ISSUE #66 – Mr Ho Meng Kit, CEO of Singapore Business Federation (pictured below) shares with us about the current business sentiment in Singapore, the outlook on ASEAN, and why businesses are venturing abroad from Singapore.
Could you tell us about the role of the Singapore Business Federation?
Established on 1 April 2002, the Singapore Business Federation (SBF) is the apex business chamber championing the interests of the Singapore business community. With 25,800 member companies, SBF’s focus is to sense, prioritise, analyse and help resolve burning issues facing significant segments of businesses. All Singapore-registered companies with a share capital of S$0.5 million and above are members of SBF.
As the bridge between the Singapore business community and the Government, SBF advocates firmly on behalf of businesses and our workforce, as well as at international settings, to promote the growth and vibrancy of our business community, contributing to the prosperity of Singapore.
The Federation works closely with key local and foreign business chambers, and has inaugurated the Trade Associations & Chambers (TAC) Alliance to be a better enabler for the business community.
Do you see more Singapore businesses going international?
According to the SBF National Business Survey 2017/2018, more Singapore companies have expanded their international footprint in 2017. 83% of businesses are currently engaged in overseas business activities, up from 56% in 2016. ASEAN is the key focus region, with 71% of local businesses operating in at least one ASEAN country. Half (50%) of the companies surveyed are also keen to expand further into ASEAN, especially those that are already doing business in the region.
Some push factors which contribute to Singapore businesses’ increased internationalisation include limited domestic size, rising business costs and manpower constraints and increased demand for products and services.
Also, with e-commerce platforms, internationalisation is now more accessible to smaller companies. Overseas expansion is no longer limited to physical expansion – smaller players can market products and services overseas without brick-and-mortar shops or end-to-end infrastructure.
We encourage local companies to venture overseas for growth, especially in ASEAN, which is expected to enjoy good growth. Businesses should also expand the use of digital technology to help them reach out to these overseas markets more effectively.
Consumption patterns in this region will shift in tandem with a rising middle class, growing affluence and increasing e-commerce penetration. Companies which are able to respond to these trends will stand to benefit in the longer term.
What are the benefits for a business to have base operations in Singapore?
Businesses come to Singapore for a variety of reasons, which includes a stable and predictable business environment, Singapore’s position within the growth region in ASEAN and Asia, as well as its connectivity to the region, respect for intellectual capital, good regulatory framework and the ease of doing business. Singapore has time and again been ranked among the world’s easiest places to do business by the World Bank.
In addition, Singapore is attractive as it also offers a highly competitive, skilled workforce in a business-friendly environment. Singapore also adopts English as its language of business. Its strategic location at the crossroads of the East and West also contributes to its key role as a bridge to the opportunities that on both sides of the globe.
Could you share with us the business sentiment in the next two quarters of the year in Singapore?
SBF partners DP Information Group to measure the business sentiment of SMEs on a quarterly basis.
The latest SBF-DP SME Index for April to September 2018 increased from 51.2 in the previous quarter to 51.8, indicating growing optimism among SMEs. The Index is based on a survey of more than 3,600 SMEs during January and February 2018.
The Index also found that SMEs expect the next two quarters to deliver their strongest sales and profit results since 2015.
It is good to see that the sentiment of our smaller companies continue to improve broadly. The positive sentiments of the SME Index will be reinforced by a facilitative set of Budget 2018 measures announced in February to foster a more vibrant and innovative economy.
In a recent poll of our members, 48% of respondents indicated that the Budget was useful in helping their companies deepen capabilities and transform. Notwithstanding the optimism amongst our SMEs and a supportive domestic policy environment, we are mindful that recent trade disputes between US and China could affect our growth path. This is a risk which we will need to monitor carefully.
What is the outlook on the ASEAN region?
ASEAN has grown between 4.5% and 6.1% annually since 2012, with growth expected to average 5.2% till 2020. By 2020, the region’s economy is estimated to reach US$3 trillion with its population exceeding 600 million. By 2030, ASEAN is projected to become the world’s fourth largest single market after China, US and the EU.
ASEAN’s strong growth has been facilitated by integration and liberalisation under the ASEAN Economic Community (AEC). A more integrated and globally connected ASEAN has helped the region continually attract strong investment inflows, and today, ASEAN is the sixth largest economy in the world. With a young population, growing middle class and increasing urbanisation, ASEAN’s growth potential is evident. The region’s continued growth is closely linked with realising the AEC’s vision of becoming an integrated single market.
Interview with Mr Ho Meng Kit, CEO, Singapore Business Federation
Published in FOCUS Magazine — Issue #2 2018 “Connecting to the Region”