Jan•Feb•Mar 2015 SUSTAINABLE GROWTH
Top SMEs upbeat about 2015 THE BUZZ ON INDIA
BusinessQuotient / Business / People / Opportunities
Renewing IndiaSingapore ties GLOBAL BIZ ISSUES
Companies to support reforms LOCAL BUSINESS MAGAZINE OF THE YEAR
SILVER MARKETING MAGAZINE’S MAGAZINE OF THE YEAR 2014
A P U B L I C AT I O N O F S I N G A P O R E B U S I N E S S F E D E R AT I O N
Smart Tech in the Kitchen
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Neo Group Founder Neo Kah Kiat believes in the power of man and machine
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Chairman’s Message
Welcoming 2015 with New Goals Greetings and a Happy New Year! The year 2014 was eventful for SBF. We had renewed leadership for the Federation in June with several new Council Members for the 2014-2016 term. I am deeply humbled to succeed Mr Tony Chew as Chairman of SBF. Last year, we continued to sharpen our focus on championing the interests and causes of our members. In September, Council Members participated in a retreat to review SBF’s goals and identify new strategies to take the Federation through 2018. I would like to take this opportunity to share several of these strategic goals. First, th there was a strong consensus to contin continue to strengthen SBF’s role as the apex business chamber and to champ champion the needs and aspirations of mem members and the wider business com community. While the SBF-led SME C Committee has done well in its aadvocacy role, SBF endeavours tto strengthen its engagement w with larger companies and w work towards shaping trade and iinvestment policies. Second, we believe we can be a stronger bridge between the business community and the Government, to enhance a conducive business environment and help businesses through our current economic transformation. We aim to
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provide thought leadership on business matters, support economic development, and help mould the national agenda to benefit businesses and contribute to Singapore’s continued growth. Third, we believe there is room for greater collaboration between the Federation and various Trade Associations and Chambers (TACs). Besides leveraging each other’s strengths, SBF aims to work more closely with the TACs to help advance the interests of the business community in Singapore and internationally. Fourth, SBF plans to increase engagements with members through participation in outgoing business missions and incoming visits by business delegations, as well as assist them to extend their global footprints – especially for SMEs – by tapping into opportunities in external markets, particularly in ASEAN, China, South Asia and emerging markets such as Africa. I am mindful that these goals will continue to evolve as the Federation works hard to deepen engagement with SBF’s members and partners in our journey to excellence. On this note, I wish our members, colleagues and their families a fruitful year ahead.
S.S. Teo Chairman Singapore Business Federation
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Contents
BiZQ is going green! We will be going digital from the July issue onwards
Economy Watch
SMEs Upbeat about Economy 06 2015 SBF-DP SME Index survey revealed that growth sectors included business services and construction.
BiZ Voice
Companies Urged to Support 10 Structural Reforms
SBF championed the push for G20 economies to implement structural reforms.
Commentary
Businesses need to think about building a culture of innovation in their organisations. RF123
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Transforming for the Future
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THE BUZZ ON INDIA
A P U B L I C AT I O N O F S I N G A P O R E B U S I N E S S F E D E R AT I O N
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Jan•Feb•Mar 2015 SUSTAINABLE GROWTH
Top SMEs upbeat about 2015
BusinessQuotient / Business / People / Opportunities
Business Quotient (BiZQ) is the official publication of the Singapore Business Federation, reaching out to over 21,000 of Singapore’s business elite, chief executives and entrepreneurs. The quarterly, published in collaboration with SPH Magazines, is your eye on Asian and global business trends, bringing you up to date on industry developments, the economy, country profiles, stories about successful companies and the people who lead them.
Renewing IndiaSingapore ties
BiZ Feature
The Pursuit of Productivity BiZQ takes a closer look at how businesses are grappling with the right mix of technology and people to deliver on better quality growth.
GLOBAL BIZ ISSUES
Companies to support reforms LOCAL BUSINESS MAGAZINE OF THE YEAR
SILVER MARKETING MAGAZINE’S MAGAZINE OF THE YEAR 2014
Smart Tech in the Kitchen Neo Group Founder Neo Kah Kiat believes in the power of man and machine
Cover photo by Jasper Yu
ABOVE: A growing number of SMEs continue to embrace innovation and technology to increase their productivity levels.
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4 Publisher Singapore Business Federation 10 Hoe Chiang Road, #22-01 Keppel Towers, Singapore 089315, Tel: +65-6827-6828, Fax: +65-6827-6807, E-mail: mr@sbf.org.sg, Website: www.sbf.org.sg chairman Teo Siong Seng chief executive officer Ho Meng Kit chief operating officer Victor Tay assistant executive director (member relations) Cheryl Kong corporate communications senior director Jinny Claire Sim manager Liew Lixia senior executive Rachelle Lee
In BiZ With
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editorial & creative senior editor Dora Tay contributing editor Casuarina Peck sub-editor Annabelle Bok associate creative director Jayson Ong art director Winnie Ong senior designer Mohamed A Rahman
Neo Kah Kiat, founder of Neo Group, believes in the power of man and machine when it comes to productivity.
Innovations
More Out of Your IT Investment 26 Getting
Amid the upward pressure on business costs, companies need to identify smarter strategies to achieve better leverage on their IT infrastructure.
Inside SBF
Budget 2015 should Focus on Helping SMEs 28 SBF:
Reducing business costs, fine-tuning foreign worker policy and helping small businesses venture overseas are some areas that should be the key focus.
Publishing Agent SPH Magazines Pte Ltd group editor-in-chief Caroline Ngui group editor Joanna Lee-Miller
Smart Technology in the Kitchen
International Markets
Renewing India-Singapore Ties 36 Trade
Modinomics has given rise to increasing business confidence in India in light of economic reforms and positive growth. What does this mean for Singapore?
SME Resources
Helping Start-ups Across Region 38 the DBS has launched the BusinessClass mobile app aimed at SMEs.
managing director Dennis Pua general manager Christopher Chan
In Style sales & client management associate account director Kaz Lim account manager Lin Mi’er senior executive, client management Neo Pei Shi publishing services team head Alice Chee For advertising enquiries, please email: jrani@sph.com.sg
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Synergy in Golf Using the sport as a tool to build corporate teamwork in organisations.
This news magazine is published by SPH Magazines Pte Ltd (Registration No. 196900476M) for Singapore Business Federation (Registration No. ROS138/2002TAP). Copyright of the materials contained in this magazine belongs to SPH Magazines Pte Ltd and Singapore Business Federation respectively. Nothing in here shall be reproduced in whole or in part without prior written consent of SPH Magazines Pte Ltd or Singapore Business Federation. Views expressed in this news magazine are not necessarily those of SPH Magazines Pte Ltd nor the Singapore Business Federation and no liabilities shall be attached thereto. All rights reserved. Editorial enquiries should be directed to the editor, BiZQ, SPH Magazines Pte Ltd, Media Centre, 82 Genting Lane, Level 7, Singapore 349567. Tel: +65 6319 6319, Fax: +65 6319 6227, E-mail: bizq@sph.com.sg. Unsolicited material will not be returned unless accompanied by a self-addressed envelope and sufficient return postage. While every reasonable care will be taken by the editor, no responsibility is assumed for the return of unsolicited material. MICA (P) 119/03/2014. Printed in Singapore by timesprinters, Singapore (Registration No. 196700328H).
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Economy Watch
Irvin Seah, economist, DBS Bank
Singapore Eyes Broader Sustainable Growth SMEs upbeat about 2015 economy, reveals SBF survey.
SPH – The Straits Times
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ingapore’s gross domestic product (GDP) growth was on track (3.5%) for the first half of 2014, but last year’s third quarter growth estimate (2.4%) fell below market expectation (2.6%). The Ministry of Trade & Industry said recently that 3Q 2014 advanced estimates revealed that Singapore’s economy grew 1.2% on the basis of a quarter-on-quarter annualised growth rate, just below many economists’ expectations of 1.3%. Looking at the broader Asian region, the picture does not appear brighter either. China, the region’s biggest economy, announced last October that it grew 7.3% in the third quarter of 2014. This was the
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slowest quarterly gross domestic product growth rate for the Chinese economy in five years. With slower loans growth and dampened luxury spending, the world’s second largest economy appeared to be slowing down. Casting an eye over the broader global economy, the outlook on the Eurozone is a little hazier. There is now widespread consensus in Europe that the Eurozone’s industrial production appears to have lost significant momentum. In October 2014, Europe’s strongest powerhouse, Germany, decided to slash its growth forecast after a drop in industrial output. German Finance Minister
“The most traditionally stable engine of growth, the services sector, has seen its growth momentum sliding in recent quarters. There is a risk that the sector will continue to slow down in the coming quarters due to the labour crunch.”
Wolfgang Schauble said that the government is expecting a weakening of its economy. “A growth rate of 1.2%, 1.3% is not particularly wonderful and the lowering of the forecasts compared to what we had announced is not pleasing,” said Mr Schauble. In the United States, concerns continue to persist with the recent end in the country’s quantitative easing, a strategy pursued in the aftermath of the global financial crisis. In addition, there are now fears that an untimely rise in interest rates in the US will hit the global economy.
All eyes on Singapore The reality in Singapore is that the republic is undergoing one of its most profound economic transitions since independence. Last September, Prime Minister
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Economic Forecasts GDP Forecasts (%YoY) 2012
2013
2014F
2015F
US
6.3
6.2
6.3
3.7
3.5
Japan
2.9
3.6
3.9
1.7
2.1
Eurozone
5.2
4.5
5.3
4.3
4.8
Indonesia
7.7
7.3
7.0
2.6
2.6
Malaysia
2.9
3.2
3.6
4.3
3.9
Philippines
4.9
5.6
6.5
9.5
8.0
Singapore
5.8
5.3
5.5
6.4
6.5
Thailand
4.7
5.4
5.6
2.1
3.5
Vietnam
11.7
10.0
9.0
10.5
13.1
China
7.2
6.9
7.3
2.9
4.1
Hong Kong
3.9
3.5
4.0
2.4
1.8
Taiwan
4.7
5.4
5.6
2.1
3.5
Korea
11.7
10.0
9.0
10.5
13.1
India*
7.2
6.9
7.3
2.9
4.1
* India data & forecasts refer to fiscal years beginning April; prior to 2013. Source: CEIC and DBS Research
Lee Hsien Loong said that it would not be adverse for Singapore if its economy were to grow by about 2% to 3% annually over the next decade. This is slightly lower than the 3% to 5% annual growth target set out in the Economic Strategies Committee plan between 2010 and 2020. This lowering of the annual growth rates factors in efforts to get the economy restructured, with a view to raising productivity and creating a more inclusive society. Looking ahead into 2015, DBS Bank economist Irvin Seah said that Singapore’s 2014 annual GDP growth “will stay below potential this year (2014) before improving marginally in 2015. The external outlook remains tepid as domestic restructuring is still a drag”. “While most expect a gradual improvement in global demand ahead, which will lift manufacturing activity, DBS notes that the manufacturing sector is weighed down by structural challenges. Domestic restructuring has resulted in a labour crunch, which is crimping export competitiveness, and affecting the performance of exports and
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manufacturing,” he explained. “Such a drag is already affecting gross domestic product growth. Singapore is ultimately an export dependent economy. So, if non-oil domestic exports continues to head south, growth will follow suit,” Mr Seah added. He also noted the growing downside risks in the services sector, explaining it thus: “The most traditionally stable engine of
Restructuring to continue in 2015 Restructuring of the Singapore economy will be a recurring theme this year. Mizuho Bank economist Vishnu Varathan explained that global economies, not just Singapore, are running out of options to spur growth through monetary and fiscal policies. Circumventing restructuring is perhaps not an option if global economies are serious about lifting the growth potential, he said. Despite all these macroeconomic forces at work, Singapore’s homegrown SMEs are still optimistic about the future.
