bent on stamping out Asia’s money transfer woes Find out more about how Instarem offers speed, efficiency and extremely competitive exchange rates as it strives to lead the region’s mobile payments wave.

hen Instarem founder Prajit Nanu stumbled across a host of challenges when it came to remitting money abroad, he realised that the Asian payment industry needed a serious boost. Commonplace challenges like opaque foreign exchange rates and extended timelines for delivery prompted him to establish Instarem, a pioneering fintech startup which offers tailor-made solutions to reduce the cost of transferring money globally. “In Asia where e-commerce, m-commerce and social commerce, are fast becoming a popular platform for buying and selling goods and services, small merchants are looking for ways to ride the faster payment wave to increase revenue and reduce customer churn,” Nanu explains, highlighting that the payment scenario in Asia is much more complex compared to other parts of the developed world. This is where Instarem comes in—it allows users to remit money safely, quickly and efficiently in just three clicks, making it a must-have application for businesses and individuals alike. Tailor-made solutions Instarem offers a different value proposition for each customer base, which sets it apart from its more traditional competitors. “For retail, unlike our competitors who charge a transaction fee and a FX spread we charge a percentage of the amount. If you are sending $1000, our fees will be, say, 0.5% so $5 which includes FX and Transaction fee,” Nanu says. In addition to lower costs, Instarem is also able to complete a transaction on the same day or within 24 hours. The World Bank rates Instarem’s service as the least expensive in the Australia-India corridor, in line with the company’s vision of steadily reducing the cost of sending money internationally. For business-to-business transactions, Instarem uses its local payout mesh in Asia, North America and Europe for seamless transfers. “Financial institutions such as

banks, payment processors and corporates can leverage our platform to make local and bulk payments. Our payments are processed on the same day and there are no deductions,” Nanu explains. Instarem’s success has been impressive: since it started operations in Australia in 2015, it processes millions of dollars every day, with 60 staff globally. Instarem is currently licensed in Australia, Hong Kong, Singapore and Canada. “We are applying for licenses in other jurisdictions such as Europe and US and this will allow us to increase our customer base massively. We are constantly in negotiations with different banking partners around the world. Having more banking partners allows us to provide a greater range of currencies and thus attract more customers,” Nanu says. Moving towards financial inclusion At the core of Instarem’s vision is financial inclusion— Nanu stresses that there is a need to collaborate and integrate with traditional players in the industry to improve the financial ecosystem and ultimately serve consumers better by streamlining financial services, providing them a seamless process. “Instarem is all about being a part of the financial inclusion initiative. We are looking at collaborations with financial institutions and traditional money changers and remittance agents to not only serve the unbanked population but also meet the expectations of digital savvy consumers of today,” he says. He adds that highly localised strategies for products such as mobile wallets and mPOS would definitely make an impact in Asia. “Mobile payments is great for financial inclusion, especially for countries that has low card usage, the chances of them embracing mobile wallets and mPOS is much higher. Also, in countries that are more developed, it is essentially an efficiency driver and it would create a more balance model of traditional vs digital,” he notes. The company’s journey is not without

“Mobile payments is great for financial inclusion, especially for countries that has low card usage.”

challenges. Nanu shares that there are big differences in each country’s regulatory scheme, which poses a huge obstacle as Instarem must navigate through different cultures, languages and policies to operate in each country. In order to address this challenge, the company only hires experienced people who have the knowledge and expertise in both local and regional markets. This allows Instarem to deliver a faster, more reliable service to its clients. “Data security is also extremely important to us, since our service involves cross border money transfer. We always ensure that our networks are secure and protected against the rampant hacking incidents. Companies must ensure that customer and company data are securely protected,” he says. Instarem is developing a digital bank for Asian SMEs, which is slated to be launched in Q1 2018. “Listening to consumers’ needs is utmost important and we have identified those concerns on remittance. In the current fast moving and tech savvy environment we live in, we need to react and solve issues faster than ever. This sets us apart from the traditional players such as banks and remittance agents for we are catering to consumers’ current needs, which is efficiency and convenience. This would help consumers move on from traditional methods,” he says. SINGAPORE BUSINESS REVIEW | JULY 2017

FIRST The Analysts’ call

What headwinds is Singtel facing?

Singtel maintained a dividend payout ratio of 73%

Stiffening competition could stifle Singtel but dividends still secure

hen Singtel announced stable full-year results for FY17 and an impressive 42,000 new postpaid subscribers in the first quarter – the highest in the country – it was still not enough to dispel fears of an imminent earnings turbulence. Analysts point to increasing competition in Singapore and Australia as a key culprit, putting pressure on mobile service revenues, although the telco is expected to retain its balance sheet strength and attractive dividends. In India, Singtel has been worrying about the price-led war that has pummeled Bharti Airtel, in which the former had recently

coverage — by 2018, which alongside the strong content bundling would put it in a solid position to fend off competition from TPG Telecom (TPG), which would likely compete on price,” says RHB. “Whilst competition remains intense across all segments, Optus would look to further optimise its cost base via digitalisation initiatives, and to capitalise on group-wide procurement savings,” the firm adds. Nidhi Dhruv, vice president and senior analyst, and lead analyst for Singtel at Moody’s, expects Singtel to embark on a deleveraging strategy, driven mainly by debt reductions, to bring metrics in line with its rating and in consideration of possibly intensifying competition in the Other headwinds like foreign Singapore mobile market. currency fluctuations will put Singtel One bright spot for Singtel is that in a bind, but Singtel should respond its dividends should remain the most by focusing on its network coverage secure and stable in the industry despite expansion and digitalisation initiatives. higher-than-expected spectrum cost due to forecasted declines for the other two telcos, says Gregory Yap, analyst upped its stake and is its single largest at Maybank Kim Eng. He also notes that if shareholder. This year, TPG Telecom’s play to TPG is unable to cope with expanding into become a major operator in Singapore looks two new mobile markets simultaneously, to bring additional headaches for Singtel. then incumbents like Singtel “will get some Other headwinds like foreign currency breathing room.” fluctuations could also put the telco in a Singtel’s recent performance was also tough spot, but it should respond by focusing good, except for the lower-than-expected on its network coverage expansion and performance of Airtel, which was the main digitalisation initiatives, as well as lowering drag for the telco. FY17 core net profit is 2% its debt. above CIMB’s forecast. The telco also saw “Management expects to close the strong net adds quarter-on-quarter for its coverage gap with Telstra — 98% population postpaid and prepaid segments. 18

SINGAPORE BUSINESS REVIEW | JULY 2017

Gregory Yap, analyst at Maybank Kim Eng Singtel may not be able to maintain >70% payout if it needs to reserve cash for spectrum, network, or other investments, especially if associate dividends start to flag. Competitive pressures on Bharti Airtel become more intense, leading to greater-than-expected profit decline. TPG’s entry into both Singapore and Australian mobile markets become more problematic than expected. Still, we expect Singtel’s dividends to remain the most secure and stable (current yield 4.7%) despite higher-than-expected spectrum cost vs forecasted declines for the other two telcos. RHB Group Research Singtel is now up against the unmistakable fourth entrant (TPG) across both the Singapore and Australian markets. We believe this could cap share price upside as investors take stock of greater earnings risks beyond its home turf. Downside risk is nonetheless limited by its fairly attractive and sustainable dividend yield of 5%. We cut our FY18/19 core earnings forecasts by 8-13%, mainly to factor in higher acquisition and retention activities at Optus, with the entry of TPG and higher capex as per management’s guidance. Key risks include stronger-thanexpected competition, forex volatility, and higher-than-expected losses from adjacent businesses. Nidhi Dhruv, vice president and senior analyst at Moody’s We expect group revenues to grow by 1-3% in FY2017-18. However, foreign currency fluctuations will continue to potentially impact Singtel’s earnings growth, since it derives over 65% of its earnings (on a reported basis) from outside Singapore. Singtel maintained a dividend payout ratio of 73% of underlying net profit and announced a final dividend of $1.75b, which takes its total dividends for FY2016-17 to $2.86b.

abacus

The cheque is not in the mail at around 20%,” notes John Cheong of Maybank Kim Eng. SingPost has also signed several new agreements for its order fulfillment business and expects more customers to come onboard in coming quarters. Analysts expect SingPost’s topline for logistics to grow. Transforming into an e-commerce logistics provider

f SingPost once hoped that e-commerce will single-handedly reverse its sliding business prospects, it now seems as though this segment will fail to deliver. Despite massive investments, the Postman has suffered painful losses from its e-commerce arm, prompting analysts to fear that bottomline growth will arrive slower than snail mail. “The overall landscape is competitive, while eCommerce also met a setback in TradeGlobal, which lost key customers,” says Low Pei Han, analyst at OCBC Investment Research. US-based TradeGlobal was acquired by SingPost in late 2015, but it has become obvious that the company’s turnaround plans will take time. “In the fast-moving world of eCommerce, it is currently unclear to us if this segment can turn in a net profit by FY19.” Due to TradeGloblal’s shockingly poor performance, SingPost has created an independent committee to thoroughly review the circumstances surrounding the consideration and approval of the acquisition. “TradeGlobal significantly underperformed the business case which has supported the investment,” adds Sachin Mittal, analyst at DBS. Whilst SingPost’s American dream has failed to deliver, analysts remain hopeful that logistics will save the day for The Postman. “On the bright side, the new regional e-commerce logistics hub is gaining traction. Several new customers will be coming on board and the warehouse capacity has reached 45%, whilst the parcel sorting capacity remains

Source: Company

The residential optimist

Whilst other developers are erring on the side of caution, UOL has hit the gas on landbanking, showing an optimism in the Singapore market’s stability and undeterred aggressiveness even in the face of still-tightened property measures. UOL plans to launch two of its three projects next year in Singapore – the freehold 45 Amber Road site with 140 estimated units and the 99-year leasehold Potong Pasir Ave 1 site with 750 estimated units – and it has been emboldened by brisk presales for residential projects amid the muted residential outlook. “Despite tepid residential transactions year-to-date, UOL’s projects have continued to do fairly well,” says Rachel Tan, analyst at DBS. As at end of 2016, UOL has substantially sold most of its projects that are completed or currently under development, selling 484 residential units with $558m in value in FY16, although this was notably only half of the sales it made in FY15. “Management has turned positive on the Singapore property market despite the government stating that ‘there will be no relaxation of property measures’ in the near term,” notes Tan. “Management believes that the Singapore property market has found a steady state at current levels and the increase in industry sales volume has been encouraging.” As part of UOL’s landbanking strategy in Singapore, which Tan says is the most

aggressive amongst large cap developers, it added two enbloc sites, Raintree Gardens and 45 Amber Road, which are intended to be launched from 2018 onwards. Eli Lee, analyst at OCBC, says the group continues to move units in its currently launched projects. In the first quarter of 2017, UOL launched the 505unit Clement Canopy and it had been received fairly well with 38% sold already. Meanwhile, the 663-unit Principal Garden is 55% sold.

