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Fracking good news for rig builders CREDIT TIGHTENING
HITS SME’S
Business parks still ulu MICA(P) 244/07/2011 KDM No: PPS1645/3/2008
Singapore casinos threatened by regulations
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FROM THE EDITOR If you want to have a glimpse of what 2013 will be like in Singapore, you can start by flipping the pages of our first issue for this year as we bring you comprehensive industry and economic reports plus interesting features.
Publisher & EDITOR-IN-CHIEF Tim Charlton Assistant Editor Jason Oliver ART DIRECTOR Jane Kristine Cruz Editorial Assistant Queenie Chan Media Assistant Daniela Gujilde Editorial Assistant Alex Wong ADVERTISING CONTACTS Laarni Salazar-Navida lanie@charltonmediamail.com Loren Laylay loren@charltonmediamail.com Rochelle Romero rochelle@charltonmediamail.com
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In this issue, we also bring you the rankings for Singapore’s top 25 largest hotels as well as 20 local start-ups to watch out for in 2013.
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Meanwhile, our channel check on Singapore’s integrated resorts revealed that odds are stacked against growth for Singapore IRs as new junket restrictions and stiffer competition from Asian neighbours may spell the end for the sector’s boom days. Looking at new retail outlets that opened in Singapore last year, we found out that Singaporeans are into the Korean craze not only because of Psy’s phenomenal Gangnam-style dance, but also because of its cuisine. Singapore is now home to no fewer than 150 Korean restaurants. In terms of clothing, however, Japanese stores are still very much in fashion.
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*If you’re reading the small print you may be missing the big picture
In this issue, we present a full analysis on Asia’s graying millions as 65 year olds are expected to triple by 2050. And as the social debate rages on about Singapore’s demographics, we found out that an unprecedented age shift looms as the population is expected to shrink from 2025 onwards. Businesses then have more reasons to worry as a lack of workers will become apparent even sooner.
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CONTENTS
11 FIRST When in Singapore, dress like a Geisha, eat Gangnam-style
11
26 ANALYSIS Singapore integrated resorts’
FIRST Business parks: Still Ulu, but still in demand?
FIRST
growth threatened by tougher regulations
COVER STORY
ANALYSIS
10 Populate or perish? 11 Business parks: Still Ulu, but still
34 20 Startups to watch in 2013
in demand? 12 When in Singapore, dress like a Geisha, eat Gangnam-style 14 The Kiasu Investor 16 Fracking good news for Singapore’s rig builders
REGULAR
OPINION
50 Numbers
growth threatened by tougher regulations
New junket restrictions and stiffer competition from Asian neighbours may spell the end for the sector’s boom days.
42 Asia still unprepared for graying
46 Hopes fade for more affordable
38 Legal Briefing 48 Dining
Check out these hot startups offering a range of products and services from online beauty and fashion stores to stock market simulation apps to aerial vehicles for non-military purposes.
26 Singapore integrated resorts’
homes in 2013
ANALYSIS
millions
With the elderly Asian population set to explode, the region needs to play policy catch-up.
22 Growth of Singapore’s
hospitality sector to decelerate in 2013
Global headwinds will slow down tourism and hotel performance in 2013.
Published Bi-monthly on the Second week of the Month by Charlton Media Group #06-09 E, Maxwell House Maxwell Road 4 20 SINGAPORE BUSINESS REVIEW | FEBRUARY 2012
For the latest business news from Singapore visit the website
www.sbr.com.sg
SINGAPORE BUSINESS REVIEW | FEBRUARY 2012 5
Agenda PEOPLE | PLACES | EVENTS | OPPORTUNITIES
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WOOLOOMOOLOO STEAKHOUSE Wooloomooloo Steakhouse, part of an independent group of steakhouses from Hong Kong, recently opened its first international branch at the third level of Swissotel at the Stamford. This 140-seater restaurant serves up premium Australian and USDA steaks under the expertise of Head Chef Kent Ho and his culinary team. Customers can indulge in a threecourse set lunch from Mondays to Fridays with the menu changing weekly. They can also relax at the 40-seater Wooloomooloo Lounge daily from 4pm to 7pm to enjoy the Happy Hour after a hard day at the office. Call 6338-0261 or email www. woo-singapore@wooloomooloo.com for reservations today.
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News from sbr.com.sg Daily news from Singapore Four property surprises for 2013 most read HOTELS & TOURISM
7 major attractions to boost Singapore tourism in 2013-2014 Universal Studios continues to offer an ideal holiday destination for families and thrillseekers. The park has announced aggressive expansion plans to bring the total number of rides to 24 in 2013, out of which 18 are unique to Singapore. Resorts World Sentosa, where Universal Studios Singapore is located, saw close to a record 19m visitors in 2011 and forecasts that the theme park will ultimately pull in 4.5 to 5m visitors annually, with the expansion plans designed to help meet this target. HR & EDUCATION
Singaporeans not keen on having more children. Thankfully, 80% of singles have strong parenthood goals. According to the Marriage and Parenthood Study by the National Population and Talent Division, 80% of singles who indicated a desired number of children wanted to have 2 or more children.
For 2013, DBS Group Research said it remains neutral on developers on the basis of valuations, after the sharp runup in stock prices. It believes the market would continue to focus on incoming supply. “As we move a step closer to the peak of incoming supply, we expect private residential prices to decline by 0-5% while volume demand should remain relatively
RESIDENTIAL PROPERTY
robust at about 20,000 units.” RESIDENTIAL PROPERTY
Rocketing vacancy rates threaten home sales According to CIMB, URA’s flash estimates show private property prices hitting record highs in 4Q12, up 1.8% qoq (3Q: 0.6%), the strongest quarterly increase for 2012.
COMMERCIAL PROPERTY
CapitaLand revamps organisation structure effective immediately But it’s not just about having a new CEO. According to a release, in October 2012, CapitaLand announced the appointment of Lim Ming Yan as President & Group Chief Executive Officer (CEO) with effect from 1 January 2013. Ming Yan has taken over the leadership baton from Liew Mun Leong who has since relinquished his executive role in CapitaLand Limited. RESIDENTIAL PROPERTY
Home prices seen to drop by up to 5% in 2013
Four possible Singapore property surprises for 2013
If that’s so, what could be in store for property stocks?
One is a reduced GLS programme. Nomura shared
8 SINGAPORE BUSINESS REVIEW | FEBRUARY 2012
with Singapore Business Review 4 possible proprety surprises for 2013. It notes that while it started 2012 with a more constructive tone (vs the more cautious outlook in the market), Nomura’s analysts find themselves at exactly the opposite end heading into 2013 (ie, more cautious than the market). RESIDENTIAL PROPERTY
Massive 50% drop in private property sales incoming: PropNex Blame it on the new round of cooling measures. Private property prices will also take a hefty hit, affecting all property owners from Singaporean citizens to permanent residents.
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FIRST paper reporting that the citizen population reached a turning point in 2012 as the first group of Baby Boomers turned 65. But the National Population and Talent Division of the Prime Minister’s Office reported that falling birth rates coupled with increasing life expectancies will result in an ageing and shrinking citizen population and workforce. “At current birth rates and without immigration, our citizen population will shrink from 2025 onwards. The median age of citizens will also rise from 40 years today to 45 in 2025.” The only good news is that even an ‘about 1%’ workforce growth rate after 2020 will be considerably better than in many economies. The participation rate describes the relationship between an economy’s workforce and its working age population.
Zalora goes from e to m
Even blind Freddy could not have missed all those ads to buy shoes and clothes from Zalora.sg, the one year old online purveyor of shoes and apparel. Singaporeans are known for their love of shopping, usually at the mall and equally online but usually from overseas fashion sites. So how is a home-grown online retailer faring in the shopping capital of Asia? With over 40,000 daily unique visitors to the Singapore site alone, “pretty well” would be the answer. Bastian Purrer, Zalora’s CMO said one of the interesting things they learned about Singapore in the past year is that urban shoppers are very brand-savvy and therefore being known for carrying hundreds of brands since the start has worked in Zalora’s favour. “There is high customer loyalty among Singaporean shoppers, and so a large proportion of our transactions are from return shoppers, so our move into mCommerce will increase the level of convenience for our shoppers especially with these return shoppers who are already familiar with the Zalora brand.” Another interesting fact is that many customers do not pay with a credit card but prefer cash on delivery – a major change from traditional e-commerce models.The company is backed by Rocket Internet, JPMorgan and Kinnevik and operates in several other Asian markets. 10 SINGAPORE BUSINESS REVIEW | FEBRUARY 2012
Populate or perish?
A
s the social debate rages on about plans to increase Singapore’s population to almost 7 million people by 2030, businesses should be the ones really worrying as a lack of workers will become apparent even sooner. The real bite on the labour market is likely to be felt most strongly over the years to 2020 than in the decade after, according to some quick number crunching done by UBS economist Edward Teather. In spite of the rhetoric that workers are hard to come by, the fact is that employment growth was 3.8% in Singapore for the third quarter in 2012 and the long term rate has been around 3%. Tighter labour market looms Given the population demographics, Mr Teather reckons that this will have to come down to just a 1 to 2% growth rate in the working population, which means the labour market will get even tighter than it is perceived to be now. Singapore is mired in a demographic dilemma as the government released a white
“The real bite on the labour market is likely to be felt most strongly over the years to 2020.
Benign workforce slowdown Assuming this will be constant in the 2020s, the Singapore government’s plans promise to deliver a relatively dynamic workforce compared to UN projections of annual working age population growth of -0.6% in Japan, -0.5% in Europe, -0.3% in China and HK, 0.2% in the US, 0.6% in Indonesia and 1.1% in India and Malaysia. “We also note that the implied slowdown in workforce growth in Singapore, while significant in the immediate future, is more benign on an international comparison looking into the 2020s,” added Mr Teather. Still this will be of little solace to companies looking for ever fewer available employees.
Employment growth is going to have to slow on a sustained basis
Source: USB, Singapore Government
FIRST
Business parks: Still Ulu, but still in demand?
I
t was not that long ago that almost every business seemed to be fleeing the city for the joys of Changi or Jurong and a business park to call home. But the rush to build new business parks along with more space in the city is making it a challenging time for owners who are struggling to fill space. Business park tenants There are a notable number of buildings scheduled for completion in 2013 and 2014 still scouring for tenants, notes Alan Cheong, senior director at Savills. “Most business park developments that have 100% sign-ons
even before completion were projects embarked in partnership with the enduser and the developer in the very first instance,” says Cheong. Alice Tan, senior manager of consultancy & research at Knight Frank Singapore concurs and adds that there has not been many new industrial end-users taking up new business park space for the second half last year. Some tenants, however, have been relocating to other business park buildings within the same region. Colliers adds that the average monthly gross rent was stable in 4Q 2012 at $3.91 per sq ft, which was 1.3% lower than the rate recorded a year ago.
Increasing supply Besides the relatively quiet leasing market, Colliers says that rental growth was also capped by the increase in supply from the completion of two new projects: Infinite Studios in onenorth and One@Changi City in the Changi Business Park. They supplied an estimated combined 843,000 sq ft of new business park space in 4Q 2012. One bank making the trek to Changi is Credit Suisse, which will take close to 300,000 sq ft of space or over 3 and a half floors at One @ ChangiCity in the Changi Business Park from February 2013, housing back-office operations in financial, IT and administrative functions, notes Knight Frank’s Tan. “There will be a few additions of business park developments over the next 2 years, such as the Nucleos at Biopolis Phase 5 in one-north slated to be completed around end-2013, and Fusionopolis 5 by year 2015. Science Park I is undergoing redevelopment with major works starting from 2015,” she added.
The average monthly gross rents for new take-up of business park space in Changi Business Park currently range from $4.10 to $4.30 per sq ft.”
Average monthly gross rents for prime industrial space as of 4Q 2012
Source: Colliers International Singapore Research
The Chartist Sharper dip in mass market transactions
Our changing citizen age profile
Shrinking and ageing Citizen Population
Source: CIMB, URA
Source: DOS
Source: DOS
SINGAPORE BUSINESS REVIEW | FEBRUARY 2012 11
FIRST “There are now no fewer than 150 Korean restaurants island wide feeding a community of about 30,000 Koreans in Singapore.
