AFG Venture Group Dispatches

Corporate advisory and consultancy in Australia, South East Asia and India.

Singapore: Present Day Relevance – Deming Chung, Associate Director, AFG Venture Group

Singapore has progressed well over the last 47 years since its independence to evolve from an obscure red dot on the map; often mistaken as a city in China, to a universally recognised independent nation synonymous with economic success, efficiency, cleanliness, political integrity, safety, diversity and great food. Heavy investment into its infrastructure allows for an extensive network of roads, bus and mass rapid transit systems, which transport Singapore’s 5.3 million inhabitants daily. Its indomitable best in class spirit has catapulted the city to the highest echelons in operational efficiency, bequeathing the nation with one of the world’s best and busiest airports, seaport and airline.

Singapore is a member of ASEAN (Association of Southeast Asian Nations) which is comprised of the following countries: Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.

Multi-nationals who relocate to Singapore benefit from generous tax incentives and government support. The following shows the breakdown of investment in 2011.

Source (EDB Singapore)

Singapore is by and large a hub for investment in the region and where the focus changes along with global demand. Presently, Singapore is a regional hub for Aerospace Engineering, Alternative Energy, Chemicals, Consumer Business, Electronics, Energy, Engineering Services, Education, Green Technology, Healthcare, Infocom Products and Services, Logistics and Supply Chain Management, Marine and Offshore engineering, Media and Entertainment, Medical Technology, Pharmaceuticals, Precision Engineering and Professional Services.

The current population of the countries making up ASEAN is around half a billion. This is clearly a sizeable consumer market and Singapore, with the strengths and policies briefly mentioned above, is in the unique position to facilitate access for foreign investors and traders. All ASEAN capitals and many other cities in the region, including China and other Asian cities outside ASEAN, can easily be accessed through Singapore’s Changi airport. Singapore also leads ASEAN in terms of its telecommunication infrastructure, logistics management, freight forwarding and banking and other professional services.

Indonesia and Myanmar have been recently been the focus for investment opportunities. Indonesia is backed by strong economic growth, averaging about 6 % in previous years and government debt re-rated to investment grade (Baa3). Myanmar, on the other hand, is at the other end of the investment spectrum. It has recently taken steps to open its economy but investment there is not for the faint hearted, albeit the rewards are likely to be great if the economy takes off. Realistically though there are many issues, such as power and other infrastructure that need to be developed and many laws which need to be changed or drafted before significant sustainable foreign investment and growth will be achieved.

The Singapore government has been known throughout the years for its flexible manpower policies regarding foreign workers but, over the last year, has tightened significantly the criteria for lower skilled foreign workers to obtain work permits. This has affected a number of companies and particularly those in the hospitality and Food and Beverage industries.  This change in policy was prompted by numerous complaints by Singaporeans over their unhappiness of being overlooked for jobs and problems with overcrowding and the stress that it created on the local infrastructure and property prices.

Whilst the Government has clearly heeded their message, it would appear, as is often the case with Governments everywhere, these changes in policy may have been too rash. However, changes in policy have not affected permits for highly skilled foreign workers.

The Government has also recently released a White Paper on the future direction of Singapore’s population and this too is producing significant debate and discussion amongst foreigners and locals.

This open discussion and debate of such issues by Singaporeans reflects a change that the ruling political party, People’s Action Party (that has ruled Singapore since it broke away from Malaysia in the 60’s) has to deal with. The younger generation of Singaporeans are well educated, worldly and have a high sense of equity and will challenge policies they think are not.

As a young Singaporean myself, I am encouraged that we will achieve political maturity and the ruling incumbent will benefit from active engagement through various grassroots and commercial bodies; enabling more representative and effective policies to be drafted with long term sustainability in mind.

Singapore will continue to be a vibrant democracy. Foreign capital and talent will always be central to the history and evolution of Singapore. As Singapore battles the global economic turmoil with Singaporeans less politically apathetic, I believe we have entered a new era in which Singapore will continue to be not only a dynamic economic hub but also one that will be sustainable for its citizens for generations to come.

About the Author

Deming Chung has been with AFG Venture Group as an Associate Director since 2010. He has 8 years of experience spanning finance, entrepreneurial start-ups and business development consulting. He has prior experience with Barclays Capital as an Analyst supporting the Debt Syndications business; he performed due diligence on global loan syndication deals and provided direct support to the business line COO. During his tenure, he built up in depth knowledge in syndications as well as banking systems, processes and infrastructure.

Deming is currently acting as partner of a sales advisory that provides consulting and executing capabilities to American technology and local SMEs that want to have a foothold in Asia. Within AFG Venture Group he provides expertise and execution for Singapore based transactions. He is also currently working on mandates in Indonesia, Myanmar and around the region. His competencies are in business development, management process engineering and valuation modelling.