No near-term respite for SIA

When Singapore Airlines revealed it would be setting up a dedicated Transformation Office that would initiate a business review meant to boost revenues and slash costs, it was clearly not meant to be a band-aid to its current wounded state. It would take years for the business review to be put into motion and bring significant benefit to the bottom line. With operating margins already razor thin and its flagship brand has failed to grow significantly in the past three years, how will SIA survive the near-term turbulence? “We remain cautious on the near-term earnings outlook for SIA as its flagship passenger business continues to face stiff competition and soft yields, leading to lower profitability,” says Paul Yong, analyst at DBS. SilkAir and Budget Aviation Holdings, which comprises the soon to be merged Scoot and Tigerair – have been continuing to improve their contributions, somewhat offsetting the weakness in SIA’s flagship business. But some analysts are unconvinced that these efforts will provide immediate relief. “SIA’s strategy of a portfolio of multi-airlines to provide connectivity as well as partnerships with local players in key markets are unlikely to bear significant fruits in the near to medium term. Even the new transformation office set up to conduct organisation-wide review to look at new revenue streams and optimise cost base will not have material impact any time soon,” says Eugene Chua, analyst at OCBC. SIA’s capital expenditure

Source: DBS Group Research

SINGAPORE BUSINESS REVIEW | JULY 2017

economy watch

Manufacturing exports are expected to hold up

Three things that will drive growth in manufacturing The semiconductor segment has the highest level of production to date, and will help Singapore’s manufacturing sector pull through in 2017.

he manufacturing sector is being closely monitored by analysts as Singapore pushes through with its ambitious economic restructuring because an underperformance could spell disaster for the trade-dependent country. Hopes are high that manufacturing exports will hold up on the back of robust semiconductor demand, but domestic manufacturing industries will still face a tougher time due to slower consumption and an ongoing property price slump. Singapore’s economy is undergoing restructuring towards higherwage jobs and increased labour productivity, which has led to worker layoffs. Whilst this transition to leaner manufacturing operations has caused some disruption, analysts hold a positive outlook for the sector. “Overall, the island’s factories remain in good shape,” says RHB Group, forecasting manufacturing output to grow 4% in 2017, surpassing the 3.6% expansion in 2016. “The projected slight improvement in manufacturing output this year will be underpinned by three factors. First, key final 20

SINGAPORE BUSINESS REVIEW | JULY 2017

Whilst this transition to leaner manufacturing operations has caused some disruption, analysts hold a positive outlook for the sector.

demand destinations, namely, the US, EU, and China should post stronger economic growth. Second, the ASEAN economies, supported by higher commodity prices, will also show improving growth. Finally, there will be stronger semiconductor demand, supported by the cyclical smartphone super-cycle,” it says. Chia Shuhui, senior Asia analyst at BMI Research, shares this upbeat demand outlook: “The manufacturing sector continues to shed jobs amidst ongoing restructuring. However, near-term manufacturing weakness will be capped by still-high global demand for semiconductors, which will provide some support and have Singapore GDP

Source: CLSA, CEIC

positive spillover effects on other sectors.” EDB Singapore’s monthly manufacturing performance report for April 2017 shows the brisk growth of the semiconductors segment at 69.1%, which helped the electronics cluster’s output expand fast in April at 48.0% year-on-year. The machinery & systems segment also grew 23.1% due to higher export demand for semiconductor related equipment. According to Chua Hak Bin, analyst at Maybank Kim Eng, this was the 14th consecutive month of double-digit expansion for the semiconductor segment and recorded the highest level of production to date, leading to a full-year GDP growth forecast of 3%. “The global demand for semiconductors remains strong, as reflected by the global Purchasing Managers Index numbers that are still in expansion phase and the continued increase in Singapore’s electronics non-oil domestic exports (NODX). We think growth will continue to broaden from electronics and traderelated segments to other segments of services,” says Chua. Semiconductor demand RHB Group expects semiconductor demand to remain a positive driver of electronics manufacturing growth in the second half of 2017, albeit at a more moderate pace after the strong gain in the first half of this year. This is in anticipation of lower flagship phones’ volume sales compared to mid-tier counterparts. Most segments in the electronics cluster showed strength in April, recording higher output. Computer peripherals (+5.6%), consumer electronics (+4.4%) and other

economy watch Singapore’s IPI

Source: Ministry of Trade and Industry

electronic modules (+17.7%) all grew at a faster pace in April, except for data storage, which posted a decline of 26.2%. This brought the cumulative output of the electronics cluster at 37.3% growth from January to April this year, compared to the same period last year, according to government data. Transport and biomed Meanwhile, the transport engineering cluster’s output contracted 14.5% year-on-year in April 2017. Marine & offshore engineering was the weakest link in the cluster, recording a steep decline of 30.5%. Conversely, the land transport and aerospace segments served to buoy the cluster, registering output growth of 10.1% and 5.0%, respectively. “The marine & offshore engineering segment remained weak with a low level of rig-building activity and lackluster demand for oilfield & gasfield equipment,” says EDB Singapore in its April 2017 monthly manufacturing report. “Additionally, the segment also recorded lower output in shipbuilding and repair jobs.” With the April contraction, the transport engineering cluster decreased 12% in the first four months of 2017 compared to the same period last year. RHB Group forecasts clear skies for aerospace and its role in lifting the cluster in the coming months. “Going forward, the aerospace cluster would likely see growth in line with increased flight activities amid the relatively low oil price environment, whereas the marine & offshore sector is set to remain weak, as oversupply concerns and credit pressures deter

Leading indicators suggest easing growth

Sources: International Enterprise Singapore, ISM

investment.” Another ailing cluster is biomedical manufacturing whose output shrank 23.3% in April 2017 year-on-year. Despite the medical technology segment expanding 11.1% driven by higher export demand for medical devices, lower production of active pharmaceutical ingredients weighed heavily on the cluster. Cumulatively, the biomedical manufacturing cluster decreased 11.7% in the first four months of this year compared to the same period a year ago. On a year-on-year basis, manufacturing output increased 6.7% in April 2017, but when excluding the city state’s battered biomedical manufacturing cluster, the output grew 15.5%. Domestic manufacturing woes On the domestic manufacturing front, there is less optimism at least in the near term. Domestic facing manufacturing industries fell 5.1% year-on-year in March, weighed heavily by slower food production as well as plummeting production of construction-related materials. “Going forward, this sector is expected to continue to face headwinds from underwhelming private consumption growth and weak property prices,” says RHB Group. “Hospitality will continue to suffer over the next 12 months due to higher supply and weak demand, as will office.” But looking at the long-term horizon, Singapore’s economic restructuring will start to boost the property sector. Xuan Tan, analyst at CLSA, says greater demand from high-tech manufacturing and services

The improving tone in Singapore’s external demand will be the key driver for GDP growth in 2017.

will drive up industrial property. Industrial rents are expected to bottom out in 2H17. External demand is key As Singapore relies on stronger external demand to galvanise its economy this year, analysts expect GDP growth to fall on the higher end of the government forecast range of 1-3%. “The improving tone in Singapore’s external demand will be the key driver for GDP growth in 2017,” says Seungyeop Lee, analyst at CLSA. “Our forecast of 2.5% remains in the upper half of the official forecast range.” He cites how external demand for Singapore’s manufactures continued to improve in the first quarter of 2017. Non-oil domestic exports rose 9.5% quarteron- quarter, seasonally adjusted, in the first two months, up from a 5.5% rise in the prior quarter. The exports jump was mostly driven by larger export volumes to North Asia, recording higher than 50% year-on-year increases in volume terms. BMI Research’s Chia provides a less bullish forecast, expecting Singapore’s GDP to grow by 1.9% in 2017. Whilst manufacturing exports will prop up the economy, the latter will be vulnerable if the trend of global protectionism gathers strength.“The uncertain global outlook will lead to an uneven performance across the city-state’s various sectors, weighing on growth. This will in turn be negative for the employment outlook, with wage increases likely to remain weak. However, the robust global demand for semiconductors and the government’s 2017 budget will cap excessive weakness,” he adds. SINGAPORE BUSINESS REVIEW | JULY 2017

analysis: solar power sector

Solar Photovoltaics Test-Bed at Tengeh Reservoir Photo credit: Solar Energy Research Institute of Singapore (SERIS)

Don’t leave the solar panels ‘hanging’ Singapore has been working hard to explore solar panel systems that are hanging, floating, and “urban,” but is the grid stable enough to handle these renewable energy innovations?

hen researchers installed a $22,000 solar panel system in a penthouse in Bukit Timah, it not only generated enough electricity to keep 400 50-watt light bulbs running for a day, it also became a testament to Singapore’s increasing ingenuity in scaling up its solar photovoltaic (PV) installations despite geographical and financing constraints. Singapore has begun exploring the use of “hanging” solar panel systems like what was installed in the Bukit Timah penthouse as well as floating PV systems and energy storage to overcome the challenge of having a small land area that rules out the creation of large solar farms. The hope is that these innovations will increase the viability and attractiveness of solar PV projects as the land-scarce country tries to meet its climate change commitments and become a clean energy hub in Southeast Asia. One of the promising 22

SINGAPORE BUSINESS REVIEW | JULY 2017

Solar systems in Singapore are always competing for space with other equipment such as cooling towers, water pumps and piping.

breakthroughs on the horizon for the Singapore solar PV industry are socalled urban solar plants. The concept suspends solar panels from steel ropes and removes the need for large permanent space, which is in such low supply in the country. Moreover, urban solar plants are designed to be easy to move, so they might be deployed to an open-air carpark, then to a new vacant area when needed. “Installing such a system over an open-air carpark would not only allow it to absorb the sun’s energy, but it would also provide shade for cars. In the future, such systems could also power electric vehicles,” said Dr Thomas Reindl, deputy chief executive, Solar Energy Research Institute of Singapore at the National University of Singapore. Reindl leads four projects to find out how solar energy can be made more viable in Singapore, including a feasibility study of urban solar plants in the country. Working with

collaborators from organisations such as solar energy firm Sunseap, he has received $4m in funding from the Singapore Economic Development Board (EDB). IE Singapore reckons that if the urban solar plant project is found to be feasible and scaled up, it could help lower the cost of solar electricity in Singapore, and lead to an increase in solar power adoption. Urban solar plants To gauge the potential of urban solar plants, researchers installed a solar panel system at a Bukit Timah penthouse which generates roughly 20 kilowatt hours of electricity a day. Frank Phuan, founder and director of Sunseap, says such “hanging” solar panel systems are ideal for highly urbanised Singapore where there is limited space even on rooftops. “Solar systems in Singapore are always competing for space with other equipment such as cooling towers, water pumps and piping. [A

analysis: solar power sector hanging solar panel system] not only brings tremendous advantages for rooftop installations, but it also opens new opportunities for example in carpark covers or temporary use of land areas which are not earmarked for new developments in the near future,” he explains. Yeoh Keat Chuan, managing director of the Economic and Development Board (EDB) Singapore, reckons these new solar research projects will enable the country to tap into the fast-growing regional solar market and strengthen its position as the clean energy hub in Asia. “The research into nextgeneration solar cells and systems, in close collaboration with the private sector, will also enable Singapore to accelerate its large-scale adoption of cost-competitive solar energy,” he says. Floating potential Another way that Singapore is working around its lack of land for solar farms is to turn to water surfaces instead. Late last year, the country unveiled the world’s largest floating solar panel testbed. Masagos Zulkifli, Singapore’s minister for the Environment and Water Resources, says the pilot test of 10 floating PV systems at Tengeh Reservoir is the largest globally in terms of the number of systems being tested and the amount it can produce, which stands at a maximum one-megawatt of energy, enough to power 250 fourroom public housing flats for a year. “Floating photovoltaic systems, those installed over our water bodies, not only help to overcome land constraints, but also have the potential to reduce evaporative losses from our reservoirs,” he says. “Given our geography, solar PV systems are a key technology is Singapore’s efforts to harness renewable energy.” Zukifli adds that floating PV systems can become more efficient by using water to cool the solar panels, allowing them to yield more energy compared to solar panels that are too hot. Singapore is expected to explore a wider deployment of floating PV systems if the pilot shows them to be economically viable and environmentally sustainable. Goh Chee Kiong, executive

director for Cleantech of EDB Singapore, reckons floating PV has become a global trend in the last couple of years, and that the country would do well to take advantage of the high investor interest and momentum behind this technological trend. “We are seeing developments in Japan, China, Europe, the Americas as well, Australia and even India. What this means is that it is a highly exportable sector that we want to grow. We are seeing strong interest by various companies wanting to participate in the floating photovoltaics testbed in Singapore,” he says, citing eight companies involved in the testbed, ranging from large Japanese and Italian corporations to local small- and medium-sized enterprises. “The starting point is that we want them to establish their business hubs in Singapore,” adds Goh. “After which then they will export the knowhow from Singapore, from doing the innovation right in Singapore.” Rising investor interest Ramping up investor interest and ensuring the financial viability of solar PV projects are becoming key priorities for Singapore as interest in solar PV deployment is forecasted to continue growing, and innovations are predicted to keep coming. Installed PV capacity has surged to almost 99.4MWp as of the second quarter of 2016, up from a measly 0.4MWp in 2008, the Energy Market Authority (EMA) reveals in a recent outlook report. The regulatory agency reckons advancements in electricity generation technologies will bolster Singapore’s power sector, including the use of renewable energies such as solar PV. This is despite the apparent inadequate access to funding for solar generation companies. “The main challenge for solar financing in Singapore is the familiarity of some financial institutions to the solar PV renewable business model and that unfamiliarity tends to heighten the risk aversion and lessen competitive financing terms,” said Camillus Yang, vice president, corporate development and finance at Sunseap.

Dr Thomas Reindl

Frank Phuan

Yeoh Keat Chuan

As solar PV penetration soars, especially if Singapore intends to fulfill its commitments under the Paris climate change agreement, EMA has expressed concern on grid stability. Gautam Jindal, research associate at Energy Studies Institute of the National University of Singapore, says that other electricity markets have managed this issue by spreading the installation of these resources across large areas – a tactic that is not available to Singapore. Unlocking energy storage “For geographically small, isolated power systems like Singapore, energy storage will play a vital role in supporting higher levels of PV deployment,” says Jindal, noting that in 2015, the country opened its electricity market for ESS by allowing them to bid for offering “regulation” service to help correct imbalances caused by load variability. From facilitating demand side management to firming up output from variable renewable energy sources, ESS can offer many solutions to generators, grid operators and consumers. This has led Singapore to develop a new policy framework to govern the application agnostic integration of energy storage solutions in its electricity market. “Energy storage has the potential to revolutionise Singapore’s electricity market in the coming years; right from enabling Virtual Power Plants to facilitating demand response, to increasing number of prosumers with PV systems on their rooftops,” says Jindal. “However, this requires that Singapore develop a solid framework that provides investors with certainty.”