When in Singapore, dress like a Geisha, eat Gangnam-style
I
f you want to know how Singaporeans are thinking, feeling, and spending, you could do worse than to take a look at what new retail outlets opened in Singapore in 2012. It was not the year of Filipino cuisine, Chinese clothes, or Italian food. The country with its culture making the biggest splash last year was Korea with its cuisine and Japan with its clothes. Of Korean cuisine and Japanese clothes A new wave of Korean barbecue restaurants, including three well-known Korean barbecue chains, launched last year including Boss BarBQ at Clarke Quay, Kkongdon BBQ at Marina Square, and Bornga at The Star Vista. According to Colliers International, there are now no fewer than 150 Korean restaurants islandwide feeding a community of about 30,000 Koreans in Singapore, and of course all those K-pop fans. But when it comes to dressing, few seem willing to dress Gangnam Style with green jackets and bow ties or wear yellow suits. Japanese stores are still very much in fashion, with a recent example being the opening of 30 leading Japanese apparel and cosmetics brands located at JRunway on the
12 SINGAPORE BUSINESS REVIEW | FEBRUARY 2012
ground floor of Plaza Singapura’s new extension. Called JRunway, the 3,600 sq ft store is the first Japanese multi-label boutique in Southeast Asia, notes Colliers. But Heidi Yong, director & head of retail agency at Knight Frank Singapore, says there is also a surge of Japanese restaurants opening up in Singapore and a few new concepts will also be launched this year. She adds that Create Restaurants from Japan has opened a number of Japanese dining establishments in Singapore, such as Hifumi at Plaza Singapura Shabu Shabu Sai at Causeway Point, and Maccha House at Central. Another trend of note is the rise in American casual dining in the heartlands, traditionally the preserve of noodle and rice stalls. At least five new diners and restaurants offering Americanstyle fare are entering the local market including modern diner and ribs restaurant Morganfield’s and seafood diner Boston Seafood Shack which both started operating at the new Star Vista mall in Buona Vista; Suprette, a whimsical diner, opened at boutique hotel Kam Leng in Jalan Besar; and the casual Cajun seafood eatery. The Cajun Kings, in Jalan Riang in Braddell Heights Estate. While
in the upmarket arena, Ruth’s Chris Steak House opened at the Marina Mandarin. Krispy Kreme doughnuts also announced that around 15 Krispy Kreme franchise locations will be set up around the island over the next five years. Foreign brands to set up This year will see 1.9 million sq ft of retail space come online of which about 17.9% or 340,000 sq ft will be on Orchard Road. So what other types of shops can we expect to see? Colliers expects a few international department stores new to Singapore to set up in the next year, as there have been some initial inquiries on the availability of suitable retail space. Alan Cheong, senior director at Savills says Isetan will open a 59,700 sq ft stall at Westgate and Robinson will open at Jem, taking up 85,000 sq ft. They will also move from Centrepoint to Heeren. Hannah MacDonald, head of retail at Jones Lang LaSalle, notes that though there is a lot of interest from foreign brands, there is nervousness and hesitation due to the cost of the bricks and mortar and the recent changes to the foreign worker policy, reducing the amount of foreigners that can work in stores. “We are often seeing new to market brands waiting for space to be available in certain malls rather than go to what they feel is an inferior mall/location. International brands often look at the brand mix, positioning of the mall, brand visibility and catchment more specifically than those that aware of the market,” added MacDonald.
Average monthly gross rents of prime retail space (By Micro-Market)
Source: Colliers International Singapore Research
SINGAPORE BUSINESS REVIEW | FEBRUARY 2012 13
FIRST
The Kiasu Investor
F
or all their similarities, Singapore and Hong Kong are worlds apart when it comes to investing philosophies. That, at least, is the conclusion from LGT bank which surveyed private banking clients to work out where they stashed their money. Singaporeans have the gold bug, with 28 % of their portfolios being
gold or metals, compared to just 14% in Hong Kong. And Singapore’s love for liquid investments doesn’t end there, with around half of all assets in cash funds vs just 1/3 for Hong Kong wealthy. Perhaps one of the biggest surprises with the results is that 19 % of Hong Kong wealthy aim to outperform the market, compared
OFFICE WATCH:
DBS’ astounding headquarters at MBFC Tower 3
T
he DBS headquarters was previously located at Shenton Way. When DBS’ multi-year, multi-market strategic occupancy programme was unveiled in 2007, DBS decided to relocate to DBS Asia Central @ MBFC Tower 3. The move allowed the bank to integrate over 4,800 DBS employees, mainly from the bank’s customer-facing units, including consumer banking, institutional banking, treasury and markets and wealth management, currently housed in four locations across Singapore, under one roof for greater productivity, efficiency and customer effectiveness. Design firm Woodhead was tasked to do a full scope interior design for DBS’ 70,000 sqm workplace fit-out. Kelly Hiew, Associate and Project Leader at Woodhead said they interviewed all of DBS’ business units to record their headcount, equipment, and operational requirements. Woodhead finally came up with hubs, workspaces, and utility rooms in all 18 floors of the new office. “We worked closely with DBS’ Group Strategic Marketing & Communications department to ensure their slogan of ‘Living Breathing Asia’ was translated into all aspect of the design,” said Hiew.
14 SINGAPORE BUSINESS REVIEW | FEBRUARY 2012
to just 5 % of Singaporeans. Perhaps a case of the Kiasu, or afraid to lose mentality. Singaporeans are also more willing to be advised on investments, with just a third making their own decisions, whereas in Hong Kong a majority make their own investment choices. Compared with Switzerland and Hong Kong, a statistically significantly lower frequency of shares, bonds, and investment funds is apparent in Singapore. Private banking clients in Hong Kong invest an average of 61% in shares, 14% each in bonds and commodities/gold or precious metals and 4% each in derivatives and alternative investments. In Singapore the average investment portfolio consists of 47% shares, 28% commodities/gold or precious metals, 13% bonds, 8% derivatives and 3% alternative investments. It even appears that the two significant factors for Hong Kong – readiness to assume risk and belief in an efficient market – are not at all significant for Singapore. In Singapore the proportion of shares is related to a tendency to avoid losses.
19 % of Hong Kong wealthy aim to outperform the market, compared to just 5 % of Singaporeans.”
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FIRST
Fracking good news for Singapore’s rig builders
W
ith all the talk of the growth in American fracking one could be forgiven for thinking that offshore drilling was taking a back seat in the quest for oil. That couln’t be further from the truth, with recent research from Barclays suggests that offshore drilling could rise a further 60 % by 2015. That is great news for Singapore’s two largest builders of floating rigs, Sembcorp Marine and Keppel, who should see orders for their semi-submersibles and jack-ups rose by 60 %. Half of all jack-ups currently being built in the world
are being fabricated in Singapore, and despite the emergence of cheaper Chinese shipyards which had been expected to offer stiff competition, so far “quality over quantity was a clear preference for all of the established players” at the Barclays Energy conference held in September last year. Safer than sorrier Perhaps its not surprising because when things do go wrong, as with Deepwater Horizon, the costs of clean up and compensation can be huge. In offshore drilling, being safer than sorrier is the order of the
Retail Watch:
The Black Label opens new flagship boutique in Singapore
T
he Black Label’s 700 sq. ft. shop located at One Raffles Place Tower 2, Unit 01-61, One Raffles Place, carries off-the-rack Italian brand shirts, jackets, hand embroidered shirts as well as accessories such as handmade shoes, premium ties and quality belts. The Black Label carries high quality Italian labels such as Poggianti and Montezemolo, among others. Off-the-rack shirt prices start at SGD189. The brand’s essential product is its bespoke tailoring services and its high quality suits and shirts using only fabrics from the top mills of Italy. Made-to-measure shirts can be made in two weeks while suits take three weeks to complete including one fitting. Clients can choose from over 4,000 fabric choices as well as different permutations such as collar styles, cuff designs, and buttons. Madeto-Measure Suit prices start at SGD900.
16 SINGAPORE BUSINESS REVIEW | FEBRUARY 2012
day and that explains the strength of the Singapore opportunity. Recent exploration successes have been made in many deepwater basins, particularly in the ‘Golden Triangle’ of Brazil, the US Gulf of Mexico and West Africa. Deepwater production will be the main driver of offshore production growth in the next two decades, and that means more rigs. The high utilisation and day rate premium for younger vessels continues to incentivize rig-owners to upgrade and refurbish their rigs. With 55 jack-ups expected to be delivered this year, 2013 is on track to record the highest number of jack-up deliveries in the past 30 years. But even after accounting for the 80 deliveries by 2015, more than half of the world’s jack-up fleet will be over 30 years old. The outlook is also good for semisubmersibles. Based on current orders, there are only 17 semi-subs expected to be delivered over the next five years.
With 55 jackups expected to be delivered this year, 2013 is on track to record the highest number of jack-up deliveries in the past 30 years.
Jack-up deliveries Jack-up deliveries 60
No. of rigs
50 40 30 20 10 0
Source: ODS-Petrodata, Barclays Research estimates
Source: ODS-Petrodata, Barclays Research estimates
No orders for jack-ups placed for delivery beyond 2015 yet
SINGAPORE BUSINESS REVIEW | FEBRUARY 2012 17
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opinion
richard branson True Grit
“ If you aren’t good at motivating yourself, you probably won’t get very far in business – especially as an entrepreneur.”
Q
: Is self-motivation an innate quality or is it something that can be learned and improved upon? - Chris Prior, Liverpool, England A: If you aren’t good at motivating yourself, you probably won’t get very far in business – especially as an entrepreneur. When you’re starting up a company and for the first couple of years afterward, there are a lot of long nights and stressful days, and the workload is heavy. You have to be able to give the job everything you’ve got every day, or it will easily get the better of you. The ability to tap into your determination and grit is not just an innate skill. You can teach yourself to get up every day and try to keep a new business going despite long odds, partly by structuring your life and job to make sure you are working toward your larger goals. I learned a lot about this from my mother, who is a very energetic and strongwilled individual. As I wrote recently, I’m thankful for the life lessons she taught me, without which I would probably not be where I am today. I always wanted to go out there and prove myself, but I was very shy when I was young, and it was clear that I would have to master this if I was going to succeed. My timidity could have easily held me back if she hadn’t helped me come out of my shell. She feels that shyness is very selfish, as it means you are only thinking of yourself, and so she was very insistent that I look adults in the eye
and shake their hands, and carry on conversations with guests at dinner and at parties – no excuses. My mother also taught me to dive into situations even if I wasn’t completely sure about my own abilities, and then solve the problems that came up as I went along. When I was almost 12, she once sent me alone on a long bike-riding expedition to another town, knowing that I would be fine, but also that I’d have to find water and ask for directions along the way. Before I left school at 16, I was already working on launching what became one of my first businesses, Student magazine. Then when my friends and I put ourselves in a position that forced the issue, by moving into a basement in West London that served as both our office and our living quarters, we really gave our magazine everything we had. There were times when we struggled to pool together enough money to afford a proper meal – that in itself was a great motivator to follow through on calls to potential advertisers. In the larger picture, we were willing to live with such uncertainty because we wanted to give our generation a voice on issues that we felt strongly about, such as the Vietnam War; this shared goal meant a great deal to everyone involved. It’s important to understand what your main motivation is so that you can focus your efforts on reaching those goals. Then structure your job – perhaps by delegating some work – so that you can spend
as much time as possible turning this energy to your company’s advantage. These days, one of my goals is to keep challenging myself. I see life as one long university education, in place of the one I never had – every day I learn something new. And perhaps I didn’t miss out, since there’s only so much you can learn sitting in a lecture hall. I’ve found that I often learn a great deal from the people I meet, and some of them have inspired me. Meeting Mick Jagger and Steve Jobs had a big impact on me. They accomplished so much in their respective fields that spending time with them made me think about what I might do in mine. Afterward, I was more motivated than ever to do the best possible job in my own business. Above all, you should work on building a business you’re proud of. This has always been a motivator for me, from my Student magazine days, through to our latest startups today. I have never gone into any business purely to make money. If money is your only motive, then I believe you shouldn’t launch the business at all. Once you know what your own motivations and aspirations are, talk to your employees and colleagues about theirs, if you haven’t already. Then structure their jobs in a way that allows them to tap into this energy, too. With you and your employees approaching your work with renewed energy and commitment, you’ll find that there’s little that you can’t accomplish together.
SINGAPORE BUSINESS REVIEW | FEBRUARY 2012 19
COMPANY FOCUS: Singapore Press Holdings profits, accounting for 84.3% of group PBT, up from 82.2% in 1Q12 and 69% in 4Q12.” Classified ads lead decline Weakness in the N&M core segment can be traced back to faltering classified ads revenues, according to OCBC analyst Eli Lee. “We saw the trend of weak print advertisement performance continue in 1QFY13 with revenue declining 4.1% mainly due to classified ads falling 10.5%, while display ads also dipped (down 1.1%). Classified ads comprised 25.1% of N&M ad revenues in 1QFY13, CIMB data show, and represent the second largest revenue source for the print segment. Display ads accounted for the largest source of N&M ad revenues at 59.7%. Magazine & Others contributed the remaining 15.2% of N&M ad revenues.
SPH print business declines as property business takes over The media giant looks to retail property for rescue.
S
ingapore Press Holdings is going against the tide these days, for good reason. While other companies are refocusing on their core segments to ride out the market uncertainty, SPH is nurturing its upstart but lucrative retail mall segment to offset the revenue rut in its print publishing arm. Declining print ad revenues The latest 1QFY13 results offered a glimpse of the shifting potential focus among SPH segments. Both advertisement and exhibition revenues slowed down, which led to a 10% yoy decline in 1QFY13 recurring earnings to S$102.8m from S$114.4m, according to CIMB analyst Kenneth Ng. Newspaper and 20 SINGAPORE BUSINESS REVIEW | FEBRUARY 2012
We saw the trend of weak print advertisement performance continue in 1QFY13 with revenue declining 4.1%
magazine (N&M) advertisements still accounted for the majority of SPH’s operating revenues at 63.6% (see chart on next page). This is why a 2% yoy decline in N&M ads to S$205m in 1QFY13 left a noticeable dent to the top line. Ongoing weakness at the N&M division also led to overall profit before taxes (PBT) in 1QFY13 to decline sharply by 8.8% yoy. The newspaper and magazine division’s PBT declined 6.6% yoy to S$93mn. Although N&M performed weakly, it remains the largest contributor to PBT, noted Nomura analyst Lisa Lee. “The group’s newspaper and magazine division’s PBT declined 6.6% yoy during the quarter but remains the largest contributor to
Slowly improving costs N&M revenues have surely taken a beating, but OCBC’s Lee says the segment has one thing going for it: Slowly improving costs. “On the cost side, however, things looked more positive: staff costs were mostly flat at S$89.0m (up 0.8%) with average headcount rising marginally to 4,258 (up 0.9%) from 4,221. Material, production and distribution costs fell by S$2.3m (down 4.1%), driven mostly by lower newsprint costs which were $2.0m lower (down 7.6%),” says Lee. OSK-DMG analyst Joshua Low says the lower newsprint costs cushioned an increase in other operating expenses. He says newsprint charge out rates were down 7% yoy to US$644/MT (-2% qoq) in 1QFY13, which “helped to partially offset against higher other operating expenses which grew 15% yoy to S$33m mainly due to increased business activities for the online businesses, which we expect to be a growing segment going forward.” But further cost reductions might not be in the cards this year. “Management expects newsprint’s charge-out rate to remain marginally unchanged with newsprint prices holding steady while print advertisement revenue is expected to perform in line with the Singapore
COMPANY FOCUS: Singapore Press Holdings economy,” say Nomura’s Lee.
