AMID the slow hum of economic growth, the urgent call for Singapore companies to go regional got another boost on Thursday as IE Singapore and UOB inked a partnership to open up business networks within Asia.
With intra-Asean trade alone expected to grow to US$1 trillion in 2020, some 200 Singapore companies could tap on this new agreement in their expansion into Asean, China, and Japan, over the next three years, said both partners. This is also IE Singapore's first strategic partnership with a local lender.
CEO of UOB Wee Ee Cheong noted existing projects within Asia that would deepen connections within the region. These include the oft-cited One Belt One Road - China's infrastructure build-up across its Silk Road economic belt - the Asean Economic Community, the Regional Comprehensive Economic Partnership and the Free Trade Area of the Asia Pacific.
"We know the journey of connectivity and integration is not always smooth, especially with the rise of nationalistic sentiments globally. But through continued engagement, a practical, paced approach and learning from past lessons, we hope to realise the collective potential of the region," Mr Wee said. "In fact, given current sentiments in the West, there may be even more reasons now for Asia to come together to ensure our continued prosperity."
The agreement caps an eventful 11 months of 2016, amid heightened economic uncertainty brought along by political and economic changes across the world, noted Lee Ark Boon, CEO of IE Singapore, in a speech at the signing ceremony. Competition is stiff, and weak external demand is hitting Singapore's trade, with the Singapore government separately on Thursday forecasting a deeper contraction in non-oil domestic exports for this year than earlier estimated.
But he points to the opportunities in Asia, in particular, Asean, with data from the Ministry of Trade and Industry showing that the largest final demand market for Singapore is no longer the United States, but the region made up of five large Asean economies, or the Asean-5 - Indonesia, Malaysia, Philippines, Thailand, and Vietnam. "Asean as our economic hinterland is no longer rhetoric but reality and opportunity," said Mr Lee.
Greater connectivity can spur new business models, with IE Singapore's group director for transport and logistics Law Chung Ming using the new travel route between Singapore and Hokkaido as an example. As consumers lament the price of Japanese goods such as that S$5 carton of Hokkaido milk, businesses can now consider a regional distribution of Hokkaido products directly to Southeast Asia, skipping the cost of passing through Tokyo. "A lot of the cost is in the supply chain," said Mr Law.
There is some cause for cheer, then, as none of the approximately 150 people at the signing event reject overseas expansion as the way to grow the business in the next two to three years. Instead, an overwhelming 98.3 per cent of those polled - including representatives from Singapore companies as well as firms that work with UOB and IE Singapore - see expansion as the way forward, leaving just 1.7 per cent unsure.
The IE agreement is also a homecoming of sorts for UOB. The partnership closes the loop in some way for a bank that has built existing connections to eight other markets in the region, through its Foreign Direct Investment (FDI) advisory units based in these markets.
The business, first set up in 2011, was meant as a point of contact for potential and existing customers of UOB to consult bankers on the ways to navigate the various - and complex - markets in the emerging region. Indeed, the same on-site poll showed that the lack of familiarity with government regulations was the biggest hindrance to overseas expansion. They also wanted in-depth market information, and financing options.
The FDI advisory units in each foreign market of China, Hong Kong, India, Indonesia, Malaysia, Myanmar, Thailand and Vietnam, are similarly backed by agreements in each country with the respective trade agency, such as the China Council for the Promotion of International Trade. UOB offers free advice to prospective clients through their FDI advisory offices in Asia, in hopes of making money through fee-generating services, or cross-border loans.