Installed solar capacity from 2008-2016

Source: Energy Market Authority

SINGAPORE BUSINESS REVIEW | JULY 2017

FINANCIAL INSIGHT: venture capital

Deal #1: Chinese online giant Alibaba acquired Lazada, an e-commerce platform in Southeast Asia, for $1 billion

Deal #2: Grab raised $750m in its investment round of funding led by Japanese conglomerate Softbank

Why over half 2017’s deals were in tech The technology sector accounted for 53% of deal volumes and 34% of deal values in the region amidst an environment marred by uncertainty in the global markets.

enture capital in Singapore has been robust in 2016 despite global uncertainties surrounding the sector, with fears that it would prompt investors, series funders, and even startups themselves to be more cautious, on top of other reasons. Valmiki Nair, senior associate at Dentons Rodyk & Davidson LLP, notes that the initial momentum for Singapore VCs last year slightly slowed down due to uncertainty over global markets and the lack of potential “next big disruptive idea” from startups, with only one or two startups doing the heavy lifting both in Singapore and the rest of the Southeast Asian region. “Many of the startups that had potential to become great had already managed to close relatively large rounds of fundraising and did not require further funding for expansion in the year,” he adds. “Startups based in Singapore have also been cautious about overspending to fund expansion efforts given the uncertainty over interest rates, market volatility, and changing politico-legal landscapes in nearby nations.” But Lisa Theng, managing partner at Colin NG & Partners LLP, says that numbers remain positive with VC investments in Singapore achieving historic figures with 100 deals with an aggregate value of $3.5b recorded in 2016, compared to the 81 deals valued at $2.2b for 2015. Experts are in agreement that technology remains the driver of venture capital growth in Singapore and, in large 24

SINGAPORE BUSINESS REVIEW | JULY 2017

Numbers remain positive with VC investments in Singapore achieving historic figures with 100 deals with an aggregate value of $3.5b recorded in 2016.

part, the region. According to a report by global valuation firm Duff and Phelps, the technology sector accounted for the majority of deal volume at 53% and deal value at 34%. Sandra Seah, joint managing partner at Bird & Bird ATMD, however, notes that this strong performance in VC in Singapore was mainly due to the two “mega” deals last year that saw Chinese online giant Alibaba acquire Lazada, an e-commerce platform in Southeast Asia, for $1b as well as the $750m raised in ride-sharing/ridehailing application Grab’s investment round of funding led by Japanese conglomerate Softbank. “The [Alibaba-Lazada] deal affirms the potential of Southeast Asia as an emerging market and may signal a tendency to fund mature businesses to secure larger returns,” says Seah, adding that “the deal also serves as a reminder to startups of the value of striking partnerships and scaling up beyond their home markets to attract VC interest” which is timely given the momentum towards the achievement of the ASEAN Economic Community. Seah, meanwhile, says that the Grab deal revealed that VC investors “still retain a healthy appetite for latestage technology startups with a proven track record in multiple jurisdictions and good potential for growth.” Apart from the blockbuster Alibaba-Lazada deal and Grab’s investment raising, other notable VC activities in Singapore include peer-to-peer marketplace Carousell’s raising of S$49.5m in a funding round led by Rakuten

FINANCIAL INSIGHT: venture capital Ventures and Khazanah Nasional’s $170m investment in internet company Garena. Asia’s VC landscape and Singapore’s leading role With uncertainties on interest rates coupled with market volatility surrounding the venture capital landscape last year, Asia-focused venture capital fundraising slightly declined to $13.3b — after peaking midway at $14.5b — from the $14.1b raised in 2015. Cumulatively, over 300 funds have been raised in the region since the start of 2014, according to data from Preqin. And whilst numbers are still rising in majority of the markets in Asia Pacific, these uncertainties, experts say, may likely only be a small bump when it comes to the promising prospect of the region’s Venture Capital (VC) landscapes in 2017 — for instance that of Singapore. VC funds focusing on China accounted for the majority of this cumulative capital from 2014 with 138 Chinafocused funds raising a combined $27.6b. India-focused funds, meanwhile, accounted for 49 raising $4.9b over the same period. Singapore, meanwhile, remains a major competitive hub for venture capital and startup firms looking for funds. This trend provides an optimistic outlook for Asia’s VC landscape for 2017. “The development of the venture capital industry in Asia has undoubtedly been one of the major success stories of recent years,” says Felice Egidio, head of venture capital products at Preqin. “Robust fundraising and healthy deal flow have established the region as a key player in the global industry, and with domestic and international investors increasingly targeting Asia-based startups, it is of little surprise that fundraising looks set to accelerate in 2017.” Singapore has largely been part of this success story in the region, rated as the world’s second-easiest place to do business, being a magnet for capital-awash multinational corporations and businesses, as well as an incubator and testing ground for startups in the Asia-Pacific region. This is true both on paper and in real-life circumstance. In a 2015 report, automated reporting and benchmarking software provider Compass ranked Singapore as the 10th best place in the world for a startup to thrive, moving up seven places from the report’s 2012 edition. The report listed Singapore’s startup experience, funding, and market reach as above average, with performance and talent slightly getting lower marks. Asia Pacific funds are sitting on an ample supply of dry powder, which has remained largely flat

Source: Preqin

Felice Egidio

Joongshik Wang

Lisa Theng

Patrick Yeo

Sandra Seah

Valmiki Nair

“This [result] is evidenced by global VCs coming to Singapore and more startup trade missions to Singapore,” says Patrick Yeo, venture hub leader at PwC Singapore. “VCs have raised more funds in 2016 targeting larger deal flows and are more varied in their sector focus. Coupled with that, Corporate Venture Capital is a growing trend where big corporates have gotten into the game by setting up their own funds.” Other experts admit that whilst Singapore has become a hub for startups looking for venture capital and funding, the landscape in the city-state remains young compared to the maturity of ecosystems like that of Silicon Valley in the United States. And this will only be a good sign as the trajectory remains upward as the landscape continues to mature. “2016 saw a record level of investments into Singapore startups. We saw the ecosystem maturing with increase in capital influx and abundance of innovative startups,” says Joongshik Wang, partner for corporate finance at Ernst & Young Corporate Finance. “Many venture capital firms raised new funds and started shifting focus from seed to Series A or Series A to Series B rounds, which will certainly help startups scale up.” A helping hand Singapore’s VC landscape is also getting a helping hand from the government. In February this year, the Government of Singapore has announced its plans to ease regulations for venture capital managers that experts believe would provide early-stage startups with more funding options and capital avenues. “On the supply side, we note that [the Monetary Authority of Singapore] is keen to lower its requirements by proposing a simplified authorisation process and regulatory framework for managers of venture capital funds,” Nair says. “The move is part of MAS’ broader efforts to promote financing for enterprise development. The simplified regime also takes into account the extent of contractual safeguards that are already present in typical fund management contracts negotiated by VC managers’ sophisticated investor base.” “Under the proposed simplified authorisation process, MAS will focus primarily on fitness and propriety assessment of the venture capital managers. Unlike the case for fund managers, MAS will not require VC managers to have directors and representatives with at least five years of relevant experience in fund management. New VC managers can expect a much shortened application process.” Nair adds this “bodes well for new VC funds to be set up with relative ease and at lower transaction costs. We may see the advent of family offices teaming up with local VC managers to launch VC funds and try their hand at startup fundraising given the amount of private family wealth circulating in the region and the younger and fresher generations taking control of such wealth.” For PwC Singapore’s Yeo, this move by MAS will also solidify Singapore’s reputation as a competitive hub for startups and other enterprises on VCs globally. “This will attract more global VCs to Singapore and at the same time raise the profile of the industry. Going forward, we SINGAPORE BUSINESS REVIEW | JULY 2017

FINANCIAL INSIGHT: venture capital should also see more VCs focusing on later stage growth companies, filling the gaps beyond series B round funding as the Singapore ecosystem matures,” he says. Looking ahead In terms of outlook in 2017, experts are cautiously optimistic, explaining that whilst VC funding and other financing options would remain available and may actually increase in quantity, expectations on valuation figures should remain modest. Whilst Dentons Rodyk & Davidson’s Nair shares that Singapore’s VC landscape is “very promising as the ecosystem is abuzz and there are several private and government initiatives to nurture the VC industry in Singapore,” entrepreneurs and startup founders “would probably have to be realistic in valuations and expectations.” This is echoed by Wang, saying that “venture capital firms increasingly expect startups to have [a] realistic path towards profitability.” This cautiousness is on top of the likely negative effects that will continue to be felt, albeit minutely according to Nair, “given the socio-political uncertainty worldwide caused by, inter alia, Brexit, the US presidential elections and the market uncertainties. We anticipate early stage financings continuing with debt financing being preferred in order to have the option of an early exit.” In terms of the sector of interest and growth for VC in Singapore in 2017, the experts are in general agreement that technology would comprise the lion’s share. Bird & Bird’s Seah also predicts that the market will demand platforms that help big data custodians organise or analyse data more effectively. “Innovators that offer such enterprise IT systems are likely to interest investors,” she says. “Startups pedalling psychometric technology may well continue to find favour with angels.” Wang also says that the next few years will see a healthier development of the venture capital sector in the region, with Singapore becoming the growth hub of Southeast Asia. This is supported by Theng who shares that in terms of e-commerce, online travel, and online media, the Southeast Asian region is expected to grow to nearly $290b by 2025 — something that would inevitably affect VC activity not just in Singapore but in all of ASEAN. “We can expect to see an acceleration of venture capital formation and investment activity in Singapore, spilling over into neighbouring markets in the next 12 months,” Wang adds. “Early-stage growth funding is still at a nascent stage in Singapore — government-linked companies, private equity firms, and multinational corporations have all been setting up venture capital funds to fill the gap and will look to make aggressive investments this year to establish their positions.” Other positive signs of a more stellar VC landscape for Singapore in the coming years include further efforts from the government like the SPRING Start-up Enterprise Development Scheme and the Early-Stage Venture Funding Scheme (EVFS), apart from the easing of rules for VC funds by MAS. “We also see a trend of more European VC funds looking to Asia to invest in promising early stage tech startups,” Seah concluded whilst stressing the decline of US VC funds’s interest over the past two years. 26

SINGAPORE BUSINESS REVIEW | JULY 2017

We can expect to see an acceleration of venture capital formation and investment activity in Singapore, spilling over into neighbouring markets in the next 12 months.

hong kong view

Investor appetite for tech rises Despite the rather inconsistent regional and global economic performance and outlook, Hong Kong remains a vital financial and commercial hub for Asia and the Pacific. This is true in the venture capital scene in the special administrative region — which can be considered as a microcosm of the rest of the region. “The Hong Kong venture capital scene continues to be strong when compared with the rest of Asia,” notes Padraig Walsh, Partner at Bird & Bird Asia Pacific. “Many venture capitalists in Hong Kong also look to invest in other jurisdictions in Asia and do not limit themselves to the Hong Kong market, meaning that Hong Kong is still very much a hub for pan-Asian VC investment.” Alex Norman, an associate for Bird & Bird Asia Pacific, adds that in terms of hot sectors, technology verticals remain very popular with investors, particularly in fintech. For instance, reports estimate that Hong Kong investments in fintech amounted to $165m last year, from the $125m in 2015. “Hong Kong’s proximity to manufacturing bases in mainland China has also made it a popular destination for companies in the [Internet of Things] space,” he adds. 2016 VC deals Some of the more successful venture capital deals last year are in fintech. The Hong Kong Venture Capital and Private Equity Association notes that WeLab, a fintech company founded in 2013, raised $165m in investments in its 2016 Series B round. Another deal is Hong Kong travel technology startup Tink Labs raising $125m in a new round of funding from FIH Mobile Limited to scale its idea of a designated mobile device provided with the hotel room for guests to use for free, eliminating the need to buy local SIM cards to makes calls, send messages, and use data. Other deals include AM730 Startup Fund’s investment of over HK$10m in the P2P diamond exchange; Horizons Ventures’, a private investment arm of business magnate and currently Hong Kong’s richest man Li Ka-Shing, of $15m to German insurance technology startup Friendsurance; and Credit China Fintech Holdings, a Hong Kong-based firm, entering into a $30m agreement and investment in BitFury, a leading bitcoin and private blockchain infrastructure provider and transaction processing company. Walsh said that these deals show how “investors continue to have a strong appetite for technology-based companies.