FY13F/14F.”
Weaker ad environment Looking forward, SPH has little hope for N&M revenues rebounding in 2013 due to a soft growth outlook for Singapore. Most analysts predict the local economy to still expand, but at a subdued rate, which will translate to muted demand for print ad placements. “With the government’s expectation of a moderate GDP growth forecast of between 1-3% ahead, we lower our FY13 N&M advertisement revenue forecast by 2.7%,” says OSK-DMG’s Low. “On the back of a challenging domestic outlook ahead, we lower our FY13 PATMI by 7% on lower advertisement and other business revenue,” adds Low. “A weaker ad environment could hinder its print revenues,” concurs CIMB’s Ng. A combination of a “dismal” economic outlook and a slew of tightening measures for the property sector will likely result in lowered N&M revenues for the year. Both analysts believe enfeebled N&M revenues will cap FY13-15 earnings to within the low single-digit growth range of 3-6%. DBS analyst Andy Sim likewise sees SPH earnings growth to remain muffled in the face of a still-nascent economic recovery. “DBS expects GDP to grow by 1.6% and 3.2% for 2012 and 2013, respectively. With this, we expect print revenues to be weighed down by the muted economic outlook and expect 0%/2% ad revenue growth in
Timing hurts exhibition revenues The N&M segment is not the only business giving SPH revenue headaches. Exhibitions, which form the bulk of the other business segment, will also perform poorly in the FY13 due to a forward shift in revenues. “SPH’s other business segment revenue fell 34.3% yoy during the period to S$10.4m. This was mainly due to the timings of the exhibitions business of which certain shows were brought forward to 4QFY12. We have consequently lowered our FY13 revenue by 18% for this segment,” says OSK-DMG’s Low. 1QFY13 recurring revenues, for instance, has already been slightly slashed due to the difference in timing of the Comex exhibition this year, say CIMB’s Ng. Additional data from CIMB show that the removal of Sky@eleven profits from the first quarter recurring earnings as of 1QFY11 has led to a steady decline in recurring earnings and operating margin. The lower pretax profit posted during the 1QFY13 can also be blamed on the lower revenues from the exhibition business, say Nomura’s Lee. SPH also cannot count on circulation revenues to pick up the revenue slack. Circulation revenues declined 2.6% yoy to S$49m in 1QFY13, and there is little reason to believe that the downward trend will be reversed. “We believe that the persistent trend of falling circulation and
Singapore has historically been a magnet to tourists within the Asia Pacific region with the top five markets.
advertisement revenues point to increasing uncertainties in SPH’s core newspapers and magazines business, and would put pressure on SPH’s overall operating margins over the mid to long term,” say OCBC’s Lee. Hopes pinned on property With N&M, exhibitions and circulation all showing revenue weakness, where then should SPH look to drive its growth? All eyes should be on property, according to analysts. “We expect rental income to offset the decline in ad revenues. Paragon, again, saw positive rental reversions while rates at Clementi Mall remained stable. Rentals from Clementi Mall are likely to stay flat this year as the first cycle of rental reversions should come in FY15,” say CIMB’s Ng. Rental and services, which accounted for 15% of 1QFY13 revenues and contributed S$24m in pretax profit for the same period, will continue to rise in importance for SPH, agrees DBS’s Sim. “We continue to see SPH growing rental income as a key buffer for the group’s softening advertising and circulation revenue. Property rental now accounts for 15% and 21.7% of the group’s revenue and PBT in 1Q, respectively, up from 14% and 19.7% a year ago. This should be further increased with the expected completion of Seletar Mall at the end of 2014. Fortunately, growth should be supported by stable contribution from its property rental income,” Sim adds.
1Q13 revenue breakdown
Decline in recurring earnings due to difference in timing of exhibition revenues
Sources: cimb, company reports
Sources: cimb, company reports
SINGAPORE BUSINESS REVIEW | FEBRUARY 2012 21
ANALYSIS: SINGAPORE TOURISM
Growth of Singapore’s hospitality sector to decelerate in 2013 Global headwinds will slow down tourism and hotel performance in 2013.
A
nalyst and government forecasts anticipate the Singapore hospitality sector’s booming growth to decelerate slightly in 2013 as more companies hold back on business trips and visitors spend less during their stay. Signs of slowing down Visitor arrivals – one of the key indicators in hospitality performance since more visitors translate to more sector revenues – will still grow in 2013 but by a muted 5.5% to 15.3 million visitor arrivals, based on government data and a DBS Group research report by analysts Derek Tan and Munyee 22 SINGAPORE BUSINESS REVIEW | FEBRUARY 2012
We forecast visitor arrivals to grow 5.5% to 15.3 million from the expected 14.5 million visitors in 2012
Lock. “We believe that 2013 is likely to be another year of growth in visitor arrivals. We forecast visitor arrivals to grow 5.5% to 15.3 million from the expected 14.5 million visitors in 2012, putting the sector within reach of its 17 million visitor target by 2015,” says the DBS report. This 5.5% growth pace is slower than the 6% growth registered in 2010 (latest available full-year figure) and the brisk 28% growth in 2010. The first quarter of 2012 had initially given hope that the hospitality sector was regaining its stride, but record sluggishness in the second quarter of 2012 has confirmed fears of a slowdown
creeping into the sector. “The Singapore hospitality sector started brightly with visitor arrivals continuing to exhibit strong growth momentum in 1H12 on the back of a strong conference and events line-up, despite ongoing global uncertainties. Visitor arrivals totaled 7.1 million visitors, representing an 11.4% increase compared to a year ago,” says the DBS report. However, the pace seems to have winded down starting in 2Q12 when the hospitality sectored posted a growth rate of 8%, the slowest over the past eight quarters. “While we believe that the
ANALYSIS: SINGAPORE TOURISM slowdown in growth momentum in 2Q12 can be attributed to the higher base effect and the current global (USA, Europe, and China) uncertainties, we continue to remain optimistic on the prospects in the Singapore hospitality sector for the longer term with the new attractions pulling visitors from the region,” says DBS. Looking forward to 2013, the first quarter will likely post the weakest number of visitor arrivals before gradually picking up for the rest of the year, says Derek Tan, Assistant Vice President at DBS Vickers Research, in a separate comment. “The outlook for 2013 appears mixed. We expect the industry to start slow and visitor growth y-o-y in 1Q13 might even be weaker vs 1Q12. This is due to the lack of large-scale bi-annual events like the Singapore Air Show, which will not be held next year (2013). Notwithstanding a slow start, we believe Singapore’s tourism sector in 2013 continues to hold promise,” adds Tan. Cautiously optimistic Singapore’s tourism development agency, the Singapore Tourism Board (STB), agrees that 2013 poses some growth challenges but insists that the robust patronage of Asian travelers will sustain the industry through the year. “Looking ahead for 2013, travel patterns are likely to continue being affected by global economic concerns,” says Edward Koh, Executive Director, Strategy and Planning at STB. “However, with the strong travel potential seen within Asia, we are cautiously optimistic that Singapore will continue to perform well in the coming months.” Pointing to the latest tourism receipts data, Koh asserts that Singapore’s draw as a regional destination has kept its tourism growth engine running. “While the global economy in 2012 witnessed weak growth coupled with a high degree of uncertainty, Singapore tourism benefited from Asia’s resilient growth, as reflected in our tourism
receipts for January to June 2012, which registered a 7% year-on-year growth to hit $11.5 billion,” says Koh. Asia-driven growth Singapore’s top five visitor markets – China, Malaysia, Indonesia, India, and Australia – accounted for 54% of the total visitor arrivals in 2011, says the DBS report. This is 13 percentage points higher than their 41% share in 2000. In contrast, visitor arrivals from Europe and the USA have declined from 20% to 14% over the same 11-year period. Visitor arrivals from other regions, representing the rest of the world, have also dipped from 39% to 32%. DBS says the government’s marketing push has been effective in making Singapore a popular regional destination among both business and leisure travelers in Asia Pacific. “Singapore has historically been a magnet to tourists within the Asia Pacific region with the top five markets continuing to grow market share over the past few years. This indicates that the marketing efforts and investments made by the government into growing Singapore’s hospitality sector into one of the region’s top destination for business and leisure has borne fruit and will continue
Singapore has historically been a magnet to tourists within the Asia Pacific region with the top five markets.
to do so in the coming years,” says DBS. STB’s Koh says that in 2013, the government will continue to focus on branding Singapore “as a compelling lifestyle destination and business hub with diverse shopping, dining, entertainment, and heritage offerings.” China’s “tremendous potential” China is currently the top visitor market for Singapore with the Chinese proclaiming Singapore as one of the top five destinations they would like to visit for their holidays, notes the DBS report. “China, which now accounts close to 12% of total visitor arrivals, has been one of the strongest growing market over the past two years (at 25-35% y-o-y) and registering visitor arrival growth of more than 25% y-o-y over the past six quarters,” says DBS. “Given the size of the China market, supported by a fastgrowing consumer class, we believe there is tremendous potential that Singapore can tap to continue to market itself as an ideal holiday destination in the coming years,” it adds. DBS also cites Indonesia as another fast-growing visitor market for Singapore. Visitor arrivals from Indonesia grew 12%
Visitor arrivals to grow by 6.5% CAGR from 2011-2015F 18.0
V isitor Arrivals 'm
E xpected CAGR of 5.5% 14.5
16.0
17.0
13.2
14.0 11.6
12.0 10.0 8.0
15.3
16.1
8.3
7.6
8.9
9.8
10.3 10.1
9.7
6.1
6.0 4.0 2.0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012F2013F2014F 2015F Source: STB, DBS Vickers
SINGAPORE BUSINESS REVIEW | FEBRUARY 2012 23
ANALYSIS: SINGAPORE TOURISM in 2011 and 32% in 2010, DBS data show. Combined, China and Indonesia will have made up 30% of Singapore’s predicted 14.2 million total annual visitors in 2012. Fewer MICE events Visitors continue to flock to Singapore for either business or leisure because of its status as a prime financial hub in Asia that also offers world-class hotels, casinos, malls, and theme parks. But business visitors might beg off temporarily in 2013. Business trips to Singapore will likely decline in 2013, an oddnumbered year, which analysts say sees fewer MICE events (meetings, incentives, conferencing, and exhibitions). A notable number of MICE events are held biennially and mostly on even-numbered years, according to an OCBC
research report by analysts Sarah Ong and Carey Wong. Weaker hotel bookings Along with the anticipated drop in MICE events, OCBC expresses a dim outlook for hotel bookings. “Our channel checks indicate that hotel bookings up to Chinese New Year (February 10) are still weak, and we believe that 2013 will see fewer MICE events,” the report says. “With no immediate catalysts to boost tourism numbers dramatically in the near-term, we are cautious in our outlook for 1H13. Corporates have also been tighter with their travel budgets. Luxury and upscale hotels will most likely perform best based on the most recent data trends. “For the first 10 months of 2012, the higher the hotel tier, the stronger the y-o-y growth in the Average Room Rate (ARR)
Visitor Europe & Top 5 Arrivals markets* USA ('m)Visitor Top 5 Europe & Other Year Arrivals markets* USA 7.69 41% 20% regions 2000 ('m) 7.52 7.69 44% 41% 20%20% 39% 2001 2000 7.52 44% 20% 36% 2001 7.57 47% 19% 2002 7.57 47% 19% 35% 2002 6.13 50% 18% 2003 6.13 50% 18% 32% 2003 8.33 8.33 51% 51% 17%17% 33% 2004 2004 50% 17%17% 33% 2005 8.94 8.94 50% 2005 9.75 51% 16% 33% 2006 9.7510.28 51% 16% 2006 51% 16% 33% 2007 51% 50% 17%16% 33% 2008 10.2810.10 2007 52% 18%17% 31% 2009 10.10 9.68 50% 2008 11.63 54% 16% 31% 2010 9.6813.16 52% 2009 54% 15%18% 31% 2011 7.10 54% 14%16% 32% 11.63 54% 1H12 2010 * Top 5 countries are: Indonesia, Ch ina, Malaysia, India and Australia 13.16 54% 15% 2011 7.10 54% 14% Source: STB, DBS Vickers 1H12
Market share by major markets (%) Year
Other regions 39% 36% 35% 32% 33% 33% 33% 33% 33% 31% 31% 31% 32%
* Top 5 countries Indonesia, Ch Malaysia, India Australia Growthare:Indonesia Chinaina, Malaysia Indiaand Australia (Y-o-Y)
Visitor arrivals 6%11% y-o-y 21% in 1H12 10% 2006 grew by Growth (Y-o-Y) 2006 2007 2008 2009 2010 2011 YTD 2012
2007 2% -11% 2008 Indonesia -1% 2009 32% 2010 6% 12% 2011 YTD 2% 12% 2012
-11% -1% 32% 12% 12%
7% -4% China -13% 25% 21% 35% 29% 7%
-4% -13% 25% 35% 29%
Source: STB, DBS Vickers
24 SINGAPORE BUSINESS REVIEW | FEBRUARY 2012
13% 2% 14% -1% 3% Malaysia 19% -6% 36% 19% 10% 10% 1% 11%2% 7%
-1% 19% 36% 10% 11%
12% 11% 8% India 0% 3% 13% 11% 14% -2%
3% -6% 19% 1% 7%
Australia 12% 11% 8% 0% 3% 11% -2%
Singapore’s position as a compelling tourism destination is reinforced by the opening of large-scale attractions such as the Marine Life Park and iconic Gardens by the Bay.
