The Hindu Business Line : Singapore’s winning mantra of ‘connectivity and reliability’

‘Connectivity and reliability’ is the mantra Singapore is using to attract more investment and promote the country as a hub to grow international businesses. It acknowledges that as a small country with few natural resources, strategic business alliances with countries that matter are vital. And India and China seem to be the flavour of the moment, says RASHEEDA BHAGAT.

Clean, green, and a booming economy… A view of Singapore.

Even though the trade between India and Singapore has doubled in the last three years, hitting a high of S$23.9 billion in 2007, against S$11.8 billion in 2004, up almost 20 per cent over 2006, there is widespread belief in the various layers of Singapore’s planning and administration that this figure could be much higher.

Making a presentation to visiting Indian journalists on “Singapore’s Mission and Vision” vis-À-vis its trading strategies across the world, Mr Chua Taik Him, Deputy CEO of International Enterprises Singapore, said even though “India is Singapore’s fastest growing major trade partner”, there was scope for much more.

India is 11th on the list of Singapore’s trading partners and, not surprisingly, comparison is made with China to tell us that there is great scope for India to be among Singapore’s top five trading partners. While neighbour Malaysia was its largest trading partner in 2007, at S$109.9 billion, followed by the EU, at S$97.5 billion, China stood third, at S$ 91.6 billion. The US came next at S$ 88.1 billion, followed by Indonesia (S$66.4 billion) and Japan (S$54.1 billion).

The mood in Singapore on trade and business opportunities with India is at its most upbeat; no opportunity is spared to declare that a “small country” like Singapore with no natural resources, cannot survive without striking strategic business alliances with countries that matter. And there is little doubt that India and China are the flavour of the moment.

Mr Chua explained how FDI from Singapore into India has grown “significantly” and Singapore was the “second largest investor in India in 2007 with cumulative FDI inflows of US$1456 million. A significant portion of Singapore’s investments into India is routed through Mauritius, given the favourable India-Mauritius Tax Treaty; this includes Singtel’s investment in Bharti Airtel and also Temasek’s recent investments,” he said.

The top trading products between Singapore and India include petroleum products, IT, telecom and civil engineering equipment, precious stones and jewellery, aluminium, copper, electronic valves and hydro-carbons.

Even though Singapore cannot offer cheap land or labour to Indian companies, about 3,000 Indian companies are registered there — against only 2005 Chinese companies — because of excellent connectivity, quality infrastructure, a qualified talent pool, transparency in operations and quick decision-making.

Connectivity, reliability mantra

Clearly, ‘connectivity and reliability’ is the mantra that Singapore is using to attract more investment and promote the country as a hub to grow international businesses. “We encourage international companies to focus on regional markets from Singapore,” Mr Chua said, adding that IE Singapore’s objective is to promote Singapore as a vibrant and globally competitive business hub from where international businesses could launch their global operations. “About 150 Chinese companies based in Singapore have been servicing their European customers from here over the last three years; they had come here to raise capital but have stayed back.”

Urging Indian businesses to “close the gap” that existed between Singapore’s trade with China and India, he said: “Use us as the gateway to grow your trade with the world.” He also underlined the need for India’s leveraging of Singapore to grow its business times with China.

Wondering if even “0.01 of your population can speak Chinese,” Mr Chua said that 77 per cent of Singapore’s population was of Chinese origin and could speak the language fluently and, hence, Singapore could serve Indian companies looking for a foothold in China.

Also, for a country with a land area of just 700 sq km, the number of MNCs in Singapore per sq km must surely be among the highest in the world. “We believe that more and more business linkages between India and China could go through Singapore because of the connectivity and openness and ease of operations. We welcome foreign investments because these investors bring not only capital but also technological and other know-how; so if these companies can give us the best technology, why should we not welcome them?”

Infrastructure

Giving an example of how this philosophy could help India, Mr Chua said that India’s infrastructural requirement was immense and “as this is created, you don’t have to go back to old-generation infrastructure… you can go in for wireless technology, clean energy, etc, as you build your infrastructure.

