Singapore Business Review (April-June 2020) by Charlton Media Group

Issue No. 91

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USINESS B in the time of

CORONA

HOW THE CITY’S BUSINESS LEADERS ARE COPING, AND ADAPTING, IN THE FACE OF A GLOBAL PANDEMIC STAFF SURVEYS NOT HITTING THE MARK HOSPITALITY SURVEY UNVEILED

SINGAPORE’S NEW DIGITAL BANKING REGULATION MBA PROGRAMMES UP CLOSE

FROM THE EDITOR About Us

t is no secret that the COVID-19 pandemic is knocking out the world’s economy and businesses began to shift their focus from dominating markets to simply just surviving this crisis. So for this issue, Singapore Business Review have spoken to several business leaders to know how they are weathering the storm. Head over to page 24 and learn how the big players are staying strong.

AUDITED CIRCULATION: 23,116 ONLINE READERSHIP: 410,000 monthly uniques through Google Analytics The Singapore Business Review is the highest circulating and best read business magazine in Singapore. Our online readership has an average of 215,000 unique viewers, according to Google Analytics. We won the Business Trade Media of the Year Award at the 2017 MPAS Awards. Do reach out to us if you would like us to tell your story to our readers via print & online advertising or events. PUBLISHER & EDITOR-IN-CHIEF Tim Charlton PRODUCTION EDITOR Nathanielle Punay GRAPHIC ARTIST Mark Simon Engracial II ADVERTISING CONTACT Aileen Cruz aileen@charltonmediamail.com Vanessa Austria vanessa@charltonmediamail.com Karisse Coderes karisse@charltonmediamail.com Reiniela Hernandez reiniela@charltonmediamail.com ADMINISTRATION ACCOUNTS DEPARTMENT accounts@charltonmediamail.com ADVERTISING advertising@charltonmediamail.com EDITORIAL sbr@charltonmedia.com

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Venture capital firms have been seen to be ramping their funding goals like never before. For instance, Jungle Ventures clinched the largest round in 2019 with a whopping $343.96m, which reflects how VC firms are pushing the boundaries. But the question remains: where does the proceeds go? Read more at page 18. This issue delves into Singapore’s hospitality industry, one of the hardest-hit sectors of this ongoing pandemic threat. Hotels have been promoting their ‘contact-less’ technologies to attract tourists, assuring that their hotels adhere to the precautions against COVID-19. Flip over to page 32 for the full story. Singaporeans’ employee engagement in 2019 dropped below the global average, lagging behind India, Thailand and Hong Kong, according to a study by Qualtrics. So far, firms with employee feedback programmes seemed to have shown better results to boost their enthusiasm at work but for some employees, their comments are being barred by their managers and thus could wane Singapore’s ranking further. Go to page 46 to know more. Enjoy the issue!

Tim Charlton

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SINGAPORE BUSINESS REVIEW | JUNE 2020

CONTENTS

COVER STORY BUSINESS IN THE TIME OF CORONA

INDUSTRY INSIGHT

FIRST 08 S-REITs to generate yields despite economic weakness

09 Singapore named 10th biggest cyberattack source in 2019 worldwide

20 Credit card revenues threatened as Singaporean travellers shun usage 22 Clothing rentals gain popularity as fashion takes over sharing economy

10 5G’s success hangs on competition 12 Power providers slash prices as live

RETAIL WATCH 16 Miniso seeks to attract older buyers with $2 concept stores

LEGAL BRIEFING 50 Singapore to elevate hub status with new digital banking regulation

ANALYSIS Singapore’s hard-hit workforce

34 Hotels bank on contactless tech to

auctions emerge

HR BRIEFING FOR OVERWORKED SINGAPOREANS: ARE FEEDBACK PROGRAMMES WORKING?

52 Anxious times ahead for

RANKINGS

and consumer acceptance

FINANCIAL INSIGHT NEW STARTUP SECTORS GAIN GROUND AS VENTURE CAPITAL FIRMS FILL UP COFFERS

entice guests during coronavirus pandemic

38 Will co-living survive in Singapore’s fast-changing rental market?

42 Online MBA programmes emerge as

56 How Singapore’s $5.1b solidarity budget could tide over tough times

58 Counting the costs of the COVID-19 pandemic: lost output could hit $50b

60 The PE boom was over before COVID-19

pandemic prompts temporary closures

Published Quarterly on the Second week of the Month by Charlton Media Group 101 Cecil St. #17-09 Tong Eng Building 2 SINGAPORE JUNE 2020 2018 SingaporeBUSINESS 069533 REVIEW | MARCH

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TPC Law explains how the new Payment Services Act will affect fintech firms

Seeking quality legal advice can help companies understand the law’s new regulatory and licensing issues.

From left to right: Liang Kok Wong, Joint Managing Director; Nikki Tay, Associate; and Lin Piah Sim, Director at Tan Peng Chin LLC (TPC Law)

hen the new Payment Services Act was unveiled, many payment service providers were uncertain as to how this new legal framework will affect their operations. Now that the Act has come into force, fintech firms and e-payment providers have to grapple with increased regulation, new licensing requirements, and tighter risk mitigating measures. “The Payment Services Act (PS Act) covers a wider array of services and activities [as compared to] the Moneychanging and Remittance Businesses Act and the Payment Systems (Oversight) Act,” explained Liang Kok Wong, Joint Managing Director at law firm Tan Peng Chin LLC (TPC Law). The old laws were enacted in 1979 and 2006, respectively, and are insufficient to address the changes that have since occurred in the payment services landscape. New payment business models have led to the convergence of payment and remittance services, blurring the lines between activities regulated under these two Acts. The new types of payment services that are regulated under the PS Act (and which were not regulated under its predecessors) include (a) issuing and maintaining payment cards, payment accounts, electronic wallets, and cheques; (b) acquiring payment transactions, such as physical and online merchant acquisition services, merchant aggregators, and master merchants; (c) providing domestic money transmission and virtual currency intermediation services; and (d) operating payments communication platforms, such as payment gateways,

payment processors, and kiosks. “Technology has transformed Singapore’s payment landscape and we now have a new forward-looking legal framework to regulate payment systems and payment services providers. TPC Law serves and supports innovative and fast-growing fintech startups and businesses who are affected by the recent legislative and regulatory changes,” Wong said. Apart from closely following the PS Act and its regulations, TPC Law has previously advised on various matters touching on or dealing with blockchain and cryptocurrency. Understanding the new law Lin Piah Sim, Director at TPC Law, noted that whilst the PS Act covers a wide range of activities, it also sets out a list of exemptions. “MAS intends to regulate only activities and services that have a direct payments nexus, where the service provider processes funds or acquires transactions for merchants,” he said. Under the PS Act, licensees are subject to licensing and business conduct requirements, with the PS Act imposing specific risk-mitigating measures on relevant licensees, such as AML/CFT, user protection, interoperability and technology risk management. “An enterprise which participates in retail payments and services needs to assess its business models and exposure to

risks associated with money-laundering/ terrorism financing, user protection, interoperability and technology, in order to implement adequate risk mitigating measures as required under the PS Act. A holder of a standard payment institution license also needs to monitor whether it has breached the threshold requiring a major payment institution license,” Sim noted. To assist payment services providers in seeking legal advice relating to the PS Act, MAS has also launched the Payments Regulatory Evaluation Programme (PREP). “Under PREP, MAS has formulated a sample questionnaire which payment service providers may use as a guide in seeking legal advice. In order to help payment service providers connect to legal firms, MAS has also provided an indicative, non-exhaustive and non-exclusive list of available legal advisors,” explained Nikki Tay, Associate at TPC Law. Seeking adequate legal advice is helpful to ensuring compliance with the PS Act. Tay noted that certain fintech firms and e-payment providers may attempt to overcome the legislative framework in the PS Act by leveraging partnerships and piggy-backing on other firm’s licenses and exemptions. “Another trend that may be emerging is aggregator arrangements whereby many service providers work together using one platform provider,” she added. Future trends Consumer protection (with implications for data protection and payment usage) has been on the rise for the past few years, and businesses need to comply with the increase in regulations. TPC Law believes that the PS Act is only the forerunner and the Singapore regulatory framework is set to increase in complexity, in line with the global trend. The challenge is to have robust regulatory oversight to secure the integrity of the payment infrastructure but at the same time not be rigid to the point of stifling technological advancements by payment service providers.

“TPC Law serves and supports innovative and fast-growing fintech startups and businesses who are affected by the recent legislative and regulatory changes.” SINGAPORE BUSINESS REVIEW | JUNE 2020

News from sbr.com.sg Daily news from Singapore MOST READ

HR & EDUCATION

Singaporeans show low level of enthusiasm at work Singapore falls behind globally in terms of employee engagement or their level of enthusiasm with their jobs, scoring only 47% or below the worldwide average of 53%, according to a study by experience management firm Qualtrics. The city lagged behind India (79%), Thailand (72%) and Hong Kong (63%). However, it outpaced Japan (35%) and South Korea (40%), which registered the lowest scores.

TELECOM & INTERNET

AVIATION, FOOD & BEVERAGE

Bharti Airtel could counter Singtel’s enterprise business: analysts Singtel’s India associate Bharti Airtel is expected to offset the weaknesses of the telco’s other associates, particularly in Singapore and Australia, according to analyst reports. RHB noted that the price repair in India continues to bode well for Airtel as its average revenue per user (APRU) went up 5.3% QoQ. In a separate note by DBS, the firm’s turnaround aided, by sharp tariff-hike in December 2019, would add $500m to FY21F profit.

SIA and SATS to suffer from flight cancellations and capacity cuts Rising fears on the novel coronavirus (COVID-19) outbreak have led to numerous flight cancellations and capacity cuts, which is expected to crash on Singapore Airlines’ (SIA) and SATS’ profitability for 2020, according to a note by UOB Kay Hian. “Overall, there is a possibility that traffic at Changi could fall by that quantum over a two-month period. SATS and SIA would be most impacted,” said K Ajith, analyst at UOB Kay Hian.

A Guide for Singapore’s SMEs: Reading between the lines of the Budget BY LI LIAN NG This was a Budget that provided short term assistance for businesses to address economic headwinds, including global trade, a weakening domestic economy and the ongoing impact of COVID-19. Simultaneously, it also sought to reaffirm Singapore’s long term position as a trusted hub in Asia and gateway to ASEAN. Amongst it were initiatives designed specifically to bolster SMEs.

Pushing Productivity Boundaries With Processes BY TERRI TAN I am pretty sure every working individual has at some point thought to themselves, “Do we need to go to that meeting? I’m so busy as it is!” As a junior employee at a Singaporean fintech firm, my company’s relatively flat hierarchy makes it easy for me to reach out to the senior management team for feedback and approval.

MOST READ COMMENTARY The Future of Holiday Retail is Blended Experiences BY YEE MAY LEONG From Sasa to once-popular departmental stores such as Metro and Isetan, a number of retailers have left Singapore shores or announced plans to do so over the last decade. However, whilst it is true that there have been some troubling signs such as store closings and an increase in the number of retailers filing for bankruptcy, they don’t quite tell the whole story.

4 4

SINGAPORE BUSINESS REVIEW | SEPTEMBER 2019 SINGAPORE BUSINESS REVIEW | JUNE 2020

SINGAPORE BUSINESS REVIEW | JUNE 2020

AGENDA PEOPLE | PLACES | SERVICES | OPPORTUNITIES

SERVICES

KRAMER Since 1981, Kramer Electronics has been a leading player and pioneer in the Pro AV industry. With customers in over 90 countries across six continents, Kramer offers an extensive and innovative pro AV portfolio of products and solutions for Corporate, Education, Houses of Worship, Government, Live Events, Healthcare, and more. For over three decades, Kramer has built its reputation on strong personal relationships with its customers and providing the highest level of service and support in the industry.

OPPORTUNITIES

ABEAM ABeam Singapore is part of the ABeam global family that was established out of Deloitte Touche Tohmatsu in 1981 in Japan. Since changing our corporate name to ABeam Consulting in 2003, the group have grown leaps and bounce to reach 5000+ headcount in 2018 while operating in 15 countries with over 30 offices, and continuously growing. ABeam Singapore started our operations in 2005. From our infancy of 10+ consultants working mainly on Japanese MNCs roll-out projects, we have transformed into a 150-team-strong organization, focusing on ERP implementation & roll-outs ; Analytics & Big Data implementation ; Robotic Process Automation (RPA); Business Process Re-engineering and Change Management; across multiple industries, covering not only Singapore but the region. Our focus industries are EC&O, FSI, Hi-tech, Discreet Manufacturing and Telco.

ERRATUM Singapore Business Review erred in the January-March 2020 issue where we credited The Travel Corporation under the E-Commerce - Business Services category. The Travel Corporation won in the Travel Services category at SBR Management Excellence Awards 2019 For the full corrected report, please visit the digital version at https://issuu.com/charlton_media/docs/sbr_q1_2020

SINGAPORE BUSINESS REVIEW | JUNE 2020

visit

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FOR MORE INFORMATION on EVENTS AND ADVERTISING

SINGAPORE BUSINESS REVIEW | JUNE 2020

FIRST

The occupancy level of new malls, such as Funan, is expected to be stable.

S-REITs to generate yields despite economic weakness

he average yields of S-REITs have bounced back to around 5.5%, despite seeing a 6.5% decline in prices early in the year, according to DBS Group Research. This figure implies a spread of over 4% against the Singapore 10-year bond yields. “The broad-based sell-off in S-REITs of up to 4-5% in a day is certainty noteworthy,” said Derek Tan, an analyst at DBS Group Research. “We see [this] as an opportunity to accumulate S-REITs on expectations that the low interest environment and high headline yields will attract investor interest back to S-REITs after the market stabilises.” The report stated that their preference includes industrial S-REITs because of their longer weighted lease expiry (WALE) supporting distributions. Office REITs, including US office REITs, are also attractive as their potential acquisitions may drive distributions higher. As for hospitality REITs, the report cited Ascott Residence Trust (ART) and Far East Hospitality Trust (FEHT) as having high fixed rents (up to 70% of revenues) which limited the current downside risks. ART and FEHT were projected to deliver yields of up to 4.7%

SINGAPORE BUSINESS REVIEW | JUNE 2020

and 4.9%, respectively. “In the medium term, we believe S-REITs will continue to be an important and relevant component of investors’ portfolio, especially given the sector’s increasing representation in major indices (current and future) such as the MSCI, STI, and the EPRA Nareit Developed World Index. Coupled with high yields of 5.5%, investors will eventually be drawn back into the S-REITs sector,” Tan added. Healthy margins S-REIT investors need not worry about

the possibility of facing margin calls as well, as large-cap stocks are finding greater demand, despite the lower absolute yield. The average leverage ratios have also been conservative. Investors, especially those having a larger concentration of non-institutional holdings, have been anxious about the prospect of margin calls. As some of these holdings may be leveraged, the market sell-off in March, 2020 may still spark a steep drop in prices when these investors liquidate their holdings. Worried investors may have been zeroing in on smaller-cap S-REITs and possibly EUR/USD-based S-REITs, Tan also noted. Most industrial REITS have less than 1% of their portfolio revenues exposed to oil and gas firms, suffering from a significant fall in oil prices in March, 2020, whilst office S-REITs’ portfolios are exposed to the sector by between 4% and 8%. DBS believes that the risk of a prolonged oil war may tighten profitability and cash flows for these firms in the future. “Whilst we do not anticipate mass weakness across the oil & gas sector, the exposure is noteworthy,” Tan said. The panic over the fall in oil prices further clouded an already volatile outlook for S-REITs. Whilst the 50-bp FED rate cut brought a short-term respite to the sector, with FED funds rate at 1% to 1.25%, there is little room left to move down if the economy weakens further. However, S-REITs’ yield spreads are expected to remain wide, which would keep incremental flows into the sector and valuations stable at current levels. Retail REITs may stabilise Despite expectations that retail REITs would be amongst the worst-hit in the

Performance of S-REITs

“Lorem ipsum dolor sit amet, consectetuer adipiscing elit, sed diam nonummy nibh euismod tincidunt ut laoreet dolore magna aliquam.” Source: DBS Group Research

FIRST economic fallout of the COVID-19 pandemic, DBS Group Research pointed out that it may not actually be the case. It says the supply of retail properties is projected to drastically drop from 2020, which will balance out falling demand. Retail property supply could crash to an average of 43,000 sqm per year from 2020 to 2023, from a peak of 250,000 sqm in 2019. “Despite the robust net supply of retail spaces in the market in 2019, net absorption was relatively healthy with good take-up within the newly completed projects. Funan Mall, Jewel and PLQ, which represented three-quarters of retail supply in 2019, are currently at occupancy levels of 98.7%, 100% and 90% respectively,” Tan said in a separate analyst report. He also noted that a ‘landlordfavourable’ market would persist, whilst occupancy rates are likely to stabilise at 93% by end-year. The impact of the dip in tenant sales on distribution per unit (DPU) could also be marginal in the range of 0.2% to 1.2%, with less than 5% of retail landlord’s rents tied directly to gross turnover. On the leasing side, an average lockin period of 2.6 years is not expected

Growth projections for the S-REITs

Source: DBS Group Research

to see an immediate impact for Retail REITs. Those with a higher exposure to suburban retail malls, which remain grounded by necessity spending, will stand to benefit in place of prime retail malls that are more dependent on tourist spending. “The yield disparity between CapitaLand Mall Trust (CMT) and Frasers Centrepoint Trust (FCT) drifted wider due to the COVID-19 outbreak, as suburban retail malls stand as the main beneficiaries given their proximity to residential catchment areas and primary

focus on necessity spending, as opposed to prime retail malls which partly rely on tourist spending,” Tan stated. It is expected that hospitality tenants will suffer the most impact of the pandemic, with Tan noting that the F&B index dropped by close to 40% YoY in April, 2003, in the midst of the SARS outbreak. F&B tenants normally make up a big percentage of retail malls’ contribution by gross rental income, in the range of 40%, and an extended period of non-operations may hurt tenants and landlords alike.

Singapore named 10th biggest cyberattack source in 2019 worldwide Singapore remained amongst the hotspots for originating cyberattacks in 2019, ranking 10th worldwide, according to data from Kaspersky Security Network (KSN). It fell by two places compared to the 2018 rankings. The number of attacks also skyrocketed 150% from the 2018 figures, with 11 million attacks caused by servers hosted in the republic last year. Around 4.66 million web threats in Singapore were also detected, putting the city-state at 157th globally in building up cyber-resilience amongst individuals and businesses, a regression of only one position from last year. “The wave of cybersecurity breaches – the leakage of personal data pertaining to 2,400 Ministry of Defence personnel, the Sephora hack, and the exposure of over 800,000 blood donors’ personal details from the Health Sciences Authority database – are indicative that regardless of the statistics we have here, the Republic continues to be a key target for cybercriminals,” said Kaspersky Southeast Asia general manager, Yeo

Siang Tiong. Kaspersky detected 7.24 million local incidents in 2019 for Singapore, as compared to 6.75 million in the previous year. These included attacks caused by malware spread via removable USB drives, CDs, and DVDs, and other ‘offline’ methods. In Southeast Asia, the top four attack vectors of web threats were: unintentional downloads of certain programmes or files from the Internet; the download of malicious attachments from online email services; browser extensions activity; and the download of malicious components or communications with command and control, run by other malware. Kaspersky noted that there was a growth in the number of online skimmers in the region, using TrojanPSW (password stealing ware) to steal information like passwords from infected companies. Meanwhile, web-mining activity fell in the beginning of 2020 due to declining interest in cryptocurrencies.

Source: Kaspersky

SINGAPORE BUSINESS REVIEW | JUNE 2020

FIRST

Following the footsteps of its Asian neighbours, IMDA offered 5G bids to the four major telco players.

5G’s success hangs on competition and consumer acceptance

ince talks of 5G availability circulated in the Asia Pacific, Singapore and the Infocomm Media Development Authority (IMDA) have rolled out bids for four spectrum bands. The two nationwide and two local bands have been offered to the four major telco players: Singtel, StarHub, M1, and Australia-based TPG Telecom. “5G, with its high-speed, low-latency and private networking capabilities, will create massive opportunities for new applications and services that will impact our society and how everyone lives, works and plays,” Sebastian Tan, head of 5G Centre of Excellence at StarHub, said in a statement. “StarHub is conducting trials and proof-of-concepts with its 5G ecosystem of technology, business, institutes of higher learning and public agency partners. “A portion of StarHub’s network is 5G-ready today to facilitate trials in the lead up to eventual commercialisation. The company is broadcasting ‘live’ 5G signals from its headquarters and has identified areas at which to expand its initial 5G coverage,” Tan added. IMDA said that it wants a full-fledged 5G standalone capability covering at least half of Singapore by the end of 2022, but neither consumers or investors seem too keen on its 10

SINGAPORE BUSINESS REVIEW | JUNE 2020

impending arrival. In a survey conducted by Maybank Kim-Eng last 2019, 74.7% of the respondents were not willing to pay more for 5G connectivity against the current 4G network. The results are said to be consistent with telco service providers’ general stance that the retail consumer base case for 5G is “not developed to a degree that requires immediate major investment”. In a comment by another bank analyst, who did not wish to be identified, consumers’ willingness to pay more for 5G depended on more than just speed. “4G is already adequate for video

streaming, etc. Higher video standards and applications may eventually demand that, but as of today, especially in Singapore where both wireless and wired broadband is readily available and decently fast, the timing of commercial viability is not clear,” he further explained. Apart from not needing 5G at the moment, there is also the issue of the compatibility of many devices. The analyst said that 5G’s viability will rely on applications being developed against niche industrial applications, such as factories and robots. On the investors’ side, they see significant risk in the multiplayer competition. “With potential four-way competition in industrial areas, higher investment risks will be factored in by would-be mobile network operator (MNO) bidders. It may also dampen interest in the localised licenses,” said Luis Hilado, analyst at Maybank KimEng, in a note. Hilado added that investors are waiting for the returns on 5G capex, which creates an overhang in the sector. A separate report by Fitch Ratings notes that another issue in 5G is if Singapore will be able to have access to a sufficient and affordable spectrum. As of now, Singapore uses the 3.5GHz band for satellite communications which can only be freed up from 2021. Fitch Ratings stated that the $55m-base price for 100MHz of the 3.5GHz frequency translates to 9.5 cents (US$0.07) per MHz per capita, which is cheaper than Hong Kong’s recent 5G spectrum auction at 12 cents (US$0.09). Fitch Ratings cited South Korea as a case study, which is reportedly the most advanced 5G market, here even telcos are struggling to boost operating cash flows, as higher marketing cost from generous handset subsidies more than offset increased wireless revenue from the upselling of expensive unlimited 5G mobile plans.

