Singapore Business Review (October - November 2016)

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THE

PROPERTY ISSUE

• Why the EC market is the hottest right now • Is it better to buy in the outskirts or in the core central region?

• Which apartments are still selling at $4,000 psf?

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SINGAPORE’S IRs:

WHERE ARE THE WHALES?

OFFICE RENTS:

IS IT TIME TO MOVE?

MEET SINGAPORE’S

18 MOST INFLUENTIAL PROFESSORS

IS YOUR FIRM

AT RISK OF BREACHING NEW

ANTI-MONEY LAUNDERING LAWS?

WHICH SINGAPOREAN COMPANIES

HAVE LURED CUSTOMERS

WITH POKÉMON GO? 73 73

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

RANK 50 LA INGS R

REAL ESTA GEST TE FI RMS 2 ARCH 0 LARG ITECT EST URE F IRMS

When power goes off your business goes on Today when it comes to guaranteeing standby or emergency electrical power, in terms of cost, flexibility and responsiveness, there’s really no better option than a diesel generator set.

C2 SINGAPORE BUSINESS REVIEW | NOVEMBER 2016

Over our 50 year history, FG Wilson generator sets have been installed in more than 150 countries worldwide by organisations and businesses just like yours. You’ll find our generator sets installed in many of the world’s most iconic buildings, quietly guaranteeing that they are never without electric power.

When you entrust your power project to us, you receive the full support of more than 300 skilled technicians who nurture your project from initial design and manufacture, right through to installation and commissioning.

Our expertise is built on over 600,000 generator sets installed globally since 1990 alone, in a multitude of applications, in all environments and with a combined power output greater than that of the entire UK mains electricity supply. Today, when you choose one of our products, you benefit from that hard-earned experience.

To find out more about what FG Wilson can do for you, visit us at www.fgwilson.com

And once installed, you can count on a lifetime of service from our network of dealers.

SINGAPORE BUSINESS REVIEW | NOVEMBER 2016 1

co-published Corporate profile

Generation Caterpillar: Pouring unparalleled expertise into extremely complex projects

Ganesh Iyer, Power Generation Global Director for Cat® and FG Wilson Electricity Generators, talks about what makes the two brands work symbiotically.

Y

ou may not always know that they are there but more than likely you will have relied on one at some time. What are we talking about? Electricity generator sets.

Usually powered by a diesel engine, linked to an alternator (an oversized version of the one you find in a car) and with a control panel and often a fuel tank. You’ll often see small generator sets at outdoor markets and their larger siblings can provide back-up power to hospitals, data centres and huge buildings.

There are a handful of global companies in the industry, of which Caterpillar is one, and a multitude of regional players. Since early 2015, Ganesh Iyer has held the reins of one of Caterpillar’s most significant power generation teams, covering the Cat branded range of generator sets up to 750 kVA and the entire FG Wilson range from 7 – 2,500 kVA. It’s a task which animates him hugely and has his undivided attention.

Ganesh has just relocated to Singapore and not long after he arrived, we caught up with him. What makes his task especially interesting is that it embraces two of the generator set industry’s most iconic brands which together have an enviable global presence in their market.

Caterpillar have been in the business since 1939 and globally today, Cat brand generators lead the way in quality, durability and worldclass support. The FG Wilson brand, which marked its 50th birthday this year, was acquired in 1999. FG Wilson has always been

Ganesh Iyer and Ann Brown

known for quality and good value for money, and with its own distribution channel it has the ability to complement the Cat brand by reaching out to different customer groups.

Yet having a brand like FG Wilson inside the stable was something of a learning experience for Caterpillar, which today owns multiple product brands. In the late 90s, much of this was new to the organization. It’s been a new journey all the way through and Ganesh is candid about it.

Ganesh says, “At first, Caterpillar left the FG Wilson brand alone, then gradually over time, we tried to make things more efficient, with common products, common processes and the ultimate was a common marketing team

“It was time to step back, really think about our customers, set out where we want to take our business and how we can grow while serving customers with two clear brands.”

FG Wilson embodies its own different culture

2 SINGAPORE BUSINESS REVIEW | NOVEMBER 2016

between the Cat and FG Wilson brands.”

This might have seemed efficient, but it was also diluting the very essence that made the FG Wilson brand unique. The FG Wilson brand was being absorbed into the corporation. FG Wilson had always embodied its own very different culture and slowly, the brand was losing its voice, inside and outside the organization and the quick-thinking entrepreneurial spirit which had made the brand special was fading.

Six months ago, Ganesh changed all that.

“One thing that is abundantly clear to me is that the FG Wilson brand is critical to our future success. It was time to step back, really think about our customers, set out where we want to take our business and how we can grow while serving customers with two clear brands which offer customers a clear choice.”

The first step was the appointment of a new Managing Director for FG Wilson, Ann Brown.

A grounded professional with seventeen years in the industry, Ann hails from an operations background. She’s now surrounded by an experienced team, many of whom started their careers at FG Wilson and who were instrumental in driving FG Wilson growth in the past.

Ganesh sees that reaffirmation of FG Wilson brand values as key. He says, “The basic technology in a generator set really hasn’t really changed for a long time. We have a 70 year old Cat generator set on display at our UK Visitor Centre which wouldn’t look out of place at a customer site today. Engines have become smaller and more efficient and

co-published Corporate profile

Ganesh Iyer

customers can work remotely with generator sets but really, the basic core product is the same. This means it’s relatively easy for new competitors to enter the market with similar products, so it’s a mature and very crowded market.”

What is much more difficult, says Ganesh, is to build up distribution networks and be capable of supporting products effectively and consistently on site. “People who buy generator sets aren’t buying the metal,” says Ganesh. “They’re buying guaranteed power, and with that comes a responsibility that you will honour the trust customers give when they buy. And that means having widespread distribution which is able to support customers 24/7.”

The story of FG Wilson distribution in SE Asia is probably similar to many other European companies. After working with some small dealers in the late 1980s, in 1992, FG Wilson opened a subsidiary office in Singapore to support the SE Asia region. The subsidiary carried stock of products and spare parts and had a dedicated sales team to work directly with customers and appoint sub-dealers.

Ganesh says, “This worked well at the start but soon we realised that we could only carry it so far. We are good at designing and building products but we are not really a distribution company. Our dealers do that better than we can.” In 2002, the subsidiary was sold to a group of companies and renamed FG Wilson Asia Pte Ltd. It has since gone from strength to strength, maintaining its own network of dealers across SE Asia.

Ganesh says, “What makes the FG Wilson distribution network really special is that

their main or usually sole focus is on our generator sets – this is what they do, so they are complete specialists. They understand the business and customers better than anyone.”

That expertise can reach into extremely complex projects. In the early days, FG Wilson built up its name designing, building and commissioning mini power stations in the Middle East, often in the most inhospitable operating environments. That tradition continues today. When you look across the skyline of a major city, there’s a good chance that many of the buildings will have an FG Wilson generator set somewhere inside, trusted to provide power when the mains supply fails.

With 600,000 generator sets installed since 1990 alone, FG Wilson doesn’t take any chances with customer trust. Every new product endures rigorous testing and validation at a $26M Engineering Centre in Larne, UK, which also houses Europe’s largest fully automated hemi-anechoic chamber, providing state of the art acoustic research and test capabilities. And every product is released with a full suite of parts at the brand’s main aftermarket facility, which stocks 11,500 product lines and ships 3 million parts a year.

The way customers are supported is high on Ganesh’s agenda. “It’s the same in any industry,” he says. “Products are getting better, but more similar and the big differentiator between brands is often service, the way customers are cared for, the way it feels to do business with a brand.“ This focus on service is a huge priority for Ganesh. He says, “Few of us now tolerate loss of power. Talk to any young person who has lost their wi-fi or data connection. Today we all expect more from what we buy, and customers who own generator sets expect the same level of service as they get when they buy a consumer product. And this is where FG Wilson is really investing time and resources.”

We asked Ganesh what are the most important learnings on his journey so far.

Without hesitation, he says number one is a clear brand: “Branding used to be something for consumer or luxury products. Not any more. The whole world is busy and distracted and clear brands make it easier for people to make buying decisions. Give your brand a clear voice, make it human and allow it to develop a personality of its own. Let it resonate with people.”

Ganesh also believes we should throw away the ideas of B2B and B2C: “Yes, when you’re selling complex products, there is a need for very technical literature, but the way we all communicate and work with customers is becoming much more immediate and more personal. People who buy for businesses are also consumers. They expect to be looked after in the same way. We all do, don’t we?”

Lastly, Ganesh has a word for organizations managing multiple brands: “It’s important to strive for efficiency across brands, but it’s also very important to strike a balance between that and ensuring that your brands have a unique identity and give people a very clear choice. That is something we have learned very much over the last few years.”

The future is very obviously where Ganesh’s mind is. Yet he’s very conscious of the heritage of FG Wilson. He says, “In May, we marked 50 years of FG Wilson with an event at our Larne facility among long-standing employees and representatives of the Wilson family.

The warmth and goodwill at that event are something I will never forget. FG Wilson is a great and historic brand with a 50-year history, and it’s our job to preserve and grow it for the future.”

Ganesh says the benefits of the changes are already being felt across the organization.

“We’re writing another chapter of a great brand,” he says. “It’s like a business school case study coming to life.”

“The way we all communicate and work with customers is becoming much more immediate and more personal.”

Supporting every customer

SINGAPORE BUSINESS REVIEW | NOVEMBER 2016 3

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FROM THE EDITOR

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Singapore Business Review’s annual property issue zeroes in on the battered residential sector and the possibility of redemption by 2017. When developers sold 1,921 units in July – around onequarter more than the units launched that month – it gave hope that Singapore’s residential sector was regaining composure after getting beaten down by additional property cooling measures.

Aside from a rise in transaction volumes, the steep price declines are slowing down, leading some analysts to predict 2017 as a year of relative stability. Could Singapore’s rising property market be fatally hopeful?

We also looked into why office rents have been falling for the last five quarters. Rents have slid from their last peak of $11.40 psf in 1Q15 to $9.50.

That’s quite a fall, and one which may now be about to come to an end.

This issue also delved into the current state of Singapore’s debt market in the Financial Insight section. Primary bond offerings from Singaporedomiciled issuers this year gained momentum and reached US$21.5 billion, up 25.2% in proceeds compared to the first nine months of 2015. How badly exposed is the SGD bond market to further rising default risks?

Flip the pages to find out. Enjoy!

Tim Charlton

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CONTENTS

AnalystS’ Call

delisting SMRt the right 22 Was call for temasek?

32

COVER STORY Is Singapore’s battered residential market finally bouncing back?

FIRST 12 Singapore’s casino whales remain at sea

13 The dentist will see you now 14 Startup funding fever cools down 16 Office rents are falling down: Why it may be high time to move out 18 Click ‘til you drop: Singapore’s online buying craze leads regionally

Published Bi-monthly on the Second week of the Month by Charlton Media Group 101 Cecil St. #17-09 Tong Eng Building 6 Singapore SINGAPORE BUSINESS REVIEW | NOVEMBER 2016 069533

28

EVENT Coverage Global transport takes one step towards decarbonisation in ItF 2016 Summit

RANKINGS

FIRST 24 SMRT gets delisted as new rail financing model rolls out

30 Architects are starting to shift their focus overseas

40 For property agencies, winter may soon be ending

REGULAR 26 Financial Insight 30 Industry Briefing 42 Legal Briefing 44 CMO Briefing

For the latest business news from Singapore visit the website

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SINGAPORE BUSINESS REVIEW | NOVEMBER 2016 7

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

MARKETS & INVESTING

COMMERCIAL PROPERTY

RESIDENTIAL PROPERTY

Singaporean investors have silly income expectations: survey

Is Singapore’s high-rise office rents bowing with slow demand?

Housing rents dropped 10.3% versus August 2013 peak

Investors in the city-state are overly upbeat about income returns with an average investor expecting a minimum return of 9.2% every year. According to Schroders Global Investor Survey 2016, this is unrealistic considering the current average stock market yield of only 3.8%. Singaporean investors also have a short-term investment view, the poll added.

The ongoing supply glut in office spaces has taken its toll on rent prices, with landlords paying the penalty for a slowing economy.

According to Knight Frank LLP, annual rents on the upper floors of Singapore’s skyscrapers fell 7% to about US$775 ($1,056) a square metre in the first six months.

Meanwhile, vacancy rate in the citystate went up 9% in 2Q.

Rental prices for HDB flats softened 0.6% MoM in August 2016 and 4.0% YoY in the same month a year ago. According to SRX Property Price Index for HDB Rentals, rents for HDB 3 Rooms, HDB 4 Rooms, HDB 5 Rooms and Executive slipped 0.4%, 0.6%, 0.1% and 1.6% respectively. “Rents in August 2016 were down 10.3% compared to its peak in August 2013,” SRX revealed.

To avoid queues, Singaporean events should go cashless

BY JAMES KANE The loud roar of engines revs up the final quarter of 2016 – as Singapore turns up its glitz and glamour, in conjunction with the 9th Formula One Singapore Grand Prix season.

Yet, after almost a decade of megaevents of this scale, attendees are still facing the same massive queues as before. These scenarios are not limited to any festival; anyone who has ever gone to a crowded event knows that queues are expected.

Singapore’s 4th telco: Is there room for differentiation?

BY TAN JIAN XIANG The bids are in, with MyRepublic, TPG Telecom, and airYotta contending for the position of Singapore’s fourth telco.

TPG Telecom’s market positioning, should they win the bid, is unknown, while the other two have indicated that they will take a data-first approach, with MyRepublic offering unlimited data and airYotta the benefits of Singapore’s first 4.5G LTE Advanced Pro network.

MOST READ COMMENTARY How Donald Trump’s views on the TPP could sink Singapore

BY KIM ISKYAN Billionaire US presidential candidate Donald Trump last year called the Trans- Pacific Partnership (TPP) a “horrible deal.”

Trump doesn’t like the TPP, of which Singapore is a founding signatory. He called it “A deal that was designed for China to come in, as they always do, through the back door and totally take advantage of everyone.” Trump might not be wrong here.

SINGAPORE BUSINESS REVIEW | JANUARY 2017 9

Agenda PEOPLE | PLACES | SERVICES | OPPORTUNITIES

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services

OPPORTUNITIES

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SINGAPORE BUSINESS REVIEW | NOVEMBER 2016 11

FIRST and sight-seeing spend reported by the Singapore Tourism Board in 1Q16. As a result, VIP revenues at Singapore’s two IRs were down 26% to US$322m over the three months to June this year, which followed an even worse first quarter when revenues were down 42%.

Bangkok BEATS SINGAPORE

Second place is all Singapore got despite its hard work on luring tourists in with a projection of 12.11 million international overnight visitors in 2016, according to a survey

by Mastercard. This is a mere half of what’s predicted for topranking Bangkok as 21.47 million overnight visitors are forecasted to visit the Thai city.

Kuala Lumpur does not fall far from Singapore with an expected 12.02 million number of visitors, followed by Tokyo, 11.7 million, and Seoul, 10.2 million. Hong Kong, surprisingly, is at the bottom half of the list as only 8.37 million visitors are projected to visit the city this year.

Still an attractive spot If the survey is to go by, Singapore will have to hugely thank visitors from Jakarta as they are the biggest spenders with a US$1.8m spend. Visitors from Hong Kong, Manila, Tokyo, and Shanghai come next in the list. Rachel Loh, deputy director, Strategic Planning and Incentive Policy, Singapore Tourism Board comments that despite the survey outcome, Singapore is still an attractive destination.

“From January to July 2016, our international visitor arrivals grew by 11.5% over the same period in 2015 and barring unforeseen circumstances, we are optimistic of achieving our 2016 forecast growth of 0– 3%,” she says.