Asia Pacific start-up and early-stage PE investments

Source: AVCJ

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ANALYSIS: FOOD DELIVERY SERVICES e-commerce from traditional retail, but it has not reached that point yet. “As food delivery is still a nascent market, even in Singapore, and new customer acquisition cost remains high, having our competitors spending in building up our market is in our long-term interest,” said Lekka.

Is the delivery business sustainable in Singapore?

Crouching Panda, hidden Roo: Getting the hop on delivery Singapore’s food delivery firms battle for long-term sustainability.

ingapore’s love for home delivered food is growing fast, with an estimated $250m a year dispatched to hungry diners’ homes and could grow to $600m by 2021. Amidst the growth, there are still a few cautionary tales and questions on the long-term sustainability of home delivered meals. Take food delivery company hawker.today for example. When the firm delivered its first order in late 2015, it became an instant hit, growing 400% month-onmonth and employing eight full-time employees with 60 delivery riders. Yet eight months after its launch, hawker.today shut down, a victim of a pricing failure that founder Jonathan Faynop said was due to delivery charges that Singaporeans ultimately were not prepared to stomach. When it launched, the firm had a delivery charge of $4.50 for a minimum order of $8. This fee was then amended with a surcharge of $3 for orders under $12, meaning that an order under $12 would attract a $7 surcharge. The firm felt the fees were necessary to pay the riders, who often had to ride a long distance, but customer feedback was that the 28

SINGAPORE BUSINESS REVIEW | JULY 2017

Amidst the growth, there are still a few cautionary tales and questions on the long-term sustainability of home delivered meals.

delivery fees were too expensive. “Like any startup, we had fundraising milestones, we had a very great investment deal on the table, but was unfortunately lost after a deadlock,” he said, also citing differences between the founders. Now Faynop is back at it again, rebranding the business to Yihawker hoping to rise like a sweet and sour braised phoenix out of the ashes and leftovers of his last business. This time his concept is e-hawker centre and handles deliveries from Bedok 85 hawker centre in East Zone, covering Pasir Ris all the way to Paya Lebar. In April it launched partnerships with over 30 hawker stalls available for Central Business District and employed 20 riders. Around 90% of its hawker stalls are exclusive. Yihawker is just one of several niche players up against the two dominant players, Foodpanda and Deliveroo. Foodpanda started in Singapore in 2012 and delivers from more than 3,000 food outlets with its fleet of 2,500 riders delivering up to 20,000 orders a day. Foodpanda Singapore managing director Aspa Lekka cited saturation as a concern for the years to come, given the large shift towards

Delivery giants Foodpanda uses a proprietary dispatching software in processing orders which is particularly useful in segregating orders from halal and non-halal restaurants, Lekka explained. It has also jumped on the drone-delivery bandwagon, testing out deliveries through unmanned aircraft in Singapore. The goal is to reduce delivery time to under 30 minutes. Deliveroo is the other big international delivery boy on the block and has been in Singapore since mid-2015. Meanwhile, Deliveroo is helping well-known restaurants establish separate “dark kitchens” in different locations which exist solely to cook for the delivery market, with no walk-in customers or dining room. The firm pioneered this concept dubbed as Deliveroo Editions in London and now has its own pop up kitchen in Katong, where it houses four restaurants under one roof including Muchachos, Sacha & Sons, Blu Kouzina, and Pho Stop. These four do not have a physical store in Katong but they still receive a high demand for delivery orders. “It’s a combination of logistics, technology, and data. Based on data we are able to predict what customers in a certain area will like, which restaurants will mostly do well in an area. We are able to understand what kind of cuisine gaps are there. With all these information we are able to hand-pick restaurants,” Deliveroo Singapore general manager Siddharth Shanker explained, noting that their biggest asset is their collection of customer data. What niche players lack in technology and muscle, they are trying to make up for with service and product differentiation. Take the online platform Alcohol

ANALYSIS: FOOD DELIVERY SERVICES Delivery which is one of the best examples of firms who found their place in the business. A brainchild of siblings Travis and Suzanne Chia, this firm offers alcohol and beverage delivery and has just turned profitable after growing revenues five-fold since 2012 with six full-time and four parttime drivers. Its services are currently available via an online platform, which lets customers pick from over 600 items ranging from cocktails packages that come with bar tools to snacks and drinking games. Orders above $50 waive delivery charges. Its standard delivery fee for orders below $50 is $10. “To date, we have been receiving a steady flow of orders and on a daily basis and we find ourselves delivering to homes and offices and the products range from cans of beer, bottles of wine as well as various spirits,” said Travis, adding that 95% of their orders are delivered within just one hour. Tech and delivery Alcohol Delivery is at the early stage of ramping up its tech but is pushing efforts to automate more of their internal processes. “This system will also be able to track the real-time location of the delivery progress and capable of formulating the total time and distance into a monetary value for salary calculation. As long as you’re in a tech-based industry, you will always have to keep up with the evolving technology. Food vendors

have an intrinsic role to play when it comes to the quality of the food, which is half of the battle itself. If delivery companies do not keep up and keep their platforms fresh and relevant, not even a Michelin-starred vendor can save the platform and likewise, no state-of-the-art platform can do well without a quality vendor,” said Travis of Alcohol Delivery. It is this type of technology power that smaller food delivery startups have to contend with. Yihawker’s Faynop said he is differentiating his company from its competitors as Go-Jek did with Uber in Indonesia. Right now, Yihawker utilises Google Firebase tech which allows them to iterate and make changes, back to front end in real-time. “I think the future of sustainable and impactful businesses is not in the single or linear approach. It’s going to be dynamic, unpredictable and complicated. I think Yihawker is in a very sweet spot for innovation that can value add to the dynamics of Southeast Asia.” Exclusive deals Technology is not the only issue facing food delivery companies as they struggle to compete for customers. Last year several food delivery companies drew the attention of regulators when it was revealed they had signed exclusive delivery arrangements with restaurants, something which could breach competition laws.

Aspa Lekka

Seshan Ramaswami

Siddharth Shanker

After an investigation, Competition Commission of Singapore chief executive Toh Han Li said the use of exclusive agreements with online food delivery providers is just one method to attain market shares, and not as anticompetitive others deemed them to be. “In the event that the online food delivery provider becomes dominant, the presence of such exclusive agreements risk infringing competition law as it would affect the competitive state of the market. Instead of relying on exclusive business practices, businesses should compete on merit, leading to a more vibrant market with more choices for restaurants and consumers,” Toh said. Foodpanda’s Lekka said, “We do not enforce any exclusivity contracts on our vendors. As a player in the industry, we see that it’s very unfair to expect restaurant partners to limit their business in order to benefit ourselves.” But Deliveroo has a different take on this. Shanker noted that restaurants have a choice to take on such deals or not. “Nobody can and nobody is forcing restaurants to take on exclusivity deals. The restaurants choose to do so because they feel that certain service providers can give them better service.” As the delivery whales battle it out and the niche minnows try to grow without being eaten, the one sure winner is Singapore’s diners who continue to enjoy almost any food or drink delivered to their homes.

Robust growth in food delivery revenue

Singapore-wide,” he adds. For a business to thrive in this booming industry, Ramswami says it has Singapore’s food delivery industry is in for a delectable growth projection to clearly define its focus in terms of its chosen market, assortment of in the next five years. According to this graph from Statista, the industry’s restaurants, pricing, and delivery times. “In forthcoming years, I suspect that an even larger proportion of F&B operators, from the small mom-andrevenue’s annual growth rate from 2017 to 2021 could reach 25.9%, resulting in a market volume of US$480m in 2021. Online takeaway is its pop hawker centre or independent café operator to the large chains will largest segment, with a market volume of US$182m in 2017. The average be offering delivery services across the island.” revenue per use under this segment is US$344.7 this year and is expected to climb to US$376.5 in 2021. Revenue in the food delivery segment Singapore Management University associate professor of marketing education Seshan Ramaswami says the growth of the food delivery market the food delivery business is a consequence of the confluence of two independent phenomena – Singaporeans’ continuing obsession with food and fascination with technology. More so, he stressed that demand for the service will always be there, and firms which are able to figure out logistics and ordering porcess will be sustainable. “In terms of consequences for the F&B sector, every operator now needs to be able to think beyond the walk-in customer and realize that they now have easy access to a Singapore-wide platform. This could have an impact on their menu assortment, on their promotions, and on Source: Statistica, September 2016 their operations – as they are also now competing not just locally but

SINGAPORE BUSINESS REVIEW | JULY 2017

salary survey 2017 being aware of the most up-to-date market salary rates and remuneration trends,” says David Jones, senior managing director, Robert Half Asia Pacific. Jones adds that it employees who are well-informed on remuneration trends can command reasonable salaries, facilitate good salary negotiations, and identify which skills are in demand in the market and which ones they should develop.

Not much pay hike this year

Why middle managers will have to make do with less

Singapore is projected to have one of the lowest increases in Asia Pacific, with only 22% of employees expected to get a pay hike this year.

eftier paychecks are on hold for most of Singapore’s hopefuls as employers brave a lacklustre economic outlook this year. With a dearth in highly-skilled talent amidst a candidate-saturated market, firms are taking a more conservative approach in increasing salaries, offering bonuses, and taking in fresh blood. Only 22% of employees will experience a pay hike this year, but it will be so small it’s almost negligible. This year, a staggering 68% of Singapore’s workforce expects salary hikes compared to an average of 49% of candidates and employees around the world, says Michael Smith, managing director, Randstad Singapore. Executives, who are now more concerned with containing costs than showering employees with bucks and benefits, are challenged to temper soaring expectations while making sure that their best talents are not snagged by other companies. Across Singapore’s industries, increases will be experienced by only 15% of those who expect it. Michael Page’s Salary and Employment Outlook 2017 forecasts a 1-5% salary increase for this small part of the

SINGAPORE BUSINESS REVIEW | JULY 2017

Michael Smith

David Jones

Christine Wright

Jeffrey Ng

workforce, except for employees in senior-level and management who will possibly receive increases of a minimum of 5%. However, Willis Towers Watson’s Asia Pacific Salary Budget Planning Report shows that Singapore is not one of the few countries that are actually expecting base salary hikes in real terms. Analysts at Willis Towers Watson forecast that only Sri Lanka, Indonesia, China, Cambodia, Hong Kong and Taiwan will experience higher base salaries in real terms in the coming year compared to 2016 numbers. Pay hikes in recent years may be less than impressive, but 2017 seems to be the most dismal of all with China’s economic slowdown being felt in the rest of the Asia Pacific region, primarily in financial hubs such as Hong Kong and Singapore. Employers in these two cities are thus faced with a huge task of strategising their remuneration schemes in order to squeeze out the most efficient system possible. “Offering a competitive salary is an important strategy to win the war on talent, as well as retain top staff. Critical to achieving this strategy is

Pay or nay? In terms of salary increases, candidates in Singapore continue to demand and expect high raises and offers of up to 40% across all sectors. Christine Wright, managing director, Hays Asia, says that increases are on the cards due to candidate shortages, however, employers are not keen on delivering high rates compared to a few years ago when the economy was growing faster than it is now. It is a tough balancing act, as salary remains to be the key motivator amongst other elements in the remuneration package such as annual leave, medical and insurance cover, and flexible work arrangements. Michael Page’s Salary and Employment Outlook 2017 reveals that employees in the legal sector can expect pay hikes of a minimum of 10% and a maximum of 20%, the highest in the coming year amongst all the sectors. Those who provide financial services in the legal sector with 10-15 years post-qualified experience (PQE) can command as much as $350,000.00 with a minimum rate of $200,000.00, while those with 15 years and above PQE can command a minimum of $280,000.00. International private practice leads local private practice by almost double--lawyers in local firms with 3-5 years PQE can receive as much as $150,000.00, but lawyers in international firms with the same experience can take home a maximum of $250,000.00. According to Robert Half’s 2017 Singapore Salary Guide, demand is strong for junior and mid-level finance and accounting candidates and reveals that the best paying industries for finance professionals in

salary survey 2017 Singapore are pharmaceuticals, fastmoving consumer goods, technology, and real estate. Amongst all finance professionals, analysts and senior analysts in the tax division of large companies have the highest increase in salaries from a maximum of $100,000.00 last year to a maximum of $110,000.00 this year. Most other job titles in the finance sector such as specialists and executives in the payroll department and managers in the treasury department will experience no change in their paychecks. Meanwhile, IT professionals who are security analysts and consultants in the financial services sector who have 4-7 years of experience can expect a pay hike of up to 12.1% in 2017, while those with more than 10 years of experience in the same department can receive as much as 14.8% increases from $150,000.00 last year to $180,000.00 this year. These IT professionals are projected to have the highest increases compared to test analysts and managers with an average of 6% increases, developers with an average of 7% increases, and IT audit and IT risk with an average of 9% increases. There are no changes for most other IT professionals such as network engineers, pre-sales and post-sales, and systems analysts. As a general trend, candidates moving across jobs typically receive bigger hikes than those who stay. Jeffrey Ng, director, Michael Page Singapore, says that since companies are still very cautious of increasing headcount, a majority of recruitment is for replacement positions. According to him, salary increases and bonuses are likely to

be moderate this year as companies are still focused on containing costs. Job movers can expect an average of 10-15% salary increases. However, those who move even with the same pay do so because they think that the new role is more interesting and can provide them with better prospects. “35% of finance and accounting workers in Singapore think they earn a salary that is below industry average and 44% think they are not being paid a fair salary. 40% of finance and accounting professionals in Singapore are willing to move abroad for a higher salary,” says Jones. Analysts at Robert Half think that pay does not only motivate job change within the Singaporean market, but also influence staff decisions on exploring more opportunities overseas. Monitoring motivations On the other hand, top IT candidates are aware that they are in demand, hence they can negotiate accordingly. Skills shortages in this sector are pushing companies to adjust their salary packages to remain competitive in attracting and retaining staff. Jones says that almost half of technology professionals in Singapore are not satisfied with their salaries and think that they should be paid more with due consideration for their workload and responsibilities. Returning Singaporean professionals across all sectors can expect a high demand and higher offers for their skills and specialisations, as Singaporean companies believe that returning talent is ideally placed to offer a global perspective to local companies seeking to make inroads in Singapore and Southeast Asia, Wright adds.