and revenue per available room (RevPAR). For example, luxury hotels registered ARR and RevPAR growth of 8.8% y-o-y and 11.8% y-o-y respectively, while economy hotels registered ARR and RevPAR growth of only 0.6% and 1.1%,” OCBC says. “We think this is attributable to more favourable supply and demand dynamics for the luxury and upscale tiers. The number of affluent visitors coming to Singapore is increasing with the general growth in arrivals, and supply is more stable for the higher-end hotel tiers,” it adds. New tourist attractions While business travel is seen to dip in 2013, leisure travel is all set to boom. An array of mustsee tourist attractions opened in 2012 with several more opening in the next couple of years, further differentiating Singapore as a leisure travel hub. “Singapore’s position as a compelling tourism destination is reinforced by the opening of large-scale attractions such as the Marine Life Park and iconic Gardens by the Bay. We have also hosted another successful F1 Singapore Grand Prix in 2012, as well as announced the extension of the race till 2017,” says STB’s Koh. The DBS report, meanwhile, is optimistic about the opening of new major attractions like the aforementioned Marine Life Park, River Safari, and the International Cruise Terminal in “anchoring Singapore as a regional holiday destination.” Existing attractions are also attempting to draw in more visitors with lavish expansion plans. The Universal Studios, for example, will be increasing its number of rides to 24, 18 of which are unique to Singapore. The Universal Studios theme park says the ride improvements will help it hit its target of 4.5 to 5 million visitors annually. Other attractions estimated to be completed by 2014 include the Kallang Sports Hub, Jurong Lake District, and National Art Gallery.
SME FINANCING
Credit tightening stifling SMEs
S
MEs are finding it harder than ever to get financing from the banks. Alarmingly, more than half or 55% of 700 applications for financing, including term loans, trade facilities and property refinancing have been rejected in 2012, with only 12.5% of all trade financing applications approved. Jeff Koh, Managing Director of SME consultancy firm Loyal Reliance reckons banks should have been more willing to approve applications for such facilities if applicants can prove they have bonafide operations. “Rejections may have occurred because banks may be more stringent in their selection regarding approval of such facilities now due to the high uncertainties of 2012.” But Kavita Bedi, Standard
Chartered Bank’s regional head of SME banking for Singapore and Southeast Asia, says it is a common misconception that when loan or trade applications are rejected, it is due to banks enforcing tighter credit criteria on businesses. “A term loan for example might not be approved if, in discussions with the business owner, it is found that there are no immediate needs for the funds and the intention of the business is to seek stand-by cash,” adds Bedi. Ultimately, Bedi suggests urges SMEs to collaborate with their banker, share their anticipated difficulties and not wait for their banker to discover these for themselves. “All these will improve business-banker relationships and help ensure healthy cash inflow to the SME community,” he concludes.
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ANALYSIS: Integrated Resorts
Singapore integrated resorts’ growth threatened by tougher regulations
New junket restrictions and stiffer competition from Asian neighbours may spell the end for the sector’s boom days. By Karen Mesina
D
espite the success of two Singapore integrated resorts (IR’s), namely, Resorts World Sentosa and Marina Bay Sands, their combined revenue at $2.8 billion still pales in comparison with Macau which is eight times larger at $23.4 billion. And more worryingly there are signs that both Singapore IR’s may have hit a near-term peak in profits. “The Singapore market experienced impressive growth after the initial success of Resorts World Sentosa and Marina Bay Sands, but regulatory changes are likely to lead to a slowdown there,” notes Fitch analyst Vicky Melbourne. Singapore has become a major gaming destination in Asia, with gross annual revenue of around S$7.7bn ($6.3bn) in 2011. “The initial appeal of the new market is now over. Government policy and weak VIP growth will also serve to restrain revenue growth,” adds Melbourne.
26 SINGAPORE BUSINESS REVIEW | FEBRUARY 2012
Singapore has become a major gaming destination in Asia, with gross annual revenue of around SGD7.7bn (USD6.3bn) in 2011.
It may come as a surprise to some but Singapore’s casinos are already reporting falling revenues. Marina Bay Sands reported that the local mass market was dropping off which led to a 6% slip in slot revenue year on year. The VIP segment also suffered due to weak demand from China, which saw overall profits based on a normalised win rate down 12% yearon-year. The revenue decline was also observed in Genting Singapore which saw profits dip 19% due to lower VIP volume. Capping commissions The biggest headwind for the casinos is proposed law amendment which will cap commissions paid by casinos to junket operators. It is the highrolling, big-spending ‘whales’ that junket operators bring in that are crucial to continued growth, and this makes it more difficult. In addition IMAs (international market agents)
won’t be allowed to extend credit to VIPs - a standard service offered in other markets. With no additional junket operators approved, “the junket model in Singapore will evolve only slowly,” notes Melbourne. Another challenge to Singapore’s South East Asian dominance is the threat that other regional countries will move to establish casinos. No concrete announcements have yet been made regarding plans, but Japan, Taiwan, Vietnam, and Cambodia are all considering allowing casinos and could have them up within a decade. Approvals are expected to be given in 1 to 2 years to Osaka and Tokyo. Existing casino markets in South Korea, Taiwan, and the Philippines are all considering allowing new casinos, and Sydney may get its first new license in 20 years. There is a lot at stake for both the IR’s and Singapore. With Asia’s market share of global casino revenue to rise
ANALYSIS: Integrated Resorts to 44% by end-2015 after having climbed to 29% in 2010 from 14% in 2006, it’s a battle Singapore cannot afford to lose. Deeper concerns One broking analyst told Singapore Business Review that Singapore’s VIP segment is even more cyclical than others as there are no junkets to provide credit/financing to VIPs. Most VIPs derive their wealth from manufacturing and property and neither segment is doing well in Singapore or China, where the casinos derive half of their VIP volumes from. “We need to see a sustained recovery in both segments in China and ASEAN before VIP volumes turn around.” But deeper concerns are held for the mass market. The casinos cannot market to locals and therefore depend on tourists for business. “Singapore is not the cheapest holiday destination with an average room rate of S$260 ($210). More should be done to increase the number of hotel rooms and bring down the average room rate so that more visitors can visit Singapore economically. For now, the casinos will likely experience mass market gaming revenue growth that will be anemic,” he adds. Barclays senior regional economist Wai Ho Leong reckons this is a short-term blip, reflecting the wearing off of the initial novelty. “Like the experience of other properties elsewhere, visits should moderate to a more sustainable longterm trend. This has been largely anticipated and is not an ominous structural signal,” he adds. Union Gaming Group principal analyst Grant Govertsen says that with the benefit of hindsight, the plateauing of gaming revenue in Singapore is not overly surprising. Singapore witnessed incredibly fast gaming revenue growth over the first two years of operations, which can be attributed to significant levels of pentup demand among local and regional customers. However, he said, given the government’s desire to minimise any potential social ills associated with gambling, restrictions on the locals’ market were expected. ”As a result, and when combined with the fact that the locals market is well-penetrated, the mass market segment is unlikely
to continue to see explosive growth. The VIP segment, on the other hand, has more recently been impaired by economic issues, and to a lesser extent by regulatory issues (e.g. restrictions on IMAs).” But not everyone thinks this is the end of the growth story for Singapore’s gaming business. The hidden jewel Standard and Poor’s associate director of corporate ratings Joe Poon said although net gaming revenue is likely to post a decline in 2012, the Singapore gaming industry still has growth potential, as there is sufficient demand in the region. Despite a slowdown in the VIP segment, visitation continues to be solid, supporting revenue rates in the mass market. “After a very quick ramp up in gaming revenue in its initial years, we expect growth in the market going forward will be more correlated with GDP growth. In 2013, we expect gaming revenue growth in the 0% to 5% range in Singapore,” he adds. Asia Pacific Gaming (APG) Consultancy Macau president and CEO Ciarán Carruthers says he believes that the fall in local numbers is likely to be a short-term issue as opposed to anything significant long term. Both properties ramped up very quickly and were successful opening up into a market that was already quite familiar with gaming as a form of entertainment. “The new resorts obviously offered so much more and brought in significant crowds and revenues, both from local mass players and from overseas tourists playing on their mass gaming floors. I don’t believe that there has
Joe Poon
Jonathan Galaviz
Vicky Melbourne
been a change in attitude towards gaming within the mass market, but perhaps the novelty of the current offering has worn a little thin. If this is the case, then you have two highly experienced, proactive and motivated executive management teams who will address this and who will know how to do it effectively,” he says. It is the new proposed laws which will cap the VIP segment that has analysts most concerned. Not a gaming hub Barclays Wai Ho Leong sees that gaming is but part of the overall visitor experience in Singapore and the situation here tends to be more heavily driven by business traffic – the conventioneers, exhibitions, conventions, business visitors as well as leisure tourists. This is unlike other places which are driven by grind gamblers and leisure, which could be more affected by tighter rules on junket operators. Union Gaming Group’s Grant Govertsen said further IMA restrictions will likely have a minimal impact on the market given that the contribution of the existing IMAs is nominal (accounting for a very low single digit percentage of VIP business). However, by not expanding the IMA program, the effect could be to artificially cap the VIP potential of the Singapore market. Standard and Poor’s director Joe Poon said the Singapore government never intended to promote itself as a gaming hub in the region. The new laws imposed by the Singapore government are designed to ensure gambling does not become a social
Singapore Gaming Revenue
SINGAPORE BUSINESS REVIEW | FEBRUARY 2012 27
ANALYSIS: Integrated Resorts problem in the country, and he expects this will be a continuous process, which could hamper growth. “We believe these concerns about social problems and potential illegal activities also drove the tight junket operator reviewing process. As a result, we don’t currently expect junket operations to have a significant impact on the gaming industry in Singapore.” he says. APG’s Macau Ciarán Carruthers says if the regulatory reins get pulled even tighter, this will undoubtedly make their ability to compete in this space much more difficult. More and more countries around the region are looking at casinos as a viable form of revenue and job creation, and eyeing the lucrative junket market to bring in significant revenues from high net worth individuals from overseas. “As competition heats up here, and junkets are provided an ever increasing range of options to choose from, it is hard to see anything but hard times ahead for Singapore’s junket efforts,” he adds. New casinos, new competition And there is always new competition from the slew of new casinos expected to be opened in regional Asia. One brokerage analyst says he doesn’t think that any new casinos in the region will have a material impact on Singapore. In other countries, the fortunes of casinos are tied to the local economies. “The Singaporean casinos are unique in the sense that they are marketed at tourists and high net worth individuals who have parked their fortunes in Singapore,” he adds. Barclays Wai Ho Leong also does not foresee the competition as significantly affecting Singapore. The properties proposed in Taiwan are much more modest in terms of scale - catering to Mainland visitors across the Straits - so is unlikely to compete with the integrated resorts in Singapore. Second, he adds, there are very few destinations that offer a complete experience for visitors – for families and business traffic. The competition in this case is only confined to Macau or Australia. “Singapore’s model is that the casinos feeds off the strong visitor traffic that come for other reasons. Not the 28 SINGAPORE BUSINESS REVIEW | FEBRUARY 2012
other way around,” he adds. New casino licenses Govertsen says he does not think regional gaming expansion is likely to have anything but a small impact on Singapore. The jurisdictions that are Ciaran Carruthers expanding, or potentially expanding, such as the Philippines, Taiwan, Russia (Vladivostok) and Japan, are generally geographically far enough away from Singapore as to not be competing for the same customers, he adds. APG president Carruthers says the new casino resorts being planned Grant Govertsen for Manila, for example, will offer the junkets everything they need to attract their players, it has greater proximity to key markets such as China, Hong Kong, Taiwan, Japan, and Korea whilst also having better proximity to South East Asian junkets than Macau has. “Add to this Wai Ho Leong a less restrictive regulatory structure from a regulator that is encouraging foreign play as opposed to local and with comparable tax rates but lower operating costs that allow for higher commission rates, and you provide the Singapore operators a very tough uphill battle if you make already tough restrictions even tougher,” he says. More challenges could lie closer to home, especially if Singapore decides to grant any new casino licenses. The current operators have exclusivity until 2017, so now is the time new entrants would be circling to start construction. Union Gaming Group’s Govertsen says there would be high levels of interest on the part of existing gaming operators who would be interested in operating in Singapore. However, he does
not think the government is entertaining thoughts of awarding new gaming licenses, especially in the context of what appears to be an increasingly conservative gaming regulatory regime. Standard and Poor’s director Poon says although the two casino operators enjoy a duopoly position in Singapore until 2017, he believes the Singapore government will be extremely cautious in granting additional casino licenses because this will intensify competition and might not bolster the economy sufficiently. Future considerations Galaviz & Co. managing director Jonathan Galaviz says he does not believe additional IR’s or casinos in Singapore will add anything incrementally useful to the current tourism value proposition of the country. Any future consideration for additional casino licenses should be researched thoroughly to ensure that they would not accelerate any social ills that seem to be increasing in the country. “In addition, if additional licenses are considered, they should be considered in the context of things such as concepts that go beyond the traditional Las Vegas-style IR model,” he adds. APG Macau’s Carruthers says the current operators will enjoy a period of exclusivity till 2017 before any new licenses could be issued and you could argue that an additional casino resort in Singapore would help make the market more attractive to players and tourists by adding yet more variety and that this in turn would further grow the market.
