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ALL EYES ON ASIAN ART See Asia’s art market shine
e’s por SingaRGEST AL LA ERCI M COMBANKS
Singapore M&A hits the brakes
DAIRY FARM cash cow dries up How to make money
out of sreits
Super Rich expat kids UOL’s investment strategy pays off MICA(P) 244/07/2011 KDM No: PPS1645/3/2008
Asian firms’ long march west SINGAPORE BUSINESS REVIEW | APRIL 2013 1
2 SINGAPORE BUSINESS REVIEW | APRIL 2013
FROM THE EDITOR This issue of Singapore Business Review brings you coverage of the latest issues across different sectors in Singapore - be it transportation, real estate, consumer, education, or M&A.
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
Interestingly, we found out that for the first time in history, 2012 marked the first year since numbers were kept that Asian firms did more outbound M&As than western firms did deals in Asia.
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These companies are on the prowl for strategic and bargain acquisitions in North America and Europe. Find out what the twofold reason for this attitude shift is.
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In this issue we also explore Asia’s lively art scene especially after Art Basel’s purchase of a well established art fair that adds world significance to an already exuberant art market.
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There are also updates on the biggest Singapore companies like Singapore Airlines, UOL, SMRT, and Dairy Farm. Find out which ones are in trouble and which ones are in a safe haven.
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*If you’re reading the small print you may be missing the big picture
But locally, the M&A scene in Singapore is not as vibrant as our report reveals that it has been the slowest start to M&A in Singapore since the gloom and doom days of 2009. Singaporean companies’ deals were, in fact, down 13.5% to just US$6.4 billion over the first 3 months of the year.
7/30/08
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CONTENTS
12 FIRST A Dairy Farm cash cow dries up
11 FIRST Home sales remain robust despite cooling measures FIRST 10 Qantas Singapore
London route hops away 11 Home sales remain robust despite cooling measures 12 A Dairy Farm cash cow dries up 14 M&A hits the brakes 16 Schools scramble for super rich kids
REGULAR 36 Legal Briefing 46 Dining 48 Life & Style 50 Numbers
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 | APRIL 2013
26 SREITs to shine on in 2013?
COVER STORY
ANALYSIS
30 Asia’s lively art scene explodes Art Basel’s purchase of a well established art fair adds world significance to an already exuberant art market.
18 Asian firms march west to
OPINION 22 Money will take you far, but not
far enough
26 SREITs to shine on in 2013? Some analysts fear that S-REITs’ stellar 2012 performanc will be short-lived.
40 Why doesn’t being born in Singapore make you a Singaporean?
go global
2012 marked a high point in mergers and acquisitions (M&As) with fast expanding Asia-Pacific firms going on a Western buyout binge.
44 China’s shale revolution and
its Asian aftershock
China is making a big push for shale gas, which could help stabilize energy prices for import-heavy Asia.
For the latest business news from Singapore visit the website
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News from sbr.com.sg Daily news from Singapore Steep cost of Singaporean retirement most read HR & EDUCATION
Singaporeans must save S$5,033 a month for ‘comfy retirement’ That’s a whopping 66% of their yearly wage. According to HSBC’s latest study Future of Retirement: A New Reality, in order to live comfortably during retirement, people in Singapore indicate that they will require 66% (or two-thirds) of their current annual household income which works out to be S$60,400 or S$5,033 per month. ECONOMY
Singapore Budget is ‘Robin Hood Tax’: PwC Is taxing the rich a smart move? Lennon Lee, a partner at PwC Services said the Singapore Budget 2013 is a “’Robin Hood’ like budget - taxing the rich through increased property tax and ARF, and redistributing to the poor, disabled, and needy.”
MAS enforces stiffer rules on motor vehicle loans
release, the Monetary Authority of Singapore will re-introduce financing restrictions on motor vehicle loans granted by financial institutions. The maximum motor vehicle loan amount will depend on the open market value of the motor vehicle purchased.
Maximum loan is 50% for units with over $20,000 OMV. According to a
Singapore to become big beneficiary of
LLP said, “The Government is sending a clear message that it is focusing on those industries where Singapore is, and can be, competitive.” TRANSPORT & LOGISTICS
ECONOMY
Ernst & Young tags Singapore Budget 2013 as ‘Darwinian’ for firms Key beneficiaries are SMEs and low-middle income earners. Ernst & Young released its reactions to the recently delivered Singapore Budget 2013. Adrian Ball, Head of Tax Services, Ernst & Young Solutions 6 SINGAPORE BUSINESS REVIEW | APRIL 2013
HOTELS & TOURISM
Indonesia’s bullish economy 48% of ASEAN tourists are Indonesians. According to ICAEW, Singapore is likely to benefit from Indonesia’s strong domestic growth through increased tourism, but economic growth in the country is expected to remain relatively weak. AGRIBUSINESS
4 reasons why Noble’s big boss insists on being ‘asset-light’ It has survived the worst year ever. According to CIMB, “asset-light” is the new buzzword. Key topics discussed during Noble’s postresults luncheon were its asset-recycling initiatives, strategy, and growth outlook. Having survived its
worst year ever, Noble is looking forward to some normalisation in agriculture profits which should be enough to drive the group’s FY13 profit growth. ECONOMY
Why KPMG thinks tax tweaking must be done in a ‘calibrated way’ And why labourintensive industries must not be ignored. KPMG recently released its reaction on the Singapore Budget 2013. Chiu Wu Hong, Partner, Tax, KPMG in Singapore said, “Tweaks to the existing tax structures have made them more progressive, but this has to be done in a calibrated way to benefit more Singaporeans.”
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Agenda PEOPLE | PLACES | EVENTS | OPPORTUNITIES
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SERVICES
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.
SINGAPORE BUSINESS REVIEW | APRIL 2013 9
FIRST fraction of these passengers might schedule their flights a day later so as to enjoy the sights and attractions in Singapore, that number in reality should be fairly minimal and not of a major concern at this point. In addition, we note that the average length of stay for Australians is closer to 2.7 days, while that of Europe is closer to 2.3 days.”
Groupon for bankS?
Singaporeans are familiar with group buying for cheap deals on sites such as groupon.com. But can the concept be applied to other industries such as banks? Well, DBS certainly thought it was worth a try and in a world’s first they decided to launch a new savings product which would only be offered to customers if enough of them agreed to buy in to the offer. The resulting promotion, called uGoiGo, was an unexpected hit, reaching the 100% target in just five days as customers shared the deal with their peers online. Besides the attractive fixed deposit savings rates, customers were also awarded 10,000 bonus miles on their DBS Treasures Black Elite American Express Card. The campaign offered new DBS Treasures customers the opportunity to enjoy interest of 1.08% per annum with a three-month fixed deposit of SGD$350,000. Customers also received an e-coupon on their mobile phones and could open their accounts at any DBS Treasures Centre. Koh Kar Siong, Managing Director & Regional Head, DBS Treasures & Treasures Private Client, said that in Hong Kong, they have also launched the second wave of the campaign on the back of a successful pilot launch in February. They will also be rolling it out in China, India, Indonesia, and Taiwan. Will other banks follow suit? We will all find out in the coming days. 10 SINGAPORE BUSINESS REVIEW | APRIL 2013
Sorry mates, but the budget buck will do
W
hen Qantas decided it would bypass Singapore in favour of Dubai for its European routes the news landed like a bombshell among tourism players. After all, Australians are the fourth largest inbound tourism market for Singapore, with almost a million visitors a year. Many feared re-routing these potential visitors would have a devestating effect on certain parts of Singapore’s tourism sector. Not a cause for concern The last flight to Singapore was made on March 31, so what will the impact be? Not as great as some may think, at least according to DBS Vickers analyst Derek Tan who calculated that at most the 2 daily flights being rerouted to Dubai had a maximum annual seat capacity of 300,000, which represents just 0.7 % of the 51.2 million passengers that Changi handled last year. Of course not all Aussies will get off at Singapore and “stay an extra day”, notes Tan, who says that transit passengers do not count as a “visitor arrival” statistic into Singapore and they are also probably not a main driver for accommodation demand. “While we do not rule out that a
Australians heading into Europe might skip Singapore as a transit stop
Still too early to gauge One business that would have noticed a difference is Boomerang, the hugely popular Australian restaurant at Robertson Quay. Boomerang managing director Martin McGettigan said that it was still early days since the ending of the kangaroo route but that he did not expect it would have a major impact. “Most people on that route would have just gone straight through to Europe, whereas people who want to come to Singapore will still come,” he said. What he has seen is big growth in passengers who have come in from Scoot or Jetstar, and are staying in four star hotels like the Copthorne or Mirimar. “We have definitely seen more coming up. They are getting to Singapore as cheaply as possible and staying a night or two and the then they get a flight to Phuket or somewhere else.” The one segment of his business which may suffer is the early retirees, who typically would break a trip from Australia to Europe with a longer 5 or 6 day break.” However those that do want to take the break in Singapore may opt to fly British Airways which still hubs here. Of course Qantas still offers direct flights to Singapore, just not on-going ones to Europe. But with more budget airlines like Scoot and Tiger increasing capacity on the Australia to Singapore legs, Singapore may still get the same or more number of Aussies, but they may be of the more budget variety.
Estimated upcoming hotel supply by Tiers
Source: Urban Redevelopment Authority, Knight Frank Research
FIRST Who could hold a grudge and want to boycott a Bee, and a Jolly one at that.
Jollibee Singapore
Jollibee entered an online hornets nest
W
hen Filipino fast food chain Jollibee opened its first store in Singapore, it never expected it would face an online call for a boycott based on a misheld belief that it would only employ Filipinos. For the group, which operates in 92 international locations and is the largest in the Philippines, it came as a shock. Afterall, Singapore was seen as an open and friendly destination, and also Asian. Call to boycott a Bee The online reaction against Jollibee was greeted in the company’s Manila headquarters with a mix of “shock
and bemusement” – after all, who could hold a grudge and want to boycott a Bee, and a Jolly one at that. “We have never encountered such a situation before wherein we were falsely accused of unfair hiring practices. We were quite taken aback when this ‘issue’ came up online as honestly, our team was just really looking forward to introducing Jollibee food to Singaporeans,” PR manager Ms Arline Adeva told Singapore Business Review. “Before the opening, we even hired a local consultant to make sure we comply with all the local employment guidelines here in Singapore. We have been issued with a Certification
of Fair Employment Practices by TAFEP (or the Tripartite Alliance for Fair Employment Practices that was established by the Ministry of Manpower) as proof that we are a company that gives equal employment opportunities.” Letting taste buds do the talking Jollibee now has 83 staff of whom the majority are Singaporean citizens, and the success of its first outlet at Lucky Plaza has emboldened the group to announce a further opening. Jollibee Vice President Dennis Flores has added: “You may check our recruitment posters and ads as well as our announcements in our official Jollibee Singapore Facebook and there was nothing in there that indicated that there is a preference for Filipino workers over Singaporean.” Hopefully the xenoboycott calls will die down and Singaporeans can get on with the important job at hand - eating. And judging by the long queues at the outlet, where at least half the customers looked to be Singaporean, many are deciding to let their taste buds, not their xenoviews, do the talking.
Jollibee Singapore employees
THE CHARTIST: Iskander vs Singapore According to CIMB, Iskandar’s attractiveness for property investment is escalating quickly due to low prices. Singapore property prices are now above their historical highs (up c.45% from 2008). While average prices at Iskandar have also more than doubled since 2008, current house prices remain 4-8x lower than that of Singapore. Meanwhile DBS said that Singapore’s investment into Malaysia has grown at a rapid pace of about 24.5% per annum over the last three years while total bilateral trade grew an average of 18% per year in the same period
Total bilateral trade flows and Singapore investment into Malaysia
Source: DBS
Average landed housing price comparison - Iskandar vs. Singapore (entry level)
Source: CIMB, URA, Savills, Company Report
SINGAPORE BUSINESS REVIEW | APRIL 2013 11
FIRST Dairy Farm made just 4.2% on its supermarket and hypermarket business across Asia, compared to 9.7% on its health and beauty operations.
A Dairy Farm cash cow dries up
A
s cash cows go, selling food into the budget segment of Singapore is proving a lot harder for Dairy Farm Holdings these days. The group, which has 433 stores in Singapore under brands such as Cold Storage, has decided to effectively exit the budget market by ditching the Shop n Save brand and upgrading them to Giant branded supermarkets. This will affect 57 stores and virtually end its bid for Singapore’s budget-conscious customers and cede this market segment to its upstart rival Sheng Siong. Ditching the budget brand The decision to ditch the budget Shop n Save brand is “a tacit admission... of the difficulty of competing in this space…and re-branding as the more popular Giant brand seems a desperate attempt to gain consumer acceptance,” noted CIMB retail analyst Kenneth Ng. This leaves analysts wondering whether Dairy Farm will attempt to compete in the budget space given that Giant is more of a hypermarket concept that competes on offerings, not price. It is a stunning reversal for a company that traces its roots back over 100 years feeding everybody since it was established in Hong Kong. So what went wrong for Dairy Farm?
12 SINGAPORE BUSINESS REVIEW | APRIL 2013
CIMB’s Ng reckons that its troubles lied with the predominantly Mandarin-speaking budget consumers identifying better with Sheng Siong’s brand. Margins in supermarkets are also typically very thin. Dairy Farm made just 4.2% on its supermarket and hypermarket business across Asia, compared to 9.7% on its health and beauty operations through stores like Guardian and 10% through home furnishings, according to figures compiled by Nomura. Margins for Shop n Save are not publically known, but it is likely that they were below the 4.2% average. Leadership shift The key driver of these changes is likely to have been Graham Allan, Dairy Farm’s new CEO. Mr Allan was previously president of US-based Yum! Restaurants, the holding company behind brands such as KFC and Pizza Hut. He has told analysts that he plans to revamp stores and change product assortments to achieve ‘category leading sales volume’. Dairy Farm is also initiating a reorganisation where operations will be managed on a country and business line basis rather than via a regional approach. Business lines such as health & beauty and IKEA will now be vertically managed. Tactically, the company will focus on more brand campaigns,
loyalty cards, revamped store layouts, and exclusive brand tieups. All of this may be great for the up-market outlets, but it must also be music to Sheng Siong’s ears whose operating philosophy is more like that of German retailer Aldi, which is of the “stack ‘em high and sell ‘em low” school of retailing. Meanwhile Sheng Siong is no technical luddite, and has earmarked $20 million from its recent IPO to e-commerce, further challenging Dairy Farm’s Cold Storage outlets. But in an interesting move, Sheng Shiong will not offer home delivery as Cold Storage does, rather it will let you order online and then pick up the purchase at the supermarket or from a drive-through window, with the first outlet due this year at Thomson. The group added 8 stores in Singapore last year, and is looking to expand its floor space a further 10% this year. “We think Sheng Siong warrants a higher multiple from its strong competitive position. We see catalysts as earnings delivery from new stores and continued store expansion,” CIMB’s Ng said.
DairyFarm - Operating margin by format, FY12 vs FY11
Source: Company data, Nomura research
Gross profit margin stablising
Source: CIMB
SINGAPORE BUSINESS REVIEW | APRIL 2013 13
FIRST deals so far this year worth US$351.1 million, or 11.3% of the market share. Singaporean companies’ deals were down 13.5 % to just US$6.4 billion over the first 3 months of the year.
