Speech by Second Minister S Iswaran at the Food & Hotel Asia 2014 and Wine & Spirits Asia 2014 Opening Ceremony at Max Atria, Singapore Expo

Your Excellencies, Ambassadors and High Commissioners

Mr Stephen Tan,

Chief Executive, Singapore Exhibition Services

Mdm Kay Kuok,

President, Singapore Hotel Association

Distinguished Guests,

Ladies and Gentlemen,

A very good morning.

I am very happy to join you this morning at the opening of Food & Hotel Asia 2014 (FHA) and Wine & Spirits Asia 2014 (WSA).  Let me also extend a very warm welcome to our guests from all over the world who have joined us for this event.

I am encouraged to know that there is an increasingly strong overseas presence at this exhibition.  There has been a more than 10 per cent increase in the number of overseas exhibitors this year compared to the previous edition in 2012, and a 15 per cent increase in the number of pre-registered overseas visitors.  I hope that our overseas guests continue to find this a useful event to meet with companies from Singapore and the region, and that this is a starting point for many future collaborations.

Positive Outlook for the Food and Hospitality Industries

The global outlook for the food and hotel sectors is encouraging, in light of steady recovery in advanced economies. The International Monetary Fund (IMF) has projected that global growth will be about 3.7 per cent in 2014, rising to 3.9 per cent in 2015.¹

Asia, in particular, has much growth potential. The Asian middle-class is fast becoming an important group of consumers, and is expected to account for 80 per cent of the growth in global spending from now till 2030.² Singapore, in the heart of Asia, is well placed to tap on this growth, and our food and hospitality sectors are likely to benefit significantly.

Singapore continues to do well on the tourism front.  We hosted 15.5 million visitors in 2013, resulting in tourism receipts of $23.5 billion.  This was an improvement over the already strong results of the previous year, which saw receipts of $23.1 billion.  We expect a similar improvement this year, with between 16.3 and 16.8 million visitors, contributing receipts between $23.8 and $24.6 billion, or a 2 to 5 per cent growth over 2013.

The food services industry has continued to perform well, buoyed by our strong tourism performance with about 10% of tourism receipts being spent on food.  Our multi-cultural society offers a wide variety of cuisines, each with a distinctive flavour and character.  This has enabled us to become one of Asia’s gastronomic capitals.  In 2012, the operating receipts of the food and beverage sector were over $7.8 billion, which is an increase from about $7.2 billion in the previous year.

Asian consumers are also increasingly seeking quality food products that meet their changing lifestyle needs.  Singapore-based food companies are particularly well-placed to cater to this trend, with our strong track record in food safety, innovative products and convenient food solutions.  This is evident from the strong growth in Singapore’s food trade with countries in Asia, which reached S$13.02 billion in 2013, a CAGR of about 9.14 per cent

over the past 5 years.³

Government Support for Productivity Improvements

To tap the strong growth potential, businesses in the food and hospitality industries must continue to enhance productivity, innovate and improve their offerings.

Singapore-based businesses must overcome the challenges posed by a maturing domestic economy.  Business costs, including space and manpower costs, have increased and many businesses have reported that they feel the strain.  The Government is committed to supporting our companies in their transition to higher productivity.  In this regard, the Hotels, Food Services and Food Manufacturing sectors have been identified by the National Productivity and Continuing Education Council (NPCEC) as priority sectors.  Agencies responsible for these roadmaps, such as SPRING and STB, have been actively working with companies and associations on the ground to implement sector-specific productivity roadmaps to meet the unique challenges each sector faces.

The use of technology can make a material difference to productivity.  A*STAR launched the Technology Adoption Programme (TAP) last year to help SMEs to identify and deploy technology solutions which can result in significant productivity improvements.  The number of sectors covered by the TAP has recently been extended to include companies in both the food manufacturing sector and the food services sector.

As an example, assisted by A*STAR’s SIMTECH (Singapore Institute of Manufacturing Technology), Kong Guan Paus and Dumplings examined their operations last year, and realised that they could further standardise their processes and eliminate redundant activities.  They managed to reduce their set-up times from 22 minutes to 14 minutes, an improvement of 36 per cent that allows Kong Guan to make over half a million more paus each year.