Average % increases from last reviews across all countries

Source: Hays Asia

how much are expats earning? Twenty-eight year old Kieran Hughes had high hopes when he decided to move to Singapore to be with his partner a year ago. Back in the United Kingdom, Hughes worked as a professional broadcast engineer earning $96,000 a year, enough to pay for mortgage and buy his own car. With his strong career background, he thought finding a job in Singapore with the same competitive pay would be just as easy. But when he started working in an audio-visual firm as a project manager, he suddenly realised that he bought himself a one-way ticket to dismal pay conditions. Hughes earns $4,000 a month – just enough to pay for his rent in a tiny dwelling and to cover for necessities. He describes living in Singapore as “barely living” and was nowhere near the life that he had back in the UK. “I have a three-bedroom house in the UK with big garden front and back and I rent it out for approx. $1,000 dollars a month. Here in Singapore you can barely get a bedroom in a shared apartment for that kind of price,” he recalled. Hughes is one of the 1.3m foreigners trying to make a living in Singapore. And whilst Singapore continues to be the most generous when it comes to expat salaries and benefit packages, it is almost like survival of the fittest for most of the expats like Hughes. Shrinking pay packages In a recent study by ECA International, expat packages in Singapore have fallen 6% to $316,600 per annum, inclusive of salary, tax, and benefits. Meanwhile, in its closest rival Hong Kong, expat packages declined 2% to $356,800 per annum. Over the past five years, the gap has widened between Singapore and Hong Kong for the total cost of an expatriate package offered to Middle Managers. “Expatriates in Singapore have some or all of their cash and benefits determined in SGD values. For the purpose of our cross border comparison we have converted values into USD. As the value of the SGD has fallen against the USD in the past 12 months, USD values of expatriate packages in Singapore have suffered,” explains Lee Quane, ECA International’s regional director. He adds that the costs associated with some of the benefits that have been provided to Singapore-based expatriates have fallen in the past 12 months. This led to accommodation costs in areas commonly inhabited by expatriate staff to fall in the past year, reducing the costs associated with housing assistance provided to expatriates. Quane argues that this would not affect Singapore’s attractiveness when it comes to luring talent. “Despite a fall in the value of typical expatriate packages for middle managers, salaries are at their highest level in SGD terms for five years. Low tax rates also mean it remains an attractive location. Beyond salary incentives, Singapore will continue to be attractive to international talent as it is an attractive place to live and work,” he reckons. Aon Hewitt Southeast Asia partner Kumar Subramanian concurs and says, “The value of working in a regional location and the experience of working in Asia are significant nonmonetary factors that global talent find attractive. In addition, a decline in wage increases in Western markets as well as a greater pool of skilled talent including local Singaporeans and expats from India and China have moderated increases in expat packages.” SINGAPORE BUSINESS REVIEW | JULY 2017

salary survey 2017 ACCOUNTING AND FINANCE

Salary (S$’000)

years of experience

3-5

5-10

10-15

GENERAL Accounts Payable Accountant

45 – 60

60 – 80

N/A

Financial Accountant

50 – 65

65 – 100

N/A

Cost Accountant

50 – 65

65 – 100

N/A

Credit Analyst

50 – 65

65 – 90

N/A

Group Accountant - Consolidation

60 – 80

80 – 100

N/A

Financial/Business Analyst

50 – 80

80 – 120

100 – 150

Accounts Payable Manager

70 – 90

90 – 140

110 – 150

Finance Manager (Small/Medium Organisation)

80 – 100

90 – 120

120+

Finance Manager (Shared Services Centre)

80 – 100

100 – 120

120+

Finance Manager (Large Organisation)

100 – 130

130 – 180

180+

Group Finance Manager

N/A

80–130

100 – 150

Credit Manager

80 – 100

100 – 130

130 – 150

Costing Manager

N/A

100 – 150

150+

Financial & Planning Analysis Manager

100 – 130

130 – 150

150 – 200

Financial Controller (Small/Medium Organisation)

130 – 150

150 – 180

180+

Financial Controller (Large Organisation)

150 – 200

180 – 220

220+

Finance Director (Shared Services Centre)

150 – 200

180 – 220

220+

CFO/Finance Director (Large Organisation)

220 – 250

250 – 300

300 – 350

Finance Director (Shared Services Centre)

200-220

220-250

250+

CFO/Finance Director (Large Organisation)

220-250

250-300

300-350

Pricing Analyst

60 – 80

80 – 100

100 – 140

Treasury Analyst

60 – 80

80 – 120

N/A

Tax Analyst

60 – 80

80 – 110

N/A

Internal Auditor

65 – 90

90 – 130

120+

Pricing Manager

100 – 120

120 – 150

150+

Revenue Controller

80 – 120

120 – 180

130+

Corporate Finance Manager

90 – 120

120 – 180

180+

Treasury Manager

100 – 120

120 – 180

180+

Internal Audit Manager

100 – 130

130 – 150

150 – 200

Tax Manager

100 – 150

130 – 180

180+

Corporate Finance Director

200 – 220

220 – 250

250 – 300

Treasury Director

200 – 220

220 – 250

250 – 300

Internal Audit Director

200 – 220

220 – 250

250 – 300

Tax Director

200 – 220

220 – 250

250 – 300

Tax Director

200-220

220-250

250-300

External Audit

50 – 70

70 – 150

120+

Tax

50 – 70

70 – 150

130+

Management Consultancy

60 – 100

100 – 150

140+

Corporate Finance

60 – 100

100 – 150

140+

Risk & Compliance

65 – 90

90 – 130

130+

SPECIALIST

PROFESSIONAL SERVICES & PUBLIC ACCOUNTING

SINGAPORE BUSINESS REVIEW | JULY 2017

salary survey 2017 FINANCIAL SERVICES

Salary (S$’000)

Role

Experience

2017 Salary (SGD '000)

2017 Bonus LOW (%)

2017 Bonus MEDIUM (%)

2017 Bonus HIGH (%)

Finance - Regulatory Finance Analyst

1 – 3 years

48 – 100

Associate/Assistant Vice President

3 – 6 years

100 – 150

Vice President

6 – 10 years

160 – 240

Executive Director

10+ years

240 – 300

Managing Director/Head

15+ years

300+

Regulatory

60-90

90-180

180-250+

250+

Insurance

50-75

75-160

160-220+

220+

Analyst

1 – 3 years

60 – 100

Associate/Assistant Vice President

3 – 6 years

100 – 180

Vice President

6 – 10 years

190 – 280

Executive Director

10+ years

280 – 400

Managing Director/Head

15+ years

400+

Assistant

1 – 3 years

60 – 100

Assistant Manager

3 – 5 years

100 – 180

Manager

5 – 7 years

190 – 280

Senior Manager

7 – 10 years

280 – 400

Director/Head

10+ years

360+

Compliance - Investment Banking

Compliance - Insurance

Finance - Financial Control – Investment Banking Analyst

1 – 3 years

48 – 96

Associate/Assistant Vice President

3 – 6 years

100 – 150

Vice President

6 – 10 years

150 – 200

Country Chief Financial Officer

12+ years

300+

Regional Chief Financial Officer

15+ years

400+

Senior Vice President/Director

10+ years

200 – 300

HEALTHCARE & LIFE SCIENCE Experience

Salary (S$’000) 3 to 5 years

5 to 10 years

10 to 15 years

15+ years

Clinical Research Drug Safety/Pharmacovigilence

50 – 65

65 – 90

90 – 150

N/A

Data Management

50 – 70

70 – 100

100 – 120

N/A

Clinical Operations

50 – 70

70 – 100

100 – 120

N/A

Biostatistician

50 – 80

80 – 100

N/A

SAS Programmer

50 – 80

80 – 100

N/A

Medical Affairs

110 – 130

130 – 180

180 – 250

300+

Manufacturing

50 – 70

70 – 90

100 – 160

200+

Process Engineering

60 – 90

90 – 120

120 – 150

180+

Mechanical Engineering

60 – 90

90 – 120

120 – 150

180+

Electrical Engineering

60 – 90

90 – 120

120 – 150

180+

Controls/Automation

60 – 90

90 – 120

120 – 150

180+

EHS

60 – 90

90 – 120

120 – 150

180+

OPERATIONS

SINGAPORE BUSINESS REVIEW | JULY 2017

salary survey 2017 HUMAN RESOURCES

Salary (S$’000)

years of experience

3-5

5-10

10-15

15+ years

BANKING & FINANCE Payroll Specialist

45 – 65

65 – 100

100 – 130

130+

Mobility Specialist

50 – 70

70 – 120

120 – 150

150+

HRIS Specialist

50 – 85

85 – 130

130 – 150

150+

Learning and Development Specialist

60 – 100

100 – 150

150 – 200

200+

Recruitment Specialist

60 – 100

100 – 150

150 – 200

200+

HR Generalist/Business Partner

60 – 110

110 – 180

180 – 240

240+

Organisational Development

60 – 110

110 – 200

200 – 300

300+

Compensation and Benefits Specialist

60 – 120

120 – 220

220 – 300

300+

Head of Human Resources

N/A

250+

300+

Payroll Specialist

40 – 60

60 – 90

90 – 110

110+

Mobility Specialist

50 – 65

65 – 100

100 – 140

140+

HRIS Specialist

50 – 80

80 – 120

120 – 150

150+

Learning and Development Specialist

50 – 80

80 – 120

120 – 160

160+

Recruitment Specialist

50 – 80

80 – 120

120 – 165

165+

HR Generalist/Business Partner

55 – 100

100 – 160

160 – 200

200+

Organisational Development

55 – 100

100 – 160

160 – 220

220+

Compensation and Benefits Specialist

60 – 90

90 – 150

150 – 250

250+

Head of Human Resources

N/A

200 – 300

300+

COMMERCE & INDUSTRY

LAWYERS years of experience

Salary (S$’000) 3-5 PQE

5-10 PQE

10-15 PQE

15+ years PQE

Private Practice (Local Firms)

70 – 150

95 – 200

190+

N/A

Private Practice (International Firms)

145 – 250

220 – 370

300+

N/A

In-house Corporate (MNC)

85 – 130

100 – 190

170 – 250

210+

Financial Services

100 – 180

200 – 350

280+

Paralegals

40 – 70

55+

N/A

Corporate Secretariat (Non ICSA–Certified)

30 – 60

55+

N/A

Corporate Secretariat (ICSA–Certified)