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BIG ISSUE 1
N E M I PEC
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Is Singapore fully out of the economic slump? Unfortunately, more headwinds loom in 2013.
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he Singapore economy in Q4 2012 grew 1.8% versus the previous quarter, amid analysts’ calls for yet another contraction which would have pushed Singapore into a technical recession. For the full-year 2012, the economy expanded 1.2% from 2011. Despite this fourth-quarter turnaround, experts believe that Singapore may not be fully out of the slump. A market specialist at OANDA, an international forex broker, points to the manufacturing sector contracting by 10.8% annualised and extending its losing streak to three consecutive quarters as a major concern. But with the global economy potentially picking up at the start of 2013 due to cheers of a “fiscal cliff” deal, the OANDA market specialist believes the manufacturing sector will readily pick up especially since Singapore’s manufacturing focuses mainly on mid-higher tier technological goods with high beta coefficients. Cyclical improvement UBS economist Edward Teather, meanwhile believes that cyclical 30 SINGAPORE BUSINESS REVIEW | FEBRUARY 2012
“Cyclical improvement has yet to take shape in recent trade and manufacturing numbers.
improvement has yet to take shape in recent trade and manufacturing numbers. But early signals of a moderate recovery persist in a survey based on lead indicators of global trade, which he says echo the cautious optimism of UBS global growth forecasts. “The certainty on US income taxes afforded by the fiscal deal over the New Year is consistent with this view. As such, we still look for cyclical improvement in Singapore growth, but the slower-than-anticipated momentum into the year end leads us to revise our real GDP growth projections to 1.2% in 2012 and 3.0% in 2013.” UBS’ bias is towards the upper end of the government’s 1-3% real GDP growth projection for this year, but Teather notes that even if the research firm forecasted a Q4 2013 high growth of 5.5%, it would remain a subdued recovery by historic Singapore standards. Sluggish H1 OCBC believes that momentum may still be modest in H1 of 2013 even though Q3 2012 momentum had reaccelerated from Q3, which was
the trough of the downcycle in 2012. OCBC nevertheless still looks for around 2% growth in 2013, even with a sluggish H1. “We expect a tepid H1 growth of around 1.2% yoy to gradually pick up some speed in H2 2013 to around 2.9% yoy,” says OCBC analyst Selena Ling. Ling notes that domestic asset prices remaining buoyant into the year-end should give the economy cushion from external shocks. Singapore’s private home prices climbed 1.8% qoq to a record 211.90 points in Q4, adding to the +0.6% qoq in Q3 2012, and bringing fullyear gains to +2.8%. Non-landed private home prices rose 0.8% qoq in Q4, while suburban prices surged 3.4%. The OCBC analyst however notes that business sentiments are showing some tentative signs of caution. Although overall bank loans added 0.5% mom in November, business loans moderated 0.4% mom even though manufacturing and building/ construction loans continued to be resilient. Consumer loans rose 1.7% mom, boosted by housing loans. Ling believes that domestic challenges still remain, namely on the inflation front amid a weak external demand environment. Further, domestic companies, she says, still face a tepid external demand environment, while domestic cost pressures remain. She notes that the upcoming budget, likely in February 2013, may offer some relief to SMEs, but the foreign manpower curbs and the productivity push are likely to remain, especially with global tail risks subsiding. MAS policy Slower-than-expected growth should, all else equal, increase the potential for looser MAS currency policy, but UBS’ Teather notes that authorities continue to highlight the inflationary capacity constraints implied by structural labour market policies. As such, UBS does not look for a change in currency appreciation policy on the part of the MAS in April, but it will be looking at the government’s budget expected in late February for guidance on how tight the authorities perceive capacity constraints to be.
SINGAPORE BUSINESS REVIEW | FEBRUARY 2012 31
BIG ISSUE 2 within SMRT, says Chew. “In an industry whereby discipline is required of the employees because of the clockwork nature of transport, we have seen SMRT experience failure in ‘Machine, Materials, and Measurement’ from the huge breakdown of its train services last year. And from this current incident, ‘Man, Methods, and Environment’ are also found wanting within SMRT, especially within its bus division. Their inability to listen and act timely on employees’ feedback has resulted in a public relations fiasco. Their inability to integrate their global workers within their corps is a lesson to be learned by others.”
SMRT drivers’ strike is over, but what’s been learned? SMRT suffers strict public scrutiny.
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alking off the job in protest has been mostly unheard of in Singapore in the last 26 years until last November 26 when about 171 Chinese bus drivers of SMRT stayed in their dormitories, refusing to make their usual rounds. Another 88 did not report for work the day after. The strike was over on November 28 but it has left a sting to SMRT which has already been previously scrutinised for its MRT service disruption. It was estimated that the strike disrupted about 5% of the city-state’s bus services. Aside from the financial cost that the strike incurred, experts note that the incident puts pressure on SMRT as every step it takes to improve quality can be seen by the public. Systems gone berserk Mark Chew, founder and principal strategist at Giants Learning Technologies, comments that this industrial strike is a result of an organisation reaching instability because it is experiencing a series of systemic failures. Chew cites a basic business management model known 32 SINGAPORE BUSINESS REVIEW | FEBRUARY 2012
“It was estimated that the strike disrupted about 5% of the city-state’s bus services.“
as the Ishikawa diagram, which points out that a problem or quality defect may arise if any of these six categories of ‘Man, Methods, Machine, Materials, Measurement, and Environment’ are not taken care of. A good example of this, he says, is an incident which happened back in June 2008 when a group of Nepalese Gurkhas in a contingent attached to the Singapore’s police force openly disagreed with their superiors because they were unhappy over their wages. “Can you believe that disciplined soldiers can be forced into such actions because of salary matters? This was indeed a rare display of indiscipline in a force that was famous for its dutiful honour. In this case, the Gurkha Contingent experienced failure in ‘Man, Methods, and Environment’. There were poor communication channels between the soldiers and their commanders. Grievance procedures were overlooked, and Management and HR policies were wanting.” Six-degree failure These similar reasons have surfaced
Lessons learned? Securities Investors Association president and CEO David Gerald notes that key lessons from the strike are, firstly, that employers must not take for granted that disgruntled employees will not react; secondly, employers, he says, must constantly review the employees’ working conditions and benefits to give the employees the assurance that their concerns are being addressed; and finally, the human resource officers, he adds, must be communicating well with the employees and must always have their door open for employees to express their grouses. Apex Headhunters managing director Pang Meng Hock explains that Singapore may be the only unique country in the world that does not allow strike or demonstration and this is a strong selling point to attract investors. “We have seen many countries in the world today, developed and developing, that have been cursed with constant strikes and demonstrations that paralysed their whole economy and society but at the end no one wins.” Pang maintains that the Chinese drivers are on the wrong side of the law. With Internet and social media today, there is always an effective way, he says, to apply pressure without resorting to violence or illegal means to achieve the desired result.
PROFILE
Dannie Francis, CEO of Cell City
Smart Apps driving great customer loyalty Find out why some mobile strategies just don’t work.
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ne-to-one marketing is the holy grail for companies seeking to please and monetize their customer database. Unfortunately, as more consumers adopt smartphones, one-to-one marketing needs to move beyond direct mail and SMS. But so many companies get it so wrong when they go forward with a mobile strategy, says one of Singapore’s leading digital marketing experts. Dannie Francis, chief executive officer of digital marketing and mobile App maker Cell City, says there are a number of exciting new developments being rolled out in the Singapore market right now. But to get it right, marketers need not just an app, but a marketing platform to empower the app. “An app may help to get you noticed, but if you don’t build in the smarts, you wont get very far. Consumers need to get value, reward and instant gratification at the very minimum to keep them coming back. Give them what they want, when and where they want it,” he says. One application the company developed for DBS is the ‘Indulge App’ which is based around the food and beverage experience, and has over 600,000 downloads. “The difficulty for a bank is they need to be able to manage the promotions of all of their merchants and match those against the preference of customers. With Indulge, that’s exactly what we do. Great Offers, from smart merchants, sent to willing customers who actually want the promotion. “But an app itself doesn’t do that, a marketing platform empowering an app makes it smart. You have to pair the pretty face at the front end with some power and intelligence at the back end,” says Francis. “With DBS apps, we overlay customer preferences on a
Apps just got smarter
map so we can do location-based marketing. We set what we call geofences, basically setting a radius of any size around a location to make sure the right offers get to the right customers at the right place and at the right time of day. “It wouldn’t make much sense sending a lunch promo out at 8 am in the morning, that’s web internet thinking, very old hat stuff, and where most newbies to mobile marketing make errors,” says Francis. Simply sending a blanket SMS to customers is not enough either. Francis cites an example such as on DBS Indulge. “If one searches for Chinese food we don’t need the consumer to formally register their preference, we automatically record the customer’s preference and match that search and put it into the database so we can tailor our push messages around that individual’s preferences. “ The next stage of development, says Francis, is predicting what you may like, based on what other people with similar profiles like, much in the way that Amazon will recommend you a book based on what basket of books other people bought. “We can predict what you want or will do with an 87.9% level of accuracy,” says Francis. Another client of Cellcity’s who has dramatically boosted sales through smart mobile marketing is EpiCentre, the Apple reseller with ten stores around Singapore. The challenge was how to increase sales without increasing the number of shops. To do this the company placed Cellcity enabled smart posters in several MRT’s and around Singapore showing Apple-related IT accessories along with a QR code to buy. Users simply scan the code and are taken to the online checkout for immediate purchase. “So that was kind of cool, to spread the retail footprint and creat virtual stores, but the real power is that now EpiCentre is able to build a customer database with in depth insight into purchasing habits to drive further sales,” adds Francis. The firm even places the posters outside its own stores and gives customers a 5% discount if they order and pay online and then collect the product from the store. SINGAPORE BUSINESS REVIEW | FEBRUARY 2012 33
singapore’s hottest startups
20 Startups to watch in 2013
Check out these hot startups offering a range of products and services from online beauty and fashion stores to stock market simulation apps to aerial vehicles for non-military purposes.
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ingapore Business Review brings you 20 of the hottest startups in the city that started operating from 2007. Find out how the founders managed to make their business flourish with initial funding that ranges from as little as $15,000 to as much as $68.4 million. We have gathered some exclusive information on who the founders are, how much funding each startup received and what products they offer. Read on and see how each startup can best serve you this year. 1. Luxola Founders: Alexis Horowitz-Burdick; Camille Schu Funding: $1.24m, WaveMaker Labs and National Research Foundation Start of operation: September 2011 Luxola bills itself as the first legitimate online beauty store in South East Asia. It competes with other online beauty stores selling grey and black market products. It boasts itself as the only online beauty store in the region selling 100% authentic products and being backed by every single brand they work with. A year after its founding, Luxola started shipping to Malaysia, Indonesia, Thailand and Brunei. It plans to ship to more countries in 2013 such as the Philippines and Vietnam.
2. GushCloud Founders: Vincent Ha; Althea Lim Funding: US$500,000, F&H Fund Management Start of operation: 18 February 2012 GushCloud runs the website GushAd which bills itself as the only platform that brings consumers into the advertising game through incentivised engagement. It allows them to perform actions on behalf of brands in exchange for a cash reward - tweeting a message and a link, completing surveys for marketing research companies, signing up or downloading apps and even buying and sharing about products. The range of rewards is between $0.50 to $100. 3. Travelogy Founders: Winnie Tan; Eric Koh Funding: $250,000; Crystal Horse Investments, Singapore Media Development Authority via 34 SINGAPORE BUSINESS REVIEW | FEBRUARY 2012
the i.JAM Reload scheme Start of operation: August 2010 Travelogy builds scalable online travel portals with a focus in Southeast Asia. It has two main products: TripZilla.com and ComeSingapore.com. Tripzilla is an outbound travel portal which according to founders has seen more than 100,000 visits monthly. They add that both traffic and user registrations are growing at more than 15% every month. As for ComeSingapore.com, it is a destination marketing platform for inbound visitors. It aims to be a one-stop travel portal that engages visitors at every stage of their trip to Singapore.
4. TradeHero Founders: Dinesh Bhatia; Dominic Morris Funding: $600,000, TNF Ventures through the Technology Incubation Scheme under Singapore’s National Research Foundation Start of operation: Mid-December 2012 TradeHero is a free stock market simulation app which draws real-world data from stock exchanges to create an unrivalled global social investment network. Users can compete with friends from their social networks, or on the global leaderboards with users from across the world. According to founders, the app brings novice and knowledgeable traders together, allowing novice traders to subscribe for stock tips via push notifications, and top traders to earn subscription fees from followers.
“GushCloud allows users to perform actions on behalf of brands in exchange for a cash reward.”
singapore’s hottest startups 5. travelmob Founders: Turochas Fuad; Prashant Kirtane Funding: US$1m, Jungle Ventures Start of operation: September 2012 Travelmob is a social stay marketplace where people can find, offer, and book unique accommodations in Asia Pacific. Founders say that travelmob provides a secure platform for property owners in Asia Pacific to list as many properties as they like for free - travelmob only collects a service fee when an actual booking is made. The site facilitates the entire booking process by offering a secure payments system as well as private messaging platform for guests and hosts to contact each other.
6. TradeGecko Founders: Cameron Priest; Carl Thompson; Bradley Priest Funding: $800,000, WaveMaker Labs and NRF, Golden Gate Ventures Start of operation: January 2012 TradeGecko Beta is a cloud-based inventory and sales management SaaS application for small-to medium-sized enterprises (SMEs). It is designed to pull together the administration that goes with running a wholesale business in a more social and engaging way.