SME survey reveals optimism According to the latest Singapore Business Federation-DP
p.8
Slump in exports due to weakness in electronics % YoY 40
Electronics exports NODX
30
Electronics-led decline in NODX
20 10 0 -10 -20 -30 -40 Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
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growth, the services sector, has seen its growth momentum sliding in recent quarters. There is a risk that the sector will continue to slow in the coming quarters due to the labour crunch.” As OCBC economist Selena Ling commented at the recent SBF-led National Productivity Month (NPM) forum, “the challenge for Singapore is in the services sector”. Just about every sector has to go beyond a focus on cost and focus more on productivity and innovation for growth, she said.
Source: DBS Bank
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SMEs: Modest Growth Outlook in Early 2015 Singapore SMEs are showing signs of modest optimism in the first part of this year, the SBF-DP SME Index in October 2014 revealed. The survey is a joint initiative of the Singapore Business Federation (SBF) and DP Information Group. According to this six-month forward-looking Index, the two industries which have shown positive sentiments are the business services and construction and engineering sectors. The Overall Index for this quarter rose by 1.1% to 55.5. A score above 50 indicates that SMEs have a positive outlook for their business prospects for the next six months. The Index, which measures SME sentiments from October 2014 to
March this year, is based on 3,000 interviews with SME owners and managers, and the financial performance of SMEs. Five industry sectors were tracked – business services, commerce and trading, construction and engineering, manufacturing, and transport and storage. Across this Index, SMEs were adopting various approaches to counter balance the continuing tight domestic labour market, high operating cost and a sluggish global economy. The results showed that this is an early sign of the SMEs’ adaptation and transformation, sparking initial indications of optimism for 2015 in some sectors.
Transformational efforts
4Q14 – 1Q15F
Overall Index (out of 100)
3Q14 – 4Q14F
Outlook for October 2014 - March 2015 Forecast 2Q14 – 3Q14F
Information Group SME Index revealed in October 2014, SMEs expressed signs of modest optimism for 2015. The survey revealed that the sectors leading in confidence included business services and the construction and engineering sectors. (See side story: “SMEs: Modest Growth Outlook in Early 2015”). Reflecting such positive sentiments, many companies such as start-up Foodgnostic decided to invest in new technologies to compete effectively in their respective industries. Foodgnostic harnessed the power of ultrasonic technology by applying it to its innovative food supply business, CEO Daniel Tay told BiZQ. “What we have done is introduce technology into our business without sacrificing the quality of our products. As a result, our customers know they will continue to get great and tasty cheesecakes,” he said. With the company now generating about S$7 million in revenue a year, Mr Tay said: “Today it is possible to use Internet technology to do many things in business. We have used technology to create an online store without having to create a physical shop. With online purchasing having become part and parcel of life, it is easier to help drive our business in this way.” Homegrown firm Jason Marine Group is another Singapore company that is focused on a people-centric approach to business processes and services. Speaking at the recent National Productivity Month Forum, Founder and Executive Chairman Joseph Foo said that the company is focused on engaging and empowering its staff, as well as demanding and delivering the highest standards of quality and service to customers. It is this commitment to quality that will enable companies to ride out challenging times.
1Q14 – 2Q14F
Economy Watch
Commerce/ Trading
56.1 55.2 54.8 55.0
Construction/ Engineering
55.3 54.4 54.9 56.0
Manufacturing 54.8 54.9 55.1 55.4 Business Services
54.8 54.9 54.8 56.5
Transport/ Storage
54.2 54.3 56.6 55.0
Overall
55.0 54.4 54.9 55.5
Percentage Change q-o-q (%)
54.8 54.9 54.8 56.5
Source: Singapore Business Federation
SMEs in the business services sector anticipated business expansion in the early part of this year, accompanied with greater access to funding to support capital investment initiatives. Similarly, construction and engineering SMEs reported positive sentiments despite domestic labour restraints, primarily driven by more construction works being expected in the next six months. Fuelled by higher turnover and profit expectations, SMEs in the business services and construction and engineering sectors are looking to increase their expansion activities. “The positive sentiment from the business services and construction and engineering sectors provides the first sign of a brighter outlook for SMEs in these sectors,” said SBF CEO Ho Meng Kit. “However, this is not reflected in the outlook of the other sectors yet. The improved sentiment is therefore patchy. There are good signs that companies are responding to the call for restructuring. Capital investments expectations are up.”
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BiZ Voice
Ho Meng Kit, CEO, Singapore Business Federation
Businesses Urged to Charge Ahead with Reforms SBF represented Singapore business community at B20 forum held in Australia. forum where businesses produce policy recommendations and present them to G20 government leaders. Singapore was invited to participate in the forum as it is a key member of the global economic system. The G20 represents around two-thirds of the world’s population, 85% of its global gross domestic product, and more than 75% of its global trade.
SPH – The Straits Times
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ingapore Business Federation (SBF) is supporting a call for the international business community to implement structural reforms over the next few years, as well as the G20 initiative for a Global Infrastructure Hub to be located in Sydney. Speaking at the B20 advisory forum held recently in Brisbane, SBF CEO Ho Meng Kit said that Singapore would benefit from the setting up of this hub as Australia, which led the initiative as this year’s G20 host, is open to including nonmember countries such as Singapore in the hub. SBF represented the Singapore business community at the B20
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Call for global support SBF championed the push for G20 economies to implement structural reforms to boost their collective economic growth by 2% above the trajectory implied by current policies over the next five years and create millions of new jobs. As mentioned, SBF supported the G20 initiative for a Global Infrastructure Hub that will be located in Sydney. The hub will function as a knowledge centre, enabling the sharing of leading infrastructure practices on a global basis and helping to match investors with various ongoing projects. It will also complement the work of
“Apart from Singapore’s expertise in infrastructure project financing, home-grown companies such as SMRT, Surbana and Keppel Corp also have relevant urban development knowledge and can ride on the hub to tap into global infrastructure project opportunities.” other international organisations in infrastructure development such as the World Bank’s Global Infrastructure Facility.
Key financial centre Mr Ho said: “Australia recognises Singapore’s position as a key financial centre in Southeast Asia, and it is quite prepared to work with Singapore. Apart from Singapore’s expertise in infrastructure project financing, home-grown companies such as SMRT, Surbana and Keppel Corporation also have relevant urban development knowledge and can ride on the hub to tap onto global infrastructure project opportunities.” It is estimated that the hub can facilitate about S$2 trillion in additional infrastructure capacity and drive an additional S$600 billion of economic activity and 10 million jobs per annum by 2030. Turkey will be hosting the 2015 G20 Summit and SBF has been invited to participate in its B20 process.
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Belgium and Singapore Foster Stronger Ties
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Belgian Economic Mission, led by Princess Astrid, was in Singapore to boost bilateral ties and explore new opportunities for economic cooperation between Singapore and Belgium. The 304-member delegation comprised business leaders and senior representatives from the food, biomedical, healthcare, ICT, transport and logistics and clean technology sectors. The mission’s three-day programme included industry visits, seminars and business-matching sessions, as well as the signing of several contracts and MOUs between Belgian and Singapore companies. During the visit, the princess called on Prime Minister Lee Hsien Loong at the Istana, and met with Mr Lim Hng Kiang, Minister for Trade and Industry; and Mr Tharman Shanmugaratnam, Deputy Prime Minister and Minister for Finance.
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Five Singapore Companies Clinch ASEAN Business Awards
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Business Federation facilitated the applications from 11 participating Singapore companies for the ABA
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ASEAN Business Awards 2014 (Singapore) SINGAPORE WINNERS Keppel Land International Cyclect Electrical Engineering
United Overseas Bank
Absolute Kinetics Consultancy
SureCatch World
AWARD CATEGORY Corporate Excellence (Regional) Innovation (Large Company) Innovation (Regional) ASEAN Centricity (Large Company) ASEAN Centricity (Regional) Micro, Small & Medium Enterprise (MSME) Young Entrepreneur (Regional) Women Leader (MSME)
SPH – The Straits Times
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ive Singapore companies have clinched accolades in the recent ASEAN Business Awards (ABA) organised by the ASEAN Business Advisory Council (ASEAN-BAC). Held in conjunction with the ASEAN Business and Investment Summit (ASEAN BIS) in Nay Pyi Taw, Myanmar, the award ceremony recognised companies who have shown outstanding performance in the region and globally. The five Corporate Winners from Singapore are Keppel Land International, Cyclect Electrical Engineering, United Overseas Bank (UOB), Absolute Kinetics Consultancy and SureCatch World. Keppel Land, Cyclect, UOB and Absolute Kinetics also won the award in the Regional category. As the national secretariat for the ASEAN-BAC Singapore, Singapore
2014 and led a delegation of 14 Singapore companies to attend the award ceremony. For 2015, Malaysia will be the Chair for ASEAN and ASEANBAC. SBF will also lead the Singapore delegation this year.
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BiZ Voice
ABAC Leaders Aim To Speed Up Integration Asia-Pacific business council wants APEC leaders to build on progress already made.
The 4th APEC Business Advisory Council (ABAC) meeting was chaired by Mr Frank Ning, Chairman of COFCO Corporation. The ABAC Singapore Members and Alternate Members for 2014 are: Mr Ho Meng Kit, CEO of SBF, Mr Jackson Yap, immediate past Group MD of United Engineers, Mr Teo Siong Seng, MD of Pacific International Lines and Chairman of SBF, and Mr Lim Sim Seng, Singapore Country Head for DBS Bank.
facilitation commitments, made by the APEC World Trade Organisation members as part of the Bali package, was also seen as a crucial element. Likewise, ABAC urged APEC economies to demonstrate greater leadership in securing a commercially significant expansion of the Information Technology Agreement.
Regulatory reforms
SPH – The Straits Times
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he Asia Pacific Economic Cooperation (APEC) Business Advisory Council (ABAC) has recommended that leaders from APEC need to pick up the pace in deepening regional economic integration as the means to sustain economic growth and recovery in the region, while adapting to new business realities. At the 4th ABAC meeting held last November in Beijing, the council called for further development of a Free Trade Area of the Asia Pacific (FTAAP) that is built around the highest standards and with the broadest possible coverage, in the face of the 2020 deadline set earlier.
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In addition, the launch of a FTAAP collective strategic study was a welcome move towards providing insightful information from the different business communities.