50 – 95

90+

N/A

PROPERTY & CONSTRUCTION

Salary (SG$’000)

years of experience

3-5

5-10

10-15

15+ years

Corporate Real Estate Environment Health & Safety

45 – 60

60 – 110

110 – 150

150+

Facilities Management & Corporate Services

45 – 60

60 – 108

115 – 160

160+

Property Management

45 – 65

65 – 120

120 – 140

140+

Security & BCP

45 – 60

60 – 125

125 – 180

180+

Leasing & Transaction Management

48 – 65

65 – 130

130 – 185

185+

Design Management

35 – 55

55 – 90

90 – 125

125+

Office Fit-Out

45 – 70

70 – 110

110 – 150

150+

Construction & Project Management

45 – 70

70 – 120

120 – 170

170+

Project Development

60 – 90

90 – 145

145 – 190

190+

Asset Management

45 – 80

80 – 120

120 – 180

180+

Portfolio Management

45 – 80

80 – 120

120 – 160

160+

Investment Management

45 – 80

80 – 130

130 – 200

200+

Asset Management

60 – 95

95 – 130

130 – 220

220+

Portfolio Management

55 – 90

95 – 130

130 – 220

220+

Investment Management

60 – 95

95 – 150

150 – 250

250+

Projects

Real Estate Investments - Agency

Real Estate Investments - Client

SINGAPORE BUSINESS REVIEW | JULY 2017

salary survey 2017 Procurement & Supply Chain years of experience OIL & GAS/PHARMACEUTICALS Quality Direct Logistics/3PL Supply Chain Distribution/Warehousing Planning Indirect Lean/Six Sigma FMCG/RETAIL Quality Direct Logistics/3PL Supply Chain Distribution/Warehousing Planning Indirect Lean/Six Sigma Technology Quality Direct Logistics/3PL Supply Chain Distribution/Warehousing Planning Indirect Lean/Six Sigma Financial Services Purchasing/Procurement Officer Procurement Specialist Procurement Analyst Procurement Manager Vendor/Supplier Relationship Manager Strategic Sourcing Leader/Manager Category/Commodity Manager GM/Head of Procurement CPO/Director ENGINEERING & MANUFACTURING years of experience R&D Engineering/R&D Design Engineer Application Engineer Engineering Manager Engineering Director Operations Manufacturing Process Engineering Mechanical Engineering Electrical Engineering Controls/Automation EHS Quality Control/Assurance Quality Engineer Quality Manager Quality Director Field Service/Service Engineering Field Service Engineer Service Manager Service Director Sales Engineer Sales Engineering Manager

Salary (S$’000) 5-10

3-5

10-15+

15+ years

50 – 70 50 – 100 40 – 80 40 – 80 40 – 70 50 – 100 50 – 100 60 – 100

80 – 110 100 – 150 80 – 140 90 – 140 80 – 140 100 – 150 100 – 150 100 – 160

120 – 160 150 – 200 130 – 180 150 – 230 150 – 180 150 – 200 160 – 220 160 – 220

N/A N/A N/A N/A N/A N/A N/A N/A

50 – 80 50 – 85 45 – 80 50 – 90 45 – 80 50 – 90 50 – 90 60 – 90

80 – 110 85 – 140 90 – 130 90 – 140 80 – 125 90 – 150 90 – 140 100 – 150

120 – 160 130 – 190 130 – 170 150 – 220 130 – 160 150 – 220 160 – 220 160 – 220

N/A N/A N/A N/A N/A N/A N/A N/A

50 – 80 50 – 85 50 – 80 50 – 80 50 – 90 50 – 85 50 – 90 60 – 100

80 – 110 90 – 120 85 – 120 80 – 130 90 – 130 90 – 140 100 – 140 100 – 170

130 – 160 130 – 190 130 – 170 150 – 220 140 – 170 140 – 200 160 – 220 180 – 240

N/A N/A N/A N/A N/A N/A N/A N/A

50 – 70 70 – 90 65 – 75 80 – 100 80 – 95 N/A 90 – 120 N/A N/A

60 – 80 90 – 130 70 – 100 100 – 140 90 – 135 100 – 160 120 – 150 N/A N/A

75 – 90 130 – 170 N/A 120 – 180 130 – 160 170 – 220 150 – 200 150 – 200 200 – 250

75 – 90 140 – 180 N/A 140 – 180 130 – 160 170 – 230 180 – 220 180 – 350 220 – 350+

Salary (S$’000) Engineer/Senior Eng.

Principal

Manager

Director

45 – 75 60 – 90 N/A N/A

70 – 100 70 – 100 N/A N/A

100 – 150 100 – 150 100 – 150 N/A

150 – 160+ 150 – 160+ N/A 150 – 250

50 – 70 60 – 80 60 – 80 60 – 80 60 – 80 60 – 80

70 – 90 90 – 120 90 – 120 90 – 120 90 – 120 90 – 120

100 – 160 120 – 150 120 – 150 120 – 150 120 – 150 120 – 150

200+ 180+ 180+ 180+ 180+ 180+

40 – 75 N/A N/A

70 – 100 N/A N/A

N/A 80 – 120 N/A

N/A N/A 150 – 250

40 – 65 N/A N/A 40 – 80 N/A

65 – 90 80 – 100 N/A 70 – 100 N/A

N/A N/A 120+ N/A 100 – 150

N/A N/A N/A N/A N/A

SINGAPORE BUSINESS REVIEW | JULY 2017

RANKINGs: MBA

INSEAD tops this year’s list of MBA providers

Top business schools gear up for MBA upgrade in 2017 An innovation driven economy requires more than the old school.

ingapore’s MBA programmes saw significant declines of 10 to 20% amongst international students in the first quarter of 2017, with less full time enrollees from major source countries such as China, Vietnam, and India, amidst signs of industry consolidation. With this trend well on the way, Singapore’s top MBA providers are set to implement major programme updates and overhauls in the midst of an increasingly competitive global arena and a highly dynamic and volatile economic environment. Established business educators in the city are acquiring new campuses and facilities, adopting flexible internship arrangements, ramping up partnerships for international placements, and tapping on technology to deliver more accessible education for its multi-tasking student population. Traditional courses are enhanced with more socially relevant themes, and new highly-specialised degrees are being offered in conjunction with general tracks. Lim Bee Ing, centre director, Manchester Business School (MBS), Southeast Asia Centre, 36

SINGAPORE BUSINESS REVIEW | JULY 2017

Singapore’s MBA programmes saw significant declines of 10 to 20% amongst international students in the first quarter of 2017.

says that long-established MBA providers around the world are using innovation, economies of scale, and employer recognition to establish their footprints in major financial hubs, thereby continuing to ease out smaller institutions and recent entrants. Top local MBA providers in Singapore are not threatened, as they step up to the challenge by expanding international networks and strengthening partnerships with the national government. Innovative education Prateek Nayak, regional head, Southeast Asia, Amity Global Business School, shares that as the market is experiencing a state of consolidation and that as the demand decreases due to government intervention, it is a good time for business schools to make improvements to their curricula and maintain their competitive position in the market. “Increasingly, people know what they want with regard to their interest and career plans. Instead of embarking on a general degree, they enroll into programmes that can equip them with specialised skills and knowledge in fields such as finance,

human resource management, and entrepreneurship and help them to scale the career ladder,” says Dr Sam Choon-Yin, dean, PSB Academy. “As the government initiatives on ‘SG Skillsfuture’ expanded the funding into a wider spread of ‘skill courses’ or VET courses, the local segment swung to a stabilised situation as the demand was captured by the public funded programmes. However, these impacts may be marginal in the case of the MBA academe,” adds Nayak. As providers innovate, it is crucial to differentiate and offer firsts, not mere rehashes of what others already have. Branding is key, and students hope to find the best institution that could provide them with a better individual market branding. Revamps and reboots With the ongoing weeding out of programmes, incumbent players which have maintained a stable demand now have the opportunity to boost recruitment and creativity. Marie-Antonie Chua Nan Sze, director, Graduate Studies, NUS Business School, NUS, says that NUS has answered the call for greater flexibility in its MBA programme. She says that the introduction of a creditbearing internship will allow MBA students to take on good fulltime internships even when such opportunities become available during the main study semesters, and at the same time, earn modular credits that can be counted toward the MBA programme. Other notable changes include Amity Global Business School’s acquisition of a new main campus at Kay Siang Road and INSEAD’s online platform for its accelerated 10-month MBA. AGBS’s campus boasts of a Fashion Studio, Engineering Laboratories, Moot Courts, and Business Incubators to assist students and alumni in business venture startups with a holistic education with Amity. On the other hand, INSEAD’s online platform offers an early start to students by leveraging new

RANKINGs: MBA

Amity Global Business School’s main campus at Kay Siang Road

technologies with online content, “integrated” digital cases, and industry-specific orientation videos for participants. “The shift in emphasis is to help arm students with life skills. Oldschool rote learning and memorising have given way to applying textbook knowledge to real-world scenarios and more current content. Language lessons and assessment now place more weight on communication skills to help students converse in English language efficiently,” says Eric Lim, head of MDIS Business School, Management Development Institute of Singapore. MBS Lim says that their programme prides itself in its international network and the benefits of sharing knowledge and experience across this network. MBS, with its focus on applied learning, offers a selection of intensive face-to-face residential workshops at its centre, as well as with partner global centres in Asia, UK, the Middle East, and the Americas. Equipping students with the right set of life skills may also be done in the context of each student’s personality, goals, and life situation. Urs Peyer, dean of degree programmes and associate professor of finance at INSEAD, shares the highlights of INSEAD’s new MBA curriculum, one of which is a personalised learning journey aimed to guide students to develop selfawareness, interpersonal skills, and communication effectiveness through professional and peer coaching. Business schools across Singapore are beginning to offer highly specialised courses and programmes,

INSEAD’s online platform offers an early start to students by leveraging new technologies with online content, “integrated” digital cases, and industryspecific orientation videos for participants.

one of which is the Specialisation in Innovation & Entrepreneurship by NUS. To be launched in August 2017, this programme incorporates inputs by an Entrepreneurship Expert Panel consisting of academics, practitioners, as well as alumni, and will consist of new electives, including more Experiential & International Learning opportunities for budding entrepreneurs and creative intrapreneurs. Further studies Professionals and executives who wish to specialise further and reach the top of the business ladder have more than a wide array of career paths to choose from. For those who aim to take it a notch higher, the PSB Academy is set to launch its first Doctor of Business Administration (DBA) course with its partner Edinburgh Napier University as an

additional option for executives who want to pursue further studies. “Equivalent to the Ph.D. in terms of originality of work and academic achievement, the DBA emphasises contribution to business knowledge and the application of ideas to the business environment. It blends theoretical learning with practical experience based on a business context to create a reflective practitioner,” says Choon-Yin. In the meantime, Lim says that part of MBS’s long term strategy is the introduction of new programmes in line with those already launched by the University of Manchester. One of the programmes that students can look forward to is the dual MBA degrees with Kelley School of Business and Renmin University in China. Who made it to the list? INSEAD’s accelerated 10-month MBA continues to attract enrollment. The school topped the list with 1,055 students in 2017. NUS ranks second with 617 students across its various MBA programmes, with most students enrolled for an NUS MBA and an NUS Executive MBA. James Cook University follows at third place with 311 students for its James Cook University MBA. The Manchester Business Schools comes in at a close fourth with 300 students enrolled in its Manchester Global Master of Business Administration. The Management Development Institute of Singapore finishes the top five with 248 students across its three MBA offerings.

Manchester Business School clinches the fourth spot with 300 students

SINGAPORE BUSINESS REVIEW | JULY 2017

RANKINGs: MBA Programmes MBA Programme

Provider

Total Number of Students 2017

2016

Anglia Ruskin University - MBA

Amity Global Business School

Bangor University (UK) MBA in Banking & Finance

Management Development Institute of Singapore

Bangor University (UK) MBA in International Marketing

Management Development Institute of Singapore

Hull University Business School Executive MBA

School of Postgraduate Studies, PSB Academy

INSEAD MBA

INSEAD

1,055

1,004

James Cook University MBA*

James Cook University Singapore

311

Manchester Global Master of Business Administration

Manchester Business School, S.E. Asia Centre

300

353

Nanyang Executive MBA

Nanyang Business School, Nanyang Technological University

Nanyang Fellows MBA

Nanyang Business School, Nanyang Technological University

Nanyang MBA

Nanyang Business School, Nanyang Technological University

Nanyang Professional MBA

Nanyang Business School, Nanyang Technological University

Nottingham University Business School MBA

School of Postgraduate Studies, PSB Academy

Rutgers Executive MBA*

Rutgers Business School Asia Pacific

S P Jain Executive MBA

S P Jain School of Global Management, Singapore

S P Jain Global Master of Business Administration

S P Jain School of Global Management, Singapore

S P Jain Master of Global Business

S P Jain School of Global Management, Singapore

Strathclyde MBA

YMCA Education Centre Limited

166

145

Sydney Business School, University of Wollongong MBA

School of Postgraduate Studies, PSB Academy

S3 Asia MBA with Fudan University, Korea University & National University of Singapore

National University of Singapore

The NUS Executive MBA (in Chinese)

National University of Singapore

118

133

The NUS Executive MBA (in English)

National University of Singapore

The NUS MBA

National University of Singapore

295

340

The NUS MBA Double Degree with HEC Paris

National University of Singapore

The NUS MBA Double Degree with Peking University

National University of Singapore

The NUS MBA – PhD

National University of Singapore

The NUS MBA – Yale Master of Advanced Management

National University of Singapore

The University of Newcastle, Australia MBA

School of Postgraduate Studies, PSB Academy

UCLA – NUS Executive MBA

National University of Singapore

University of Birmingham MBA

SIM Global Education

140

University of Northampton - MBA

Amity Global Business School

133

University of Sunderland (UK) MBA

Management Development Institute of Singapore

111

191

TOTAL

3,506

3,535

DATA PROVIDED BY COMPANIES. SURVEY PERIOD: march-april 2017 Currencies were converted to SGD based on FOREX rate as of april 24, 2017. *DATA RETAINED FROM 2016 REPORT 1 INSEAD’s multi-campus structure enable its MBA students to exchange between campuses in Fontainebleau and Singapore. Each year, 70% of students participate in the exchange programme; and the number of MBA students in the Singapore campus will oscillate between 400 and 600 students at different time of the year.