“TradeHero is a free stock market simulation app that brings novice and knowledgeable traders together. Google Earth. Avetics also custom develops UAVs together with their customers. Founders say that they are currently in talks with research institutes to establish key technologies in the field of image analytics. 8. Fashfix Founders: Vivien Chia; Shazanah Hassan Funding: $15,000, NTU Ideas Start of operation: October 2012 Fashfix is a shopping portal for women. Founders claim that it has two unique selling points. First, it bills itself as the first online website which allows women to easily swap clothes with each other. Secondly, Fashfix.sg also stores all buyers’ purchases from Fashfix so that if, on physical arrival, the item does not fit, the buyer can easily use the original listing to relist the item on Fashfix for resale. Founders also claim that it is more than just another shopping portal as it is a source of fashion inspiration where fashion addicts can peek into the wardrobes and wishlists of the Fashfix community to discover new brands and new styles. According to Chia, since launching, Fashfix has already garnered almost a thousand members and that there are over 800 items already listed for sale/swap on the site. 9. All Deals Asia Founders: Goh Yiping; Wayne Goh Funding: $500,000, Iconic Ventures Start of operation: 16 August 2010 A recent report from Groupon states that three in five group buying sites in Singapore have died out over the past two years and AllDeals Asia is just amongst those standing still. AllDealls Asia bills itself as one of the most watched deal commerce sites in Singapore with regional reach especially in Malaysia and the Philippines.
7. Avetics Founders: Zhang Weiliang; Joshua Chao Funding: $55,000, Government grants Start of operation: April 2011 Avetics develops Unmanned Aerial Vehicles (UAVs) for non-military purposes. Founders claim that their first product, the Falcon, can stay airborne for one hour and produce maps of 10x better resolution than SINGAPORE BUSINESS REVIEW | FEBRUARY 2012 35
singapore’s hottest startups 10. LoveByte Founders: Steve Sng; Amelia Chen Funding: $300,000, Ruvento and Crystal Horse Investments, under Media Development Authority (Singapore)’s iJam programme Start of operation: April 2011 Lovebyte aims to help couples to keep their relationship strong by creating an avenue for them to spend more quality time together even when apart. Founders say that LoveByte is designed to enrich the relationship between couples by creating a private space for both of them to easily communicate, share, and store memories. It also encourages couples to spend more time together offline by recommending interesting date ideas and things to do. “In simple terms, Lovebyte is like a Facebook for couples. Within a month, we’ve accumulated 20,000 downloads for the app. To us, it is an indication that people love the idea,” the founders shared.
11. Luxe Nomad Founder: Stephanie Chai Funding: Less than $1m, Tigris Capital, Spring Seeds Capital Start of operation: July 2012 The Luxe Nomad is a flash deals site offering discounts of up to 70% on the most luxurious hotels and resorts across Asia. The deals are only available to members and usually only remain open for one or two weeks. According to William Klippgen, venture capitalist at Tigris Capital and BAF Spectrum, the business model of Luxe Nomad is ‘very scalable’ and the CEO, herself a famous Malaysian model, has signed up a number of other celebrities across Asia sharing their travel insights on the site. 12. Hastify Founders: Timothy Ee; Ryan Oh; Jagdish Chandiramani Funding: Less than $50,000, private angel funding Start of operation: 2012 Hastify is an online food pre-ordering website. Customers can view the list of partner restaurants at Hastify.com and order from a digitised version of their menu. Orders are sent real-time to the restaurant kitchens through a proprietary technology developed in-house. Hastify now has more than 40 outlets around the major CBD areas of Singapore. 36 SINGAPORE BUSINESS REVIEW | FEBRUARY 2012
13. Dropmysite Founder: John Fearon Funding: $800,000, Crystal Horse Investments, Stanley Street Labs, and individual investor Start of operation: August 2011 Dropmysite bills itself as Asia’s fastest growing startup for attracting 630,000 users within 50 days, faster than Twitter, Pinterest, and Fab.com. The company backs up the Internet, with a focus on backing up Cloud data, such as websites, emails, chat, social media, and more. The company has developed and launched two websites: Dropmysite.com and Dropmyemail.com. The latter is a Cloud-to-Cloud backup solution for emails, which has signed up over 650,000 users in less than 50 days since its launch at DEMO Asia in March 2012. After the recent acquisition of OrbitFiles, a cloud data backup site, Dropmyemail is now at 911,000 users. 14. Bubble Motion Founder: Thomas Clayton Funding: $68.4m; Sequoia Capital US, SingTel Innov8, Infocomm Investments, Sequoia Capital India, Comcast Ventures, Palomar Ventures, Northgate Capital Start of operation: March 2007 Bubble Motion runs the social media service ‘Bubbly’ which has grown to more than 20 million users since 2010, which the founder boasts as nearly twice as fast as what either Facebook or Twitter achieved in their first two years. With Bubbly, people share SMS and voice updates with friends, family, fans, and followers. “Bubbly is like ‘Twitter with a voice’ and brings social networking to mobile phones. Bubbly was first launched in India, Japan, Indonesia, and the Philippines and then expanded to Korea, Thailand, Vietnam, and Saudi Arabia. The company recently launched iOS and Android versions of its app to reach users on smartphones worldwide. 15. Halbase Founder: Ariffin Kawaja Funding: undisclosed, NTU Ventures, iJAM, NRF, angel investor Start of operation: 29 December 2010 Halbase offers an application that provides real-time feedback indicator of chances of the product obtaining halal certification. Any new discovery of the ingredients can be quickly updated in the database which can be utilised by users globally. According to
singapore’s hottest startups the founder, while there are thousands of ingredients out there, only a handful of ingredients’ halal statuses are known. Halbase is an automated web application that facilitates halal councils, manufacturers, food consultants, etc. in verifying products and services. 16.BagoSphere Founders: Zhihan Lee; Ivan Lau; Ellwyn Tan Funding: US$120,000; Kickstart, private investors Start of operation: 2011 BagoSphere launched a pilot call center class in a suburb area in the Philippines in 2011 with a 90% success rate of getting trainees into call centers. According to the founders, the company provides the quickest way for rural youths usually living on US$3 a day to gain access to a full-time job in a multi-national company which pays them about US$250 a month. To do this, the company offers a two-month Call Center Course which trains rural youths in English communications, IT skills and provides basic call center exposure. 17. Sprooki Founders: Michael Gethen; Claire Mula Funding: S$400,000, Australia/US/Singapore private equity Start of operation: February 2011 Sprooki offers a locationbased promo alerts from malls and retailers. It bills itself as Asia’s first proximity marketing and mobile commerce service for the retail sector. Sprooki shoppers receive access to exclusive offers and alerts from nearby and favourite stores and malls; pay conveniently through phone; and instantly redeem in-store or at customers’ convenient time. 18. Teamie Founders: Shivanu Shukla; Ashwin Singh Funding: S$800,000, angel investor Start of operation: March 2011 Teamie is a learning platform that lets students connect with their classmates and teachers, discuss and ask questions, work and collaborate on projects, and access their school virtually. Founders say that Teamie aims to make learning more social, fun, and engaging; drive teacher productivity by allowing mobile and web access to grading tools and learning discussions beyond the physical classroom; and leverage the cloud to offer a subscription service that
“Quantine offers a complete package of prerecorded video interviewing techniques with candidate testing capabilities. is affordable, manageable with their limited IT resources, and not cost-prohibitive. 19. Start Now Founders: Keith Tan; Ivan Chang Funding: $86,000, SPRING Singapore YES! grants Start of operation: January 2012 Start Now launched a volunteerism social platform in February 2012. It bills itself as Singapore’s first non-governmental volunteerism advocacy social enterprise. Start Now aims to connect volunteers from schools, corporate organisations, and the public with a range of volunteering opportunities, from professional services, administration, fund raising, welfare and social work to independent projects through its online portal. Start Now claims that over 120 non-profit organisations have come on board boosting user base to over 28,000 in just under 100 days. Founders also boast that it has over 6,200 users logging in one week alone. 20. Quantine Founders: Kenneth Yap; Daryl Low Funding: $800,000, private, VC, SPRING YES! Start of operation: 2009 Quantine bills itself as the first company in the region to offer a complete package of pre-recorded video interviewing techniques with candidate testing capabilities. Launched late last year was the combined force of new ‘virtual introduction’ with the existing ‘virtual interview’, brought through Quantine’s flagship product, Next-5. The new ‘video introduction’ feature would equip jobseekers with video introductions as a part of their professional resumes. Next-5, in conjunction with talent recruitment and management tools, allows a pre-recorded selection, introduction, and assessment of candidates – all conducted virtually thereby saving time for the recruiter and candidate. SINGAPORE BUSINESS REVIEW | FEBRUARY 2012 37
legal briefing
Singapore toughens rules on gambling Online gambling however remains untouched
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he government passed the Casino Control (Amendment) Bill in November 2012 to promote the development of integrated resorts for economic and tourism benefits while concurrently minimising the adverse social impact of gambling to financially vulnerable Singapore citizens and Permanent Residents. The bill gives more extensive powers to the Casino Regulatory Authority (CRA) in terms of gaming regulations while the National Council on Problem Gambling’s Committee of Assessors is now empowered to issue and revoke casino exclusion orders, visit limits, and even provisional family exclusion orders for cases deemed imposing serious harm to family members. The bill extends from providing new rules pertaining to so-called ‘junket promoters’, strengthening law enforcement levers to deal with casino-related crime and raising penalties for serious breaches. A single setback however was the absence of rules pertaining to online gambling. Yap Wai Ming, partner in Stamford Law Corp, says that the government has not published any statement yet regarding whether it will regulate this sector. This is despite a law reform committee recommendation paper that called for some form of regulation along the established gaming jurisdictions like in the USA for a complete outlaw of online gaming or the Australian model of licensing but with restricted access to Singapore-based players. To date, Yap says that Singapore still relies on archaic laws that it has concerning prohibition of physical common gaming houses in Singapore. “Some recent cases have extended such laws to cover internet café that undertook online gambling activities that are conducted at a common physical location.” How are junket promoters regulated in the amended bill? According to Allen & Gleddhill partner Christian Chin, ‘junket promoter’ will be relabeled ‘international market agent’ (IMA) because it more accurately describes the role of these middlemen who bring international high-rollers to the casinos. The CRA, he says, will have the powers to suspend or cancel an IMA licence when it is in the public interest to do so. Rajah & Tan partner Lau Kok Keng notes that IMAs will not be allowed to target Singaporean citizens or Permanent Residents, and the maximum penalty for illegal IMA activity has been raised from $300,000 to $500,000. CRA, he adds, will be empowered to set a cap on commission payable by the casino operators. Are casino operators allowed to extend credit to Singaporean citizens or PRs? Only if they are ‘premium players’. Lau notes that the 38 SINGAPORE BUSINESS REVIEW | FEBRUARY 2012
Lau KoK Keng
Christian Chin
Yap Wai Ming
definition of ‘premium players’ has been clarified and additional procedural requirements will be prescribed in the regulations before the premium players will be entitled to receive credit from casino operators. One of the additional requirements, he adds, will be that a minimum deposit of $100,000 must first be set down for gaming purposes before Singaporean citizens and PRs may be granted additional credit by the casino operator. Are there rules to prevent criminal activities from occurring within casinos? According to Lau, to make sure that vice, illegal money lending, and disorderly behavior do not occur, casino operators are now further required to ensure that illegal betting activities and unlicensed marketing activities do not occur in the casinos either. The Amendments, he adds, also introduce newly created casino-specific offences such as counterfeit chips, cheating at play, collusion, and unlawful interference with gaming equipment. How are casino visit limits imposed? Lau says that the visit limits will come in the form of a monthly cap on the number of times an individual may visit the casino. Such visit limits may be applied for by individuals, family members or by third parties. In relation to third party visit limits, the NCPG’s Committee will be required to assess, inter alia, whether the individual has engaged or is likely to engage in gambling activities in disregard of the needs and welfare of his family before determining if a visit limit ought to be imposed. Violators may face a fine of up to $10,000 or imprisonment not exceeding 12 months, or both.
“The bill gives more extensive powers to the Casino Regulatory Authority in terms of gaming regulations” What are the penalties for serious breaches? Allen & Gleddhill’s Chin notes that the maximum financial penalty which may be imposed in the event of serious breaches will be raised from the current maximum of S$1 million to 10% of the casino’s annual gross gaming revenue. A casino operator’s failure to provide information to the regulator when required, or the provision of false or misleading information, he adds, will explicitly be made grounds for disciplinary action. According to Lau, each casino operator may potentially face up to approximately $200 million in fines if found liable for serious breaches, based on reported annual revenue figures in 2011.
Every business has a different story and a different goal. We understand that. Over many years in this market of unique opportunities, we’ve developed the local knowledge, resources and connections needed to turn ambitions into reality. That’s why we’re one of the most well-established northern European banks in the region. For corporates, financial institutions and private banking clients, we’re ready to listen and cater to your needs – in Beijing, Shanghai, Hong Kong, Singapore and New Delhi. For further information, please call us on +65 6223 5644 or visit sebgroup.com/asia SINGAPORE BUSINESS REVIEW | FEBRUARY 2012 39
Jon Hicks/Corbis/Scanpix
When it’s time to do business, we’re exceptionally open.
Singapore’s 25 largest hotels
What Singapore’s 25 largest hotels must brace for in 2013 Hotels face tight competition with around 2,500 new rooms coming onstream this 2013.