M&A hits the brakes
I
t has been the slowest start to M&A in Singapore since the gloom and doom days of 2009. Singaporean companies’ deals were down 13.5% to just US$6.4 billion over the first 3 months of the year. The only bright spot was domestic M&A activity which improved 32.7% to US$1.5 billion from the comparable period last year. Meanwhile, outbound M&A activity slightly fell by 1.4% so far this year with transactions amounting to US$3.1 billion compared to 1Q 2012. Singapore lags peers in M&A The Singapore Government’s GIC was a big buyer overseas, snapping up the luxury resort properties of US-based MSR Resort Golf Course as well as La Quinta Resort & Club, Claremont Resort & Spa, PGA West, and The Arizona Biltmore units. The combined estimated value of these deals reached US$1.5 billion, according to Thomson Reuters. Meanwhile, Real Estate accounted for 22% with US$1.4 billion, up 32% from the first quarter of 2012, and followed by Consumer Staples (14.1%), Retail (13.6%), and Energy & Power (10.5%). Buy side Financial Sponsor M&A deals in Singapore improved significantly as deal value reached US$75.4 million, a seven-fold increase from the first quarter of 2012, despite lower deal count. KKR China Water Investment 14 SINGAPORE BUSINESS REVIEW | APRIL 2013
Holdings Ltd, a subsidiary of KKR & Co. LP, agreed to raise its stake to 45.8% from 34.6% by acquiring 11.2% stake in United Envirotech Ltd, a provider water & wastewater treatment services, for S$49.3 million (US$ 40.1 million). The deal pushed Energy & Power sector to capture 53.2% of the PE-backed acquisitions in Singapore. Despite capturing 18.3% market share, Singapore fell behind Vietnam and Indonesia which accounted for 48.6% and 22.3% of the PE-backed acquisitions in Southeast Asia. Meanwhile, foreign acquisitions targeting Singaporebased companies reached US$911.3 million so far this year, a 301.1% increase from the first quarter of 2012. Real estate is main dragger The bulk of inbound transactions targeted Singapore’s Energy & Power sector with 8 deals worth US$623.4 million, a significant increase compared to 3 deals announced during the first quarter of 2012 worth US$43.7 million. Energy & Power accounted for 68.4% of Singapore’s inbound M&A, followed by High Technology (9.9%) and Consumer Staples (6.0%). In terms of value, United States captured a huge portion of Singapore’s outbound M&A activity with US$1.9 billion, or 60.4% of the market share. However, China saw the most number of acquisitions from Singapore with 13 announced
Who’s on the lead? According to estimates from Thomson Reuters/ Freeman Consulting Co., M&A advisory fees from completed transactions in Singapore totaled US$47.8 million so far this year, a 190% increase from the comparative period in 2012. Goldman Sachs takes the lead in the fee rankings for completed M&A deals in Singapore with US$10.5 million, capturing 21.9% wallet share so far this year. In South East Asia volume was $14.0bn via 422 deals in 1Q 2013, down 20% on 1Q 2012 ($17.4bn via 574). Real Estate influenced the decline, with volume down 53% to $921m via 46 deals in 1Q 2013, according to Dalogic, who note that Malaysia was the most targeted South East Asia nation in 1Q 2013 with $7.5bn, up 9% from $6.9bn in 1Q 2012 and the highest quarterly volume since? For more M&A analysis, see page 18.
Asia Pacific (ex Japan) M&A Revenue Ranking
Source: Source is Dealogic M&A Review
Any Singapore Involvement Announced M&A Quarterly Volume
Source: Thomson Reuters
FIRST The Analysts call
Can it get operations back on rail? Nomura - Wen Jia Chen
SMRT at risk of being a ‘fallen dividend angel’ It has been a tough couple of years for SMRT, one of the major transport operators in Singapore. First it had to contend with a drivers strike and in early April it announced it was expecting its first ever quarterly loss. The rail, bus and taxi company had been a favourite of investors looking for steady dividends, and having a near monopoly on several business routes seemed like a good way to make profits. What went wrong Unbeknownst to many of its passengers, but now very much on the minds of investors, is its investment in a bus system in Shenzhen where the wheels are falling off. SMRT spend $68 million for a 49% stake in Shenzhen Zona, a transport company in China with 78 buses and 830 taxis.
SMRT wrote off almost a third of its investment, or $17 million. In a presentation to investors at a Credit Suisse conference in 2010 the company said one of its strategic thrusts was “overseas expansion opportunities in core competencies” and that it expected Zona’s profit contribution to be material in 5 years. Just two years later things are not
looking so rosy and SMRT wrote off almost a third of its investment, or $17 million. The contract to operate and maintain the Palm Jumeirah Monorail development in Dubai was terminated in 2010. Internal issues Closer to home, the group has struggled with engineering issues and trains have been delayed, and it had a drivers strike to contend with. Worse, passenger numbers are falling, with rail ridership for the first two months of the year down 2.3%. SMRT has a new management team headed by Desmond Quek Bak Chye who was appointed President and CEO last August. Mr Quek also served 14 years in the Army and was most recently the permanent secretary in the ministry of environment and water resources. Other ex-military recruits drafted in to fight this battle include 47 year old Lee Ling Wee, who came on board in April and was formerly head of Air Engineering & Logistics at the Republic of Singapore Air Force, where he was responsible for fleet and weapons maintenance. The new team is undergoing an entire review of Singapore bus operations and some analysts worry this could see further write-offs. So are these just glitches or are there deeper issues for investors to be worried about?
Dividends are at risk due to lower reported profits. The question remains as to whether the company will pay out dividends based on the normalised profit or the actual reported profit. Separately, dividends are also at risk due to a potentially lower payout ratio, as we believe that the group needs to conserve cash for future capex. Hence, even if normalised profits are used as the basis for dividend payment, it also remains to be seen whether the payout will be in line with historical experience. The group has a stated payout ratio of 60%, though they have historically paid above that.
Maybank Kim Eng - Bernard Chin
SMRT has been a dividend darling in the past, with stable and growing earnings providing shareholders with a steady stream of dividends to look forward to. However those days of stability and certainty look to be coming to an end. We see a possibility of SMRT lumping all its bad news in a single quarter to posture for a favourable fare review outcome. The method in which public transport fares are decided is currently under review, and land transport companies like SMRT could be attempting to signal its poor financial position should the revised fare formula not equitably account for its rising costs.
CIMB - Lee Wen Ching
SMRT surprised us with its profit warning. The group will slip into its first-ever net loss in 4QFY3/13 as a result of high operating costs and S$17m goodwill impairment for its associate Shenzhen ZONA. But it will remain profitable for the full year. The S$17m goodwill impairment is nonoperational and hopefully, non-recurring. A more pressing concern is SMRT’s ballooning costs. SMRT’s guidance for losses suggests that opex inflation has been more severe than expected. Such costs are structural in nature and will continue to erode margins. Cost inflation will continue to erode profit margins in the absence of fare hikes.
SINGAPORE BUSINESS REVIEW | APRIL 2013 15
FIRST At the Overseas Family School the average revenue per student is $25,509 a year and the profit margin was 25%.
Schools scramble for super rich kids
C
atering to the offspring of Singapore’s well-heeled expat children is a growing business, and Singapore has no shortage of contenders for the hearts and wallets of the little ones. The latest education institute to make a big push is Overseas Education Limited (OEL), which runs the Overseas Family School (OFS). The group successfully listed on the SGX in February and the net proceeds will be used to finance the land and construction of a new campus in Pasir Ris which will allow for a 27% increase in capacity when ready in 2015. OEL may be the only Singaporean listed operator of a top 5 school, but it
is not alone in an industry estimated to earn $1 billion a year. The “big five,” comprising Singapore American Schools, United World College, Tanglin Trust and the Australian International School earn almost half a billion dollars between them, according to figures compiled by CIMB. A lucrative business At the OFS average revenue per student is $25,509 a year and the profit margin was 25%. It is also a fast growing industry, up 8.4% in FY10 and 13.7% in FY11, according to research by Frost & Sullivan
who estimates that the total student population in the industry will rise from approximately 42,504 in Academic Year 2011/2012 to about 58,051 in Academic Year 2015/2016, or a CAGR of approximately 8.1%. OFS also has pricing power, raising tuition fees by 6.1% for the junior school and 5.7% for the senior school in the 2010 academic year. Darren Box, managing director of Vertical Payment Solutions, a company which specializes in school systems, says technology plays a big part in how schools market themselves. “They all want to be seen as the best school and technology is one of the differentiators. Some things include smart chip wrist bands which do everything from checking kids in and out of school, buying things, and even opening lockers so we do away with padlocks. Another extension is bus tracking, which tags a child onto a bus and his photo is matched on an iPad, and then the bus is GPS tracked and the information made available to the child’s parent,” added Box.
Revenue data of foreign system schools
Source: ACRA, FROST & SULLIVAN
RANKINGS:
Singapore’s 5 biggest housing lenders DBS takes the lead in Barclays’ latest chart showing mortgage market shares of Singapore banks. However, these are the same banks that will most likely be affected by latest set of cooling measures amid heavy exposures, said Barclays. 2012 full year housing loan data is yet to be released but market expected it to have grown by 8-10% from $131.11bn. MAS has introduced numerous rounds of property cooling measures over concerns of the property market overheating. Barclays analysed banks’ mortgage risk weightings and the capital positions and found that DBS among the local Singapore banks are most affected by property tightening measures due to their low mortgage risk weightings of 5-6% under the internal-risk based approach. It believes that mortgage rates will rise independent of US interest rate hikes due to tightening system liquidity in Singapore. 16 SINGAPORE BUSINESS REVIEW | APRIL 2013
Mortgage market share in Singapore FY12
Source: Company data, Barclays Capital
FIRST HOT START-UP:
New cancer cell detecting-system developed
The days of cancer being an incurable disease are long gone. Various technologies are now available to detect and cure the life-threatening disease. And just recently, a new startup, Clearbridge BioMedics, raised $9m to develop the ClearCell System that is commercially available to effectively detect, isolate and retrieve circulating tumour cells (CTCs). According to co-founder Johnson Chen, the company’s proprietary ClearCell System is one of the first non-biomarker based systems that is commercially available to effectively detect, isolate and retrieve circulating circulating tumour cells (CTCs). These CTCs are cancer cells that slough off from a physical cancer tumour and are circulating in the blood stream. Researchers wish to identify and obtain these CTCs, as they may be used in cancer research. The ClearCell System was launched in 2012 to the research market following the company’s announcement that Clearbridge BioMedics has achieved ISO13485 certification for the development of cell-based in-vitro diagnostic devices. “Most of the other systems available for identifying CTCs use biomarkers that tag themselves to the cancer cells. This is
OFFICE WATCH:
Singaporeans are happiest people Johnson Chen
ideal for research purposes, as the CTCs can be retrieved in their native state,” said Chen. Clearbridge recently raised $9 million in March 2013, and the funds will be used to develop the next generation ClearCell System, with clinical applications including cancer screening/ diagnosis, cancer staging, supporting cancer treatment decisions, personalised cancer treatment and post cancer monitoring. The underlying technology for Clearbridge BioMedics began its life in a laboratory at the National University of Singapore, headed by Prof Lim Chwee Teck. A spokesperson said that when Johnson Chen, who was a University friend of Prof Lim, heard about the technology, he saw the potential of developing this into a commercial device.
Most of the other systems available for identifying CTCs use biomarkers that tag themselves to the cancer cells.
The Co’s fresh spin on office spaces Rent an office suite for S$900 a month per person. Located in the CBD area, The Co offers affordable workspaces that address the needs of Singapore’s bustling business hubs. A product of Arcc Holdings, The Co is an 8-storey building that caters to Singapore’s business community and start-ups. It features 202 office workstations, 50 coworking desks, 3 floors of breakout spaces and event spaces, 2 meeting rooms, and 1 conference room.
There have been recent reports saying Singaporeans are emotionless people but a recent ad campaign proved otherwise. Back in November 2012, Singapore made a buzz when it ranked as the most emotionless society in the world. The survey generated mixed reactions from the public noting Singaporeans’ longer work hours as one of the possible culprits of the survey’s outcome. In its recent campaign, StarHub unveiled a series of activities that show the happier side of Singaporeans. Tagged as “Happy Everywhere,” this so-called social movement aimed at encouraging Singaporeans to spread happiness all over the city through little acts of kindness. Surprises include giving away free cups of coffee, organising a mobile carnival for kids, delivering refreshing drinks and snacks to cabbies waiting in the taxi queue at Changi Airport, and giving soccer fans a surprise match with the LionsXII. Kicking off the campaign was the launch of a social engagement activity which allowed Singaporeans to share videos, photos or tweets of what happiness means to them at http://happyeverywhere.sg/.
SINGAPORE BUSINESS REVIEW | APRIL 2013 17
ANALYSIS: ASIAN M&A
geographical region, ahead of Europe (33%), North America (29%) and Latin America (2%). Compare this to five years ago, in 2006, when only 24% of the Fortune Global 500 companies came from Asia-Pacific. In half a decade the region’s companies, predominantly from China, catapulted to the list and bumped off the stagnant giants from Europe and North America.
charts and causing a shift in global M&A capital flows,” said Andrew Heard, managing director, Asia Pacific Benefits at Towers Watson in the consulting firm’s 2012 M&A yearend report. Flush with capital and driven by ambitious global expansion plans, Asia-Pacific companies increasingly prefer to engage in outbound M&A activities rather than in joint ventures or greenfield investments, outside of a combination of the three. Asia-Pacific companies previously preferred greenfield investments, valuing its safer and studied approach of expanding overseas from scratch. But now, these same companies who were averse to risk now seem more willing to forge ahead with M&A deals, valuing the quicker results and promise of total control compared to time-consuming greenfield investments or compromise-ridden joint ventures. “In the increasing flood of globalization, M&A serves as a path of rapid expansion into new markets and operational capacity abroad, and Asia Pacific is no different,” said the Towers Watson report. “With many Asia-Pacific companies having grown organically and sufficiently scaled-up through intra-Asia-Pacific acquisitions, many are now turning outward to non-Asia-Pacific nations in Europe, the Americas, the Middle East and Africa,” it added. North America is the most popular target market for outbound regional expansion among Asia-Pacific companies, said Towers Watson, citing an Asian Traiblazers survey where 37% of the respondents chose North America as the most important region for their future growth. This was followed by a preference for Latin America (31%), Africa (30%), Central and Eastern Europe (19%), Western Europe (18%) and the Middle East (16%).
Why M&A is increasingly preferred Asia-Pacific companies feel they are ready to step up as global players, and M&A activities offer the fastest way to reach their grand growth targets. “More and more, Asia-Pacific multinationals are using M&A to expand, finding top spots on deal
Rising M&A outbound activity Towers Watson cited data from mergermarket, an M&A intelligence service, which show that outbound M&A volume from Asia-Pacific companies reached an estimated 464 deals in 2012, the highest ever in the past decade, and the third straight
More Asian companies march west to go global 2012 marked a high point in mergers and acquisitions with fast-expanding Asia-Pacific firms going on a Western buyout binge.
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n what analysts are noting as an aggressive shift in attitude, capital-rich companies in AsiaPacific who have spent the last decade expanding in the region are now on the prowl for strategic and bargain acquisitions in North America and Europe. The reason for hunting outside the region is two-fold: AsiaPacific companies are now looking to establish a Western presence in order to go global, and Asian M&A targets are becoming prohibitively more expensive. Asia-Pacific companies also seem more willing to wield their growing financial clout. Around 36% or more than a third of Fortune Global 500 companies in 2012 came from Asia-Pacific, the largest from any 18 SINGAPORE BUSINESS REVIEW | APRIL 2013
“Asia-Pacific companies feel they are ready to step up as global players, and M&A activities offer the fastest way to reach their grand growth targets.”