TPG making its mark on its free trial service?

“Lorem ipsum dolor sit amet, consectetuer adipiscing elit, sed diam nonummy nibh euismod tincidunt ut Source: Maybank dolore Kim-Eng laoreet magna aliquam.”

FIRST The anonymous analyst also described what could be the worst case scenario for Singapore’s 5G rollout: as with the current 4G state, wireless pricing could become disrupted and never recover, whilst investments in new technology compatible with 5G would be wasted as they may not unlock new revenue streams. “I doubt anyone expects any operator in any country deploying startup technology with limited or no pricing power to escape the shortto medium-term cash flow pressure,” he said. “This is typically why for developing countries the major investments in what is today’s new technology would take place later on, when the mass market and ecosystem is developed and equipment becomes cheaper.” TPG set to lag Another telco that is looking to join the 5G race is the Australia-based TPG, which has officially launched in Singapore last 31 March. It rolled out its “50GB for $10”, its 30-day no-contract SIM only plan. However, Sachin Mittal, an analyst at DBS Group Research, expressed that the firm will be swept away amidst tight competition pressure and a likely mobile revenue fall. He noted that Singtel’s attractiveness is increasing, with a yield of 5% and earnings

Not compelled to pay more for 5G

Maybank Kim-Eng

CAGR of 5% over FY2020-2022 because of Bharti’s turnaround. It also trades at a wider holding company (HoldCo) discount at 22%, which was formerly at 15%. Netlink also has an attractive 5% yield and has a unique business model of being largely immune to economic cycles, whilst Starhub trades with a 6% yield. There is also the possibility of its 400,000 free service users throwing out sim cards upon the telco’s entry as it becomes a paid service, which would likely boost the postpaid mobile revenue of existing players. Currently, TPG aims to achieve EBITDA

breakeven with 400,000 subscribers at $10 monthly ARPU, translating to a $48m annual revenue. “The difference may be largely due to accounting, treatment. It seems to us that most network-related expenses (including the fee paid for accessing MRT tunnels) are captured under the capex (A$211m over the last 30 months), which should lead to higher depreciation (partly cash) expenses after the commercial rollout. TPG may not break even below $150m revenue on a cash basis excluding the capex, and 5G is another big challenge,” Mittal said.

SURVEY

Singapore-based e-commerce giants dominate Southeast Asia’s retail scene Singapore-headquartered e-commerce platforms Lazada and Shopee were the two most actively used e-commerce shopping apps in Southeast Asia in 2019, according to a report by metasearch platform iPrice. The two apps were rated most popular in Malaysia, Thailand, and the Philippines, whilst they landed in the top five in Singapore, Vietnam, and Indonesia. In terms of web visits, Shopee retained its position as the most visited e-commerce platform, garnering more than two billion visitors across the region in 2019. Meanwhile, Lazada continued to thrive on market share in the region, as the company saw a 13% growth in visitors over the same period. Another notable Singaporebased platform is Qoo10, which was the second most-used e-commerce app in Q3 2019. It garnered almost 30% of the web

market share in Singapore as of end-2019. However, iPrice noted that due to several big online sales events in Q4, the company slid to third position. For 2019, Singapore recorded the highest average basket size in Southeast Asia, at $110 on Singles’ day. iPrice noted that this was due to Singapore’s maturity in technological advancement, where average order values in the country’s e-commerce sector also registered to be three to four times higher than its neighbouring countries. Overall, a study by Google, Temasek, and Bain & Company stated that Singapore’s e-commerce industry is predicted to contribute a total of $9.8b to the national economy in 2025. This is a 22% rise from 2015, which signifies ample room for further growth in Singapore’s e-commerce sector within the next five years, the report added.

Source: iPrice Group

SINGAPORE BUSINESS REVIEW | JUNE 2020

FIRST INFOGRAPHIC

WHERE SINGAPOREAN CONSUMERS STAND IN ASIA’S RETAIL TRENDS

SINGAPORE BUSINESS REVIEW | JUNE 2020

Power providers slash prices as live auctions emerge

he operator of Singapore’s wholesale electricity market, Energy Market Company (EMC), wanted to cut the time it took companies to find their electricity retailer, which was then up to two months. Since launching its procurement portal PowerSelect in 2018, that time has been slashed to just 15 minutes. Since the launch of PowerSelect, EMC has successfully conducted over 50 live auctions for businesses in the manufacturing, transportation and storage, accommodation, and food services industries, shared Liang Ching Tan, senior vice president for business development at EMC. “On average, these businesses enjoyed savings of about 30% off the regulated electricity tariff (based on prevailing tariff rates at time of auction) when they procured electricity through PowerSelect. Compared against the businesses’ reserve prices (or starting bids for the auctions), the amount of additional savings ranged between 3% and 15%,” he said in an exclusive interview. PowerSelect allows businesses to shortlist retailers based on their packages as well as their track record of performance. After the round of shortlisting, the retailer that offers the most competitive price in PowerSelect’s 15-minute auction ultimately wins the contract. He recalled a customer in the F&B sector which conducted a live auction for a Discount Off Tariff plan. The live auction allowed the customer to secure a final discount of 28% off the regulated tariff, which was higher than the 25% rate it had with its incumbent retailer. “Most businesses prefer fixed price plans as there is certainty in their electricity spending which is helpful for budgeting purposes. They usually compare 12- and 24-month contracts, and decide based on the prevailing fixed rates. In the current market situation, 24-month fixed rates are lower for

EMC has conducted over 50 live auctions.

businesses,” Tan said. Most of the time, the electricity procurement process is still very manual and time-consuming—businesses contact electricity retailers individually for quotes and then try to make sense of the various electricity packages which often come with detailed and complex terms and conditions. PowerSelect condenses the procurement processes in its platform by housing data from the wholesale and futures electricity markets, with an in-house team that assists businesses in understanding and navigating the contract terms and conditions of the different electricity retailers and advises them in areas like the reserve price (or starting bid) for the auctions as well as the contract durations. In the future, EMC is looking to expand the PowerSelect platform as it has observed that businesses are increasingly looking for other energy-related products and services. “Whilst there were plans to roll out additional, value-added services on PowerSelect at later stages, we intend to bring forward our plans to better support our customers. We are in the process of evaluating our options for PowerSelect,” Tan said. With the consolidation of Singapore’s retail market, EMC is expecting more differentiated packages from the remaining retailers, such as green electricity packages. This will increase as consumers’ awareness levels and expectations also rise over time.

CO-PUBLISHED CORPORATE PROFILE

A reason to celebrate with The Travel Corporation 2020 marks a milestone for The Travel Corporation as it celebrates 100 years of travel excellence.

Stay at The Red Carnation Hotel’s Ashford Castle on a Trafalgar or Insight Vacations trip to Ireland. It is the only hotel in Ireland to achieve a Forbes five-star status.

he Travel Corporation owns 42 awardwinning exceptional travel brands such as Trafalgar, Insight Vacations, Contiki, Costsaver, Luxury Gold, Uniworld Boutique River Cruise Collection, U River Cruises, AAT Kings, Inspiring Journeys and The Red Carnation Hotel Collection. With a team of 10,000 staff worldwide “Driven by Service”, TTC serves over 2 million customers annually and offers customers a diverse range of high-quality holiday styles, be they independent or guided, luxury travel and hotels, safaris or river cruises. When you choose any of their travel brands for your group holiday, TTC’s involvement and support will start right away. • Peace of Mind: Leverage on TTC’s expertise to get the most out of your holiday where in-depth knowledge of destinations means they can assist with the finer details of the itinerary • Increased value: TTC negotiates the best prices for your group, thanks to their unrivalled buying power as one of the largest contractors of hotel space in the world • Incredible range and breadth of destinations: Choose from over 300 worldwide trips covering over 70 countries in all seven continents— Europe and Britain, Asia, Australia and New Zealand, Africa, North America, South America and Antarctica. Group air deals: Highly competitive group airfares with TTC’s airline partners • Hassle-free experience: TTC can organise all aspects of the trip, including transfers, hotels, dining, sightseeing and priority admissions. Each of TTC’s brands offers something

unique. Trafalgar is the cornerstone of TTC as the travel company’s flagship brand. Each Trafalgar holiday is a carefully-crafted itinerary packed with real experiences that will connect guests to the soul of the places visited. From seeing the icons, to stays with stories and connecting with locals in their homes, travellers will enjoy a real holiday without worrying about a thing. Meanwhile, Insight Vacations’ itineraries are expertly designed for smaller groups of an average of 32 guests. Guests can enjoy unique Insight Experiences, delicious authentic dining experiences, hand-picked hotels in the best locations and 40-seat customised coaches with extra legroom. Luxury Gold offers bespoke trips perfectly tailored to the groups’ interest and wishes. Travel in luxury with a Travelling Concierge who will accompany the group throughout their holiday. Guests can enjoy exclusive VIP

experience, savour exceptional dining and relax in luxury hotels. On selected departures, as part of the Chairman’s collection of exclusive VIP experiences, guests can meet with iconic local legends such as a member of the Austrian Habsburg family, a duchess from England or a former Olympic athlete. Uniworld is the world’s most luxurious all-inclusive river cruise line, featuring one-ofa-kind ships, exclusive excursions, farm-totable cuisine, and one of the highest staffto-guest ratios on the rivers—in Europe, Russia, China, Vietnam and Cambodia, India, Egypt and the Amazon. Uniworld elevates every aspect of luxury river cruising to an unmatched level. With a broad range of holiday options including Guided Tours, Short Breaks and Day Tours, AAT Kings are the holiday experts for trips to Australia and New Zealand, breaking the boundaries of one-size-fits-all travel experiences. For travelling millennials from 18 to 35 years, Contiki are the world leaders in travel experiences. Travellers can choose Contiki trips as they are all about discovery, once-ina-lifetime moments, human connections, and making every second of being young count. From hosting a private wedding reception abroad or a special anniversary celebration for family or friends or organising an incentive trip or “Food & Wine”or “Ärt & History” special interest trips, let TTC’s travel experts match you to the perfect trip or create a customised one just for you. Call TTC travel experts at 69225950 or visit www.ttc.com to plan your next holiday!

“TTC serves over 2 million customers annually and offers a diverse range of high-quality holiday styles.”

Traveling aboard a river cruise ship means you only need to unpack once and yet visit up to four countries in a week.

SINGAPORE BUSINESS REVIEW | JUNE 2020

STARTUPS Spacetech firm Aliena strengthens satellites

˘ ˛ and Mark Lim. George-Cristian Potrivitu Bocanet

anking on the broadening spacetech industry worldwide, spacetech startup Aliena is manufacturing cost-effective technologies that enable satellites to manoeuvre smoothly in space whilst bearing in mind the various constraints, including limited power for the satellites and the real-estate set aside for propulsion systems. “Aliena’s product line therefore includes engines that are small in form-factor, easily integrable onboard satellites, operate at unprecedented low powers, and are extremely fuel-efficient,” said Mark Lim, CEO and co-founder of Aliena. Aliena is also taking advantage of the growing accessibility of satellites to companies, where one of the main interests is in deployment of smaller commercial satellites in space at lower altitudes. The startup’s systems give satellites longer lifetimes, compared to conventional thrusters that are prone to failure after extended periods of operation. Lim explained that satellites are usually short-lived as the effects of the atmospheric drag are not compensated for. “The business was started in August 2018 when the founders assessed that there was a real market need for advanced propulsion systems that could allow for the company to address operational requirements that would empower and enable businesses to thrive,” Lim said. In November 2019, Aliena raised $1.5m in seed funding, led by Cap Vista, the strategic investment arm of Singapore’s Defence Science and Technology Agency. It was also attended by 500 Startups and Australian VC Paspalis. “In general, it’s difficult to raise funds as a ‘space startup’—because the runway before revenue generation kicks in may be long, and the high capital investment required for space qualification facilities also adds to the risk that investment entities have to take during early-stage investment,” Lim said. Aliena plans to use the funds to commission a private jet propulsion test facility and satellite integration/ assembly centre in Changi. The company will also launch a 3U nanosatellite platform in space for the first in-orbit demonstration, in partnership with Singapore-based space tech firm NuSpace. “Aliena is already hard at work with setting up their jet propulsion test facility. This will in turn set them up nicely for a successful in-orbit demonstration. Thereafter, with proven space heritage, they would make a compelling case for all commercial small satellites to re-think propulsion, and be ready to take the space propulsion sector by storm,” said Daniel Tan, head of investment at Cap Vista. 14

SINGAPORE BUSINESS REVIEW | JUNE 2020

New telco startup offers eSIMs “This enables a massive advantage for the traveller as they can keep updating the SIM to connect to local networks using the networks’ own connectivity plans. As we are partnering up with local telcos globally, the eSIMs we sell on our site will hold the same price as what you would pay from the operator’s website Bahadir Ozdemir or from the stalls in airports,” explained outheast Asian travellers often Bahadir Ozdemir, CEO and co-founder complain about long queues on of Airalo. SIM cards stall at airports and know He also noted that eSIMs have less that it can’t always be reliable, particent impact on the environment. A physical markets. These still need to be bought SIM card has a CO2 footprint of 21 outside or shipped, and pocket Wi-Fi grams, which includes the energy devices do not always provide a stable and water consumed in production. alternative connection. Meanwhile, the envelope and paper In response to these issues, Airalo insert that accompanies each card adds has partnered with a number of telcos another 10-15 grams of CO2. to provide ‘embedded SIMs’ (eSIMs). Another opportunity up-for-grabs for Instead of inserting a SIM chip for Airalo is the fact that providers are also every telco provider, they can embed a looking to include eSIMs in their product rewritable chip inside a mobile device. roster, Ozdemir added. Airalo obtained Buyers can freely choose a data plan 146 eSIMs across the globe to its roster and download the telco’s information within the first six months of operation. into the eSIM chip, and the platform Airalo secured $2.31m (US$1.65m) allows 15 eSIMs to be stored on an eSIM- in a seed funding round led by Venture enabled iOS phone. Capital firm Sequoia last October.

AllRites expedites the film rights acquisition a commission of up to 10% of the deal from the seller. Compared to the traditional means, a film or TV series distributor approaches a potential buyer though an office meeting or at a trade fair. The distributor usually brings a physical catalogue of 100 film and TV shows Riaz Mehta and picks a few of them for pitching. Once the buyer expresses interest, the distributor uying film/TV content rights can be a provides more materials via email and may long and painful process for producers discuss the availability of the desired rights and distributors, involving a lot of time and determine the price. Then a contract is and money, with face-to-face meetings issued, which goes back and forth between and intense contract negotiations. It poses the parties until it is finally signed. Once all a higher risk of losing money as some of that is done, the distributor will then send distributors do not pay what they owe to materials through a third-party service. All content creators. of this takes a minimum of four weeks to as To solve this pain point, Riaz Mehta, the long as six to 12 months. co-founder and CEO of AllRites, created a In January 2020, AllRites secured $1.54m platform that can condense the month-long (US$1.1m) from a seed round led by process into a single day. A content creator Australian VC Artesian. for them as there or distributor can list their film/TV shows on were not a lot of VCs who were familiar with the platform by uploading a poster, trailer, the media industry. or an episode along with synopsis and rights “The content industry is on the cusp of availability information. major disruption,” said Artesian’s managing Buyers search for content by genre, partner Tim Heasley and director Melody language, or other filters. They can check Zhang. “AllRites is targeting the disruption out trailers, screeners and rights availability information. The deal can be negotiated with of long-standing inefficiencies and a lack the seller through the platform and a contract of transparency in the large and growing is electronically signed. AllRites will then take industry of video content production.”

STARTUPS StaffAny streamlines HR and admin tasks who have workers paid on an hourly basis. “Operational processes like scheduling and timesheet management were painful, prone to errors and it was hard to better the performance of this hourly workforce,” said Eugene Ng, co-founder and head of growth at StaffAny. Employees may use the platform to clockin, clock-out and submit requests for leave. Workers will receive notifications when there are changes with their schedules, as well as reminders when their shifts StaffAny team are coming up. The platform allows HR managers to track employees on leave, and dministrators and human resources which part timers are available in real time. It managers often do timesheet can also manage overtime and hours to stay consolidation manually, which in compliance with labour law requirements. can cause a lot of errors and headaches At the end of every month, StaffAny will be for them at the end of every month. To the one to compute the emlpoyees’ salaries solve this pain point, software-as-a-service StaffAny offers a platform that automates all based on the number of hours they worked. In August 2019, the company raised $1m of these tasks. in a seed funding round led by FreakOut StaffAny claims to help such managers Holdings. They also had angel investors such reduce work dedicated to scheduling as HRtech Niwa Capital CEO Kenji Niwa and and time tracking, and reduce the cost live chat software company Zopim; as well of operations by minimising time theft as co-founders Lim Qing Ru, Kwok Yang Bin and overtime spend. In addition, it also and Royston Tay. automates end-of-month timesheet Ng stated that they will use the proceeds consolidations. to further strengthen their products. This is especially helpful for businesses

Claritecs automates bunkering vessel arrival times, bunker tanker availability, fuel type, and other relevant data. The system will also suggest an alternative bunker tanker when ships are faced with scheduling conflicts. Any changes in the vessel arrival time Claritecs’ founders and Innoport can be done through the platform, which sends notifications to each of the parties unker operators are often involved. “Our BunkerMaestro solution burdened with the frequent has been proven to increase work changes in the ships’ arrival efficiency by up to 75%,” the co-founders times, and the complexities of the types said. and quantities of fuel needed for each In June 2019, Claritecs secured vessel. For this, maritime solutions $850,000 in a pre-series A funding startup Claritecs has created a platform round led by INNOPORT, the corporate that streamlines data in the bunkering venture capital unit of the ship owner segment. and ship management company According to Claritecs’ co-founders, Bernhard Schulte. It was also attended CEO Wong Hong Lee, CMO Marianne by a private angel investor from the Choo, and CPO Russell Gomes, Singapore maritime industry. their core service is ‘BunkerMaestro’, a “There has been an increase in software-as-a-service platform which fuel types and blends to comply with taps on real-time data sets to monitor international regulations on sulphur movements of ocean-going ships content limits in fuels, increasing the planning to call at their port for fuel complexities of scheduling a bunker or cargo operations. They do this by tanker to deliver fuels to meet changing using experience-based algorithms and demand,” said Haymon Sinapius, predictive analytics, matching predicted investment manager at INNOPORT.

How DEXTF is shaking up the asset management scene

DEXTF co-founders

igital asset management platform DEXTF hopes to revolutionise the industry by reducing the cost of opening a hedge fund, and paving the way for the rise of non-traditional asset classes such as wine, art, and IP rights. “Today if you are a new asset manager, you need at least $100-200m in assets under management in order to be viable. There are entire asset classes that are just the preserve of either ultra-high net worth individuals (UHNWI) or institution investors because they require high nominal investment amounts,” said co-founder and CEO Mario Aquino. DEXTF’s platform halves the traditional custody, compliance, and back-office costs, and can even reduce expenditure by as much as 20 times. It leverages distributed ledger technology (DLT), which tokenises both traditional and non-traditional assets. In turn, these assets can be made available in smaller amounts rather than the high-cost investments available traditionally. Using the platform is easy, and akin to simply filling out a Google sheet: a fund manager can easily create a hedge fund and specify the assets which the fund will carry. On the other side, an investor can sign up for a fund with just a few clicks and track where their investments are going. This means that investors using DEXTF’s platform no longer need to transfer ownership of their assets to a third party when entering the hedge fund scene, thus allowing for more accountability and transparency, and making investments safer. “The asset management industry still largely relies on legacy infrastructure that was built over half a century ago and is highly inefficient, with multiple layers of intermediaries, agents, and in some cases archaic systems that still rely on paper and faxes,” noted Aquino. In November, the company raised $639,110 (US$460,000) in its seed round, led by LuneX Ventures and SGInnovate. The company plans to use the funding for the development and launch of their alpha product. “Digital assets remain an area of sustained interest for institutional investors and asset managers, yet many see the current investment infrastructure as inadequate. There’s lot of potential in the development of this proprietary infrastructure and protocol by DEXTF, which could provide a solution to a significant industry problem,” said Pang Heng Soon, SGInnovate’s head of venture building. SINGAPORE BUSINESS REVIEW | JUNE 2020

RETAIL WATCH

Miniso seeks to attract older buyers with $2 concept stores It aims to provide the best bang for the buck with its super cheap yet quality items.

