CASE 2

DOING BUSINESS IN SINGAPORE

The government of Singapore offers a pro-business environment and Singapore
is places 1st in the World Bank’s global ranking index for “Ease of Doing Business” and
“Trading Across Borders”. To achieve this, the Singapore government has created a
robust ecosystem to promote international trade and investments through its various
ministries and agencies or statutory boards. For instance, the mission of the Ministry of
Trade and Industry (MTI) of Singapore is to promote economic growth and create jobs,
so as to achieve higher standards of living for its citizens, protecting Singapore’s
international trade interest, in particular, with a view to enhance access to global markets
for goods, services and investments; and providing good understanding of the current
state of and outlook, for policy formulation and refinement.
These strategies are derived from Singapore’s general philosophy of economy
management – strong adherence to a free market economic system, and active pursuit
of outward-oriented economic policies. Its vision is to develop a globalized,
entrepreneurial and diversified economy to turn Singapore into a leading global city. MTI
overseas then statutory boards including the Singapore Economic Development Board
(EDB). The EDB is the lead government agency that plans and executes strategies to
enhance Singapore’s position as a global business centre and grows its economy. Its
”Host to Home” strategy aims to move Singapore from being a host to companies to
becoming a home where global business, innovation, and talent are nurtured. EDB’s
consistently result-oriented initiatives are testament to Singapore’s governmental
influence on trade.
The following are examples of some global companies that leveraged good
government policy to expand their Asia wide presence in Singapore.
Siemens Medical Instruments
As one of the world’s leading manufacturers of digital hearing instruments utilizing
the latest microelectronic technology, Siemens established the operations of Siemens
Medical Instrument (SMI) in Singapore in 1974. Ever since, their research department
has grown into a full-fledged R&D centre taking advantage of the robust growth and
market opportunities in Asia that now homes a fast rising ageing population (presently
207 million, estimated to cross million by 2050) and middle class. These factors prompted
Siemens to boost it investments in research and development by 10 percent in 2013.
Siemen’s long term investment in and dedication to the region is testament to Singapore
government’s growing role as a strategic partner with leading companies, to achieve
visionary growth.
Trina Solar
Similarly in 2011, Trina Solar, one of the world’s leading photovoltaic (PV)
companies, established its Asia Pacific operating headquarters in Singapore to
strengthen its growing presence and customer base in Asia after it sealed a research
agreement with the Solar Energy Research Institute of Singapore to develop high
efficiency solar cells using Trina Solar’s mono-crystalline wafers.
The Singapore government through its energy agency Energy Innovation
Programme Office (EIPO) created an investment environment that fostered the
development of a skilled talent base and strong logistics infrastructures, these made it
strategically advantageous for Trina Solar’s regional R&D centre as it developed new
solar technologies and application to meet the demands for clean energy expected to be
fuelled by Asian markets.

Rolls-Royce
Since its entry into the country in the 1950s, Rolls-Royce has become a major
player in Singapore’s aerospace industry, accounting for over 15 percent of Singapore’s
aerospace output. A world leader of power systems and services, Rolls-Royce is
anticipating strong growth in its operations in Asia achieved through joint ventures with
key local industry partners including Singapore Airlines Engineering and activities in the
energy ad marine sector. The Singapore government has been a strong partner of growth
for Rolls-Royce and the country is a leader in aerospace maintenance, repair, overhaul,
aviation, manufacturing and R&D in Asia. According to Jonathan Asherson, Regional
Director, Rolls-Royce, the company has also benefited from the valuable business
opportunities, excellent talent pool, and solid infrastructure that Singapore offers.

Procter and Gamble

Procter and Gamble of P&G’s market capitalization is more than the GDO of many
countries and it markets its products in over 180 countries. It is the largest household and
personal care company in the world, and it brands include some of the world’s best known
names such as Gillette, Pampers, Pantene, Oral-B, and SK-II. The Asia Pacific
headquarters for P&G’s operations in Singapore carries out brand and business
management activities like manufacturing, marketing, supply-chain management,
research and development, finance and talent development across the region. Singapore
is also home to P&G’s Asia Leadership Development Centre.
P&G leveraged on the strong research capabilities in Singapore through an
agreement with Singapore’s government Agency for Science, Technology and Research
(A*STAR). In 2011, P&G invested US$192 million to build a mega innovation centre in
Singapore. Deborah Henretta, Group President, Asia, P&G remarked that Singapore
embodies the essence of what successful companies look for: commitment to innovation,
world-class infrastructure, business-friendly environment, excellent local talent and an
agility to work as partners in progress.
Unilever
Another leading global supplier of fast moving consumer goods (FMCG) with a
presence in more than 150 countries is Unilever. Parent to the world’s best known brand
such as Lipton, Wall’s, and Dove, Unilever deals products in nutrition, hygiene and
personal care reaching out to a wide range of customers. Established in Singapore over
50 years ago, Unilever Singapore has since emerged as a strategic global hub for
Unilever, and is home for several key members of its senior leadership team. Through
Four Acres Singapore, its new global leadership development center, Unilever will access
the Singapore EDB’s LINK (Leadership, Initiatives, Networks and Knowledge) ecosystem
to provide executive talent development and leadership programmes with business
schools and corporate partners. Paul Polman, CEO of Unilever recognizes that
Singapore’s evolved business infrastructure, excellent human capital, connectivity, and
strong base for supporting industries combined with the support provided by the
Singapore Government make it an ideal regional business hub.