ANALYSIS: ASIAN M&A year of growth for the region. Companies based in Asia-Pacific ramped up M&A activity outside of Asia-Pacific by an average of 20% year-over-year between 2003 and 2011, experiencing an annual growth rate of 37% in terms of value over the same period, merger market data also showed. There was a brief decline in outbound M&A activity in 2009 as companies became more cautious following the global financial crisis, but the following year in 2010, deals spiked with a vengeance. Total value grew a whopping 176% year-overyear from 2009 figures, an annual growth trend that has continued until 2011. 2012 proved to be a watershed year, because for the first time on an annual basis, Asia-Pacific has seen more outbound M&A than inbound activity, said Towers Watson. Japan and Australia, in particular, continue to lead the region in outbound M&A deals value, but China has been catching up. “Chinese activity outside of Asia-Pacific has eclipsed Australia’s share of M&A outside the region, as Chinese bidders are pushed abroad by insatiable demand from China’s domestic economy as well as encouragement from the PRC government’s 12th Five-Year Plan to expand abroad,” said Towers Watson. It will take years though for China to overtake Japan in terms of deal value, especially given that Japanese firms now heavily rely on outbound M&A to drive their growth in the face of slowing domestic markets. Chinese
bidders also still have a lot to learn on deal negotiations, which has hindered them from clinching more highprofile deals. Towers Watson highlighted how in January 2012, RBS rejected a bid from China Development Bank (CBD) for RBS Aviation despite posting the highest offer. RBS reasoned that CBD failed to pay enough visits to the RBS Aviation headquarters, which led to the deal ultimately closing in favor of the Japan-based Sumitomo Mitsui Financial Group in June 2012 for $7.3 billion. Favorite targets, notable deals On the whole, acquisitive AsiaPacific companies have been most interested in the Industrials & Chemicals, Energy, Mining & Utilities, and Technology, Media and Telecommunications (TMT) sectors, according to Towers Watson. But in terms of money spent, they have funneled the most to Energy, Mining & Utilities, with 2011 being a particularly strong year as the sector made up 17% of deal volume and 54% of deal value annual totals. The energy sector also saw the largest deal of 2011: BHP Billiton’s $15.5 billion acquisition of US-based Petrohawk Energy Corporation in July 2011. The Australia-based global energy and resources giant was looking to enhance its position in the exploration, development, and production of natural gas properties, and so it purchased Petrohawk’s roughly 1 million acres
Asia-Pacific outbound M&A volume
Source: mergermarket
“2012 proved to be a watershed year, because for the first time on an annual basis, Asia-Pacific has seen more outbound M&A than inbound activity.”
in Texas and Louisiana. Another large deal of 2011 involved Hong Kong-based Cheung Kong Group’s successful $7.8 billion bid for the listed UK-based water utility Northumbrian Water Group Plc, a deal which closed in October 2011. In 2012, Asia-Pacific bidders also flocked to the Western European consumer sector. China-based Bright Foods acquired a 60% stake in Weetabix Limited, a UK-based company producing and selling breakfast cereals and bars, for $1.2 billion. Towers Watson said the acquisition will allow Bright Food to expand its business in UK as well as the international market, and will help Weetabix strengthen its business in China. Slowdown in 2013? The brisk pace of 2012 outbound deals could slow down this year though, if 1Q 2013 data is any indication. Japan, for instance, saw its outbound volume plummet 69% quarter-on-quarter to $5.8 billion in 1Q 2013, from $19.1 billion, according to Dealogic. This is the lowest quarterly total for Japan outbound M&A since 2Q 2010 ($5.7 billion) with US targeted volume recording the largest decline, down 93% to $654m compared to $9.5 billion in 1Q 2012 In Singapore as well, overseas acquisitions from Singapore companies remained flat as deal value reached US$3.1 billion to date, slightly lower by 1.4% from the first quarter period in 2012, and witnessing its third quarterly decline since 2Q 2012, according to Thomson Reuters. If it is any consolation for AsiaPacific countries, the sluggishness in M&A deals – both outbound and inbound – seems to affect most other world regions. Dealogic reports that even if Global M&A volume reached $596 billion in 1Q 2013, up 2% on the $584.2 billion recorded in 1Q 2012, it was down 34% on 4Q 2012 ($906.2 billion). The Americas was the only world region to see an increase on 1Q 2012 ($248.1 billion), up 34% to $331.3 billion in 1Q 2013. SINGAPORE BUSINESS REVIEW | APRIL 2013 19
COMPANY FOCUS: UOL Meanwhile, fair value gains on UOL investment properties surged during the period, rising a staggering 181% to a total of $549.6 million for both the Group’s investment properties and those of associated companies. The spectacular gains on investment properties turned around what would have been a severe bottom line crash. Group profit before fair value and other gains/ losses and income tax was $439.7 million, down 40% from $727.8 million in 2011, due to lower income from property development and associated companies. But including fair value gains, pretax profits were up 7% to $964.3 million. Factoring in a lower income tax and share of profit of noncontrolling interests, net attributable profit grew 19% to $807.7 million.
UOL’s investment strategy begins to pay off Rising revenues from newly acquired investment properties prop up the company as development property contributions dry up.
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n recent years, UOL Group has invested roughly $1 billion in Singapore-based recurrent income projects as a response to a weakened property development market. This strategy has generated increased revenues from its investment properties, and has partially offset the steep drop in residential sales last year due to the completion of several projects. Analysts believe that with UOL’s success with investment assets, these will become one of the company’s growth linchpins in the coming years. FY 2012 results For the financial year ended 31 December 2012 (FY 2012), the UOL Group posted a 19% increase in net 20 SINGAPORE BUSINESS REVIEW | APRIL 2013
“UOL Group posted a 19% increase in net attributable profit to $807.7 million.”
attributable profit to $807.7 million. The company attributed this profit spike to robust recurring income streams from rentals of its offices and shopping malls, as well as fair value gains from investment gains, both of which more than made up for the earnings drop in residential unit sales. Revenue from investment properties rose 4% to $166.1 million as occupancies and average rents increased, according to the group’s FY 2012 financial results. Revenue from hotel ownership and operations also increased 5% to $377.7 million, including revenues from PARKROYAL Melbourne Airport, and higher revenue from its Yangon and Perth hotels.
Bigger fruits Commenting on the results, UOL’s Group Chief Executive Gwee Lian Kheng says the company stands to reap even bigger fruits from its investment asset strategy. “Our FY 2012 results reflect our strategy of deploying capital into investment assets that can generate recurrent income streams to smooth out the lumpiness of earnings from property development. Over the recent years, we have committed nearly S$1 billion in recurrent income projects in Singapore which should start contributing to the bottom line in the next two years.” Group expenses remained fairly even, increasing by just 1% to $207.3 million, the main contributor being an 11% increase in marketing and distribution expenses to $37.4 million. These expenses were due to a sales commission for Katong Regency and advertising expenses for the launch of residential and office units of The Esplanade in Tianjin. Analysts seem to agree with Kheng’s rosy assessment on investment properties. They predict that UOL will exert a stronger focus on building recurrent income and practicing selective land banking not only in Singapore but also in other Asian countries, particularly China and Indonesia. “Looking ahead, the group would
COMPANY FOCUS: UOL continue to be selective in terms of land banking in Singapore and look to building up its investment properties and hospitality assets,” says Lock Mun Yee, analyst at DBS Vickers. “It had committed S$1 billion in recurrent income projects such as 1 Upper Pickering, PARKROYAL on Pickering, Pan Pacific Serviced Suites and OneKM and will continue to deliver a pipeline of hotels and service residences to expand the PARKROYAL and Pan Pacific brands across Asia including Shanghai, China and Bogor, Indonesia,” he adds. “UOL has quietly deployed over $1 billion into recurring income assets and is looking for more in Singapore. The bulk of the capex has been committed. Its low net gearing of 0.28x leaves room for more acquisitions,” says Donald Chua, analyst at CIMB. A low net gearing implies that UOL can easily take on more leverage for its planned acquisitions.
on improving the performance of our property investments and hospitality,” says UOL. CIMB’s Chua says that UOL asset valuations have room for growth, a conclusion made after the CIMB hosted a post-results investor luncheon for the property developer. “46% of United Square’s leases will be up for renewal in FY13, with renewals in 1Q13-3Q13 already largely firmed. We believe that FY13 could still see some rental reversions, which will help push up book values,” says Chua. UOL has also been rolling out asset enhancement initiatives (AEIs) to boost the value of its assets, which Chua reckoned might slow down as far as its remaining Singapore properties are concerned. “UOL mentioned that it has been consistently enhancing its assets through redevelopments and AEIs. Left now are Odeon Towers and Faber House, unlikely candidates in our view.”
Acquiring investment assets UOL itself has revealed that a greater slice of its capital will be put towards acquiring more investment assets, and analysts believe the firm is in a solid financial position to carry out its plan. “The recent cooling measures and the latest property tax changes by the government in Singapore will dampen overall demand and moderate prices. We remain cautious and selective in our land acquisitions and will continue to reinforce our recurrent income streams and focus
Development property decline While it is clear that UOL will be shifting more capital to its investment properties, the question now is how will UOL boost its development properties, which are contributing far less to the top line and bottom line. Group revenue fell 42% to $1.15 billion in FY 2012 as property development revenues fell 60% to $560 million. Residential property sales for the period were driven by Katong Regency (244 units sold during the year; fully sold) and Archipelago (473 units sold during
Capital expenditure
Sources: UOL_DBS
“UOL has quietly deployed over $1 billion into recurring income assets and is looking for more in Singapore.”
the year; fully sold), notes Min Chow Sai, research analyst at Nomura. UOL says that much of this revenue decline in property development can be traced to project completions in 2011 and 2012, and revenue recognition for several projects in 2011 (Panorama and Duchess Residences). UOL has begun using the completion of construction method following the adoption of INT FRS 115, an accounting rule for recognising revenue for sales of units before construction is complete. But UOL, like many other Singapore property developers, have also borne the brunt of lower overall demand in the face of global economic jitters and a string of property cooling measures the Singapore government has rolled out since 2009. The latest of these cooling measures came out in January with another increase in the Additional Buyer’s Stamp Duty of between five and seven percentage points across the board. Boost property development UOL plans to reinvigorate its property development segment with new unit launches in Singapore, China, and Malaysia, says DBS’s Lock. “UOL expects to top three projects this year and will launch 631 units from the Bright Hill Drive site in June, followed by St. Patrick’s Garden site in July. Overseas, it will offer more blocks at The Esplanade in Tianjin and launch The Panorama in KL towards end of 2013. This would continue to drive earnings visibility going forward.” Eli Lee, analyst at OCBC Investment Research, believes the upcoming launches at Bright Hill and St. Patrick’s will serve as “midterm catalysts” to the UOL stock, while Nomura’s Sai expects the St. Patrick’s Garden redevelopment (186 units) and the Bright Hill Drive project (445 units) to be launched “in the near term.” New China projects will also be coming online in the next couple of years. But the burgeoning market presents a mixed bag for UOL. China counts as one of its strongest overseas markets but not without showing some pricing weakness. SINGAPORE BUSINESS REVIEW | APRIL 2013 21
opinion
richard branson
Money will take you far, but not far enough
Q
“It can be better to start with very little money, since the skills you’ll develop as you overcome the challenges of growing your business will be invaluable.”
22 SINGAPORE BUSINESS REVIEW | APRIL 2013
: Does starting a business always require a big pot of money? A: No. While you will need a few core ingredients to launch a business and then make a success of it, a big pot of money is not one of them. In fact, having substantial financial backing can actually slow or stop you from identifying your business’s problem areas and coming up with ways to fix them. In many cases, it can be better to start with very little money, since the skills you’ll develop as you overcome the challenges of growing your business will be invaluable – you’ll notice your mistakes earlier and adjust more quickly, which will make for a healthier company. Let’s face it: Your first few attempts to start a business are not likely to go according to plan. I have launched my share of businesses that didn’t get off the ground, and looking back, these were useful experiences. Smaller capital means smaller risks. When I was a schoolboy I tried to launch a number of different schemes – for example, when my friend Nik Powell and I tried to grow and sell Christmas trees, but we lost our crop to hungry rabbits. It was disheartening at the time, but had we more capital to begin with, we would probably have made the same mistakes on a bigger scale, and we’d have lost more money. So money can only get you so far. If you’re a beginning entrepreneur launching your first startup, a big pot of money may only mask
problems that will eventually catch up with you. From my first experience of failure I began to understand just how much I didn’t know about starting a business, and that even ideas that I thought couldn’t fail wouldn’t necessarily work out. Passion and cause And gradually, by making mistakes over time and learning from them, I hit on what became my key guiding principles: That you must only launch businesses that will improve people’s lives and that you are passionate about. You must try to create something different that will stand out. When things go wrong (as they often do), don’t give up – be tenacious. Try to be visible – it’s important to get out there and sell your product. Many great ideas fail just because their potential customers don’t hear about them. A perfect example of how far you can go without financial backing can be seen in the Tenner competition held by the business and enterprise education charity Young Enterprise, in which young school kids in Britain are given 10 pounds and challenged to use it to do something enterprising within a month. Children have used the money for everything from helping musicians and artists to promote their work to setting up a course on feeding and grooming horses. It is amazing to see how much some are able to do with their tenner. Help for entrepreneurs With the creativity and spirit
of those kids in mind, I am thankful that my team and I are in a position to help other entrepreneurs find funding these days. Through a public-private partnership including Virgin Money, Virgin Unite, and Project North East, we are helping to manage a government program in the North East of England and in Cumbria that makes small loans available to emerging businesses – up to 25,000 pounds at reasonable rates of interest. The program is only a few months old but we have already seen some wonderful people and ideas, in businesses ranging from pet shops and hardware stores to digital animation studios and dance schools. The StartUp Loans program doesn’t just provide sensible levels of funding but also mentorship and advice for those who are given loans – invaluable insights from people who have been there and done it. In business, the best way of learning is through doing, so I always encourage young people to start a business over going to business school – it’s cheaper and you’ll learn a lot more about what it takes to run a successful company. Entrepreneurship is a great leveler, since having the benefit of a wealthy background or a generous investor isn’t always an advantage. The wonderful thing is that money is not the sole currency when it comes to starting a business; drive, determination, passion, and hard work are all free and more valuable than a pot of cash.
THOUGHT LEADERSHIP SERIES 1: EDUCATION
See how EASB discovers your full potential as a competent industry professional One of EASB’s full-time lecturer, Willard Tan, shares his incredible educational journey with EASB and how he gives back to his alma mater.
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s a world-class educational institution, the EASB East Asia Institute of Management focuses on offering excellent programmes and producing competent and career-ready professionals. One of the many people who benefited from EASB’s unparalleled offerings is Willard Tan, who finished his undergraduate and postgraduate degree at EASB with distinctions and returned to his alma mater as a lecturer for the Queen Margaret University Programmes at EASB. A worthwhile educational journey Willard joined EASB as an undergraduate student in the Bachelor of Arts in Hospitality & Tourism Management while working as a wine consultant in a wine retail company. While juggling both work and studies, he founded the EASB Choir (now known as the EASB Performing Arts), the Club de Cuisine, and the Photography Club. After his undergraduate degree, he enrolled as an MBA candidate at EASB while working for a 5-star hotel establishment as a Manager. Willard was awarded Distinctions for both Bachelor and MBA and was also honoured to be the Valedictorian for the graduating class of 2010. But Willard’s achievements did not stop at EASB. He also completed the Cambridge International Diploma for Teachers & Trainers (CIDTT) from Cambridge International Examinations University of Cambridge, and the Advanced Certificate in Training and Assessment (ACTA) from the Workforce Development Agency, Singapore. To name a few of his accreditations from various wine associations, Willard is a Certified Specialist of Wine from the Society of Wine Educators (USA), Certified Bartender from the Bartenders Association Internationale (USA), and a Certified Service Professional from the Workforce Development Agency (Singapore). Having finished his MBA at EASB, Willard reckons EASB’s approach to the post-graduate programme recognises that students are constantly engaged in a process of learning and the development of their academic works and understanding. All taught modules use assessment methods that allow students to reflect on the professional practice and the discussion of contemporary academic issues. “In addition, EASB posses a great pool of academic lecturers that supported my studies in the pursuant of my MBA, each with a specialty domain area, which provided excellent guidance in the various modules conducted,” says Willard, adding that EASB’s
Holistic Education Approach also allows students to discover and nurture talents by having various clubs, associations and events, such as the Sports Day, the Club de Cuisine, EASB Performing Arts, Toastmasters Club, Leo CLub, Photography Club, and various other sports and Cultural Clubs. The secret to success Willard notes that all programmes offered at EASB are of the highest quality in terms of academic rigour and are approved and registered by the Council for Private Education (CPE) under the Ministry of Education, Singapore. Curriculum developed are always relevant, current to the industry and the main emphasis is on the application of theoretical knowledge taught. “There are various national and international bodies that contribute to the quality assurance of our programmes such as reviews by CPE, a government regulatory authority for private institutions in Singapore, UK University Quality Assurance Agency, a government agency pertaining to quality assurance for higher education, annual reviews and validations by our university partners in UK, and our internal reviews by the Academic Board and Examination Board,” he adds. But what really sets EASB apart, according to Willard, is that its programmes are developed based on the UK’s Credit Accumulation Transfer Scheme which all modules will carry a certain amount of credit points. As such, students who intend to complete their final year for their BA, will be allowed to transfer their credits to any universities in the UK or Commonwealth countries, which enables relevant modules to be exempted. For instance, in the Hospitality & Tourism Management programme, students will be placed for a 6-month internship in the area of hospitality and tourism such as in leading hotels, travel agencies, attractions, and events companies after their 2-month in-school practical training at the newly built Hospitality and Tourism Training Centre (HTTC). “We are proud that EASB is the 1st Private Education Institute to perform at Disneyland, Hong Kong at 2012. Students have also represented EASB and competed with hotel professional at the Annual F&B Amazing Race organised by the F&B Managers Association. These extracurricula activities are examples of how EASB integrates the Holistic Education Approach into the learning journey of our students.” But other than the EASB Holistic Education Approach, practical training at the HTTC, and
Willard Tan, Lecturer for the Queen Margaret University Programmes at EASB
the 6-month internship, Willard reveals that students will also be involved in the student exchange programmes held in the partner universities in UK which exposes them to cross-cultural experiences. They will also be exposed to overseas industry practices such as study trips to Hong Kong, Macau, Korea, and Malaysia for their Integrated Resorts Management module where they will learn about the actual functional areas in the back of the house and front of the house operations in leading hotels and casinos. A call to give back After getting this much training and exposure during his stay at EASB, Willard felt the need for him to give back to the society and community. Hence, he decided to be a fulltime lecturer at EASB with the aim to inspire students to be effective leaders and critical thinkers based on 4Cs: Creative, Committed, Confident and Competent. “I hope to spark their passion in the professional practice of management and their contribution back to the relevant industry and most importantly, the society. The sense of satisfaction is the ultimate reward I get when I see students grow and eventually carve their individual success in the industry after they graduated. This continuous sense of satisfaction drives my passion to be as a lecturer,” says Willard. For more information, visit www.easb.edu.sg.