Bolstering closer integration The council believes that efforts to achieve closer economic integration will be bolstered by promoting supply chain connectivity, liberalising cross-border services trade and investment, and taking more ambitious positions in multilateral negotiations including those ongoing discussions related to trade-in services. The implementation of trade
Addressing the issue of connectivity, ABAC developed several policy recommendations on domestic regulatory reform and business and skills mobility. Since services account for a significant portion of APEC economies, developing an efficient and internationally competitive service sector has proved to be a critical driver for growth. Hence, the council commissioned the Marshall School of Business to conduct a study on the impediments to investment in the services sector. The study concluded that significant barriers still remain in the region. The council’s recommendations on infrastructure development are focused on spurring investments and mobilising long-term savings, promoting public private partnerships and helping governments plan more infrastructure projects effectively. The council also placed importance on sustainability and has developed recommendations
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Sino-Singapore Roundtable Explores Opportunities Business leaders gathered to discuss upcoming ASEAN Economic Community 2015.
M
ore than 40 top business leaders from the Singapore Business Federation (SBF) and China Entrepreneur Club (CEC) gathered recently to discuss business and investment opportunities in the months leading to the ASEAN Economic Community (AEC) 2015. The AEC, which comes into effect later this year, envisions a single market and production base with the free flow of goods, services, investment, capital and skilled labour among the 10 ASEAN member nations. SBF Chairman S.S. Teo said: “AEC 2015 presents immense potential for China enterprises. Singapore has been a key ASEAN member and with its world-
class infrastructure and global connectivity, it provides an ideal platform for Chinese companies keen to extend their global footprint in ASEAN. “As Singapore and China celebrate 25 years of diplomatic relations in 2015, we look forward to further developing the bilateral ties between our two countries.” Mr Teo added: “Through the SBF-CEC Business Roundtable and similar discussions held between the business communities from both countries, SBF hopes to facilitate more networking opportunities for both Singapore and Chinese entrepreneurs. “Besides looking at investment opportunities, Singapore and Chinese entrepreneurs can find ways to collaborate and venture
into other countries.” China is currently Singapore’s top trading partner, with total bilateral trade amounting to S$115.2 billion in 2013, and it is a large and influential market. Singapore was also China’s biggest investor country in the same year, with investments reaching US$7.23 billion in worth. “Singapore plays a crucial role in China’s economic development,” said Mr Ma Weihua, CEC Executive Chairman and a former President and CEO of China Merchants Bank. The CEC delegation met with various leaders from the political, business and academic fields, and hopes to build a strong foundation to further cooperative ties between China and Singapore.
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related to the challenges presented by urbanisation, food security and health, including the recent Ebola outbreak. ABAC members later attended the APEC CEO Summit 2014 which was opened by President Xi Jinping of China, and speakers included United States President Barack Obama, Russian President Vladimir Putin, and Indonesian President Joko Widodo.
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ADVERTORIAL
Make a Difference in the Marketplace One Singaporean designer creates unique quality leather products, while another adds fun and excitement to its product lines. Technology powers this artisan leather goods retailer In this day and age of consumerism, customers are mostly spoilt for choice. Should one choose a superluxury premier-brand item or opt for a run-of-the-mill product? One retailer making a difference in the marketplace and creating a niche for itself, especially in the area of delivering quality leather goods at affordable mass-market prices, is February 29. For a start, the name of the company is unusual and begs the question: Why such a moniker? Commenting on this and how it reflects its brand name, founder Mr Eden Kew told BiZQ that February 29 is a day added into the leap year of the Gregorian calendar, and this unique date occurs only once every four years. Without this extra day, the calendar system that we know would not be synchronised, he said. “We want to make a difference – just like this day – by crafting value leather goods at mass-market prices. We want to be that child prodigy that appears every once in a while. We want our designs to be as unique as the date itself. We like to be different,” he said. Armed with this deep-seated entrepreneurial idea, Mr Kew has gone far and wide to source
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for a gamut of quality materials and inspirations: leather from vintage tanneries, buttery-soft cotton from farmland cotton mills, sturdy iron buckles from sweaty blacksmiths, and antique leather designs in flea markets. “We get down to the basics and source all over Asia just for our crafts,” he added. “We are a local designer brand known for our unique style in both genuine and faux leather crafts.” He said that the business started in 2005, and it was not too long into 2007 that the retailer secured its own trademark. With more than 500 designs under its belt, Mr Kew said that knowledge and technology are key enablers in his business. The company operates outlets at VivoCity and malls in Bugis, Jurong and Bedok, while maintaining an online presence at www.MyFeb29.com. “We send our colleagues for a variety of training courses and these include Workforce Development Agency ones for customer service. We also conduct in-house training relating to the knowledge required for analysing leather,” he said. Then there are other more rudimentary but equally important skills relating to continuously adding value to products, leveraging smartphone applications, keeping
abreast with technological developments and tapping into appropriate government programmes like the Productivity Innovation Credit scheme to help defray costs, he said. Though still a relatively new retailer, February 29 has already taken the big leap of deploying its point of sales on Cloud applications, he said. Mr Kew emphasised to BiZQ that technology is “fundamental” to improving speed and quality in all aspects of his business, from production to fi nal sale. February 29 also uses threedimensional computer-aided design applications to design products; this reduces wastage by minimising the need to create multiple prototypes. Reflecting on the current national focus of raising productivity, he said: “We are still a small business with very limited resources. Hence, February 29 is constantly relooking at processes to streamline work and eliminate redundancies.” Hopefully, this gets reflected in the rewards, he quipped.
Creating Singapore’s very own unique toys Creative DotBook, Kido Daruma and LITTLEBIGSOUND – the names of some of ActionCity’s toys and products are likely to perplex many, but they are a growing collection of locally curated items aimed at creating lots of fun, excitement and laughter, and bringing delight. Dispelling the notion that fun toys can only be developed and marketed by mega-toy companies, this homegrown company creates “funique” products that add a touch of play to daily lives, said founder and director David Chong. He and co-founder Tan Tong Hong set up and built their business on their passion for toys. Mr Chong said: “We wanted to introduce play in small but significant
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SPH - The Straits Times
ADVERTORIAL
ways to our everyday lives, while holding on to the childlike belief that play is not frivolous... it can be serious yet fun. “ActionCity is built on the vision of re-introducing play into daily lives, with the intention of delighting people. The mission is to inspire people to rediscover the joy of play.” In any case, this is no pushover business. ActionCity, which is the retail arm of Big Box International Pte Ltd, has created some award-winning products like its LITTLEBIGSOUND headphones and portable speakers. Developed by its own team of engineers and designers and priced
Value through partnerships
affordably, this family of products has earned patents from the World Intellectual Property Organisation and the Intellectual Property Office of Singapore. These patents recognise and attest to the company’s extensive use of intellectual property. Besides focusing on creativity, protecting the company’s intellectual property is an equally important dimension of its business. ActionCity learnt it the hard way when one of its competitors made copies of its Breadou product just a few years ago. The imitation of this wrist-rest, bread-smelling item went so far as to copy the company’s registered mailing address, said Mr Chong.
As an Asia-focused real estate investment and capital management company, we believe in the value of building strong relationships with our customers, business partners and investors. Through these, we are able to grow together and create business communities that share in the rewards of our collective success.
While this reflected the marketplace’s desire to imitate ActionCity’s unique creations, the downside was that it ended in the proliferation of a product that did not adhere to ActionCity’s quality requirements. It was also a breach of its intellectual copyrights. It was a painful lesson, which has since taught the company’s founders about the importance of protecting its copyrights. Yet, ActionCity remains undeterred by these hurdles. It has found a unique blend of injecting the founders’ passion and creativity into thrilling products that excite the customers, while putting a Singapore label to the business. This article is brought to you by Mapletree Investments Pte Ltd.
We appreciate the support of all our business communities and are proud to be an active member of every one of them. You cannot put a price on partnerships but at Mapletree, we appreciate the value that they create.
www.mapletree.com.sg
Jan•Feb•Mar 2015
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Commentary
Transforming for the Future Businesses need to think about building a culture of innovation in their organisations.
SURVEY OF 291 COMPANIES The Department of Information Systems at the NUS highlighted various challenges and capabilities companies should implement to promote innovation within their organisations. 1 THE SURVEY FOCUSED ON THREE KEY SECTORS OF THE SINGAPORE ECONOMY: 1
I
n the past, companies could operate with limited innovation, and provide quality products and services that were updated infrequently and incrementally. A classic example is that of rotary phones, which used to dominate the telephone market for over three decades with few improvements, until touch-tone phones were introduced in the mid-1960s. However, recent trends have emerged that have made innovation imperative to most industries. With globalisation, outsourcing and rising customer expectations, organisations are facing the need for innovation in products, services and processes. Good business management is also needed to drive down costs and improve productivity.
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A survey of 291 companies that the Department of Information Systems at the National University of Singapore (NUS) conducted highlighted various challenges and capabilities companies should implement to promote innovation within their organisations. The review focused on three key sectors of the Singapore economy: information technology, hospitality and financial industries.
Challenges and barriers The findings indicated that while Singapore companies faced higher costs and shortage of skilled or unskilled foreign labour, innovation was not the first solution that comes to mind. Often, the organisations attempted to manage costs and
INFORM ATION TECHNOLOGY 2 HOSPITALITY 3 FINANCIAL INDUSTRIES
labour shortage issues in a more direct manner, while the notion of a product or process innovation did not surface immediately as an answer. This is because innovation is often perceived to be costly, risky and requires significant resources. Even as companies become aware of the need for innovation, many do not know how to bring about a transformation in their operations and processes so as to build a p.18
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Commentary culture of innovation within their organisations. Questions that were raised included “Where should we start?” and “What areas should we focus on?” The NUS findings looked for both commonalities and distinguishing features in the capabilities and mechanisms for innovation in the three sectors.
Converging technologies In the IT sector, converging technologies were developing, and these included mobile devices and new business models such as cloudbased computing. Indeed, companies in this industry faced challenges in differentiating themselves in the market while competing on costs. While innovation in this sector often suffered from limited funding, commercialisation potential and intellectual-property protection, the survey found that certain key capabilities differentiated those firms that still manage to succeed in innovation. Resources such as employee skills, IT investments and incentives were salient in fostering innovation activities. Companies that were market leaders showed strong capabilities in leveraging external knowledge for innovation. In terms of specific innovation ideas, some of the leading organisations tapped on market needs in data analytics and security by providing solutions such as security analytics systems to help companies combat security threats. Specific IT innovations were also being built for high-growth sectors like healthcare (such as imaging solution for X-ray, ultrasound and computerised tomography) and e-commerce (such as pre-paid card for online payments).
Luxury hospitality segment In the hospitality sector, hotels in Singapore have seen a mixed outlook, with growth being mainly in the luxury segment. While tourism in general has
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been bolstered by events such as the Formula One race and the introduction of new or upgraded attractions, the hotel sector continues to encounter infrastructure constraints, limited manpower resources and keen regional competition. Among the hotels polled, employee training stood out as a key differentiator for innovative organisations. Capabilities of knowledge creation and customer relationship management were important determinants. Particular innovations that were highlighted include cross-functional training or multi-skilling of staff, as well as steps to improve workflow and productivity such as using motorised trolleys for transporting supplies to rooms and passport scanners to speed up the check-in process.