But for that you need the right kind of partner and Singapore has constantly absorbed the best in these areas because we have nothing of our own! We will help you not only build a port or an airport but also provide port and airport management services; that is our strength.” IE will be opening its fourth office in India, at Kolkata, soon, he added.

Two Indian companies that we visited and who shared their Singapore stories with us were i-flex solutions and Bilcare Research, the latter an integrated service provider for pharma companies, mainly in packaging solutions.

Success stories

Mr A. Srinivasan, COO, i-flex solutions Pvt Ltd, the Singapore subsidiary of i-flex solutions, explained that they started operations in Singapore in 2000 with less than 10 people; “the growth momentum has been such that we are now 600 plus employees in Singapore.”

Vouching for the “excellent cooperation and support” his team had got from the Singapore government and the Economic Development Board, he said that being at the heart of the Asia-Pacific region and having a good university education system, Singapore met their needs for a talented work force.

Singapore universities offer a good mix of nationalities that we can hire from.” The result is a local team “with a mix of nationalities; we currently have people of seven nationalities at our Singapore operations and 30 per cent of our workforce in Singapore is locally hired.”

Apart from Core Banking and IT Services, Mr Srinivasan said, Islamic Banking is a key growth area for i-flex in Asia Pacific, where the adoption of Islamic banking is highest in Malaysia. Singapore has recently entered the Islamic banking space with Islamic Bank of Asia.

i-flex’s FLEXCUBE for Islamic banking has customers in Malaysia and Singapore in Asia Pacific and Bahrain, Dubai and Saudi Arabia in West Asia. Islamic banking is based on shariah principles or code of conduct, the major principle of which prohibits charging of interest.

With more and more Muslim customers of banks asking for the product, Islamic banking is seeing massive growth and being adopted even in non-Muslim countries such as United Kingdom.

As a result of this, the demand for shariah-compliant Islamic banking software is on the rise. Comprehensive Islamic banking software requires to be built in accordance with shariah principles and in consultation with Islamic banking scholars, he added.

Bilcare Research, with headquarters in Pune, has established a spanking facility in Singapore and has invested, over the last three years, S$60 million here. Mr R. Venkit, Director, said the company operated state of the art manufacturing and research h facilities in India, Singapore, the US and the UK, and partnered with global pharma majors to address key packaging concerns on counterfeit, cost and convenience, apart from a better shelf life for drugs. The company also provides complete packages to many of its clients for clinical research trials.

The benefits of operating from Singapore include “choice of shipping lines and routes on a daily basis, the best of infrastructure, excellent banking and other facilities required for the smooth running of any business facility,” he added.

From third to first world

Singapore today enjoys a per capita income of US$33,919 and observing its infrastructure — be it the delightful-to-travel-from Changi Airport, its greenery, its clean air, the state of its roads or the comfort of its public transport — it is easy to forget that barely in 1965, when it became independent from Malaysia, it was known as a “third world country”, its per capita was less than US$500.

The island-state’s transition from a low-labour participation and high unemployment (10 per cent in 1965) country with a poorly educated labour force to a developed economy with a value-add manufacturing base having diversified export markets is a story of meticulous planning and impeccable delivery mechanism.

Last year it edged out Hong Kong as the world’s second most competitive economy, according to the World Competitiveness Yearbook 2007, and currently ranks only behind the US on this count. It came out top in a World Bank survey last year on the criteria “ease of doing business”.

It was interesting to see that, far from resting on its laurels, the think-tank of Singapore is all the time chanting this mantra: “Because we are such a small economy, constituting a mere 0.3 per cent of the global economy, we cannot afford to be insular.

We are strategically located and feel we can serve both Indian and Chinese companies in the coming years as they grow into global economic giants! So, make us your business partners.”

Response may be sent to rasheeda@thehindu.co.in

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