She adds that Singapore offers a unique value proposition that is not easily replicated elsewhere.

“While there is increasing competition, the positive growth in Asia Pacific outbound travel and inbound arrivals to Asia will benefit countries in this region and should continue to do so for the rest of 2016.”

12 SINGAPORE BUSINESS REVIEW | NOVEMBER 2016

xxx are vanishing from casinos VIPs

Singapore’s casino whales remain at sea

I

n any casino, it’s the slot machines for punters and the VIP gaming rooms for the whales, those VIP gamblers who bring the big money to the tale.

Unfortunately for Singapore’s IRs, the last two years has seen a precipitous drop in VIP revenue, down 39% since 2014, with analysts in Morgan Stanley forecasting a further 10% decline this year. That’s almost $1.4b in lost revenue and it’s starting to hurt the industry.

Chinese gamblers are turning away Sure part of the problem is the much maligned decline of the Chinese gambler, but Singapore has been particularly hard hit whilst the Chinese are travelling to new gambling destinations like the Philippines, which recently opened its fourth major Crown casino, and has seen VIP revenues rise from US$650m in 2014 to a US$765m forecast for 2016. In fact the Philippines saw a 79% jump in Chinese tourists over the first six months of 2016 compared to 55% for Singapore.

The problem for the casinos is that many of these Chinese tourists are not the sort of high roller the IRs want, as evidenced by the 21% YoY fall in entertainment, gaming

The reality is that the VIP pie has gotten smaller rather than cut into different sized pieces.

VIP pie is smaller Grant Govertsen, managing director at research firm Union Gaming Securities Asia, says that it’s important to keep in mind that gamblers are not necessarily ditching Singapore for other jurisdictions. “Sure, some small number are going elsewhere, but a large majority simply aren’t gambling anywhere. This is also true in Macau. The reality is that the VIP pie has gotten smaller rather than cut into different sized pieces. Most of the VIP declines in Macau and Singapore are gone. Period. These are individuals who believe it to be in their best interest to stop gambling – likely a function of the ongoing anti-corruption campaign in China,” he says.

Govertsen adds that the reason that other jurisdictions like the Philippines are growing is that they started from a very low base, so they “pretty much have nowhere to go but up.” To make matters worse, Morgan Stanley reported that bad debt provisions of Genting Singapore declined by 42% QoQ to US$39m in 2Q16, owing to successful collections in 2Q16. “Outstanding receivables of more than a year have mostly been collected and should remain below ~US$50m a quarter. For MBS, bad debt provision has been relatively stable at the US$20-35m range from 1Q15 to 2Q16, accounting for 7-23% of VIP revenue,” it says.

VIP rolling chips fell 34% YoY or 26% to S$11.8b in 2Q16

Source: Company Data, Morgan Stanley Research

FIRST Q&M Dental Group’s outlet and core earnings

Source: Company, Maybank KE

Market is wincing from toothaches

The dentist will see you now

A

re Singapore’s mom and pop dentist clinics facing a bad case of decay? If recent acquisitions of some well-loved dental practices by larger listed competitors are anything to go by, the answer may be yes. Q&M Dental Group was the latest to snap up three small practices, buying Ho Dental Surgery, Toofy, and Jurong Point Dental Surgery. As far as acquisitions go, these are small, with the combined three contributing just $400,000 a year in profit to the group and the purchase price of around $3m.

There are 1,000 dental clinics and Q&M operates around 70 of them,

It is large and varied enough to allow for healthy competition, and to offer greater choice and better value.

so there is certainly room for more acquisitions, especially as the group still has $23m of borrowing capacity from a MTN loan facility.

Push for acquisitions Dr Edgar Kieu, deputy director at Raffles Dental, also noticed a trend of consolidation in the industry and identified two main factors leading to the push for acquisitions. Firstly, stiffer competition with rising costs is driving a need to leverage on economies of scale to survive thinner margins. Another interesting thing driving the consolidations is senior dentists seeking to sell their practices

in view of retirement planning.

According to Dr Kieu, “As practices become more expensive to takeover, younger dentists seeking to join the private sector are less able to afford the takeover costs.”

But while there is a growing interest in acquisitions amongst some dental groups, Raffles Dental still prefers banking on organic growth. “It has grown significantly in the past three years, fuelled by a greater demand for quality dental care services, similar to that provided by Raffles Medical.

While acquisitions have their upsides, our organic growth strategy has allowed us to maintain our high standard of care across the network and standardise practice protocols,” adds Dr Kieu. Patrick Wong, head, Unity Denticare, NTUC Health, says the market is currently fragmented with a few group practice and many individual operators. “It is large and varied enough to allow for healthy competition, and to offer greater choice and better value.”

The Chartist: JOB SEEKERS IN SINGAPORE ARE RUNNING OUT OF VACANT SPOTS TO FILL It would be a hard time for jobseekers in the city-state as they would have to vie for declining job posts. The latest figure by the Ministry of Manpower (MoM) notes that job posts declined from 50,000 in March to 49,400 in June. The downtrend has been on since March 2015, when vacancies declined by a thousand.

“Coupled with the increase in unemployed persons, the seasonally adjusted ratio of job vacancies to unemployed persons declined further to 93 openings per 100 seekers in June 2016, from 103 in March 2016,” MoM says. This has fuelled unemployment rate amongst the city-state residents, which saw a 4.1% spike in June. “There were sustained increases amongst residents in their 30s (2.6% to 3.4%), 40s (2.9% to 3.2%),” it adds.

Resident unemployment rate and number by age and education (non-seasonally adjusted)

Source: Labour force Survey Manpower research & statistics MOM

Job vacancy

Source: Labour force Survey Manpower research & statistics MOM

SINGAPORE BUSINESS REVIEW | NOVEMBER 2016 13

FIRST

Startup funding fever cools down

Survey

MIGRATION THOUGHTS

G

rab’s headline-grabbing $750m venture capital financing, the largest in the history of Southeast Asia and private equity, may have got a lot of us in Singapore wondering what we can do to be tech billionaires, or as they call it in the industry, unicorns.

Unfortunately for many would-be unicorn treaders, despite the influx of money, including Venturecraft Two, a $50m fund aimed at boosting medtech and ICT startups in the region, it seems to be getting harder, not easier to get financing. Michael Lints, venture partner at Golden Gate Ventures, says, “Although there are more and more investment pouring into the regions, it is getting increasingly difficult for startups to attract potential investors and secure funding through each phase.”

Times are hard for startups now

partner JFDI.Asia, adds that this is a healthy sign of an ecosystem growing up.

Too many weak companies were starting to get funded because there was little downside risk for investors.

“In my view the quiet withdrawal of the important tax breaks that got things It’s harder everywhere started is well-timed. ‘Venture capital’ Geeman Yip, CEO of BitTitan, concurs can’t just be about ‘capital’ - there has to that funding is harder right now on a be ‘venturing’ too. In the short term, like global scale. “More people are investing quantitative easing, generous tax breaks in later stage companies for more on angel and VC funding take away the stability. When you look at the Singapore downside on investment but the risk market, there are a lot of early/seed stage if measures like that continue too long companies. I’ve frequently been to the is that it creates a dependency culture startup events around Singapore and amongst startups and investors, drawing many are still in their infancy or idea in uninformed investors who really can’t phase.” add any value and should be not taking In contrast to others finding the issue a risks at this stage anyway, and results in a challenge, Hugh Mason, CEO of venture lot of weak companies,” he says.

Mobile App Watch

A fun way to transfer money at your fingertips

N

ot all people have cash in hand when they need it, which leads to small loans between friends that are either forgotten or difficult to chase down. Other times people don’t have exact change which leads to the same problem. These instances happen so often, but who really wants to go through the cumbersome process that is internet banking to sort out this type of debt?

As young people who hangout with friends, founders of mobile payment app Kashmi experience these issues every day. They wanted a solution which gave rise to Kashmi. It is a mobile app that allows users to send or request money from each other instantly, for free. The application is designed to address the everyday inconveniences of cash and is expected to ease the difficulties associated with paying and reclaiming debts between peers.

14 SINGAPORE BUSINESS REVIEW | NOVEMBER 2016

Rakhil Fernando, CEO, Kashmi

Transfering money is more fun

It is getting increasingly difficult for startups to attract potential investors and secure funding through each phase.

Singapore might be one of the best destinations for expats, but more than four out of 10 Singaporeans will choose to migrate to other countries, if given the chance.

Even though majority of Singaporeans rated many aspects of the country’s living and working environment as “good/excellent” such as safety (80%), economy (68%), and standard of healthcare (67%), around 42% of Singaporeans will migrate elsewhere when the opportunity arises, according to an online Ipsos and SSI study conducted among 1,050 Singaporeans.

Tired of the fast-paced life?

“In Singapore, a typical complaint is the fast pace of life that is synonymous with city living, and another being the relatively limited opportunities to explore niche careers such as those in arts and music. Hence the impetus to migrate perhaps stems from a person’s desire for a different lifestyle, or for a place where someone’s unique interests are viable career opportunities,” says Melanie Ng, head, market understanding unit at Ipsos.

The same survey also revealed that more than half (56%) will encourage their children to study outside of Singapore despite nearly 3 out of 4 (74%) respondents rating the standard of local education as “good/excellent.” “While there has been considerable effort put in place to ensure that a university degree is accessible to all Singapore children, studying and living overseas is thought to provide a richer learning experience and teaching them to be independent and accountable.

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SINGAPORE BUSINESS REVIEW | NOVEMBER 2016 15

FIRST

Office rents are falling down: Why it may be high time to move out

N

ow may be as good a time as any to move to that new office space with rents due to stabilise after more than a year of gentle declines, according to analysts. After more than doubling since the lows of the financial crisis, Grade A office rents have fallen for the last five consecutive quarters and are now down 17% to an average of just $9.50 psf. But now all those cranes that built much of the new office space in the Marina Bay area are about to fall silent with just one new office block due to be completed in 2019 within the CBD. Since 2009, Singapore has been able to finish and lease an average of 1.4 million sq ft of office space a year, but that will drop to 900sq ft in 2019, and 2020 is looking even sparser with just one new office site up for grabs on Central Boulevard. The only saving grace for landlords is that despite much lower rents, capital values have held up. From their respective peaks, office rents have lost 17% but capital values just 5%, according to Maybank Kim Eng. Duncan White, head of office services at Colliers International, Singapore, says that there are two main factors among many others that caused the rents to fall for the

last five quarters. “Firstly, rentals have been dropping due to global uncertainties, and along with the oversupply in Singapore, occupiers are uncertain about future positions,” he says.

Dwindling demand, burgeoning supply Tay Huey Ying, head of research at JLL Singapore, adds that rents have been pressured since 1H15. “The combination of a large influx of new office supply in the Central Area in 2016 and 2017 amounting to 3.6 million sq ft and dwindling demand owing to the weak and uncertain economic environment that saw numerous businesses (particularly in the oil and gas as well as financial industries) consolidating their operations and reducing their real estate footprint.” She points to the uncertain business environment as one of the reasons that pushed businesses to adopt a cautious stance with regard to expansion plans and real estate commitments, further clipping demand for office space and pressuring down rents.

The Central Boulevard site is an interesting case in point. Asia Square Tower 1 is currently the closest comparable and when sold in September 2007 Grade A office rents were around $15

OFFICE WATCH

A coworking space with a hotel ambience

The Great Room, a hospitality-inspired coworking space, has officially launched last July 16 at One George Street. It was founded by a hotelier, Jaelle Ang, who has been spearheading the development of the ultra-luxury Capella Hotel, Four Seasons Hotel and the 73-storey Four Seasons Private Residences in Bangkok in the last five years.

Following her lead, the design of the 15,000 square feet Grade A space is designed by hospitality specialist Distillery Studio and office designer Hassell. Distillery Studio also designed Manhattan Bar at Regent Hotel and Club Hotel. Besides hotdesks and dedicated offices of coworking spaces, The Great Room claims of pioneering the concept of ‘Hot Office’ in Singapore. It allows for members to have most of the security, privacy and convenience of a dedicated office, at a fraction of the cost.

16 SINGAPORE BUSINESS REVIEW | NOVEMBER 2016

Office supply, island wide

Welcome to the “Hot Office”

Source: CBRE, Maybank Kim Eng

psf in 3Q07 and rose to peak at almost $19 psf in 3Q08. This led to an aggressive price of $1,409 psf paid for that site. Fast forward to today and rents have slid from their last peak of $11.40 psf in 1Q15 to $9.50. That’s quite a fall, and one which may now be about to come to an end.

White adds that many tenants are considering their current portfolios to ensure they are maximising their office commitments, and have in many cases right-sized their take-up. “It should also be noted that in the last year Singapore has seen less new entries to the market; without new demand entering Singapore, the supply will continue to affect the rental rates negatively. As new developments continue to secure tenants and increase their occupancy rates, the leasing pressure will shift to the existing developments to attract and retain tenants,” he says.

We elevate icons to new heights.

www.oue.com.sg

OUE has embarked on an ambitious valuedriven enhancement strategy for the iconic 75-storey Class A office tower in downtown Los Angeles. OUE Skyspace Los Angeles— the world’s first open-air observation deck with connecting glass slide, is a prime example of the company’s asset repositioning capabilities.

Transformational Thinking SINGAPORE BUSINESS REVIEW | JULY 2016 17

FIRST NUMBERS

Concerned but not covered - the health i gap in Singapore

Health Gap in Singapore

The Power of Protection Confidence in the future Responses from people aged 25+ in a survey of over 11,000 people in 12 countries a 1,000 people in Singapore.

Health is the biggest worry

Many are fina

40%

67%

say they are financial should something un

of Singaporeans say their greatest worry in life is their health vs. global average of 65%

say they could not ma or at all financially

China

70%

Mexico

69%

Hong Kong

69%

Singapore

67%

France

66%

Concerned but not covered - the health insurance gap in Singapore Are Singaporeans the region’s biggest online shoppers?

happen to their health

35% 5%

say they have nothing but would find a way

The main ba is cost-relate

57%

Argentina 64% Concerned but not covered - the health i Malaysia 64% Confidence in the future The Power of Protection gap in Singapore Concerned but not covered - the health insurance 64% Indonesia of those actively Responses from people aged 25+ in a survey of over 11,000 people in 12 countries and territories, including Taiwan 62% considering taking o gap in Singapore 1,000 people in Singapore.

The Power of Protection Confidence in the future UK

health insurance but

60%

Responses from people aged 25+ in a survey of over 11,000 people in 12 countries a not yet done so say t 1,000 people The Power of Protection Confidence in the future USA in Singapore.

58% is because they expe Responses from people aged 25+ in a survey of over 11,000 people UAE in 12 countries and territories, including 56% know it to be too exp 1,000 people in Singapore.

Health is the biggest worry Click ‘til you drop: Singapore’s online buying craze leads regionally 67%

Many are financially unprepared

40%

Health is the biggest worry Many are fina Whose responsibility?

Many are financially unprepared

Health is the biggest worry

18 SINGAPORE BUSINESS REVIEW | NOVEMBER 2016

To read The Power of Protection Confidence in the future report visit www.hsbc.com Survey conducted in October and November 2015 by TNS

Family

Employer

State/government

of those actively considering taking out health insurance but have not yet done so say this is because they expect or know it to be too expensive

To read The Power of Protection Confidence in the future report visit www.hsbc.com Survey conducted in October and November 2015 by TNS

believe that someone else should be responsible for the cost of their personal healthcare

53%

56% UAE

Source: HSBC

UK

Malaysia

Argentina

France

Singapore

Hong Kong

Mexico

China

Source: HSBC Commercial Banking The Future of Consumer Demand – Singapore

Whose responsibility?