Investments in financial segment While Singapore is a wellestablished financial hub offering key advantages for banks, competition in the industry has increased substantially due to deregulation and advances in IT and management techniques, as well as risk adjustments such as securitisation. In the findings, resource factors such as employee skills and IT investments were differentiators that were in common with analysis from the IT sector. In the financial section, the majority of innovations reported were technology-based. These included automated teller machines, adjustable rate mortgage and digital technology like smartphone banking solutions (such as payment, savings, loans and account management functions). Other distinguishing factors were personal-finance management tools and card management solutions, in addition to new cards such as multi-currency and shopping cards.
Principles for organisational innovation Overall, there were five key principles for organisational innovation that emerged from the findings: Building employee skills, training and incentives Employee skills and knowledge are key differentiators. Hence, the development of employee skills – whether through recruitment or training – thus becomes imperative. ●
● Exploit technology A large majority of the innovation reported in the survey were based on advancements in technology, including IT. With rapid advances, a company that does not embrace technology is unlikely to be able to innovate and survive. ● Focus on the customer Companies should tap into customers’ knowledge and feedback to create and/or refine products and services through various means, including crowdsourcing. ● Knowledge acquisition and creation With know-how being the most significant input for innovation, there should be processes for the continuous scanning and acquisition of external knowledge.
Fostering innovation culture Essentially, innovation can come from anywhere in the organisation where employees are encouraged to innovate on the job. These activities should not be confined to the R&D department. An innovation culture is one that allows experimentation and some degree of mistakes, in order to allow novel ideas to surface and bloom. ●
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This article was contributed by Associate Professor Atreyi Kankanhalli and Professor Teo Hock Hai from the Department of Information Systems, National University of Singapore.
08/01/2015 17:10
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BiZ Feature
The topic of productivity is on the mind of just about every decision maker and analyst in Singapore. BiZQ takes a closer look at how businesses are grappling with the right mix of technology and people to deliver on better quality growth.
The
Pursuit of
Productivity
Volker Möhrke/Corbis
S
ingapore is an open economy operating in a world where the global macroeconomic growth has been stagnant since the 2008 financial crisis. With fiscal and monetary policies looking increasingly muted, circumventing restructuring is perhaps not an option, said Mizuho Bank economist Vishnu Varathan. While a quantitative poll has not been conducted on whether economists and analysts are more supportive of Singapore’s macroeconomic policies in pursuit of restructuring for productivity gains, Selena Ling, OCBC Head of Treasury Research & Strategy, observed: “Restructuring is not new (to Singapore) in the context of the last two decades. This is inevitable for a small, open economy like Singapore.” As an indicator, the results from the latest SME Development Survey 2014 revealed that the top concern among small- and medium-sized enterprises pertain to
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manpower challenges. More than 2,800 companies took part in the study, which was conducted by DP Information Group. Manpower costs continue to top the list of cost concerns for the third year running since 2012. And the survey highlighted the key thrust that a growing number of SMEs continued to embrace innovation and technology in their bid to up productivity levels. However, many SMEs felt that these are still early days, and more companies need to come on board the productivity route so that businesses as a whole would maintain their competitive edge. Explaining the pursuit of productiveness in the country, Prime Minister Lee Hsien Loong said that productivity has long been fundamental to Singapore’s prosperity. Speaking at the inaugural National Productivity Month last October, he said: “Productivity is a long haul; a marathon without a finish line. But so long as we have confidence and keep working at it together,
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Lee Hsien Loong, Singapore’s Prime Minister
“Productivity is a long haul; a marathon without a finish line. But so long as we have confidence and keep working at it together, we will stay in the race – and ahead in the race.”
we will stay in the race – and ahead in the race.”
Productivity Turnaround in 2015?
Reducing competitiveness Singapore’s aim of chasing productivity growth in its manpower pool has even appeared on the radar of the International Monetary Fund (IMF). In a recent report of the nation by the IMF, it was revealed that the country’s plans to cut reliance on foreign workers could reduce its competitiveness and growth potential. “Productivity improvements might take some time to materialise, and may not fully offset the effects
Productivity (Change in %)
15 10 50-5 -
2010
2011
2012
2013
Source: Ministry of Trade & Industry
of declining labour force growth,” the report stated.
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SPH – The Straits Times
Focus on productivity In recent times, the aggressive quest for productiveness has become the ultimate focus in the country, both from the perspective of businesses and from the national view. Labour productivity growth averaged a mere 0.1% from 2011 to the second quarter of 2014. The country has now set the objective of 2% to 3% annual growth in productivity for the next 10 years, slightly lower than the target growth rate of 3% to 5% a year that was set out by the Economic Strategies Committee (refer to bar chart). Businesses that BiZQ spoke to emphasized the relentless pursuit of productivity, given the context of wage inflation and rising business costs on the one hand, and the need to stay at the forefront of competition on the other. Alexander Hungate, the President and Chief Executive Officer of SATS Ltd, said that as one of the leading ground handlers in Singapore, the company prepares about 76 million meals a year for airlines. “There is pressure on the topline and the bottomline, as airlines are not keen on spending a lot these days,” he told attendees at the
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BiZ Feature National Productivity Month forum. The company had to contend – and painfully too – with managing its 12,000 staff, which belong to five unions. With a national cap of manpower supply in the country, SATS had to invest large amounts of capital in its massive kitchens to retain its key position as a leading provider of gateway services and food to airlines. Alongside this capital investment to raise productivity, Mr Hungate said he spent a growing amount of time and energy on staff engagement in an effort to build trust and commitment. “You cannot just go to (the staff) every year and ask them to double their productivity… You have to recreate the way they work... improve processes and inject technology so as to raise output in the organisation,” he said.
Turning around the business The relentless pursuit of productivity is not just a matter that concerns only larger companies, but also budding SMEs. One company that went through the rough ride is Jason Marine Group, which undertook one of its biggest restructuring turnaround efforts two years ago. Managing Director Joseph Foo said that one of the key traits in keeping productivity high is the focus on being very performance-driven in terms of getting the job done. Highlighting the dual challenge of recruiting people in a tight labour market as well as retaining existing staff, Mr Foo had to embark on a systematic strategy of building trust among his staff. “One of the ways we did this was to show (professional) competence in what we do – and it shows and builds trust,” he said. As part of this strategy, Mr Foo said that there was a systematic focus on building trustworthiness, developing a more open communicative atmosphere and building on the strengths of
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Gerald Tan, CEO, Pan Asia Logistics Singapore Pte Ltd
“We are constantly adapting to the changing market environment and customer demands to develop and deliver improved solutions to ensure the company’s longterm sustainability.”
MAJOR CHALLENGES FACING SMEs Manpower issues are still a major concern among its leaders. Nearly half of the respondents cited difficulty in hiring staff and high manpower costs as their top business concerns. Increasing competition was the third most common worry, followed by high rental costs. Top Business Concerns
2014
Difficulty in Hiring Staff
49%
High Manpower Costs
48%
Increasing Competition
45%
High Rental Costs
31%
Uncertain Global Environment 23% High Material Costs
19%
Difficulty in Retaining Staff
17%
Lack of Access to Opportunities
8%
Loss of Market Share
8%
Cash-flow Problems
3%
Difficulties in Securing Bank Financing
2%
No Major Concerns
2%
Source: DP Information Group
people as part of the overall approach to enhance productivity in the organisation.
Tailor-made solutions Another SME from another industry with a similar problem is Pan Asia Logistics Singapore Pte Ltd, a company that has focused on improving its customer experience through tailor-made offerings, providing more customer touch points for better engagement and developing innovative value-added solutions and services. CEO Gerald Tan said that one of the many solutions to help raise productiveness was through the implementation of the mini-load Automated Storage & Retrieval System. This is a high-density, highspeed storage system that reduces the storage space by 50% and increases operational efficiency by three to four times, compared to conventional storage ways. “Realising that a productive company needs a productive workforce, Pan Asia Logistics has put in place a holistic human resource strategy to train, motivate and reward employees,” he explained. “This includes up-skilling courses, wellness development programmes and initiatives to encourage the mind-set for continuous creativity and innovation, as well as to improve productivity and performance,” said Mr Tan. He said these corporate initiatives have resulted in a 70% increase in productivity in terms of speed, accuracy and response time to better serve its customers. “Productivity is a journey, not a destination. Pan Asia Logistics’ productivity initiatives are part and parcel of our ongoing process that never ends,” he added. “We are constantly adapting to the changing market environment and customer demands to develop and deliver improved solutions to ensure the company’s long-term sustainability.”
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Flag-bearers of Singapore’s Productivity
A
t the inaugural Singapore Productivity Awards in October 2014, six companies led the charge in raising productivity and were commended for their efforts. As a result of their internal efforts, the winners – Holiday Inn Singapore Atrium, LF Logistics Services, Neo Group Ltd, Pan Asia Logistics Singapore Pte Ltd, Select Group Ltd and Sheng Siong Group Ltd – received their awards from Mr Tharman Shanmugaratnam, Deputy Prime Minister and Minister for Finance, at the 20th Business Excellence Awards and inaugural Singapore Productivity Awards. At the commendation of the six companies, Singapore Business Federation Chairman S.S. Teo said: “Productivity is a continual journey for all businesses, and enterprises have to constantly challenge themselves to improve productivity levels. These six winners can serve as productivity role models to other companies in their industries,” he said. One of the winners was food catering company Select Group. This company adopted several technological systems in its central kitchens, including kitchen and food processing technologies, IT systems and an automation project for one of its food outlets, Hong Kong Sheng Kee Dessert. Implemented in 2011, this resulted in an increase in sales revenue from $1 million in 2010 to $10 million in 2013. Select Group outsources high-volume sauces and the preparation of vegetables, saving 80 hours of manual work per day, allowing kitchen staff to be deployed in higher value-added jobs. In mid-2014, Select Group streamlined menus for two Hong
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Kong Sheng Kee Dessert outlets, reducing the original list of 85 items to just 58 of the most popular ones. This resulted in faster preparation times, decreased waiting periods, faster seat turnaround and an increase in revenue by some 20%. Managing Director Vincent Tan said: “Five years ago, we did a study trip to Japan and saw many companies operating efficiently on a skeleton crew. We started looking seriously at how we could improve our operations in a similar manner across departments and train our staff accordingly. The results of our previous productivity efforts have been clear – with increased revenues, savings in time and improved customer experience.
S.S. Teo, Chairman, Singapore Business Federation
“These six winners have demonstrated exemplary performance and commitment in leading a productivity-led culture, embracing technology and innovation, engaging employees, as well as sharing the benefits of productivity growth with their staff.”
