Mr Teo Ser Luck at the Opening Ceremony of Café Asia 2013 and International Coffee & Tea Industry

KEYNOTE ADDRESS BY MR TEO SER LUCK, MINISTER OF STATE FOR TRADE AND INDUSTRY, AT THE OPENING CEREMONY OF CAFÉ ASIA 2013 AND INTERNATIONAL COFFEE & TEA INDUSTRY ON 14 MARCH 2013, AT 10:25AM AT HALL D, SANDS EXPO & CONVENTION CENTER, MARINA BAY SANDS

Mr Danny Shin, CEO, Exporum Inc.

Mr Victor Mah, President, ASEAN Coffee Federation & Singapore Coffee Association

Mr. Edward Liu, Managing Director of Conference and Exhibition Management Services Pte Ltd

Distinguished Guests, Ladies and Gentlemen.

Introduction

Good morning. I am glad to see all of you here this morning. This is not my first time trying to support this industry. Because when you normally come for this event, you get free coffee and what not. I just half of it just now. I will try to complete the other half after the event. In the process of growing up, I think in the past when I was younger, I didn’t take that much coffee but as I grew older, it seems that I can’t do without it. From kopitiam coffeeshops to cafes as well and I think it was very (?) that we go to coffeeshops and socialise over coffee. Today it’s still about the same. And I do have plans as an MP of my constituency to bring little cafe corners into the heartlands to appeal to our HDB residents as many of them have already adopted this lifestyle. They actually go to coffeeshops to get their daily fix. I was thinking why not bring this daily fix of coffee nearer to them and to make it so much more accessible. Well it’s great to see such an event. I am happy to be here to open it. I also wanted encourage this industry to really look at  Singapore as a heart, not only for trading of the coffee community but really as means to have a lifestyle with regards to coffee.

Global coffee & tea and café industry

The culture of coffee and tea consumption is well-entrenched in the everyday lives of consumers in almost every part of the world. I congratulate the organisers for launching Café Asia 2013, which promises to serve as a platform to further the growth and development of the coffee trade and industry in Singapore and the ASEAN countries.

Co-held with the inaugural Café Asia 2013 is the International Coffee & Tea Industry 2013, which I have been told serves as a springboard for local and international industry players to tap into Asia’s promising market potential. The concurrent Asia Coffee Summit 2013, features some of the international coffee connoisseurs and experts, brings together the many different businesses and stakeholders within the booming coffee industry in the Asia Pacific region.

With more than 15 Singapore-based companies participating in Café Asia, this event is also an important platform to help Singapore’s companies and home-grown brands market to promote their products and services to regional buyers.

Tapping into global trends

The Singapore food and beverages industry includes some 6,453 establishments. In 2011, this industry accounted for S$7.1 billion in revenue, of which, a significant portion about 20 per cent (S$1.4 billion) is represented by the cafes and bars segment. So it is not a small industry. It is relatively large comprising of many players. Some are Small Medium Enterprises, many are micro enterprises. But they all contribute a part to this industry continuing to achieve as well.

Over the past few years, the industry has grown due to Singapore’s connectivity to the region, rising incomes and changing consumption patterns. The well-developed F&B scene in Singapore and cosmopolitan market also means that Singapore companies are well-positioned to tap into the growing global demand for new, quality food products and concepts. So maybe you just don’t go to the famous chains, you would also go to the specialty coffee joints which have very unique offerings. And I think this concept is very exciting. This suits the lifestyle of the young.

Using the café and bars segment as an example, between 2007 and 2011, the compound annual growth rate (CAGR) of the global café and bars segment grew steadily at about 1.6 per cent to reach US$489.6 billion. As the second largest market for café and bars, behind Western Europe, the Asia Pacific region presents a strong growth story, achieving a strong CAGR of 5 per cent between 2007 and 2011. As with these positive developments, the significance of this region will continue to grow because we have a growth of the middle class. People are becoming more affluent, income levels go up.  There is room for a quality lifestyle. Coffee is very much a part of it  