MINISO branch at Bishan Junction 8 Shopping Centre

iniso is already known for selling cheap yet fashionable products, but they are taking it a step further with their $2 concept stores in Singapore. And they already have their eyes set on stingier, older customers looking for cheap quality goods amidst the high cost of living in Singapore. First launched at HarbourFront Centre and IMM in October 2019, the concept stores offer a wide-ranging selection from household goods to electronic devices. These include fans, coffee machines, keyboards, Bluetooth earphones, bags and organiser, a press release revealed. As they promise, these are all priced at S$2, whereas a pair of headphones for instance would typically cost around $25. This is also the case for a desk lamp that would have been priced $15, or a bag that would normally cost $8 to $9. The S$2 concept store was initially a trial run aiming to attract older and price-sensitive consumers with a re-selection of goods based on price, a spokesperson told Singapore Business Review. The company also noted that although Singapore’s economy is considered to be very developed, the cost of living is also very high, which would prompt strong demand from local consumers for consumer goods that are as high-quality as they are affordable. In particular, many consumers are still taking a waitand-see approach on Miniso’s collaboration offerings, 16

SINGAPORE BUSINESS REVIEW | JUNE 2020

On the eve of the opening of IMM MINISO outlet, hundreds of people stood in line outside the store to get coveted items for the first time.

such as the Marvel x Miniso official licensed store, the spokesperson noted. “We started with MINISO outlet ($2 concept stores) as a bridge between the lower price and good quality products that can reduce the psychological burden of consumers’ consumption threshold and build their trust and confidence for MINISO,” Miniso told Retail Asia in an exclusive correspondence. The store was well-received—by its third weekend in November, the IMM store recorded sales volume four times of the usual sales figure of their stores, and consumers bought 12 products on average, according to a press release. Miniso also said that the transaction unit price for each customer reached a peak of above $25.03 (RMB176.7), but there was still associated purchase rate ranging between 1.3 and 5.0. They also found that the growth rate of sales of their outlet was three to four times over the normal stores. “On the eve of the opening of IMM MINISO outlet, hundreds of people stood in line outside the store to get coveted items for the first time. Three hours before the opening time, many MINISO fans and loyal consumers waited in a long queue outside the store,” it noted. Founded in 2013 by Ye Guofu and Miyake Junya, the fast fashion brand and variety store established itself in China and has since expanded with 4,000 stores across over 90 countries by end of 2019, with an average monthly growth rate of 80 - 100 stores, according to its company website. This includes Singapore, where it has already launched 31 stores since launching operations in the city in 2015. Miniso has adopted a double model for its business in the city. Besides the $2 store, it also runs Marvel x Miniso official licensed store in Westgate, Vivo city, NEX, North Point City and more. The brand aims to bring the attention of trendy youth with Marvelthemed merchandise like tumblers, lamps, keychains and plush toys. Their spokesperson noted that with this setup, it aims to cover as wide a variety of consumers as possible. The company plans to expand the categories of its $2 stores to further cover the demand of their consumers’ daily lives, and bring in more designers and IP products. They are also looking to optimise their operations to eventually form a unique business model for these outlets. Further, they have been gradually setting up $2 zones in all stores. “We hope to use this as a market “laboratory” to continuously optimise MINISO’s operation model, products and services in the Singapore market,” the spokesperson from the fast fashion brand said.

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FINANCIAL INSIGHT: VENTURE CAPITAL

New startup sectors gain ground as venture capital firms fill up coffers Specialised funds are growing larger than ever, but where does the money go?

enture capitalists’ long-running efforts towards launching funds for emerging startup segments are paying off as rounds grow larger. By the time native venture capital (VC) firm Jungle Ventures launched its newest fund (and its third in Southeast Asia), it had already pumped up its targets to $286.64m (US$200m)—significantly larger than the targets it had for its first fund in 2012: $14.33m (US$10m). In April 2019, it successfully breached this target and closed the round with a whopping $343.96m (US$240m). Jungle Ventures’ latest round is one of Singapore’s largest for 2019 and highlights how VC firms are pushing their funding goals further than ever. But a question remains: where does the money from these big rounds go? According to Valmiki Nair, partner at Dentons Rodyk, startups in fintech, payment services, B2B, and digital tech are getting the most attention from these funds. This is reflected in the data aggregated by Enterprise Singapore (ESG) which showed that for the first three quarters of 2019, digital tech startups clinched 93.2% of the $13.4b deployed towards startups, accounting for 278 deals, up from 145 deals in the same period last year. Notably, by the time Jungle Ventures III closed, it had already invested in Indonesian beauty e-commerce and social platform Sociolla ($57m or US$40m, series D), Vietnamese point-of-sale software provider KiotViet ($8.56m or US$6m,

We expect to see a trend towards the emergence of value-chain specific funds and fund managers.

DEAL #1: JUNGLE VENTURES’ LATEST ROUND IS ONE OF SINGAPORE’S LARGEST FOR 2019.

SINGAPORE BUSINESS REVIEW | JUNE 2020

series A), Jakarta-based logistics platform Waresix ($20.68m or US$14.5m, series A), and AI startup Engineer.ai. But the capital does not only flow to these popular segments, as other investment areas have emerged as well. Nair noted that logistics and healthcare are two sectors that have attracted significantly more interest. Notably, Reefknot Investments’ new $69m fund for logistics and supply chain startups is especially interested in companies that are using AI or deep mind tech, digital logistics, and trade finance to solve problems that range from analysing supply chain data to managing the risk of financing trade transactions. Mark Suckling, partner at Cento Ventures, thinks that this is just the beginning for supply chain-related funds in Southeast Asia, as institutional flows are still intensifying. “We expect to see a trend towards the emergence of value-chain specific funds and fund managers. Digitalisation is reaching ever further into numerous industry sectors and Southeast Asia hosts an increasing portion of many global supply chains. New venture firms and vehicles will emerge with clear sector-led investment theses for tech in the fashion industry, agriculture and food, labour, healthcare services, manufacturing, construction tech, and so on,” he said. Biotech boot up Biotech is also taking a share of the available capital, with

DEAL #2: BIOPHARMA STARTUP LUCENCE RAISED $28.62M (US$20M) IN SERIES A FUNDING LED BY IHH HEALTHCARE AND BACKED BY SGINNOVATE AND TEMASEK UNIT HELICONIA CAPITAL.

FINANCIAL INSIGHT: VENTURE CAPITAL Share of VC funding by country in H1 2019

Source: PitchBook

healthcare and biomedical science startups receiving $148.3m in funding and digital health startups clinching $126.9m, according to ESG data. Investments in biopharma and medtech startups for the year were also sizeable at $21.4m. Experts see a lot of investment potential across these sub-sectors. Vishal Harnal, partner at 500 Startups, is most excited about the biopharma space. “We will see a number of companies in the cell and gene therapies space as well as small molecules,” he said. Related startups include Lucence, which raised $28.68m (US$20m) in a series A round in November 2019 for its product involving a less invasive liquid biopsy tool that helps clinicians analyse tumors and make treatment decisions. Nair, on the other hand, sees interest in new medical devices, such as diagnostic tools, companion diagnostics, health software, and alternatives to drugs as innovations get traction. For instance, EndoMaster which raised $20.5m in 2017, will soon launch a robotic-assisted system that can remove tumor from the intestines and stomach without making incisions. Hsien-Hui Tong, head of venture investing at SGInnovate, concurred with Nair but added, “Medtech products or services that focus on the users—be it healthcare professionals or patients—instead of only on the technology, which is just the enabler, will continue to win big.” Tong said that biotech startups’ innovations can be difficult to get off the ground due to challenges unique to the sector, and these are not limited to financial metrics. “Besides the need for ‘patient’ capital, there are various unique technical, structural and cultural barriers that these startups have to overcome. It takes years, not just a few deals, to go through the cycle to get the real experience and make the right judgement calls. This is especially so for the biomedical sector as there are safety and regulatory approvals required at different stages of development as well as rounds of clinical trials to conclude,” he said. Moreover, there is also a risk that the market may no longer be there when the product is ready to be launched. Even with the heavy risks, Nair argued that the criticality of funding still drives investments into biotech, Nair said. “It typically takes about 8-10 years to grow a biomedical start-up, and will typically take in the region of $71.73m (US$50m) to $143.45m (US$100m) to successfully fund such a startup from start to exit.,” he said. Do stage and size matter? The interest in the above startup sectors would not materialise if it weren’t for the 36% jump in overall venture startup funding driven by growth across all funding stages. However, a gap between deal volumes is noticeable. ESG data revealed that

Mark Suckling

Valmiki Nair

Vishal Harnal

Hsien-Hui Tong

whilst early stage funding almost doubled to $886.1m across 304 deals, growth stage funding amounts leapt 33% to reach $12.5b in 83 deals. Cento Ventures report also said that the growth in the volume and size of deals less than $500,000 (over 100%) significantly outpaced the growth of big deals with $5m-$10m, and usually Series A and B (50%). Nair explained that one reason was due to the rise of angel investors and family offices’ investments into startups. “High net worth individuals and family offices are increasingly viewing startups as having the potential for outsized returns. This is expected to continue in the future as the current generation, being in the tech era and environment, better understands the startup mentality and the need to diversify beyond the usual target businesses,” he said. Suckling also explained that in its reporting of data, a number of factors were at work. “Deals at the earliest stages (under $717,200 or US$500,000 in proceeds) are not always as widely reported as those at the slightly later stages. Whilst we try to gather as much information from the participants in each market as we can, we also take the view that reporting of the smallest deals is subject to some variability.” Their findings still suggest that there is an uptick in activity across the board. “We conclude that this is being driven by an improving supply of opportunities for investors, as more startups emerge that apply technology across the various sectors of Southeast Asia’s economy. This is combined with a strong supply of capital. Many established VC firms have announced new funds, and other sources of capital continue to appear. New sources include corporate investors, as well as VCs from other regions that have only recently started investing in Southeast Asia.“ Tong commented that in their area of specialty, deep tech startups, a gap is also emerging between early-stage and later-stage funding rounds, particularly from series B onwards. “Investors still tend to shy away from later-stage deep tech startups, due to reasons such as the longer gestation period, bigger funding rounds and difficulties of evaluating these research-based solutions. As a way to help bridge the series B round for local deep tech startups, SGInnovate co-invests with PE firms, large VC firms and corporate VC firms. We hope to lower the risks for the private sector and encourage more investments in deep tech startups,” he added. Some venture capitalists are taking the funding gap with a grain of salt. Harnal said, “More people are starting companies—that’s a great development. However, doubling the base of the pyramid doesn’t necessarily double the number of companies that are able to scale and attract capital successfully.”

Share of VC deals done by country in H12019

Source: PitchBook

SINGAPORE BUSINESS REVIEW | JUNE 2020

INDUSTRY INSIGHT: FINANCIAL SERVICES

Being front of the wallet is key, according to J.D. Power.

Credit card revenues threatened as Singaporean travellers shun usage Card users turn to cash as they steer clear of lofty transaction fees and poor exchange rates.

anks may have to rethink their reliance on credit card fees as a driver of revenues as technology savvy travellers are resorting to cash or alternate payment apps to avoid being slugged with high foreign transaction fees and usurious exchange rates. In a report that should disturb all banks relying on overseas charges as a growing source of revenue, TransferWise said that using a credit card to pay for overseas purchases could cost an average Singaporean as much in fees as a one day holiday in Bangkok. The firm estimates a typical Singaporean would lose as much as $926 (US$650) in additional fees and currency exchange losses. One way Singaporeans are avoiding hefty credit card fees

SINGAPORE BUSINESS REVIEW | JUNE 2020

Using a credit card to pay for overseas purchases could cost an average Singaporean as much in fees as a one day holiday in Bangkok.

is to simply use cash, notes a separate study by J.D. Power. Seventy percent of Singaporeans still prefer to use cold hard cash when making purchases abroad, 50% of the total overseas spending by Singaporeans are still cash-based, the report added. Lofty transaction fees and poor foreign exchange rates were cited as the two main reasons why they avoid using cards. Singaporeans also fear fraudulent transactions overseas. Such pain points manifested in the staggering $1.1b lost yearly to fees associated with overseas card expenditure, or 4% of the $27.3b estimated total overseas expenditure that Singaporeans make via cash and cards, a study commissioned by tech company TransferWise revealed.

“Singaporeans are avid travellers, but banks have not provided an affordable, transparent card option for spending abroad, either to individuals or businesses,” says Surendra Chaplot, TransferWise’s head of APAC card product. He noted that banks could still do better in the area of transparency. “When you book a flight or a room, the airline or hotel tells you how much you are charged, but when you spend your card overseas, banks somehow believe they have the right to hide what they charge by putting their fees in the exchange rate mark-up. This may have been acceptable in another century or decade, but consumers in an age of transparency should and will reject it,” Chaplot added.

INDUSTRY INSIGHT: FINANCIAL SERVICES If cards don’t respond to consumers’ cries, there’s a missed opportunity for credit card issuers to fully capture overseas spending, according to Anthony Chiam, regional practice leader, Asia and Australia, global business intelligence at J.D Power. “According to SingStat, Singapore residents on average travel twice a year. Our study shows they spend approximately $4,800 annually during these trips, and that’s a missed opportunity for credit card issuers to fully capture overseas spending,” said Chiam. “It should be a cause for concern, given the rapid availability of other payment choices in the market.” Right now, issuers are banking on their various rewards benefits programmes in the hopes of raising card usage numbers. These include air miles, cashback, rewards points, and shopping discounts, amongst others. Just offering more benefits or higher reward points on overseas spending will not equal more usage, however. Whilst 89% of cardholders are aware of the plethora of benefits that come with their cards, 72% use three or fewer of those offered. But it remains key to attract users: 64% of cardholders have used discounts or special privileges offered by issuers’ partners. With benefits programmes a critical aspect of customer acquisition and engagement, issuers must ensure they remain relevant by keeping up with the changing preferences of cardholders, said J.D. Power. First choice is king Keeping their benefits relevant to the preferences of the public will also help card issuers remain in the front of their wallet. Seventy seven percent of total credit card spending by Singaporeans are done through their primary card, reported J.D. Power. Further, 44% of surveyed card subscribers have only used their primary card in the past year. The number is even higher amongst millennials,

with 48% transacting solely using their primary card, which is why ensuring customer satisfaction has become a major battlefield amongst Singapore’s eight major credit card issuers. In particular, overall brand satisfaction was noted to strongly correlate to whether customers perceive that their primary card issuer is customer-driven, with results revealing that the top-ranked brands are also topping this metric. American Express (AMEX), who led J.D. Power’s customer satisfaction survey, shared that enhancement of current credit card offerings and constant communication with customers remain their strategies to be consumers’ top pick. “We consistently talk to our customers in the process of designing our products and services to make sure we’re giving them what they want, and this applies to all customer segments, including the younger customers,” a spokesperson from AMEX said. “We have a benefits programme which enables our card members to receive savings and incentives for shopping, dining and travel, and can be received in the form of discounts, statement credits, and bonus points. We regularly communicate with our card members to remind them of such benefits and notify them of new offers and promotions.” OCBC, who ranked fourth in the survey, couples its rewards programme with financing flexibility and fraud protection. “We grant our credit card holders with benefits ranging from air miles, cashback, rewards points, airport transfers, lounge access, complimentary travel insurance, shopping discounts, concierge services, and special deals with various merchants,” added Vincent Tan, head of credit cards at OCBC Bank. An impending collapse? Gearing up their credit card offerings becomes more important

Overall brand satisfaction was noted to strongly correlate to whether customers perceive that their primary card issuer is customerdriven.

now more than ever for banks to avoid downturn predictions sighted in the turn of the century. Payment solutions firm Worldpay forecasted the collapse of credit card usage in Singapore this year, with its usage slated to drop of 24 ppts. In a separate report, an analyst from Euromonitor International noted that the growing animosity against cards could be because certain demographics were not able to quickly adapt to alternative digital payment methods, reversing brands’ expectations for a 100% adoption in cashless payment schemes. “Amidst the high penetration of smartphone usage in Singapore, the projected uptake of alternative payments and mobile wallets is not as quick as expected. There are still various sectors and demographics that are resisting adopting alternative digital payment methods as they still prefer cash,” the analyst noted. Alternatively, although adoption did not materialise as expected, Euromonitor remains optimistic for growth of Singapore’s cashless market and sees credit card transactions in Singapore to demonstrate an upward trend. Total card transactions, which accounts for all card payment types such as charge cards, debit cards, prepaid cards, and store cards, is projected to increase to $132.3m this year from $128.7m in 2019. Also, credit card transactions are expected to rise from $95.4m in 2019 to $99.5m by 2020.

What makes up the US$810m in lost card fees?

Source: TransferWise

SINGAPORE BUSINESS REVIEW | JUNE 2020

INDUSTRY INSIGHT: RETAIL

Style Tribute outlet store

Clothing rentals gain popularity as fashion takes over sharing economy Since 2015, a number of clothing rental services have sprung up in Singapore’s retail scene.

ingaporeans are warming up to the slow fashion movement with the increasing procurement of sustainably-made apparel, a consumption practice that used to be foreign amongst local shoppers. A study by Nielsen found that about 80% of Singaporeans are willing to pay premium prices for products that are sustainably produced, and made using environmentally friendly materials. Furthermore, the Climate Change Public Perception Survey 2019 revealed that four in five of those surveyed were prepared to play a role towards a low-carbon Singapore, even if it meant bearing some additional costs and inconvenience as consumers. A Life survey by Uniqlo similarly reflected this sentiment having found that nine in 10 Singaporeans have taken at least some action to protect the environment. The survey also 22

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revealed that close to seven in 10 Singaporeans believed in pursuing a reduced environmental impact, such as buying only what they need to reduce waste, whilst about 85% would consider buying eco-friendly products if they are readily available. Euromonitor said that future consumers will be focused on products as services, whether that be apparel rental, furniture rental or mobility-as-a-service, such as autonomous cars or ride-hailing super apps. The peer-to-peer based activity of the sharing economy has long been commoditised for lodging and transport services, but remains a far-fetched concept for the industry of fashion retail. However, a Knight Frank report cited that conscious consumerism will be one of the top retail trends in 2020, noting that the growing trend will give rise to the popularity of clothing rental

Future consumers will be focused on products as services, whether that be apparel rental or mobility-as-aservice.

providers. Singapore-grown fashion rental startup Style Theory, which launched operations in 2016, started its services grounded on the same principle that consumers had grown responsive to a sharing economy. “Since consumers are already accustomed to sharing rides and homes with strangers thanks to the rise of services like Grab and Airbnb, this got us thinking about giving people the opportunity to access an infinite wardrobe stored in the cloud in a financially and environmentally sustainable manner,” said Style Theory’s spokesperson. Whereas clothing rentals only used to refer to special and occasional wear such as formal wear and costume ensembles, the new rental framework amongst fashion rental stores now includes basic wear. Other clothing rental services that have sprung up are Covetella,

INDUSTRY INSIGHT: RETAIL Average Gross Rents of Prime Retail Spaces*, Q4 2019

Radhika Singal

Source: Knight Frank Research

Madthreads, and Fabaholics, with Covetella being founded in 2015, and both Madthreads and Fabaholics starting operations in 2018. Aside from clothing subscriptions, Singapore has seen several offline and online peer-to-peer, secondhand fashion destinations and platforms, such as Reebonz, Refash, and Style Tribute all adding to the circular economy in fashion retail, according to data from Euromonitor. Euromonitor’s research consultant Radhika Singal said that the rise of alternate retail business models is a natural outcome of the growing slow fashion movement and the increasing awareness of both consumers and business owners on sustainable zero waste lifestyles. Should more stores adopt the rental subscription model, Fitch Solutions’ consumer and retail analyst Taohai Lin forecasts a mix of positive, and negative outcomes for certain industries such as mall occupancies and dry cleaning services. He noted that mall occupancy may drop, given that these subscription businesses require fewer physical stores compared to conventional retail. Meanwhile, demand for warehousing, dry cleaning and delivery services will increase, since such a business model relies on shuffling clothing between the customer, the dry cleaner and their warehouse. This is currently manifested in rental shops like Style Theory, which recently just opened its first physical store in 313@Somerset in October 2019. Sharing may also unlock latent

demand for luxury or fast fashion brands, as they may be now able to tap on new customers who would not have wanted to buy clothing before the possibility of rental, added Lin. A Fitch Solutions report similarly stated that in 2020, the sustainability spotlight is set to shine on fast fashion. The winners will be fashion brands that implement and communicate sustainable policies, whilst those that fail to create sustainability initiatives may see their brand perceptions suffer. Local departmental stores can’t choose to overlook the wave too with Takashimaya department store launching its first “Love the Earth” festival in 2019 ‒ a month-long Earth day annual event to provide customers with an eco-conscious shopping experience, noted Lin. Clothing rentals aside, are established stores ready to jump in on offering sustainably-made apparel in general? Ready-to-wear brand IN GOOD COMPANY’s managing director Jaclyn Teo said that they don’t see adding sustainable apparel in the near future, citing supply chain, inventory, and logistics as top concerns. “Production of ecoconscious and sustainable apparel requires an entirely different supply chain of logistics, material and production. We do what we can in small and increasing ways that are possible for us at present, anything less will just be green washing,” said Teo. Fitch Solutions outlines a sustainability spectrum citing the challenges that the fast fashion industry is expected to face as it

Taohai Lin

Gin Lee

incorporates sustainable production of apparel. Fast fashion brands would have to tackle the sourcing, manufacturing, supply chain, and product sustainability of its products. To source sustainably, companies must be aware of where their items are made, and what materials are used, for example the use of sustainable cotton. Of the manufacturing sustainability aspect, companies will be faced with growing concerns on labour practices and how manufacturing practices can impact the environment, such as dying techniques and dye seeping into water sources. Fast fashion brands will also see the sustainability of their supply chain a challenge. The use of cheap labour in order to keep the prices for fast fashion garments low requires the utilisation of textiles hubs that are traditionally located in emerging markets, with goods then shipped over thousands of miles to developed state consumers, noted Fitch Solutions. Lastly, the report discussed product sustainability. Fast fashion brands would have to evaluate the very nature of their brand as they are grounded on seasonal fashion where new products are required by consumers to remain ‘on trend’. This, coupled with the lower quality materials used in the fast fashion sector, has led to a disposable clothing and footwear culture, with goods worn for a short period of time and then thrown away. Less than 1% of clothes were recycled in 2019, said the report. Fashion brand Gin Lee Studio shared that in its efforts to support sustainable production, the creation process for clothes undergoes many laboured iterations before actual creation to produce as little waste as possible. “We develop our designs from scratch, rather than using the mass market method of buying samples and copying to speed up development,” said Gin Lee, owner of Gin Lee Studio. “Once a style is considered, we put it through rounds of performance tests before cutting up our fabrics. As for production, quantity is kept at a minimum to prevent excess inventory so pre-orders are available to alleviate sudden demand,” added Lee. SINGAPORE BUSINESS REVIEW | JUNE 2020

COVER STORY

Loremshelves ipsum at dolor sit amet consectetuer Empty supermarkets are a common sight as COVID-19 triggers panic buying.