“Moving forward, we will move to a new headquarters in Senoko Road (in 2015). This will allow the company to benefit from greater economies of scale and the convenience of co-locating its central kitchens, manufacturing and laboratory facilities.” Another homegrown company that is also leading the charge is supermarket chain Sheng Siong Group. This organisation employed various user-friendly IT solutions to improve its operations over the last two years. The first was a more effective vegetable-processing system that assisted operators in trimming, packing and labelling the produce. This saved an estimated 180 hours of manual work per day. Sheng Siong also became the first supermarket chain in Singapore to computerise the purchasing and administration system at the Jurong Fishery Port. PDAs were used to key in details such as items bought, weight and price, which expedites purchase orders and invoices. These devices connected seamlessly with digital weighing machines to prevent miscommunication or mislabelling. This system saved an estimated 45 hours of manual work per day. In its distribution centre, a Pickto-Light System was implemented to improve efficiency and accuracy. Other new technologies included solar panels that provide 15 to 20% of electricity required, and electronic shelf labelling for rapid updates of prices at its stores. Commenting on the improvements, Chief Executive Officer Lim Hock Che said: “We are in the service industry. Thus, to us, productivity is about how we work together seamlessly as a team, with clear objectives and targets.”
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In BiZ With
Jasper Yu
Using Smart Technology in the Kitchen
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Mr Neo Kah Kiat, founder of Neo Group, believes in utilising the power of man and machine.
“P
roductivity doesn’t come about because a company can operate more machines. Today, it is easy to just buy machines. Productivity comes about when you combine human resources with machines to create intelligent technology,” said Mr Neo Kah Kiat, Founder, Chairman and CEO of publicly listed Neo Group Ltd. The group, which recently emerged as one of the winners at the inaugural National Productivity Awards held last October, has been relentless in its pursuit in raising productiveness. Combining the best of people and machines, Neo Group’s kitchens now has an operating capacity to dish out meals for up to 40,000 people a day, up from 12,000 just some three years ago. The rise in productivity has been achieved with minimal change in the size of the kitchen staff, which currently stands at 234. With this smart strategy, the Neo Group is able to deliver a reasonably sized batch of fried rice for 120 people within 20 minutes. In comparison, the same 20 minutes through the traditional hand-fried method can only serve 50.
Man and machines The secret to Neo Group’s success, which registered S$52.4 million in turnover for the year ended in January 2014, lies in delivering food that is consistently good in quality through a sound combination of man and machine, Mr Neo told BiZQ. The group’s strong brand standing, built up over a solid 22year track record of serving quality and fresh food, had contributed to its leading market position and sterling performance. For the 12 months ending January 2014, it served a record 2.5 million guests, compared with 2.13
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million a year earlier. Mr Neo emphasised that it is back-breaking work for the kitchen staff to deliver the volume of catered meals today if it were to rely solely on manpower. This is not to mention the complexity of its offerings: from 10-customer mini-buffets to large gatherings comprising hundreds of people, in addition to a wide variety of food options, from halal to Asian and Western cuisines. Hence, from its founding in 1992, Mr Neo paid attention to every aspect of the kitchen operations with an unwavering commitment to delivering consistently good food. The strategy was to deploy trained staff to operate rotary fryer machines to provide staples from fried rice to noodles. It also searched for manufacturers to make customised machines for deep-fried food items. As a result, Neo Group was able to deploy just one staff working on machines to equal the output from three to five workers, said Mr Neo. He added that the company also leveraged sound business strategies and processes to deliver on its productivity aspirations. For example, it set up two identical kitchens – one in the western part of the island and the other in the east – as part of
The secret to Neo Group’s success lies in delivering food that is consistently good in quality through a sound combination of man and machine.
a “shared kitchen” strategy. With standardised recipes, pre-made sauces, trained staff and real-time communications, both kitchens were able to deliver “consistent, good-quality” meals to customers in a seamless manner.
Deploying technology The self-made businessman, who single-handedly built this business after completing his national service, said technology had also been actively conceptualised and deployed in its frontline and administrative operations. Now deploying its thirdgeneration customised information technology scheme, its Buffet Catering Management System is now able to issue an internal order to its kitchens within three to five minutes upon receipt from the customer, compared with 30 minutes in the past. Other benefits of this customised system include the ability for one person to take about 25 to 30 orders a day and execute almost perfect on-site deliveries. “This is part of our philosophy of zero-error transformation,” said Mr Neo. In the 2015 agenda is the ability for on-site catering staff to be able to upload photos of the arrangements at any one event to the headquarters in real time through the use of Android (mobile) technology. This will enable catering experts at the head office to advise their on-site colleagues on whether further fine-tuning is needed on the ground, thus enabling the company to deliver on its highest levels of customer satisfaction. Mr Neo added that its meticulous approach, sound strategy, keeping its staff satisfied and ensuring a positive attitude across all departments in the organisation have enabled it to grow from strength to strength. Neo Group’s philosophy is constantly evolving to adapt to the needs of its staff and market developments, and this has certainly placed it in pole position as the No. 1 food catering group in Singapore.
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Innovations
Getting More out of Your IT Investment Amid upward pressure on business costs, companies need to identify smarter and more “disruptive” strategies to better leverage their IT infrastructure. BiZQ takes a closer look.
T
A key part of the strategy involves taking a second look at IT infrastructure investment – an important component in today’s open, digital economy and one that increasingly involves greater resources. At the recent National Productivity Month: Technology Symposium, a key takeaway from expert speakers at the event was that there are now more costeffective IT solutions which do not require significant investment and could help businesses
“Businesses are pursuing a default strategy of choosing the same mode of buying and maintaining their IT equipment without giving additional thought to more strategic alternatives.” become more efficient. Experts say there are now more innovative ways for businesses to structure their operations to create greater opportunities for product and business model innovations. One of these innovative strategies requires businesses to examine how they allocate financial resources for IT investments and how they can upgrade their equipment and better manage maintenance contracts.
SPH–Zhao Bao
he 2014 fourth quarter Singapore Business Federation-DP Information Group SME Index revealed that businesses are cautiously optimistic in their outlook for 2015 as regional economic pressures remain uncertain. Companies are constantly being challenged to revisit the way they operate amid ongoing economic restructuring. Despite these headwinds, businesses have started to plan, invest and seek growth opportunities at home and abroad.
Jason Ogden, Vice President for Asia Pacific, Curvature Singapore
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A recent study by Forrester Research Inc on 300 global business decision makers (30% were Singapore respondents) showed that there is much wastage in most businesses’ IT infrastructure. The insights from this global survey, “Challenging the Status Quo on Maintenance Contracts and Refresh Cycles to Lower Costs”, revealed two underlying misconceptions, one relating to the life cycles of network equipment and the other relating to support for such equipment. These myths are contributing to wastage in IT spending, said Jason Ogden, Vice President for Asia Pacific, Curvature Singapore. The company specialises in helping businesses manage their IT investments more efficiently. First, there is an ingrained mindset that businesses need to upgrade their networking and IT equipment every five years. The Forrester findings revealed that all 300 respondents in the survey said that 79% of their IT equipment is refreshed every three to five years. Ogden debunked this by explaining that empirical evidence shows that the useful life of most IT equipment is from seven to 10 years and the mean time between failure of such equipment is from 18 and 33 years. “This suggests that businesses are getting rid of very valuable and useful IT and networking equipment too early in their product life cycles,” he told BiZQ. The survey also showed that 85% of decision makers would retain their IT equipment if the original equipment manufacturers (OEMs) continued to provide necessary support, failing which many decision makers feel compelled to upgrade. The survey results also showed that at the time of upgrade, 80% of the respondents did not know of competitive alternatives to OEM support, compounding the confusion in the marketplace. “This shows that businesses
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are pursuing a default strategy of choosing the same mode of buying and maintaining their IT equipment without giving additional thought to more strategic alternatives,” said Ogden.
Tighter IT budgets Second, the survey showed that respondents felt that their businesses needed to have 100% Internetwork Operating System (IOS) contractual support from a manufacturer for all their networking equipment and IT infrastructure. Ogden explained that in reality, only 40% to 60% of such equipment requires such support. Making reference to Singapore, Ogden said that businesses here had similar misconceptions in addition to having to manage smaller IT budgets. According to him, the survey showed that 75% of businesses in Singapore, similar to their global counterparts, are concerned about rising costs and feel a need to curtail such expenditure. Hence, 78% of businesses in Singapore are open to options that enable them to reduce IT operational costs to free up precious corporate dollars for new technology development, as well as product and service innovation. Ogden added that these survey findings and additional marketplace insights led to four principal conclusions: Many businesses are spending disproportionate amounts of effort and resources to try and pare down IT hardware costs; Corporate decision makers are being unjustifiably influenced by IT suppliers to install state-of-the art networking equipment; In the rush to keep pace with technological advances, businesses prematurely dispose of too much IT and networking infrastructure; and Most organisations follow similar processes in buying IT equipment, signing maintenance contracts and upgrading equipment, despite knowing that
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Rethink Your IT Investment Strategy Keep what’s working. Organisations should take a pragmatic view of their infrastructure and assess which services need to be delivered and what the infrastructure can handle – especially when networking equipment and IT infrastructure can work efficiently and effectively for more than five years. Don’t pay for software updates unnecessarily, or if they are available for free. Maintenance agreements with OEMs are costly and do not always provide maintenance and upgrades for the hardware that customers are actually running. Put maintenance contracts out for competitive bid. Consider third-party options in addition to those from OEMs and their resellers. Put metrics in place. Metrics are important; companies should reward value, quality and longevity, not just resilience.
smarter and more agile ways of managing IT investment need to be implemented. Ogden said these insights reveal that business decision makers need to take a more strategic look at how they prioritise their IT investments. Companies should be able to choose to manage their networks the way they want, by adhering to a few simple strategies (See side story: “Rethink Your IT Investment Strategy”). He said that Curvature, in helping businesses overcome these challenges and offering them choices, has managed to deliver close to US$400 million (S$521.5 million) in corporate savings since 2008.
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SPH Library
Myths and realities of managing IT
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Inside SBF
SBF: Budget 2015 should Focus on Helping SMEs Business leaders discussed changing global issues at PwC-SBF roundtable. Reducing business costs, fine-tuning the foreign worker policy, helping small businesses venture overseas, and availing assistance in R&D are some areas that should be the key focus of Budget 2015, according to the Singapore Business Federation (SBF) and PricewaterhouseCoopers (PwC). At the SBF-PwC Pre2015 Budget Roundtable, the apex chamber said that recent developments such
as the fall in oil prices, the slowdown of the Chinese economy, and the changing global fiscal environment present both opportunities and challenges for Singapore companies. The roundtable was moderated by Mr Ho Meng Kit, CEO of SBF and Mr Abhijit Ghosh, Tax Markets Leader from PwC Singapore. Some of the issues and challenges raised during the discussion included rising business costs,
foreign labour restriction, Singapore’s progress on productivity and innovation, and means for supporting local businesses to expand internationally, as well as the implications of new challenges owing to changing global tax environment. Mr Ho noted: “This joint PwC-SBF roundtable is part of SBF’s efforts to seek inputs from the business community for the Singapore Budget 2015. This is an important role that SBF plays as a bridge between the business community and the government in enhancing the overall business environment.” Key points raised in the session included: Rising business costs The government should consider raising the cap for the deduction of medical costs to help employers manage the cost of hiring older workers. ● Measures to encourage older workers to rejoin the workforce should also be considered. ● Restrictions on foreign labour could be relaxed in certain circumstances, and a mechanism could be introduced to monitor transfer of skills. ● Incubation spaces should also be introduced to alleviate rental
Looking Glass/Blend Images/Corbis
●
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costs for start-ups and entrepreneurs. Fall in oil prices The decline in oil prices should benefit Singapore as a net importer of oil. Also, savings from lower business costs, as a result of the fall in oil prices, should be passed to customers and partners. ●
Productivity and innovation ● To promote more R&D in Singapore, the government should give greater recognition to the developmental aspect of projects, instead of just research activities. ● Singapore should be strategic in selecting industries to focus on, such as healthcare, which is a high-growth area. Internationalisation With more trade denominated in China’s RMB currency, direct trading should help to reduce costs, but this is still in its early stages. ● As going international could result in foreign withholding taxes for Singapore businesses, it is timely for a review of Singapore’s tax treaty network to reduce costs. ●
Global fiscal environment ● The government should address crossborder issues during treaty negotiations, so taxpayers will not have to suffer double taxation. ● Forming a platform to raise awareness on Base Erosion Profit Shifting and related implications among Singapore businesses.
