On Thursday 23 June, 2016, the inaugural internationalisation forum organized by Human Capital Singapore (HCS), Singapore’s Continuing and Education Training Centre for human capital development, was held at Resorts World Sentosa Convention Center. The aim of the forum was to bring people together to create value, provide opportunities for companies to leverage on one another’s strengths and experiences, help small and medium enterprises (SMEs) ready to venture abroad, and highlight benefits of the partnership between big corporations and SMEs.
Mr. Richard Magnus, chairman of the HCS management board, in his foreword in the event programme touched on the need for Singapore companies to expand to foreign territories in emerging markets, including the ASEAN nations, India and Africa. In his opening remarks at the forum, he spoke about the need to explore, discuss and build linkages that generate ideas turning Singapore SMEs into global market ready enterprises; linkages between Singapore SMEs and large companies; linkages between education and jobs; and cross sector linkages among leaders to develop ecosystem strategies.
Giving the welcoming address, Ho Geok Choo, the CEO of HCS, referred to capability development and internationalisation as twin engines that power Singapore’s sustainable productivity growth. With regards to internationalisation, she spoke about the need for a mindset change that would see local businesses leaving their comfort zones to venture overseas. The increasingly important role internationalisation would play in Singapore companies’ growth strategy and the efforts of the government to support companies in their internationalisation journey, were prominent in the Minister for Trade and Industry (Trade) Lim Hng Kiang keynote address.
Singapore companies’ internationalisation strategies would involve venturing into new markets, expanding international footprints and gaining economies of scale. Panellists at the forum addressed the issue of how companies can navigate the global landscape and prepare for overseas business expansion and its complexities. Considerations would include macroeconomic factors, economic fundamentals important to the business in a particular environment, operating successfully in a local environment, competitive advantages, utilizing the Singapore brand or goodwill (good corporate governance, transparency, good quality and reliability), sourcing for talent pool, and finding the right local partner.
The panellists also highlighted key issues and challenges of internationalisation that companies have faced. Surveys done by IE Singapore show 5-6 top issues. These are the inability to find business partners and contacts, inertia due to uncertainties such as political issues, lack of market knowledge, opportunities and customer requirements, difficulty obtaining relevant licenses and permits, forex risks and financing. Singapore Business Forum (SBF) suggest managing risks, including risks of operating in an environment different to Singapore, competition and bureaucracy are key challenges businesses seeking to venture overseas face. Market information, business mission overseas trips, market interest segments, sharing of knowledge and business contacts and feedback to government agencies for renegotiation of trade agreements, etc., are examples of how these risks are ameliorated.
Singapore Government Support
The Singapore government provides financial and non- financial support individually, collaboratively with Trade Associations and Chambers (TACs) and through an enhanced business environment. For instance, the government works with individual companies in their internationalization efforts through IE Singapore. Companies are able to utilize schemes such as Market Readiness Assistance and Global Company Partnership; tax incentives such as double tax deduction; and loans such as loan insurance schemes for underwriting risks and trade finance loans. There is also collaboration between companies and TACs, bringing together companies with complementary strengths useful for gaining international competitive edge in overseas markets. Finally, the government has in place strong legal frameworks, regional business networks and bilateral and regional trade agreements.
Windows of Opportunity
Primarily, the forum focused on windows of opportunity for SMEs in ASEAN and other Asian countries, including China and India. Reasons for this include the size of Singapore and number of companies, familiarity with South East Asia and the wide window of opportunity in emerging markets in Asia. There was recognition of growing interests in other emerging markets in places such as Latin America, the Middle East and Africa, although these are oftentimes seen as for the ‘strong hearted’. However, operations in these other emerging markets tend to be by larger companies or smaller companies in partnership with larger companies.
Still on the issue of windows of opportunity beyond Asia and companies’ mindset change, it is worthwhile to consider the impact financing, or the lack thereof, may have on companies. A pertinent question by a member of the audience concerned how the government can help Singapore SMEs who want to venture abroad. This is more so because banks in Singapore are private banks focused on the local and regional Asian markets. SMEs derive more than 95% of financing needs from the private banking sector with the remaining 5% coming from government through a variety of schemes organized by IE Singapore and SPRING. The challenge here is that many companies venturing overseas would like to capitalize on the familiarity of their financing partners. However, in the case of Singapore, the banking partners do not venture far from Asia, lacking a wide international footprint.
In conclusion, the forum accomplished much of what it sought to address. The close to 400 participants would have left with a good grasp of what internationalisation involved; the need for a mindset change and how to go about achieving this change; the strong government support towards internationalisation as well as the risks, challenges and opportunities on venturing abroad. Perhaps all that was lacking was more detailed considerations of internationalisation beyond Asia for the most part, particularly Africa which was of utmost interest to this writer. Although the forum had a masterclass on Africa and Middle East, the singular view presented was useful but limited in addressing relevant issues in these two regions. Fortunately, IE Singapore will be organizing its bi-annual African Singapore Business Forum from 24-25 August 2016 which will focus solely on Africa and the opportunities for internationalisation by Singapore companies.
Published:18 July 2016