SINGAPORE BUSINESS REVIEW | APRIL 2013 23
CO-PUBLISHED CORPORATE PROFILE
See how the trading industry has evolved after 20 years
Find out how the drastic changes in the industry and the “democratisation of information” have helped Saxo Bank succeed.
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efore Saxo Bank became a fully licensed and regulated European bank with specialisations in trading and investment, it was one of the first companies to explore the opportunities in the online trading platform back in 1992. Lars Seier Christensen, co-founder and CEO of Saxo Bank, recalls that it was very difficult being a small broker doing manual assistance to a relatively immature client base and all the complexities involved. “Our wish was really just to do what other brokers were doing, but trying to do it with a better service level. But we were fortunate to stumble over the internet that time when it was very young and nobody believed it because we thought it offered us the possibility of becoming a market leader. Without the internet, we would never have prospered like we did,” he adds. After more than 20 years, Saxo Bank’s platform has already evolved tremendously with a full suite of platforms utilising web and mobile technologies to meet the needs of traders and investors. The role of technology Christensen reckons there has been tremendous change in the industry over the years especially with all the technology that became available in what he calls the “democratisation of information.” And this made way for a huge difference in the industry compared to how it was in the 1990s. “Even relatively small investors can trade something as sophisticated as foreign exchange, so I think it’s a good example of one of the markets that have really moved in
a very significant way over the years and have exploded in volume,” says Christensen. Apart from technology, a very strong reduction in trading costs also lead to the explosion of volume as it opened up more sophisticated opportunities even for small investors. He also notes that Asia may be a little bit ahead of western Europe in terms of embracing these opportunities but adds that the development is pretty much the same across the world. “If you’re looking at the more sophisticated products like foreign exchange, derivatives, commodities, I think foreign exchange is more common here in Asia than it is in, for example, western Europe where there aren’t many private individuals involved in those types of markets.” Technology indeed was an overwhelming tool for the industry in that it justified giving out an efficient service even to relatively small accounts and still be able to make a profit on it. “If you had to deal with that manually like we used to do back then - with all the expensive systems to execute trades - realistically, you would not want accounts smaller than a million because it was not worth the hassle.” Since technology has developed across the board, it has brought many people into the market. Consequently, the regulatory aspects have also grown bigger than 20 years ago. Christensen deems regulation as the leading issue in the industry today. For a global institution such as Saxo Bank, he notes that one has to constantly adapt to rapidly developing regulatory environment that are different from country to country. “It’s a major resource allocation to stay on top of
“Even relatively small investors can trade something as sophisticated as foreign exchange, so I think it’s a good example of one of the markets that have really moved in a very significant way over the years and have exploded in volume.” 24 SINGAPORE BUSINESS REVIEW | APRIL 2013
Lars Seier Christensen Co-founder and CEO SAXO Bank regulatory changes around the world,” he adds. Staying optimistic Market activity was very subdued in 2012 but Christensen believes it will not stay like that this year. “This year will be better, in terms of volumes in general, so I’m pretty optimistic in the long run because I still think foreign exchange is under-utilised although it’s the world biggest market system,” he says while adding that the ever-growing interest in the private investors’ communities is also a positive. Christensen reveals Saxo Bank got markets in Hong Kong, Singapore, Tokyo, and Sydney well covered and that they are now slowly establishing their presence in emerging markets like Turkey, South Africa, and Uruguay. However, he notes that while foreign exchange is beneficial for investors’ portfolio composition, professional equity players that invest worldwide are still unaware about how big a part of their return profile actually comes from the currency moves. “If they’re not into foreign exchange trading, I like them to think closely about how big a part of their everyday activity foreign exchange is and appreciate how big a part of the international portfolio is foreign exchange-related in terms of their returns. It’s a very under-utilised asset class that could have great benefit,” concludes Christensen.
HONG KONG VIEW
Tim hamlett
Injustice in money laundering
M
oney laundering is an interesting offence. There is no victim. The perpetrator does what is in normal circumstances considered acceptable, even virtuous. He or she moves money around. It is the essence of money that it should be highly mobile and acceptable by people who do not know the background of the person offering it. This is what makes money socially useful. So it is odd to find rules requiring someone accepting money in the normal way of business to discover where it came from. A bank’s crime The oddity does not stop there. It seems that in most of the world this offence can only be committed by a bank. Banks of great size and respectability admit money laundering, or offer to pay gazillions of dollars not to admit money laundering. Under these circumstances you would suppose that prosecutors would be in a position to prove that money laundering has taken place. And you would suppose, in that case, that they could also prove that some named individual had done the foul deed. Yet somehow the individual concerned never appears in the dock. Even more strangely the boss of the errant bank, with whom you might suppose the buck stopped, carries on with business as usual, including the collection of bonuses for his good conduct and care for the shareholders’ interests. So it is apparently assumed that shareholders in banks have no objection to the organisation they own engaging in illegal conduct, and no objection to the continued employment of the person under whose aegis the crime took place. It is difficult to believe that anything quite like this would happen in other industries. Another oddity: money laundering is usually not prosecuted by the country where it takes place. All the high-profile cases are prosecuted in America. It is not, though, alleged that the foreign banks who are prosecuted have engaged in money laundering in America. The American law against money laundering applies to anyone who needs to be in good odour with the Americans. As this is a rather common requirement in the banking industry, this means that for banks, at least, we already have a World Government. Unfortunately money laundering seems to be the only social evil it is interested in. This is a pity because money laundering does not seem to be of great interest to the rest of the world. In normal boring countries there is not much call for it. Bans on money laundering are usually explained as a way of hampering the operations of organised crime. But criminals are used to this problem and no doubt have well-established ways round it. If your credit card is stolen in Hong Kong, for example, the thief will go immediately to the nearest betting centre, to make wagers which will be charged to credit but paid in cash. Only organised criminals on a very large scale really need the services of banks. Financing organised crime? And you would think that criminals on a large scale would be pursued for their crimes. It is a Guilty?
tim hamlett Former Editor of Sunday Standard and Associate Professor of Journalism
strange admission of defeat to say, as the police sometimes do when explaining their hostility to unofficial gambling, that the proceeds may be used to finance organised crime. Are we so helpless against organised crime that the best we can hope for is to stop the perpetrators from spending their winnings? Of course the Americans offer a rather different explanation, fearing perhaps that organised crime is regarded as their forte anyway. Money launderers are described as having helped drug dealers and terrorists. So the campaign against money laundering is an offshoot of two wars - one which is a failure and one which is a fraud – against drugs and terror. Strange discrepancy This is not the place to go into the dubious merits of the war on drugs, but there is a strange discrepancy here. The drug lords are supposed to be keen on laundering their money so that they can spend it on legitimate pleasures. This is, after all, why criminals collect money. But the terrorists are not making money to spend on legitimate pleasures. Terrorism is a loss-making activity. So they don’t need to spend it and their need for legitimate banking services is, you would think, rather modest. If you just need to move cash around you can do it in a suitcase. There was a charming story about a gentleman who left a cool million in a taxi. The taxi driver took it to the police. They had some difficulty in tracing the owner, who had not reported his loss. He explained that it had never occurred to him that anyone who found a million bucks in a taxi would do anything but keep it. But I digress. The point of this excursion through the philosophical thickets surrounding money laundering is to wonder what on earth was going on in a Hong Kong court when a 61-yearold lady was convicted of money laundering and sentenced to 10 years jail. This sentence seems to me barbaric and indefensible. I know that in the words of the old song it’s the rich what gets the pleasure and the poor what gets the blame. We have to have laws against money laundering. But if it is an offence for which bankers get a bonus while humble housewives get ten years hard, then the law is an ass. Actually it seems the law on this topic does have rather donkeylike characteristics. In their haste to pounce on the proceeds of organised crime the legislators carelessly forgot to include one small requirement in the offence. The prosecution does not have to prove that the money was the proceeds of crime. It does not have to prove, actually, that a crime has taken place, that the original supplier of the money was the criminal or that the person actually moving it knew this was the case. All it has to show is that the launderer “had reason to believe” the money was dirty. As the launderer is frequently a Bear of Little Brain (a similar cruel sentence was handed out to a 22-year-old man who had dropped out of middle school) this does not help him or her very much. It seems we can expect to see a succession of small potatoes copping a decade in the slammer while the maximum sentence for a banker participating – supposing one is ever prosecuted – is seven years. SINGAPORE BUSINESS REVIEW | APRIL 2013 25
ANALYSIS: SREITS
SREITs to shine on in 2013?
Some analysts fear that Singapore’s 2012 REITs stellar performance will be short-lived
L
ast year, Singapore REITs dazzled investors with spectacular returns, and several subsectors are poised to keep their strong momentum this year. Analysts point to office and retail Real Estate Investment Trusts (REITs) as particularly compelling investment choices, while industrial, hospitality and healthcare REITs may have the capacity to overcome increasing headwinds. But pessimists caution against betting it all on Singapore REITs (SREITs), pointing to signs that the soaring valuations seen in 2012 could taper off in the coming months. 2012 bonanza SREITs offer superior gains and solid fundamentals, according to Kevin Tan, analyst at OCBC, which makes them attractive to investors. He notes how SREITs that OCBC recommended with Buy ratings mostly outperformed the broader market, racking up a growth of 4.5% on average. 26 SINGAPORE BUSINESS REVIEW | APRIL 2013
The SREITs has been one of the best performers in 2012 (39% price return in FY12).
“Most of our preferred picks, we note, have also fared very well. Specifically, Ascott Residence Trust, Frasers Commercial Trust and Starhill Global REIT (SGREIT) have rerated by 5.28.4% since 17 Dec 2012. This resulted in their unit price performances falling within the 80th percentile of the SREITs’ returns under coverage,” says Tan. Despite posing higher risks, SREITs attracted droves of investors in 2012 on the hunt for their higher returns—and were gladly surprised when SREITs delivered as promised. “The SREITs have been one of the best performers in 2012 (39% price return in FY12). Last year, we have seen many pension, insurance and income funds switching into REITs to pursue higher returns for the sheer fact that the yield-curve is almost flat,” says Ong Kian Lin, analyst at Maybank Kim Eng. SREIT segment performance Among the handful of SREIT segments, three underwent notable
price appreciation in financial year 2012 (FY12), according to Ong. Office REITs led the pack with a 59% price appreciation, retail REITs appreciated 37% while industrial REITs appreciated 33%. Yields should continue to impress well into 2013. “We believe that SREITs will continue to retain their shine in 2013, underpinned by comparatively higher yield spreads against their peers in other geographical markets, continued interest in lowerbeta yield plays by investors and a generally positive sector outlook,” says OCBC’s Tan. This bullish forecast was countered by a more sobering outlook from Maybank’s Ong: “We do not think that SREITs will be able to repeat its stellar performance in 2012. In our view, SREITs will find it challenging to complete yield-accretive acquisitions in 2013, given that property prices in most segments are already past their 2008 peak levels. We also see limited opportunities for further positive rental reversions as rentals face more downward pressure in 2013, following looming supply and softening of business sentiments.” Office and retail REITs While office REITs appreciated the most during FY12, the subsector will be one of those experiencing a stark slowdown as office leasing activities begin to dry up. “We think it is unlikely that the momentum will continue into 2013. On the fundamentals, office leasing is likely to slow as office tenants become increasingly cautious and cost-conscious amidst the volatile macroenvironment. We expect financial institutions to cut back on leasing activity in 2013, while new leasing demand (< 10k sqft) will stem from law firms and oil and gas companies –both new entrants, as well as incumbents.” Ong adds that vacancy risks and prime rental pressures remain on the downside with the impending completions of new Grade A office buildings such as Asia Square Tower 2 (3Q13, with net leasable area or NLA of 782,280 sqft), SBF Centre (2014, NLA: 353,480 sqft) and
ANALYSIS: SREITS Capitagreen (4Q14, NLA: 720k sqft) in the core central business district. Retail REITs benefited last year from “lively” leasing demand particularly from international fashion and food & beverage brands, says Ong, citing data from research firm CBRE. Retail leasing demand will likely stay strong in 2013, but will be concentrated in select areas and regions. “We see rental bright spots in selective micromarkets such as Orchard Road and Outside Core Region, especially near upandcoming Regional centres (Woodlands, Jurong East) and subRegional centres (Marine Parade, Paya Lebar, Serangoon, Bishan, Buona Vista),” says Ong. Industrial REITs Meanwhile, industrial REITs are facing a government-led cooldown after the physical capital values for most of its asset classes rose above their peak 2008 levels. It was mainly speculative investors who drove up industrial property and rental prices. This convinced the government to roll out the country’s firstever seller’s stamp duty (SSD) for industrial design to temper shortterm speculative activity. For instance, industry property with a holding period of up to one year will have an SSD payable of 15% of consideration or market value, whichever is higher. Industrial properties with a holding period of more than one year and up to two years, will have their SSD payable lowered to 10%, and those held for more than two years and up to three years decreased even more to 5%. Industry properties with a holding period of more than three years will have no SSD payable. The SDD payable is the latest in a string of recent government cooling measures aimed at curbing industrial property speculation, which has been experiencing an overrun effect from the booming residential sector. Tan recalls how the government introduced smaller industrial sites on short tenures in Dec 2011, while imposing a minimum 150 sqm strata unit size and minimum technical specifications
on industrial property. Then six months after, in June 2012, the government halved the maximum tenure for all sites in the industrial government land sales programme to 30 years from 60 years. Combined with these two cooling measures, analysts are hopeful that the new SSD will whittle down speculative activity. Industrial REITs even stand to receive some trickle down boons. “With the government now levying the SSD according to the holding period, the potential return on short-term bets will fall, thereby helping to limit speculative demand on industrial properties,” says Moody’s. Stabilization in 2013 OCBC’s Tan predicts a stabilization of industrial property rental rates and prices in 2013, saying: “We see this move as a direct and effective way to cool down the industrial market and make industrial properties more affordable for genuine industrialists. We do not expect any significant impact on larger industrial REITs, but believe the development may be a mild positive for smaller industrial REITs on their acquisition front since the bulk of the speculative fizz is likely to come from smaller industrial properties.” Tan tagged the industrial REITs subsector with an Overweight
We expect financial institutions to cut back on leasing activity in 2013, while new leasing demand (< 10k sqft) will stem from law firms and oil and gas companies.