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Nurturing Young Leaders for our Future Collaborative efforts via SBF-led Young Business Leaders Alliance. Start-ups and young companies have the advantages of being small and adaptable to changes in the business environment. They are usually at the frontiers of innovation, technological developments and business ideas. Hence, it is important to place greater emphasis on nurturing young business leaders and grooming globally competitive companies. According to the Global Entrepreneurship Monitor 2013 report, Singapore fared well. It ranked third behind the United States and Canada in terms of total early-stage entrepreneurship rate. Indeed, entrepreneurship is the key contributor to the vibrancy and dynamism of Singapore’s business sector.
Young Business Leaders Alliance Several industry players have banded together to nurture a pro-business environment in Singapore. One such example is the Young Business Leaders Alliance (YBLA), led by SBF, and five other ethnic chambers and organisations: Business
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of Understanding with the Jiangsu Youth Federation during the eighth Singapore–Jiangsu Corporation Council meeting last October. Meanwhile, the Alliance is supporting the establishment of the ASEAN Young Entrepreneurs Association to promote greater collaboration and opportunities among entrepreneurs in the region.
Mentorship programmes
Leaders Alumni Club, three respective Young Entrepreneurs Network at Singapore Chinese Chamber of Commerce and Industry, Singapore Malay Chamber of Commerce and Industry, Singapore Indian Chamber of Commerce and Industry, and a group of 22 individual Young Business Leaders. The initiative, launched by Minister of State for Trade and Industry Teo Ser Luck two years ago, aims to strengthen support for the community of young entrepreneurs. SBF Chief Operating Officer Victor Tay said: “SBF recognises the value of coordinating one common platform to identify promising young leaders to represent the national and business interests on the local and international front.
A ministerial dialogue between YBLA members and President Tony Tan Keng Yam.
“It is also a convergence platform for young Singapore business leaders to foster relationships, share experiences and coinnovate with one another. It is often through such sessions that entrepreneurs shorten their learning curve to avoid pitfalls.” In line with this, YBLA members have had ministerial engagements through sessions with President Tony Tan Keng Yam and Education Minister Heng Swee Keat. These allow candid exchanges on fresh ideas and new perspectives. With the objectives to facilitate overseas business opportunities, YBLA also organised business missions to Jiangsu, China and Myanmar. In addition, it signed a Memorandum
With the advent of new markets and emerging global competition, coupled with domestic constraints, today’s entrepreneurs face multifaceted challenges. Lending a helping hand to businesses, SBF has been organising its Mentorship Programme since 2010. It matches eminent business mentors with business leaders so they can seek advice. The programme is supported by distinguished industry veterans, including Mr Lim Soon Hock, Mr Poh Choon Ann and Mr Wong Fong Fui. Since then, SBF has matched more than 500 C-level executives with 30 mentors, and assisted several companies in their journey to being listed in the Singapore Exchange. Looking ahead, YBLA will collaborate on the various mentorship programmes to continue grooming the next generation of leading businesses.
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30
Inside SBF
Boosting Investment and Bilateral Trade in Japan SBF inks MOU with Japanese association. Singapore Business Federation (SBF) signed a Memorandum of Understanding (MOU) with the Japan Management Association (JMA) last October to strengthen business relations between companies from the two countries. A business delegation led by JMA President Mr Masami Nakamura met Singapore businessmen
SPH – LianHe ZaoBao
S.S. Teo, SBF Chairman
“Singapore companies can work with their Japanese counterparts to facilitate knowledge and technology sharing, while the Japanese companies would gain market knowledge in the local and ASEAN markets.”
28-031 InsideSBF.sbf.ab.indd 30
at the Singapore National Productivity Month launch. JMA represents more than 1,300 companies in Japan, which are also looking out for new opportunities in light of the upcoming ASEAN Economic Community (AEC) in 2015. With the MOU, companies can look forward to more business events, fairs and conferences held in Singapore and Japan to help firms in both countries internationalise. SBF Chairman S.S. Teo noted: “Japan’s focus on industries such as engineering, machinery and equipment sectors are complementary to Singapore’s high technology-high value manufacturing in areas such as the chemical and pharmaceutical sectors. There is thus the potential for knowledge and technology collaboration between both sides.” “Singapore companies can work with their Japanese counterparts to facilitate knowledge and technology sharing, while Japanese companies in turn would gain from the market knowledge of Singapore companies in the local and ASEAN markets”. He added: “ASEAN has a market of about
PROMOTING BUSINESSFRIENDLY GOVERNMENT AGENCIES The Maritime and Port Authority of Singapore is the most business-friendly Government agency, according to the annual Pro-Enterprise Ranking survey in 2014. It was awarded the Pro-Enterprise Panel (PEP)-Singapore Business Federation (SBF) ProEnterprise Agency Awards 2014 as it topped the annual PEP-SBF perception-based survey of business customers of regulatory agencies. The survey monitors how well Singapore's Government agencies performed in delivering regulatory functions. The other top five award recipients, in ranking order, were
Singapore Customs, Singapore Land Authority (SLA), Infocomm Development Authority of Singapore, and the National Environment Agency. The survey also tracked the most improved agencies. The Ministry of Manpower was the biggest mover, climbing 11 places from 23rd in 2012 to 12th last year. NEA came in second, moving six spots to fifth in 2014, while SLA inched one position up to third during the same period. In terms of the overall Pro-Enterprise Index of the 26 agencies surveyed, there was an increase of three points from 71.2 in 2012 to 74.2 in 2014.
650 million people with a combined GDP of more than US$2 trillion. Japanese companies can position themselves in Singapore as a strategic starting point to seek opportunities in ASEAN. “We hope to collaborate with JMA to assist its members to enhance their understanding of Singapore as a strategic hub for growing the ASEAN market, and as
a gateway to the global business community.” This February, a delegation of about 15 companies from the Japanese engineering and machinery sectors will be visiting Singapore to explore other business opportunities. SBF will support JMA in the areas of business matching, knowledge sharing of industry trends and site visits.
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Exploring Opportunities in Turkey Singapore Business Federation (SBF) and IE Singapore recently led a 20-member business delegation to Turkey in conjunction with Prime Minister Lee Hsien Loong’s official visit to the country. During his trip, Mr Lee and Turkish PM Ahmet Davutoglu signed a Joint Declaration on a Strategic Partnership to pave the way for deeper bilateral cooperation between the two countries. While negotiations on the Turkey-Singapore Free Trade Agreement are making good progress, there is a lot of potential to develop trade further. Bilateral trade between Turkey and Singapore amounted to S$1.4 billion in 2013. Turkey’s economy grew steadily at 4% in 2013, which was faster than the global growth rate of 3%. With an established manufacturing base, vast infrastructure needs, a strategic location, as well as a young and rapidlygrowing population, Turkey offers ample investment opportunities for Singapore companies. SBF Chairman S.S. Teo said: “Over the years, SBF observed a growing
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number of Singapore businesses from diverse sectors exploring opportunities in new emerging markets, and Turkey is one of them.” “SBF is pleased to be able to help our members gain early market access into Turkey. This mission aims to better prepare them for the TurkeySingapore FTA, which we hope will be concluded and come into force soon.”
Investment opportunities Meanwhile, at the 4th Turkey-Singapore Business Forum in Istanbul, Singapore’s Trade and Industry Minister Lim Hng Kiang described the upcoming free trade pact with Turkey as “progressive”
SUCCESSFUL PARTNERSHIPS Singapore SMEs such as BLUETREE TREK 2000 X MI
have made headway with Turkish distributors to sell their products in key retail stores
and “covering a wide variety of sectors”. He said that the pact would further cement bilateral ties between the two countries when it is completed. Speaking to over 100 businessmen from both countries, Mr Lim said Turkey was an emerging market for Singapore companies, and its economic growth and potential made it an attractive investment destination. For Singapore SMEs, opportunities in Turkey’s consumer electronics and medical technology sectors enjoy the greatest potential. The consumer electronics market in Turkey increased 10% to reach US$12.4 billion in 2013, while total spending in the sector was forecast to grow at a compound annual growth rate (CAGR) of 3.7% from 2014 to 2018.
Singapore SMEs such as Bluetree, Trek 2000 and XMI have in fact made headway in the market. The companies have successfully partnered Turkish distributors to sell their products in key retail stores. The Turkish medical device market is expected to grow by a CAGR of 8.5% from 2013 to 2018, as compared to a global CAGR of 6.6% from 2014 to 2019. This is driven by rising healthcare needs, including the expansion of healthcare facilities such as large city hospital complexes, as well as rising costs. Turkey currently relies heavily on imports for medical devices, while Singapore SMEs in this sector can consider Turkey as a new market for expansion.
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RF123
Singapore companies eye key growth sectors in consumer electronics and medical technologies.
8/1/15 5:54 PM
32 ADVERTORIAL
A MERICAN E XPRESS & S INGAPORE B USINESS FEDERATION: S INGAPORE B USINESS AND FINANCIAL S TRATEGY S URVEY 2014
More Companies to Focus on Productivity, Regional Growth Local businesses to manage rising business costs and other issues over next 12 months. Singapore companies are adopting a variety of strategies to manage multi-faceted domestic challenges during this period of economic restructuring. This fi nding was revealed in the recent Singapore Business and Financial Strategy Survey 2014 jointly conducted by American Express and Singapore Business Federation. The survey was aimed at uncovering the main business concerns and outlook of enterprises’ growth strategies in the next 12 months. Findings also showed that many companies considered domestic issues like manpower, escalating business costs, as well as uncertain global economic growth as key roadblocks to growth. However, most of them remained optimistic in achieving growth, although a good majority is cautious in their optimism, expecting growth to be slower in both revenue and profitability.
“Ongoing manpower issues and escalating business costs are driving Singapore enterprises to re-look their strategies moving forward. In view of the opportunities presented at ASEAN Economic Community 2015, we strongly encourage enterprises to leverage on the branding of Singapore’s enterprises to regionalise to emerging ASEAN markets. In the face of increased competition, businesses will have to band together in consortium to increase their economy of scale,” said Mr Victor Tay, Chief Operating Officer of SBF. A few noteworthy strategies that emerged from the survey were: Due to rising business costs and
240 KEY DECISION MAKERS WERE POLLED IN SEP 2014
72%
of local enterprises were concerned with currency volatility/fluctuation & interest rate environment. OTHER STRONG CONCERNS INCLUDE:
68%
Local & regional political influence/change in leadership
68%
Credit availability
More than half likely to seek new or additional financing.