58% USA

62%

60%

64%

Taiwan

64%

Indonesia

64%

66%

67%

69%

69%

70%

of Singaporeans say their greatest worry in life is their health vs. global average of 65%

67%

Health is the biggest worry

To read The Power of Protection Confidence in the future report visit www.hsbc.com Survey conducted in October and November 2015 by TNS

13%

47%

To read The Power of Protection Confidence in the future report visit www.hsbc.com Survey conducted in October and November 2015 by TNS

20%

13%

Me

To read The Power of Protection Confidence in the future report visit www.hsbc.com Survey conducted in October and November 2015 by TNS

20%

20%

Percentage of the national population who bought something online in the past month

57%

The main barrier is cost-related

5%

20%

say they have nothing specific in place but would find a way to manage

say they could not manage well or at all financially

happen to their health:

35%

40%

53%

47%

53%

53% say they are financially unprepared should something unforeseen

Many are financially unprepared

57% 57%

The Power of Protection Confidence in the future Responses from people aged 25+ in a survey of over 11,000 people in 12 countries and territories, including 1,000 people in Singapore.

Local vs multinational “However, there is no clear winner in Singapore yet for online shopping.

Channel mix is quite evenly split between B2C, C2C, and social media shopping,” she adds. Bose notes that the combination of high affordability, highly digital consumers, and an efficient ecosystem of payments and logistics provides the ideal environment for online shopping.

Interestingly, the survey also showed that Singaporeans also trusted local retail leaders 52% more than multinational names as only 49% trust them. Bose comments that retailer trust is quite a multi-faceted metric to measure from a consumer standpoint. “It comprises quality of

67%

State/gover say they are financiall Employer should something unf

of Singaporeans say their product manufacturing, ability to of Singaporeans say their Family happen to their health happenbelieve to they their health: say are financially greatest worrybe inresponsible life that someone elseunprepared should for the greatest worry in life should somethingisunforeseen their health vs. global design the products to the Singaporean 35% Me cost of their personal healthcare of Singaporeans say their is their health vs. global 35% happen to their health: say they could not ma average of 65% greatest worry in life say they could not manage well or at all financially taste, as well as the simple affinity average of 65% is their health vs. global or at all35% financially say they could not manage well 5% average of 65% towards the fact local products are China 70% say they have nothing or at all financially 20% 13% 20% 5%Mexico but would find a way 69% China 70% made physically in Singapore, ” she say they have nothing specific in place 5% China 70% say Kong they nothing specific in place Hong 69% but would findhave a way to manage Mexico CEO of 69% The main bar explains. Alexis Lanternier, but would find a way to manage Mexico 69% Singapore 67% is cost-relate Hong Kong 69% Lazada Singapore, adds that Singapore Hong Kong 69% The main barrier France 66% The main barrier Singapore 67% Singapore 67% shoppers enjoy shopping at retailers Argentina 64% is cost-related is cost-related France 66% Malaysia 64% Francethat they 66% that are recognisable and are Argentina 64% Indonesia 64% Argentina 64% of those actively familiar with. “One key trend to note Malaysia 64% Taiwan 62% considering taking ou 64% is that online shoppersMalaysia are interested health insurance but Indonesia 64% UK 60% of those actively There is no not yet done so say t Indonesia 64% Taiwan 62% USA 58% in replicating their offline purchasing considering is because they expe of those actively taking out clear winner62% 60% considering insurance but have UAEhealth taking 56% know it to be too exp Taiwan out habits across the online space.” UK not yet done so say this in Singapore 58% health insurance but have 60% is because they expect or Another interestingUKfinding is USA yetknow doneitresponsibility? so say UAE 56% notWhose to be toothis expensive yet for online 58% that apart from beingUSA kiasu, being is because they expect or shopping.

State/gover UAE 56% know it to be too expensive kiasi is something Singaporeans are Whose responsibility?

Employer avoiding as they are ahead of Hong Family State/government believe that someone else should be responsible for the responsibility?

Me Kongers, Australians,Whose Chinese, and cost of their personal healthcare Employer Family Japanese who stated in the surveybelieve that someone else should be responsible for the State/government Me cost of their personal healthcare that adventure and taking risks are Employer 20% 13% 20% important to them. Only Indians Family believe that someone else should be responsible for the are more seeking of thrills as 70% of cost of their personal healthcare 13% Me 20% 47% 20% them said so compared to 59% of Singaporeans.

Ankiti Bose

Concerned but not covered - the health insurance gap in Singapore

S

ingaporeans love to shop. Only South Korea tops Singapore in the Asian region for people wanting to shop online in the past month according to a survey by HSBC. Hong Kongers, Japanese, Malaysians, and the Chinese are among the Asians who were less interested to purchase something online.

Ankiti Bose, CEO of fashion e-tailer Zilingo, says Singapore was always going to be a market with high penetration of online buying and with ~9% penetration in the fashion category.

40%

40%67% 53%

say they are financially unprepared should something unforeseen

57%

co-published Corporate profile

Continental Automotive Singapore’s drive for innovation is unstoppable and insatiable

Expanding engineering capabilities and a strong focus on the future of mobility, the local team is growing a strong footprint in Singapore to push the Smart Nation Vision.

E

fficient transportation has always been a concern in every country, no matter how developed it may be. The densely populated city-state of Singapore, for instance, faces its own urban transport issues. With its increasing population density, heavier traffic congestion seems more like an inevitability.

However, there are organizations that constantly develop intelligent technologies and solutions to meet the endless transportation needs of drivers around the world, including leading automotive supplier Continental. In line with Singapore’s Smart Nation Vision, Continental aims to harness its technology to mold an innovative ecosystem in Singapore for efficient transportation.

“The concept of mobility is constantly being redefined to be even safer, cleaner, and above all, fully connected,” says KF Lo, Managing Director of Continental Automotive Singapore. “This requires more efficient, more intelligent, and more sustainable mobility solutions.”

Premium on innovation In April 2014, Continental Automotive Singapore along with partners A*STAR’s Institute of Infocomm Research and Technische Universität München, set up the Intelligent Transport Systems (ITS) Lab to carry out research, study and test-bedding of a whole range of communications, information and automotive innovation and technologies with the aim to improve the safety, efficiency, and performance of transport systems in Singapore.

“Through the ITS Lab, we launched the first showpiece - the Park&Go @SG mobile app, in November 2015,” says Lo. “Park&Go @SG demonstrates how we are innovating to help drivers navigate efficiently to available car parks in Singapore.” Continental has also recently unveiled the app’s iOS version as well as new features for the Android version.

Focus on future driving Continental is also actively participating in the technology of automated driving with its commitment to “2025 AD”, representing the year of automated driving. To further promote

A highly automated driving technology is the future

a global conversation on automated driving, Continental launched the new website 2025AD.com early this year for experts and consumers alike to discuss all technical, legal and social aspects of future mobility.

In addition, when it comes to automated driving, safety is Continental’s biggest priority. This involves a lot of testing and validation. Therefore, Continental follows a step-by-step approach. “Our road map for autonomated vehicles is that in 2020 we foresee a highly automated driving technology ready in the world and in 2025 a fully automated technology will be possible,” says Lo. Expanding capabilities Continental Automotive Singapore is constantly expanding since it first unveiled its new Research & Development (R&D) center in July 2012, dedicated to the design and development of in-car information management systems. Soon after, a new extension building was opened in November 2014 to expand the R&D capabilities in Singapore and gain a stronger foothold in the region.

The facility in Singapore, being one of Continental’s largest R&D centers in Asia, drives the full product creation process from conception to realization to mass production.

In addition, Continental Automotive Singapore’s Instrumentation and Driver HMI Business Unit has also strengthened itself as a

“Continental’s road map for automated vehicles is that in 2020 we foresee a highly automated driving technology ready in the world.”

vital Business Hub in the region, and recently celebrated its tenth year anniversary in the country. With Asia developing as the new frontier in the growth of global automotive industries, the team in Singapore will be instrumental in the engagement of business with customers, acquisition of new business, running projects in the global team, and ensuring successful launch of products in the manufacturing plants.

Growing the Singapore footprint With a total land space of 16,250 square meters, the Singapore R&D facility currently houses more than 1,200 employees. More than 70 percent of these employees are currently involved in software, hardware and mechanical engineering roles, and there are plans to further expand its staff capacity.

The increasing number further demonstrates Continental Automotive Singapore’s continuous growth and the strengthening of its footprint not just in Singapore, but in Asia. This is in line with the company’s aggressive Asia growth strategy within the automotive industry.

“In Singapore, we certainly focus on Asian customers with their growing region in terms of automotive development,” says Lo. “We do business with most of the Japanese automotive customers. We also have quite a big crew here working on projects for the major European car manufacturers.”

Continental worldwide currently employs approximately 215,000 people in 55 countries. In 2015, the corporation generated sales of €39.2 billion with its five divisions, Chassis & Safety, Interior, Powertrain, Tires, and ContiTech.

SINGAPORE BUSINESS REVIEW | NOVEMBER 2016 19

FIRST

Eighteen influential business professors aged 40 and under

S

ingapore Business Review proudly presents the 18 most influential business professors in the city aged 40 and under. This is the second time since 2014 that the publication has released such a list to identify business professors who show notable willingness to share their skills, knowledge, and expertise in any medium.

Chosen by their schools and colleagues, these young teachers are rising stars, both in the classroom and in cutting-edge research. They are authors of significant publications and are the most sought after speakers in various forums.

They are arranged from the oldest to the youngest.

1 Guoli Chen, 40, Associate Professor, INSEAD Guoli’s research focuses on the influence of CEOs, top executives, and boards of directors on strategic choices and organisational outcomes, as well as the dynamics in CEO-board relationships and corporate governance. His work has been published in Administrative Science Quarterly, Academy of Management Journal, Strategic Management Journal, Organization Science, Journal of Business Venturing, and Leadership Quarterly, among others.

2 Fu Quiang, 40, Associate Professor, National University of Singapore (NUS) Business School Qiang’s research focuses on Applied Game Theory and Industrial Organisation. Prior to joining NUS, he was a Visiting Scholar at the Max Planck Institute for Tax and Public Finance in Munich and CIREQ in Montreal. His work is published in International Journal of Game Theory, Journal of Mathematical Economics. and International Journal of Industrial Organisation.

3 Roderick Swaab, 40, Associate Professor, INSEAD Roderick’s research focuses on the impact 20 SINGAPORE BUSINESS REVIEW | NOVEMBER 2016

of communication structures and technologies on negotiation, conflict resolution, and group decision-making.

His research has been published in the Proceedings of the National Academy of Sciences, Journal of Applied Psychology, Organizational Behavior and Human Decision Processes, and Psychological Science.

4 Wenlan Qian, 40, Associate Professor, NUS Business School Wenlan serves on the editorial board of Real Estate Economics and Financial Management.

Her research appears in or is accepted by top academic journals such as American Economic Review, Journal of Financial Economics, Review of Financial Studies, Review of Economics and Statistics, Management Science, and Review of Finance.

5 Yan Li, 39, Associate Dean of Faculty, ESSEC Business School, AsiaPacific Yan Li’s research interests include consumer behaviour in mobile social network, big data for strategy, IT offshoring and policy making in GreenIT. Her works have appeared in IEEE Transactions on Engineering Management, Decision Support Systems, Information & Management, and Journal of Business Research.

6 Onur Boyabatli, 39, Associate Professor of Operations Management, Lee Kong Chian School of Business, Singapore Management University (SMU) Onur’s research interests

are in the area of risk management in supply chains. He is the co-editor of Handbook of Integrated Risk Management in Global Supply Chains. He is currently serving as an Associate Editor for the M&SOM journal’s special issue on Interface of Finance Operations and Risk Management.

7 Keung Ching Tung, 39, Associate Professor, NUS Business School Keung’s research focuses on capital markets and financial analysts. His research is published in several academic journals such as Review of Accounting Studies, Accounting Review, and Journal of Accounting Research. He is also an ad hoc referee for The Accounting Review, Accounting and Finance, Contemporary Accounting Research, and Journal of International Business Studies.

8 Devasheesh Bhave, 39, Assistant Professor at Lee Kong Chian School of Business, SMU Devasheesh’s research interests include emotional labour and customer service, emotions and wellbeing, and workplace relationships.

His works have been published in the Academy of Management Journal, Journal of Applied Psychology, Personnel Psychology, Journal of Management, Journal of Organizational Behavior, and other outlets.

9 Johan Sulaeman, 38, Assistant Professor of Finance, NUS Business School Johan’s research interests focus on the effects of geographic factors on various economic outcomes, and the effects of institutional investors on market outcomes and corporate decisions.

His other works are published in the American Economic Review, Journal of Financial Economics, Review of Financial Studies, and Management Science.

10 Li Xiuping, 38, Associate Professor, NUS Business School Xiuping’s research is focused on the social role that brands play; the influence of temporal, spatial, and social distance on perception of brand effectiveness. Some of her research were picked by an independent online blog which converted her research work into a short video using layman’s terms so that the masses can learn from her research.

Xiuping has been invited to give talks in China, Australia, and Hong Kong.

11 Jan Ondrus, 37, Associate Professor, ESSEC Business School, Asia-Pacific Jan serves as the Associate Editor of the Information Systems Journal (ISJ) and Electronic Commerce Research and Applications (ECRA). Jan has visited the University of Hawaii, Sungkyunkwan University, Mannheim University, University of Lausanne, Case Western Reserve University, Seoul, and holds a M.Sc. and Ph.D. in Information Systems from HEC Lausanne (University of Lausanne) in Switzerland.

12 Gokhan Ertug, 36, Associate Professor, Lee Kong Chian School of Business, SMU Between 2016 and 2019, Gokhan will serve as an Associate Editor of the Academy of Management Journal. Gokhan focuses on social networks, reputation, trust, knowledgemanagement, and international business.

His works have been published in journals like Administrative Science Quarterly, the Academy of Management Journal, Organization Science, Strategic Management Journal, and the Journal of

International Business Studies.

13 Aarti Ramaswami, 36, Associate Professor, ESSEC Business School, AsiaPacific Aarti’s research focuses on systems used to identify, select, and develop managerial and executive talent. Her articles have appeared in Personnel Psychology, Human Resource Management, Human Relations, Journal of Business Ethics, Journal of Business Research, Journal of Career Development, and International Journal of Human Resource Management.

14 Zhang Yan, 35, Assistant Professor, NUS Business School Yan graduated with a Ph.D. in Marketing from the University of Chicago. She has at least ten tier one journal publications up her sleeve, half of this research was published in psychology journals.

Additionally, she researches topics such as fickle men and faithful women. One wonders how that relates to marketing, but Yan creatively demonstrates how it relates to variety-seeking behaviour.

and culture. She has an extensive array of awards and achievements under her belt at a young age. Her research has been published in leading journals such as the Academy of Management Journal and Organization Science. She has authored several books’ chapters and presented papers at many international conferences and seminars such as at the European Group for Organizational Studies Colloquium.

17 Michael Mai Ke, 30, Assistant Professor, NUS Business School Michael conducts research that focuses on two primary research streams - deviant and unethical behaviors and group and team processes. His work has been published multiple times in top tier journals such as,Journal of Applied Psychology and Journal of Experimental Social Psychology, and has been covered and featured in various media outlets, such as CNNMoney, FORTUNE, Huffington Post, Bloomberg Businessweek, and Psychology Today.

18 Sam Kai Chi Yam, 27, Assistant Professor, NUS Business School Sam is the youngest professor and the only one from an Asian university on the Poets & Quants list of upand-coming professors under 40. He has at least 13 publications including Academy of Management Journal, Academy of Management Review and Journal of Applied Psychology. His research topics include - Do flexible work hours favour employees who choose to start work early and discriminate against those who start work later? Does engaging in corporate 16 Kim Hee-Yon, 33, Assistant social responsibility give employees a Professor, NUS Business School sense of entitlement that result in deviant Kim’s research is focused on organisational behaviours? Such prolific research has seen status and identity and international Sam being featured in the U.S. and local expansion and the impact of nationality media, as well as in Harvard’s blog.