M
arina Bay Sands has topped Singapore Business Review’s inaugural list of largest hotels in Singapore for 2013 based on the number of rooms. The 55-story MBS, billed as the world’s most expensive standalone casino property at more than $6 billion, has a total of 2,561 luxury rooms and suites. MBS has its busiest MICE month ever in October as it hosts 13 tradeshows and several key conferences. “The 13 tradeshows which attracted around 46,000 delegates, is approximately four times the monthly average since Sands Expo and Convention Center opened in April 2010,” MBS said in a statement. It posted a decent revenue per available room of US$362 in 4Q12 or a 10% rise from a year ago despite occupancy rate falling by 4 percentage points to 98.4. “Performance-wise, 2012 was a banner year - from the nearly 70 awards we won, including the Best Foreign City Hotel from Condé Nast Traveler and ‘Best Business
40 SINGAPORE BUSINESS REVIEW | FEBRUARY 2012
“The 25 largest hotels have a total of 18,468 rooms or account for nearly third of approximately 53,000 inventory of hotel rooms expected end-2013.
Event Venue Experience’ from the Singapore Tourism Board, to the high occupancy rate we sustained,” said president and chief executive officer George Tanasijevich. Swissôtel The Stamford and Mandarin Orchard Singapore took the second and third spots with 1,261 and 1,051 rooms, respectively. Swissôtel The Stamford and sister company, Swissôtel Merchant Court Singapore implemented a smoke-free policy on March 31 last year. With 1,261 and 476 rooms respectively, the Swissôtel brand boasts the distinction of offering the most number of smoke-free hotel rooms in Singapore. “As public awareness of the dangers of second-hand smoke grows, more guests are demanding a smoke-free environment. We hope to be able to create an impact, committing all 1,737 guest rooms in both hotels to this cause,” said Aiden McAuley, Swissôtel Hotels & Resorts’ regional president for Asia-Pacific. Rounding up the top five are Carlton Hotel Singapore and V Hotel with 915 and 888 rooms, respectively.
The 790-room Pan Pacific Singapore which was renovated between April and October 2012, came in 6th. The hotel’s general manager Scott Swank disclosed to Singapore Business Review that a total of $80 million were spent for the renovation. “Our key challenge, which was encountered and overcome, was the retention and redeployment of our over 500 associates during our Transformation,” said Swank. Fairmont Singapore, another hotel under the Swissôtel brand came in 7th with 769 rooms. It edged out Shangri-la Hotel by only 19 rooms. Shangri-la boasts of its newlyrenovated Garden Wing, billed as Singapore’s only urban resort. The Garden Wing, which houses 158 guestrooms and suites, was reopened in June 2012 after an eight month- renovation. The S$66 million renovation also includes the creation of what it bills as Singapore’s first CHI spa and a new dining concept called Waterfall Cafe, said management. Grand Hyatt Singapore landed at 9th place with 662 rooms. The hotel introduced an innovative restaurant10 SCOTTS last year which features areas for a library, dining, veranda and collection room. Orchard Hotel Singapore, ranked 10th with 656 rooms, has also undergone a full refurbishment of its 331-room Claymore Wing. Together, the 25 largest hotels have a total of 18,468 rooms or account for nearly a third of approximately 53,000 inventory of hotel rooms expected end-2012. Singapore’s largest hotels have 739 rooms on the average. New supply CBRE estimates a total of 2,400 rooms entering the market in 2012, possibly resulting in a 5.8% growth in the gazetted stock. CBRE adds that a further pipeline of 2,500 rooms is expected by end 2013 and hotel projects currently in planning stage could contribute another 2,400 rooms. Year 2013 will welcome the opening of Ramada Singapore, Carlton Project , Connexion , Holiday Inn Express, Fairy Hill Point Hotel, AcqueenTyrwhitt Hotel, Modena Frasers Suite, Sofitel Singapore, and Acqueen Geylang Hotel.
Singapore’s top HOTELS
Largest Hotels in Singapore HOTEL
NUMBER OF ROOMS
GENERAL MANAGER
1
Marina Bay Sands
2561
George Tanasijevich
2
Swissotel The Stamford, Singapore
1261
Aiden McAuley
3
Mandarin Orchard Singapore
1051
Danny Wong
4
Carlton Hotel Singapore
915
Tracy Ng
5
V Hotel
888
Charles Goh
6
PAN PACIFIC HOTEL SINGAPORE
790
Scott Swank
7
The Fairmont Singapore
769
Aiden McAuley
8
Shangri-La Hotel Singapore
750
Manfred Weber
9
Grand Hyatt Singapore
662
Willi Marin
10
Orchard Hotel Singapore
656
Andrew Tan
11
Ritz-Carlton, Millenia SingaporE
608
Peter W Mainguy
12
Furama Riverfront Singapore
605
Lily Chan
13
PENINSULA EXCELSIOR HOTEL
600
Benny Chung
14
Marina Mandarin Singapore
575
KURT WEHINGER
15
Grand Copthorne Waterfront Hotel Singapore
574
Colin Wang
16
Grand Mercure Roxy Hotel
573
Albero Dominique
17
Traders Hotel Singapore
546
Tina Sim
18
Hotel Ibis Singapore on Bencoolen
538
Pierre-Etienne de Montgrand
19
Parkroyal on Kitchener Road
534
Gary Moran
20
Mandarin Oriental Singapore
527
Christian Hassing
21
Holiday Inn Atrium, Singapore
515
Sam Davies
22
Royal Plaza
511
Patrick Siat
23
Conrad Centennial Singapore
507
Heinrich Grafe
24
Riverview Hotel
476
Andreas KOCH
25
Swissotel Merchant Court Singapore
476
Rainer Tenius
The list was obtained from CBRE’s survey of hotel room supply as of January 2013 SINGAPORE BUSINESS REVIEW | FEBRUARY 2012 41
ANALYSIS: ASIAN AGEING
Asia still unprepared for graying millions With the elderly Asian population set to explode, the region needs to play policy catch-up.
T
he number of elderly Asians is set to double or even triple by 2050 to close to a billion 65 year olds. Unfortunately, Asian countries still lack policies and programs to support this fastincreasing cohort, said economists. Asian economies have been booming in the past decades, a spectacular growth pace that has been partly driven by the region’s mostly young and healthy workers. Yet the demographic tides are turning – and maybe turning faster than governments and the private sector are prepared for. Asia aging fastest in the world “Populations are aging in Asia far more rapidly than anywhere else in the world,” said Julia Wang, Economist at HSBC. Wang pointed 42 SINGAPORE BUSINESS REVIEW | FEBRUARY 2012
Populations are aging in Asia far more rapidly than anywhere else in the world.
to data from the United Nations Population Division (UNPD) and HSBC which suggest a doubling or even tripling number of 65 year olds across Asia by 2050, barring a few exceptions such as Japan. “In China for example, this ratio will rise from 9.9% to 30.8%, less than elsewhere, but still a significant increase, while in Korea, the over 65 ratio will jump from 13.8% currently to 40.2% in 2050. This implies that nearly 1 in 2 Koreans will be over the age of 65,” said Wang. In this decade alone, Asia-ex Japan will see the number of 65 year olds rise almost 50%, growing at about double the rate of Japan, according to a separate forecast from Amar Gill, Head of Asia Research at CLSA. HSBC’s Wang further predicted that the Asian region, including
Australia and New Zealand, will be home to close to a billion people aged 65 and over by 2050 from 300 million currently. The region’s ratio of 65 year olds to the total population by then will have spiked to 1:6 from 1:14 currently. CLSA’s Gill said that for some countries like Hong Kong, Australia, Singapore and Taiwan, crossing the 1:6 elderly-to-population threshold will be reached even as early as the current decade. Median age to hit mid-50’s UNPD and HSBC data also peg the median age in Asia to spike from the current low-20’s to early-40’s range to a much older mid-20’s to mid-50’s range. Countries like Taiwan, Japan, Korea, Hong Kong and Singapore will see the highest median age increases
ANALYSIS: ASIAN AGEING of more than ten years each. “Although median age is set to rise throughout the region, smaller Asian economies are more at risk. In particular, note that median age will hit around 55 in Taiwan, Japan, Korea, Hong Kong and Singapore. In contrast, US will stay relatively young at 40 thanks to a higher birth rate,” said HSBC’s Wang. “A direct implication of rising median ages and over 65 ratios is a much larger old age dependent population vis-à-vis a shrinking workforce. In other words, dependency ratios – the number of 0-14 plus over 65 year olds to those aged 15-64 – will rise sharply. Over the next four decades, dependency ratios will more than double in Hong Kong, Japan, Korea, Singapore and Taiwan. The ratio will be higher than 1:1 in Hong Kong, Japan, Korea and Singapore,” added Wang. The fast graying of Asia is not merely a possibility, but more an inevitability, according to Wang. “Bear in mind that demographic projections are based on parameters such as fertility, mortality and life expectancy, which are largely known and unlikely to change short of major catastrophes or scientific breakthroughs. As such, demographics are more like projections than forecasts.” Driving forces for aging Asia’s demographic transition toward older populations is part of a natural progression, said Donghyun Park, Principal Economist, Economics and Research Department at Asian Development Bank (ADB). “The region is simply following in the footsteps of the advanced countries. As in the advanced countries, Asia’s demographic transition is driven by rising life expectancy - i.e. people are living longer - and falling fertility - i.e. women are having fewer babies,” said Park. The biggest headline is not that Asia is getting older, it is that it is getting older at such a brisk pace that it might catch unprepared countries flat-footed. “What separates Asia from other parts of the world is the exceptional speed and scale of the demographic transition. This
is especially true in East Asian countries,” said Park. Different strategies Asian countries, Park said, face different strategies for coping based on their stage of aging, which can range from early to advanced. “Some Asian countries such as Korea and Singapore are at the advanced stage of aging. Other countries such as India and Philippines are still at the early stages while yet others such as China and Thailand are in between,” said Park. Advanced-aging countries should be the most aggressive in addressing the impact of population aging, according to Park. Relatively younger countries have some more leeway, but it will do them well to begin preparing earlier than later. “Addressing the impact of population aging is an urgent priority for advanced-aging countries. In contrast, the much more important priority for early-aging countries is to take full advantage of their youthful populations and thus reap the demographic dividend,” said Park. “However, even for younger Asian countries, the time to prepare for population aging is now even though a greyer future may seem to lie on the distant horizon. This is because policies implemented today will affect the ability of individuals to prepare for their retirement two to three decades down the road.”
A direct implication of rising median ages and over 65 ratios is a much larger old age dependent population visà-vis a shrinking workforce.
Two socio-economic challenges ABD’s Park said population aging poses two strategic socio-economic challenges for Asia: Sustaining growth that has so far been driven by the now-shrinking youth cohort, and providing the rising number of elderly with sufficient support, financial or otherwise. “First, the region must find ways to sustain growth in the face of less favorable demographics. A relatively youthful population and consequently an ample pool of workers gave Asia a sizable demographic dividend in the past but, as a result of rapid aging, the dividend is gradually turning into a tax across the region,” said Park. “Second, Asia must strive to deliver affordable, adequate and sustainable old-age income support for its fastgrowing elderly population. Failure to do so poses a serious risk to inclusive growth since a large and expanding segment of Asia’s population may become poor and marginalized,” said Park. Underdeveloped public transfer payments There are three main forms of oldage income support, according to ADB’s Park. First is private transfer payment in which adult children support their parents financially. Second is asset draw down in which the elderly spend their savings to pay
Percentage over 65 in total population: graying fast.
50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%
CH
Sour e UNPD
IN
HK
JP
KR
AU
ID
MA
NZ
PH
2012
2025
2050
SG
SL
TH
VN
TW
US W.Europe
HS C
Source: UNPD, HSBC
SINGAPORE BUSINESS REVIEW | FEBRUARY 2012 43
ANALYSIS: ASIAN AGEING for post-retirement expenses. Third is public transfer payment in which the government directly supports the elderly. Of these three, Park said public transfer payment is particularly underdeveloped in Asia compared to the advanced economies and Latin American countries. The fast graying of Asians though will likely spur the region’s governments to develop more comprehensive public transfer programs, if only to court their increasingly elderly – and influential – constituents. “Due to the sheer speed and scale of population aging, agingrelated liabilities, such as those for public pensions and health care, are projected to rise sharply even if there are no big systematic increases in public transfers. But political economy considerations suggest that systematic increases are likely since the growing elderly population will yield more political power,” said Park.
income countries,” said Park. Asian governments face the challenge of forming sound regulatory frameworks that will ensure healthy competition in the insurance and pension markets while protecting the elderly consumers, added Park. Better, more productive workers With much of Asia getting older, the region’s economies will rely less on their youth to drive growth. Instead, Asian countries should be looking at improving the productivity of future older workers, or tapping into untapped labor force groups such as housewives and mothers, or even raising the retirement age. “The basic idea here is to make up for fewer workers with better, more productive workers,” said Park. “Countries such as Korea, which have relatively low female labor force participation rates, can expand child care facilities to encourage more women to work and women to work longer. Yet another solution is to raise the retirement age and enable older workers to participate more actively in the labor market,” added Park. “In many emerging markets, including in China, the retirement age is currently lower than 65. A rise in the retirement age to Western levels could thus restrain the increase in dependency ratios a little,” said HSBC’s Wang. Asian countries can ill afford to twiddle their thumbs at implementing policies aimed at addressing the fast
Rudimentary public pension systems Park also said that Asian countries must strengthen their public pension systems which he said still remain “rudimentary and fragmented.” “In the advanced economies, where concerns about fiscal sustainability have escalated due to the growth of public debt to unhealthy levels, there is a growing role for the private sector in the provision of health care insurance and pensions. This trend is likely to emerge in developing Asia as well, especially in middle and high
Median age projected to rise across Asia Chart 2. Median age projected to rise across Asia 60 50 40 30 20 10 0
CH
Sour e UNPD
IN
HK
JP
KR
AU
ID
MA
NZ
PH
2010
2025
2050
HS C
Source: UNPD, HSBC
44 SINGAPORE BUSINESS REVIEW | FEBRUARY 2012
SG
SL
TH
VN
TW
US W.Europe
The 65-andover age group will also spend more on housing, food and drinks, healthcare, household goods, hotels and leisure.