recommendation, reasoning that it possesses a sustained growth profile, higher-than-average average [distributions per unit] DPU yields and healthy financial positions. Among industrial REITs, Maybank’s Ong singles out Ascendas REIT (AREIT) as a preferred pick since its “near-term DPU stands to benefit from ongoing redevelopment projects and asset enhancements.” Hospitality REITs Prospects for the hospitality REITs will grow dimmer in 2013, following the sector’s increased competition and soaring hotel room supply that outpaces demand growth. “We are downbeat on the hospitality segment as we forecast tourist arrivals to grow at a[compound annual growth rate] CAGR of 5.2% over 2011-2015, reaching 16.2 million arrivals (visà-vis STB’s target of 17 million) by 2015 (14.2m in FY12). However, hotel room supply (measured in terms of available room nights) will grow at 6.1% CAGR, outstripping demand growth of 5.9%. [Average room rate] ARR growth is projected to slow from 15% in 2011 to 6% in 2012 and 2%3% over 2013-2015,” says Ong. The Maybank analyst also warns investors of increasing cost pressures with the tightening of S Passes and Employment or E Passes for the service industry, which he says
S-REITs outperform STI
Source: Bloomberg
SINGAPORE BUSINESS REVIEW | APRIL 2013 27
ANALYSIS: SREITS will indirectly cut into the hotel landlord’s rentals. “With more hospitality trusts onboard and more hotel rooms coming onstream, we would advise investors to stay cautious with hospitality REITs,” says Ong. 2013 trends In fact, analysts believe that acquisitions will be one of the main trends that will define SREITs, pushing them to possibly raise equity although in more bite-sized placements. SREITs with higher asset leverages—including Cache Logistics Trust (CACHE), Mapletree Commercial Trust (MCT) and CapitaMall Trust (CMT)—are more likely to go the equity funding route. But SREITs with larger pipeline assets such as Keppel REIT (KREIT), MCT and CMT will require larger cash calls. Chua also notes that in the primary market, ARA Asset Management could revisit a potential listing of Dynasty REIT, and Soilbuild Trust could be considering an IPO. Chua pegs equity fundraising in 2013 to amount to S$5.2 billion, taking advantage of their popularity among income funds and yield-seeking investors, which will then be used to bankroll more acquisitions. This equity fundraising forecast, if hit, will be the highest in the sector’s short Regional Yeild-Spreads
Source: Bloomberg
28 SINGAPORE BUSINESS REVIEW | APRIL 2013
listing history, he says. For Maybank’s Ong, a key trend will be how property prices will be propped up by persistently low interest rates and high liquidity on the back of continuing rounds of the US monetary policy of Quantitative Easing Infinity, the European Central Bank’s unlimited bond-purchase program and the Bank of Japan’s yen-asset-purchase program. Ong also dubs 2013 as the “year of consolidation” for SREITs that will warrant further yield compression of at most 3040 basis points (bps), translating to a maximum of 68% upside. Ascendas REIT Analysts also weigh in on the performance and outlook for several trusts. AREIT still has room for yield compression, says Maybank’s Ong, for as much as another 60bps. It also boasts of a healthy lease expiry and debt maturity profile that will appeal to investors. Those who fear AREIT’s business park exposure do have cause for worry. AREIT’s business/science park portfolio will constitute a large chunk of its gross asset value and gross revenue in 2013, but it faces pressure from an onslaught of new known supply estimated at seven million sqft coming online between 2012-2015. Around 81%
Equity fundraising in 2013 to amount to S$5.2bn, taking advantage of their popularity among income funds.
of this new supply will be located in the central region, particularly One North and Mapletree Business City. And with AREIT’s business park portfolio comprising roughly of 40% of asset revenue in central region and 60% in east and west regions, the new supply should inflict some damage but not as fatal as doomsayers predict, says Ong. Another positive point for AREIT is that around 60% of the impending supply is already precommitted. At 94% occupancy (as of 30 Sep) for a business park with mostly multinational corporation tenants, Ong reckons AREIT stands in good stead with its business park portfolio with concentrations in the east and west regions. Ong also expresses confidence that AREIT will be able to eventually lease out the majority of its upcoming 223,000 sqft Nexus@onenorth project, which will be completed in 3Q12. There are also new asset enhancement initiatives (AEIs) and developments that should help drive AREIT growth. Among its portfolio, the former Aztech Building and Ultro Building are undergoing refurbishment works until 2Q13 and 4Q13, respectively.“We forecast rental upside of 117% for Aztech (SGD 2.73 psf/mth from SGD1.25 psf/ mth) and 56% for Ultro (SGD3.90 psf/mth from SGD2.50 psf/ mth on completion). We expect existing developments (Unilever Four Acres, Nexus@onenorth) and AEI works (Freight Links, Xilin, TechPlace II) to be the main growth driver for AREIT in 2013,” says Ong. CapitaMall Trust CMT is poised to spend its recently raised funds on new AEIs aimed at adding value to its portfolio. CMT has said that it planned to use 99% of proceeds on capex and AEIs. Ong believes shelved makeovers for Funan and Tampines Mall could push through this year. CMT has a lot of incentive to push through with the Funan DigitaLife Mall upgrades. The mall’s surrounding area has been
ANALYSIS: SREITS Price performance of S-REITs under coverage (17 Dec 2012 - 11 Jan 2013)
Source: Bloomberg, OIR Note: Overall S-REIT sector performance (S-REITS) is represented by change in FTSE ST REIT Index.
picking up in retail activity, and the trust had already secured planning permission to expand the mall for extra office space until the global crisis dashed those plans. “We think it is now timely to relook at the viability of proceeding with the office building, which we think could potentially lead to an NAV accretion of 5 cents/unit,” says Ong. Similarly, CMT has obtained the planning permission for Tampines Mall to increase its plot ratio, part of which will be allocated for office use. Further AEIs could further enhance the mall’s value despite it already being the most valuable suburban mall in the CMT portfolio at S$2,495 psf. Ong also expresses confidence that should CMT undertake these AEIs, it will lead to increased property value due to the company’s vast experience. Starhill Global REIT Starhill Global REIT (SGREIT), on the other hand, is looking to gain greater bargaining power over retailers who lease its Orchard Road assets. The popular shopping area has dwindling supply, with only a few malls being completed in the near-term. This will likely push up rents in Orchard Road, where a chunk of SGREIT malls is located. “SGREIT’s key assets are in the coveted Orchard Road area, where tight supply and the entry of new
international retailers should give it greater bargaining power in terms of leasing its space. We continue to like SGREIT for the rental upside at Wisma Atria (3Q12 passing rent at S$35.04 psf/mth) and income stability in Malaysia and Australia,” says Maybank’s Ong. Ong further cites CBRE figures which showed that in 3Q12, Prime Orchard Road rents stood at S$31.60 psf/mth (unchanged qoq & yoy) while capital value for strata-titled retail space remained at S$6,500 psf (unchanged qoq• +3.8% yoy). Occupancy rate is still at a robust 93.7%. An expected surge in tourist arrivals should also prop up retail space demand in the increasingly supply-starved Orchard Road. “We believe that Orchard retail demand will grow at a CAGR of 2.7%, outstripping overall supply increases (CAGR: 2.3%) for 2011-2015. This will cause vacancy rates to dip from 5.4% in 2011 to 4.2% in 2015. We also expect Orchard rentals to register per annum growth of 02.5% in 20122015, as previous concerns on the supply overhang are removed. [Net property income] NPI yields are thus likely to remain steady at 5.05.2%,” says Ong. Four other trusts Janice Chua, analyst at DBS Group Research, also chimes in at the prospects for four other trusts.
Orchard retail demand will grow at a CAGR of 2.7%, outstripping overall supply increases (CAGR: 2.3%) for 2011-2015.
First, she said Frasers Commercial Trust will have one of the strongest profiles within the sector as it will deliver a DPU CAGR of c19% over FY12A-14F. Its yields will hover at the high levels of 5.17.2%, and will be one of the higher-yielding REITs. Key drivers will be the repurchasing of its existing convertible preferred preference units from the sale proceeds of Keypoint and other underperforming Japanese assets as well as interest savings earned from refinancing its high cost debt. For Cache Logistics Trust, resilience will be a key theme over the next two years as it escapes much of the pressure from new logistics supply since majority of leases will not be expiring. Further acquisitions under management review could bump up earnings, as well as medium term upside from the completion of cS$500m worth of logistics space from its sponsors. Meanwhile, she sees Far East Hospitality Trust delivering an “attractive” CAGR of 4% over FY12A14F as its phased refurbishments complete in the coming quarters. There are also further earnings upside from the completion of its proposed acquisition of Rendezvous Grand Hotel Singapore and its accompanying gallery wing, which Chua believes will be an accretive deal. Last but not the least, she says that MCT is one of the few REITs which offer strong DPU growth of 19% in 2013, and that it has a significant pipeline from its sponsor that can grow its asset base in the medium term. She cautions against factoring in, either in the positive or negative, the management’s recent proposal to acquire Mapletree Anson, a prime office asset in Tanjong Pagar for S$680 million. This is because the financing details of the deal has not been disclosed and will largely determine its impact on the trust. Chua did signal further upside earnings surprises from the acquisition of Mapletree Business City, which should bring earnings stability to the trust, as well as further growth developments in the Singapore’s Southern corridor. SINGAPORE BUSINESS REVIEW | APRIL 2013 29
Hung Keung with his work, Microcosmic Play and Appreciation, Interactive Video, 2012.
Asia’s lively art scene explodes Art Basel’s purchase of a well established art fair adds world significance to an already exuberant art market.
S
ingapore and Hong Kong are two of the most vibrant art markets in Asia. In fact, in Hong Kong, ART HK ran for five years, growing every year with runaway attendance and art sales under the able direction of Director Magnus Renfrew. More and more international galleries and local and Chinese dealers realized it was the place to be, bringing their best artists and cutting-edge art. Collectors from all around the world thronged the Hong Kong Convention and Exhibition Centre, dashing between the art fair and Christie’s massive spring sale, as well as hundreds of galleries, auctions, special sales and performances dotted around the territory. Sniffing around the edges of the fair as the profits steadily increased over the years were the organizers of the internationally famous and well-branded Art Basel, an annual art extravaganza started by commercial art dealers in 1970 in Basel, Switzerland. Art Basel Miami debuted in 2002, which immediately became one of the most important art fairs in America. The Art Basel crew had considered Singapore or somewhere in China as a locus in Asia, but censorship and tax issues led them to decide Hong Kong was the perfect place for the major Asian art fair. Upon deciding to stay with the art fair despite the change of ownership, Magnus Renfrew said, “We want to build on the best of ART HK with Art Basel’s 40 years experience and access to a much wider global community, creating together a new show, and a rich and unique experience for visitors. Art Basel in Hong Kong will be 30 SINGAPORE BUSINESS REVIEW | APRIL 2013
clearly defined by its host city and region; 50 percent of galleries in the show will be from Asia and the Asia-Pacific region. The new sectors are conceived to encourage curatorial focus on the most important developments in the art scene in the last 100 years and today, historical material from Asia, emerging artists, and the most cutting-edge art in Asia and from across the world”. Now Art Basel HK introduces the participation of around 245 of the world’s leading galleries, taking place Thursday, May 23, to Sunday, May 26, 2013 at the Hong Kong Convention and Exhibition Centre (HKCEC). With an emphasis on the highest quality of work and presentation, art pieces by more than 3,000 artists are showcased, ranging from young stars to the Modern masters of the early 20th century, hailing from both Asia and the West. Fair highlights The fair’s four sections, Galleries, Insights (a section for Asia-based galleries to feature Asian artists) Discoveries and Encounters, plus special events and performances, will keep fair attendees very busy. VIPs and distinguished collectors can expect a warm welcome from main sponsor Deutsche Bank. Just to mention the galleries who will be participating in the fair could fill a book, but visitors should know that local Hong Kong galleries showing at the CEC will be mounting special shows around Hollywood Road and other areas as well. Only a small selection of
ART REPORT these galleries can be featured here. Among the younger, smaller Hong Kong galleries who made it through the tough selection process are Sin Sin, Galerie Ora Ora, Grotto (the sole specialist in Hong Kong artists), Blindspot, FEAST, Anna Ning Fine Arts, Platform China, Pekin Fine Arts and Gallery EXIT, and the Pakistani specialist Gandhara Arts. All have rich, strong programs for art collectors to seek out. Galleriest and art consultant Anna Ning is offering a journey through the highest quality Chinese Modern Art rather than Chinese contemporary works. Ning said, “This year we’re pleased to present ‘Faces—Modern Chinese Portraits of Femininity,’ including works by 20th century Chinese artists such as Zao Wouki, Ai Xuan, Wu Guanzhong, Xu Beihong, and Wang Yidong. We’ve selected works from these artists that focus on the central theme of feminine beauty, and the expression of femininity as a cultural and artistic concept. “The range of aesthetic styles from the various artists demonstrates the wide array of perspectives and cross-cultural differences in the portrayal of beauty. This selection not only shows the artistic excellence of these 20th century artists, but also provides insight into the historical development of portraiture and beauty as a cultural ideal within 20th century China”. Ning added, “With the international atmosphere of Art Basel, we wanted to focus on art and artists which exemplified China and the truly exceptional artwork from this period”. Relative newcomer 2P Contemporary Art Gallery is featured in the “Discoveries” section showing new work by Tang Kwok Hin. Founder Pui Pui To says, “We think that our gallery was chosen because we have always presented a very avant garde program with artists who
Hung Keung, Dao x Microcosmic Play and Appreciation, Interactive Video, 2013.
have been showing their work internationally. Art Basel has raised the bar higher for Hong Kong galleries and we all need stronger gallery programs to be considered by the judges”. Tang’s work, “I Call you Nancy,” an imaginative recreation of artifacts of the sister he never had, was shown at the MandarinOriental Hotel last year as part of ARTHK12. He says he works through his process of “symbolic collage”. “People can tell my work from my frequent appropriation of objects. I bring unrelated things together and transform their predefined nature into something else. I use everything. My mixed-media work is conceptually based”. A premier showcase for artists For most of the galleries in Asia, ART BASEL HK presents the premier showcase for their artists. Gallery EXIT will feature Chihoi, Lin Xue, Kong Chun Hei, Ivy Ma, Sarah Lai, Christine Ng Mien Yin, Hsu Yinling, Lulu Ngie Lewis Lau, Kwan Sheung Chi, and Angela Su. While not yet bigshots in the international market, the sheer number and variety of the artworks from these artists will surely attract new buyers. Gallery EXIT’s Co-Director Arianna Gellini, said, “Established in 2008, we work closely with and present conceptually grounded artwork that is well made and not afraid to be subjective and even beautiful. The gallery emphasizes new artists of all media who articulate the dynamic contemporary experience of living in East Asia. Although many of these artists are young, we are pleased with the inclusion of Lin Xue’s ink drawings in ‘Phantoms of Asia’, shown in the Asian Art Museum, San Francisco, last year, and this summer in ‘The Encyclopedic Palace’ at the 55th Venice Biennale.” Hong Kong arts specialist gallery Grotto Fine Art is presenting five Hong Kong artists, Danny Lee, Wai Pongyu, Bovey Lee, Koon Wai-bong, and Joey Leung in the group exhibition The Ceaseless Lines. Each artist’s interpretation of line and linearity opens debates questioning the identity of post-colonial Hong Kong art. Director Henry Au-Yeung explains that the most interesting development came in the first decade of the 21st century. In addition to Asia’s hybrid culture and history, artists were equipped with modern “materials” such as biro, ink pen, paper cuts, and even stainless steel in sculpture; and through their usage a new definition of “line art” was born. This “linear” art form is more descriptive than calligraphy and more substantial than a sketch. The usage of line has gone beyond conventional application and two-dimensional surfaces. The result is an indigenous style that transmits the innermost feelings of the artist and defines the most current trend in contemporary Asian art,
Su Xiaobai (b.1949) Overwhelms Men 袭人，2012, Oil, lacquer, linen and wood 油彩、大漆、麻、木板, 120 x 130 cm SINGAPORE BUSINESS REVIEW | APRIL 2013 31
ART REPORT
Gao Xingjian, Under the moonlight,2010.
especially in Hong Kong. Mimi Chun, Director of Blindspot Gallery has chosen another entry point into Hong Kong art. She says, “We believe the fair will help us bring more international exposure to Asian contemporary photography, our area of primary focus. As a Hong Kong-based gallery, we are extremely excited to see the arrival of the world’s most prestigious art fair in the city. We particularly appreciate the opening of the Insights section, a section for Asia-based galleries to feature Asian artists, as it allows the fair to highlight the uniqueness of the Hong Kong and Asian art scenes, while also presenting international art at large.” Her gallery is showing another mountainman’s latest project “From Su Shi to Bada Shanren”. Also known as Stanley Wong, this awardwinning artist recreates the popular iconology in classical Chinese paintings in a highly original rendition that is inspired by the work of the innovative Northern Song Dynasty titan, Su Shi. The drive to subvert runs through the series, as the photographic work captures the essence of painted objects that closely resemble classical Chinese painting alluding to the master eccentric, surrealist painter, Bada Shanren from the late Ming and early Qing Dynasty, whose possibly feigned madness perhaps just reflected his grief at the fall of the Ming Dynasty. Well-established galleries Of the older, more well-established fine art galleries participating are 10 Chancery Lane, Pearl Lam Galleries, Hanart TZ, Osage, Schoeni, and Alisan Fine Arts, famous for supporting traditional and modern ink and brush paintings and the Hong Kong Ink Society. Founded in 1981, Alisan Fine Arts was one of the first professionally run galleries in Hong Kong. Mrs Alice King, Director, said, “The gallery focuses on promoting Chinese artists living overseas and in the mainland. During the past 30 years, it has organized over 100 exhibitions in Hong Kong and abroad, making it a pioneer in 32 SINGAPORE BUSINESS REVIEW | APRIL 2013
introducing Chinese contemporary art to collectors at large. “The focus of Alisan Fine Arts’ show at Art Basel in Hong Kong 2013 is to showcase the contemporary Chinese artworks by eight well-known Chinese artists who are from New York, Paris, Beijing and Shanghai, including Chao Chung-hsiang, Chu Teh-chun, Gao Xingjian, Walasse Ting, Wang Tiande, Wei Ligang, Yang Jiechang and Zao Wou-ki. They are all deeply rooted in Chinese tradition, have been influenced by the West and show a distinct style of their own. Furthermore, we are introducing Yu Youhan’s new series of limited edition original lithographs, as well as exhibiting sculptures by Hong Kong artist Man Fung-yi”. Representing another aspect of the Asian spectrum, 10 Chancery Lane features artists from Southeast Asia, including Vietnam’s Dinh Q. Lê and Bui Cong Khanh, Cambodia’s Sopheap Pich and Thailand’s Tawatchai Puntusawasdi, whose works explore the fast-changing yet culturally rich environments of the region with an emphasis on traditional materials. Katie de Tilly, founder of 10 Chancery Lane Gallery says, “Over the past 12 years, 10 Chancery Lane Gallery has been offering opportunities and a dynamic platform to exceptional young and midcareer talents in rarely profiled regions, while developing discourse through engaging specialists for curated shows and parallel talks.” Director Nicole Schoeni, is very pleased to have been selected to participate this year. She said, “As a native Hong Konger and a Swiss descendant, a gallery owner and an art collector, it is thrilling to witness Hong Kong becoming a world renowned art hub; with the presence of Art Basel in Hong Kong this year, we are becoming more than just a financial metropolis or even a gateway to artists from Mainland China. “As one of the longest standing professional art galleries in Hong
Chao Chung-hsiang, Never to Part, c.1980.
