Singapore firms increasingly look to opportunities in Asia

The Straits Times/Asia News Network

SINGAPORE — Singapore firms are more focused on growth opportunities in Asia than their Asian counterparts, according to a new survey. It also found that local firms regard mainland China, Indonesia and India as the most promising locations over the next three years. More than twice as many Singapore executives are confident of prospects in these countries while they are less hopeful about the major regions outside Asia, revealed the Ernst & Young survey. Malaysia, mainland China and Thailand are the top business locations for Singapore firms now. “Singaporean companies are much more active internationally than those of most countries, whether in Asia or elsewhere,” said Max Loh, the country managing partner for Ernst & Young in Singapore. The trend is apparent. Foreign direct investment (FDI) outflow more than doubled between 2004 and 2011 to US$22.6 billion, with a peak of US$32.7 billion in 2007, said the Ernst & Young report. It is expected to hit US$38.6 billion by 2020. Although overall FDI outflow has not reached the level of inflow, the gap is fast narrowing, said Loh. A few road bumps need to be overcome as local firms compete for assets, resources, talent and customers in Asia. One involves hiring and retaining top management talent, which Singapore executives are noticeably less confident about than their regional counterparts. Most of them doubt their firms’ ability to retain key global talent. Other weak links include motivating employees from different cultures and evaluating and rewarding high performance across different markets. “In the war for talent, everyone needs to raise their game,” said Mr Loh. Singapore executives are also less optimistic about their firms’ ability to internationalize the corporate culture, which is critical for expanding businesses. “This is surprising if you consider that Singapore companies are likely to have more experience in internationalizing their business compared to their Asian counterparts. It also suggests the steep learning curve that other Asian companies need to climb as they venture abroad,” said Loh. Control is another issue. About 37 percent of the Singapore firms surveyed allow extensive autonomy at local offices as opposed to the head office tightly controlling the international operations. However, only 3 percent of Singapore executives feel their firms are effective in empowering local decision-making, implying that these executives need to have greater international exposure to make them more aware. The Ernst & Young report was based on a survey conducted in March and April of more than 600 business executives based in East and South-east Asia, including 70 from Singapore.