Krishna Savani, 34, Assistant Professor, Nanyang Technological University (NTU) Krishna’s innovative research contributions have earned him the 2015 Rising Star Award presented by the Association for Psychological Science (APS). APS, a premier society of psychological scientists around the world, recognises researchers whose innovative work has already advanced the field and signals great potential for their continued contributions.

15

SINGAPORE BUSINESS REVIEW | NOVEMBER 2016 21

startups

Peer-to-peer shopping service raises $1m in funding Boxers at the same time.

After starting their service while living in Melbourne and travelling to Singapore and Malaysia where the couple bootstrapped, they saw a huge spike and traction in shoppers coming on board their platform. They then raised their seed round and raised $1 million in funding. This round was led by seed stage venture capital firm, 500 Startups, together with a group of angel investors.

ShopandBox is a platform that allows you to shop like a local for anything you want, from anywhere in the world with the help of a personal shopper, known as a ‘Boxer.’

ShopandBox is designed to empower shoppers to buy items that are either not available in their country or cheaper overseas.

Xin shared that ShopandBox started after they noticed that whenever they travelled overseas, friends would ask them to buy things that they couldn’t get back home in Australia. It seemed obvious to them that there was a gap in the market and they have gone a long way to fill it.

Two students score first bank partnership with DBS

Ex-Microsoft developer raises $15 million for his cloud startup

Closing a business deal with large-scale businesses can be a real challenge, especially for startups and still has no proven track record. However, two MBA students made an impression when they scored the first bank partnership with Singapore’s largest bank lender, DBS. Kelvin Teo, 30, and Reynold Wijaya, 28, founded Funding Societies in 2015, an online peer-to-business (P2B) lending platform in Singapore for Small-Medium Enterprises (SMEs) to secure loans for growth and for lenders to earn good returns.

They launched the startup in Singapore and Indonesia, while being physically in the US studying their MBA degrees. They later emailed DBS CEO Piyush Gupta and scored the first bank partnership as a student CEO. Kelvin claims that Funding Societies, the first escrow arrangement for fund handling and the first 2FA electronicsigning process for P2B lending in Southeast Asia, has amongst the lowest credit default records.

Founded in Singapore to provide alternative financing and investment, Funding Societies, it expanded to Indonesia in January 2016 under the brand “Modalku.”

start afresh.

With zero experience in managing a business, he founded a company in 2007 that was very much a “one man and his computer” type of operation for several years. It was bootstrapped until only recently when he was able to raise $15 million from Series A funding led by TVC Capital.

Geeman started BitTitan as a cloud services enablement and managed services automation pioneer, enabling IT service providers to sell more cloud products, onboard customers to the cloud, and create reoccurring revenue Technopreneur Geeman Yip has in 2007. While a Singapore startup, been in the software industry for it is also a global company dedicated 20 years and was working on “cloud” to cloud services delivery market and when YAHOO! was a catalog. He was serving 8,000+ partners including a developer at Microsoft for nearly tech giants Microsoft, Amazon, nine years, and his name appeared Google, HP, IBM, and Dropbox. on patents for the company. He was BitTitan has nearly 200 employees enjoying a stable, high-paying job when worldwide, 30 of whom are based in one day he decided to chuck it all and Singapore.

The founders Kelvin, a Singapore permanent resident, came here on the ASEAN scholarship and was a valedictorian of NUS, before serving as a consultant at Accenture, McKinsey, and KKR Capstone and graduating from Harvard Business School. He’s a Chartered Accountant and sits on the young professionals committee. Kelvin shared that the first time he came across peer-to-peer lending (P2P) was in 2014. He thought it was crazy when his friend told him how P2P lending works until something happened that changed his perception.

“Upon visiting several P2P lending companies in the US, I was blown away. I found that it could truly impact SMEs and societies. Not just our society in Singapore, but also societies across Southeast Asia.

Hence we call ourselves ‘Funding Societies,’” he said.

Reynold, meanwhile, graduated from Harvard Business School and was a Summa Cum Laude from the University of Michigan with a Master of Engineering. He was a leading executive in a reputable family business conglomerate in Indonesia. He’s also the co-founder of Indonesian non-profit organisation Let’s Go to School.

L

iving out of a suitcase for three years has been the norm for husband-and-wife duo Xin Lung Tai and Rebecca Chia, since they founded global peer-to-peer shopping service ShopandBox in 2013.

They were in a different country each month, spending time with their team, seeking out opportunities around the globe, or meeting up with shoppers and ‘Boxers’ from different cities. With only $40,000 funding from their own pockets, they didn’t have a physical office. They have a remote team based in four different countries and over 200 WhatsApp chat groups with their

22 SINGAPORE BUSINESS REVIEW | NOVEMBER 2016

Saws. Storage. And More.

KASTO offers more than high productive sawing machines and storage systems for bar stock and sheet metal.

Visit us in our new regional headquater in Singapore!

KASTO Asia Pacific Pte. Ltd. 25 International Business Park #01-26/29 German Centre Singapore 609916 Phone: +65 6896 1747 Fax: +65 6896 1424 Email: info@sg.kasto.com Internet: www.kasto.com

Saws. Storage. And More.

SINGAPORE BUSINESS REVIEW | NOVEMBER 2016 23

FIRST The Analysts’ call

Was delisting SMRT the right call for Temasek?

Expenses go up, earnings go down

SMRT gets delisted as new rail financing model rolls out

W

hen Singapore’s new rail financing model (NRFF) was announced, analysts were concerned about the toll it would take on SMRT. They knew that the firm would undoubtedly be plagued with the costs and uncertainties associated with its ageing and expanded network. To soften the blow of the new rail model, majority shareholder and state-owned investment firm Temasek Holdings pulled the pin on the privatisation of the rail company. In effect, Temasek would wholly own SMRT,

With rail reliability still undergoing upgrades, we expect expenses to increase and erode earnings over the next few years. and the company would be delisted from the Singapore Exchange mainboard.

But was privatisation the right call for Temasek Holdings? “SMRT will need to focus on delivering on existing and new multi-year programmes to support an ageing and expanded network, including the need to deliver a higher order of rail reliability and service in line with the heightened Maintenance Performance Standards to be determined by the LTA,” Temasek says.

According to Carmen Lee, head of research at OCBC Investment Research, the privatisation bid is also better for the company’s shareholders, as the way the 24 SINGAPORE BUSINESS REVIEW | NOVEMBER 2016

NRFF is structured isn’t exactly favourable for SMRT. “Under the NRFF, SMRT will be sacrificing EBIT margin upside for higher free cashflow positions throughout the licence period of 15 years. Furthermore, with rail reliability still undergoing improvements and upgrading, we expect expenses to increase and erode earnings over the next few years,” Lee says.

Shekhar Jaiswal, analyst for RHB Research, concurs that SMRT is expected to face challenges like costs and uncertainties associated with an ageing rail network, and that the company will need to deliver greater rail reliability services under the new rail financing framework. “Temasek believes that SMRT’s privatisation will provide it with the flexibility to focus on its primary role of delivering a safe and high-quality rail service – without the short-term pressures of being a listed company – in the midst of its transition to the new framework,” Jaiswal adds.

Meanwhile, other transport companies such as CDL are also at risk due to a domino effect ignited by the privatisation of SMRT. According to Derrick Heng, analyst from Maybank Kim Eng, negative implications could also arise for ComfortDelGroafter SMRT is privatised. “While commercial considerations remain important, a privately-held SMRT could take a longer term view when investing. This implies that it could sacrifice near-term profitability to enhance its capabilities,” Heng says.

Derrick Heng, Maybank Kim Eng: We highlighted an unfavourable deal for SMRT shareholders under the new rail financing framework.

As Temasek’s privatisation offer of SGD1.68 represents a significant 23.5% premium to our fair value of SGD1.36, we recommend that shareholders accept the offer.

Under the Scheme of Arrangement for the shares, 75% of the shares not owned by Temasek must vote in favour for the deal to go through.

Temasek will not revise the offer price.

Carmen Lee, OCBC Investment Research: With rail network renewal only set to complete in 2018, SMRT’s share price may continue to face downward pressure on weak earnings outlook. Furthermore, even with high free cashflow, we believe most of the cash will be invested into improving SMRT’s maintenance capabilities rather than paying out higher dividends. Therefore, based on these reasons, we think it makes sense for investors to use this opportunity to cash out for other investment opportunities.

Shekhar Jaiswal, RHB Research: Temasek’s offer price of SGD1.68 is only 4.5% below our offer price.

We assess that this price implies a long term EBIT margin of 4.5% for SMRT’s rail business versus our base case assumption of 5% EBIT margins. Given near-term cost headwinds and uncertainty on rail fares and ridership, it is likely that SMRT may earn <5% margins under NRFF. We believe the offer fairly compensates shareholders for an expected return that the stock will generate in the next 12 months.

abacus

Is Singtel being complacent amidst competition?

Dial Four for mobile

The fight for the fourth spot in Singapore’s telco scene is intensifying--who will be the sore losers?

I

t’s anyone’s guess as to whether there will end up even being a fourth mobile telco, let alone which of the incumbents will be most at risk.

At press time, three companies were in the running to be Singapore’s next mobile carrier - MyRepublic, airYotta, and TPG Telecom. AirYotta is an unknown, linked to OMGTel & Consistel. Media reports that it is led by Michael DeNoma, OMGTel’s former CEO. Philip Heah, formerly OMGTel’s VP for networks and infrastructure and IDA’s senior director of next-gen infrastructure, is its CTO. TPG Telecom is known in Australia for its low-cost model.

It is a broadband, IPTV and mobile service provider that emerged from obscurity just five years ago to become the second largest ISP and the largest MVNO in Australia through a series of acquisitions.

MyRepublic is the upstart ISP and broadband network operator started in 2011 by

former StarHub executive Malcolm Rodrigues and now has 55,000 broadband subscribers in Singapore.

Whilst MyRepublic looks to be the leader at this stage, TPG Telecom, with an Australian market cap of $400m also stands a chance as second favourite.

Telco losers So who would lose out?

Gregory Yap, an analyst with Maybank Kim Eng, reckons Starhub and M1 are most at risk of losing market share.

StarHub should lose less market share due to its stronger multi-play hold on subscribers (e.g. consumer hubbing and improving corporate stickiness due to its enterprise strategy).

Singtel is already too big for its Singapore boots, with the local mobile business accounting for just 12% of revenue, with the rest coming from its overseas interests. Still, there is always the final possibility that none of the telcos end up being

Working out debts with banks

granted a licence in Q4 this year, in which case the spectrum will be allocated to the existing players.

Drilling down There is an old adage in banking that when you owe the bank $1m you have a problem, but when you owe the bank $1b, the bank has a problem. So it is with Singapore oil and gas services firm Swiber, which is trying to work out its debt problems with the help of KPMG after initially deciding it was all too much and filing for liquidation.

So why is the company being rescued rather than being allowed to go under? It’s the $1.6b orders it has on its books that Singapore’s banks have partly financed that has many at the Marina Bay Financial Centre working overtime.

Busiest of the lot are the DBS bankers, who according to reports have been busy booking flights to Bombay to meet with Swiber’s customers to see if and how the projects Swiber was working on, and which were financed by DBS and others, can continue.

DBS has sent a team to meet

state-owned Oil & Natural Gas Corporation (ONGC) in India, Swiber’s key customer, to discuss restarting the two affected projects, according to a research note from OCBC. DBS just got lucky DBS provides working capital financing for the two construction projects with life cycle of 2-3 years, which are currently 50% and 80% completed, comprising trade finance and performance/ warranty bonds. Cash flows from the two projects are ring fenced. Luckily for the bank, it does not have exposure to the US$710m offshore field development project in West Africa from a Houston-based customer, which has been delayed indefinitely.

Not so lucky are Swiber’s unsecured creditors, who may end up getting just 2 to 4 cents for every dollar owed. In the meantime KPMG is continuing to run the company as the “interim judicial managers”, and the thoughts of $1.2b losses cascading through the banking industry are keeping everyone working hard on literally keeping the rig afloat.

SINGAPORE BUSINESS REVIEW | NOVEMBER 2016 25

FINANCIAL INSIGHT: SINGAPORE BONDS

Offshore bond market lures issuers away

Singapore bonds: Who’s borrowing where?

Issuers are avoiding the domestic SGD bond market and turning their sights to the USD bond market.

W

hen the primary bond offerings from Singapore-domiciled issuers reached US$6.6 billion in the first quarter of 2016 – the highest first quarter period in terms of proceeds since 2013 – there was a question on whether this momentum will be sustained. So far, it has been, with companies still preferring to raise funds offshore, leaving the Singapore dollar bond market out to dry.

Primary bond offerings from Singapore-domiciled issuers this year continued to accelerate to reach US$21.5 billion, up 25.2% in proceeds compared to the first nine months of 2015, says Elaine Tan, senior analyst, deals intelligence at Thomson Reuters.

“Singapore issuers looked beyond the domestic SGD bond market and turned offshore, tapping the US dollar bond market,” says Tan, noting at least US$5.7 billion worth of issuance, a 3.4% increase in proceeds from the same period last year. This is a shift from the first quarter of 2016 when Singapore issuers tapped the US dollar bond market and only raised US$1.1 billion, down 43.6% in proceeds compared to the same period last year.

Meanwhile, EURO-denominated bonds issued by Singapore companies reached US$3.9 billion, a sharp increase compared to US$634.6 million in the first nine months of 2015. This is a further improvement from the first quarter of 2016 when EURO-denominated bonds issued by Singapore companies only totaled US$3.1 billion compared to the US$634.6 million issuance in the first quarter of 2015.

26 SINGAPORE BUSINESS REVIEW | NOVEMBER 2016

Primary bond offerings from Singaporedomiciled issuers this year continued to accelerate to reach US$21.5 billion, up 25.2% in proceeds compared to the first nine months of 2015.

Notable deals include Temasek’s euro debut with US$1.2 billion (€1.1 billion) and United Overseas Bank’s US$541.7 million (€498.3 million) first euro covered bond. By contrast, the SGD bond market, which has been favored as a safe haven against market uncertainty and volatility, could be facing headwinds for the rest of this year.

The third quarter of 2016 has already shown signs of a slowdown, with Singapore’s local currency bond issuance dipping to S$2.6 billion, a 63.7% sequential decline from the second quarter of 2016, and down 52.9% from the third quarter of 2015. This is a further deterioration from the first quarter of 2016 when the SGD bond market reached around S$3.8 billion (US$2.6 billion), a 21.6% decline in proceeds compared to the same period last year.

The first quarter of 2016 seems to have held up better due to Singapore’s Housing & Development Board issuing its SGD seven-year bond and raising S$1.0 billion (US$698.0 million). Investment-grade names such as DBS Group Holdings, Ascendas Pte Ltd, and Mapletree Treasury Services also tapped the SGD bond market at the time.

Tallying up to September, SGD bond market proceeds amounted to S$15.2 billion (US$11.1 billion), a 9.2% decline in proceeds from the comparative period last year. Tan reckons this is the lowest level of proceeds for the first nine months since 2013, which posted S$13.5 billion, and has been triggered by sluggish domestic growth, among other factors. “A slowing economy and prolonged commodity price weakness are among the several factors affecting

FINANCIAL INSIGHT: SINGAPORE BONDS primary issuance in the SGD bond market,” says Tan. The Singapore economy grew 2.1% in the second quarter of 2016, unchanged from the first quarter, but a far cry from the growth levels it reached in 2014 and 2015. The economy has been limping in the past quarters – it reached as low as 1.7% in the second quarter of 2015 – due to underwhelming performances in the key manufacturing and services sectors. “The Singapore dollar weakening against the US currency could also be another dampening factor for the city state’s local currency bond market,” adds Tan. The Singapore dollar has been dipping in early October against the US dollar, and has been lagging behind regional currencies as well. The Financials sector continued to account for most of SGD bond offerings at 41.8% market share, followed by Government & Agencies (29.5%) and Real Estate (11.9%).

