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ASIA FOCUS

One pinpoint leads to another


 
International Enterprise Singapore (IE Singapore) is an agency under the Ministry of Trade and Industry spearheading Singapore's efforts to develop its external economic wing. It aims to help Singapore-based companies grow and internationalise successfully. Lee Yi Shyan, the CEO of IE Singapore, talks to InnovAsia analyst Tina Wu about typical internationalisation challenges facing Singapore-based companies.

Q. How do Singapore-based companies perform in foreign countries generally?

A. At the aggregate level, Singapore's foreign direct investments into the world have grown by more than seven times, from S$18 billion (US$10.7 billion) in 1992 to S$154 billion in 2003. It is noteworthy that the rate of investment has been faster in recent years. For example, between 2001 and 2003, the investment value jumped by 50%. This shows that Singapore-based companies are viewing internationalisation as an important growth strategy. In general, Singaporean firms enjoy a high reputation overseas: integrity, quality and professionalism. In some sectors, Singapore's working style, sometimes called "Singapore software", is also well respected.

Q. What recent trends have you observed with regard to the internationalisation of Singapore-based companies?

A. Apart from traditional markets such as Malaysia and Indonesia, we've begun to see rising interest among Singapore-based companies investing in markets such as China, India and the Middle East. Since 1997, China has emerged as the largest recipient of Singapore's FDI dollars. In the past two years, more Singapore firms are also travelling to Middle Eastern countries such as the United Arab Emirates and Qatar. Some have undertaken massive construction and engineering projects. The Business Times has reported that the 30 largest Singapore companies are expected to derive close to half of their profits this year from operations outside Singapore.

Q. How do large corporations, small and medium-sized enterprises and startups differ in internationalisation?

A. While larger companies may have the clout, track record and financial backing, we believe that smaller companies can offer their value in niche markets or areas. We see SMEs venturing into nearby markets in Asean; we also found them as far away as Kazakhstan, Hungary and Namibia. Our SMEs span many sectors, including the lifestyle sectors (food, spa and health), education, logistics, legal, financial and environmental engineering sectors. One good way for SMEs to internationalise is to join hands with other Singapore-based SMEs or with good local partners. Another possibility is to grow via a franchising agreement.

Q. In your opinion, what are the major challenges that Singapore-based companies face when going global?

A. Our survey shows that the top three concerns of our firms venturing abroad are: understanding the local market and operating environment, good human resources to drive the internationalisation plan and adequate financing. In response, IE Singapore has designed our assistance programmes around a "3C Framework" to help firms build their strengths in competency, connections and capital. We launched the S$30-million International Partners (iPartners) programme in October 2003 to catalyse the formation of strategic alliances among Singapore-based companies.Q. Do you have any interesting success story to share?

 
A. The opening of the seafood restaurant Fish & Co in the Philippines in September 2005 was one of our recent success stories. Our Manila office helped identify possible partners and venues for its outlets. We also assisted Fish & Co in understanding local legal requirements. Following its successful launch, Fish & Co now has plans to open up at least five more restaurants in the Philippines.

 

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