Mr Lim Hng Kiang at the Singapore International 100 Ranking Ceremony and Networking Cocktail

KEYNOTE ADDRESS BY MINISTER LIM HNG KIANG, MINISTER FOR TRADE & INDUSTRY, AT THE SINGAPORE INTERNATIONAL 100 RANKING PRESENTATION CEREMONY AND NETWORKING COCKTAIL ON TUESDAY, 4 NOVEMBER 2008, 1825HRS AT THE ASIAN CIVILISATIONS MUSEUM

Distinguished Guests,

Ladies and Gentlemen,

Good evening.

I am pleased to join you this evening for the Singapore International 100 (SI 100) Ranking ceremony.

It is heartening to note that our companies have made excellent progress in their ventures abroad. Let me first congratulate all the SI 100 companies for their exceptional performance overseas. In particular, I am happy to know that our SMEs are also making great strides in penetrating overseas markets. These companies serve as concrete examples of Singapore’s global competitiveness, and also as positive encouragement to other Singapore companies seeking to succeed abroad.

No Longer Business-As-Usual

The world economy is undergoing a very challenging phase. Chaos in the global financial system has seriously impacted the availability of credit and shaken investor confidence. Even as financial markets stabilise, broader economic recovery will not be immediate. This financial trauma and its after-effects will translate into a global economic slowdown for several quarters.

As an open economy, Singapore has not been spared the adverse effects of the current financial crisis. Slowing demand, particularly in the United States where consumer spending is declining and job losses deepening, has taken a toll on Singapore’s exports and weakened the growth in our manufacturing and services sectors. This unfavourable situation will likely persist into 2009.

Opportunity in the Midst of Crisis

Despite the pervasive gloom in the global economy, Singapore remains well-positioned to weather the current challenges and emerge stronger than before. We must take advantage of this period to strengthen our domestic competitiveness and to uncover pockets of opportunity in the midst of crisis.

Many of our internationalising companies remain financially sound and are in a strong position to capitalise on emerging opportunities. Singapore companies should strive to advance their global footprint in the emerging economies during the upcoming downturn, and prepare themselves to become even more competitive when economic recovery eventually takes root. In particular, Singapore companies can consider three growth strategies in the current economic climate: market diversification, mergers and acquisitions, and banding together to venture overseas.

Firstly, diversification. In such turbulent times, it is even more imperative for Singapore companies to further diversify their customer base and generate new demand beyond the traditional markets. While economic growth in the developed countries will be slow or stagnant in the next year, some of the emerging markets continue to hold good growth potential.

Asia will remain a bright spot. Domestic demand in Asia is holding up relatively well. Having emerged stronger from the difficulties of the Asian Financial Crisis a decade ago, continued growth in Asia, albeit at a more moderate pace, will cushion the world economy next year. Even with the current economic downturn, the IMF expects emerging economies, led by China, to grow by 6.9% in 2008 and a healthy 6.1% in 2009[1].

Singapore companies are already strongly plugged into the big Asian economies. In fact, India was the market that experienced the strongest growth for the SI 100 companies, generating more than 150% increase in turnover in 2007. China and Southeast Asia also saw high double-digit growth rates of 59% and 37% respectively.

In addition, Singapore companies can also look to places such as Latin America and the Middle East. IE Singapore’s efforts to strengthen Singapore’s business linkages with Latin America and Russia, in particular, have generated great interest among our companies in recent years, based on the successful ventures and the large number of business opportunities generated from flagship events such as the Russia-Singapore Business Forum and the Latin Asia Business Forum. There is also significant room for our companies to grow in the Middle East and Africa, as these regions each account for less than 2% of the total overseas revenue generated by the SI 100 companies last year.

A second growth strategy that Singapore companies can focus on is mergers and acquisitions (M&A). A KPMG study on M&A activities found that companies with sound M&A strategies and execution outperformed their competitors even in a difficult environment[2]. Companies which are financially healthy should take advantage of the current downturn to acquire physical or technological assets that would enhance their core capabilities and international competitiveness. This would put them in good stead when the global economy turns around.

CWT, a logistics company offering comprehensive solutions to different industrial sectors, is an example of a Singapore company with an eye on the future despite the challenging business environment. In September this year, it acquired a 100% stake in a Belgium logistics company which owns warehouses in one of the busiest container terminals in Europe. Going forward, this acquisition will enable CWT to establish a firm foothold in Europe, placing it in good position to capture the significant commodity flows between Asia and Europe[3].

The third growth strategy which companies should consider is the formation of consortiums when pursuing overseas projects. By banding together, Singapore companies of different sizes and industries can combine resources, complement each other’s product offerings, achieve economies of scale, reduce time-to-market and pursue bigger projects. In a time when resources are tight and risks are high, banding together will maximise our companies’ chances of success overseas.

To promote such partnerships, IE Singapore has in place the International Partners, or iPartners Programme, which facilitates and supports the formation and development of synergistic, international alliances between Singapore-based companies. iPartners has supported more than 30 consortiums which will generate over S$3 billion of projected overseas sales over the next three years.

Conclusion

I would like to encourage Singapore companies to continue their search for new market opportunities in the coming year.Singapore will be stepping up efforts to help companies in this regard. The theme for tonight’s event is “Fortune Favours the Bold”, and this will ring even more true in the challenging times ahead.

On this note, I wish you all a pleasant evening and every success in your future internationalisation efforts. Congratulations once again to all the SI 100 recipients.

Thank You.

 
[1]IMF press release, 8 Oct 2008, ‘IMF Sees Major Slowdown for Global Economy, Calls for Strong and Coordinated Policies to Support a Turnaround” http://www.imf.org/external/np/sec/pr/2008/pr08236.htm

[2]KPMG News Release, 2 June 2003, Beating the Bears: How value Can Be Enhanced - Latest KPMG Transaction Services survey finds more successful deals.

[3]CWT Limited, Announcement, 19 Sept 2008, CWT expands its commodity logistics business with a strong foothold in Europe