The hierarchy of most active sectors did not seem to change from the first quarter of 2016, when issuers from the Financials sector also accounted for a lion’s share of the SGD bond market at 49.0%, raising S$1.8 billion (US$1.3 billion).

The Government & Agencies and Real Estate sectors captured 28.9% and 10.7% market share, respectively.

There was a marked slowdown in the Energy & Power and Industrials sectors, which accounted for only 4.6% and 2.1% market share, respectively. Both sectors witnessed double-digit percentage declines in proceeds, although Tan expects the amount to pick up over the next two years. Still, there is caution is in the air with at least S$35.1 billion worth of SGD bonds expected to mature for the rest of the year through 2018, and approximately 20% of the proceeds from Energy & Power and Industrials issuers. “Given the recent bond defaults in these sectors, the SGD bond market is potentially exposed to further rising default risks,” warns Tan.

SGD bond market is exposed further to default risks

2017 continues to be a tough year for the debt capital markets in Singapore and South East Asia as a whole, says Vicky Münzer-Jones, a partner in the Singapore office of Norton Rose Fulbright. “There remains hope that there will be more deals in the region during the last part of the year and we are certainly seeing bankers aiming for windows of opportunity to issue, but it is a faster flowing trickle rather than a flood.”

Given the continued slow economic growth, depression in commodity prices and some high-profile defaults, like that of South Korean container shipping firm Hanjin, having an impact on the markets, she says there is likelihood that a few more issuers could be in hot water in the near term. “If there is a bright side to a default (for those not active in the distressed debt market), then it is the lessons a default teaches market players,” says Münzer-Jones.

“It hopefully reminds investors to consider the risks of the credit and product in which they were investing and to understand their rights under the documents, while reminding banks and advisers of the value of well-drafted documents.”

Tough year In November last year, Indonesian telecommunications products retailer PT Trikomsel Oke became the first company to default on SGD bonds since 2009 on the back of dipping regional currencies and depressed commodity prices. There has been an a reported increase in Singaporelisted firms seeking to relax bond covenants this year, including Ausgroup Lt.d and Otto Marine Ltd. Companies have been trying to extend the maturity of debt and ease requirements to maintain certain leverage levels due to tighter cash flows and the global economic slowdown.

Singapore dollar bonds volume - Top Macro industry - 2016 YTD Elaine Tan

Source: Singapore DCM Review, Thomson Reuters

Vicky MünzerJones

Panda or dim sum While the SGD bond market withers and default risks rise in China, dim sum bonds are once again heating up, but it is a trend that not everyone is keen to ride just yet. Despite the higher yields that dim sum bonds offer, more cautious investors have been limiting their exposure due to a fear of defaults and currency depreciation.

“There are conflicting views on whether issuers will return to the dim sum market. There was a tail-off last year and the beginning of this and the reasons for the reductions have not disappeared,” says Münzer-Jones.

“However, some are starting to believe the rhetoric that China’s slowdown is a sensible correction, and, therefore, the prospects for the currency over the typical term of a dim sum bond are not so bad.”

She reckons offshore renminbi issues will be attractive for investors who are looking for higher returns compared with other currencies, especially in a market where negative interest rates are not just confined to Japan. It will also be a SINGAPORE BUSINESS REVIEW | NOVEMBER 2016 27

FINANCIAL INSIGHT: SINGAPORE BONDS Singapore DCM volume by macro industry breakdown - 2016 YTD

Source: Singapore DCM Review, Thomson Reuters

viable option for those that want to diversify their portfolios.

“Investors may be willing to ignore why the higher yields are offered. In this environment, a dim sum bond may seem like the better option,” says Münzer-Jones.

“Some investors sitting on capital which needs to grow are looking at increasingly risky structured investments as a means to get a return which they would have been able to get from reasonably standard investments not that long ago,” she adds. “Purely anecdotally, in Singapore we have had more clients asking about panda bonds than we have about dim sum bonds,” says Münzer-Jones.

China’s panda bonds market opened last year to great enthusiasm, opening up a new funding channel that had been exclusively available to select agencies. Since then overseas-incorporated Chinese companies had been lining up to issue panda bonds due to their lower funding costs compared to dim sum bonds.

Over the past months, there has been expectation that China’s panda bonds, which are yuan-denominated bonds sold by foreigners on the mainland, will exceed dim sum bonds for the first time. In Singapore, warehouse developer and operator Global Logistic Properties (GLP) became one of the first foreign companies to issue panda bonds on the Shanghai Stock Exchange. GLP floated $224 million which proved to be popular among institutional investors and ended up three times oversubscribed, with reported plans to issue a larger amount of up to $1.5 billion. But despite GLP’s successful issuance, some foreign issuers have had to deal with a muck of regulatory issues surrounding panda bonds, which has tempered interest.

Key challenges for potential issuers include providing past three years of financial statements under Chinese accounting standards (CAS), according Jack Chan, managing partner, financial services, Greater China at EY. Converting non-CAS accounts into CAS as part of the filing can be a very arduous task, barring any granted exemptions for the issuer. Panda bond issuers also have to draft circular and disclosure documents in Chinese, requiring careful translation. But for issuers that decide to push through, the payoffs could be worth it. He reckons panda bonds offer a way for financial and non-financial enterprises to diversify their investor base and gain a foothold in China. They also provide a vehicle for enterprises that want to fund an onshore subsidiary or to expand their operations in China.

And for first movers, the issuance grants significant publicity and marketing advantages.

28 SINGAPORE BUSINESS REVIEW | NOVEMBER 2016

In Singapore, warehouse developer and operator Global Logistic Properties (GLP) became one of the first foreign companies to issue panda bonds on the Shanghai Stock Exchange.

hong kong view How would you describe the current state of Hong Kong’s debt market? With default risks rising in China, dim sum bonds are once again heating up. What can you say about this trend?

ELAINE TAN, THOMSON REUTERS: Hong Kong maintains its reputation as an international financial centre. In the equity capital markets, Hong Kong remains the world’s top venue for initial public offerings to date. Concurrently, Hong Kong SAR Government continues to implement additional measures to develop the city’s bond market. These include the Government Bond Programme initiative, enhancing Hong Kong’s position as an Islamic Finance centre, as well as retaining its status as the largest offshore Chinese Yuan clearing centre.

Total issuance of Hong Kong dollar-denominated (HKD) bonds continued to grow at a record pace with proceeds amounting to HK$137.6 billion (US$17.7 billion), an 89.5% increase from the same period last year. The financials and government sectors accounted for majority of the issuance with 95% market share.

Overseas issuers (excluding China) tapped the HKD bond market and accounted for 26.7% of the market share. Hong Kong’s local currency bond market remains a viable source for issuers seeking to meet regulatory capital requirements. However, HKD bond issuance was overshadowed by the growth of the Dim sum bonds, in previous years. Dim sum bonds started to gain momentum in 2010 until it reached annual record level in 2014 when total proceeds raised amounted to RMB337.7 billion (US$54.9 billion).

Both demand and issuance for dim sum bonds slowed down afterwards affected by the equity boom in China, yuan devaluation and the opening of China’s onshore bond market, or Panda bonds. Total dim sum bond proceeds so far this year amounted to RMB85.6 billion (US$13.0 billion), down 38.8% from the same period last year. Although dim sum bonds started to pick up again during the second quarter of this year, potential headwinds include currency concerns and increasing interest in China’s onshore bond market.

Panda bonds issuance increased in 2016 year-todate and reached RMB17.6 billion (US$2.7 billion), a significant increase from RMB5.0 billion (US$777.8 million) issued in 2015.

Dim Sum Bonds

Source: Thomson Reuters

SINGAPORE BUSINESS REVIEW | NOVEMBER 2016 29

Industry briefing: GREAT SINGAPORE SALE the GSS with more promotional seasons available online.

Singaporeans are becoming selective with their spending, and when they do decide to splurge on fashion and luxury items, many would rather shop online than walk around. Analysts reckon that mall brands and landlords will have to focus on rolling out novel concepts and store experiences if they hope to compete with popular online stores and survive the increasingly brutal Singapore retail landscape.

Shopping atmosphere has become gloomy

What happened to the Great Singapore sale?

The disappointment that was the Great Singapore Sale reveals that more than discounts, shoppers are craving for novel concepts and experiences.

A

fter the crowds had thinned and the cash registers counted, the Great Singapore Sale (GSS) was not that great after all. Even the addition of two weeks to the country’s biggest sale event failed to draw out more Singaporeans, many of whom would rather wait for the next online sale or were simply tired of the same old brands they were seeing in the malls. “This year seemed like one of the worst GSSs we have ever experienced,” says Juliana Cai, analyst at RHB. “While there were ongoing discounts spanning across ten weeks, the shopping hype was just not there anymore. The shopping stretch was very quiet and empty on weeknights.”

Retail sales for department stores and apparel and footwear shops in June fell 3.8% year-on-year 30 SINGAPORE BUSINESS REVIEW | NOVEMBER 2016

Not even the Great Singapore Sale could lift the lethargic shopping mood in Singapore.

(y-o-y) and 4.4% y-o-y, respectively, revealing that not even GSS could lift the lethargic shopping mood in Singapore. Cai says that, based on channel checks in various shopping districts, shopper traffic has visibly reduced, mainly due to weak consumer sentiment from concerns over the economy and job security, and the increasing irrelevance of

Offline fallout The Singapore retail sector continues to be in the doldrums with retail sales, excluding motor vehicles, contracting by 3% y-o-y in April and another 3.3% in May, leading British brand New Look and French menswear brand Celio to close down their Singapore operations.

Most retailers suffered from poor operations in the second quarter of 2016, registering low, if not negative, y-o-y growth in footfall and sales, says Derek Tan, analyst at DBS, and retail brands particularly in footwear and apparel have been downsizing and exiting Singapore throughout the year. The Al Futtaim Group shuttered 10 stores, including Royal Sporting House, Marks & Spencer, and John Little, while the Jay Gee Melwani Group closed down its New Look and Celio stores. Smaller apparel and footwear brands have not been spared, with the likes of Purpur, Frontieer, and Heatwave reducing their store count. There is cause

Average gross rents of prime retail spaces

Source: Knight Frank Research

industry briefing: GREAT SINGAPORE SALE for concern that this trend will continue on in the latter half of the year, especially in Orchard Roadfocused malls, says Tan, explaining that the 11.3% y-o-y increase in visitor arrivals does not appear to have boosted spending for malls like Vivocity, Wisma Atria, and Paragon. “We think the operating environment has worsened since 2015, as we noticed more hoardings at shopping malls this year.

Moreover, a considerable number of hoardings have no indication of new stores coming up,” says Cai. Rents falling As it becomes harder for retailers to prop up their sales, there is an increasing pressure for landlords to lower their rents, even in hightraffic and core areas. Prime rents for Orchard Road, for example, declined by 1.1% q-o-q while that for suburban markets declined by 0.7% q-o-q, according to Zhi Bin Yeo, analyst at CIMB. In her full-year forecast, Doreen Goh, associate director, research at Colliers International, reckons Orchard Road rents will fall by up to 2% in 2016 while regional centre rents will drop by around 1% as retailers adopt a more cautious stance.

“We foresee a further softening in prime ground-level shopping mall rents in the second half of 2016.

Most retailers will stay selective and cost-conscious with regards to their physical space requirements going forward. Landlords will maintain realistic rental expectations and stay flexible during lease negotiations, with a focus on tenant retention and attraction,” says Goh.

As it becomes harder for retailers to prop up their sales, there is an increasing pressure for landlords to lower their rents.

Source: Colliers International Singapore Research

Tay Huey Ying

Doreen Goh

Derek Tan

Asia Pacific shopping centre rents, 2Q16

Source: JLL

Average capital values of prime retail space (by micro-market)

“However, the easing rents bode well for local and foreign retailers which are keen to set up shop, relocate, or expand their physical footprint in the coming months.

In addition, there should be opportunities to secure previously unavailable prime retail spaces at more affordable rental levels. Such spaces are likely to be freed up by existing retailers drawing up new strategies, consolidating and ‘rightsizing’ their operations,” she adds.

Higher vacancy rates Consolidation appears to be a popular coping strategy amongst existing retailers, pushing up the vacancy rates in malls in the second quarter of 2016. The second half of the year due should see vacancy rates inch even higher due to a flood of new supply and a more cautious approach by retailers, according to Huey Ying Tay, head of research, Singapore at Jones Lang Lasalle. Tay expects 2.8 million sq. ft. in new supply to come on stream in 2H16, namely in Guoco Tower and Marina One, which will put even more pressure on vacancy rates. In response, landlords have been focusing on tenant retention.

Some are offering more flexible terms, including short-term leases and lower-than-market rents, when leases came up for renewal. Other landlords offered rental rebates as well.

Analysts believe that one of the best moves for retailers and

landlords to win back shoppers that are shopping heavily online or are avoiding malls altogether, is to inject innovation into their offerings.

Innovative offerings Already, some offline brands are rolling out original products and shopping approaches that can only be seen and felt when you step into a physical store. “Brands that are able to create unique selling points will survive well, as consumers continue to search for a novel and differentiated experience. This is evident in the top fast-fashion players – such as Uniqlo and H&M – that continue to be footfallmagnets, due to their product technologies and innovation.”

The softer retail market provides a golden opportunity for retailers and landlords to test retail concepts, says Wendy Low, executive director & head, retail at Knight Frank.

Homegrown retailers, in particular, can inject Singapore flavour in the mall experience that helps differentiate them from online shops. “To counter the weaker retail scene, mall owners are looking towards local retailers to add refreshing retail options to their existing trade mix,” says Low. She reckons homegrown online brands like Naiise, MDS, and Love Bonito have shown success in transitioning from online to offline by setting up shop in local shopping malls. More homegrown talent is set to occupy more mall spaces too, she says.

SINGAPORE BUSINESS REVIEW | NOVEMBER 2016 31

COVER STORY

Residential market could be making its way out of the woods

Is Singapore’s battered residential market finally bouncing back?

For a time, there seemed to be no end in sight for Singapore’s sales sluggishness and home price declines, but 2017 could provide a long-awaited respite.

W

hen developers sold 1,921 units in July – around one-quarter more than the units launched that month – it gave hope that Singapore’s residential sector was regaining composure after getting beaten down by additional property cooling measures. Aside from a rise in transaction volumes, the steep price declines are slowing down, leading some analysts to predict 2017 as a year of relative stability. “With improvements in transaction volumes and prices of different market segments showing a mix of mild increases or decreases generally, the private home sales market appears headed towards a bottoming in the next few quarters, provided sentiments remain positive and barring major external shocks,” says Ong Teck Hui, national director of research & consultancy at JLL. Sharing this cautious optimism, Tay Kah Poh, executive director & head, residential services at Knight Frank says the private housing market is “finely poised.” He expects total new sales volume to reach 6,800 to 7,500 units in 2016, albeit some challenges line the market’s recovery path.