Business in the time of Corona

The global pandemic has forced most of the world into circuit-breaking lockdowns, Singapore’s business leaders reveal how they responded and how firms are coping with it.

t’s a whole new world out there in 2020, and a whole new Singapore business environment. The continuing growth and new investments of 2019 are no longer top of mind for most of the city and its economy. That mantle has been taken by the new severe acute respiratory syndrome coronavirus 2, which causes the highly dangerous coronavirus disease, or COVID-19. In 2020, Singaporeans have found themselves focused on facemasks, handwashing, and social distancing as they work to “flatten the curve” of infection across the city-state. Singapore is handling the pandemic well, at least comparative to many other countries and markets. Still, the country has recently adopted an unprecedented “circuit breaking” set of movement restrictions for the four weeks from 7 April, including the closure of the vast majority of workplaces. “Instead of tightening incrementally over the next few weeks, we should 24

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make a decisive move now to preempt escalating infections,” Prime Minister Lee Hsien Loong said on April 3. “We will therefore impose significantly stricter measures (to) help reduce the risk of a big outbreak occurring.” Businesses across the economy are naturally being caught up in the nationwide response, with the nature of those impacts being wide and varied. Clearly, airlines, hospitality, and retail businesses have each suffered a huge drop in demand as customers choose, or are forced to stay away – and there have been thousands of jobs lost in these sectors. Even the most optimistic forecasts see those numbers growing even further in the months ahead. Other sectors are facing issues around getting workers to the places they need to be, and ensuring their health and safety in this new regime of avoiding human contact and close interaction. Many technology and office-based businesses have been

Singapore is handling the pandemic well, at least comparative to many other countries and markets.

forced to move to work from home arrangements for the majority of their remaining staff. Meanwhile, essential service providers, including hospitals and healthcare providers, transport and logistics firms, and even supermarkets are all making do with the resources they have available to them in the best possible way. View from the top Singapore Business Review spoke to 16 prominent business leaders, from a broad range of sectors operating in the Singapore market. We asked each about how their organisations had fared over the tumultuous first quarter of 2020, and the specific challenges being faced as well as the solutions being developed. Their responses show a strong level of resilience across the business community here. For some, it has been the chance to test out some business continuity processes developed for this very situation.

COVER STORY Michael Page

Anthony Thompson, regional managing director

How has the COVID-19 pandemic affected your company’s operations? Across the APAC region we have seen an impact in almost all markets but at different times. In recent weeks we have seen impacts increase in Hong Kong and Singapore along with Japan, India and our other offices in Southeast Asia. There is certainly an impact in the level of hiring activity and in the willingness of clients and candidates to make decisions. There is still considerable recruitment activity and in certain sectors we have seen a surge in hiring. These areas include healthcare and pharma, technology and a variety of digital segments. What changes have you had to make with regards to staffing

Robert Walters

Rob Bryson, managing director

How has the COVID-19 pandemic affected your company’s operations? Fortunately, Robert Walters is a fully digital and mobile business. As such, we are able to work from anywhere, including home, and our operations are continuing as normal. However, COVID-19 is impacting our clients and their hiring appetite, which is having a knock on effect for our business. What changes have you had to make with regards to staffing numbers and working arrangements? We have implemented full work-from-home arrangements for our entire Singapore office. Over the past few years, we’ve been implementing technologies to help

numbers and working arrangements ? We have not made any material changes to staffing numbers in Asia, however we have had to adapt to considerable differences in working arrangements. During February, we have had a large percentage of our people operating from home some or all of the time. This has not been without its challenges but overall we have managed to be more productive than we had anticipated. What measures have you implemented to help your customers amidst these trying times? As much useful communication as possible. This has been through phone calls and social media one on one and through broader communication. The nature of our business means that we are able to quickly understand how a wide variety of companies and people are dealing with the situation and we have endeavoured to share this feedback as much as we can. The companies and candidates we work with have been and continue to be hungry for such information. What has been the immediate effect on your business from a revenue and cost standpoint? We have endeavoured to eliminate non-essential costs and clearly travel has reduced significantly. Any investments we make are focussed on Page people as well as our clients and candidates. These are challenging times but that does not mean we cannot make client and candidate engagement as well as the development of our own employees the key priorities.

our employees become more mobile and these has helped us easily transition to full work-from-home arrangements in this challenging period. We have made no changes to staffing levels. What measures have you implemented to help your customers amidst these trying times? We have helped facilitate the move of our clients’ and onboarding processes online. For example, we help to conduct and coordinate online interviews. We have also been working with our clients to assist any employee of theirs who may be retrenched, not only with their job search but also upskilling in terms of improving interview skills, access to understanding areas of demand, improving their LinkedIn profile and others. What has been the immediate effect on your business from a revenue and cost standpoint? To date there has been no immediate effect, however we are expecting a challenging Q2 in revenue terms. We are also expecting cost savings through working from home rather than operating a full CBD office. Could you share with us your future plans amidst this pandemic? We will continue to monitor the situation carefully and adjust our business strategy accordingly. In these tough times, our priority is to protect the jobs of our employees and we will do everything in our power to achieve this aim. SINGAPORE BUSINESS REVIEW | JUNE 2020

COVER STORY Deliveroo

Deliveroo has been ramping up their efforts as delivery demand rises.

Exclusive statement from a spokesperson: How has the COVID-19 pandemic affected your company’s operations and what has been the immediate effect on your business from a revenue and cost standpoint? In February, March and April, Deliveroo saw an average of 20% increase in orders compared to the weeks before. However, as there are other ongoing marketing campaigns, the COVID-19 situation may not be the sole factor contributing to the increase in orders. We have seen over 700 new restaurants join the platform since late January, allowing more restaurants to be able to extend their sales through delivery. Since 1 March, there has been a 50% jump in the number of restaurant sign-ups, compared to the previous month.

Jetstar Asia

Bara Pasupathi, CEO

How has the COVID-19 pandemic affected your company’s operations? Jetstar Asia made the decision to temporarily suspend all services for an initial period of three weeks, from 23 March to at least 15 April 2020. If border measures remain, we can expect the majority of our services to be suspended in line with these. This represents the temporary grounding of all Jetstar Asia’s 18 A320 aircraft. What changes have you had to make with regards to staffing numbers and working arrangements? We have been working with MOF, PSD and CAAS to find temporary job opportunities offered by the public agencies and the private sector institutions. 26

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What changes have you had to make with regards to staffing numbers and working arrangements? Deliveroo saw an 80% increase in rider applications in the past month (w/c is 16 March) compared to a normal week. We are always prepared for delivery demands thanks to our rider supply team. The team uses data analytics to match supply and demand, ensuring that we have the right number of riders on the road in the right place at any one time. Many private firms, including restaurants, have also increased measures like registration and requiring temperaturetaking of all visitors and delivery personnel to reduce the risk of spreading the virus. Riders are also able to make orders contact-less by letting customers know through the app before they arrive. If a rider does feel an area is high risk, and they wish to not to deliver, they can request to cancel any booked deliveries without penalty. We’ve also recommended to them to not complete deliveries should they feel unwell. Could you share with us your future plans amidst this pandemic? We’re using our delivery-only expertise to help guide restaurants as they make the transition from dine-in to delivery-only outlets. We have developed bespoke online marketing tools for restaurants to let customers know they have delivery services, established teams of people across the business to onboard and support restaurants who want to be able to deliver and developed our app to introduce ‘contact-free delivery’.

To date, more than one-third of our crew have taken up roles with the Singapore Food Agency, National Environment Agency and Raffles Medical Group. These contract positions are for a period of one to six months and allows our crew the opportunity to work and support themselves, whilst contributing to the community. It also ensures they will be ready to return to their full-time positions when demand for air travel resumes and we are ready to restart flying. What measures have you implemented to help your customers amidst these trying times? For any Jetstar Asia customer affected by this suspension we will give a full refund in the form of a travel credit voucher to anyone with an existing Jetstar Asia booking for travel between 15 March and 30 April. Given our call centres are experiencing extremely high demands, the fastest and easiest way for customers to request a voucher is by visiting Manage My Booking and submitting their details online. What has been the immediate effect on your business from a revenue and cost standpoint? The impact of this pandemic is delivering the single biggest shock the aviation industry has ever faced. Cost containment initiatives include salary cuts for the senior leadership team and I, as the CEO, will not be taking salary during this suspension period. To preserve cash, we have been disciplined in right sizing the capacity of our airline to match market demand, against a strong cash and capital management framework in order to sustain the business long term.

COVER STORY Great Eastern

Great Eastern has been expanding their health insurance coverage.

Exclusive statement from a spokesperson: How has the COVID-19 pandemic affected Great Easternâ&#x20AC;&#x2122;s operations? What changes have you made regards to staffing numbers and working arrangements? Since early February, temperature screening has been implemented at our offices/customer service centres. We have also stepped up cleaning of common areas as well as providing hand sanitisers at all offices and branches. Customer-facing staff are wearing masks, and our customer service counters are equipped with hand sanitisers and face masks. Safe distancing measures have been put in place as well. Employees and financial representatives have been strongly urged to exercise good personal hygiene practices, monitor their health closely and to promptly seek medical attention if unwell. We have put in place Work From Home (WFH) arrangements to ensure the safety and well-being of staff.

Senoko Energy

Bernard Esselinckx, president & CEO

Exclusive statement: Operations at Senoko Energy have not been disrupted. Making sure our operations continue running smoothly, even at times like this, is crucial as we are an essential service provider. We have a robust Business Continuity Plan (BCP) to minimise the risk of disruption in electricity supply. Protecting the health and welfare of our employees As part of our Business Continuity Plan, we have implemented a number of measures to protect the health and welfare of our employees whilst ensuring the business can continue to operate smoothly. Some of these measures include implementing telecommuting and supporting a work-from-home protocol for

What measures have you implemented to help your customers amidst these trying times? We recently announced a $1m holistic support package to help our customers in Singapore should they be affected by COVID-19. Effective 14 February until end-2020, Great Eastern customers and/or their immediate family members who are hospitalised due to COVID-19, will receive a cash benefit of $200 per day of hospitalisation up to a maximum of 60 days. In the unfortunate event that death occurs, a $20,000 lump sum will be paid out. In addition, we are extending a six-month grace period for life insurance premium payments of customers financially affected by COVID-19, to ensure that their insurance cover continues uninterrupted. On a national level, we have contributed $200,000 to provide financial assistance to those in Singapore affected by COVID-19 through the Courage Fund (facilitated by the National Council of Social Service & Community Chest). In Malaysia, we launched a similar deferred premium payment programme for policyholders affected financially by COVID-19. We have also pledged a $328,654 (RM1m) Financial Assistance Programme to support affected customers, whilst in Brunei, we have pledged a $50,100 (B$50,000) support package for customers. Policyholders with Integrated Shield Plans can use our Health Connect call-in service for their medical insurance needs, such as pre-authorisation for bills and specialist appointments. Outpatient video medical consultations with Doctor Anywhere are also available at preferred rates, if they prefer to avoid visiting GP clinics during this period.

staff who can carry their duties away from our plant, enforcing strict social distancing measures, temperature and health monitoring, and increased cleaning of the premises. For staff who are required to remain on-site to ensure operational continuity, we have physically segregated them into different teams with staggered working hours and implemented virtual meetings as the norm. To ensure that our employees are at ease with the slew of changes in their work arrangements, we have also stepped up our employee engagement activities. Our physical town halls are now conducted through a webcast in order to keep everyone informed, and we have also moved several employee activities to digital platforms such as e-learning and employee Learn@Lunch sessions. Supervisors are also advised to check in more often with their teams to keep them motivated and encouraged. We are also encouraging our employees to take greater care of their health by giving out masks and hand sanitisers, as well as Vitamin C and other health products. Continuing to serve our customers Electricity prices are falling and our retail and hedging teams are tapping on this opportunity by helping our customers lock in the lower rates. This will generate greater cost savings for our customers, and in turn help lower part of their expenses in the current challenging environment. To help households keep their electricity bills low, we are launching special offers for this segment of customers through our digital channels. SINGAPORE BUSINESS REVIEW | JUNE 2020

COVER STORY Shopee

Junjie Zhou, chief commercial officer

How has the COVID-19 pandemic affected your company’s operations? What changes have you had to make with regards to staffing numbers and working arrangements? The safety and well-being of our employees is our utmost priority. Shopee has taken—and will continue to take—all necessary precautionary measures, following the advice of public health officials. We have implemented work from home measures in accordance with government regulations, and we are committed to supporting our employees during this critical period. What measures have you implemented to help your customers amidst these trying times? Shopee remains fully operational in the majority of our markets, and our various customer service channels (hotline, email, live chat) are accessible to all our users. We are also committed to

Rajah & Tann

Rebecca Chew, deputy managing partner

How has the COVID-19 pandemic affected your company’s operations? About 60% of our workforce had already been working regularly outside the office. With our BCP in place, we are able to use our in-house online platform and other tech applications (such as Zoom) to enable our lawyers to continue servicing clients effectively and to communicate with one another remotely securely and smoothly. In other words, whilst our operations have been impacted, we have been able to overcome almost all of the obstacles through use of technology. What changes have you had to make with regards to staffing numbers and working arrangements? Staffing numbers remain constant as we adhere unwaveringly to our values of treating our people as our most valuable resource. Working 28

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ensuring that health-related products and essential household items remain available and accessible for our shoppers, and are taking the appropriate measures to manage that. In all of our markets, we have rolled out Shopee Shop From Home campaigns, which reminds users to make use of e-commerce and makes it easy for them to find and order daily essentials on our platform. We want to support social distancing measures, as well as other governmental efforts and the work-from-home policies, that have been rolled out by various companies. In some markets like here in Singapore, we have taken an additional step to ensure our buyers have fair access to essential supplies, by limiting the number of key and essential items such as masks, that each consumer can buy via Shopee Mart. What has been the immediate effect on your business from a revenue and cost standpoint? Generally, traffic and transaction volumes remain robust during this period and we have also seen greater demand for products related to health and personal hygiene, as well as other essential household items. We have been, and will continue, working closely with our partners and sellers to manage demand and ensure these items remain available and accessible to buyers. Could you share with us your future plans amidst this pandemic? Shopee will continue to prioritise the safety and well-being of our employees, partners, sellers and users and will be complying with all applicable regulatory measures during this period. We will continue to monitor the situation and adhere to government guidelines, as well as implementing additional support measures where necessary.

arrangements have become more flexible and fluid in response to the evolving situation and the governments’ guidelines. The majority of our support staff have been working from home to support remotely the work of our lawyers as well as those support staff in the office. This collaboration between those in the office and those at home has proven to be extremely effective in providing the high level of service our clients expect of us. What measures have you implemented to help your customers amidst these trying times? To assist our clients during this period, we have made available various means of virtual communication with our clients. This was in fact a tech strategy we had already started last year prior to our move to our new office at Marina One. We wanted to plan an office for the future but what we did not anticipate was COVID-19 and how our technology is now relied on by our lawyers/staff/clients to communicate. We have also set up a COVID-19 Resource Centre on our LinkedIn page and website to help our clients navigate these challenging times. What has been the immediate effect on your business from a revenue and cost standpoint? Our revenue has thus far been fairly stable given the broad spectrum of services we provide in Singapore and across the region. In line with the general economic downturn, we can anticipate some knock on effect but we are hopeful that we can overcome any adverse impact given the strength and depth of our various practices across both disputes and corporate as well as the quality of our clientele. Cost wise, we remain careful given the uncertainty but continue to invest in capability building for the longer term.

COVER STORY Deloitte

Pui Yuen Cheung, CEO

to consider and mitigate the impact of COVID-19 across our operations. • Providing advice and support to our people and clients in relation to COVID-19 measures taken by Deloitte as a firm, the local government agencies and the World Health Organisation. • Adhering strictly to the government’s advisory of practicing safe distancing at the office where staff and guests are instructed to sit at least one meter apart from one another at all times. • Having a robust IT infrastructure to support secure remote working. • Encouraging our people to hold virtual meetings as much as possible using virtual communication tools. • Having a secure offsite facility available to support our ongoing operations in the event of such a situation and we regularly carry out drills to be prepared for such an eventuality.

How has the COVID-19 pandemic affected your company’s operations? Deloitte is no stranger to flexible work arrangements and working from home—we have had a variety of options for our people for quite some time. However, the circumstances have increased and even mandated the need for flexibility. This means that there is a new learning curve due to the increase in scale, including constantly improving IT infrastructure to support at scale, and being more vigilant around information security.

What has been the immediate effect on your business from a revenue and cost standpoint? Our compliance work—audits and tax returns—continues but some advisory projects have been delayed, and many companies are reconsidering or postponing some of their major investments and strategic projects. However, we are receiving many requests to support organisations in reviewing their business continuity plans, reviewing their operations for efficiencies, and developing plans to increase liquidity.

What measures have you implemented to help your customers amidst these trying times? • Having a response team in place from the initial stages of the outbreak in China which has been undertaking scenario planning

Could you share with us your future plans amidst this pandemic? We are taking this time to experiment and observe the efficiency of these new work arrangements; this could very well be the defining moment in the way we work as a firm moving forward.

Max Loh, managing partner for Singapore and Brunei

Exclusive statement: The safety and wellbeing of all EY people, clients and communities remains our primary concern. We have been taking a number of precautions with respect to COVID-19 based on the guidance and direction of local governments and the World Health Organization (WHO). These include implementing guidelines deferring all nonessential domestic and international travel, which incorporate all government requirements relating to travel, and following applicable self-isolation and quarantine recommendations. Individual EY offices around the world are implementing work from home arrangements where needed or advisable.

We are monitoring the situation closely, updating guidance as developments warrant and working to support all EY people and clients and their communities. In Singapore, EY has practised flexible working arrangements since 2013, and this has enabled us to be nimble in addressing the potential business continuity and contingency needs as a result of the COVID-19 outbreak. Clients are also experiencing business pressures, and we are listening to their concerns and asking how we can add value to them–be it navigating the challenges or seizing any emerging opportunities–particularly in areas like supply chain resilience, workforce management, business transformation, and strategy and operations. EY is closely monitoring the potential impact of COVID-19 on the capital markets. Globally, we are engaged in dialogue with the relevant regulators, companies we audit, and EY people as necessary where travel or in person meetings are required to complete our audit work. We understand that various exchange regulators are gathering information on listed and regulated companies in their markets, and in some instances extending company reporting obligations.

SINGAPORE BUSINESS REVIEW | JUNE 2020

COVER STORY RHT Law

Azman Jaafar, managing partner

How has the COVID-19 pandemic affected your company’s operations? As a regional firm, much of our work is cross border and the travel restrictions, although necessary, impacts us most. An immediate workaround requires us to deploy collaborative technology to ensure that we remain ahead of the curve on client matters. Our meetings with clients and our regional partners are now held online via a collaborative platform. We have reorganised our teams to minimise the risk of infection within the office. Our Business Continuity Plan (BCP) will require us to adapt to a new normal in office operations. What changes have you had to make with regards to staffing numbers and working arrangements?

Knight Frank

Wendy Tang, group managing director

How has the COVID-19 pandemic affected your company’s operations? Our technology platforms are operating at optimal levels with the increased virtual capacity to support all teams via the cloud. All communications are conducted via phone or online using Skype, Microsoft Teams and Zoom. Our corporate insurance hospitalisation plan covers staff for COVID-19-related expenses (in the unfortunate event that a staff contracts COVID-19). In accordance with the Ministry of Health’s guidelines, all large-scale events have been suspended. We have mandated staff to cancel/defer travel plans. What changes have you had to make with regards to staffing numbers and working arrangements? • During this time, no visitors are allowed in all our office premises. 30

SINGAPORE BUSINESS REVIEW | JUNE 2020

Although our staffing numbers remain the same, co-workers will have to communicate and coordinate their work as one team will always be operating from home. Management and administrative functions are more challenging as not only is one team operating remotely, we have two physical offices to manage. We have invested heavily in cloud technology and applications over the last two years. Due to some delays in our move to PLQ, we started operating remotely since December last year. The delay was a blessing in disguise as it gave our lawyers and staff a head start in the basics of telecommuting. What measures have you implemented to help your customers amidst these trying times? Training and development has been given top priority as we need to ensure that all our people are familiar with the various technology solutions being implemented. In these circumstances, our engagement with clients will be very dependent on our ability to leverage effectively on technology. Not being able to physically meet a client will also mean that we have to create innovative solutions to support clients in times like these, for example, through video conferences and specially-curated and dedicated webinars and learning management platforms; to name a few. Clients will also have unique challenges in these times; new challenges which may not have surfaced before. Our ability to develop a deep and thorough understanding of these new challenges is vital. We will be spending more time engaging clients through video and telephone conferences to achieve this.

• Staff who are working remotely should avoid heading to the office, unless necessary. • All Staff are to defer/cancel travel plans over the next three months, until 30 June 2020. • Staff on Leave of Absence or Quarantine Order will be rendered support—the HR team will be in touch with affected personnel on a daily basis, with resources to offer them community and assurance, to ensure that they are able to go about daily living with peace of mind for their immediate family members. What measures have you implemented to help your customers amidst these trying times? a. Valuations & Advisory For properties where valuers will have to carry out internal inspections, the team will have an online contact tracing form on hand, to facilitate recording of the date, time, property address and name of person(s) met during inspections. b. Auction & Sales The team is in the midst of exploring virtual auctions, to create the same, interactive environment at live auctions that is familiar to regulars, without compromising on the health and safety of clients. c. International Project Marketing The team is working with our developer clients on their marketing and go-to-market strategies, focussing on online digital based channels. With physical exhibitions postponed, this will be replaced where appropriate with online webinars, where customers can dial in and be involved in an interactive educational environment with our experts. In addition, the team has been employing the use of videos and web-based interactive links to showcase properties to customers.

COVER STORY Prudential

Tan Ping Ping, head of corporate affairs

Exclusive statement: To ensure business continuity and the well-being of employees and Financial Consultants, Prudential Singapore (Prudential) has implemented several measures at the workplace as part of our COVID-19 response: 1. Split team working arrangements: Our employees are divided into two teams, with one team working in the office and the other team working from home. Members from both teams are not allowed to physically meet even after office hours. Team members in the office have been told to maintain a social distance of at least one metre. We are also conducting cleaning more frequently for all desks and common areas on a daily basis.