SINGAPORE BUSINESS REVIEW | JULY 2017

RANKINGs: MBA Programmes Head of Singapore Office/Dean

Total Number of Students

Minimum Cost (S$)

Duration

Number of Intakes Per Year

Full Time

Part Time

Full Time

Part Time

Full Time

Part Time

Easwaramoorthy Rangaswamy

18,190

1 year

Roland Ng

20,896

12 months

Roland Ng

20,896

12 months

28 months

Sam Choon Yin

Ilian Mihov

1,055

Dale Anderson

303

32,356.80 122,263

44,940 including GST (International) 43,674 including GST (Domestic)

10 Months 43,674 including GST (Domestic only)

16 months

3 intakes (full time) 2 intakes (part time)

Lim Bee Ing

300

68,167.56

1.5-2 years

Olexander Chernyshenk

95,000

14 months

Siriwan Chutikamoltham

75,000

1 year

Goh Kim Huat

62,000

1 year

Douglas Streeter Rolph

65,000

18 months

Sam Choon Yin

32,742

24 months

Joseph Schaffer

75,000

14.5 months

Yasmin Javeri Krishan

35,310 without tax

18 months

Yasmin Javeri Krishan

68,622

12 months

Yasmin Javeri Krishan

60,520

16 months

Joe Heng

166

38,500

24 months

Sam Choon Yin

23,946.60

28 months

Bernard Yeung

64,000

17 months

Bernard Yeung

118

95,000

24 months

Bernard Yeung

95,000

15 months

24 months

Bernard Yeung

154

141

62,000

Bernard Yeung

62,000

17 months

Bernard Yeung

44,000

24 months

Sam Choon Yin

28,761.60

16 months

44,000 0

44,000

17 months 20-24 months

44,000

24 months

2 36 months

Bernard Yeung

153,265

15 months

Ho Soon Eng

140

32,528

24 months

Easwaramoorthy Rangaswamy

23,540

1 year

Roland Ng

25,195

23,946

12 months

18 months

SINGAPORE BUSINESS REVIEW | JULY 2017

RANKINGs: MBA Providers MBA Provider

MBA Programme

Head of Singapore Office/Dean

INSEAD1

INSEAD MBA

Ilian Mihov

S3 Asia MBA with Fudan University, Korea University & National University of Singapore

Bernard Yeung

The NUS Executive MBA (in Chinese)

Bernard Yeung

The NUS Executive MBA (in English)

Bernard Yeung

National University of Singapore

The NUS MBA

Bernard Yeung

The NUS MBA Double Degree with HEC Paris

Bernard Yeung

The NUS MBA Double Degree with Peking University

Bernard Yeung

The NUS MBA – PhD

Bernard Yeung

The NUS MBA – Yale Master of Advanced Management

Bernard Yeung

UCLA – NUS Executive MBA

Bernard Yeung

James Cook University Singapore*

James Cook University MBA

Dale Anderson

Manchester Business School, S.E. Asia Centre

Manchester Global Master of Business Administration

Lim Bee Ing

Bangor University (UK) MBA in Banking & Finance

Roland Ng

Bangor University (UK) MBA in International Marketing

Roland Ng

University of Sunderland (UK) MBA

Roland Ng

Management Development Institute of Singapore

Amity Global Business School

Nanyang Business School, Nanyang Technological University

School of Postgraduate Studies, PSB Academy

YMCA Education Centre Limited

S P Jain School of Global Management, Singapore

Anglia Ruskin University, MBA

Easwaramoorthy Rangaswamy

University of Northampton, MBA

Easwaramoorthy Rangaswamy

Nanyang Executive MBA

Olexander Chernyshenko

Nanyang Fellows MBA

Siriwan Chutikamoltham

Nanyang MBA

Goh Kim Huat

Nanyang Professional MBA

Douglas Streeter Rolph

Nottingham University Business School MBA

Sam Choon Yin

Hull University Business School Executive MBA

Sam Choon Yin

Sydney Business School, University of Wollongong MBA

Sam Choon Yin

The University of Newcastle, Australia MBA

Sam Choon Yin

Strathclyde MBA

Joe Heng

S P Jain Global Master of Business Administration

Yasmin Javeri Krishan

S P Jain Executive MBA

Yasmin Javeri Krishan

S P Jain Master of Global Business

Yasmin Javeri Krishan

DATA PROVIDED BY COMPANIES. SURVE Y PERIOD: march-april 2017 Currencies were converted to SGD based on FOREX rate as of april 24, 2017. *DATA RETAINED FROM 2016 REPORT 1 INSEAD’s multi-campus structure enable its MBA students to exchange between campuses in Fontainebleau and Singapore. Each year, 70% of students participate in the exchange programme; and the number of MBA students in the Singapore campus will oscillate between 400 and 600 students at different time of the year.

SINGAPORE BUSINESS REVIEW | JULY 2017

RANKINGs: MBA PROVIDERS Total Number of Students Full Time

Part Time

1055

1055 Grand Total

154

Full Time

Part Time

Number of Intakes Per Year

122,263

10 Months

64,000

17 months

118

95,000

24 months

95,000

15 months

141

295

62,000

24 months

44,000

DuratioN Part Time

118

303

Minimum Cost (S$) Full Time

1055 21

5 4

Total

44,000

62,000

44,000

Grand Total

617

311

Grand Total

311

62,000

17 months 20-24 months

44,000

24 months

300

Grand Total

300

20,896

36 months

17 months

43,674 including GST (Domestic only)

16 months

68,167.56

1 1

24 months 153,265

44,940 including GST (International) 43,674 including GST (Domestic)

1 15 months

16 months

3 intakes (full time) 2 intakes (part time)

1.5-2 years

12 months

20.896

111

25,195

23,946

12 months

12 months 18 months

3 3

Grand Total

248

18,190

1 year

133

23,540

1 year

Grand Total

187

14 months

95,000

75,000

1 year

62,000

1 year

Grand Total

180

79 31 9 57

65,000

18 months

32,742.00

24 months

32,356.80

28 months

9 57

Grand Total

166

Grand Total

166 67

Grand Total

158

16 months

176

166

23,946.60 28,761.60

38,500

68,622

24 months

12 months 35,310 without tax

60,520

2 18 months

16 months

2 3

SINGAPORE BUSINESS REVIEW | JULY 2017

Legal briefing

How complex is the new Companies Act? The recently passed Companies Act amendments are aimed at making business ownership transparent.

n March, Parliament passed the Companies (Amendment) Bill and Limited Liability Partnerships (Amendment) Bill in response to rising incidence of money laundering, terrorist financing, and tax evasion, and in support of the country’s bid to become an international centre for debt restructuring. The Companies Act amendments are aimed at making ownership and control of business entities more transparent, introducing an inward redomiciliation regime for foreign corporate entities, reducing regulatory burden to make doing business easier, and enhancing Singapore’s debt restructuring and corporate rescue framework, according to senior minister of state for law and finance Indranee Rajah S.C. What are the new registers, and which companies need to comply? Singapore now requires business entities to keep registers of controllers, registers of members of foreign companies, and registers of nominee directors. “A key change is the introduction of a requirement for Singapore companies and limited liability partnerships as well as foreign companies registered to do business in Singapore and to keep registers of significant controllers and nominee directors,” says Allen & Overy. “The application of these rules to determine whether a particular person appears on a company’s register of registrable controllers can be complex.” Some key issues that firms should take note of to comply with the new requirements include considering exemptions, sending notices in the prescribed form, and documenting the sending of prescribed notices and receipt of the subsequent replies, says Christine Chan, co-head of the corporate and regulatory compliance practice group at Allen & Gledhill. Firms must also maintain and keep a register of registrable controllers, update, and correct the information contained in the registers, observe timelines for keeping the register, and disclose the registers to Registrar and public agencies upon request. “The transparency-related amendments are further examples of the Singapore government’s objective of

The country has also abolished the rule requiring liquidation of foreign companies to “ring fence” Singapore assets and pay off debts incurred in Singapore first.

making ownership and control of business entities more transparent, and continue to strengthen Singapore as a leading financial centre that follows international best practices,” says Andrew Martin, head of corporate and 42

SINGAPORE BUSINESS REVIEW | JULY 2017

Keeping registers of significant controllers is now required

securities practice group at Baker McKenzie in Singapore.

Andrew Martin

Christine Chan

What will be the impact of the new inward redomiciliation regime? Singapore has introduced a framework to enable foreign corporate entities to transfer their registration to Singapore, a process called redomiciliation, often to benefit from the country’s more conducive regulatory environment or to move closer to their main operational base or markets. Martin says the new inward redomiciliation regime will enhance Singapore’s reputation for flexibility and attract multinational companies looking for a hub to springboard their growth in the Asian markets. Firms that want to redomicile in Singapore must meet certain requirements, as well as comply with the Companies Act like any other Singapore-incorporated company. ACRA has indicated that the inward redomiciliation regime introduced by the amendments will be implemented within the first half of 2017. What will the amendments on debt restructuring mean for Singapore? In 2013, the Insolvency Law Review Committee made recommendations to update Singapore’s insolvency laws so that the country could take advantage of the rising demand for debt restructuring services in Asia. The new amendments look to further enhance Singapore as an international debt restructuring centre and facilitate corporate rescues, and include the introduction of “super priority” for rescue financing and the relaxation of criteria for making of a judicial management order from the current “will be unable to pay its debts” to “is likely to become unable to pay its debts.” The country has also abolished the rule requiring liquidation of foreign companies to “ring fence” Singapore assets and pay off debts incurred in Singapore first, except for certain specific financial entities like banks and insurance companies.

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GLOBAL BUSINESS POWER CORPORATION’S CEO ROLANDO BACANI FIGHTS TO KEEP UP WITH THE PHILIPPINES’ RENEWABLES RACE

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GONZALO LUCHETTI HEAD OF RETAIL BANKING ASIA PACIFIC CITI

HOW DID PROFITS GROW 46% IN HALF A DECADE?

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marketing Briefing

Is account-based marketing here to stay? Singapore’s marketers reveal how data-driven ABM is becoming the norm for businesses in the city state.

years, largely in part because we have the technology to scale ABM now that weren’t available before. ABM uses data to uncover relevancies and opportunities within a customer/account, drive growth, and increase return on investments within said customer,” says Wong Yongjie, chief marketing officer and co-founder at on-demand logistics start-up Quorier. Wong notes that data accuracy and precision is key. “The more you know about your customers/accounts, the better equipped you will be to select the right targets. Industry and revenue alone don’t tell you much. Combine these two and you have a rough idea of your market,” says Wong.

f businesses are to have any chance of attracting and retaining customers and thus earn returns on their investments, they must have an outstanding grasp of their customers’ sentiments, tastes, and preferences. For the longest time, traditional marketing fulfilled this need, but as businesses—especially those in the customer service sector—become more competitive and technology levels evolve, businesses are finding the need to step up and similarly boost their marketing efforts to a higher level. Enter data-driven, account-based marketing (ABM), considered by many analysts to be the future of business marketing. “Account or activity-based marketing work is for analysing the processes of a business marketing effort to identify strengths and weaknesses,” says Benny Chow, chief marketing officer and co-founder at Firefly Photography, adding that, specifically, ABM is more oriented toward creating cost effectivity—“seeking out areas in marketing where a business marketing effort is losing money so that those activities can be eliminated or improved to increase profitability.” How do businesses conduct ABM? “Data-driven ABM uses information collected on your business’ accounts/clients, either internally-sourced or externally-collected, to better target them,” explains Roy Ang, marketing and business development manager at Withers KhattarWong. According to Ang, data-driven ABM focuses on achieving more effective B2B (businessto-business) marketing via better collection and data use. According to Chow, data-driven ABM is accomplished by several levels of testing before arriving at a quantifiable conclusion. “When measurable data is collected based on certain marketing efforts or actions, via AB testing, the different tests or effort is shown via an analytical platform report, i.e. Google Analytics, that shows you which tests or effort is working and which is not.” These days, data-driven ABM has become more commonplace thanks to significant advances in data technology. “ABM has gathered traction in the last few

How will account-based marketing translate to success?