“While there are signs of a market turnaround from emerging value, global economic weaknesses will dampen the recovery. We expect price movements will

32 SINGAPORE BUSINESS REVIEW | NOVEMBER 2016

After the mid-year lull in June, activity has clearly picked up in the private home market, as seen in the new launches and a marked increase in transactions

be range-bound in a tight band for the rest of this year, but with a bias downward,” says Tay. Buying demand remains strong Buying demand remains strong, according to ERA, as evidenced by the 1,921 units sold by developers in July. It also shows that the abundant stock that has been putting pressure on prices is progressively being absorbed. Out of the sold units, 1,091 (57%) were private residential units, a 104% increase in transaction volume over the previous month. Meanwhile, 830 (43%) were executive condominiums (ECs), a 258% increase. “After the midyear lull in June, activity has clearly picked up in the private home market, as seen in the new launches and a marked increase in transactions,” says Ong. The EC market also continues to draw buyers, with seven out of the top 10 best-selling projects being ECs. The ERA points out that the EC market has already outperformed 2015 in terms of number of transactions, with 2,697 units sold in the first seven months of 2016, compared with 2,550 in the whole of 2015. Projects already on the market were also snapped up by buyers, with developments such as Bellewaters, Bellewoods, The Visionaire, and The Glades selling well.

COVER STORY By the end of the year, ERA expects developer sales to be about 7,500 to 8,000 units for private condominiums and 3,000 to 3,500 units for ECs. Private residential unsold inventories have continued to decline, with 23,282 units remaining unsold, the lowest level in the last decade, says Celine Chan, research analyst at OrangeTee. She attributes the lowering inventory level to the tapering of government land sales sites in recent years, which has constricted the number of new launches, narrowed buyer options, and increased sales of existing launches. More buyers will be looking to snap up bargains soon due to a confluence of enabling factors.

“We believe that there is ample liquidity accumulating on the sidelines. Given the past strong performance of the Singapore property market, the relative safety of Singapore real estate, and current low interest rates, both Singaporeans and foreigners are still very keen to invest in Singapore property,” says Chan. “With no changes to cooling measures in sight and the market experiencing waiting fatigue, the ‘pent-up’ liquidity may continue to seep into the market,” she adds.

Tay Kah Poh

Desmond Sim

Private property price declines decelerate As the supply of unsold units lowers, there has been a notable slowdown in private property price declines.

The second quarter of 2016 was the 11th consecutive quarter where the private property price index continued to decline, but it also registered the smallest quarterNew private residential units take-up

Source: URA, CBRE Research, Q2 2016

Gross yields of private residential property, by market segment

Source: REALIG(based on data as at 25 July 2016, UFA, Knight Frank Research

on-quarter change at -0.4% since the slides began in the fourth quarter of 2013, says Chan.

She highlights how the price changes in the Core Central Region (CCR) and Rest of Core Central Region over the last few years have slowed, suggesting stabilisation in the two submarkets. “The CCR in particular should continue to receive heightened interest as developers offer deferred payment schemes or/ and direct discounts to help buyers cope with cooling measures,” says Chan.

Knight Frank’s Tay expects island-wide private home prices to decline at a slower pace in 2016 than in the past two years, with the mass market leading the fall, although prices of luxury homes are likely to be supported by homebuyers who believe in the value proposition of high-end homes. For investors, this makes the mass-market segment the least attractive from a riskreward perspective, while the CCR or prime residential property segment is a great choice as prices moved against the grain by increasing 0.3% and 0.2% in the first and second quarters of 2016, respectively, says Eli Lee, analyst at OCBC. Luxury segment livening up One segment that is attracting more buyers recently is luxury residential. Interest in luxury homes picked up in the first half of 2016 (1H16) as the price gap between sellers and buyers narrowed. Prices of good class bungalows (GCB) seem to have found a sweet spot, falling by 2.5% to $1,318 psf on land area, from $1,352 psf as at end of 2015.

“With owners’ price expectations moderating, some buyers are seeing a window of opportunity to invest.

Moreover, owners who bought good class bungalows several years ago have found it profitable to sell at today’s prices rather than at a later date,” says Desmond Sim, head of research, Singapore and SEA at CBRE. The most expensive GCB sold in 1H16 is located at Kingsmead Road, and Sim reckons the $29 million transaction at $1,065 psf was driven by pure land price since the house had to be redeveloped. Also, the period saw the garden of Eden Hall, the official residence of the British high commissioner, offered to the market for a second time this time with a 20% discount, keeping in line with the 12.3% decline in the URA price index for landed homes since it hit a peak in the third quarter of 2012.

Similarly, 1H16 saw stronger buying of luxury apartments as developers offered discounts and creative financial schemes. A total of 131 luxury apartments worth $5 million and above were sold during the first six months of the year, already 76% of the 166 units sold in the whole of 2015. Sim says that amongst the developments that contributed to the 1H16 volume was Ardmore Three, which sold 34 units priced at $3,200 psf after a 15% discount plus a 15% cash rebate for additional buyer’s stamp duty. Other projects that sold during the period included Leedon Residence (11 units), Goodwood Residence (6 units), and Gramercy Park (4 units).

Luxury apartment prices have been climbing as demand holds up and supply remains tight. The most SINGAPORE BUSINESS REVIEW | NOVEMBER 2016 33

COVER STORY expensive luxury apartment sold in 1H16 was a 7th floor unit in Le Nouvel Ardmore which fetched $21 million at $4,000 psf. At end-June, the overall average price of luxury apartments stood at $2,950 psf, up from $2,700 psf at end-2015. “These strong sales could be attributed to creative pricing packages and payment schemes which triggered a flight to value. These sales have put luxury apartments in a good position to perform better in 2016 compared to 2015, albeit an expected slowdown in the second half of 2016 (2H16), in the absence of new launches. Prices too could hold firm as pipeline stock is limited,” says Sim. Ultra rich Indonesians snap up posh homes Another factor that breathes life into the luxury segment is the increase in posh home purchases by wealthy Indonesians. 30 properties valued at over S$5 million or more were bought between January and mid-August.

What’s driving the surge in luxury transactions among Indonesian buyers? Apart from it being a ripple from the Indonesian tax amnesty, Krishna Guha, equity analyst at Jefferies Research, says that one of the factors is that businesses are morphing into family offices/investment holding companies. “Companies which are not involved in real estate are closing down or merging because of various reasons including lack of growth, cost pressures, thin margins due to competition, succession planning issues and/or outright bankruptcy. Such business owners are partly investing the cash proceeds into investment property to seek rental income.” She adds that the introduction of stamp duties in Australia and UK and concerns around BREXIT also contributed to the increase.

On the other hand, while generally more buyers snapped up GCBs and luxury apartments, there were no sales of Sentosa Cove bungalows in 1H16, and in the absence of sales evidence, prices have held at 2015 levels. “The dearth of transactions could be attributed to the wide price gap between buyers and sellers,” says Sim. Looking forward, he reckons luxury sales activity might slow down in 2H16, with cooling measures still in place, uncertainties on the global economy and political front, and the absence of new launches. But GCBs will continue to be a bright spot with CBRE expecting 25 to 35 GCBs to be sold throughout the year as buyers look for an opportunity to upgrade to a better location, bigger plot, and more prestigious address.

Private residential property price index (RPPI)

Source: URA, OrangeTee Research

34 SINGAPORE BUSINESS REVIEW | NOVEMBER 2016

Average luxury residential prices

Source: CBRI Research, July 2

Total transaction volume, by type of sales

Source: UPA, Knight Frank Research

Eli Lee

Ong Teck Hui

In September, the Monetary Authority of Singapore announced that it would fine-tune the refinancing rules under the Total Debt Servicing Ratio (TDSR) that would essentially exempt more borrowers, but analysts hold mixed views on the impact of these tweaks on the residential market. “These fine-tunes are very well thought-out and would add a measure of stability to the balance sheets of existing borrowers. At the margin, this could relieve some stress on the secondary market and is overall positive for the domestic housing market and the banks’ mortgage loan books,” says Lee. TDSR refinancing rules tweaked While existing borrowers will get more breathing room, Lee reckons that the limits regarding new property loans have not been changed and the authorities have emphasised that the move should not be taken as an easing of the property cooling measures that have been so effective in curbing demand. Analysts expect the residential market will continue to feel the pressure in 2H16 and pull down prices. Buyers, especially those outside of the luxury residential segment, will remain apprehensive about locking in deals due to the dearth of available supply and the possibility of better offers coming along in the near term. “Looking ahead to 2H16, barring curb reversals, we expect home prices to grind lower under a potent mix of an uninspiring economic outlook, continued physical oversupply, and persistent pressure from still-falling rentals as buyer sentiments remain cautious in what is by now one of the longest property bear in recent history,” says Lee.

SPECIAL FEATuRE: german country report

growth markets like China, India, and rest of Southeast Asia It comes as no surprise for Dr. Moo that Germany is Singapore’s largest trading partner in the European Union, while Singapore is Germany’s largest trading partner in South-East Asia.

As of 2Q16, data from the Singaporean-German Chamber of Industry and Commerce showed that Singapore’s exports to Germany jumped 3.2% to $1.9billion compared to figures from the same period last year.

Imports from Germany also jumped 3.7% to $3.07billion yoy.

Bilateral trade between the two countries stood at $20 billion in 2015, and over $17 billion of overall foreign direct investment from German companies in Singapore in 2014.

Over 1,400 German firms are in Singapore right now

Number of German firms in Singapore up by almost 300% This number is predicted to increase as the inaugural Germany-Singapore SME Funding Programme was launched.

W

hen German companies KASTO and Hoffman Quality Tools opened their Singapore offices, both had only one thing in mind: to make Singapore their jump-off point to expand presence in the Southeast Asian market. The two companies are now part of the steadily growing number of German companies, which increased by almost 300% just in the past 10 years.

According to Dr Tim Philippi, executive director, SingaporeanGerman Chamber of Industry and Commerce, the number of German firms in Singapore constantly risen as has the number of German citizens residing here.

“Every year, we’ve seen an influx of between 60 and 100 new companies from Germany.

There are now more than 1,400 of them. As for the number of Germans living here, there are probably around 9,000, mostly

Singapore stands out as a trusted and sophisticated business hub for German companies.

German company employees and their families but also academics and scientists who are working at the city’s universities and research institutions,” he says.

Singapore as first base This number is expected to increase further with the growing recognition of Southeast Asia as the third engine for growth, next to China and India, and the recent launching of the inaugural Germany-Singapore SME Funding Programme.

According to Dr Moo An Wee, regional director, Europe, Singapore Economic Development Board, many German companies choose Singapore as their first base in Southeast Asia. “Amongst the ten ASEAN member states, Singapore stands out as a trusted and sophisticated business hub for German companies, especially the mid-sized German companies - or Mittelstand - to expand into high-

Singapore as an important hub Jürgen Seitz, managing director at Mannheim-based firm Pepperl+Fuchs in Singapore, could not agree more. “Thirty-five years ago, the Mannheim-based SME, Pepperl+Fuchs, ventured into the Far East. Today, the automation specialist has deep roots in Singapore, which is home to production, sales, and Research & Development. When a company wants to set up a business in Asia, the first step via Singapore is advantageous,” he said.

“With an ever more closely integrated ASEAN region, Singapore can heighten its importance and attractiveness to German companies.

In particular, our SMEs can benefit from the unique and innovative entrepreneurial environment in Singapore and find interesting and reliable partners for ambitious joint high-tech projects. With the help of the regional know-how and expertise of their Singaporean counterparts, they can also expand their activities successively to other Asian markets”, Prof. Dr.-Ing. Axel Stepken, Chairman of the Board of Management of TÜV SÜD AG and GSBF Co-Chair since 2011, said in the recent launch of Germany-Singapore SME Funding Programme.

SINGAPORE BUSINESS REVIEW | NOVEMBER 2016 35

SPECIAL FEATuRE: german country report

German companies take the lead in Singapore’s competitive tools industry Find out what German companies such as Hoffman Quality Tools Asia Pacific and KASTO Maschinenbau GmbH & Co. KG are doing in Singapore.

S

ingapore’s economic growth since our inception and expanding our continues to thrive despite global headcount by 10 times since we started in headwinds, and foreign companies 2012,” says Banerjee. The Hoffman Group’s still flock to The Lion City to widen their -- and by extension Hoffman Quality Tools foothold in the region. Of these foreign Asia Pacific’s -- diverse and numerous firms that have established themselves product portfolio includes tools for cutting, in the city-state, two German companies machining, clamping, measuring, grinding, stand out as their service and product as well as hand tools, occupational safety, excellence keep setting the bar high in the workstations and storage, and workshop tools industry. accessories.

Hoffman “ The biggest challenge Banerjee says their Quality Tools success in Asia has along the way is to Asia Pacific to do with their achieve a 100% growth partners who are and KASTO for the business year.” familiar with their have carved a name for products. “They themselves are more than just in Singapore’s business industry as two of distributors who sell our products, they the most trusted names when it comes to are specifically trained on a yearly basis high-quality tools. and have an extensive knowledge of our product offerings,” shares Banerjee. In Gearing up for greater things addition, they have over 300 German The Asian arm of the Hoffmann Group, companies that they are working with Europe’s no. 1 system partner for industrial globally. They are the company’s “key quality tools, has been having a good year account business” that have heavy in the region. According to Hoffman’s Asia presence in Asia.

Pacific managing director Pinaki Banerjee, Hoffman Quality Tools Asia Pacific, which Diligence is key started operations in 2012, attained its Banerjee is fully aware, though, that most successful period this year. “The success comes with diligence. “The biggest biggest milestones in the last four years challenge along the way is to achieve are achieving three-digit growth by far a 100% growth for the business year,”

Partners are more than just distributors who sell our products.

36 SINGAPORE BUSINESS REVIEW | NOVEMBER 2016

Pinaki Banerjee Managing Director, Hoffman’s Quality Tools Asia Pacific

Banerjee says. He notes that it is a very bold plan but is committed to deliver this result with the company’s dedicated team members across the region. “In order to get more mileage in this business, we have to create more engaging activities with our customers be it seminars, road shows, live demonstration, exhibitions and the like,” he adds.

The company is also keen on expanding their operations further. They have their

SPECIAL FEATuRE: german country report

All for a faster and more personal service

and high-quality sawing and storage technology and efforts are being stepped up in all industries to deploy networking and automation to rationalise production processes. “This is where we can provide users with optimum support,” he shares.

Stolzer notes that even the standard Lifting the bar versions of many The company’s storage “This is why we expanded of KASTO’s sawing machines offer solutions our network to offer a high level of Raising the bar in Southeast Asia include our customers in the automation and KASTO has its eyes set on growing compact, region faster and more can be integrated its regional business further. KASTO standalone into a uniformly Maschinenbau GmbH & Co. KG, (KASTO), towers as personal service.” controlled a company based in Achern, Germany, well as fully materials flow. that specialises in sawing and storage automatic “We help companies to achieve significant technology for bar stock, has been active high-rack honeycomb systems with improvements in production efficiency in Southeast Asia since 1991. The company thousands of storage cassettes for bar while at the same time reducing their manifested their intention to expand in the stock, sheets and residual materials, costs – two outcomes which in today’s region further by opening their Singapore which are being returned to storage after economically challenging climate are in subsidiary in October 2015. machining. especially great demand,” he says.

“Our location has an excellent Combining these two lines of business infrastructure and we are very close to all has resulted in the development of sawing the other countries in Southeast Asia,” centres or storage-saw cell systems in says Armin Stolzer, Owner and CEO which all the storage, handling, sawing, of KASTO. He uses as an example the marking, palletising and bundling company’s processes, excellent including material “The operators of our access to the identification, are sawing and storage market in performed fully systems expect quick, Singapore. automatically personal, and complete in multishift “The service from the operators of operation. Even our sawing with their success maker.” and storage in the market, systems Stolzer believes expect quick, personal, and complete there is more to come for the company service from the maker,” he continues. in Southeast Asia. “Singapore and the Armin Stolzer “This is why we expanded our network to whole of Southeast Asia are still promising Owner and CEO, offer our customers in the region faster markets for KASTO,” he says. There is a KASTO and more personal service.” huge demand, Stolzer says, for innovative eyes set on a warehouse logistic hub in Singapore in the near future. This will allow them to reach out to more target markets with a comprehensive logistics network and also enhance their delivery capabilities.

