Africa, Central Asia par for the course when Singapore firms go abroad


SOUTH-EAST Asia, the traditional market for outward-looking Singapore businesses, is no longer the only market for firms venturing overseas.

Instead, some Singapore companies are heading traipsing to far-flung and lesser known regions like Africa and Central Asia.

Government agency Enterprise Singapore (ESG) and the Singapore Business Federation (SBF) said they are seeing growing interest from small and medium-sized enterprises (SMEs) in such locales. Just last month, ESG and SBF took a business delegation of 30 business owners and C-suite personnel to Saudi Arabia to explore opportunities.

Overall, ESG has led 13 business missions to Central Asia, Africa and the Middle East this year, covering markets like Kazakhstan, Uzbekistan, Rwanda and Ivory Coast. It's nearly double the number of missions organised in 2018.

Companies venturing to these lesser known markets tend to be those that are already active in South-east Asia, and are looking to reap more growth, according to industry experts.

To date, there are about 15 Singapore companies doing business in Central Asia, 70 in Africa and 300 in the Middle East, going by ESG's estimates.

"While South-east Asia may be the first port of call for our local companies by virtue of the region's proximity to Singapore, there are other open and growing economies for our SMEs to expand to," said G Jayakrishnan, the global markets director at ESG.

"In many cases the companies venturing to lesser known emerging markets would have conducted business in South-east Asia. They approach the emerging markets as a means of diversifying their business," Mr Jayakrishnan noted.

According to SBF's latest national business survey released this year, 82 per cent of the more than 700 companies surveyed are currently active in at least one Asean country outside of Singapore.

Ho Meng Kit, CEO at SBF, said that while growth opportunities can be found around the world, frontier and emerging markets may make a more compelling case. Being relatively untapped markets, they have a higher potential for growth, he explained.

Local SMEs making the push into the new frontiers reflect those observations.

EtonHouse International Education Group opened its first preschool in Kazakhstan in 2015 and its first campus in Bahrain last year.

Its executive director Ng Yi Xian also told BT in October that the group is keen to expand further in Central Asia.

On why it decided to enter the Middle East and Central Asia, Mr Ng said the group has established "a significant presence" in South-east Asia spanning Singapore, Vietnam, Indonesia, Malaysia, Cambodia, and Myanmar. Hence, it continues to be on the lookout for expansion opportunities in other parts of the world.

The appeal of the Middle East and Central Asia lies in their growing wealth and population, which fuel demand for high-quality education, Mr Ng said. "Hence, we foresee a steady increase in our total enrolment coming from these two regions".

Enrolment for EtonHouse's Kazakh campus has doubled in the last two years. And it has been approached by partners to set up in Saudi Arabia and Kuwait as well.

Another SME, Terra Weather, wants to plumb the depths of the Middle East's oil and gas activity. The Singapore-based firm provides weather modelling services to offshore businesses. In the second half of this year, it set foot in Jordan with help from a local partner, ArabiaWeather.

Jordan was an "easy choice", said Christian Jonathan, who is in charge of the firm's business development, citing how most of the country's population is aged 30. Its people are also some of the most friendly in the Middle East.

Terra Weather is now seeking local partners in the United Arab Emirates and Qatar. Currently, South-east Asia is the company's largest source of revenue but it could well be overtaken by the Middle East in future, said Mr Jonathan.

Promising as they may be, overseas markets - whether in South-east Asia or lesser known places - can be fraught with challenges like political risks and cultural differences.

Frontier markets may even be trickier, according to SBF's Mr Ho, as local governance practices, and financial and logistical infrastructure may be less developed.

SMEs and experts suggest finding a suitable local partner to reduce the stress.

Preschool operator Modern Montessori International, which took a leap into Uzbekistan in September, foresees issues with language, culture, talent and a foreign business environment in Central Asia.

However, its chairman, T Chandroo, is optimistic that support from its partner, the Uzbekistan Ministry of Preschool Education, can help "minimise or overcome" such difficulties.

In Terra Weather's case, the local partner was a great help, said Mr Jonathan. From analysing the "opportunities that we can strike with", to preparing pitches to prospective clients, the partner was there to help.

"We were surprised with the ease of developments in Jordan because of the good local partner," he remarked.