Talent important in winning the ASEAN game

Q: What do you see are the challenges in getting Singapore companies to venture to ASEAN?

With its high economic growth rate and proximity to Singapore, South-east Asia is often the first stop for Singapore companies looking to grow and find new revenue streams. Most of the time, the key challenges lie in navigating through the regulations, finding a suitable local partner and talent to grow the business.

We have a range of assistance in place to make it easier for companies to go overseas. But first, to enter ASEAN successfully, companies must have a clear, differentiated product or service offering as competition is stiff. Many global investors are interested in this region given its huge population base.

Second, companies must be prepared to navigate a business landscape that can be very different from Singapore, and watch political developments that may impact business. Third, take time to develop relations with stakeholders in the market, at both the national and city level as decisions can be decentralised depending on the sectors. In Indonesia for example, water projects are usually decentralised, and a Singapore water company might have to partner a regional state-owned company to access the project.

Importantly, for a company to stay and succeed in the market in the long run, it must find and develop the right talent who understand the culture and market nuances. This goes beyond acquiring a knowledge of the business, regulatory landscape and government policies. Given the importance of personal relationships in doing business in South-east Asia, the person whom the company posts to the market needs to know how to build strong relationships with its Indonesian, Vietnamese or Thai partners. Even within a country, there could be regional differences in the conduct of business. For example, in Vietnam, people in the southern parts tend to be more direct in the way they speak and engage for business. In the north, the people place great emphasis on relationships and spend more time building networks and relationship before formally engaging in business discussions.

Q: What are the issues that you see in building up the appropriate talent among Singaporeans for jobs in South-east Asia?

Overall, investing in talent management and succession planning are important to prepare for future growth. However, companies, especially the smaller ones, often need to build more strategic human resources (HR) capabilities to develop their talent to drive growth.

For South-east Asia, while Singapore companies are keen to send local employees to these markets, some face challenges in finding the right talent to do so mainly due to cost considerations and a limited talent pool with the right skillsets.

Singaporeans are less willing to take up overseas postings to emerging markets because of the perceived lower standard of living as compared to the more developed markets such as China and Australia, as well as unfamiliarity with the terrain they will be operating in and the personal costs that they are subject to under foreign legislation. To entice them, companies often offer attractive packages and utilise our Overseas Market Attachment scheme and the Double Tax Deduction scheme for Internationalisation to defray some costs.

Another concern is the lack of talent with competencies in market development, financial literacy, operational know-how, and cross-cultural knowledge. These areas can vary vastly across the different South-east Asian markets, especially for culture. Internationalising companies must spend the time and resources to train their employees.

For example, develop professionals, managers, executives (PMEs) through programmes such as the Professional Conversion Programme (PCP) for South-east Asia Talent, and equip leaders with international management knowledge through programmes such as the ASEAN Leadership Programme (to be rolled out in September). They can also leverage Enterprise Singapore's Capability Development Grant to enhance their HR practices in talent management and talent mobility. Such support will equip them with the capabilities to prepare for future growth by building a sustainable pipeline of talent.

Q: How is Enterprise Singapore (ESG) helping in this effort?

Specific to building a talent pipeline ready for the ASEAN market, ESG looks at targeting different levels of talent:

This includes training them on the skillsets required, including market awareness, and intercultural communication skills. We work with the IHLs to curate the programmes and bring companies on-board. About 42 per cent of such overseas exposure takes place in ASEAN markets.

Q: Which are the growth areas where Singapore companies and Singapore talent can contribute?

Rapid urbanisation, a growing middle income group, and young digital population are creating opportunities for Singapore companies and Singapore talent in four key areas.

CONSUMERISM

The consumers are hungry for all kinds of consumer products and services, from luxury goods, education, to wellness and leisure services. Enterprise Singapore has been working with Singapore companies across food and retail brands, logistics, manufacturing, and more recently e-commerce. ASEAN's online economy is projected to be worth more than US$200 billion by 2025, growing at a 10-year compound annual growth rate of 27 per cent. By then, it will account for 6 per cent of the region's GDP, three times today's contribution.

Singapore companies can address the growing market needs in:

TECHNOLOGY AND INNOVATION

The technology scene in ASEAN, while nascent, has been growing rapidly. ASEAN saw a record for startup funding in 2017, pulling in a total of S$10.74 billion from investors, compared to S$3.44 billion in 2016. Our companies, entrepreneurs and startups can look at connecting to the growing ASEAN innovation and business community, be it to seek partners for market entry or to co-create solutions. For example, we worked with the Singapore Economic Development Board on the Global Innovation Alliance network in Jakarta and Bangkok, connecting Singapore startups and students to the local innovation and technology eco-system. As part of this, the Action Community for Entrepreneurship is working with Thailand's True Digital Park to create a launchpad for Singapore startups going to Thailand.

INFRASTRUCTURE

South-east Asia faces a huge infrastructure gap, especially Indonesia, the Philippines and Vietnam. Indonesia alone needs more than S$1.37 trillion in infrastructure investment from 2015 to 2030. Earlier this year, Vietnam's Prime Minister also announced approval for more than S$1.23 billion of investment for economic zone and industrial parks till 2020. Most of these investments will be in utilities and transport infrastructure like roads, rail and ports.

As these countries do not have sufficient available public sector capital to invest in much-needed new infrastructure or maintaining the old ones, significant private sector participation and financing are required.

MANUFACTURING

Manufacturing remains a key industry for several ASEAN countries, in turn offering different opportunities for Singapore companies.

Thailand, with a developed automotive and precision engineering manufacturing cluster, is ready to adopt Industry 4.0 solutions. Malaysia is a choice location for Singapore manufacturers that want proximity to headquarters in Singapore but face land constraints. Vietnam has emerged as an alternative export manufacturing base to China, especially in electronics, textile & garment and furniture. The continued expansion of the Vietnam Singapore Industrial Parks is testimony to the long-term potential of the manufacturing sector.

The ASEAN Economic Community will boost intra-ASEAN trade, in turn generating more opportunities for manufacturing. We have made good progress in the trade of goods, where around 99 per cent of goods traded between ASEAN Member States are tariff free. As the chair of ASEAN, Singapore is pushing for the ASEAN Single Window and ASEAN-wide Self Certification Scheme, which should further strengthen ASEAN as a single production base.

AS the Singapore government agency championing enterprise development, Enterprise Singapore (ESG) works closely with regional governments and business communities to support the entry of Singapore companies into the region through its 8 overseas centres across ASEAN - Bangkok, Hanoi, Ho Chi Minh City, Jakarta, Surabaya, Manila, Kuala Lumpur and Yangon. For more information on ESG's talent initiatives, please visit www.enterprisesg.gov.sg/talent-development