They will also focus on main markets such as Thailand, Indonesia, Vietnam and India, and expand business in these areas by next year.

KASTO’s products, Stolzer says, range from small manual machines for workshop use through to high-performance band sawing units for the industrial machining of large ingots and sheets.

SINGAPORE BUSINESS REVIEW | NOVEMBER 2016 37

Singapore’s 25 largest Architecture Firms

NTU The Hive--Photo from CPG

Architects are starting to shift their focus overseas Hiring sentiment for architects remains subdued as local projects dwindle, but optimism remains as firms expand abroad.

A

round a decade ago, the majority of business revenues of the DP group of companies came from local projects, but overseas projects now represent a big source of revenue for the architecture and design consultancy group.

This is becoming a typical story in Singapore, where many architectural companies have chosen to expand abroad as the pipeline of local projects thins.

While overseas expansion has helped prop up hiring demand for architects, firms are feeling the pinch due to the domestic slowdown, which prevents them from expanding their headcount.

“We feel overseas projects will start to contribute by 20% more towards our revenue mix given our presence in the Middle East and the many opportunities we have found there. We are opening new offices in Istanbul and Doha, 38 SINGAPORE BUSINESS REVIEW | NOVEMBER 2016

While companies are not actively downsizing, they are more cautious with headcount.

and are hiring in line to support project needs and requirements,” says Angelene Chan, CEO of DP group of companies.

Cautious with headcount Architecture companies, in response, have been careful about adding headcount with new hiring efforts often intended for staff replacement rather than for staff expansion. “As property cooling measures remain in place in Singapore, the quieter residential market has affected hiring demand in the sector,” says Lynne Roeder, managing director at Hays in Singapore.

“While companies are not actively downsizing, they are more cautious with headcount.”

She reckons that with local residential projects drying up, architecture firms are not only looking to overseas for growth but also to a few flourishing local

sectors, a strategy which has helped stave off major layoffs.

“Architects are not facing heavy retrenchment exercises, instead, roles are shifting towards specific sectors, mostly into infrastructure where developments in Singapore and more commonly in countries around the region continue to be driven by new and ongoing projects,” says Raymond Tan, team lead for property and real estate, Randstad Singapore.

While demand for architects is on the decline, he expects brighter hiring prospects for interior designers with experience in corporate fit outs, medical planners, both local and overseas, and project managers with strong experience in healthcare and transport.

Many firms have switched their focus to look for opportunities in the public sector. “Some smaller firms that specialise in residential or small-scale projects have encountered difficulties in qualifying, and securing government infrastructure projects,” says Shao Yen Tan, managing director of CPG Consultants. “Many architectural firms which are beginning to switch focus to seek opportunities overseas may find challenges in building up their networks, limitations in expertise and resources, as well as high operational costs in their Singapore home office, or attracting Singaporean staff to be based overseas or travel frequently.”

Who made it to SBR’s list?

DP Architects and Aedas remained the two largest architecture firms in Singapore based on total number of locally registered architects with headcounts of 79 and 71, respectively. CPG Consultants rose to third place from fifth, with numbers increasing to 69 from 52. The list also welcomes new entries including AWP, Laud Architects, Swan & Maclaren Architects, and RDC Architects.

Singaporeâ&#x20AC;&#x2122;s 25 largest Architecture Firms 2016

ARCHITECTURE FIRM

2015

2016 NO. OF REGISTERED ARCHITECTS

2015 NO. OF REGISTERED ARCHITECTS

KEY EXECUTIVE OFFICER

1

DP ARCHITECTS

1

79

82

ANGELENE CHAN

2

AEDAS

2

71

73

TONY ANG

3

CPG CONSULTANTS

3

69

52

KHEW SIN KHOON

4

SURBANA JURONG

3

59

64

WONG HEANG FINE

5

RSP ARCHITECTS PLANNERS AND ENGINEERS

4

58

59

LEE KUT CHEUNG

6

ONG&ONG

6

46

49

ONG TZE BOON

7

ADDP ARCHITECTS

7

29

29

-

8

P&T CONSULTANTS

8

23

21

CHOY MENG YEW

8

SAA ARCHITECTS

11

23

14

YEO SIEW HAIP

10

ARCHITECTS 61

10

15

19

MICHAEL NGU KING TENG

11

WOHA ARCHITECTS

9

12

22

WONG MUN SUMM AND RICHARD HASELL

11

MKPL ARCHITECTS

11

12

14

SIEW MAN KOK

11

AGA ARCHITECTS

15

12

7

NG HOE THEONG

14

CIAP ARCHITECTS

15

11

7

THAM TUCK CHEONG

15

DESIGN LINK ARCHITECTS

15

10

7

CAROL TEO

15

SCDA ARCHITECTS

14

10

8

CHAN SOO KHIAN, EDWARD LAU, MALCOLM JIN

15

AWP

-

10

-

EDWARD WONG

18

DCA ARCHITECTS

13

9

11

KOO TIN CHEW, VINCENT

19

ID ARCHITECTS

15

7

7

LOKE LEONG SENG

19

JGP ARCHITECTURE

15

7

7

JAMES GOH

19

AC CONSORTIUM

15

7

7

GRACE YOUNG AND TAN MEOW HWA

19

LAUD ARCHITECTS

-

7

-

JOSEPH LAU

19

SWAN & MACLAREN ARCHITECTS

-

7

-

LIM CHAI BOON

19

RDC ARCHITECTS

-

7

-

MOHAN SHANMUGAM

25

FORMWERKZ ARCHITECTS

15

6

7

606

566

Total

-

DATA PROVIDED BY COMPANIES AND SOURCED FROM BOARD OF ARCHITECTS. SURVEY PERIOD: JUNE-JULY 2016.

SINGAPORE BUSINESS REVIEW | NOVEMBER 2016 39

SINGAPORE’s 50 largest REAL ESTATE agencies Ong expects reduced demand for property agents in the second half of 2016 due to prolonged weakening of the property sector in terms of buying interest and leasing interest. But agencies with a more strategic mindset are continuing to hire to prepare for further expansion overseas and a local market rebound in 2017.

Some agencies are also taking advantage of the local market slowdown to hire new agents, and train them rigorously on how to make and close deals.

“In a market upswing, there won’t be much time for training.

Hence the forward-looking and financially strong agencies can afford to recruit more agents and pump in more resources to train agents to relentlessly seek deals in this downturn, and prepare them for market recovery,” says Ong.

Seasoned professionals will finally return to the local market come 2017

For property agencies, winter may soon be ending

The market slowdown in the past couple of years has forced agencies to lay off and agents to hibernate, but signs point to brighter times next year.

A

fter Lynn Er Say Ling left her job as an accounting manager for a multinational fast-food chain to join ERA as a property agent, she spent the next seven years honing her expertise and client service skills – an advantage that is helping her through the dry spell of 2016. Property industry analysts are pessimistic that the second half of the year will see improved buying sentiment, but the market should stabilise in 2017, encouraging more agent hires and easing the pressure on veterans like Ling.

“The challenges that agents are currently facing are working within the framework of the cooling measures and uncertainty of global economies. Further, we have to manage the expectations of wellinformed sellers and buyers, and agents have to constantly upgrade 40 SINGAPORE BUSINESS REVIEW | NOVEMBER 2016

While hiring will remain muted for the remainder of 2016, the prospects of property agents will improve in 2017.

their knowledge to serve clients professionally,” says Ling whose major transactions include luxury condominiums, landed houses, and high-class bungalows in Districts 9, 10, 11, and 21. “Real estate is a service-oriented business.

Customers will always be able to tell and appreciate it if you put efforts to help and put their interest first. With this, you will have more and more referrals for potential business. With my experiences in this industry, I’m very positive about the future of real estate,” she adds.

Reduced demand for agents Aggressive and competent agents like Ling may be the ones who remain and weather the 2015 to 2016 storm, says Ong Kah Seng, director at R’ST Research, which has been marked by subdued hiring and even layoffs in some agencies.

Return of seasoned pros While hiring will remain muted for the remainder of 2016, the prospects of property agents will improve in 2017, says Ong, on the back of rosier market sentiments and reduced supply of private residential completions. This will, in turn, drive up dealmaking activity and draw out agents that have gone on hiatus this year. “The sector is going through a difficult time. Some may diversify to other areas and will come back to the sector when the market recovers,” says Jeff Foo, president of Institute of Estate Agents, Singapore. He reckons many property agents have since left the sector but they still hold on to their registration, and some are simply waiting for the opportune time to get back to the property game.

“We can expect to see some agents or real estate professionals who dropped out in 2016 for a sabbatical break, to return in 2017, although a proportion of these dropouts might have progressed to their new chapters, including endeavours outside of property practice,” says Ong.

SINGAPOREâ&#x20AC;&#x2122;s 50 largest REAL ESTATE agencies 2016

Real Estate Agency

1

ERA REALTY NETWORK

1

2

PROPNEX REALTY

1

3

HUTTONS ASIA

3

2015

No of Salesperson 2016

No of Salesperson 2015

Name of Key Executive Officer

6,243

6,036

LIM TONG WENG (EUGENE)

5,718

5,826

LIM YONG HOCK

2,911

3,228

TIANG AI SEEK (PEGGY NGIAM)

4

ORANGETEE.COM

4

2,438

2,038

TAN WEE SIN MICHAEL

5

CUSHMAN & WAKEFIELD

5

1,406

1,848

CHUA HOON LAN (JUNE)

6

DENNIS WEE REALTY

6

1,249

1,379

LIM HWAI NGUN GARY (GARY)

7

SAVILLS RESIDENTIAL

8

736

794

ANG YING HUI PHYLICIA (PHYLICIA ANG) MING KOK WAH (STEVEN MING)

8

GLOBAL ALLIANCE PROPERTY

-

699

-

9

KF PROPERTY NETWORK

29

617

778

TAN TEE KHOON (HARRY)

10

HSR INTERNATIONAL REALTORS

7

588

972

HONG ENG LEONG (JEFFREY HONG)

11

SCOTIA REAL ESTATE GROUP

10

471

597

LIM GEOK CHWEE (DEREK LIM)

12

C&H PROPERTIES

12

411

468

LIM KIM CHAI NELSON

13

SLP REALTY

14

389

441

DARREN CHEW YONG SIANG (DARREN)

14

CBRE REALTY ASSOCIATES

13

365

460

LEONG BOON HOE

15

ONEHOME PROPERTY PTE LTD

47

230

40

ZHANG QINGLIN (ARTHUR ZHANG)

16

MINDLINK GROUPS

17

150

174

CHOW YI TONG (MERSON)

17

ECG PROPERTY

15

146

225

CHENG LYE MENG ERIC

18

REAL CENTRE INTERNATIONAL

20

129

99

LIM TZEN NAM

19

JONES LANG LASALLE PROPERTY CONSULTANTS

21

99

95

FOSSICK CHRISTOPHER JOHN WOON CHUEN THIAM (WINSTON C.T. WOON)

19

REA REALTY NETWORK PTE LTD

18

99

116

21

VESTOR REALTY

19

92

103

22

SHENTON REALTY HOMES

22

89

93

TONG YICK HOONG EDWIN (EDWIN TONG Y H)

23

LHG PROPERTIES

39

76

47

HO CHAI HWA (LEWIS)

24

CBRE

23

72

82

PAULINE GOH

25

HOUSE & HOME PROPERTY

26

65

70

ER CHENG HIANG (ALVIN) YEO ENG CHING DANNY

ANG YEN NEY

26

KNIGHT FRANK

30

64

62

27

COLLIERS INTERNATIONAL

24

62

77

TANG WEI LENG

27

SINGAPORE ESTATE AGENCY

34

62

57

SEE LYE KEONG (SHI LAIQIANG) (CALVIN) WONG TECK KEONG (WILLIAM)

29

REALSTAR PREMIER GROUP

28

60

67

30

ASIAPAC REAL ESTATE SERVICES

-

57

-

KOK KITT SOON JANSEN

31

MIRACLES REALTY GROUP

27

54

68

PHER KWONG SIANG (JEREMY)

32

31

52

62

sim kain kain

33

SLP INTERNATIONAL PROPERTY CONSULTANTS CENTALINE (SINGAPORE) PROPERTY AGENCY

-

48

-

KHOO BOON TIEN (RONNIE)

34

SAVILLS (SINGAPORE)

32

47

61

MING KOK WAH (STEVEN MING)

34

SPACEZ REAL ESTATE

38

47

48

LONG HIAN BOO (MICHAEL)

34

VENTURE INTERNATIONAL PROPERTIES

-

47

-

CHANG CHU HOON (LINA)

37

DTZ DEBENHAM TIE LEUNG (SEA)

43

43

43

TAN PHECK HWA (ANGELA) LEOW HUN SIN (BENSON)

38

YOUR ESTATE SPECIALIST LLP

-

42

-

39

RIPTON REALTY

50

39

39

CHUA YONG KANG

40

WRITE REALTY

45

38

42

CHEW BEE KUAN (ANGIE)

41

SE REALTY

44

37

43

TAN YU MEI ANGELYN

42

SRI

-

37

-

TAN WEILIANG (CHEN WEILIANG) (NICK TAN)

43

MCDOWELL REALTY NETWORK

43

35

43

44

CITYHOMES

46

34

41

MOHD AMIN BIN MOHD ZAIN

WANG SOON YEE LARRY

45

KPN PROPERTIES LLP

42

33

43

KOH KIAN SOON (DANIEL)

46

ALISTER & LEE PROPERTIES

-

32

-

LEE TWE JEAT (GARY)

47

CCN REALTY

-

31

-

SETO SIU MANG (IDA)

47

DEANS REALTORS

-

31

-

CHIA OI LIN (JANE)

49

WILD WILD WEST PROPERTIES

48

30

40

YAP ENG CHENG (ROBERT)

50

TEAKHWA REAL ESTATE

SIEOW TEAK HWA (TEAKHWA)

-

29

-

TOTAL

26,579

26,845

Data obtained from Council for Estate Agencies (CEA). accessed on july 8, 2016.

SINGAPORE BUSINESS REVIEW | NOVEMBER 2016 41

Legal briefing

Fueling anti-money laundering regime New regulations will not be rolled out, but heightened vigilance is to be expected.

T

he moment the Monetary Authority of Singapore (MAS) ordered Swiss private bank BSI to pay fines amounting to an unprecedented US$13.3 million and shut down local operations earlier in May, it sent a strong signal that there would be little mercy shown to those that want to make a fool out of the country’s anti-money laundering (AML) regime.

MAS is not planning to roll out new AML regulations as it considers the regime already being one of the strongest in the world, although it did create new teams to enhance enforcement. Legal experts reckon the aftermath of the recent case will also heighten vigilance in compliance as the threat of severe, even criminal, punishment permeates the minds of banking bigwigs and their staff.

As part of the push to strengthen the AML regime, the MAS has created new dedicated AML supervision and enforcement teams? How do you think will it help?

The creation of these new teams is a very positive addition to the current regime, and they will enhance supervisory focus especially given the increasing complexities of transnational flows and cross border transactions, says Kim Kit Ow, partner, banking & finance at RHTLaw Taylor Wessing LLP. “Where the supervision team is concerned, the objective is to have these teams dedicate their efforts and focus on streamlining the existing responsibilities for regulatory policies, and to monitor money

“Laundering is a real risk for organisations.” laundering and other financial risks by carrying out onsite supervision of how financial institutions manage such risks,” says Ow. “A dedicated Enforcement department will translate into a strong enforcement capability that is necessary to take swift actions to punish the institutions or individuals who have breached MAS’ regulations.”