population growth, according to CLSA’s Gill. “Even if this seems far off, the tracks need to be laid now. In essence, this entails setting aside an ever growing share of national income for the inevitable boom in retirees. For governments, this means less and less cash is available for generous infrastructure spending. For employers, this means higher wage costs as surcharges are applied to build up pension assets. To avoid a slowdown in growth as a result, as well as rising inflation pressures, productivity growth will have to rise,” said Gill. With millions of elderly entering the consumer market in the next decades, there will also be a shift in economic spending patterns. Demand for savings products, including life insurance, will be robust, said CLSA’s Gill. The 65-and-over age group will also spend more on housing, food and drinks, healthcare, household goods, hotels and leisure. Meanwhile, expenditure on education, transport and communications will decline relative to the elderly’s overall spending. Massive growth in elderly products CLSA’s Gill also noted specific product industries that will be emerging along with the rise of elderly Asians. These include robotics, which is expected to boost the productivity of the active labour force but also for the care of parents and grandparents “given the Asian cultural norm of avoiding placing ageing parents in homes.” “Demand for incontinence products will follow Japan where the market for adults diapers is crossing over the number of units for infants. Anti-ageing skincare is set to be a fast-growing cosmetics segment as it has been in the developed world. China’s cosmetics market is already the largest globally, but per-capita spend is just one-quarter of the USA, indicating massive growth in the region for products catering for the elderly,” added Gill.
co-published Corporate profile
Pharmaton helps raise funds for Special Olympics Singapore
Boehringer Ingelheim’s Managing Director Augusto Muench pledged to join as a cyclist at the fund-raising event.
B
oehringer Ingelheim is committed to bringing breakthroughs in the pharmaceutical industry. And with Pharmaton core products that help people of all ages achieve optimum physical health, Boehringer Ingelheim indeed delivers “value through innovation.” For adults, Pharmaton has various products that help improve one’s vitality - from capsules to caplets to effervescents. For children, Pharmaton offers vitamins, minerals and key nutrients in the form of syrup, effervescents, and chewable tablets. Cycle for a cause However, Pharmaton does not only offer a range of nutritional supplements to the market. With the aim of promoting a healthy lifestyle, Pharmaton is the presenter of See & Be Seen 2013, Singapore’s first ever night cycling safety initiative that aims to promote safe night cycling. To support this cause, riders are given tips to stay visible and safe. In its first round in 2012, over 300 cyclists participated the event. And this year, the night cycling initiative is opened for the first time to youths from the Special Olympics and corporate honchos will ride with them to support the fund-raising effort. Spearheaded by the organisers of the Firefly Night Race, the event hopes to raise
funds for the Special Olympics youths in this second edition by appealing to families and friends to pledge S$1 for every kilometer completed by the riders to support the cause. Cyclists can choose to take either the 84km or the 42km night ride along Singapore’s eastern park connectors. Proceeds from See and Be Seen 2013 will be donated to Special Olympics Singapore, a non-profit organization that helps persons with intellectual abilities to develop physical fitness, self-esteem, and confidence through sports training and competitions. Not only does the event aim to raise funds for the Special Olympians, it also wants them to feel welcome and build up self confidence by giving them the knowledge that they are able to play a part in supporting the cause. Being a known supporter of activities that promote a healthy lifestyle, Pharmaton engages in this event not only as a presenter, but also as a participant. Mr. Augusto Muench, Managing Director of Boehringer Ingelheim Singapore, pledged his personal support by joining the event as a cyclist. Joining Mr Muench for the ride with cyclists is Mr Tan Chuan-Jin, Acting Minister for Manpower and Senior Minister of State, Ministry of National Development. “I’m pleased to be able to do my part to raise funds for the Special Olympians. On top of
“Pharmaton is the presenter of See & Be Seen 2013, Singapore’s first ever night cycling safety initiative that aims to promote safe night riding tips.”
Augusto Muench Head of Regional Operating Unit South East Asia Managing Director Singapore Boehringer Ingelheim Singapore Pte. Ltd.
that, I get to do something healthy and fun while contributing to such a meaningful initiative,” Muench said. Healthy lifestyle and Pharmaton Being a presenter of this event is in line with one of Pharmaton’s goals of promoting better lifestyle habits to help reduce the risk of different diseases. Along with taking nutritional supplements by Pharmaton, the company encourages people to maintain a healthy diet to reduce the risk for heart disease. Pharmaton urges people to limit their intake of foods and beverages high in calories but low in nutrients, and limit how much saturated fat, trans fat, cholesterol and sodium they eat. Lastly, being physically active is also encouraged. Taking nutritional supplements cannot replace the need for regular physical activity as this can help maintain a normal weight and help one reach physical and cardiovascular fitness. Pharmaton believes common activities like swimming, cycling, jogging, walking and many other activities can already support one’s heart health. Being a company with integrity, Pharmaton does not give these tips to people without acting on them. So this year, Pharmaton takes on a CSR initiative targeted at improving physical fitness. To register, visit http://www.seeabseen. com/event.html and to pledge for Minister Tan Chuan Jin, visit http://seeabseen.com/ donate.php. SINGAPORE BUSINESS REVIEW | FEBRUARY 2012 45
OPINION
Krisana Gallezo
Hopes fade for more affordable homes in 2013
N
otwithstanding the government’s move to cap the mortgage loan tenure in October, home prices across the board have continued to rise at a faster pace in 4Q12 at 1.8%. The latest figure has triggered the introduction of more cooling measures early this year but experts are wary that none of them will significantly impact on prices. Experts note that 2012 measures aren’t totally a failure as on a full-year basis, private property prices only rose 2.8% YoY, below the 5.9% in 2011. They believe though that strong mass market demand will continue to push prices up. Lower volumes and fewer launches CIMB analyst Donald Chua explains that while price growth persisted throughout 2012, 4Q’s price increases came with lower volumes and fewer launches in November. Robust home sales are thus attributed to discounting schemes to lure buyers. A case in point, Chua says, is CDL’s Echelon which was 70% sold on its public launch week late December, on the back of 1517% discounts from list prices. “We continue to expect resilient demand, though a large amount of physical completions expected in 2013 and more launches/ discounts to clear old inventories could rein in 2013 prices and volumes.” Policy changes to stir sales Nomura analyst Min Chow Sai meanwhile argues that market anticipation of policy changes will actually boost sales in the near term. “The October measures were the sixth set of policy changes introduced by the government since September 2009 but the market is clearly desensitized. Ironically, the market’s anticipation of further policy changes may even have a positive impact on home sales in the near term (i.e. the “buy before it becomes more restrictive” mentality), as suggested by the recent robust take-up of new launches such as Echelon.”
Property Price Index (PPI)
Source: CIMB, URA
mass-market homes. Among property segments, prices of non-landed private homes in OCR increased the most – rising 3.4% QoQ, a stronger uptick from 3Q’s 1%. Chia adds that the price appreciation in the OCR also drove home buyers to consider homes in the central region, as the price gap between new massmarket homes and completed higher-tier properties continued to narrow. This, she said is illustrated in prices of non-landed housing units in the CCR (Core Central Region) and RCR (Rest of Central Region) rising by a faster 0.8% and 0.9%, respectively, in 4Q compared to the corresponding increases of 0.1% and 0.8% three months earlier. “The increased momentum in the QoQ price up-trend – particularly in the mass-market housing segment, as well as the return of buying interest in the high-tier segments – are likely to keep the authorities high on guard again and have further heightened policy risks in the residential sector.”
Future trends Chia believes that low interest rates are likely ““Home prices across the board have to continue to be supportive of home-buying continued to rise at a faster pace in 4Q12 demand, while the volatile markets could push investors to seek refuge in the property sector at 1.8%.” that proved to be resilient to external shocks in the past year. Downside potentials however may come from sizeable residential supply that will come onDemand drivers stream in the next few years, and the growing inertia Low interest rates and high liquidity continued towards further price appreciation is likely to keep to persist in the fourth quarter of 2012 and drove prices in check. The risk of further cooling measures demand for homes. Colliers International director from the government should also put developers and of research and advisory Chia Siew Chuin explains the majority of home buyers on a cautiously optimistic that the overwhelming popularity of homes in OCR stand and contain their risk appetite, she says. (Outside Central Region) helped to boost prices of 46 SINGAPORE BUSINESS REVIEW | FEBRUARY 2012
BY KRISANA GALLEZO Senior Reporter krisana@charltonmediamail.com
The overwhelming popularity of homes in Outer Central Region helped boost prices of mass-market homes.
SINGAPORE BUSINESS REVIEW | FEBRUARY 2012 47
DINING
Irresistible Bites
Choose from this lip-smacking selection of snacks, tapas and dimsums in the island.
Amuse
If you’re looking for a casual eatery and bar serving an array of international small bites and drinks along Orchard Road, Amuse is the right place for you. With Armin Leitgeb as the consultant and Lee Chee Kheong as the head chef, Amuse offers a full spectrum of global tastes from light to hearty that ranges from $9 to $78. Amuse’s quality fare is matched by a great selection of drinks and wines. The bar at Amuse is fronted by young Austrian whiz kid, Klaus Leopold. Amuse also introduces an early afternoon ‘Daily Special’ from 3pm to 5pm daily where diners can enjoy a small bite and a beverage at an irresistible price.
Sabio by the Sea, Singapore
Inspired by the original Sabio on Duxton Hll, Sabio’s concept has been taken “to the sea” with their most recent grill restaurant and tapas bar at Sentosa Cove. Sabio by the Sea has been designed for spending time, to escape from the tensions of the city, especially with its relaxed dining outdoor sofas. With an array of grilled meats and fishes to celebrate the seaside and nautical ambience, Sabio By the Sea serves up Grilled Octopus Leg with Viola Mashed Potatoes and Roasted Rack of Lamb, along with a selection of Tapas including jamon iberico de bellota and anchovies- all created from the best and freshest ingredients from Spain and Asia.
Chopsuey, Singapore
After exploring Chinese restaurants and hole-in-the-wall takeaways, Chopsuey Café was born. Located in the heritage army Barracks of Dempsey Hill serving ‘Anglo Chinese Cuisine’, Chopsuey brings forward fond food memories with a collage of fresh produce, bold flavors, traditional taste profiles, inspired combinations, decadent desserts as well as carefully paired wine and cocktails. Brunch sees the serving of delicate dim sums such as White Skin Siew Mai, Four Seasons Har Gao, Szechuan Pork Buns. While dinner serves up the likes of Crispy Duck Pow! Pockets, Smoked Duck and Lychee Salad, and of course Chopsuey.
Recommended by QUINTESSENTIALLY LIFESTYLE, the world’s leading luxury lifestyle group with a 24-hour global concierge service. Contact singaporebusiness@quintessentially.com. 48 SINGAPORE BUSINESS REVIEW | FEBRUARY 2012
www.turfclub.com.sg
at the Singapore Turf Club’s premises, where your ideal event becomes a reality. With state-of-the-art audio and visual equipment and a cosy ambience, guests get to feel at home as they network. From networking sessions and training workshops to corporate team building programmes, rest assured that we have the perfect fit for your event.
For bookings or more information, please contact: Ms. Lisa Tan Phone: 6879 1979 Email: business_development@turfclub.com.sg
SINGAPORE BUSINESS REVIEW | FEBRUARY 2012 49
numbers
How Singaporeans use social media and smartphones Singaporeans go social
What’s Hot in Asean
Feel Good Body and the Mind
Nail Art
Source: Ipsos Global
Eyelash Obsession
Smart phones on the increase According to research firm Canalys, mobile phone shipment in Southeast Asia is still growing and expected to reach 163 million by 2015. “This is indicative of a continued strong demand for mobile phones and services in Southeast Asia. This can also be seen from the mobile penetration rates of various countries in the region.
Cosmetic Surgery & Medical Tourism
Skin Whitening
Source: Ipsos Global
Source: Ipsos Global
How likely are you to purchase new products?
Who or what urges you to buy a new product?
I will purchase a store brand or value op on when available I wait un l a new innova on has proven itself before purchasing I prefer to buy new products from brands familiar to me I like to tell others about new products I have purchased I am generally willing to switch to a new brand Economic condi ons and recent world events make me less likely to try new products I prefer to purchase local brands over large global brands I am willing to pay a premium price for innova ve new products Source: Nielsen Global
Singapore
Asia Pacific
Global
56%
63%
64%
61%
62%
60%
66%
55%
60%
49%
64%
59%
58%
44%
50%
44%
43%
45%
33%
38%
40%
36%
43%
39% Source: Nielsen Global
For more information contact: Ipsos, Tim Hill (tim.hill@ipsos.com) and Nicolas Bijuk (Nicolas.Bijuk@ipsos.com); Nielsen, Cuijpers, Ellen (Ellen.Cuijpers@nielsen.com) 50 SINGAPORE BUSINESS REVIEW | FEBRUARY 2012
SINGAPORE BUSINESS REVIEW | FEBRUARY 2012 51
52 SINGAPORE BUSINESS REVIEW | FEBRUARY 2012