UOB

UOB Headquarters

Exclusive statement from Dean Tong, head of group human resources: In February, we moved swiftly to activate our business continuity plans for critical services. We also halted all business travel, large-scale internal meetings, workshops and training at the same time. For those colleagues whose job requirements and roles require them to continue to come into the office during the ‘circuit breaker’ period or in our operations teams, we have staggered work hours and split shifts. Exclusive statement from Benny Chan, head of channels: From 11 April to 4 May, 38 branches in strategic locations island-wide will remain open. The majority of these branches are located near other essential services such as grocery stores and food and beverage outlets. Branch employees affected by these adjustments will fill in for those

2. Undertake precautionary measures for internal events/ activities - Employees are also encouraged to hold meetings, training and internal events remotely via video and/or teleconferencing. 3. Daily declarations: Employees who are feeling unwell need to declare their status online. Those issued a five-day medical certificate need to make a daily declaration on their health status by noon. Employees will also need to notify HR if they have been issued with a Quarantine Order or Stay-Home Notice. Employees have been advised to stay at home on sick leave even if their symptoms are mild. 4. Townhalls via webcast: We recently held a townhall webcast, which was viewed by employees from our various office locations and at home. 5. COVID-19 Care Kits: We have Care Kits for all employees and Financial Consultants, comprising a thermometer, hand sanitiser and face masks. It also includes a health advisory on good hygiene practices, tips on proper hand washing, how to sanitise your hands and how to wear a mask. In addition, our 5,000-strong Agency force has also been strongly advised to: • Practice split team working arrangements and safe distancing— our financial consultants are encouraged to work from home where possible, so as to reduce close physical interaction; • Undertake precautionary measures for internal events/ activities—this includes holding meetings, training and internal events remotely via video and/or tele-conferencing.

who are taking rostered time off or take up other roles such as being our dedicated Safe Distancing Ambassadors. We have been prioritising the first hour of banking operations at our branches to serve elderly and vulnerable customers. Exclusive statement from Eric Tham, head of group commercial banking: We are actively engaging our customers to support their near-term liquidity needs through measures such as the Special Financial Relief Programme (SFRP). These measures are in addition to the UOB $3b programme we announced in February to help our SME customers. We will also continue to help SMEs by offering them loan moratorium and allowing them to repay loan interest only to help them meet their immediate liquidity needs. We are seeing a significant number of SMEs from a range of industries tapping the various financing schemes to manage their cash flow needs during these trying times. Exclusive statement from Jacquelyn Tan, head of personal financial services: We have launched a coordinated communications effort through our mobile banking app UOB Mighty, our website, ATMs and electronic mailers, as well as on social media, to provide customers with more information on the various options available under the SFRP. Customers can apply to defer the repayment of their property loans or to convert their outstanding unsecured loan balances to a new term loan at a reduced effective interest rate of 8%. Since the launch of the SFRP, we have received more than 3,000 applications to defer mortgage repayments. SINGAPORE BUSINESS REVIEW | JUNE 2020

COVER STORY Airalo

Bahadir Ozdemir, CEO and co-founder

How has the COVID-19 pandemic affected Airalo’s operations? Airalo has always been a distributed team with employees spanning the globe. Even as an early-stage startup we have team members from all over including Singapore, Turkey, Sweden, Canada, South Korea, Philippines, United Arab Emirates, Greece, Ukraine just to name a few. Being a fully online business, our eSIMs can be bought, sold, and installed digitally without the need to handle physical products. One of the benefits of embedded SIMs (eSIMs) is the ease and convenience of purchasing and using them. What changes have you with regards to staffing numbers and working arrangements?

Allrites

Riaz Mehta, CEO & founder

How has the COVID-19 pandemic affected your company’s operations? As with most businesses, all our staff are working from home across four countries. AllRites is a disruptive technology therefore the travel bans and cancellation of trade fairs have prompted more customers to join our platform therefore we have seen a surge in our user base (i.e. overall a positive impact on our business). What changes have you had to make with regards to staffing numbers and working arrangements ? We are maintaining our current staffing levels but will not be hiring any additional headcount that was planned in the coming months due to the economic uncertainty.

SINGAPORE BUSINESS REVIEW | JUNE 2020

Fortunately, COVID-19 hasn’t impacted the way the Airalo team works. Having members from all over the world means we have been remote-friendly since day one. We use different tools to make collaboration easier across teams and timezones, such as Slack, Notion, and Google Hangouts. There is one big change we made, and that’s with our Singapore office (where we are headquartered) wherein we have all decided to work from home. Airalo puts our team’s health as a priority and we believe that we need to do our part in curbing the spread of the virus. What measures have you implemented to help your customers amidst these trying times? When the travel bans began in mid-March, we understood that a lot of travellers, even those who aren’t Airalo users, would be stranded as they try to figure out how to manage the situation. Whether they were going to stay put and ride it out or head home to be with their families, it was important for us that travellers are able to stay connected with their loved ones. Airalo isn’t just a connectivity business, we know that connectivity stands for so much more than just a utility. Traveling in the time of COVID-19, we know that connectivity isn’t just about posting on social media but really a way to reschedule flights, book hotels, and stay in contact with families and friends so they know we are safe. Because of that, I took it as a founder to really help where we’re needed. We did this by reaching out to our users and on social media to extend our help to anyone who’s stranded abroad by offering them free eSIMs.

What measures have you implemented to help your customers amidst these trying times? We are enhancing our services to make it easier for our content buyers to discover and acquire the content that they need to fulfil the rising demand as more people are confined to their homes. We are also launching innovative business models to generate more revenue for content producers who have been very badly hit with the economic impact of the virus as most film and TV productions have shut down. We will be helping our clients generate alternative revenue sources through our platform to help cushion the blow of the economic winter that is ahead of us. What has been the immediate effect on your business from a revenue and cost standpoint? We haven’t seen a significant impact in revenue as yet however we do anticipate a positive impact in the coming months as more of our customers will choose to conduct their business online through our platform. We have reduced our costs since our staff is not traveling to meet clients or attend trade fairs. Could you share with us your future plans amidst this pandemic? Our focus will be on assisting our customers through these tough times whilst containing our costs as best as possible. We will also be building additional services to provide further value to our customers who are spread across the globe.

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HOSPITALITY INDUSTRY SURVEY

Marina Bay Sands

Hotels bank on contactless tech to entice guests during coronavirus pandemic Firms are installing self check-in kiosks, chatbots, direct booking applications, and digital in-room dining services.

he hospitality sector continues to be amongst the worst-hit industries in the coronavirus pandemic, as border restrictions persist in Singapore and throughout the world. The Singapore Tourism Board’s (STB) latest figures reveal that hotels’ average occupancy rate crashed 32.1 percentage points (ppt) MoM in February 2020, from 83.1% in January. On a YoY basis, occupancy rate has taken a 37.5 ppt nosedive from 88.5% in February 2019. Aiming to attract guests as soon as restrictions have lifted, hotel operators are likely to promote their contactless technologies, such as facial recognition verification during customer check-in and out. In this year’s issue of Singapore Business Review’s Largest Hotel Rankings Survey, Marina Bay Sands has maintained its lead with more than 2,500 rooms. Hotel Boss remains in second spot with 1,500 rooms, 34

SINGAPORE BUSINESS REVIEW | JUNE 2020

whilst Swissôtel The Stamford comes in third with 1,252 rooms. Rounding up the top five are Mandarin Orchard Singapore and Carlton Hotel Singapore with 1,077 and 940 guest rooms available respectively. The 58 largest hotels in SBR’s list house 31,336 rooms, compared to 30,600 rooms in 2019. The rankings include newly launched hotels, such as Village Hotel Sentosa (606 rooms) and Oasia Hotel Downtown (314 rooms). Overall, the STB noted that room revenues fell to 40% in February as hotels remain half-filled. The average room rate saw a 2.3% YoY drop at $230, with revenue per room (RevPaR) sliding 41% YoY down to $117 per night. Large hotels suffered the most, STB noted, occupancy rates crashing 39.5 ppt YoY to 51.4% and RevPaR plunging 42.7% YoY to $125. Medium-sized hotels were moderately

Analysts continue to believe that growth drivers in Singapore’s hotel industry will remain intact over the long run.

hit in comparison, dropping by 35.4 ppt in occupancy rate to 52.1%, and their RevPaR also fell 36.3% to $114. As for small hotels, even while they were the least impacted, they still saw occupancy rates dip by 26.6 ppt YoY to 46.2% over the same period. RevPaR for these hotels also slipped by 30% YoY to $71. Pandemic won’t topple hotels Despite the impending risk and downward pressure on travel-related sectors in 2020, Colliers International’s executive director of valuation and advisory services Govinda Singh continues to believe that growth drivers in Singapore’s hotel industry will remain intact over the long run. These growth drivers include government efforts to rejuvenate tourism offerings, such as revamping the Orchard Road shopping belt, as well as construction of new attractions and improvements to travel and

HOSPITALITY INDUSTRY SURVEY tourism infrastructure. In a report by UBS’ Asset Management for Real Estate & Private Markets (UBS-AM REPM), analysts believe that Singapore’s hotel sector will be largely stable. “Tourist arrivals in Singapore have put on a strong showing over the past 10 years, and whilst there are ebbs and flows as is expected in the hospitality sector, the trend is undeniably upward,” it stated. Part of this is attributed to China’s role as an economic superpower and the resultant growth of the middle class, highlighting the opportunities that come about when a destination country manages to capture a period of rapid growth in a source market. This is said to be the exact strategy that Singapore is seeking to replicate and adapt for the growing middle class in Southeast Asia. UBS-AM REPM further noted that between the ten-year period 20092019, tourist arrivals grew at a CAGR of 7%, whilst supply of hotel rooms have barely kept up with a CAGR of 5% over the same period. Occupancy rates are thus well-supported, with the standard average occupancy rate climbing to 87.1% in 2019, higher than the 10-year average of 83.8%, and revenue per available room (RevPAR) was similarly above the historical average. Further, a separate report by JLL is expecting the same level of recovery that hotels have shown after the SARS dilemma quietened down. “Hotel trade performance recovered only five months after the SARS outbreak. Only two months after Singapore was declared SARS-free on 30 May 2003, market-wide occupancy rapidly recovered and exceeded the 70% threshold in July 2003.” “Barring the expected short-term blip from COVID-19, this should further support the hotel market when visitor arrivals start to recover in the medium term,” UBS-AM REPM added in its report. Attracting visitors As with all companies, hotels have been implementing extra measures to be in strong positions when the pandemic is overcome. In an attempt to lure visitors, they have been establishing a number of contactless

customer service technologies. Betting on automation and artificial intelligence (AI), hotels have launched a slew of features to reduce operating costs. Self check-in kiosks, mobile check-in, chatbots, direct booking applications, contactless payments, as well as digital in-room dining services are becoming the new norm. Further, the Singapore Tourism Board and the Singapore Hotel Association recently launched the facial recognition tech E-Visitor Authentication System (EVA), which enables participating hotels to verify guests and clear the way for a faster and smoother check-in experience. Once fully implemented, stakeholders expect this technology to reduce check-in process time by up to 70%. So far, it has piloted in three hotels: Ascott Orchard, Swissotel the Stamford, and Grand Park City Hall. Aside from improving the overall customer experience, another trend that is boosting guest traffic in hotels revolves around the growing sustainability awareness amongst today’s consumers. Shengwen Chua, commercial director of Conrad Hotels, has noticed a significant increase in ethical consumerism, with an emphasis on sustainability. “Guests want to know where the hotel sources their food and materials. They want to ensure they themselves are part of the chain to minimise their carbon footprint and support the local industries,” Chua said. To ensure this, Conrad Hotels sources products from sustainable stocks. For instance, the fish they serve guests are certified by the

Govinda Singh

Shengwen Chua

Marine Stewardship Council and the Aquaculture Stewardship Council. This means that their fish only come from responsible fishing and farming. The hotel group also does not serve shark’s fin in its dishes. In addition, the company has also implemented a corporate responsibility performance measurement platform that enables it to keep track and measure the use of energy and water as well as waste and carbon output. They have also incorporated alternative materials for plastic waste reduction. In the hotel, plastic straws have been swapped for rice straws, whilst trash bags are now biodegradable. Likewise, they have replaced toilet paper with more sustainable bamboo-based toilet rolls. Similarly, a spokesperson from Crowne Plaza Changi Airport noted the rise of eco-consciousness across the hospitality industry, with Singapore hotels implementing more eco-friendly practices that are grounded in sustainability. Crowne Plaza Changi Airport is not an exception to this. Branded and recognised as a green hotel, their ecofriendly efforts include appointing an Environmental Management Committee, incorporating technology innovation in rooms to conserve water, and adopting EcoWiz, an avant-garde food digester that transforms food waste into water. The hotel has also switched plastic straws with biodegradable ones. The environmental policy is displayed on notice boards and awareness cards are distributed to the guests.

Crowne Plaza Changi Airport

SINGAPORE BUSINESS REVIEW | JUNE 2020

HOSPITALITY INDUSTRY SURVEY NUMBER OF ROOMS 2020 2019 >2,500 2,561 1,500 1,500 1,252 1,261 1,077 1,077 940 940 888 888 792 792 790 790 778 769 677 677 656 656 634 634 615 615 608 608 606 N/A

2020

HOTEL

2019

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Marina Bay Sands Hotel Hotel Boss SwissĂ´tel The Stamford Mandarin Orchard Singapore Carlton Hotel Singapore V Hotel Lavender Shangri-La Hotel, Singapore Pan Pacific Singapore Fairmont Singapore Grand Hyatt Singapore Orchard Hotel JW Marriott Hotel Singapore South Beach Furama Riverfront, Singapore The Ritz-Carlton, Millenia Singapore Village Hotel Sentosa

1 2 3 4 5 6 7 8 9 10 11 12 13 14

Peninsula Excelsior Hotel

571

576

575

Melvin Lim

Grand Mercure Singapore Roxy PARKROYAL COLLECTION Marina Bay (formerly Marina Mandarin Singapore) Grand Copthorne Waterfront

Paul Town* Charles Goh Marcus Hanna Danny Wong Darren Ware Edmund Yip Bipan Kapur Kurt Wehinger Marcus Hanna Willi Martin Jean-Philippe Jacopin Stephane Fabregoul Jovian Hun (Hotel Manager) Peter Mainguy Jim Khoo William Wong (GM) Peter Yap (Operations) Klaus Gottschalk

574

Tracy Ng

Hotel Jen Tanglin Singapore

565

Vathsala Subramaniam

21 22 23 24 25

Genting Hotel Jurong ibis Singapore on Bencoolen PARKROYAL on Kitchener Road Mercure Singapore on Stevens Mandarin Oriental Singapore

20 21 22 23

557 538 532 518 527

557 538 532 N/A 527

Holiday Inn Singapore Atrium

512

591

David Lane Richard Ong Kevin Bossino Christian Hassing Tuncay Bockin (General Manager) Shreyas Ladde (Hotel Manager)

Conrad Centennial Singapore

512

Royal Plaza on Scotts

511

Hotel Jen Orchardgateway Singapore

499

29 30 30 31 32 33 34 34 35 36 37 38 39 40 41 41

Hotel Chancellor@Orchard Four Points by Sheraton Singapore, Riverview Swissotel Merchant Court, Singapore Hotel Michael Shangri-Laâ&#x20AC;&#x2122;s Rasa Sentosa Resort & Spa, Singapore Festive Hotel Furama City Centre, Singapore Holiday Inn Express Singapore Clarke Quay Park Hotel Alexandra Regent Singapore Oasia Hotel Novena, Singapore Hilton Singapore Hotel Sheraton Towers Singapore Hotel M Hotel Singapore Concorde Hotel Singapore York Hotel Singapore

28 29 30 31 32 33 34 34 36 37 38 39 40 41 41

488 476 476 464 454 447 445 442 442 440 428 423 420 415 407 407

488 N/A 476 464 454 447 445 442 442 440 428 423 420 415 407 407

42 43 43

Days Hotels by Wyndham Singapore at Zhongshan Park InterContinental Singapore Novotel Singapore Clarke Quay

43 44 44

405 403 403

Tony Cousens Michael Martin Alan Burrows

The Fullerton Hotel Singapore

400

Cavaliere Giovanni Viterale

45 45 46 47 48 49 50 51 52

Mercure Singapore on Bugis Singapore Marriott Tang Plaza Hotel Village Hotel Bugis Orchard Rendezvous Hotel, Singapore (formerly Orchard Parade Hotel) Ramada by Wyndham Singapore at Zhongshan Park Village Hotel Changi Oasia Hotel Downtown The Westin Singapore Capri by Fraser China Square

*NEW* 47 48 49 *NEW* 50 *NEW*

395 395 393 388 382 380 314 305 304 31,336

N/A 393 393 388 N/A 380 N/A N/A N/A 30,600

Philip Wong Jason Leung Hairul Bin Anis Kris Wong Tony Cousens Abdullah Bin Ali Kenny Yeo Lance Ourednik Vernon Lee

TOTAL NUMBER OF ROOMS *SENIOR VICE PRESIDENT OF NON-GAMING OPERATIONS **TAKEN FROM WEBSITE

591

GENERAL MANAGER/HEAD OF HOTEL OPERATIONS

SINGAPORE BUSINESS REVIEW | JUNE 2020

Heinrich Grafe Patrick Fiat (General Manager) Neeta Dave (Director of Operations) Julian Wipper (General Manager) Jeraldine Tan (Director of Operations) Wilson Lim** Felix Yeo Rainer Tenius Gavin Weightman Jovian Hun Sandra Kloprogge Andrew Donadel Oscar Postma Karamjit Kaur Peter Webster Steven Long Jacqueline Ho Karl Muir Jessie Tan

Everise goes the extra mile for our partners, literally. When Everise commits to a partner, we go the extra mile. 415 to be exact. Recently, when one of our clients became stranded in Guatemala due to travel restrictions, we drove them over 400 miles to the nearest airport in Mexico to get them safely home to their family. Weâ&#x20AC;&#x2122;ve seen the news and felt the effects of this virus. Itâ&#x20AC;&#x2122;s surprising how little it takes to severely disrupt even the strongest companies and economies. At Everise, we offer crisis-resilient partnerships that are as proven as our outsourced home-based customer experience solution, which is highly resilient and built upon our large global footprint. Everise is ready to engineer a home-based CX continuity solution for your business to get you through this crisis, and the next one as well.

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RANKINGS: SERVICED RESIDENCES

Oakwood Premiere AMTD Singapore

Will co-living survive in Singapore’s fast-changing rental market? Landlords still favours the flexibility to cash out on their investment properties at short notice, so most developers still prefer the traditional build-to-sell model as rents continue to escalate.

o-living firms and traditional serviced residences are grabbing the attention of different target markets. Co-living spaces are targeting travellers who are looking for cheaper rooms for long-term stays, whilst the latter are branching out and obtaining hotel licenses to be able to attract tourists only staying for short-term. Flexible living is still a trend, but is the coliving model viable for the long-run? For this year’s Serviced Residences Survey, Singapore Business Review added co-living assets as the model continues to boom. In fact, newcomer lyf Funan, a co-living establishment by The Ascott, grabbed top spot with the most number of units at 329. Coming in at second place is Ascott’s Citadines Rochor Singapore with 320 units, which just launched last December 2019. Next in line is Great World Serviced Apartments, 38

SINGAPORE BUSINESS REVIEW | JUNE 2020

which used to be SBR’s top serviced residences with 304 rooms. Oakwood Premier AMTD Singapore (formerly ‘Oakwood Premiere OUE Singapore’) followed with 268 units, whilst rounding up the top five is Frasers Suites with 255 units. Overall, the 36 largest serviced residences in Singapore have 5,939 units, 15% up from the 5,162 units posted in 2019’s rankings. For a time, co-living has been a buzzword across the sector. With cheaper rents that are already inclusive of all amenities, the sector targets professionals who can’t afford to buy a house or rent an apartment given the rising rents in the city. For space-starved Singapore, the concept of spaces with shared facilities is indeed ideal. However, the government think tank Center for Liveable Cities (CLC) stated in its 2019 report that the Lion City’s

Co-living firms, unlike their counterparts from the homesharing and ride-sharing industries, face no direct institutional or legal barriers to growth.

co-living sector, which emerged in the mid-2010s, is still a fledgling. JLL’s 2018 data on co-living firms found that they only occupy 1% of Singapore’s total available space, with the most well-known ones being Hmlet, China-based Mamahome, Ascott and COVE. “This is surprising since co-living firms, unlike their counterparts from the home-sharing and ride-sharing industries, face no direct institutional or legal barriers to growth,” CLC stated. CLC further noted that operators are even free to sublet individual bedrooms in an apartment as long as they obtain the agreement of their landlords and comply with the Urban Redevelopment Authority’s (URA) requirements. The URA requires no shorter than three consecutive months of stay for residents and no more than six for the total number of occupants. Unlike traditional serviced

RANKINGS: SERVICED RESIDENCES residences, co-living companies do not need to obtain estate agent, hotel or other licenses. “A key impediment to the growth of co-living businesses is the difficulty in acquiring and maintaining a longterm supply of rental housing units,” CLC said. This comes on the back of its typical tenancy agreements that last less than one year. What’s more, with Singapore’s rapidly changing rents scene, landlords still prefer to retain the flexibility to cash out on their investment properties at short notice, whenever housing prices rise. As a result, co-living firms are finding it difficult to make long-term plans. “Co-living firms not only compete with other potential tenants for residential space in an established leasing market, but also have to meet their landlords’ demand for market rate rentals, whilst keeping co-living rents affordable and attractive to their target customer base,” CLC noted. To solve this, Hmlet has been partnering with real estate firms in order to have access and freely customise the design and manage tenants on behalf of the landlords. “The Hmlet model is most beneficial in a time when developers and investors are shifting their focus away from traditional build-to-sell, and towards build-to-rent. For example, in 2019 Hmlet partnered with LHN Facilities Management, an indirect subsidiary of real estate management services group LHN Limited, for the development and launch of Hmlet Cantonment,” said Yoan Kamalski, founder & CEO of Hmlet. However, CLC said there are only a very few developers with the financial capacity to retain ownership of a sizeable number of residential units, limited by the cost brought by Singapore’s laws and regulations. Most housing developers usually start marketing and selling units in their projects as soon as they obtain planning and other regulatory approval, as progress payments received from purchasers are an important source of funds for construction. “As for the small number of completed projects still under the

sole ownership of developers, many are already being leased on the rental market (for example, through corporate leasing arrangements) or have been converted into serviced apartments,” CLC added. The traditional model still thrives Contrary to their co-living counterparts, serviced residences are doubling down on growth, taking advantage of the government’s decentralisation efforts to put more commercial sites outside CBD. “Distance is never a problem due to the highly efficient and well-managed transportation infrastructure. As such, accommodation outside the CBD is in high demand now,” said Oakwood’s interim CEO Dean Schreiber. Richard Tan, VP for serviced suites at Pan Pacific Group, cited some serviced residences being developed outside CBD, which are projects in Balestier, Rochor, and Farrer Park, whose growth has seen a saturation in supply. With the entry of co-living firms, Tan added that serviced residences have started to struggle with the long-term segment. “We are seeing more ‘hybrid’ serviced apartments which operate like hotels in terms of allowing short-term stays (less than six nights). Serviced apartments will need to better segment their markets to drive revenue and profitability and employ a different strategy given shorter stays and higher guest turnaround,” he added.