21%
Seeking new or additional financing in next 12 months (once).
31%
Seeking new or additional financing in next 12 months (more than once).
032-035 Amex Advertorial.indd 32
9/1/15 9:00 AM
ADVERTORIAL 33
manpower issues, many companies were looking at increasing their operations internationally, particularly into emerging markets within the region in 2015. Most of these fi rms were planning to migrate production functions and expand sales and distribution activities into these markets. An overwhelmingly high 92% of enterprises, especially the small, mid-sized and large ones, were also planning to focus on raising productivity as a core cost management strategy. Despite slower growth projections over the next 12 months, survey respondents indicated that they still had a good appetite to invest, with IT-related and branding and marketing activities featuring high in their investment strategy.
On The Global and Domestic Front In general, key decision makers in many companies expressed their concern on the global economy,
Domestic Economy and Challenges Domestic Challenges also persist. Key Concerns: ■
Manpower costs (92%)
■
Lack of suitable manpower (88%)
■
High rental costs (82%)
A tight labour market also resulted in micro, small and mid-sized enterprises being most concerned with rising manpower costs; while the financially stronger large enterprises are more concerned with the lack of suitable manpower.
and naturally so, as many were trade-oriented, doing business in the United States, Europe, China and other markets. The survey showed that
Singapore Business and Financial Strategy Survey 2014 4 Segments of Enterprises Micro Large
17%
12%
Mid-sized
22%
240 key decision makers were polled in Sep 2014 ■ ■ ■ ■
Micro : <S$1 mil Small : S$1 - 10 mil Mid-sized : S$10 - 100 mil Large : >S$100 mil
Myriad of Industries: Small
49%
Concerns Over Domestic Economy and Challenges
■ Manufacturing ■ Wholesale & Trading ■ Transportation,
Logistics & Storage ■ Construction ■ Services
★
Lack of suitable
★ manpower (88%) ★
71%
High labour cost (92%)
96% 98% 90%
61%
82% 88% 73% 78%
High rental cost (82%)
Intense industry competition
50%
Compliance costs to comply with govt regulations Micro
Small
89% 96% 95%
86% 85% 80%
64% 73% 67% 70%
Mid-sized
Large
developments in the regional countries such as changes in political leadership were also significant causes for concern among businesses. On the domestic front, topping the list of challenges among survey respondents were escalating business expenditures on manpower, rental and compliance, as well as suitable labour supply and intense industry competition. These concerns could have arisen from factors such as recent changes to foreign workers policies and a tightening labour market with demand for high wages by locals.
Expected Financial Performance Despite facing significant challenges domestically and internationally, cautious optimism about growth surfaced among Singapore businesses from the survey. Almost three-quarters (about 72%) of the respondents expected positive revenue growth in the next 12 months, although most of p.34
032-035 Amex Advertorial.indd 33
9/1/15 9:00 AM
34 ADVERTORIAL
them expected growth to be slower, quite likely due to the challenges in play. In terms of annual profitability growth, the majority of businesses across all segments also expected positive results.
Cost Management Embracing the drive for productivity as a core strategy, many companies were specifically looking at the following to manage costs: adopting technology, calibrating capabilities, tapping into government grants, and implementing payment options like corporate cards to streamline expense management and gain better visibility in expenditure. To a lesser extent, decision makers were also looking at other cost management strategies including reducing overheads, sourcing for cheaper suppliers, outsourcing and leveraging on shared services. Nigel Fox, Vice President and General Manager (Global Corporate Payments), Nigel Fox, Vice American President and General Express, advised: Manager (Global Corporate Payments), “Companies can American Express look at alternate payment solutions, to streamline expense tracking and improve cash-flows. One such solution is using corporate cards instead of paying suppliers in cash. Corporate cards consolidate expenditure, giving better visibility, control and compliance on spending”. “With this data available, companies can negotiate with suppliers to get better rates, and
032-035 Amex Advertorial.indd 34
rewards or rebates earned can also be funneled back into future payments to give a company more cost savings.”
Business Investment Strategies Despite projecting slower growth, the survey revealed that majority of small, mid-sized and large enterprises were actually planning a healthy level of increase in investments. “Enterprises across all segments intend to spend more on IT-related investment as well as branding and marketing activities,” said Mr Fox. He explained that while different segments of companies planned to increase spending on capital expenditure, micro-enterprises appeared to favour outsourcing.
Market Expansion & Operations Not surprisingly, emerging markets have become a greater focus for Singapore enterprises, as they present exciting opportunities with a growing economy and increasing consumer buying power. The survey revealed that more than half (52%) of Singapore businesses were planning to increase their operations in emerging markets in 2015 to boost their bottom lines, a contrast to the 37% in the domestic market. Their plans include migrating of functions related to production, as well as expanding sales and distribution activities to these markets.
Financing Needs To fuel their growth plans, be it expansion into developed and emerging markets or locally, more
TOP 3 REASONS FOR NOT EMPLOYING A HEDGING STRATEGY:
1 My company does not understand much about Hedging.
2 Company’s margin is sufficient to cover any major volatility in FX markets.
3 The currencies that my company works with are relatively stable.
Survey Core Objectives ■ Current Business and
Financial Sentiments ■ Cost Management Strategies ■ Market Expansion Strategies ■ Enterprises’ Financing Needs
Respondents ■ Large enterprises ■ Mid-sized enterprises ■ Small enterprises ■ Micro enterprises
Industries Surveyed ■ Manufacturing ■ Wholesale & Trading ■ Transportation,
Logistics & Storage ■ Construction ■ Services
9/1/15 9:00 AM
ADVERTORIAL 35
Expected Profitability Change A majority of enterprises are also optimistic about profitability. Micro
Small
Expected Profitability Change in the next 12 Months
Mid-sized
81% of respondents
Large
38%
30% 26%
29%
28%
21%
Hedging Strategies
20% 18%
15% 10% 6%
10% 7% 7%
14% 13% 11%
15% 13%
12% 10%
11% 7%
7%
8% 8%
7%
0%
Loss making
Breakeven
2% to less than 5%
5% to less than 10%
10% to less 15% to less than 15% than 20%
20% or more
Cost Management Strategies Lifting productivity is a core strategy to manage rising costs. Other measures include reducing overheads, sourcing for cheaper suppliers, outsourcing, freezing headcount and moderating wages and leveraging on shared services.
Cost Management Strategies for next 12 Months 71% 92% 98% 100%
Raise productivity 36%
Reduce overhead
32% 44% 44% 48%
Look to outsource
Look for shared services
39% 47% 25% 43%
18% 18% 31% 23%
Downsizing
29% 21% 12% 28%
Reduce range of products/services
Mid-sized Large
032-035 Amex Advertorial.indd 35
29% 40% 31% 23%
Relocate facilities to lower cost countries
Micro
Close down the business
69% 63% 63%
39% 64% 69% 65%
Source for cheaper suppliers
Cut/freeze/moderate wages for staff
Small
than 50% of the companies planned to seek new or additional sources of fi nancing in 2015 to support their expansion plans. While many enterprises were still looking at traditional fi nancing sources such as banks, newer sources such as equity and peer-to-peer funding are becoming increasingly popular.
14% 21% 17% 23% 7% 4% 2% 8%
In light of increasing cross-border business operations, a majority of enterprises across all segments found currency trading important. However, companies highlighted that currency swings in an unstable geo-political environment made currency trading challenging. It is also notable that only 30% of enterprises surveyed employed a hedging strategy to manage FX exposure. Mr Fox noted: “Businesses that look to expand and grow beyond the domestic border can adopt a hedging strategy against exchange rate risks and in turn protect profit margins. Small and mid-sized enterprises could consider forward exchange contracts to reduce the risk associated with foreign exchange payments and/or receivables.”
Change Strategies to Move Forward This is an important time for Singapore enterprises to re-look and possibly re-engineer their business strategies and processes. By gaining a better understanding of the different options out there, they can also have greater ammunition to leverage on. “By keeping themselves well-tuned into the various cost reduction methods and modes of payment available to manage their costs, and by adopting them according to their needs, companies can then enjoy better infrastructure and cash flow to run their businesses more successfully”, said Mr Fox.
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9/1/15 9:00 AM
Jan•Feb•Mar 2015
36
International Markets
Rising Business Confidence In India Renewing India-Singapore relations under Prime Minister Modi’s leadership.
RF123
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THE GLOBAL ECONOMY IS EXPECTED TO GROW BY
3.1%
I
t was only some months ago that India witnessed one of its most transformative elections since independence. The unprecedented electoral turnout in the subcontinent has put Mr Narendra Modi in the country’s highest elected office – Prime Minister. With the newly-elected Modi government, India’s “medium-term growth outlook should remain strong” said Credit Suisse’s India Equity Strategist Neelkanth Mishra in his recently-released 2015 report on the country. He explained: “While there is little that the central government can do quickly to revive growth, state governments are initiating exciting economic reforms in diverse areas such as ground level infrastructure, financial inclusion and labour.” Reflecting a similar sentiment about the upside potential, JP Morgan’s Chief Asian and Emerging Market Equity Strategist, Mr Adrian Mowat, said that while economic growth is still poor, “we expect this to improve with rising business confidence and a more benign monetary environment”. According to the latest UN report, the global
LATEST UNITED NATIONS REPORT
in 2015. This is about half of India’s growth rate, which is projected at
6.0% economy is expected to grow by 3.1% in 2015. This is about half of India’s growth rate, which is projected at 6.0% over the next 12 months – the country is projected to be one of the fastest growing economies in the world. A tad more bullish in the longer term, the report stated that India is expected to deliver gross domestic product growth of 6.3% in 2016, as compared to the global economy’s 3.3% growth rate for that year.