Dell
Since 1984, Dell has pioneered technologies and innovations as the front-runner
in the computer industry that sells custom-built computes directly to customers. Dell
currently operated its Asia Pacific headquarters in Singapore using this cosmopolitan
market and strategic location as a test bed for its services and solutions in Asia. Dell
opened its first design center in Singapore in 2005 to boost company’s R&D capabilities
in display and imaging products. It further added its Dell Singapore Solution Center (DSC)
in 2011, tapping into the country;s large pool of infocomm industry professionals and
highly proactive government agency, the Infocomm Development Authority of Singapore
(IDA). Amit Midha, President of Dell Asia Pacific and Japan, points to the fact that
Singapore’’s robust ecosystem, pro-business environment, geo-political landscape and
high-technology infrastructure enables Dell to bring the benefits of technology solutions
to customers in the Asia Pacific Region

Mitsui Chemicals
Mitsui Chemicals (MCI) is one of the largest chemical companies in Japan. In
Singapore, its business include manufacturing plants, R&D facilities, and sales offices.
MCI subsidiaries in Singapore are Mitsui Chemicals Asia Pacific Ltd, Mitsui Phenols
Singapore Pte Ltd, and Mitsui Elastomers Singapore Pte, Ltd. The company has invested
over US$600 million to expand its operations in Singapore since the 1980s including
phenol, bisphenol, and Tafmer plants. MCI’s Asia Pacific Headquarters in SIngapre also
provides suppot in sales and marketing, technical, logistics and business functions. In
2011, it opened its R&D Center (MS-R&D) working closely with its Singapore government
agency partner A*START and research institutes. Mr. Yasushi Nawa, Managing Director
of Mitsui Chemicals Asia Pacific, commented that Singapore’s pro-business government
policies, talented and hardworking workforce and top infrastructures have enabled Mitsui
Chemicals to look to the country as a launch pad for its growth strategies in the Asia
Pacific region.

CHINA-SINGAPORE COOPERATION INITIATIVES

As part of an ongoing effort by Singapore’s government to influence and facilitate
international trade, the monetary Authority of Singapore (MAS) has developed new
initiatives to influence and support trade. Singapore and China have agreed on new
initiatives to strengthen cooperation on financial sector development and regulation. The
new initiatives will further promote the international use of the Renminbi (RMB) through
Singapore.
China will extend its Renminbi Qualified Foreign Institutional Investor (RQFII)
program to Singapore, with an aggregate quota of RMB 50 billion. This will allow qualified
Singapore based institutional investors to channel offshore RMB from Singapore into
China’s securities markets. RQFII licence holders may also issue RMB investment
products to the broad pool of investors in Singapore, using the RQFII quota. The RQFII
program will help to diversify the base of investors in China’s capital markets and promote
adoption of the RMB for investment.
Singapore will be given consideration as one of the investment destinations under
the new Renminbi Qualified Domestic Institutional Investor (RQDII) scheme. This will
allow qualified Chinese institutional investors to use RMB to invest in Singapore’s capital
markets. The measure will help to broaden the universe of assets available to Chinese
investors as well as the investor base for Singapore’s capital markets.
China and Singapore will introduce direct currency trading between the Chinese
Yuan and Singapore Dollar. New measures will allow cross-border flows of RMB between
Singapore and Suzhou Industrial Park (SIP) as well as Tianjin Eco-City (TEC).
In addition, Singapore and China have agreed on and announced measures to
strengthen regulatory cooperation. Relevant agencies are in discussions to facilitate
China-incorporated companies which have received regulatory approval to list directly in
Singapore, instead of through entities incorporated outside China.
Furthermore, the Singapore Exchange and Shanghai Futures Exchange have
signed an MOU to strengthen collaboration in the joint development of commodity
derivatives.
The Singapore and Chinese governments have also agreed to strengthen
cooperation in banking regulatory issues, through exchanges and dialogs on topics of
shared interest, and enhanced coordination on international regulatory issues. These new
initiatives build on agreements concluded earlier this year, including the signing of the
MOU on RMB Business Cooperation between the Monetary Authority of Singapore (MAS)
and the People’s Bank of China (PBC), and the enhancement of the bilateral swap
agreement between the two central banks, which paved the way for the launch of RMB
clearing functions in Singapore in May this year (2013).
 MAS Managing Director, Mr. Ravi Menon, already declared that 2013 had been
the productive year with lots of cooperation initiatives between Singapore and China. The
excellent relations between MAS and the central bank and their regulatory counterparts
in China only cemented ties between the two countries, putting Singapore in a position to
promote RMB for long-term trade and investment in the future.

QUESTIONS
1. Discuss why and how the Singapore government promotes the international
trade process.
2. Why is free trade so vital to Singapore’s survival and growth?
3. Singapore has a highly developed trade-oriented market economy and its
economy has been
4. ranked as the most open in the world. What has been the government’s role in
achieving this feat?
5. Why do multinational corporations (MNCs) find Singapore an attractive place to do
business?