Dean Schreiber

Richard Tan

Yoan Kamalski

In response to these developments, Oakwood shared that they aim to incorporate smart home technology into their residences. They partnered with McLaren Technologies to develop the ICE Mobile app, which allows guests to check in the residences and incorporates manuals to guide guests on the use of appliances in the apartments. They also teamed up with Samsung and LUMAS Galarie Singapore to ‘digitalise’ art for longstaying guests. Oakwood plans to launch its mobile club lounge service by end2020, which is said to be the first of its kind in Asia. Oakwood partnered with Brass Lion Distillery to offer the ‘Gin Staycation’, which allows evening cocktails and canapes to be delivered to each guest’s apartment at Oakwood Premier AMTD Singapore. This includes a full bottle of Brass Lion Gin and a complimentary guided tour of Brass Lion’s distillery, with two-way transportation. Comparing serviced residences with hotels, a report from OCBC Investment Research (OIR) noted that serviced residences were likely to fare better than large hotels in the light of the COVID-19 pandemic. Whilst hotels’ occupancy rate dropped to 30% in mid-March from 40% in February, serviced residences’ occupancy rate was at 80% from 70% over the same period. OIR attributed this to serviced residences’ long-term nature of stays and focus on corporate travel.

Hmlet Cantonment

SINGAPORE BUSINESS REVIEW | JUNE 2020

RANKINGS: SERVICED RESIDENCES Total number of units

2020

SERVICED RESIDENCE

2019 ranking

lyf Funan Singapore

*NEW*

Citadines Rochor Singapore

*NEW*

320

N/A

The Ascott Limited

1 night

Great World Serviced Apartments

304

GWC Serviced Apartments Pte Ltd

6 nights

Oakwood

1 night

2019

329

N/A

Hospitality Management

Minimum Stay

The Ascott Limited

1 night

268

"Oakwood Premier AMTD Singapore (formerly Oakwood Premiere OUE Singapore)" Frasers Suites Singapore

255

Frasers Hospitality

6 nights

Orchard Parksuites

223

6 nights

Treetops Executive Residences

220

6 nights 6 nights

Ascott Orchard Singapore

220

Far East Hospitality Edmund Tie & Company Hospitality Management Services Pte Ltd The Ascott Limited

Orchard Scotts Residences

204

Far East Hospitality

1 night

Orchard Grand Court Singapore

186*

186

Orchard Grand Court

7 nights*

Wilby Bukit Timah

180

181

Wilby Estate International

3 months

Pan Pacific Serviced Suites Beach Road

180

Pan Pacific Hotels Group

2 nights

Citadines Balestier Singapore

*NEW*

166

N/A

The Ascott Limited

7 nights

Fraser Place Robertson Walk, Singapore

164

Frasers Hospitality

6 nights

Citadines Mount Sophia Singapore

154

The Ascott Limited

7 nights

Hmlet Cantonment

*NEW*

150

N/A

6 nights

Park Avenue Clemenceau

150

Hmlet Park Avenue Hotels and Suites (United Engineers)

Ascott Raffles Place Singapore

146

Oasia Residence, Singapore

140

Far East Hospitality

6 nights

Far East Plaza Residences

139

Far East Hospitality

6 nights

Wilby Central

138

Wilby Estate International

7 nights

Village Residence Clarke Quay

127

Far East Hospitality

6 nights

Central Square

127*

127

BridgeStreet Global Hospitality

7 nights*

Shangri-La Apartments

127

Shangri-La Hotel Limited

6 nights

Pan Pacific Serviced Suites Orchard, Singapore

126

International Service Apartments

115*

115

1 month*

Fraser Residence Orchard, Singapore

115

Pan Pacific Hotels Group E. Millennium Investments and Fontainebleau (ISA) Frasers Hospitality

Somerset Bencoolen Singapore

110

107

The Ascott Limited

7 days

Fortville

109

Forthavens Pte Ltd

7 nights

Winsland Serviced Suites by Lanson Place

109

Lanson Place Hospitality Management

6 nights 6 nights

The Ascott Limited

6 nights 1 night

6 nights

Oakwood Studios Singapore

Oakwood

PARKROYAL Serviced Suites, Singapore

Pan Pacific Hotels Group

6 nights

Regency House

Far East Hospitality

6 nights

8 on Claymore Serviced Residences

Royal Plaza

7 nights

The Club Residences by Capella Singapore

Capella Hotel Singapore

7 nights

Village Residence Hougang

Far East Hospitality

6 nights

Hmlet Portofino

*NEW*

N/A

Hmlet

6 months

Fraser Residence Singapore

*NEW*

N/A

Frasers Hospitality

30 nights

Village Residence Robertson Quay

Far East Hospitality

6 nights

Shangri-La Residences

Shangri-La Hotel Limited

3 months

Village Residence West Coast

Far East Hospitality

6 nights

Citadines Fusionopolis Singapore

The Ascott Limited

7 nights

Alocassia Serviced Apartments

Park Avenue Robertson

5,939

5,162

TOTAL NUMBER OF ROOMS *RETAINED FIGURES FROM 2019

2020

SINGAPORE BUSINESS REVIEW | JUNE 2020

Edmund Tie & Company Hospitality Management Services Pte Ltd Park Avenue Hotels and Suites (United Engineers)

7 nights 6 nights

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SINGAPORE BUSINESS REVIEW | JUNE 2020

RANKINGS: MBA PROGRAMMES AND PROVIDERS

S P Jain main branch

Online MBA programmes emerge as pandemic prompts temporary closures Some of the top MBA providers are planning to launch online programmes in the future.

n this year’s Singapore Business Review rankings of the largest MBA programmes, INSEAD MBA emerged on top, with a whopping 1,008 students enrolled in the programme. It is followed by S P Jain Master of Global Business with 239 students, and Manchester Global Master of Business Administration by Alliance Manchester Business School with 219. Amongst MBA providers, INSEAD with just its sole MBA programme still has the most number of MBA students, followed by S P Jain School of Global Management and the National University of Singapore (NUS) Business School with 509 and 373 students, respectively. As a whole, the overall number of students in the top 33 MBA programmes and top 13 MBA providers fell 12.86% to 3,671 in 2020, compared to 4,213 in 2019. In contrast, online MBA programmes have been on the rise.

SINGAPORE BUSINESS REVIEW | JUNE 2020

Aventis School of Management academic director Stanley Soh told Singapore Business Review that they received a spike in requests from prospective students who are considering taking an online MBA, especially in light of the COVID-19 pandemic and the increasing digitisation of business school offerings. In response to such demand, MBA providers have increasingly been bringing such programmes in Singapore. For instance, a spokesperson from the Management Development Institute of Singapore (MDIS) shared that they are offering five online or e-learning MBA programmes through Edinburgh Napier University with different specialisations, namely Leadership and Innovation, Marketing & Sales Management, Events Management, Hospitality and Tourism Management, and Health

As executives become strapped for time, balancing their careers and personal commitments, online MBA programmes will see a surge in popularity.

Management. Aventis is also currently in talks about launching an online MBA programme, after digitising some of their Graduate Diploma programme. Further, Kaplan Higher Education is considering the possibility of launching online MBA programmes. Currently, they are offering an online Master’s programme for Executive Master in Leadership and Strategy and Innovation, in partnership with Murdoch University. “We believe an online MBA programme will help our students as it offers greater flexibility in terms of managing their time and not being confined to a classroom setting. This will particularly benefit professionals who need to travel frequently for work,” Kaplan Singapore COO and provost, associate professor Rhys Johnson said. Amity Education Group is also moving towards this, Amity Global

RANKINGS: MBA PROGRAMMES AND PROVIDERS Institute’s regional director for South East Asia Prateek Nayak shared. “We are fully supportive of the idea of Online MBAs - particularly given its usefulness in allowing lessons to go on as normal despite the rise of global crises such as COVID-19,” he said. Complement to traditional MBA For Kaplan, an online MBA works as a complement or alternative to the more traditional MBA programmes, as it provides flexibility to those who need it. Johnson notes that students still seem to prefer the traditional faceto-face delivery and teaching model, reflected by their growing MBA students. “One reason for this is that they value the networking opportunities made possible through face-to-face interactions, which cannot be easily replicated in an online environment,” he said. MDIS believes that online MBA programmes are tipped to grow. “As executives become strapped for time, balancing their careers and personal commitments, online MBA programmes will see a surge in popularity. MDIS is poised to ride this growth in demand with five online MBA programmes,” MDIS Business School head Ignatius Teo said. Johnson sees future opportunities in adopting the online delivery structure, especially when situations such as the COVID-19 outbreak are expediting its use. However, he felt that there is still more work to be done to be able to deliver the curriculum online. “Programmes will have to be structured differently or undergo redesign to ensure that quality and learning outcomes are not compromised by a change in delivery mode,” he said. Either way, Soh believes that the traditionally-taught MBA programmes are not going anywhere. “The physically taught face-to-face MBAs are here to stay as graduate students still value networking, which form a critical part of the MBA proposition,” they said. Blended learning Further, Nayak expressed that the market’s appetite is geared towards a blended learning approach, which

involves a combination of face-toface sessions with an online blend. “We’ve responded with flipped classrooms where students can absorb much of the simpler material remotely, yet come together for more complex discussions over less easily understood concepts and issues. Plus, it’s easier to progress as a cohort when you have a strong support group of classmates urging you on in the real world,” he said. Beyond online programmes, Kaplan is also focussing on a blended learning approach. “Our academic faculty utilises a myriad of digital platforms and online resources to facilitate their lessons, allowing students to better absorb knowledge and access learning resources on-thego,” Johnson added. Aventis in particular has digitised all of their MBA contents, and provided live Facebook recording virtual networking sessions through Zoom of each class as a supplement to on-ground teaching. The incorporation of digital materials and on-demand teaching videos could help schools that lean towards on-ground teaching amidst the rising popularity of online MBA, Soh said. MDIS is also adopting the use of cloud-based video storage platform Echo 360, which is designed for students to learn anywhere and anywhere they wish. This aims to increase the effectiveness and efficiency of learning for their students. “Cloud computing has enhanced

the learning for students through anytime-anywhere accessibility of teaching materials. Information stored in remote cloud servers allow students to access courseware from any device as well,” Teo said. Ignatius Teo

Rhys Johnson

Stanley Soh

Prateek Nayak

Attracting more students The landscape is expected to become more challenging with the rising popularity of specialised business master programmes, the wider adoption of online MBAs and softer demand for graduate programmes partly due to weakening economy, Soh shared. However, Teo remains optimistic about MBA programmes for 2020. “This year, MBA programmes in Singapore will continue to attract students, especially as corporations around the world compete to attract executives equipped with solid management training,” he said. According to QS Global MBA Rankings, Singapore captured four out of the top 10 universities in Asia for MBA programmes, with INSEAD at first, ESSEC Business School at third, NUS at fourth and Nanyang Technological University (NTU) seventh. Globally, these four universities were ranked third, 30th, 32nd and 43rd, respectively. An article by admissions consultancy firm MBA Crystal Ball says Singapore is considered to be a hub for an MBA degree due to its multicultural society that is open to foreign nationals and offers a high quality of life for MBA degree holders.

Kaplan Singapore

SINGAPORE BUSINESS REVIEW | JUNE 2020

MBA PROGRAMMES SURVEY Total Number of Students MBA PROGRAMME

PROVIDER/LOCAL PARTNER

HEAD OF SINGAPORE OFFICE/DEAN 2020

2019

INSEAD MBA

INSEAD

1,008***

1,018***

Ilian Mihov

S P Jain Master of Global Business

S P Jain School of Global Management, Singapore

239

173

John Fong

Manchester Global Master of Business Administration

Alliance Manchester Business School

219

176

Lim Bee Ing

James Cook University MBA

James Cook University Singapore

246

210

Prof. Chris Rudd

Coventry University MBA in Global Business / MBA in Global Financial Services

PSB Academy

180

Sam Choon Yin

S P Jain Executive MBA

S P Jain School of Global Management, Singapore

172

167

John Fong

The NUS MBA (including MBA-MPP & MBA-PhD)

National University of Singapore

161

302

Andrew K. Rose

Singapore Management University MBA

Singapore Management University

146

121

Gerry George

Murdoch University MBA

Kaplan Higher Education

140

131

Professor Peter Warring

SIM Global Education

120

Ho Soon Eng

John Fong

100

Christina Soh

University of Birmingham MBA S P Jain Global Master of Business Administration Nanyang MBA

S P Jain School of Global Management, Singapore Nanyang Business School, Nanyang Technological University

The NUS Executive MBA (in Chinese)

National University of Singapore

140

Andrew K. Rose

Nottingham University Business School MBA

School of Postgraduate Studies, PSB Academy

Sam Choon Yin

University of Roehampton, London

Aventis School of Management

*NEW*

Stanley Soh

University of Northampton - MBA

Amity Global Institute

187

Leon Choong

University of Sunderland (UK) MBA

Management Development Institute of Singapore

213

Ignatius Teo

University of London MBA

Amity Global Institute

*NEW*

Leon Choong

University of Newcastle, Australia MBA

School of Postgraduate Studies, PSB Academy

Sam Choon Yin

The NUS Executive MBA (in English)

National University of Singapore

Andrew K. Rose

Nanyang Business School & Shanghai Jiao Tong University Nanyang Business School, Nanyang Technological University Management Development Institute of Singapore

Christina Soh

192

Ignatius Teo

Northumbria University MBA

Kaplan Higher Education

N/A

Dr Jacqueline Holland

Nanyang Executive MBA

Nanyang Business School, Nanyang Technological University

Christina Soh

UCLA â&#x20AC;&#x201C; NUS Executive MBA

National University of Singapore

Andrew K. Rose

Nanyang Fellows MBA

Nanyang Business School, Nanyang Technological University

Christina Soh

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

National University of Singapore

Andrew K. Rose

Bangor University (UK) MBA in Banking & Finance

Management Development Institute of Singapore

136

Ignatius Teo

University of Stirling

Amity Global Institute

*NEW*

Leon Choong

The NUS MBA Double Degree (Peking University, HEC, Yale)

National University of Singapore

Andrew K. Rose

TOTAL

3,019

3,122

Nanyang Executive MBA (Chinese) Nanyang Professional MBA Bangor University (UK) MBA in International Marketing

GENERAL FIGURES SHOW TOTAL NUMBER OF STUDENTS AS OF 31 JANUARY 2019

SINGAPORE BUSINESS REVIEW | JUNE 2020

MBA PROGRAMMES SURVEY TOTAL NUMBER OF STUDENTS

Minimum Cost (SG$)

Duration

Full Time

Part Time

Full Time

Part Time

Full Time

Part Time

Number of Intakes Per Year

1,008

N/A

$130,200

N/A

10 months

N/A

239

N/A

$77,500

N/A

12 months

N/A

219

N/A

$68,200*

N/A

18-24 months

$37,200

N/A

12 months

N/A

1 4

100

$27,200

16 months

20 months

N/A

172

N/A

$37,000

N/A

18 months

$62,000*

17 months

24 months

$67,400

$70,600

10-15 months

18 months

110

24,500*

$21,500*

12 months

N/A

120

N/A

$34,500

N/A

24 months

N/A

$77,500

N/A

12 months

N/A

$62,000**

N/A

12 months

N/A

$120,000

N/A

24 months

N/A

$33,400

N/A

24 months

3 (FT)

$19,300

$16,100

12 months

$23,500

13 months

18 months

$19,300

$16,100

13 months

N/A

$29,100

N/A

16 months

N/A

$100,000

N/A

15 months

3 (FT)

N/A

$128,600

N/A

24 months

N/A

$65,000**

N/A

18 months

1-2

N/A

$23,500

N/A

12 months

18 months

N/A

$21,200*

N/A

15 months

1-2

N/A

$100,000**

N/A

14 months

N/A

$163,200*

N/A

15 months

N/A

$75,000**

N/A

12 months

N/A

$64,000

N/A

16 months

N/A

$23,500

N/A

12 months

18 months

N/A

$16,100

N/A

14 months

N/A

$44,000*

N/A

20-24 months

N/A

*BEFORE GST **NEW ADDITIONS ***THIS INCLUDES NUMBERS IN FRANCE

SINGAPORE BUSINESS REVIEW | JUNE 2020

MBA PROVIDERS SURVEY MBA PROVIDER

INSEAD

S P Jain School of Global Management, Singapore

MBA PROGRAMME

HEAD OF SINGAPORE OFFICE/ DEAN

INSEAD MBA

Ilian Mihov

TOTAL NUMBER OF STUDENTS Full Time 1,008

Part Time N/A TOTAL

S P Jain Global Master of Business Administration

John Fong

S P Jain Executive MBA S P Jain Master of Global Business

N/A

John Fong

N/A

172

John Fong

239

N/A TOTAL

National University of Singapore Business School

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

Andrew K. Rose

N/A

The NUS Executive MBA (in Chinese)

Andrew K. Rose

N/A

The NUS Executive MBA (in English)

Andrew K. Rose

N/A

The NUS MBA (including MBA-MPP & MBA-PhD)

Andrew K. Rose

The NUS MBA Double Degree (Peking University, HEC, Yale)

Andrew K. Rose

N/A

UCLA â&#x20AC;&#x201C; NUS Executive MBA

Andrew K. Rose

N/A

33 TOTAL

PSB Academy

Coventry University MBA in Global Business / MBA in Global Financial Services

Sam Choon Yin

Nottingham University Business School MBA

Sam Choon Yin

N/A

University of Newcastle, Australia MBA

Sam Choon Yin

N/A

100

TOTAL

Nanyang Business School, Nanyang Technological University

Nanyang Business School & Shanghai Jiao Tong University James Cook University Singapore University of Manchester, Alliance Manchester Business School

Kaplan Higher Education

Nanyang Executive MBA

Christina Soh

N/A

Nanyang Fellows MBA

Christina Soh

N/A

Nanyang MBA

Christina Soh

N/A

Nanyang Professional MBA

Christina Soh

N/A

Nanyang Executive MBA (Chinese)*

Christina Soh

N/A

50 TOTAL

James Cook University MBA

Chris Rudd

246 TOTAL

Manchester Global Master of Business Administration

Lim Bee Ing

N/A

Northumbria University MBA

Dr. Jacqueline Holland

N/A

Murdoch University MBA

Professor Peter Warring

110

219 TOTAL

TOTAL

Amity Global Institute

University of Northampton, MBA

Leon Choong

University of London MBA

Leon Choong

University of Stirling

Leon Choong

N/A

Singapore Management University MBA

Gerry George

TOTAL Singapore Management University*

Management Development Institute of Singapore

60 TOTAL

Bangor University (UK) MBA in Banking & Finance Bangor University (UK) MBA in International Marketing

Ignatius Teo

N/A

Ignatius Teo

N/A

University of Sunderland (UK) MBA

Ignatius Teo

University of Birmingham MBA

Ho Soon Eng

N/A

TOTAL SIM Global Education

Aventis School of Management *Before GST **Before prevailing taxes

SINGAPORE BUSINESS REVIEW | JUNE 2020

120 TOTAL

University of Roehampton, London

Stanley Soh

N/A

79 TOTAL

MBA PROVIDERS SURVEY Minimum Cost (SG$)

TOTAL

Duration

Number of Intakes Per Year

Full Time

Part Time

Full Time

Part Time

$130,200

N/A

10 months

N/A

$77,500

N/A

12 months

N/A

172

N/A

$37,000

N/A

18 months

239

$77,500

N/A

12 months

N/A

1,008 1,008 98

509 28

$64,000* (in NUS)

N/A

16 months

N/A

$130,000*

N/A

20 months

N/A

$100,000*

N/A

15 months

161

$62,000*

17 months

24 months

$44,000*

N/A

20-24 months

N/A

1-2

N/A

$163,200*

N/A

15 months

$27,200

$26,600

16 months

20 months

N/A

$33,400

N/A

24 months

$29,100

N/A

16 months

N/A

$100,000**

N/A

14 months

$75,000**

N/A

12 months

N/A

$62,000**

N/A

12 months

N/A

$65,000**

N/A

18 months

N/A

$128,600

N/A

24 months

$37,200

N/A

12 months

N/A

$68,200

N/A

18-24 months

N/A

$21,200*

N/A

15 months

2 per year

140

24,500

$21,500*

12 months

3 per year

$19,300

$16,100

12 months

$19,300

$16,100

13 months

N/A

$16,100

N/A

14 months

$67,400

$70,600

10-15 months

18 months

$23,500

N/A

12 months

N/A

3 (FT)

$23,500

N/A

12 months

N/A

3 (FT)

$23,500

13 months

18 months

N/A

$34,500

N/A

$19,800*

10 months

373 180

320

255 246 246 219 219

180

154 146 146

125 120 120 79 79

SINGAPORE BUSINESS REVIEW | JUNE 2020

HR BRIEFING

For overworked Singaporeans: Are feedback programmes working? Such schemes claim to raise employee’s productivity, but not all comments are heard.

orking in a communication company, Matthew felt that his work culture felt rather rigid and stifling, as firms tended to go through the motions of playing by the rules and following processes. “Work here feels very transactional, and there’s nothing wrong with that except when employees start to feel as though their supervisors only notice their mistakes but pay no attention to their successes,” he told Singapore Business Review. Poor delegation of tasks can leave some employees overworked and unsatisfied, especially if their hard efforts are unrecognised, explained Robert Walters’ HR director for Southeast Asia, Tricia Tan. “Employees who feel valued will continue to work hard to impress leadership. Those who are not recognised as a contributor will eventually stop trying,” she said. This reflects a study by experience management firm Qualtrics revealed that Singapore’s employee engagement in 2019 has dropped off and is now below the global average. In Asia, it lagged behind India, Thailand and Hong Kong, although it outpaced Japan and South Korea. A 2018 survey by Mercer confirms this as well—only 72% of Singaporeans felt satisfied with the companies they work for, compared to 82% in Indonesia, the Philippines, and Vietnam. Further, Matthew felt that hyper-productivity has been so ingrained amongst Singapore workers that it was common amongst his peers to feel guilty for even taking a break.

