Opening address by Mr Sunny Verghese, Chairman, International Enterprise (IE) Singapore, at the IE Partnership Seminar, Thursday, 4 February 2010, 9 am, Suntec City
Distinguished guests, Ladies and Gentlemen, a very good morning. INTRODUCTION
1. It gives me great pleasure to welcome you to the IE Partnership Seminar 2010. I am encouraged by the strong turnout today. The theme today is “Positioning for A Changing Global Marketplace” – to mark a challenging past year, and a recovering economy.
2009 – YEAR IN REVIEW
2. 2009 was a turbulent year for most of us. The global economy was in deep recession, which started with the financial and credit crisis in 2008. It was only towards the last quarter of 2009 that signs of a gradual recovery surfaced.
3. As an open and export-oriented economy, Singapore felt the impact of the global crisis sharply. At the peak of the recession around the first quarter last year, our GDP plunged 9.4 per cent while total trade recorded a drastic 27.7 per cent drop, the lowest since 1965. The full year figures for Singapore’s growth last year are estimated at a more moderate minus 2.1 per cent, and our total trade at minus 21 per cent.
4. In spite of the uncertain economic situation, internationalisation remained close to the hearts of many Singapore businesses. DP Info’s SME Survey in 2009 showed that the proportion of SMEs engaging in international business went up from 64 per cent in 2008 to 69 per cent in 2009 despite the downturn. The more recent SI 100 Ranking on top Singapore companies by overseas revenue, similarly revealed that the total overseas revenue of both the top 100 companies and top 10 SMEs in 2009 had in fact grown by 18 per cent from 2008, with overseas revenue now comprising a larger proportion of total revenue as compared with previous years. Bucking the notion that internationalisation would take a nosedive with the downturn, it now appears that it is in fact an important component of enterprise resilience.
How IE supported companies through the downturn 5. During the past year, IE Singapore stepped up on our assistance to Singapore-based companies. In 2009, we served over 44,000 companies via our broad-based services such as our call centre, Advisory Centre, and seminars, and organised over 170 outgoing missions for close to 700 companies. In addition, our ramped up incentive programmes on capability and market development helped companies achieve overseas sales worth $8.2 billion, and overseas investments amounting to $3.8 billion in 2009.
6. We also worked closely with companies to facilitate over 350 projects successfully, achieving $6.3 billion and $1.7 billion in overseas sales and overseas investments respectively
Capital 7. With the tight credit conditions last year, many companies looked to the government for support to finance their overseas projects and to proceed with their expansion plans.
8. As part of the government’s Special Risk-Sharing Initiative, which was recently extended on revised terms to January 2011, IE introduced the Export Coverage Scheme, to allow companies to enjoy a higher quantum of trade credit insurance coverage against potential buyers’ default. We also sought to improve access to trade financing to support companies’ export activities via the enhanced Loan Insurance Scheme (LIS), and introducing LIS+ as a complementary programme. Together, LIS and LIS+ supported over 2,000 cases with a total loan quantum of $1.6 billion. Connections
9. With developed economies such as the US and Europe drying up in terms of demand, we saw the need to help companies establish diversified demand bases by looking at markets which were still holding out relatively well, such as Latin America, Russia, Libya, Peru, and Africa. For instance, we doubled our efforts to explore and engage the African market through study trips, seminars and missions.
10. We pressed on with our marketing efforts overseas, in partnership with trade associations and chambers, to organise more overseas trade fairs and missions under the International Marketing Activities Programme (iMAP). In all, we supported some 2,600 companies in 170 trade fairs and missions in 2009, which are expected to generate overseas sales worth $1.8 billion.
11. Efforts to encourage Singapore-based companies to develop and strengthen internationalisation-related capabilities were also intensified.
12. Manpower development was one such capability we encouraged companies to invest in. 200 executives were trained under our International Business Fellowship (iBF) Programme last year, visiting Central Asia, China, India, Latin America, the Middle East, Russia and Vietnam, to get an overview of the local business culture and practices, and to build networks. In addition, we launched the Exporter Development Programme – a half year programme designed to give our SMEs a good foundation to exporting. Since its launch in May, 60 companies have signed up, and half of these have completed the programme which includes an in-market visit.
13. We also saw the formation of 8 new alliances under our International Partners (iPartners) programme, which enables our SMEs to band together to pursue overseas projects. These new alliances are from sectors varying from ICT to furniture, targeting markets from Ukraine to the US, and are projected to achieve $478.9 million in overseas sales over the next 5 years.
Accessing more Trade Opportunities
14. Last year, we embarked on an intensive programme to raise awareness of Singapore’s 18 FTAs with 24 trading partners, and how Singapore-based companies can benefit from them. It is therefore heartening to note that while total exports dropped by 18 per cent, our Preferential Domestic Exports figure has been at 2008 levels. Likewise in 2009, the number of Singapore-based companies benefitting from FTAs increased 9 per cent from 2008.
SINGAPORE IN 2010 - ONSET OF A CHANGING GLOBAL MARKETPLACE
15. Our economy is now healthier and the outlook more promising. MTI’s latest forecast for Singapore’s economy in 2010 is a positive 3 to 5 per cent growth. Many Singapore-based companies have weathered through the uncertain times and emerged stronger and wiser.
16. The recent economic crisis has ushered in a new era in the global economy. Asia is expected to be the prime driver of global economic growth in the coming term. PriceWaterhouseCooper recently predicted that China will overtake the US to become the world’s largest economy by 2020, and by 2030, the top 3 world economies could be China, the US and India. These are bold projections. Nonetheless, given our strategic location, Singapore-based companies would be well-placed to take advantage of the growing Asia focus in coming years.
17. Within Asia, China remains an important destination for business and investment. IE Singapore will be expanding our focus from coastal cities where many of our efforts have concentrated thus far, to also cover the less explored areas in the West and Central regions. Within Southeast Asia itself, we see much potential in Vietnam and Indonesia.
18. Apart from Asia, the Middle East is another market we have been actively promoting. According to the SI100 ranking, the region is the fastest growing in terms of overseas revenue of top Singapore internationalising companies. IE Singapore will also continue our promotion efforts in promising markets such as India, Brazil and Russia.
19. For 2010, companies can look forward to over 400 IE-organised events and business missions to support your internationalisation efforts. In particular, we will be stepping up on our assistance to SMEs. To build and promote a network of SME Internationalisation Enablers, we will align our capability and market development efforts with SPRING to maximise the impact for SMEs, and empower trade associations and chambers to play a larger role in driving SME internationalisation. We will also strengthen the market access capabilities of SMEs by developing new programmes, or enhancing current schemes to help our SMEs. Our vision is to grow a vibrant pool of export-capable and international SMEs to drive Singapore’s economy and trade.
20. I hope you will find today’s Seminar useful, and that you will get the opportunity to speak with our overseas-based Regional and Centre Directors who are here today.
21. On this note, I wish all of you a fruitful and productive session. Thank you.