ART REPORT
From SuShi To Bada Shanren, 2013.
LIN Xue, Untitled, (2012-1).
Lewis Lau, Drift on Nile, 2012.
Kong, I am delighted to be a part of the fair and to present the work of Hung Keung, a Hong Kong-based artist exploring Chinese traditional culture through the prism of new media. He is showing his interactive installation work Dao x Microcosmic Play & Appreciation, the marriage of two of the most complex projects he has developed in the past decade: ‘Dao Gives Birth to One’ (2009-2012) and ‘Microcosmic Play & Appreciation’ (2013). The former is an illustration of how dynamic images digitally convey the concept of time and space, and the idea of ‘three distances’ (san yuan, ) has influenced traditional Chinese landscape paintings (shan shiu hau, )”. Pearl Lam Galleries is presenting a stellar international lineup of Jenny Holzer, Entang Wiharso, Tsang Kin-Wah (with a special installation), Li Xiaojing, Yinghua, Li Huasheng, Jason Martin, Su Xiaobai, and Zhu Jinshi. Pearl Lam said, “Our stand is broken down into two parts: the first part addresses the question of how ideology and information affects the reading of our body, and the second part explores how different artists each deal with materiality through painting, sculpture and installation.” International galleries HK branches of overseas galleries that will put on exhibitions at Art Basel HK include Ben Brown, Galerie Perrotin, deSarthe Gallery, White Cube, Simon Lee, Edouard Malingue Gallery, Lehmann Maupin and Gagosian, all names well known to Art Basel collectors and art lovers. Their advantage during the May Art Madness is that visitors and collectors can drop in on these galleries and find more art to contemplate buying. With room for only one example from the group named above, Emmanuel Perrotin’s Galerie Perrotin is a relative newcomer to Hong Kong. Originating in his native Paris, where he has been a leader in identifying top quality artists from around the world, he will soon open a new gallery in New York. At Art Basel HK, he will be showing new works by Takeshi Murakami, the world-famous Japanese artist
‘West Wind’ from Tawatchain Puntusawasdi courtesy 10 Chancery; Lane Gallery and Tawatchain Puntusawasdi
who almost single-handedly created contemporary Japanese art as a world force in the international art market as well as in the commercial world with his collaboration with Louis Vuitton and creation of marketable items such as T-shirts and collectible versions of his flower and skull paintings. At the same time, the Murakami exhibition at the gallery in Hong Kong (21 May - 22 June 2013), is the ninth solo show organized by Galerie Perrotin in 20 years of collaboration, that will display in particular a set of new paintings featuring his famous alter-ego Mr. DOB. This small sampling of art at Art Basel HK is not a road map but rather a plea for collectors and visitors to broaden their horizons and recognize the importance and value of Hong Kong’s artists and thriving gallery scene. It can only get better. SINGAPORE BUSINESS REVIEW | APRIL 2013 33
Singapore’s 20 Largest Commercial Banks Southeast Asia’s third largest lender by assets, also aims to double the bank’s lending to small businesses across Southeast Asia over three years to 2015. To deliver this growth in Malaysia, Indonesia, Singapore and Thailand,UOB plans to hire more than 100 relationship managers across the region to serve small businesses specifically. It also endeavors to streamline processes and shorten the loan application and approval time for small business customers. Victor Lee, UOB Group head of business banking said that UOB in 2011 halved its loan processing time for customers across the region with the development of a new S$15 million credit application tool.
Singapore’s largest banks roll out first-of-its-kind services Products range from virtual credit cards to security token to enhance ebanking experience.
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itibank Singapore has topped Singapore Business Review’s inaugural top 20 banks for 2013 based on the number of employees. Citibank led the pack with a 10,000-strong workforce. It was followed by two local banks United Overseas Bank (UOB) and DBS. OCBC has declined to give its numbers but banking experts estimated it to be around 7,000 staff. It shares with Standard Chartered Bank (STAN SG) at 4th place. Chart-topper Citi Citibank, an American bank, bills itself as the first bank in Singapore and in Asia to offer credit card that incorporates social networking as part of its core card features - the Citibank Clear Platinum Card which targets segment of 21 to 35 year olds. Citing Visa’s Strategic Market Analysis Report for Singapore, Jacquelyn Tan, head of credit payment products at Citibank boasts that the proportion of total card spend attributed to ecommerce grew 34 SINGAPORE BUSINESS REVIEW | APRIL 2013
Citibank lead the pack with 10,000 workforce. It was followed by two local banks UOB and DBS.
28% YoY in 2011, with the figure for Citibank Singapore growing faster than the market at 36%. Citibank added 270 staff in the last quarter of 2011 but also among foreign banks in Singapore which cut headcount last year. It laid off over 10 employees mostly from the commercial banking division. UOB took the second spot with 7,850 staff. UOB has just launched in March this year the UOB American Express Virtual Pay which it said is the first service in Singapore that allows customers to buy online directly from overseas online retailers that do not accept credit cards that have been issued in Singapore. Customers are given a special 15-digit credit card number which can be used to make direct online purchases from US and other overseas sites that accept American Express. Gan Ai Im, managing director of cards and payments at UOB said that a third of all online spending on UOB Cards was with online retailers outside of Singapore. UOB,
Singapore banks step up UOB is also expanding its commercial banking operations in Asia as it plans to set up five more foreign direct investment advisory units next year in China, India, Indonesia, Malaysia and Thailand. DBS, now the anchor tenant of Marina Bay Financial Centre Tower 3 billed as the largest corporate fitout in Singapore, came in third with 7,800 group strength. According to Sim S Lim, DBS Singapore country manager, in a bid to position itself a leading wealth player in Asia, its customers in mid-2013 will be able to trade shares without the need to maintain separate relationships with their bank and a brokerage firm. This, he said, makes DBS the first Singapore bank to offer banking and brokerage products under one roof. DBS, which claims to be the market leader in Singapore for mobile banking services with over 450,000 mBanking account holders has also launched last year its applicationbased mBanking electronic securities application (ESA) service, which it touts as the first such service in Singapore. Customers through it will be able to make their IPO application via their smart phones while on the go. DBS also unveiled last year Singapore’s first two-in-one device that acts as both a credit/debit/ATM card and a personal security token. The security token card has the size of a credit card but is only 0.1cm thick.
Singapore’s 20 Largest Commercial Banks
Largest Commercial Banks BANK
NUMBER OF EMPLOYEES
CEO/Country Head
1
CITIBANK
10,000
Michael Zink
2
UNITED OVERSEAS BANK
7,850
Wee Ee Cheong
3
DBS BANK
7,800
Sim S. Lim
4
OVERSEA-CHINESE BANKING CORP
7350
Samuel N. Tsien
5
STANDARD CHARTERED BANK
7,000
Ray Ferguson
6
HONGKONG AND SHANGHAI BANKING CORP.
3,500*
Alexander Charles Hungate
7
AUSTRALIA & NEW ZEALAND BANKING GROUP
2,200
Vishnu Shahaney
8
BNP PARIBAS
1,600
Jean-Pierre Bernard
9
MALAYAN BANKING
1,400
Pollie Sim Sio Hoong
10
CIMB BANK
900
Mak Lye Mun
11
BANK OF CHINA
580
ZANG QINGSONG
12
MIZUHO CORPORATE BANK
500
Yasuhiro Sato
13
RHB BANK
500
Jason Wong
13
CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK
300
Pierre Finas
14
STATE BANK OF INDIA
165
ANIL KISHORA
16
INDUSTRIAL AND COMMERCIAL BANK OF CHINA
100
ZHANG WEI WU
17
BANK OF INDIA
86
Pawan Kumar Bajaj
18
ICICI BANK
85
Bki Iyer
19
INDIAN BANK
66
V. Baskaran
20
PT BANK NEGARA INDONESIA (PERSERO) TBK
66
Wahyu Purwandaka
Data provided by companies *estimates, media reports
**latest annual report JP Morgan Chase declined to give numbers SINGAPORE BUSINESS REVIEW | APRIL 2013 35
legal briefing
The curious case of ‘Nutello’ versus ‘Nutella’
Does it really matter if your nut has an O or an A at the end? Apparently it does especially if there is a looming trademark infringement case.
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he Singapore Court of Appeal in Sarika Connoisseur Café Pte Ltd v Ferrero SpA [2012] SGCA 56 has recently found that the “Nutello” sign had indeed infringed the “Nutella” trademark as both were ‘visually’ and ‘aurally’ similar. The two signs are not conceptually similar -- Nutello, a gourmet beverage, and Nutella, a confectionary good -- but the Court ruled that since both were chocolate products, a likelihood of confusion has existed. The Court found that there was infringement by damaging connection to a well-known trademark and dilution by blurring, and that the appellant had committed the tort of passing off. What are the facts? The appellant in this case was a company incorporated in Singapore, engaged inter alia in the business of food and beverage retail. Allen & Gledhill partner Stanley Lai explains that the appellant used the sign “Nutello” to identify a gourmet beverage it sold in its “TCC” chain of outlets. Tan Tee Jim, Senior Partner at Lee & Lee, notes that it was on 1 August 2007 when the appellant introduced a new gourmet hot coffee beverage served in a shot glass under the “Nutello” sign in its cafes. The ingredients in the “Nutello” drink, he says, included espresso, milk foam, cocoa powder, and Nutella spread. The Nutello beverage was listed under the “Espresso Specialties” section of the TCC Drinks Gallery Menu. The respondent was a global manufacturer and distributor of confectionery goods, and owned a series of “Nutella” word and device trademarks as applied to confectionery and chocolate products. The respondent sued the appellant in the High Court for trademark infringement under the Trade Marks Act (TMA) and for passing off on January 6, 2010. The High Court held that the appellant’s sign was an infringement of the respondent’s marks under sections and the appellant had passed off its goods as those of the respondent’s, as the respondent’s marks had goodwill in Singapore and the appellant had misrepresented its goods. Lai says that the resulting restriction of the respondent’s expansion into the drinks industry in Singapore was considered a valid head of damage. What’s the Court’s view on the probable damage to ‘Nutella’? On the facts of the case, Tan says that the Court found that there was a “real and serious likelihood 36 SINGAPORE BUSINESS REVIEW | APRIL 2013
Stanley Lai
Tee Jim Tan
See Tow Soo Ling
that the distinctiveness of the respondent’s ‘Nutella’ trademarks may be weakened or lost in the medium to long term.” This, he says, was especially because the relevant public was likely to draw a link or association between the “Nutella” mark and the “Nutello” sign. “The Court was of the view that the ability of the ‘Nutella’ trademarks to identify products for which they were registered and used would be diminished, together with their capacity to conjure immediate association with the respondent’s products. In the premises, the respondent’s claim for dilution succeeded.” What’s the implication of the case to businesses? Lee & Lee’s Tan says that the Court’s judgment confirms that the comparison for similarity of goods in cases of trademark infringement should be made between the alleged infringing goods and the products in respect of which the claimant’s trademark is registered for. This, he says, would allow trademark proprietors who have registered a trademark but have yet to produce or market goods within the specifications of the registered trademark to commence a claim for trademark infringement under the TMA. Tan notes as well that the judgment also confirms that, in the context of a dilution claim under the TMA, the claimant need only show a real or serious probability of damage to its wellknown trademark’s distinctive character. There is no need to show actual damage. The Court’s position both supports and reflects the high level of protection accorded to well-known marks under Singapore’s statutory trademark regime, he says.
“The claimant need only show a real or serious probability of damage to its well-known trademark’s distinctive character.” See Tow Soo Ling, partner at Colin Ng & Partners, notes that the Court of Appeal’s affirmation of the High Court’s decision is a cautionary tale to businesses of the potential liability in attempting to modify the trademark of another to become its own. This practice, she says, has been observed to be particularly prevalent in, though not limited to, the food and beverage industry. “It is good practice for businesses to have a general awareness of the circumstances in which the use of a sign in the course of business can constitute trademark infringement.,” she says.
PROFILE
Eddie Jordan (F1 Racing Legend & Owner of the exJordan Grand Prix F1 Team and Robbie Hoyes-Cock
Podium Lounge set for global expansion
SBR’s Simon Hyett speaks exclusively with entrepreneur extraordinaire and founder Robbie Hoyes-Cock.
I
f you were to chance upon the Podium Lounge (www. podiumlounge.com) this September you’d be forgiven for thinking that you have entered a real life James Bond set. The trio of party nights, hosted poolside at the Ritz-Carlton, Millenia, is one of those annual gatherings that is so exclusive, so sophisticated, that aside from the high-fashion, cosmopolitan guest list – it really is the place to be seen. Physically located within the boundaries of Singapore’s F1 Grand Prix Marina Bay Street Circuit, on the same weekend that the iconic, 21st Century nighttime skyline of Singapore is displayed to the world, The Podium Lounge applies all the glamour of Formula One racing to a who’s who after-party each night of the Race Weekend.