Firing up SingaporeIndia ties Alongside these changes, trade and investment relations between India and Singapore have gotten a jump-start. In November 2014, top business leaders from India and Singapore converged
at the inaugural Singapore-India Business Symposium to discuss new opportunities that tie in with a government-led push for economic growth in India. Jointly organised by the Confederation of Indian Industry (CII), IE Singapore and the Singapore Business Federation (SBF), the forum took place amid rising optimism among Singapore companies about doing business in India. Under the new leadership of Prime Minister Modi, the Indian government has increased foreign direct investment limits and implemented reforms to make it easier to do business in the country. Several sectors have been spotlighted in the push for economic growth and job creation, with key
over the next 12 months – the country is projected to be one of the fastest growing economies in the world.
initiatives such as Make in India, 100 Smart Cities, Digital India and Clean India launched in recent months. Some Singapore companies are already taking steps to expand their presence in India. The Port of Singapore Authority, through a local subsidiary, was recently granted the concession to develop and operate the fourth container terminal in Mumbai’s Jawaharlal Nehru Port. Singapore Airlines and Tata Sons have also entered into a joint venture to establish Vistara, set to be India’s third fullservice air carrier. “Singapore serves as India’s gateway to ASEAN and East Asia. India’s domestic need for
08/01/2015 17:43
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Port infrastructure Apart from Singapore Airlines, one Singapore heavyweight that has made a push into India
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Singapore to Help Andhra Pradesh Develop New City Singapore recently announced that it will be partnering India’s Andhra Pradesh in masterplanning and developing the latter’s new capital city and surrounding region. Both parties said in an announcement in December 2014 that they will jointly implement the master plan through a “seed development” fund. Singapore will also be conducting courses and workshops on urban governance for selected Andhra Pradesh officials. Under the agreement,
a Capital Region Plan covering some 7,325 square kilometres and a Capital City Master Plan covering some 125 square kilometres of the core of the capital city will be drawn up. A detailed Seed Development Master Plan will guide the construction of various Andhra Pradesh state entities, and the first eight square kilometre section will be overseen by a Singapore master developer. The Centre for Liveable Cities and Singapore
is PSA International. Through its whollyowned subsidiary PSA Bharat Investments Pte Ltd, it recently signed a concession with Jawaharlal Nehru Port Trust (JNPT) to develop the JN Port’s fourth container terminal on a design, build, operate, finance and transfer basis in Mumbai for a period of 30 years. PSA said that this investment in India’s largest and premier container gateway port is an important opportunity, not only to cater to the increasing demand for container handling capacity, but also to facilitate maritime trade in India. Under this deal, Phase 1 of Bharat Mumbai Container Terminals is expected to commence operations in early 2018. It will have three container berths
and a total quay length of one kilometre, equipped with 12 quay cranes for a designed capacity of 2.4 million TEUs (twentyfoot equivalent unit). The second phase will double the figures to six berths, two kilometres of quay, 24 cranes and an annual capacity of 4.8 million TEUs.
Demand for flavours, fragrances It is not only Singapore companies that are renewing their views on India; multinationals that have long operated in Singapore are also taking the plunge into India. One such company is flavours and fragrances company Takasago International. Scheduled to open a major plant in Poonamallee, Tamil Nadu in the first quarter of 2015, the
Cooperation Enterprise will also help Andhra Pradesh develop its institutional capacity in urban governance and related areas through training programmes for its officials responsible for the development of the capital city.
company sees its investment in India as a way to expedite production and delivery, and as a decisive and direct response to its customers’ growing needs and demands. Mr Rajendra P. Ghogale, Managing Director of Takasago International India, told BiZQ: “The market for flavours and fragrances is dynamic and consumers are becoming demanding and sophisticated. Takasago is able to use its hallmarks of innovation and creativity to make a difference in this market.” Demand for flavours and fragrances is on the rise in India; analysts expect it to be one of the fastest growing markets in Asia. Major research group IAL Consultants has forecast that the Indian market for flavours will reach US$421 million in 2015, up from US$256 million in 2010.
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SPH – The Business Times
infrastructure development offers opportunities for Singapore companies, particularly in the urban solutions space,” said SBF Vice Chairman Gautam Banerjee. “Prime Minister Modi’s call for the development of smart cities across India offers Singapore companies such as Surbana, SembCorp and Hyflux a chance to offer an integrated suite of solutions which can help with the development of these smart cities. The projects also offer downstream opportunities for Singapore SMEs in various sectors like the skills development and building and construction sectors.” Mr Ajay Shriram, President of CII, added: “With Singapore’s leadership in the global financial sector, expertise in infrastructure and urban development, a strong diasporic Indian presence and over 6,000 Indian companies in the country, Singapore is a natural partner for India.” The event was attended by Mr S. Iswaran, Minister, Prime Minister’s Office, Second Minister for Home Affairs and Second Minister for Trade and Industry, as well as key Singapore business leaders such as Mr Piyush Gupta, CEO, DBS Group Holdings and DBS Bank, Dr Robert Yap, Chairman and CEO, YCH Group, and Mr Jonathan Yap, Assistant Group CEO, Overseas Funds and CEO India, Ascendas Group.
08/01/2015 17:43
Jan•Feb•Mar 2015
38
SME Resources
DBS app: Helping Start-ups Across Asia
SPH - The Straits Times
Local bank launched BusinessClass mobile app aimed at SMEs.
Companies can now seek business advice and opportunities across Asia with the DBS BusinessClass, a mobile app for start-ups and SMEs that are looking for business advice and opportunities across Asia. This programme allows entrepreneurs to consult and connect with more than 20 industry experts, investors and fellow business owners. The panel of advisors manning the DBS BusinessClass forums and live-chat system include respected experts from various industries, such as Mr Lim Kuo-Yi, Monk’s Hill Partner; Mr James Tan, Managing Partner of QuestVC; Mr Tan Choon Seng, Chairman of the Trustcott Group and Angel Investor; and Mr Dennis Goh, Founder of Singapore food site Hungrygowhere.com. More business experts are expected to join the panel in the next few months. On top of attending exclusive networking
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and require a lot of guidance from successful entrepreneurs and mentors, who can help to shorten their learning curve by sharing their personal experiences. It can also help them find business partners, investors and opportunities to help them grow their businesses further. events, members can access news and articles on topics pertinent to starting and running their businesses. Mr Lim Chu Chong, Head of SME Banking in DBS Bank, said: “We found that fast-growing SMEs need help connecting with investors and experts when they are scaling up their business. By building a mobile platform that allows SMEs to access business advice, insights and exclusive networking opportunities, we hope to help SME owners build social capital and sharpen their competitive edge.” Dr Alex Lin, Head of Infocomm Investments Pte Ltd and a DBS BusinessClass advisor, added: “Most of our local start-ups lack the necessary experience
Building on relationships Entrepreneurs can reach out to any advisor by sending them a chat message on the app, said DBS. The bank’s relationship managers will also answer banking questions on-the-go through
the app’s functions. Community managers will also curate, select and tag relevant news for DBS BusinessClass members every day. Useful SME tools can also be found in the app. Such tools include a loan calculator that calculates monthly instalments and interest paid for a variety of business loans, and a working capital tool that allows companies to calculate their cashconversion cycles. Singapore is the first country where DBS BusinessClass is being rolled out. Plans are in place for the programme and mobile app to be introduced regionally to the organisation’s key markets of China, India, Indonesia, Hong Kong and Taiwan. This regional expansion will allow local entrepreneurs to connect with others, and even access market knowledge on other countries in the region, and for all to benefit from the programme’s resources.
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The app can be downloaded for free on iOS and Google Play.
NETWORKING OPPORTUNITIES DBS BusinessClass members can look forward to exclusive events such as roundtables and seminars, where investors, entrepreneurs and industry experts will come together to discuss ways to deal with the challenges faced by startups and SMEs. Key learnings at each
roundtable will be distilled and published on the DBS BusinessClass mobile app. Since March, DBS has organised more than 10 events to help SMEs make sense of matters pertinent to running a business, including funding, cashflow management, financial modelling and fund-raising.
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SME Resources
SBF Business Missions in 2015 In the coming year, the Singapore Business Federation will be convening several business missions to countries in Asean, China and North Asia, as well as some in the Middle East, Africa, Central Asia, Oceania, the Americas and Europe. The Federation provides services such as business matching, logistics, advertising and more. If you’re looking to venture overseas, we invite you to join us and explore new growth opportunities!
Mar 20 BDO LLP
latest missions www.sbf.org.sg/ public/eventsvc/ bizmissions.jsp
Upcoming Missions Gujarat, India Jan 8-13
Iran
Nigeria & Niger
Jan 31-Feb 5
Apr 11-18
Dresden, Berlin & Madrid
Azerbaijan & Kazakhstan
Feb 1-7
Apr 11-17
United States
Kuwait & Basrah, Iraq
Mar 21-29
Apr 12-16
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SEA Asia 2015 Apr 21-23
SME Workshops
A listing of the
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Upcoming Events
Singapore Business Federation (SBF) and BDO are organising a Family Business Workshop to help business leaders understand and realise that family businesses are important drivers among small and medium enterprises. Key concerns faced by many family-run businesses are sustainability and finding the balance between maintaining family ties and business growth. The workshop is designed for C-suite executives, heads of businesses/divisions, and board members. The trainer is Roger Loo, Director of Marketing and Strategic Advisory at BDO. He is also BDO’s Practicing Management Consultant and an Accredited Family Business Advisor.
SEA Asia is the platform for the maritime industry to do business, network, and unveil new products and services in the Asia-Pacific region. As the area’s leading shipping and maritime event, it is held in conjunction with the Singapore Maritime Week. This conference and exhibition is expected to attract more than 14,000 participants, including chief executive officers, presidents, decisionmakers and maritime professionals from diverse sectors of the global shipping industry. It will feature debates and thought-leadership sessions on all vital issues currently influencing the maritime markets.
LETTERS FROM OUR READERS If you have any views, comments or suggestions about BiZQ or other SBF events, we want to hear from you. Please send your contributions to: The Editor, BiZQ Magazine, Singapore Business Federation, 10 Hoe Chiang Road, #22-01 Keppel Towers, Singapore 089315. Or e-mail us at corpcomm@sbf.org.sg.
08/01/2015 17:03
Jan•Feb•Mar 2015
40
In Style
Synergy through Golf
Andersen Ross/Blend Images/Corbis; RF123
Golf as a tool to build teamwork in organisations.
What is a company’s most valuable asset? Motivated and engaged employees. So how can a corporation empower and motivate its employees? By introducing team building activities, of course! With a fast-changing work environment and more employees working remotely, such exercises can provide multiple benefits to both employees and businesses. Consider a game of golf for your next team building session. The key to ensuring such activities benefit employees is to focus on the objective of a game or event. Consider this checklist: ● Aim of team building exercise: Having a clear objective makes it much easier to measure the
040 Instyle.sbf.indd 40
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outcome of your event. ● Personality check: Create activities that cater to both a person’s strengths and weaknesses. ● Follow up on feedback: Talk to the team immediately afterwards. Make sure your questions are related to the goals and objectives set at the start, and then do a follow up afterwards.
Interactive golf Many team building activities do not necessarily require prior experience. Knowledgeable organisers can help you make the most of it! With proper planning, an activity such as golf can become an interactive, entertaining
game that promotes teamwork through a range of collaborative activities. Golf, after all, is a sport that requires different sets of skills to propel a ball from the tee to the hole, again and again. As a team building tool, players will naturally bring their individual strengths and weaknesses to the game. The key is for members to understand that, when compared to an individual working alone, tteamwork can be a highly effective tool. To optimise the results of the game, take these simple steps: ● Divide your “players” into teams comprising people with varied levels of golf experience. ● Create special rules that
allow each player to take strokes even though only the best shots count. ● End the golf outing with some social time. Over drinks, the team could share stories of challenges met and how they were conquered.
Planning the rules Teammates can work together to plan the theme and concept of the golf rounds, as well as the rules of completing a series of holes. With this in mind, teams will learn to rely on each other and may even sharpen their skills as the round progresses. This approach encourages the team to build trust through play. As each hole is completed, the team moves on to the next challenge.
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