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SGC paving the way for S'pore, German companies

Smart cities and high-end manufacturing are two areas of opportunity for German businesses.

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Singapore's current focus on the digital economy, as the chairman of Asean, should give German SMEs an added incentive to look to Singapore as a potential base, says Dr Trenner.

THE immense, yet-to-be realised economic potential of South-east Asia's markets presents German companies with numerous opportunities, and Singapore is well-positioned to serve as a hub for the swelling tide of German investment that's heading into the region.

So says Singaporean-German Chamber of Commerce and Industry (SGC) president Claus Trenner: "Singapore and the Asean countries provide one of the best opportunities for companies to develop further in the most interesting economic trends that every business is concerned with today - Industry 4.0, startups, Internet of Things (IoT), all driven by digitalisation."

In particular, the development of smart cities and high-end manufacturing are two areas in which Dr Trenner sees major opportunities for German businesses. "German companies have cooperated with many local entities to implement new processes in relation to smart city development and high-end manufacturing," he says.

When the SGC was first established in 2004, foreign direct investment from Germany into Singapore stood at S$7.28 billion. By the end of 2016 (the most recent statistic made public), FDI from Germany had more than doubled to S$17.7 billion.

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Over the years, the number of German companies in Singapore has climbed steadily. Some 1,700 have set up shop here to date, 6 per cent up from about 1,600 just a year ago.

Many is not too many, though.

"There are still many good opportunities for the small and medium-sized enterprises of Germany - known as Mittelstand - to break into the Asean region," says Dr Trenner. The backbone of Germany's industrial sector, the Mittelstand are known for being family-run, highly specialised companies, many of whom have grown into world-class leaders in their respective industries.

And Singapore's current focus on the digital economy, as the chairman of Asean, should give German SMEs an added incentive to look to Singapore as a potential base. Dr Trenner sees this as a "further platform for growth for SMEs".

"They will be able to access distant markets at a relatively low cost and be able to work in collaboration with partners from other parts of the world," says Dr Trenner.

Singapore may be small, with limited resources and a small population. But, no other Asean city is as "developed, technologically advanced, legally and financially sound, and focused on the smart city movement as much as Singapore is," he says.

That is why Singapore is often still the first choice for multinational corporations looking to establish headquarters in the Asia-Pacific region, says Dr Trenner. And its "wide array of competitive advantages" ought to "enable it to remain as and further develop in the future as the best entry point for European companies heading into the Asean market".

Yet, for German companies, expanding into Singapore and then Asean is not without challenges too.

"One major challenge for German companies in the manufacturing sector is certainly the rise of non-tariff measures and non-tariff barriers to trade that are impeding trade in Asean," says Dr Trenner. Such barriers range from customs delays to burdensome third-party testing requirements.

German companies interviewed for SGC's recent Singapore-Asean Business Climate Survey also expressed concern about the standard of technical education here, rating insufficient qualified labour and labour costs as two major business risks for them. This was despite their generally positive take on the business outlook in Singapore - many are looking to raise investments and hire more workers here.

Helping member companies to address such concerns and to voice their challenges to relevant authorities makes up a key part of the chamber's advocacy work, says Dr Trenner.

So, SGC has expressed its concern over the rise of barriers to trade by contributing its expertise to Singapore's Committee on the Future Economy and other discussion, as well as by publishing its own position papers.

In addition, SGC also organises events such as a trade policy analysis seminar - in anticipation of the upcoming EU-Singapore free trade agreement. Recently, SGC also hired a trade policy specialist to advise companies on how best to benefit from complex free trade agreements such as the Trans-Pacific Partnership and the Regional Economic Comprehensive Partnership.

As for concerns over Singapore's lack of qualified, technical talent, Dr Trenner says, "The future does not look all that unwelcoming, with tertiary institutions continuously revamping their curriculum to cater to industry needs."

In this area then, the chamber has focused on advocating for continuous professional training. It recently signed a memorandum of understanding with Nanyang Polytechnic to produce training programmes and joint applied research solutions for workplace and competency-based training and learning.

"Germany has a long-standing tradition in the areas of train-the-trainer as well as on-the-job training, both of which are covered in this MOU with Nanyang Polytechnic, with the strong partnering support of the Chamber of Industry and Commerce for Munich and Upper Bavaria," says Dr Trenner.

But it is not only German companies that SGC serves - it is keen to offer its services to Singaporean companies that are interested in Germany too. "The chamber's mission is to be the first point of contact in Singapore for German companies entering Singapore, and for Singaporean companies planning to set foot in Germany and Europe," says Dr Trenner.

Over the years, SGC has established a thorough understanding of Singapore and its markets, and built up business connections with member companies, partners and government agencies.

"The SGC works very closely with our Singaporean partners. From research on market entry for German companies, to organising networking events to discuss upcoming trends and developments, SGC's close cooperation with its Singaporean counterparts has enabled us to gather the experience and ability to advise German and Singaporean companies on a wide range of investment and market opportunities," says Dr Trenner.