Early beginnings The Podium Lounge is the brainchild of Singapore-based entrepreneur Robbie Hoyes-Cock. Thirty-one-year-old HoyesCock has a CV that truly reads like that of a tear-away secret agent. Having attended the Tanglin Trust School in Singapore, followed by the prestigious United World College of South East Asia, Hoyes-Cock finished his schooling at Eton College, followed by reading law at the University of Bristol. It was during a day of lectures on property and tort law, that he says, “Nearly killed me,” that he decided entrepreneurial lifestyle’s appeal was far greater. “By mid-2009, ‘B-Yond’, our brand name, was behind one hundred private parties, and we met with the (then) Ritz-Carlton, Millenia sales and marketing director, Andreas Kohn,” recalls Hoyes-Cock. What happened next changed the face of the global elite party calendar, but it took guts. “Andreas was looking to do something radical during the Formula One Grand Prix but there was less than eight weeks to go until Race Day.” The temptation of the tie-up was striking, despite the looming deadline. “The Ritz-Carlton’s poolside with its stunning setting in the heat of the action made the perfect venue. Also, the hotel itself is the top choice for the majority of F1
The Podium Lounge 2012
teams, owners and celebrities.” Hoyes-Cock was out to eclipse the Race Weekend party benchmark, Amber Lounge, and judging just from the inside tales of high-life that he is willing to share, it seems that he has undoubtedly achieved that goal. High society anecdotes abound A particular favourite occurred when Fernando Alonso walked in with a group of friends wearing a pink panther t-shirt. The ever-perfect host provided a VVIP table and inquired on drinks. The F1 superstar ordered two bottles of Dom Perignon, a bottle of Belvedere and a Coca-Cola. “Go figure!,” adds Hoyes-Cock, humourously.” What’s next for Podium Lounge? Exportation of course! While Hoyes-Cock admits that he has his eyes firmly set on Monte Carlo, Shanghai and Delhi, it is Podium Lounge’s 2013 launch in Abu Dhabi that’s the talk of the F1 party circuit. Much like the Ritz-Carlton, Millenia, Podium Lounge’s choice of hotel, the Yas Viceroy Hotel is physically located within the Yas Marina circuit. “As a matter of fact, the track literally goes through the Yas Viceroy Hotel.” The synergies were perfect adds Hoyes-Cock. “When we discovered that the hotel has a rooftop swimming pool we fell in love with the space. The only difference [between Yas Viceroy and The Ritz-Carlton, Millenia] is that the Yas Viceroy’s rooftop view encompasses the Yas Marina’s exquisite fleet of super-yachts.” Commercially Podium Lounge offers a unique opportunity for sponsors to highlight the class of their brands before a select guestlist of superstars enjoying the finest Champagne and fabulous nightclub-style entertainment. Podium Lounge’s captivating and ethereal mystique is largely generated by Hoyes-Cock’s scrupulous selection of sponsors and entertainment partners. Add to this a nightclub setup of live entertainment, electronic house grooves provided by celebrity DJs in 2012 such as legendary UK DJ Seb Fontaine, supported by bombshell local DJs Angie Vu Ha and Tenashar; the nightly fashion show gracing the purpose-built runway atop the pool; various Miss Universe winners; SingTel Grid Girls; F1 Drivers; team members and sponsors’ VIP clients and it’s easy to see why this is the party to end all parties. So we’ll see you this year for a Champagne martini, yes… shaken, not stirred, of course. SINGAPORE BUSINESS REVIEW | APRIL 2013 37
FEATURE: BUSINESS TRAVEL
Experience business travel at its best Learn more about Scoot’s premium cabin ScootBiz and AirPlus International’s exceptional business travel management solutions. laptops and tablets. ScooTV is refreshed every second month and is available for economy class passengers for just S$15 (pre-purchase) or S$16 (onboard purchase) per flight, while ScootBiz guests can get it for free. For those without their own device, Scoot’s Rent-a-Tablet service is also available at S$20 (pre-purchase) or S$22 (onboard purchase). “Scoot is excited to be the first airline in Asia to offer this innovative inflight entertainment option. Going wireless keeps our aircraft lighter, our costs down and our fares cheaper. And better yet, ScooTV empowers our guests with even more entertainment options,” notes Campbell Wilson, CEO of Scoot. Scoot’s network now comprises nine cities including Singapore, Sydney, Gold Coast, Bangkok, Taipei, Tokyo, Tianjin, Qingdao and Shenyang, with more exciting destinations scheduled to launch in 2013, and 35 more destinations offered in conjunction with partner airlines.
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coot is an airline for the young, the young-at-heart and the value seeking. And since Scoot was announced publicly on 1 November 2011, the airline has not stopped innovating and launching flights and services that further establish its brand in the industry. Scoot offers their guests choice and empowerment to tailor travel to their own wishes without subsidising the choices of others. They can have a fantastic value air-only ticket, or add bells and whistles as they desire – seats with more legroom, baggage, meals, entertainment, hotels, drinks, insurance. Purchasing add-on services in bundle combos (Fly, FlyBag, FlyBagEat) will offer even better value for money – buying the bag and meal as part of a bundle saves about 20% versus buying a la carte. With the widest seats amongst budget carriers in the region, Scoot’s economy class service clearly redefines low-cost travel. Scootin’ with ScootBiz For those wanting a real premium experience, there’s also ScootBiz, a
18 SINGAPORE BUSINESS REVIEW | JUNE 2012 38 SINGAPORE BUSINESS REVIEW | APRIL 2013
premium cabin complete with wide leather seats offering 38-inch pitch, food & beverages and 20 kilograms of checkin baggage. ScootBiz provides 6” more legroom, 4” more width than a legacy economy seat, and offers a cosy 32-seat cabin with a 1:15 lavatory ratio – also much better than a legacy economy class. Yet, the fare is the same and often less than legacy airline economy. In addition to fantastic value airfares, Scoot provides a safe, reliable and contemporary travel experience with a unique attitude – Scootitude. Scoot also introduced ScooTV, Asia’s first-ever inflight entertainment, that the passengers can even stream to their own
“With the widest seats amongst budget carriers in the region, Scoot’s economy class service clearly redefines lowcost travel.”
Scoot Biz
FEATURE: BUSINESS TRAVEL
Apart from a great airline, business travellers seeking a smooth process from booking to flying will find AirPlus International’s services quite handy. AirPlus International, a global leader for Business Travel Management solutions, enables companies to manage their travel more conveniently and cost effectively through intelligent solutions. AirPlus has gained the trust of global companies with more than 32,000 availing of its services. AirPlus has been the preferred payment partner of airlines around the world and is also one of the first financial service providers to receive a complete certification for the entire company. The company’s airline partners include Continental Airlines, Northwest Airlines, Lufthansa German Airlines, Austrian Airlines, Swiss International Airlines and TAP Portugal. AirPlus flying high Corporate customers from around the world can avail of AirPlus’ three main products: AirPlus Information Manager, AirPlus Company Account, and AirPlus Corporate. According to Christian Gall, Air Plus’ executive director for Asia Pacific, the AirPlus Information Manager is an innovative reporting tool which always gives a clear view of company business
NEO building
Christian Gall, Air Plus’ executive director for Asia Pacific
travel expenditures, available worldwide throughout the year. “The AirPlus Information Manager reports will uncover potential cost savings and will allow you to negotiate terms and conditions with airlines and other service providers. It offers you maximum transparency, right down to the flight coupon level. Unlimited sorting options are available as well as customized reports,” notes Gall. Meanwhile, the AirPlus Company Account is a preferred form of payment and a central billing account lodged within a client’s travel management company, for all ticket purchases, designed exclusively with business travelers in mind. Gall reveals that with this product, there is no change required to the customer’s current booking procedure. “You continue to make reservations through your preferred travel agency as you do now. You can also combine agency service fees and air transactions on a single, detailed statement for easy reconciliation. In addition the AirPlus Company account is fully compatible with online reservation tools,” says Gall. He adds that this product operates internationally in all the world’s key business markets including China, giving clients a single solution for their global travel needs. Statements are also
“Within this card, your travelers can easily settle all their business expenses during their trips.”
tailor-made to meet a company’s needs. They can be broken down by a number of criteria, such as cost centre, department, project code and employee number. Lastly, Gall notes that the AirPlus Corporate helps a customer manage all other travel and entertainment spending. “Within this card, your travelers can easily settle all their business expenses during their trips. Cash advances and timeconsuming administrative procedures are now a thing of the past. And travelers have the mobility and convenience they demand,” he adds. AirPlus in Singapore In Singapore, Airplus offers its corporate customers a co-branded MasterCard corporate card in partnership with UOB. This card, notes Gall, can be used to pay for all expenses incurred during the trip such as car rentals, hotels, and restaurants. This card is accepted by more than 25 million merchants and 1.2 million ATMs worldwide and comprehensive statements are available each month. AirPlus has grown ten-fold over the last four years in the Asia Pacific market. In 2012, volume growth was approaching 70%. With this burgeoning demand, AirPlus opened new offices and created an APAC Services Hub in Singapore to increase the quality of service delivered to its customers. “Hence all questions pertaining to credit limits, rejected transactions, invoices queries can be answered locally to our APAC customers,” says Gall. SINGAPORE BUSINESS REVIEW | APRIL 2013 39 SINGAPORE BUSINESS REVIEW | JUNE 2012 19
OPINION
GREG JAMES
Why airlines will not give up their Malaysia-Singapore flight fight
D
escribed as a game-changer, the recent high-speed rail link deal between Malaysia and Singapore stirred up considerable buzz on both sides of the causeway. Jointly announced by both heads of government, it is perceived as both blight and an advantage – causing airline stocks to dip and stock market prices to fluctuate. Set to be completed by 2020, the Kuala Lumpur-Singapore high-speed train presents a 90 minute journey between the cities. Whereas a direct flight will take an approximate three hours, including airport transfers and immigration queues. In a recent survey by HRG, it was revealed that business travellers are three times more likely to choose rail over air for rail journeys that are less than three hours. Taking this into account, the upcoming high-speed train seems to be the discerning choice for commuters. Nonetheless, air travel between the two cities are certainly not about to give up without a fight. With a current average of 3 flights to Kuala Lumpur leaving Singapore every hour, airlines provide the greatest flexibility and availability to business travellers, who are often faced with shifting schedules. As such, a grand total of 10 airlines ranging from budget airlines to national carriers proffer 668 flights per week between both destinations. The aggressive competition generated among the carriers thereafter provided constant and cyclic promotions of cheap airfare for the route. With usual airfare prices averaging from $80 $100, the introduction of the new bullet train may trigger competition that will see further reductions on airfare. As more and more travellers are beginning to take into account the door-to-door journey of a trip, transition time is an essential factor
it played witness to being the dark horse of transportation.
Fast track travelling Overall the ability of this rail link to transport travellers between Singapore and KL in a mere 90-minutes is a promising alternative for travellers and will, without a doubt, have a huge impact on our travel options between the two cities. While this preference may cause airline passenger volume for the Singapore-KL route to decrease, it is unlikely that the airline routes will be immediately displaced by the high-speed train when it is introduced in 2020. However it is difficult to say with certainty how much airlines’ businesses will be affected once the high speed rail is up due to the lack of information that is available about the project. For instance, business travellers enjoy the flexibility of having close to 30 flights a day to choose from but as information about train schedules is currently unavailable it is hard “The Kuala Lumpur-Singapore highto determine whether their preferences speed train presents a 90 minute journey would switch to rail or remain with air. For this reason it would be crucial for between the cities.” airlines to monitor the situation prior to assessing what, if any, changes should be made to taken into account as airport transfer, check-in, flight frequencies before the launch of the highsecurity and waiting times at airports can easily speed rail. stretch a 45-minute plane ride to a three hour It will be fascinating to see how this plays journey. out, the airline industry is one of the most Although high-speed rail has proven to be competitive in the world and the airlines will rise largely successful in a number of cities globally, to the challenge of the rail alternative. high-speed rails have also seen cases where 40 SINGAPORE BUSINESS REVIEW | APRIL 2013
BY GREG JAMES General Manager of HRG Singapore
Travel faster!
CO-PUBLISHED CORPORATE PROFILE
Cybercom revolutionizes operator efficiency and customer experience management Find out how Cybercom aims to deliver excellent service to mobile operators with three main practices - mobile network quality, operational excellence, and green connectivity.
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Conny Karlsson Managing Director Cybercom International
“ Cybercom helps operators improve revenues and reduce costs while offering an exceptional customer experience.”
obile operators today face the challenge of having a constant need for increased data traffic, not to mention capacity being expensive. Also, 4G is being implemented throughout the region. So with new techniques come new challenges to roll out networks in an efficient way with high quality. With its global experience, broad expertise and attractive offerings, Cybercom is well positioned to help operators overcome these challenges and boost their performance regardless where in the lifecycle they are. With the mission to “boost your performance in the connected world,” Cybercom offers a wealth of services helping its clients to optimize their investments from a financial and quality point of view with innovative thinking and global experience bringing best in class solutions benefitting from its global exposure, both from a technical and commercial perspective. Connectivity management Cybercom is a one stop shop for operators, providing services in all critical areas of an operator’s daily headaches. The company has four main business domains namely, connected engineering, connectivity management, digital solutions and secure connectivity. Cybercom designs and adds intelligence to products and devices, assures that connectivity is as efficient and manageable as is ever possible, and provides a future connected world with meaningful solutions. With Cybercom’s unmatched expertise in these areas, the company has delivered services to companies such as Ericsson, Sony Mobile, TeliaSonera, Volvo, Volvo Car Corporation and many mobile operators in the region. Cybercom has 1,400 employees in seven countries, making it an
excellent consultancy company to provide local and international companies with the tools to make their operations more efficient and develop new products and services to enhance their competitiveness. The investment-heavy connectivity management domain faces a number of unsolved dilemmas that needs innovation and solutions. Good thing Cybercom has the technical edge to help operators achieve financial benefits and improved customer experience. With Cybercom, customers can improve their revenues and reduce costs while getting exceptional customer experience. At Cybercom Singapore, the focus is on the mobile networks that makes or breaks the experience of a new device or service. The company now targets mobile operators with three main practices: mobile network quality, operational excellence, and green connectivity. Cybercom’s practices By constantly ensuring mobile network quality, Cybercom addresses the needs to provide excellent quality of experience to its customers. The company recognizes that customer experience management is the best competitive strategy for operators to meet and exceed customers’ expectations so with proven expertise in performance management, Cybercom enables its clients to maximise revenue generation and customer loyalty. Its offerings include customer experience management, benchmarking, audit, and performance improvement. Cybercom also delivers best practice services to improve efficiency by practicing operational excellence. The company’s operationally oriented service scope is aiming to recommend and implement ways of improving efficiency in terms
of cost and time to market. As an independent third party, its sole interest is to maximize the operational and business KPIs for the client. Cybercom then offers vendor management, managed functions, connectivity business excellence, procurement support, and project management. Pioneers in Green connectivity Lastly, Cybercom prides itself to be one of the pioneers in green connectivity as it aims to be environmental friendly while saving significant cost. For markets with less reliable grid power or fully off-grid, power cost is substantial. The Green Connectivity practice provides consulting services for optimising power consumption and cost in general, as electricity charges constantly increases, and especially for the off-grid part of the network through the most appropriate combination of battery, solar and wind power. With Cybercom, customers can achieve savings in the range of 3MUSD/year for as little as 100 replaced sites. Offerings include power management & optimization, site ROI management, and swap management. Managing Director Conny Karlsson reckons Cybercom’s position as a forerunner ensures that their clients benefit from the latest innovations. “An example of this is our power management offering Green Connectivity, where we based on savings sharing address operators total power situation with a focus on lowering Opex and at the same time introducing environmentally friendly techniques,” says Karlsson. Cybercom Singapore Pte Ltd. 30 Raffles Place, Level 17 Chevron House, SG 048622 Phone: +65 6809 6282 Fax: +65 8387 5921 Conny.Karlsson@cybercom.com www.Cybercom.com
SINGAPORE BUSINESS REVIEW | APRIL 2013 41
SECTOR REPORT: Wealth Management
How banks can win Asia’s wealth management race Check out the possible challenges and opportunities in this market worth $10.7 trillion.
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rivate banks are in a fierce competition to serve Asia’s rich which “have a whopping combine wealth of $10.7 trillion. According to banking research and advisory firm East & Partners, for the first time, the Asia Pacific has the highest population of high net worth individuals (HNWIs) in the world. “In a year when the number of HNWIs fell by 1.7%, and India’s market slump saw the country fall out of the global top 12, the number of HNWIs in the Asia Pacific expanded 1.6% to 3.37 million, with estimated private wealth of $10.7 trillion,” said the report. As the market segment for HNWIs grows, competition will no doubt become even more intense. So how can banks attract more clients and win Asia’s wealth management race? What are possible challenges as well as opportunities for this burgeoning 42 SINGAPORE BUSINESS REVIEW | APRIL 2013
The number of HNWIs in the Asia Pacific expanded 1.6% to 3.37 million, with estimated private wealth of S$10.7 trillion
market? Wealth management According to Jeremy Soo, managing director and head, Consumer Banking Group (Singapore) at DBS Bank, it is important to realize first that Asian HNWIs are different from their peers in the West as the wealth of the Asian HNWIs is usually closely inter-linked with their business. “They have varied portfolios and want a more proactive investment strategy. There is also the need for succession planning as wealth flows to the next generation,” says Soo. RCBC’s senior executive vice president for retail banking Ismael Sandig notes that what will be most critical to capturing the market is building relationships and offering a more simplified process. Private banking customers become more demanding and will want the banks to go the extra mile to
make the difference. Asia’s wealthy have a set of needs that must be met by the banks such as a reliable and personalised service, a wide suite of financial and wealth products and a strong financial advisory support to help them make investment decisions, notes Renzo Viegas, group deputy CEO and head of consumer banking at CIMB Bank. Hence, building a competent network of relationship managers is also key. Apart from wealth management, another key trend in Asia’s retail banking sector is the rise of new generation channels like social media as this affects the client’s preference and expectations of the bank. How do the banks use social media not for making revenue, but for connecting with customers? As DBS’ Soo notes, customers do not want to be marketed to on social media platforms. Instead banks need to set out to share banking insights on social media to add more value to their customers and to deepen relationships with them. Social media Marged Lloyd, head of online communications at Standard Chartered, notes it is inevitable
SECTOR REPORT: Wealth Management that people will talk about the bank online so they have made a conscious decision to participate in these conversations in a meaningful way. Lloyd reckons that this may simply involve responding to customers when they approach the bank through social channels such as Facebook and Twitter but on the other hand, it entails using social media to reach out and speak to people about the topics that are important to them. The main impact of using social media, notes Lloyd, is that banks are compelled to review how their various internal teams work together. “As a consumer, when you speak to your bank through social media, you don’t care whether you’re speaking to customer service, human resources, marketing or communications. As far as you’re concerned, you’re simply talking to your bank. You expect them to give you the right answer quickly.” Increased integration and teamwork between relevant departments across the globe therefore prove to be pivotal in social media activities. But apart from the positive feedback a bank can get from social media, RCBC’s Sandig takes note of its sensitivity to negative comments as well. The virality factor of social media must indeed be handled with a careful strategy. The challenge behind this form of engagement, says CIMB’s Viegas, is essentially the ability to add value to the customers as users of social media want to connect with banks only if the bank is able to bring value to their lives. This value can be in the form of providing useful content, answering queries, giving them a chance to participate in a contest or building a community of like-minded people to connect with. “We can understand more about what our customers want and what we can do for them only by engaging with our community of customers,” Viegas adds. So in today’s highly digitized banking environment, what is the role of the branch? With the internet and with the concept of mobility in terms of payments and connecting with customers rising in Asia, is the branch still considered a profit center?