Staying Competitive

The Government had been working closely with companies in this sector to evaluate their business processes and improve staff performance through service capabilities development and skills upgrading. As you know, we are discussing the Budget. This Budget is to strengthen our local business sector. It is really important as we are facing economic uncertainty globally and at the same time we are also facing certain segments with growth opportunities. We try to keep our balance while we are also experiencing a labour crunch which is seen through all businesses throughout. There are some difficulties for some of the Small Medium Enterprises. But nonetheless, there are many schemes that to help the SMEs that take a proactive approach to take a step forward to review the processes and that includes the F & B industry. We want to work together with all these companies, not just to improve productivity but let me just say that productivity drives is one way to strengthen companies. Some of these schemes help companies to improve their output and improving output does not only mean you work your workers harder. There are companies that are from labour intensive industries, for example the F & B industry. When there is a gap that arises when improving productivity, there are schemes to help. Sometimes these schemes not only help to recover the cost of operations, it gives an incentive.

For example, companies can tap on the Productivity and Innovation Credit (PIC) to enjoy 400% tax deductions or 60% cash payout when they invest in innovation or productivity improvements. I think innovation can come in small ways. I was introduced to this product that brews tea in an original way.  Companies with ideas and innovative ways only not improves not just productivity but also products and services. There are government schemes and programmes to help you to do the research & development.  On top of that, DPM Tharman announced at Budget this year that businesses which invest in qualifying activities under the PIC will receive a PIC Bonus of up to $15,000 over three years to improve cash flow into companies. . That means when you actually invest in a company to do innovative development or to buy equipment to improve productivity, there is the $5,000 Innovation & Capability Voucher (ICV) to not only recover costs, you can also get cashflow from the government. That helps the smaller, cash-strapped companies in some ways. The government is looking at different industries to work with. Especially those with potential for productivity improvement. Or with potential to strengthen the industries, or the potential to grow and position Singapore as a global or international or regional hub. The Coffee & Tea Industry is one big sector that cannot be ignored. So I hope the Associations & the government can work together to explore ways to improve the entire industry as a whole.   

In addition, the Government has also put in place the Collaborative Industry Projects (CIP) to encourage industry collaboration from all businesses in the sector for productivity improvements. We  will  work  with  industry  players  and  partners  such  as  the Trade Association  and  Chambers  (TACs),  to  identify  sector-wide  productivity  issues faced by companies. Consortia comprising solution providers and users will be formed to come up with initiatives with deployable and scalable solutions that can be adopted to improve productivity within the sector. The Government will co-fund the development and adoption costs of these solutions. We strongly encourage F&B companies to tap this to address common productivity challenges they face.

In the time to come, the government will be rolling out schemes to help many small business in your sector. Many of your members will benefit from these schemes. It is important to be watchful for those schemes and to work closely with our officers on the ground from the any   of   the Enterprise Development Centres (EDCs) or in future the SME Centres for advice. These integrated one-stop centres will provide SMEs from any sector, access  and advice  on  a  wide  range  of  assistance  programmes  from relevant  government  agencies  and  private-sector  organisations.  Such  centres will  also  extend  outreach  to  more  businesses,  providing  more  concerted government help and easier access to the schemes. So I understand that many of the challenges businesses face are vast and diverse. Several of the policies we roll out are not one size fits all. Policies that we roll out will be customised to the different sectors. It is going to be a flexible and open approach in terms of applying some of the schemes and incentives to this industry, to help this industry to develop. And it is important to respect the domain knowledge of the industry and its players so that the schemes will be supportive from bottom up and not top down. My colleagues at SPRING Singapore and several of us from the government would be more than happy to advise on the schemes or to engage you and to work together on practical solutions.

Conclusion

At this juncture, I would like to commend the trade associations such as the Singapore Coffee Association, the Singapore Manufacturers Federation and the ASEAN Coffee Federation for organising Café Asia 2013 and International Coffee & Tea Industry 2013. Singapore has an established reputation of quality and service and the potential of becoming an even more important hub serving the Asian coffee and tea trades. We hope that the associations and businesses will continue to grow their base here by initiating, innovating and responding to the demands of the market, both globally and locally.

In closing, I wish all exhibitors and visitors a rewarding and enjoyable experience at the event. For our overseas guests, I wish you a pleasant stay in Singapore. Thank you.