Restaurants can also use technology to improve their productivity.  The Quayside Group of restaurants tapped on SPRING’s Capability Development Grant (CDG) to launch their self-service wine dispenser at their wine-bar Grape and Grain.  This has resulted in a 50 per cent reduction in manpower as they now only need 2 staff members.  Their customers’ experience has also improved as customers now purchase their wine by simply using a pre-paid card, removing the need to wait for orders to be taken.

I would like to encourage more restaurateurs, food manufacturers and hoteliers to tap on the Government’s schemes and programmes such as TAP to innovate, grow and enhance their competitiveness.  This will put them in good stead to internationalise, and tap the potential of overseas markets for their products and services.

Government Supports Companies Internationalising

On the international front, competition is increasing from emerging economies that are starting to refine their offerings and build their capacity to compete internationally. In turn, our companies must build their capabilities to internationalise, to seize opportunities in new and emerging economies.

There are several dimensions to the benefits derived from internationalisation.  In the short term, internationalisation allows companies to gain cost efficiencies as they scale and gain access to lower cost resources in overseas markets.  In the medium term, by expanding their overseas operations, companies will also grow these markets for their products and services.  Most importantly, in the longer term, internationalisation helps companies build up their capabilities and management know-how as they operate in more complex environments and cater to different customers.

The Government provides extensive support to our businesses for internationalisation.  For example, IE’s Market Readiness Assistance provides broad-based assistance for companies new to internationalisation.  IE Singapore’s Global Company Partnership covers assistance for capability building, market access, manpower development and access to financing.

IE Singapore also has a network of 39 overseas centres to help companies navigate new markets by providing market insights and valuable business connections.  We have seen good export growth by our food companies in many countries served by IE Singapore’s overseas centres, including China, Indonesia and the Middle East.

The Government has committed to do more to help our businesses internationalise.  In Budget 2014, a further $25 million has been committed to boost support for internationalisation.  These enhancements will help companies tap into global growth opportunities by taking on bigger projects overseas, while building the necessary capabilities for internationalisation.

One example of a company that has benefitted is Pastamania, which tapped on IE’s Global Company Partnership to set up restaurants in Shanghai.  IE Singapore helped the company by providing market knowledge about the casual dining landscape in Shanghai, and contacts to facilitate their market entry.  IE also provided advice to Pastamania on establishing their central kitchen and logistics facility to achieve high product quality and consistency, as well as enhancing labour productivity at their outlets.  Pastamania’s first two outlets opened in Shanghai last year, and their success has led to plans for a third Shanghai outlet, which is due to be set up later this year.  Franchise outlets in Tianjin and Wuxi are also in the pipeline.

Importance of FHA

Events such as FHA are a vital part of the ecosystem that helps our companies grow and internationalise.  With thousands of trade attendees and exhibitors from all over the world, FHA provides an invaluable opportunity for our businesses to network, exchange information and learn about overseas markets.  It also provides an opportunity for our businesses to learn about the latest industry developments, and process and product improvements that can help them improve their competitiveness.

Indeed, there are already many readymade solutions on display that hold great promise for our companies here.  I encourage all of our local businesses to take advantage of this opportunity to assess at first hand the suitability of these solutions for adoption.

With support from SPRING, IE, and the Singapore Exhibition and Conventions Bureau, the three Singapore pavilions, namely at FoodAsia, SpecialityCoffee&Tea, and Wine&Spirits Asia, also have a much larger presence than in previous years.  The pavilion at Wine&Spirits Asia has grown by more than 5 times to 250 square metres, and the pavilion at FoodAsia is about 30 per cent larger at nearly 1,200 square metres.

At the last FHA in 2012, the Singapore pavilion garnered S$1.79 million of sales on-site. I understand that we have a 17 per cent increase in participation from Singapore companies at this year’s show, which is testament to the popularity in Singapore products. I look forward to an increase in the volume of deals coming out of this event.

Conclusion

In the coming week, there will be many activities and networking opportunities.  I encourage all attendees to make full use of them.  I would like to congratulate the organisers for successfully putting this event together, and I wish you all a fruitful and rewarding FHA 2014.

¹ World Economic Outlook Update, January 2014.

² Asian Affluence: The Emerging 21st Century Middle Class. June 2011. Morgan Stanley.

³ Source: Department of Statistics