will continue to be an important customer touchpoint. However, the role of branches have changed to one which provides more value added service such as loans and investment related services as customers migrate to self-service banking and online banking for basic transactions such as cash withdrawal/deposit and funds transfer. “The branch’s role really is to accommodate queries and to build the relationship. For RCBC, it is considered a profit center,” adds RCBC’s Sandig. The advent of internet banking and other digital channels have not marginalised the branch as an important channel and profit centre especially for an effective face-to-face interaction with customers, according to CIMB’s Viegas. In Malaysia where services are becoming the main differentiator in an extremely competitive market, the traditional brick-and-mortar structures of the branches are the “welcoming faces“ which represent a bank’s values. The ability to create this exceptional first impression can be one of the contributing factors for a bank’s excellent turnaround. However, Viegas still notes the importance of investing in other channels like internet banking. With household broadband penetration reaching 62.9% as at the first quarter of 2012 from an estimated 6.7 million households in Malaysia, Viegas believes internet banking will become the channel of the future. Mobile banking will also feature dominantly especially
Renzo Viegas
Ismael Sandig
with the country’s cellular phone subscriptions having breached 35.7 million at the end of 2011 or over 124% penetration rate. “Going forward, we see all channels complementing each other and creating its own niche, with branches as the shops that provide the advisory services and internet and mobile banking as the transaction platforms. The challenge for banks is to provide the same exceptional customer experience,” says Viegas. Profitability check In all aspects, however, banks need to be even more innovative in the way they increase customer touchpoints. Keeping profitability in check amidst the uncertainties in the market is of course of utmost importance. While on a mission to expand across Asia, banks need to focus in delivering excellent cross border services, enabling customers to invest wider and to trade more with one another. “In the midst of our expansion quest, we are always mindful of the need to reap clear synergies when we enter into a new market or acquire a new business. These synergies will help mitigate any short term profitability pressures as we would typically need to incur set-up or integration costs at the onset,” notes Viegas. Ultimately, a bank needs to be very clear on its plans and objectives from the start when setting up a new business or entering a new market.
Role of the branch DBS’ Soo reckons that branches SINGAPORE BUSINESS REVIEW | APRIL 2013 43
ANALYSIS: CHINA’S SHALE GAS
China’s shale revolution and its Asian aftershock China is making a big push for shale gas, which could help stabilize energy prices for import-heavy Asia.
S
een as a sleeping giant sitting on huge untapped reserves of shale natural gas, China has the potential to catch up and even overtake the US, currently the world’s largest producer of shale resources. The Chinese government, keen on easing its growing energy imports, has greenlighted policies to expand shale gas exploration that experts believe will lead to massive annual production in as short as a decade. With China joining the US in championing shale production, world energy prices could start to flatten – and it will be the majority of Asian countries who import their energy that will stand to benefit. Shale revolution China has the largest technically recoverable reserves of shale natural gas in the world at an estimated 1,275 trillion cubic feet (TCF), or 50% more 44 SINGAPORE BUSINESS REVIEW | APRIL 2013
“In 2001, crude oil imports represented just under 30% of total oil demand. That’s grown to about 60% in 2012.”
than the United States who comes in second with 862 TCF reserves, according to data from the US Department of Energy and Deutsche Bank. Taimur Baig, Ph.D, chief economist at Deustche Bank, predicts that when China taps heavily into these vast reserves, the global energy landscape could shift dramatically. And it has every incentive to do so. Faced with rapid economic expansion that demands tremendous energy resources to sustain, the Chinese government has fast-tracked the exploration of its shale reserves to augment and effectively lessen the country’s dependence on crude oil imports. “China’s energy needs are considerable. Its crude oil imports averaged 5.5mn bbl/day in 2012, up nearly 70% since 2007. Indeed, China started this year by importing
6mn bbl/day, which was about 2mn bbl/day less than what the US imported in January. The US-China crude oil import gap has narrowed dramatically in recent years,” said Baig. “As Beijing observes its oil import dependence rising every year, energy security has taken greater priority for policymakers. In 2001, crude oil imports represented just under 30% of total oil demand. That’s grown to about 60% in 2012.” Baig said there is no lacking in the number of Chinese companies willing to charge into the shale frontier. China has already launched two auctions of shale natural gas blocks that attracted much commercial interest, and has set a bold target of producing 6.5 billion cubic meters of shale per year by 2015. But many experts doubt that China will be able to meet this ambitious production target, said Baig. China is still considered to be technologically deficient in commercially viable methods to extract shale gas. These same skeptics say a more reasonable timeline for China’s emergence as a leading shale gas producer would be in the next decade – enough time in which China could master
ANALYSIS: CHINA’S SHALE GAS the technology and know-how to effectively extract shale gas from its reserves. British oil and gas company BP estimates that shale natural gas will account for about 20% of total Chinese natural gas production by 2030. Baig said China is allocating substantial funds for infrastructure development and mobilizing its state-run energy companies to tie up with more knowledgeable shale gas partners, particularly in the US. “Large state-owned Chinese energy companies are investing in the US with expectations of picking up shale-related skills and expertise, and they are setting up joint ventures with major global energy companies for the same reason,” he added. In February, the state-owned giant China Petroleum & Chemical Corp (Sinopec), the country’s largest producer and supplier of oil and petrochemical products, invested around $1 billion in Oklahoma-based Chesapeake Energy Corporation, the second-largest producer of natural gas and most active driller of new wells in the US. Baig said that once China applies what it has learned from its Western tie-ups, and adopts reforms for its still-volatile natural gas pricing system, the country could well enter into “a shale revolution.” Asian aftershock Baig stresses that Chinese shale developments could have a big impact on Asia. The emergence of shale as a precursor for energy price stability, which for a region that primarily imports energy save for a few producers, will prove to be economically advantageous. “The structural change that is ongoing may well end the commodity supercycle, thus ushering an era of energy price stability. Most Asian economies are importers of energy, with Australia, Malaysia, and Indonesia three notable exceptions, but all are likely to be profoundly impacted by shale related developments.” Baig cited India and Japan as two big beneficiaries from a possible energy price stability. “For a country like India, which spends nearly 40% of its total import
bill on coal and oil, and runs a large current account deficit, energy price stability or decline would bring significant dividends in terms of external stability and domestic disinflationary dynamic,” said Baig. In 2012, India imports jumped 40% to a record $140 billion, mainly because of skyrocketing oil prices, as imported crude oil increased by as much as $27 per barrel, according to government ministers. “For Japan, lower energy pricing, combined with access to cheaper LNG [liquefied natural gas] imports from the US, could provide a significant boost for an economy that was left increasingly exposed to energy costs following the Fukushima disaster (as imported power fuel has been used to offset the loss of nuclear power),” said Baig. In March 2011, an earthquake and subsequent tsunami devastated the Japanese nuclear plant in Fukushima, which led to nuclear meltdowns and release of radioactive materials in the surrounding areas. The disaster is widely considered to be the largest nuclear disaster in the 21st century, pushing the Japanese public to demand the phase out of nuclear power altogether and the government to explore alternative “safer” sources of energy. With few domestic energy resources and the impairment of its nuclear power production, Japan is now the world’s largest importer of LNG, second largest importer of coal and third largest net importer of oil,
“Natural gas will account for about 20% of total Chinese natural gas production by 2030.”
based on US Department of Energy’s Energy Information Administration. Lower energy pricing will do much to lower the costs of its massive energy import bill, with LNG imports alone hitting a record $6.5 billion, according to Reuters. While more stabilized energy prices could boost most other Asian nations that import energy, the few producers in Asia are looking at the China’s nascent shale boom with trepidation. This includes Australia and Indonesia, said Baig, whose LNG producers have invested heavily in recent years with Asia’s seemingly insatiable demand in mind. China’s increasing energy independence could further affect Australia and Indonesia who have thrived in recent years on the back of soaring coal exports, with coal making up about an average of 15% and 14% of total exports, respectively. China imported 30.55 million tons of coal in January alone, according to official customs data, but this could lessen gradually as domestic shale natural gas production hits its full stride. “Over the long term, a meaningful shift away from coal to cleanerburning natural gas driven by environmental as well as energy diversification imperatives, notably in China, could have significant ramifications for the global coal market and key exporting countries that have depended on China’s rising coal appetite,” said Baig.
Shale natural gas reserves: wait till China gets into the act
Source: US DOE/EIA, Deutsche Bank
SINGAPORE BUSINESS REVIEW | APRIL 2013 45
DINING
Muy Delicioso Gastronomic feasts await in these two succulent Spanish tapas bars and one crowdpleasing South American eatery
Binomio
Meaning “duo” or “pair” in Spanish, this aptly-named restaurant marries the quality of fine dining and the vibrancy of a tapas bar and serves stellar Spanish fare. Executive Chef Jose Alonso has worked with many celebrity chefs including Sergi Arola, Francis Paniego and celebrated Spanish chef, the late Santi Santamaria. Playing with only the freshest of ingredients, Binomio allows guests to take advantage of a wide range of seasonal produce. Must try items are Chef Jose’s specialties such as his squid ink paella, char-grilled suckling pig and cuttlefish sofrito, along with the restaurant’s signature Sangria.
La Cicala
In the midst of the bustling Club Street is La Cicala, a stylish tapas bar with hints of modern Spanish gastronomy. Starting with pristine, wholesome and quality ingredients, the cuisine is prepared with a contemporary twist, anchored in traditional Spanish gastronomy - you will not be left disappointed. La Cicala is also Singapore’s first official outlet for Bombay Sapphire gin so you can look forward to delicious aperitifs and their Sangria which has been concocted with their top secret recipe.
SUR Nuevo Latino Kitchen
Housed in a two-storey shophouse in the North Canal Road stretch, SUR is one of the most buzzworthy eateries to have popped up on the Singapore dining scene of late. Chef-owners Alejandro Luna and Vitelio Reyes may have come from distinctly different culinary backgrounds but their shared love and passion for South American cuisine is apparent in their clever contemporary interpretations of traditional Latino dishes. Remember to try the restaurant’s delectable variety of ceviches, the Pabellón which consists of a well braised Short Rib, Black Bean Tacu Tacu and sweet plantain puree, as well as their delightful dessert menu.
Recommended by QUINTESSENTIALLY LIFESTYLE, the world’s leading luxury lifestyle group with a 24-hour global concierge service. Contact qsingapore@quintessentially.com or +65 6511 1199 46 SINGAPORE BUSINESS REVIEW | APRIL 2013
SINGAPORE BUSINESS REVIEW | APRIL 2013 47
LIFE & STYLE
5 amazing brews in Singapore
These coffee houses rise above the rest with their exquisitely prepared cups, pedigreed beans, and artisanal service. Papa Palheta
Strangers Reunion With a quirky mismatched interior, a trip to Strangers Reunion will be both rewarding and satisfying. The Café is helmed by twotime Singapore National Barista Champion, Ryan Tan, who has lent his expertise at world renowned cafés in Melbourne. Now, he brings his extensive coffee knowledge to Singapore at Strangers Reunion. The sharp and utilitarian worktop, intrinsic customer experience, accompanied by personalized and warm service along with an extremely knowledgeable crew makes Strangers Reunion the perfect place to enjoy a warm cup of coffee with friends.
Hidden away in a corner of Bukit Timah Road, this quaint coffee shop is the perfect place to enjoy a cup of coffee with friends, or even some quiet time with a good book. The coffee retail boutique’s philosophy is simple- bring out the best in the beans with our unique brewing and roasting techniques. Believing every coffee has its story, their roasters practice micro production methods making sure the profile of their coffee is painstakingly tweaked and cupped. Taking their coffee very seriously, Papa Palheta has people around town talking about the rare selection of coffee beans that are all roasted and sold on-site. 40 Hands Focussing on sustainability produced speciality coffee, stocking Fair Trade and Direct Trade coffee beans, 40 Hands offers a resident house blend and a speciality blend that rotates every week. Found in a quaint corner of Tiong Bahru, and inspired by the Third Wave Coffee movement, it aspires to the highest form of culinary appreciation for coffee by providing you with high quality beans, single origin coffee and latte art. They also offer a sweet drive-in service for those who are constantly on the move. Maison Ikkoku New to the Haji Lane area is Maison Ikkuko located at Kandahar Street. The multi-concept venue, offers a café, retail space and bar all under one roof. The exciting new joint boasts baristas trained by latte art specialist Hiroshi Sawada. Along with serious servings of caffeine, you can enjoy renditions of your favorite comfort food and homemade cakes. Following through to the second story of the minimalist rustic shop, you can find a multi label menswear boutique selling labels from Japan, France, UK and USA. With a semi-alfresco bar due to open in mid-November, Maison Ikkuko is set to be a neighbourhood hangout for the style set. Toby’s Estate Sometimes all you need is a cup of freshly brewed coffee. Toby’s Estate is a Specialty Coffee Roastery that started in 1997 in Sydney, Australia by passionate espresso lover Toby Smith. The café reached Singapore 2011 and has been on the map of all caffeine connoisseurs ever since. Toby and his team select only the most distinctive high altitude Arabica coffees from around the globe. The striking flavors and aromas of these beans are the products of the micro climates in which they grow. Located at the hip Rodyk Street area, Toby’s Estate satiates your deepest caffeine habit.
Recommended by QUINTESSENTIALLY LIFESTYLE, the world’s leading luxury lifestyle group with a 24-hour global concierge service. Contact qsingapore@quintessentially.com or +65 6511 1199 48 SINGAPORE BUSINESS REVIEW | APRIL 2013
SINGAPORE BUSINESS REVIEW | APRIL 2013 49
numbers
Freshness now a top consumer concern Type of store preferred for purchase of fresh foods-Singapore
Is environmentallyfriendly
Keeps food fresh longer 55%
55%
Makes it easier to eat/drink on-the-go
31%
Keeps food/ beverages at right temperature
33%
Global Consumers Willing to Fork Out More for Fresh and Sustainable Packaging
Is re-usable
42% Source: Nielsen Global
Is easier to use
Prevents mess or spills
34%
39%
Countries most interested in packaging that keeps food fresh longer
Source: IPSOS
Frequency of purchase Singapore
Source: IPSOS
Servings of fruits & vegetables consumed on average per day
Base : All respondents n=512 Source: Nielsen Global
Source: Nielsen Global
For more information contact: Ipsos, Tim Hill (tim.hill@ipsos.com) and  Nicolas Bijuk (Nicolas.Bijuk@ipsos.com); Nielsen,  Ellen Cuijpers (Ellen.Cuijpers@nielsen.com) 50 SINGAPORE BUSINESS REVIEW | APRIL 2013
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Join us at the Food & Electronic Fair on 26 – 28 April 2013 at the Singapore Expo Hall 5 and learn how generations of families worldwide have trusted Pharmaton to keep them fit and strong.
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Buy any Pharmaton product between 26 April and 21 July, and get a Scratch & Win Card which lets you instantly win a S$5 voucher or coffee mug. Plus chance to win a Volvo S60. Simply complete and mail your Scratch & Win Card to Boehringer Ingelheim Singapore Pte Ltd @ 300 Beach Road, #37-00, The Concourse Singapore 199555 by 21 July 2013, 12pm *.
26 – 28April 2013
9.00 am – 10.00 pm
Food & Electronics Fair
Venue: Singapore Expo Hall 5 Join Us In Staying Healthy ALL YEAR ROUND
* The scratch cards come with the Pharmaton vitamins and supplements. Terms and conditions apply SINGAPORE BUSINESS REVIEW | APRIL 2013 51
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