SINGAPORE BUSINESS REVIEW | JULY 2017

Data-driven ABM uses information collected on your business’ accounts/clients, either internally-sourced or externallycollected, to better target them.

Benny Chow

Roy Ang

Wong Yongjie

What are the pros and cons of ABM? Despite its current relevance, a number of businesses and marketers alike continue to face hurdles in data analysis, a crucial component of data-driven ABM. “Marketers have always known that ABM can drive growth in the B2B marketing space, but the lack of data or the lack of tools to analyse these data are often a hindrance,” notes Ang. Nevertheless, the benefits of data-driven ABM continue to outweigh any potential hurdles as marketers seek ways to maximise its use in order to deliver ROI. According Ang, the success of data-driven ABM is rooted in data accuracy and integrity. “Marketers can maximise the use of data-driven ABM to discover new opportunities in the market and the key clients to focus on by ensuring that the data is up-to-date and accurate,” says Ang. “It is important to check in with the account managers and sales teams to ensure that the data is up-to- date and any campaigns you have planned are discussed with the account managers,” he adds. What does the future hold for ABM? Moving forward, analysts predict data-driven ABM’s further development as technology provides businesses greater access to customer information and analysis while shrinking costs and expanding scale. “I believe ABM will be more prevalent and advances in technology will afford marketers more data points and insights to enrich a customer account profile. In three to five years, ABM will drive the strategic marketing direction for most companies, as we move from ‘one market fits all’ to a more bespoke approach,” says Wong. “Data-driven ABM is in the spotlight now, due largely to advances in technology and expertise in marketing analytics that make ABM more scalable and cost-effective than before,” adds Ang.

THE

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ANALYSIS: asia demographics

Population dynamics is a critical factor for growth

The current status of Asia’s young and old Diverging demographics outlook promises heterogenous regional performance in the decades ahead.

long with global output growth, Asia as a region has slowed in the past decade. While the 2008/09 global financial crisis and the subsequent rise in trade protectionism have played major roles in subtracting from economic activity, a broader, structural factor is at play. Many of Asia’s dynamic, fast growing economies of the past decades are slowing as they have begun to age, with the share of the economically inactive population rising as a share of those in the labor force. For economies like Singapore, South Korea, or Japan, this is taking place at a time when they have already reached the high-income cohort, affording them with the wherewithal to deal with the associated headwinds. But for the likes of China and Thailand, the onset of aging has coincided with reaching only middle-income status. For a variety of reasons, aging before getting rich can be particularly challenging.

SINGAPORE BUSINESS REVIEW | JULY 2017

Asia’s working age population will grow by 317m, roughly in line with Africa’s, to 3.3b by 2030.

Although economies representing 1.8b Asians are past their demographic peak, another group of countries, representing an even larger population (around 2.1 billion) remain blessed by favorable demographic dynamics. Led by India and Indonesia, and followed by Bangladesh, Myanmar, Pakistan, and the Philippines, these economies offer considerable potential in the form of a demographic tailwind. Indeed, the fact that some parts of Asia are aging and some parts will likely remain largely youthful offer intriguing recalibrations of growth and relocation of production in the coming decades, in our view. Population dynamics is a critical factor in determining potential economic growth. A favorable proportion of working people over non-working ones means more income generation, higher tax collection, higher savings, lower cost of labor (and hence competitiveness), and more societal and fiscal affordability with respect to pension

and healthcare costs. All of these trends can reverse as the population ages. Of course, a youthful population is not a guarantee for high growth, nor is aging destined to confine an economy to low growth. A poorly educated workforce and inadequate infrastructure can diminish the demographic dividend, while productivity enhancement through innovation and investment can keep growth going even in an aging society. Abundant labor supply Asia has impressive financial savings, sizable FX reserves, and vibrant markets, but its biggest asset is in fact its people. According to the United Nations, the region is home to 60% of the world’s population. Going forward, Asia will therefore continue to account for the bulk of global growth and demand. The region’s large population also ensures abundant labor supply, providing firms relative ease to expand capacity within the region. While the African continent is fast catching up, Asia

ANALYSIS: asia demographics remains home to 6 for every 10 of the world’s workforce. Mediumvariant projections of the United Nations, which assume that fertility behavior evolves in line with historical trends, indicate that Asia’s working age population will grow by 317m, roughly in line with Africa’s, to 3.3b by 2030, whereas the rest of the world’s workforce is projected to remain stable. With continued labor force growth, increased labor competition could give way to technological advancements and innovations, breathing vitality to many of Asia’s economies. In particular, emerging economies of India, Indonesia, and the Philippines, as well as the frontier markets of Bangladesh, Cambodia, Laos, Myanmar, and Pakistan-altogether comprising a population of around 2.1 billion, nearly half of Asia’s headcount--have the potential to achieve stronger economic growth going forward. Most of these economies can leverage on their large and youthful populations to stimulate domestic demand and lift output. In addition to a demographic tailwind, many of these economies have populations over 100m, a large enough scale to help support self-sustaining domestic demand. At a time when the global trade outlook has darkened, economies with large and young populations ought to be able to differentiate with higher potential GDP growth in the coming decades.

have attained in the past decade or so--in terms of reviving growth, containing inflation, liberalizing trade and finance, fiscal consolidation, and ultimately poverty alleviation -- also puts these countries in a position to reap the demographic dividends to some extent. On the other end of the spectrum are Asian countries marked with a graying population. Leading the pack is Japan with a median age of 46, the world’s highest, and which is projected by the United Nations to rise to 51 by 2030. Japan’s rapidly declining birth rates have already driven down the population to 126.5m in 2015 since peaking at 127.3m in 2009. The United Nations is projecting the population to further drop to 120m by 2030, with the elderly accounting for 53% of the working age population. The protracted struggle of Japanese policymakers to revive the country’s sluggish economic growth and reverse chronic deflation illustrates the challenges associated with rapid population aging. Hong Kong, South Korea, and Singapore are also at the advanced stages of their demographic transition. With a median age of at least 40 years old, these three countries currently have three dependents for every 10 people in the workforce, and which are projected by the UN to double in the next 15 years.

Harvesting demographic dividend A demographic dividend is not a guarantee; it needs to be harvested. The gains would only occur if the rapidly expanding workforce is channeled into gainful employment, thereby, converting the ample labor supply into productive economic agents. In fact, realizing the demographic dividend requires prudent policymaking and collaboration between the public and private sector. For one, it requires good governance, sound macroeconomic management, sufficient public sector investments in economic and social services, and efficient labor and financial markets to attract jobcreating private sector investments. The socio-economic progress they

Unfavorable demographics But in as much as the dividends are not automatic, there remains hope for countries facing an unfavorable turn in their demographics. Faced with an aging society, policymakers would now have to turn their attentions towards structural reforms particularly aimed at boosting productivity and promoting innovation. The labor force pool can also be expanded by raising the retirement age and encouraging more women to work, while creating a working environment conducive to the seniors and women such by allowing flexible working schedules and providing more childcare centers. Singapore, for instance, apart from raising the retirement age to 62

Hong Kong, South Korea, and Singapore are also at the advanced stages of their demographic transition.

years old, is requiring employers to re-employ eligible employees up to the age of 65, and which from July onwards, will rise to 67. In addition, policies and incentives to encourage child-bearing would help to boost labor force participation in the long run. Equally important as well, Asia’s diverse demographic dynamics poses an opportunity to deepen intraregional integration. More advanced yet aging economies of China, Hong Kong, Japan, Singapore, South Korea, and Taiwan, would find it viable to export capital and expertise to less advanced economies in the region with large domestic markets and abundant labor supply. This would increasingly be the case going forward, in our view, as protectionist measures are advanced by the US and to some extent, Europe, triggered by Brexit. Deepening regional economic integration would also have to involve greater labor mobility so that countries with labor shortages can leverage on the slack in other parts in Asia, and vice versa. That is partly the goal of the ASEAN Economic Community, although progress in establishing free movement of skilled labor has unfortunately lagged behind. With recent developments in the West becoming unfavorable to Asia, now will have to be the time for policymakers to step up efforts to facilitate easier flow of goods, labor, investment, and capital within the region. That is, as the West looks inward, Asia would have to awaken its growth potential from within. By Taimur Baig, Chief Economist Asia, Deutsche Bank

Asia’s other half is facing unfavourable demographics

Sources: Haver Analytics and Deutsche Bank

SINGAPORE BUSINESS REVIEW | JULY 2017

Event coverage: Middle East FinTech Forum

Khalid Al Rumaihi speaks at the inaugural Middle East and Africa Fintech Forum

See how Bahrain follows Singapore’s fintech footprint If there’s one country which Bahrain is taking inspiration from as it builds its own financial technology hub, it is Singapore.

n the first Middle East and Africa FinTech Forum organised by the Arab Financial Services, one of the key discussions was on how Bahrain is following the footsteps of the lion city in being a regional hub for fintech and innovation. David Parker, Bahrain Economic Development Board’s (EDB) executive director, noted how the Monetary Authority of Singapore has been at the forefront of innovation when it comes to the financial services sector. “We have seen over the last two to three years, as Singapore become a recognised global hub, an innovator within the fintech space. MAS is at the heart of that. So for us, it is a natural partnership to go with Singapore. We believe that it is a great model to follow,” Parker explained. To recall, MAS managing director Ravi Menon announced the creation of a regulatory sandbox in Singapore during the week-long fintech festival last year. MAS also unveiled the Looking Glass, an innovation lab that would enable players to experiment with fintech solutions and provide consultation to start ups. 48

SINGAPORE BUSINESS REVIEW | JULY 2017

The Central Bank of Bahrain announced the issuance of a white paper on their own Regulatory Sandbox for FinTech.

Prior to this, Singapore’s central bank released 12 Application Programming Interfaces for developers and financial institutions to use in their products and services. Sandbox for FinTech Bahrain is doing just the same. Rasheed Mohammed Al Maraj, governor of The Central Bank of Bahrain, announced the issuance of a white paper on their own Regulatory Sandbox for FinTech. “At the Central Bank of Bahrain (CBB) we understand the disruptive nature of fintech to business models and jobs but we have made a conscious decision to adopt it. The pace of innovation is not reversible,” he said. For Khalid Al Rumaihi, EDB’s chief executive, the white paper consultation is a big step in putting in place the ecosystem that will turn the country’s ambition of creating a fintech hub into a reality. In line with its goal to nurture a fintech space in Bahrain, the EDB signed a partnership with fintech incubator and ecosystem builder Singapore Fintech Consortium (SFC) to establish a fintech ecosystem and

regulatory framework. Dubai-based asset management and advisory firm Trucial Investment Partners is also part of the agreement. Together with the SFC, Trucial will support Bahrain in developing related commercial and legal infrastructure required to initiate, nurture and sustain Bahrain’s fintech ecosystem. “We have a long-standing relationship with SFC and Bahrain. We bring our investment experience and background to assist in many of the ventures and try to build the ecosystem within Bahrain by bridging it to other parts of the world,” Trucial Investment Partners executive director Wael Al Hashimi said. Working together SFC co-founder Gerben Visser said the consortium wants to assist Bahrain just as how it did with Singapore for the past three years. Visser noted that SFC has helped on the corporate incubation with large financial institutions, making them understand how they can come into the fintech space even at its infancy. He enumerated three key phenomena they are focussing on: insurtech, regulatory technology, and blockchain. “On one hand we work here to see how we can set up a dedicated fintech hub, which is a platform neutral space not just for start ups locally, but also for companies outside to come to Bahrain and soft launch, and to have a place they can call home. This is also for incumbents and larger players here in Bahrain to have their innovation teams to sit and collaborate with early stage companies,” he noted. Visser pointed out that Bahrain can position itself globally as a fintech hub in relation to Islamic Finance. In the mid-1970s, Bahrain was the first to put emphasis on Islamic Banking to nurture the concepts, rules, and common standards of Shari’a compliance. This has led to the Kingdom being the most developed Islamic Finance centre in the GCC region. The said industry is expected to more than double this year to US$2.6t. By Kiersnerr Gerwin Tacadena

8 JUNE 2017

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