How should banks and other financial institutions brace for tougher regulation moving forward?

In the short run there will be some heightened measures in the banks and financial institutions, says Ow, in order to self-ensure and self-police that they are not going to be the next bank to be made an example of by regulators. This is a good time for banks and financial institutions to take stock and ensure that their existing policies and processes comply with regulatory expectations. The increased regulatory scrutiny will compel financial institutions to make AML compliance not merely the concern of 42 SINGAPORE BUSINESS REVIEW | NOVEMBER 2016

solely the back office compliance team but a concern that is shared by all members of the organisation, says Eric Chan, partner, financial services regulatory, Shook Lin & Bok LLP.

Eric Chan

Kim Kit Ow

Nizam Ismail

What else should be done to avoid repetition of the incident involving local financial institutions of Singapore?

The MAS and enforcement agencies must continue to push for a mindset change in relation to the risks of money laundering, says Chan. “The regulatory standards are already there. And most financial institutions and regulated entities would already have implemented internal policies and procedures consistent with those standards. What is now needed is an enhancement of implementation and execution efforts,” says Chan. To improve adherence to corporate policies and procedures, he reckons staff working in financial institutions and other regulated sectors will need to take personal ownership of AML compliance.

Management, meanwhile, must take the lead in setting the tone, which is often easier said than done, because the risks often seem somewhat distant.“Our key weakness – as is the case, I should add, in many other jurisdictions – is that many individuals still do not believe that money laundering is a real risk for their organisation,” says Chan. “It is for this reason that many staff in financial institutions and other regulated sectors still tend not to take customer due diligence requirements too seriously but continue to regard it as a cumbersome burden. And this explains the various lapses that we have been hearing of recently,” he says.

Banking leaders such as board members and senior management must start owning AML and counter financing of terrorism (CFT) compliance matters because they can be at risk, and even face criminal prosecution, for egregious lapses, says Nizam Ismail, partner and head of regulatory practice at RHTLaw Taylor Wessing LLP, and co-founder of RHT Compliance Solutions. MAS has shown that it will be ruthless when it comes to prosecuting leaders when it comes to compliance lapses, announcing in public that it has referred six former senior business leaders in BSI bank to the public prosecutor’s office for criminal prosecution.

Ismail advises board members and senior management to allot robust resources for AML/ CFT and then rally the organisation to strengthen compliance. “Compliance culture is key,” says Ismail. “The BSI case highlighted that even with well-resourced compliance teams and AML/ CFT processes, breaches can occur where senior management did not take compliance seriously.”

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a customer or remains a passer-by. These are the moments that businesses can leverage through the use of location-specific intelligence and platforms, far beyond the Pokémon hype.”

How to catch customers with Pokémon GO Four marketers share their tips and trend forecasts for the wildly popular mobile game.

W

hen Pokémon GO launched in Singapore and became an instant craze, telecommunications giant Singtel released thousands of in-game lure modules at checkpoints called Pokéstops near their stores to attract the legions of fans playing the mobile game.

The hype has died down a bit, but big-name brands have spent the last few months launching campaigns around Pokémon GO and the planned release of new features might mean fresh opportunities for other brands to ride the bandwagon. Four marketers share their insights on how to aim a Pokémon GO campaign that captures the right customers, and weigh in on the trend’s lasting impact.

Leverage on location intelligence While it has been nearly a decade since locationbased services started to appear in mobile and be used in marketing, the efforts and results have not been spectacular – that is until the game-changing arrival of Pokémon GO. “The main lesson marketers can learn from the rise of Pokémon GO is that it’s shown the true potential of location intelligence and services and validated its importance in how they can reach today’s mobile-dependent generation,” says Nandita Pal, general manager, SEA & Hong Kong at Near. Pal reckons the most effective retailers and brands used location data for Pokémon GO campaigns to communicate real-time information in the lead up to real-time action. “For example, targeting an individual who is standing at a particular retail outlet, the duration of his short stop at the location will determine whether he becomes

44 SINGAPORE BUSINESS REVIEW | NOVEMBER 2016

They need to take a closer look at how the game delivers value to their brand.

All eyes on augmented reality While augmented reality (AR) is still out of reach for most consumers, Pokémon GO has introduced it to the masses, and marketers looking to the future will need to be ready to tap into the influx of AR applications that are sure to come out, says Paula Parkes, Asia Pacific director of marketing at Adobe Marketing Cloud. “Even if Pokémon GO doesn’t resonate with your brand right now, the myriad of AR apps that are bound to follow will certainly offer more opportunities in the near future.” Parkes reckons AR-enabled location-based games are becoming a major hotspot for marketing campaigns, with U.S. revenues from locationtargeted mobile ads set to grow from $6.8 billion in 2015 to $18.2 billion in 2019, based on a recent report from BIA/Kelsey.

Master customer conversion While Pokémon GO may have taken the world by storm with millions of players, only brands with the ability to convert these players into paying customers may want to consider running fullblown campaigns, says Ning Lim, marketing manager, Asia at Progress. Two successful brands that have shown success in this regard are Resorts World Sentosa and Singtel, both of which released lures within their key attractions and shops, as well as ran online contests for fans to score discounted tickets to Universal Studios Singapore and SEA Aquarium, as well as a mobile phone.

“While capitalising on the Pokémon GO hype can be beneficial to some brands, marketers must bear in mind that this may not work for all.

They need to take a closer look at how the game delivers value to their brand and its effectiveness in converting traffic and engagement to actual sales, given that the traffic is driven by consumer interest in the game and not on the product itself,” says Lim. “This underlines the importance of being able to effectively engage customers in both physical and online spaces, in order to capitalise on the foot traffic and convert players into customers.”

Enjoy the ride while it lasts Brands that are running Pokémon GO campaigns should also prepare for the possibility that the hype behind the game will crash as fast as it soared.

“Our advice to brands based on what we are seeing is don’t expect long term Pokémon-related success,” says Charles Tidswell, VP Asia at Socialbakers.

“This was a good example of how brands need to be responsive and hopefully acted as good ‘test ground’ for the next big thing.”

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event coverage: ITF 2016 summit

ITF Corporate Partnership Board family photo

Global transport takes one step towards decarbonisation in ITF 2016 Summit

What was once the dream of carbon-less transportation has now taken a large step towards becoming a reality as the transport sector collectively locks arms in the annual International Transport Forum summit.

W

hile the COP21 Paris Agreement has created a political path for global CO2 mitigation efforts, the herculean task of decarbonisation is now passed to the transport sector. This is why the International Transport Forum (ITF), the world-renowned intergovernmental think tank for transport policy, has launched its landmark Decarbonising Transport Project at the annual International Transport Forum 2016 Summit held at the Congress Center in Leipzig, Germany from May 18 to 20, 2016 with the theme “Green and Inclusive Transport.” This year’s Summit was attended by more than 1,000 delegates across 70 countries.

The Global Decarbonising Transport initiative of the ITF aims to achieve zero transport emissions by around 2050. Transport currently makes up 23% of all energy46 SINGAPORE BUSINESS REVIEW | NOVEMBER 2016

This is a very ambitious project. But ambition is what the world needs to stop climate change.

related emissions. “This is a very ambitious project. But ambition is what the world needs to stop climate change. Ambition is also something that has characterised the transport sector throughout its long history of innovation. Our challenge is to reduce transport CO2 without sacrificing the access and opportunities offered by transport, keeping our societies together and making our economies turn,” said ITF secretary-general José Viegas at the inauguration event during the summit.

Examining transport policies Christiana Figueres, executive secretary of the United Nations Framework Convention on Climate Change (UNFCCC) applauded the Decarbonising Transport initiative, saying, “Governments must have the tools to understand whether or

not policy is working as intended, and robust, responsive tools give policymakers a better sense of what can be accomplished.”

Figueres added that the common assessment tool should unite the transport sector worldwide in its push towards climate neutrality.

The move was also lauded by European Commissioner Maroš Šefčovič, vice president of the Energy Union, noting how the current generation will be hailed as the one who made the giant leap in clean transport. “The European Commission is driving the transition to a low-carbon mobility system, and I warmly welcome the support of the International Transport forum in this undertaking,” he said. “The transition to clean energy and mobility is in full swing, we should move fast. On the road to decarbonisation of transport there is no speed limit.”

event coverage: ITF 2016 summit Regulation of for-hire passenger transport is necessary but it needs to become more flexible to allow innovation.

JB Straubel addresses the audience

The project’s preliminary results will be presented at the next ITF Summit in May 2017, while the work will be completed by 2018/2019, in time for the first round of reviews of the COP21 decarbonisation targets in 2020.

Another highlight of the event is an open ministerial roundtable event where transport ministers discussed the framework, challenges, and trade-offs for governments to support green and inclusive transport. The discussion was joined

by Laurent Troger, president of Bombardier and JB Straubel, chief technical officer of Tesla Motors.

In the ministerial event, UN climate head Figueres called upon attending ministers to “unite the transport sector worldwide in the push towards climate neutrality” and connect “the patchwork of policies we can expect from at least 189 different national climate action plans designed for different national circumstances.”

Ride-hailing apps Ride-hailing apps and taxis, along with their regulation, was also a hot topic in the Summit. In a session entitled “App-based ride and taxi services: How should governments regulate,” ITF economist Philippe Crist shared the findings of the ITF report “App-Based Ride and Taxi Services: Principles for Regulation.” Crist said app-based transport services need tailor-made regulations which provide room for tech disruptions in the sector in order to provide better experiences for customers. “The government has to sit around the table and think

what fair policies we need to have.

Existing taxi regulations aren’t state of the art. We can do better for the whole sector,” Crist said. The report explains how taxi market shares are effectively linked to household incomes, the relative costs of car ownership, and the availability of alternative or complimentary modes of transport. To illustrate, it noted that taxi trips represent 11% of all trips in Guangzhou in 2011, 7% of all trips in Seoul in 2013 and Singapore in 2012, and 6% of trips in Beijing in 2012 and Hong Kong in 2011.

Meanwhile, this number is much less in other key cities, comprising 3% of all trips in Bogota in 2008, 2% in Taipei in 2013 and 1% or less in cities like Chicago and London.

Additionally, the report noted that the popularity of the new commercial transport apps with consumers and the conflicts their market entry engendered with established transport providers have created a case for re-examining the regulatory frameworks in place today for for-hire passenger transport services. “Regulation of for-hire passenger transport is necessary - but it needs to become more flexible to allow innovation,” the report said.

The future of the car Meanwhile, Tesla CTO Straubel also talked about the emergence of electric vehicles and its massive potential towards a decarbonised future. “All vehicles are migrating towards electric,” he said. He added that new batteries will be better and cheaper, exhibiting more energy in the same volume of materials.

“On the technical side that comes in terms of energy storage research; chemistry research, material science to make better batteries, and improve materials and reduce the cost. There’s a lot of room to improve there. It’s nowhere near the fundamental ceiling or physics limits yet.”

On the topic of driverless cars, Straubel predicted that trends are irreversible. “We’re not going to see them slow down or stop, and, full autonomy will be achievable from a hardware capability point of view much sooner than most people expect in a matter of years, not decades,” he said. Claire Martin, vice president for corporate social responsibility, MD Renault Foundation, also noted in a session how the car has a long way to go in terms of meeting global challenges.

For instance, she noted how car manufacturers comprise 15% of all greenhouse gas emissions, while the global average consumption per day per person for car owners is 2 liters of oil.

Cutting emissions for aviation The task of cutting greenhouse gas emissions is not only for land transport, but also for aviation. In a session entitled “Aviation’s big year for climate agreements,” Michael Gill, executive directorof the crossindustry Air Transport Action Group, briefed attendees about how the global aviation industry calls for the support of governments in capping greenhouse gas emissions from 2020 onward.

“What we are trying to achieve is a balance between allowing the industry to grow and providing an economic and social benefit to society,” Gill said.

Tony Tyler, director general and chief executive officer of the International Air Transport Association, also explained in a plenary session entitled “The Transport We Want: Green, Efficient, and Inclusive” how international aviation and shipping needs its own Paris Agreement.

“The International Civil Aviation Organization had made significant progress on dealing with aviation emissions,” Tyler said.

SINGAPORE BUSINESS REVIEW | NOVEMBER 2016 47

EVENT COVERAGE: GLOBAL PRESS & ANALYST SUMMIT

Data deluge got everyone panicking

Why the IoT got everyone panicking about security

It’s a huge opportunity, but a rather scary one as well, and service providers, carriers, and the cloud industry must keep calm and carry on.

T

he Internet of Things (IoT) is a $1.46 trillion market opportunity and specifically, the United States and Western Europe are leading the pack, followed by Japan and Asia Pacific.

Almost 150,000 devices will start connecting almost every minute by the year 2025. Currently, almost 5000 devices are connecting every minute, and experts predict it’ll give birth to a massive shift in the next eight to nine years.

“All the devices we have now are going to generate data and that’s going to result to a data deluge,” Sathya Atreyam, research manager at IDC’s Worldwide Mobile and Internet of Things (IoT ) says at the NetEvents’ Global Press & Analyst Summit 2016 held in Saratoga, California. “Almost 3.8% of the data which will be generated is IoT relevant and IoT actionable. That is actually 8.6 times of the actual data which is currently being generated. In total, we are looking at almost 180 zettabytes by the year 2025. It’s definitely a huge amount of data 48 SINGAPORE BUSINESS REVIEW | NOVEMBER 2016

All the devices we have now are going to generate data and that’s going to result to a data deluge.

coming in,” he adds.

The internet is about to be taken away from human users, their web browsers, and will be turned over to things. Human users are going to be outnumbered a hundred to one in the use of the Internet.

Is the Internet that we now have designed for and useful in that kind of arrangement?

A sense of panic Glenn Ricart, founder and CEO of government initiative US Ignite, says that most of the effect users will feel once the data deluge is rolling out is just “local impact.”

“We’re going to see the rise of something called edge computing or local cloud computing. It will be elastic just like cloud computing. A lot of the cloud computing matters will still apply, but it’s going to be local. That means that we’re going to need to have a new structure for the Internet to support the Internet of Things in our communities,” he says. Frank Wiener, vice president for marketing, Wedge Networks, says “When you’re thinking about

the connectivity of the Internet of Things, the key thing is if you’re going to bring the Internet of Things and allow the innovation that it offers to come to life, the security officers in the enterprise have to allow it to happen.”

But where will this shroud of security come? Milind Pansare answers that with IoT, security is an interesting issue because traditionally what Wi-Fi security has been about is users have enterprise authentication 21X. “You come in, you authenticate yourself to the network and then what happens with devices that are now on these wireless LANS, they put them on PSKs, on a single shared PSK often on a single SSID. That’s what happens even, strangely enough, on guest networks in the enterprise.”

How open is the system?

The firms who are providing network access ought to provide the ability to do softwaredefined programming of their networks, according to Ricart.

“But you can’t allow everyone to do software-define the carriers’ network right, that would be crazy--unless you put it in a slice.

Maybe you can programme your own slice, so software-defined networking for your slice of the carriers’ network. So then you’re ending up paying the carrier for the slice and then you are managing softwaredefined networking within that slice. That creates an ecosystem which is open.” Pansare couldn’t agree more as he adds that open Application Programming Interface (APIs) are happening right now. But Wiener warns that in terms of innovating and allowing firms to come together, it is important to address the security that allows people to turn it on and use it. “The security aspects have to have incredibly low latency because some of these applications are not going to be very latency sensitive, but others are going to be extremely latency sensitive.”

By Karen Lou Mesina

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50 SINGAPORE BUSINESS REVIEW | NOVEMBER 2016