Employees who feel valued will continue to work hard to impress leadership. Those who are not recognised as a contributor will eventually stop trying. “The scary thing is that this has been so deeply ingrained to the extent that I sometimes find myself judging a colleague who has left the office at the dot even if they have work to be completed. It is our prerogative to work within our stipulated working hours but we’re so great at worshipping productivity that we begin to police each other,” he added. David Lim, an employee working in a law firm, also felt that there was a need for a better work-life balance, especially for the lawyers. “That may be because the nature of their work inherently takes a significant chunk of time out of their personal lives. They are literally at the beck and call of their clients most of the time, most especially when they need to provide advice urgently as the situation requires. So they have to reply at 2am or work through the morning,” he said. A 2019 report by IoT company Kisi revealed Singapore to be the second most overworked city in the world, trailing just behind Japan. The average Singaporean worker arrives at work by 9:34 am, takes 14 vacations a year, commutes oneway for 44.5 minutes, and has their number of actual work 48

SINGAPORE BUSINESS REVIEW | JUNE 2020

Glassdoor’s survey ranked Google as the best place to work in Singapore.

hours 23% higher than the mandated 48 hours per week.

Lewis Garrad

Tricia Tan

Feedback programmes To improve the workplace environment, some companies hold feedback programmes. Qualtrics’ survey revealed that firms conducting these programmes recorded a higher level of employee engagement, compared to those who do not. Mercer International Region partner for employee experience practice, Lewis Garrad, noted various ways of holding feedback programmes, including a cyclical employee survey, gathering of feedback during an onboarding process or a leadership change, digital focus group and natural language processing, employee preference tools, and anonymous polling tools during townhall meetings. Garrad noted that most multinational and large local firms have well-developed employee feedback programmes. He found that companies that gather systematic feedback and use it to improve their business do gain real results. David’s company did not offer any feedback programme that he knew of, instead, feedback is taken directly to their manager. “From what I’ve seen direct feedback are very much taken into consideration and are acted upon, so long as the action doesn’t come directly against firm directive or tradition,” he noted. In contrast, Matthew’s company holds one-on-one feedback sessions between employees and their line managers every quarter. However, he felt that there was only so much that an individual could do, citing an instance of a coworker being advised against commenting about some of the company’s practices by their line manager. He stressed a need for a system where employees can empower each other. “For me, the mark of a company that truly cares about employee welfare is the existence of an employee welfare taskforce, which has employees coming together in conversation around what is wrong and what more can be done to improve company culture,” he said. Likewise, Garrad recommended companies to put more focus on action and improvement, rather than just measurement for these feedback programmes.

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LEGAL BRIEFING

Singapore to elevate hub status with new digital banking regulation A more flexible Payment Services Act makes it easier for fintechs to apply full operations in Singapore.

he Monetary Authority of Singapore (MAS) has finally commenced the new Payment Services Act (PSA), repealing the Money-changing and Remittance Businesses Act and the Payment Systems (Oversight) Act. The new act, launched in January 2020, covers new types of payment services, such as digital payment token services, and adopts an activity-based licensing framework. It is expected to be enhanced under the new PSA in an effort to strengthen consumer protection and promote confidence in the use of e-payments. What makes the regulatory framework of the new PSA more flexible than the two previous acts it repealed? The PSA unifies the prior regulatory regime and implements a flexible, modular and risk-focused regulatory structure. This allows the rules to be tailored both to the specific scope of services being offered by a payment services provider and to the magnitude and systemic importance of such providers, according to Chua Tju Liang, director of corporate and finance at Drew & Napier. Chua added that under the PSA licensing regime, at any point in time, a payment service provider needs only one license, but of a class that corresponds to the risk posed by the scale of payment services provided. Risk mitigating measures are then tailored to the specific payment services that a licensee provides to better safeguard customer and merchant monies, ensure adequate controls against money laundering and terrorism financing risks, reduce fragmentation and strengthen technology and cyber standards in the payments space. Can you elaborate the benefits that the Act brings for global cryptocurrency firms? Baker McKenzie’s financial services practice principal, Stephanie Magnus said that in an area where new services and technologies are launched, regulatory certainty is crucial. It gives cryptocurrency firms and players in the market comfort over how crypto-related services are regulated. The oversight of cryptocurrency firms also requires AML/KYC rules to be complied with and brings a previously unregulated market into ethical and KYC standards, which is much needed in light of the high risk transactions that may take place in the crypto space. Which types of payments services will be regulated? “The PSA will license and regulate seven distinct categories of payment services. The new categories of payment services, i.e., account issuance, e-money issuance, domestic money transfer services, cross-border money 50

SINGAPORE BUSINESS REVIEW | JUNE 2020

The PSA will license and regulate the categories of payments services.

Jacqueline Loke

Tju Liang Chua

Stephanie Magnus

Elaine Chan

transfer services both in-bound and out-bound, merchant acquisition and digital payment token services are now licensable activities under the PSA,” said Elaine Chan, joint head of the financial services regulatory practice at WongPartnership. The range of licensable payment services has been expanded due to the increased complexity of the payments landscape with the proliferation of new players and innovative payment solutions available in the market. The new framework is intended to address emerging risks arising from the rapidly evolving payments ecosystem in areas such as money laundering/terrorist financing, shadow banking, cyber-security, consumer protection and interoperability. Ultimately, the new framework is intended to consolidate the regulation of all relevant segments of the payments ecosystem in Singapore to improve interoperability, promote public confidence and encourage the use of e-payments. How can PSA assist in promoting digital payment tokens? “Whilst digital payment token service providers are primarily regulated to ensure that there are appropriate AML measures in place, the prerequisite for licensing is that the applicant must meet fit and proper requirements,” said Dentons Rodyk’s senior partner Jacqueline Loke. She explains that entities that meet such fit and proper requirements will have the opportunity to seek a license under PSA and establish operations in Singapore. For digital payment token service providers too much regulation may adversely stifle innovation. The risk-based supervisory approach which PSA represents should be an attractive proposition for service providers who are seriously considering basing their operations in Singapore, as it provides regulatory safeguards for higher risk aspects of the business, and unregulated space to explore improved and more efficient approaches in payment services.

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SINGAPORE BUSINESS REVIEW | JUNE 2020

ANALYSIS: HUMAN RESOURCES

Three-fourths of Singaporeans believe that their jobs will be highly impacted by new or changing technology in the next five years.

Anxious times ahead for Singapore’s hard-hit workforce as automation kicks in

New research from PayPal shows Singapore workers are increasingly impacted by fundamental changes in the economy, whilst those that aren’t concerned probably should be.

he future of work in Singapore will see fundamental changes wrought by rapid adoption of technological changes such as automation, machine learning and artificial intelligence; the rise of the gig economy and independent work; socio-demographic changes such as the ageing population; as well as the increasing attractiveness of entrepreneurship as a career path. These changes require corresponding shifts in other sectors. Singapore’s greatest resource is its workers and the Singapore government has invested heavily in policies to help prepare them for the changing skill requirements of a new world of work. At the same time, sectors like education and health are also responding to the shifts in the labour market. This research paper is the first to consider the implications of the future of work on the financial 52

SINGAPORE BUSINESS REVIEW | JUNE 2020

sector and on the financial health of Singaporeans. This report is based on a survey that was administered to 1,000 working age Singaporeans in 2019, an extensive literature review, more than 100 expert interviews with financial services and future of work specialists, and proprietary data and insights from PayPal. The major findings of the Financial Health for the Future of Work in Singapore report include: • Singaporeans will face greater job churn in response to automation than any other major economy in Southeast Asia • Singaporean workers are increasingly taking up income earning opportunities offered by the online platform economy • Young people in Singapore are voicing increasing concerns regarding their long-term financial health and

The Singapore government has invested heavily in policies to prepare workers for the changing skill requirements of a new world of work.

ability to retire in comfort. • Women in Singapore may need more support to be able to invest time and effort in skills upgrading • Entrepreneurship is fundamental to the Singapore economy, but more can be done to support the enterprises that are financially distressed. Automation concerns and preparation Automation, machine learning, and artificial intelligence are reshaping nearly every aspect of our lives and societies, especially the workforce. For Singapore, whose only natural resource, as Dr. Annie Koh of the Singapore Management University says, is “human resource,” taking advantage of and building resiliency in the face of these changes is an existential concern. A 2018 study found that 20.6% of Singapore’s full-time equivalent

ANALYSIS: HUMAN RESOURCES Share of respondents who are at least somewhat confident that they can –

Singaporean workers have to work harder than their counterparts in other Southeast Asian economies to upskill themselves.

Source: PayPal Singapore - Financial Health for the Future of Work

workforce will have their jobs displaced by artificial intelligence by 2028. This is the highest share amongst the six largest economies in Southeast Asia. However, the same study acknowledged that the higher displacement in Singapore is due to the enabling environment for accelerated digital transformation that facilitates the easy and rapid adoption of cutting-edge technology by businesses. Whilst this improves productivity and efficiency, Singaporean workers have to work harder than their counterparts in other Southeast Asian economies to upskill themselves in order to keep pace with these changes. The Singapore government, in recognition of these challenges has made significant forward-looking investments through the creation of dedicated measures to bridge the skills gap and by spreading awareness amongst Singaporean workers about the need for constant upskilling and training. Due to the government’s holistic approach and policy foresight, Singapore is better prepared than any other global city for technological disruptions due to AI and automation. This sense of preparedness is reflected in Singaporeans’ overwhelmingly positive attitudes towards automation. Of those surveyed, 89% of respondents said that they believe that automation is good for the Singapore economy, even if it displaces jobs. The survey shows that 77% believe that their jobs will be highly impacted by new or changing technology in the next five years. This is seven percentage points more than the global average of 70%. At the same

time, 79% of Singaporeans whose jobs are at high risk of automation are aware of the incoming impacts of technological change—a share that is 11 percentage points greater than the global average of 68%. Singaporeans are taking initiatives to prepare themselves for the changes that are expected from automation. 77% of all Singaporeans and 81% of those most at risk of job displacement due to automation have taken measures to upgrade their skills or learn new ones to prepare for these changes. Confident in the gig economy Singaporean workers are increasingly taking up income earning opportunities offered by the gig economy, and online platforms that connect employers with workers of a wide range of different tasks. Most of them work in the sector out of choice rather than necessity; and show signs of positive financial health as well as higher optimism regarding their

financial future. Platform workers face unique challenges due to the variable nature of their income. The absence of financial tools suited to their needs could hinder their ability to build up long-term savings and to plan for retirement. Such concerns did not, however, reveal themselves in the PayPal research. For example, 29% of the respondents in the PayPal survey said they work in the online platform economy, and 40% of these workers indicated that platform work is the only job they hold. Despite the potentially volatile nature of this kind of work, 73% of platform workers said they feel they have control over their monthly income, 16 percentage points higher than those who do not work via online platforms. Platform workers are also more financially resilient, as 77% said that they can cover three or more months of expenses with their savings in the event of losing their main source of income, compared to only 55% of non-platform workers. Further, 57% said that their incomes would be more predictable in the next five years. In comparison, amongst those who do not work in the online platform economy, only 37% believe that their income will be more predictable in the future. Shifting demographics Singapore has gone through a fundamental demographic shift in the past few years. As of 2019, Singapore is an “aged society”, as

Elderly employment rate has increased from 17.6% in 2010 to 27.8% in 2018.

Source: PayPal Singapore - Financial Health for the Future of Work

SINGAPORE BUSINESS REVIEW | JUNE 2020

ANALYSIS: HUMAN RESOURCES It is estimated that by 2030, one in four Singaporeans will be of age 65 or above

Source: PayPal Singapore - Financial Health for the Future of Work

per the World Health Organization (WHO) definition, with over 14% of its population aged 65 years or older. At the same time, Singapore’s high life expectancy of 83 years and low fertility rate of 1.1438 means that there will be fewer young people to support the elderly population. A 2019 study by Mercer found that whilst Singapore fares much better than other Asian economies in preparedness to deal with the impact of workplace automation on the ageing, it still lags other major economies globally. Even more disquieting, is their finding that jobs done by Singapore’s elderly are more disproportionately vulnerable to automation than jobs done by younger workers. Enabling the elderly to adjust to these changes will require a concerted approach between the government and businesses. Looking into inter-generational differences in financial health between Generation-Xers (aged 39 to 50) and millennials (aged 22 to 38), PayPal’s survey data reveals mixed results. Whilst nearly 80% of both millennials and Gen X-ers stated that they make a consistent income each month and that they are able to cover all their expenses each month, millennials expressed more certainty than Generation X-ers about future income prospects. Another demographic factor that is reshaping the labor market in Singapore is gender. With a female labour force participation rate that has steadily hovered around 60% over the last half-decade, Singapore ranks 9th amongst OECD countries in this metric. However, a 2018 study of these countries by the 54

SINGAPORE BUSINESS REVIEW | JUNE 2020

Singaporean entrepreneurs are, in general, financially healthier than their global counterparts.

International Monetary Fund (IMF) found that a larger proportion of the female workforce is at a high risk for automation than the male workforce – primarily because of women, on average, perform more routine tasks than men across all sectors and occupations. This, combined with a pay gap of between 9% and 18%, gives women cause to be less optimistic about their financial future than men. Only 50% of the women PayPal surveyed said that they are at least somewhat confident that they will be able to reach their financial goals, as opposed to 60% of men. Entrepreneurs in good stead Entrepreneurship remains fundamental to the Singapore economy. Whilst Singaporean entrepreneurs are, in general, financially healthier than their global counterparts, the research has found that more can be done to support financially-distressed enterprises. In Singapore, 65% of entrepreneurs

Generations’ confidence in their ability to increase their income

Source: PayPal Singapore - Financial Health for the Future of Work

reported having a consistent income each month, whilst globally, only 46% of entrepreneurs do so. Further, 88% of Singaporean entrepreneurs say they are able to cover all their expenses each month with their current income – 10 percentage points higher than the population average, and six percentage points higher than the share of global entrepreneurs. However, 57% of all the small business owners surveyed said that they had paid a bill late and incurred additional fees or interest as a result in the past year. Nearly half (49%) of all entrepreneurs in the survey were looking to better manage their cash flow with changes in income. “The future of work brings both challenges and opportunities to the Singaporean workforce,” the research concludes. “In our research, we find that the Singaporean worker’s financial needs and aspirations are being transformed in response. The financial system therefore has a vital role to play in empowering Singaporeans to navigate these changes. However, a majority of the financial tools and solutions available today were designed for a very different world – one where a traditional nine-to-five job was seen as the norm. The evolving needs of the Singaporean workforce can only be met by a financial ecosystem that is sensitive to the changes in the way people work and earn and which places financial health at the very heart of its products and services.” The PayPal Financial Health for the Future of Work in Singapore was released on March 17, 2020

NUMBERS NUMBERS

FINANCIAL HEALTH FOR THE FUTURE OF WORK IN SINGAPORE

References: 1. Survey data collected in 2019 from 1000 working age individuals in Singapore. 2. Survey data collected in 2018 from 8000 working age individuals in 8 markets - Brazil, Canada, China, France, Germany, India, the United Kingdom, and the United States. 3. “PayPal & Freelancers Singapore,” October 2017. This analysis is based on an online survey of 300 Singaporean freelancers conducted in Singapore in October 2017. 4. “Singapore Economy,” Statistics Singapore, Accessed October 10, 2019. https://www.singstat.gov.sg/~/ media/Files/visualising_data/infographics/economy/singapore-economy28032019.pdf

SINGAPORE BUSINESS REVIEW | JUNE 2020

ANALYSIS: ECONOMY-1

Changi Airport is one of the first to announce a 50% rental rebate for all of its tenants.

How Singapore’s $5.1b solidarity budget could tide over tough times

Analysts are coining that the property, retail and financial sectors may drag Singapore’s GDP down, so the government has been ramping up its citizen’s spending power.

ollowing the $48.4b Resilience Budget on 26 March and the $6.4b Unity Budget in February, Deputy Prime Minister and Finance Minister Heng Swee Keat announced the Solidarity Budget of $5.1b. This brings the total stimulus to $59.9b, which is about 12% of Singapore’s GDP, according to OCBC Investment Research (OIR). With the latest measures, the overall budget deficit for FY2020 will increase to $44.3b or 8.9% of GDP. To get a sense of how significant this is, in FY19, Singapore saw a deficit of $1.7b, which was just 0.3% of GDP. To further support the country during the four weeks when the circuit breaker measures are in place, the Solidarity Budget aims to save jobs, and protect the livelihoods of people during this temporary period of heightened measures. There will also be help for

SINGAPORE BUSINESS REVIEW | JUNE 2020

businesses to preserve their capacity and capabilities, to resume activities when the circuit breaker is lifted. In addition, there will be direct cash in hand for households, to help tide families through this difficult period. Should the circuit breaker be extended beyond four weeks, we believe there could be a possibility for further measures. All in, the measures that the Singapore government is taking would be a supportive factor for the domestic equity market, and this latest Solidarity Budget is meant to tide the country over these four weeks. Should the circuit breaker last longer than expected, further measures may be required. Helping where it hurts most In this Solidarity Budget, the bulk of the money will be spent on labour retention, waiving foreign worker

All in, the measures that the Singapore government is taking would be a supportive factor for the domestic equity market.

levy, the Self-employed Personal Income Relief Scheme (SIRS), amongst others. Such relief measures, such as the enhanced job support schemes (higher wage subsidies) and the waiving of foreign worker levy due in April, are believed to further insure against the risks of longer-term harm on the domestic labour market and corporate margins due to the COVID-19 outbreak. All in, the measures that the Singapore government is taking would be a supportive factor for the domestic equity market, but key drivers are still the global COVID-19 trajectory and impact on overseas markets, given Singapore’s small and open economy. On the S-REITs’ side, one of such measures taking place is the Enhanced Jobs Support Scheme, which is expected to provide more buffer to underlying tenants’ cash

ANALYSIS: ECONOMY-1 Overall, whilst capital positions of Singapore banks remain solid, the sector is projected to face continued headwinds in 2020.

CDL allotted over $17m of property tax and rental rebates.

flows. The higher wage subsidies and waiver of monthly foreign workers levy due in April as mentioned in the earlier section would provide additional support for businesses. Awaiting details of the new Bill to be introduced by Singapore’s Ministry of Law (MinLaw) on deferral of rental payments. MinLaw had announced on 2 April that it would be introducing a COVID-19 (Temporary Measures) Bill in Parliament, with the aim of providing temporary relief to businesses and individuals who are not able to fulfil their contractual obligations due to COVID-19. The introduction of this new Bill will reveal whether there would be any safeguards for landlords should a tenant enter into insolvency after the rent deferment period of six months. It will also make it mandatory for property owners to pass on the property tax rebate to be received in full and in a timely fashion to tenants. “Given the uncertainties over the details of the new Bill to be passed, we continue to believe that REITs and Business Trusts with higher earnings visibility include Keppel DC REIT and NetLink NBN Trust,” OIR’s equity research team wrote. Favour grocery names Under the enhanced Care and Support package, all Singaporeans aged 21 and above will receive a oneoff cash payment of $600, namely the solidarity payout, i.e. an additional $300 cash payout on top of the $300 cash announced previously. The government will also bring forward some cash payouts from August/ September to June 2020 to provide timely support to needy families.

Together with the $400 grocery vouchers and $3,000 cash payout for lower-wage workers announced earlier, OIR noted that there will likely be a positive spillover effect in spending, and supermarket operators like Sheng Siong are likely the key beneficiary. Supermarkets and hypermarkets sales rose 15.5% YoY in February compared to the 8.6% decline in Singapore’s overall retail sales. “We observed a similar trend during SARS and believe that supermarkets sales are likely to be more defensive during a pandemic,” OIR added. Cushioning loan deteriorations The focus of all of these measures remains very much on helping to broaden the support rendered across sectors and households. For the banking sector, DPM Heng reiterated key highlights announced by the Monetary Authority of Singapore last 31 March, with a fresh item of an increase in the government’s risk sharing under the Enhanced Financing Scheme from 80% to 90%

for trade loans initiated from 8 April 2020 to 31 March 2021. Under the proposed MinLaw bill, select loans and facilities granted to SMEs may also be given relief from legal action for six months (with possibility to lengthen the period to 12 months). However, OIR stated that support measures provided are on an opt-in basis, not an automatic moratorium, with deferments increasing future obligations. Increased support from the government in ensuring cash flows to those whose livelihoods are affected by the pandemic (subject to pre-conditions) may help to cushion the pace of loans’ deterioration. Overall, whilst capital positions of Singapore banks remain solid, the sector is projected to face continued headwinds in 2020, from low interest rates and a challenging growth environment, which implies downside risks to earnings estimates and dividends. However, the report added that asset quality risks should also increase and credit management will be key for the sector as banks are expected to book forward looking provisions, in line with IFRS9 (International Financial Reporting Standards). “Within the sector, we maintain our relative preference for UOB which is expected to be relatively less rate sensitive (vs DBS) and offers more attractive long term valuations (already breached the past global financial crisis trough of 1x price/ book). Singapore banks are expected to provide updated guidance in the upcoming Q1 reporting season, which starts with DBS on 30 April.”

Retail demand is expected to shift to supermarkets.

SINGAPORE BUSINESS REVIEW | JUNE 2020

ANALYSIS: ECONOMY-2

Whilst the government continues to place more stringent procedures, the economy wanes.

Counting the costs of the COVID-19 pandemic: lost output could hit $50b Singapore will still be slapped with a ‘permanent loss’, even as the economy is expected to recover in 2021.

he Singapore government announced a significant step-up in social distancing measures, in contrast with the incremental tightening that had occurred since the start of the COVID-19 outbreak. The key measures—which include the closure of most workplaces (except for essential services and key economic sectors) and a nationwide closure of schools for the first time—are intended to act as a ‘circuit breaker’ against the rapid increase in locally transmitted cases in recent weeks and will apply for one month, ‘in the first instance’. Meanwhile, the Finance Minister also announced further support measures today - the third round is just around three months. $50b in lost value-added In light of the escalating global situation and tightening domestic measures, the Bank of America 58

SINGAPORE BUSINESS REVIEW | JUNE 2020

(BofA) had already severely cut their 2020 forecasts throughout ASEAN, including for Singapore. They forecast the economy to contract by -5.7% for the full year, the worst on record. Even after assuming a V-shaped recovery starting in the second half of the year and a 6.3% growth rebound in 2021, the total amount of ‘lost output’ due to the COVID-19 shock is estimated at around $50b over 2020-2021. “This would represent a permanent loss, with GDP levels still seen below the pre-COVID trajectory into 2021. At this stage, the risks remain to the downside and the cost could increase substantially if the pandemic continues into the second half of the year,” BofA said in its report. However, they also clarified that the decision to close “most” workplaces would be unlikely to incrementally add a significant economic cost for two reasons. First,

This would represent a permanent loss, with GDP levels still seen below the pre-COVID trajectory into 2021.

activity had already been impacted severely by the double-hit from the domestic and external demand channels. These impacts had already been incorporated into our forecast for a -5.7% contraction in growth. Second reason is that the government will allow essential services and other “economic sectors that are strategic, or form part of a global supply chain” to keep operating, albeit with safe distancing measures in place. As such businesses serving daily needs (food establishments, markets, clinics, hospitals, transport, key banking services, etc.), as well key export sectors such as semiconductor, pharmaceutical manufacturing and several others will be allowed to stay open. On the other hand, sectors such as construction, retail trade, real estate & recreational services are expected to be severely affected. “We estimate these severely

ANALYSIS: ECONOMY-2 Locally-transmitted cases have been on the rise, triggering stricter measures ahead

One common question from investors had been why the record fiscal support had not led to positive growth upgrades.

Source: Bank of America

impacted sectors to account for around 10% of GDP, but employ nearly 800k workers—or 20% of total employment. The risks of a prolonged closure will thus be felt primarily in the labor market, rather than overall economic activity at the first instance,” BofA stated. Budget takes support to $60b Finance Minister Heng Swee Keat’s latest solidarity budget amounting to $5.1b. Its key highlights were (a) an enhanced 75% wage subsidy (for the first $4.6k of monthly salary) for all local workers in April; (b) waiver of foreign worker levy for April and a $750 levy rebate for each workpermit and S-pass holder; and (c) a one-off $600 payment in cash to all Singaporeans in mid-April, which also includes the $300 which was due to be paid in June. This already adds to the already large fiscal measures unveiled over the past few months. Taken together, the total size of fiscal support stands at around $60b, or around 12% of GDP. Of these, roughly two-thirds ($37b, 7.8% of GDP) will be in the form of direct fiscal injection, with the remaining primarily made up of the $20b in loan capital. “One common question from investors had been why the record fiscal support had not led to positive growth upgrades,” BofA noted. “First, this is because the epidemic cycle is still winning the race against the policymakers, who are responding only with a lag. Second, even the amount of direct fiscal injection does not translate one-for-one to economic

‘value added’ due to high degree of import leakage and low marginal propensities to consume.” For example, MAS estimates over 2013-19 show that every 1% of GDP of fiscal impulse is only expected to increase growth by a small 20bp. This is said to be clear in the case of the jobs support scheme, which merely shifts part of the cost of paying wages from the firms to the government. Labour market to be severely hit Alongside the deep and broad-bases contraction in economic activity, the labour market is also expected to come under stress. With the collapse in demand across most sectors, firms will likely undertake a range of measures to manage excess manpower, including placing workers on short work-week, temporarily laying them off, or letting them go altogether. Both the number of retrenchments

and workers on short work-week or temporary lay-off spiked during previous recessions, and lead the overall and resident unemployment rates significantly higher. “Despite the record policy support, we expect significant pain ahead in the labor market,” the report said. Overall unemployment rate could spike to around 4% (from 2.3% at end-2019), whilst the increase in resident unemployment rate is expected to be more muted given the policy support that is specifically targeted at these jobs. Meanwhile, retrenchments will likely test the global financial crisis (GFC) highs and could also overshoot if the stress is protracted. BofA thinks there is room for average resident wages to contract by around 3-4% this year, higher than the -2.7% fall seen during the GFC. Given the all-out effort to preserve jobs and the near-90% (88.4%) private sector employees who are estimated to work in firms with some form of flexible wage system, firms may rely on larger wage adjustments than usual. It was also noteable that over 60,000 applications had been made for the government’s Temporary Relief Fund, targeted at those who have suffered at least a 30% drop in income or have lost their jobs, within a week since applications opened last 1 April. This report is from the Bank of America’s “Singapore Economic Watch: Counting the costs of COVID-19”, released on 7 April 2020.

Breakdown of the three fiscal packages released so far

Source: Bank of America

SINGAPORE BUSINESS REVIEW | JUNE 2020

ANALYSIS: PRIVATE EQUITY

Elite Logistics Fund, the pure-play of Singapore-based private equity firm Elite Partners Capital, gained its first close to tap Europe’s logistics scene.

The PE boom was over before COVID-19 A slump in private equity deals across China and Southeast Asia is being felt across the Asia-Pacific region.

fter roaring ahead in 2017 and 2018, AsiaPacific private equity (PE) investment declined year-on-year as the region’s largest market, Greater China, slumped. There, the boom that produced record deal value for two years running ended abruptly: Deal activity and exits plunged, pulling down the wider region’s performance. In all other geographies, including Singapore and Southeast Asia by contrast, investment grew or was on par with the average of the previous five years. Domestic factors played a large role in China’s reversal. Real GDP growth in the second half of 2019 slowed to 6%, the lowest rate since the first quarter of 2009, in the midst of the 2008–2009 recession. The ongoing low level of RMB-based fundraising undercut investment activities by reducing dry powder. Ongoing trade tensions with the US and social unrest in Hong Kong also undermined the economy and investor confidence. Bain’s 2020 60

SINGAPORE BUSINESS REVIEW | JUNE 2020

Asia-Pacific private equity survey, conducted with 175 senior market practitioners, shows that macro softness was the no. 1 worry for PE funds focused on Greater China. Beyond the contraction in Greater China—and perhaps more worrying—the sharp drop in exits across the region meant that cash flow for limited partners (LPs) in late 2018 and 2019 was negative for the first time since 2013. General partners (GPs) already had trimmed their portfolios in 2018 when exit values hit a record high, but an uncertain macroeconomic outlook, tepid M&A activity, and an erratic stock market also discouraged funds from pursuing exits. Despite warning signals, several positive trends stood out. Solid investment growth in other markets helped maintain Asia-Pacific’s heavyweight status in the global private equity market. The asset class also remained a popular source of capital in the region. It made up 17% of the Asia-Pacific merger-and-

Private Equity investment in Singapore in 2019 was on par with the average over the past five years.

acquisition (M&A) market, slightly down from the previous year, but up from an average 14% in the previous five years. Importantly, returns remained strong, with the top quartile of Asia-Pacific-focused funds forecasting a net internal rate of return (IRR) of 16% or higher, and private equity outperformed publicmarket benchmarks by at least six percentage points across 1-, 5-, 10and 20-year periods. Looking forward, the region’s general partners face a broad set of challenges. Widespread uncertainty in financial markets, exacerbated by the coronavirus pandemic across the world, trade frictions, and macroeconomic risk paint a more sober picture for the coming year. Any one of those factors could trigger serious economic and social imbalances in the coming decade, changing the investment outlook for countries or regions. As investors weigh those risks, many are becoming more cautious.

ANALYSIS: PRIVATE EQUITY Asia-Pacific now represents a quarter of the global PE market

Source: Bain & Company

But uncertain times also create opportunities for those who are well-prepared. Leading funds are anticipating disruption and targeting sectors likely to thrive in a downturn. Bain research shows that in hard times, the performance gap between winners and losers widens. Top performers adjust their strategies before the market shifts, increase their control over deals, and manage their portfolios more actively. Reducing risk whilst redoubling their focus on opportunities helps GPs outperform even in an unpredictable market. As PE funds seek out new pockets of growth, many are eying Internet and tech-related assets. Though investors worry about the risk of a market correction, the sector offers faster-than-average growth and was widely recession-resistant during the last global financial crisis. But given the record high prices for these assets, ferreting out smart investments requires a special set of skills and capabilities. Winning GPs are investing in talent, building partnerships, honing their approach to deal assessment, and ensuring companies with new technologies have a path to commercialisation. What happened in 2019? Asia-Pacific’s private equity markets went their own way in 2019, with diverging tales of growth and contraction. Greater China was hit hard by macroeconomic uncertainty and a reduction in megadeals, whilst investment activity flourished in most of the other markets.

With Asia-Pacific’s powerhouse market down, investment decelerated to $213.61b (US$150b). Exits took a hit across the region and sank 43% from a record high in 2018. Overall, fundraising in 2019 tumbled 45% from the historical five-year average. Restrictions on RMB-denominated funds continued to hamper activity in China. And with a record $552.53b (US$388b) in dry powder available, GPs didn’t feel pressure to raise new funds. After historic highs in 2017 and 2018, Asia-Pacific deal value slumped 16% in 2019 to $150 billion, but was still 9% higher than the average annual $195.11b (US$137b) in the five previous years. The average deal size was $173.75m (US$122m), on par with the fiveyear average. Greater China suffered the biggest drop in the region’s deal activity. The decline in RMB-based fundraising was a key factor undercutting investment. Total deal value fell below the levels of the previous two years and was 16% lower than the annual average for the previous five years. By contrast, investment value in India, the second-largest market in Asia-Pacific, was 29% higher than in 2018 and 88% higher than the previous five-year average. Despite a softening economy, strong interest from global and local investors in India’s burgeoning Internet and technology sector buoyed deal value. The four remaining Asia-Pacific markets performed solidly in 2019. Deal value in South Korea outperformed the 2014-to-2018

For the eighth year running, the Internet and Technology sector attracted the largest share of private equity capital.

average by 36%; it rebounded 18% in Australia–New Zealand, and rose 19% in Singapore and Southeast Asia (although it declined slightly from the year before). By contrast, deal value in Japan was slightly below the past five-year average and 144% above 2018, when investment activity fell sharply, the result of fewer large deals and investors’ inclination to hold high-quality assets instead of selling in a difficult market. Investors again preferred teaming up on deals, a trend called deal clubbing. The average number of investors per deal was 3.2, on a par with 2018 and higher than 2.6, the average for 2014 to 2018. Joining forces gives investors greater access to a larger pool of deals and mitigates the risk. For the eighth year running, the Internet and technology sector attracted the largest share of capital. However, for the first time since 2017, investment slowed in the sector and made up 42% of all investment value, compared with 53% the previous year. In a dramatic reversal, the number of Asia-Pacific megadeals in the Internet and tech sector valued at $1.42b fell to 10, down 50% from 2018. The decline in RMB fundraising was partly responsible for this drop. By contrast, investors had a strong appetite for consumption-driven sectors, including consumer products and healthcare, which rose from the prior five-year averages by 170% and 66%, respectively, buoyed by a rising middle class in Southeast Asia, India, and China. Whilst investors prefer deals that give them control over the way the company operates, locking in a majority stake isn’t easy in Asia-Pacific. As in 2018, buyouts accounted for only a quarter of the market. Growth deals again were the largest segment, making up 62% of deal value. GPs are still looking for a path to control in situations where they have a minority stake, securing board seats or decision rights for the most important decisions. Bain’s 2020 Asia-Pacific survey shows 38% of minority deals included a path to control in 2019, and investors expect SINGAPORE BUSINESS REVIEW | JUNE 2020

ANALYSIS: PRIVATE EQUITY that proportion to increase to about 50% in the next two to three years. Global and domestic GPs were more active than institutional and corporate investors in the region, although domestic GPs’ share of deals fell to a five-year low. The 2019 drop in domestic GPs reflects a decline in domestic funds’ activity across all geographies, particularly China, where local funds are traditionally strong. Corporate investors retrenched, taking part in only 13% of deals, well below 2017’s high of 20%. What’s clear is that a tougher investment landscape has done nothing to diminish competition in Asia-Pacific. Eighty-five percent of PE funds say that rivalry for the best deals has increased in their primary market, with other GPs considered the biggest competitive threat, followed by corporate investors and LPs investing directly. The number of active investors in 2017 to 2019 reached a record 3,300, compared with 2,700 for 2015 to 2017, though the growth has plateaued. The top 20 players were involved in 31% of deals by value, roughly on par with prior years. The wave of investors chasing deals of all sizes has surged, pushing valuations to exorbitant levels over the last few years. According to our survey, GPs’ no. 1 concern is high prices. Despite intense competition, slowing GDP growth and the increasing likelihood of a global recession have given many investors pause. For the first time since 2013, multiples contracted slightly in a few regions, with median enterprise value-to-EBITDA entry multiples for PE-backed transactions declining to 12.9 from 13.3 in 2018. About 60% of the GPs expect valuations to decline further in the coming two years. Many of the funds we’re working with don’t include any multiple expansion in their valuation model, a change from five years ago, when 38% said multiple expansion was the biggest factor contributing to returns. Maintaining a high IRR in that environment will require GPs to find new sources of value and work harder to expand revenues and margins.

SINGAPORE BUSINESS REVIEW | JUNE 2020

A breathtaking fall in exits Exits dropped even more precipitously than deal value. After setting a record in 2018, pushed by the $22.79b (US$16b) sale of Flipkart, Asia-Pacific’s exit market plunged, breaking the recycling of capital that typically fuels the next investment phase. Exit values totalled $85 billion, down 43% from 2018 and 31% from the previous five-year average. With a bumpy stock market and timid corporate M&A activity, exits to other PE funds gained in importance: the share of secondary sales jumped to 17% from a 10% average over the previous five years. Exit value declined primarily because GPs sold fewer assets, as opposed to selling smaller companies. Exit count plummeted to 330 sales, a 10-year low, with double-digit drops throughout Asia-Pacific, including in Hong Kong. It was a striking contrast to the region’s peak year in 2017, when the total number of exits reached a record 760. GPs felt this seismic shift on the ground: Roughly half of the PE funds we surveyed said the exit environment was more challenging in 2019 than in 2018. Several factors contributed to the broad downturn in exits, particularly a poorly performing initial public offering (IPO) market and soft macroeconomic conditions. During the booming sale markets of 2017 and 2018, GPs trimmed their portfolios. That allowed them to

PE Exit values in 2019 dropped by 41% from the highs of the previous year.

The Asia-Pacific PE market slowed in 2019

Source: Bain & Company

hold off in 2019, whilst working to boost value. With exits on hold, the value of companies held in PE portfolios, or unrealized value, reached a new high of $806 billion in June 2019, up 32% from a year earlier. The good news is that strong exit activity in recent years has led to younger portfolios overall. Fundraising: Another dip As funds returned less capital to LPs, fundraising activity from purely Asia-focused funds fell further (after also plummeting in 2018), and was 45% below the previous five-year average. The region’s share of global fundraising dipped to 13% from 16% a year earlier. With ample stocks of dry powder, and peak sums raised in 2016 and 2017, GPs were under less pressure to raise new capital. Conditions remained extremely soft for RMB-based funds. The stringent asset-management rules China introduced in 2018 that prevented insurers, banks and other financial companies from investing in private equity have been partially lifted. But they still limit the ability of Chinese GPs to raise RMB funds. Fundraising data underscored the ongoing flight to quality, with the average size of Asia-Pacific funds expanding to a record $401.41m (US$282m) from$321.7m (US$226m) in 2018. Total capital raised was spread among far fewer funds, which closed 8% ahead of their target.

ANALYSIS: PRIVATE EQUITY The most active Asia-Pacific investors were global general partners

Source: Bain & Company

Returns: Steady for now Despite slower market momentum, private equity continued to outperform the public market. Over 1-, 5-, 10- and 20-year horizons, the IRR for Asia-Pacific buyout and growth funds have been at least six percentage points higher than comparable market benchmarks. Overall, industry returns were stable at 12% median net IRR. Whilst it’s too early to know how younger vintages will perform, top performers continued to deliver well above expectations of 16% returns for Asian emerging markets. But IRR was trending down for most recent funds. With exits down, LPs’ cash flow in the fourth quarter of 2018 dipped into the red for the first time since 2013, and was negative again in the first half of 2019, with only $1.22 (US$0.86) returned for each $1.42 (US$1) invested. Negative returns will push PE firms to focus more intensely on value creation. Whilst most expect top-line growth to continue fuelling returns over the next five years, they’re increasingly counting on margin expansion and M&A as sources of returns. Opportunities despite uncertainty The region’s private equity landscape is in flux. Elevated prices, increased competition and limited exit opportunities could make it tougher for GPs to replicate the returns of the past few years. An uncertain landscape has accelerated investors’ flight to high-quality assets, and that trend is likely to widen the gulf

between winners and losers. However, several positive developments and innovations on the horizon may help reignite investment activity and optimism, including the pending Regional Comprehensive Economic Partnership (RCEP). This AsiaPacific trade bloc deal, if signed by the 15 intended countries, would create the world’s largest free trade pact, comprising nearly a third of the world’s population and about onethird of GDP. Members of the pact are counting on it to counterbalance the economic slowdown in China and stimulate economic growth, trade and investment. However, India’s opt out in late 2019 was a serious blow to the negotiations, and time will tell how valuable this deal will be to the region. Many funds are incorporating environmental, social and

Turbulent times pave the way for smart funds to leapfrog the competition.

governance (ESG) considerations in their investment decisions at an accelerating clip. Sixty-eight percent of investors say they’re seeking investments that have positive social or environmental impact alongside financial returns. And 87% say they plan to increase their focus on sustainability investing in the coming three to five years. As the debate about environmental and social concerns grows more acute, all private equity firms will need to consider how ESG issues affect their portfolios. A decade has passed since the end of the global financial crisis. With the risk of a global recession looming, it’s a good time to ponder the lessons learned from the last one. During economic downturns, the gap between winners and losers widens, and turbulent times pave the way for smart funds to leapfrog the competition. Successful investors are preparing for a more difficult road ahead, putting in place strategies to mitigate volatility. They are taking a more active role and pursuing new approaches to deal sourcing, deal assessment and portfolio management. It’s also a good time for GPs to rethink their investment strategy for Internet and technology companies. This fast-evolving sector offers attractive new investments in second-generation technologies. But the risks associated with high prices and a stampede of investors chasing deals are as high as ever. Leading

Asia-Pacific exit value plunged by 43%, and exit count dropped to a 10-year low

Source: Bain & Company

SINGAPORE BUSINESS REVIEW | JUNE 2020

ANALYSIS: PRIVATE EQUITY Asia-Pacific fundraising declined as renminbi-based funds continued to plummet

Almost half of GPs surveyed believed PE has now passed its peak.

Source: Bain & Company

funds are building specialist teams and new capabilities to make the most of new opportunities. Looking forward: key trends in 2020 and beyond After a long and robust period of growth, many indicators now point to downturn and disruption. Smart investors are bracing for what could be a perfect storm. Fundamental changes to the macro landscape, changing demographics and rising inequality are likely to trigger serious economic and social imbalances in the coming decade. For governments, companies and investors, it will be a time of unprecedented challenges. The most immediate concern is a global downturn that brings an end to the long-running expansion. Economists forecast the coronavirus outbreak will slow the region’s growth, heightening the risk of a global economic downturn. But other factors cloud the horizon too. The US-China trade dispute and Brexit create critical challenges for supply chains and increase investor uncertainty. The International Monetary Fund (IMF) warns that conditions are ripe for the next global financial crisis, and banks are poorly prepared for it. Some economists forecast oil supplies may run short in the coming decade as demand for energy continues to grow in the wake of a slowdown in capital investment. The geopolitical crisis in Iran or conflict elsewhere in the 64

SINGAPORE BUSINESS REVIEW | JUNE 2020

Middle East also could precipitate a squeeze on oil supplies. Add to that troubling outlook the unpredictable effects of climate change. And as the world’s population swells toward an estimated 10 billion by 2050, its consumption of natural resources is accelerating. Extreme inequality, which has triggered violent social unrest around the world, is on the rise. Ongoing civil protests, including those in Hong Kong, add to an increasingly unstable political climate. Perfect storm or not, the effects of these trends are sobering. The IMF estimates that in 2019, global growth in 90% of the world slowed to its lowest rate since 2010. It also forecasts that the trade war between China and the US could cost an increasingly fractured global economy $996.6b (US$700b) in In fundraising, winners continued to take all

Source: Bain & Company

2020. It’s impossible to evaluate the potential cost of damage from events related to climate change in the coming years, but new data triples previous assessments of infrastructure, businesses and individuals vulnerable to rising sea levels by mid-century. Even if governments agree to battle climate change by scaling back carbon emissions, that effort risks creating stranded assets in fossil fuels, energy infrastructure, transport and other industries. Those somber forecasts have investors on edge. Fifty-nine percent of Asia-Pacific GPs ranked macroeconomic conditions— mainly associated with the financial crisis and trade war—among the top three issues keeping them awake at night. Almost half said they believe private equity has now passed its peak or entered a recession phase, and a striking 96% expect a downturn in the next two years, with 54% anticipating a severe or moderate impact on their portfolio. In addition to the macroeconomic challenges, recordhigh multiples risk making it harder for funds to sustain returns if they start to decline. Since 2016, more than 40% of Asia-Pacific PEbacked deals had an entry multiple higher than 15, compared with 25% to 30% from 2010 to 2015. The Asia-Pacific Private Equity Report 2020 was published by Bain and Company in March, 2020.

SINGAPORE BUSINESS REVIEW | JUNE 2020

Singapore Business Review (April-June 2020)

Articles inside

The PE boom was over before

How Singapore’s $5.1b solidarity budget could tide over tough times

Counting the costs of the COVID-19 pandemic: lost output could hit $50b

Anxious times ahead for Singapore’s hard-hit workforce

Singaporean travellers shun usage Clothing rentals gain popularity as fashion takes over sharing economy

Singapore to elevate hub status with new digital banking regulation

Credit card revenues threatened as

and consumer acceptance Power providers slash prices as live auctions emerge

Miniso seeks to attract older buyers with $2 concept stores

S-REITs to generate yields despite economic weakness

Singapore named 10th biggest

cyberattack source in 2019 worldwide 5G’s success hangs on competition