KEEPING THE
COMPETITION AT BAY
Singapore leverages on its strengths to remain a global hub for trade and logistics
BEING IN THE RIGHT PLACE at the
right time with the right product - this
is the mantra traders live by, but when
it comes to being a global trading hub, it
takes a lot more than that.
Singapore's position as a global
trading hub should remain strong due
to some immutable factors such as its
key location at the focal point of global
trade. While this gives it a strong inher-'
ent advantage, the republic has built on
that by developing good infrastructure
and providing strong government sup­
port for the sector it continues to work
12 _ PULSES _ JULY 2009
hard on, setting itself apart from upcom­
ing competitors.
Dominant port operator PSA, for ex­
ample, is investing in new berths despite
the current downturn. Its Pasir Panjang
tenninal will have 26 berths under the
first two phases scheduled to be com­
pleted by this year, bringing annual con­
tainer handling capacity across PSA's
four Singapore terminals to 35 million
twenty-foot equivalent units (TEUs).
Dedicated car carrier terminals to
serve the needs of NYK and K-Line also
started operations this year. And Phases
TEXT _ VINCENT WEE
TIlree and Four will see around $2 bil­
lion being invested over the next 10
years to build another 16 berths in Pasir
Panjang with annual handling capacity
of 14 million TEUs.
There have also been myriad in­
centives for companies to set up here
over the years. Tax concessions, for in·
stance, are offered under the Traders
Programme and Approved and Shipping
and Logistics scheme. This has combined
with the top-class Singapore standards
of efficiency and governance to gain it
wide recognition.

Among its accolades is being ranked
the world's top logistics hub by theWorld
Bank in 2007. Further boosting that sta­
tus is the fact that 21 of the world's top
25 third-party logistics service providers
(3PLs) have significant operations in Sin­
gapore, offering high-value, integrated
supply chain services. These include key
players such as Agility, DHL, Expeditors,
FedEx, Kuehne & Nagel, Menlo World­
wide, Nippon Express, Toll Logistics,
TNT and UPS.
"Singapore provides Maersk Logis­
tics with opportunities to offer a broad
range of logistics services to clients,
with its good geography, security, trade
processes, and efficient shipping and air­
freight capabilities," said Maersk Logis­
tics Asia-Pacific regional manager Tony
Hotine.
Singapore has become the preferred
logistics and supply chain management
hub for leading players across industries
such as aerospace maintenance, repair
and overhaul (MRO), biomedical scienc­
es, electronics, telecoms, fine foods and
luxury goods.
As Singapore becomes a global
manufacturing and trading site for these
industries, top 3PLs have invested in
specialised facilities and solutions here.
These include Vopak's oil terminals on
Jurong Island, TNT's largest regional life
sciences hub, and CWT's logistics hubs
that offer specialised handling and ware­
housing services for chemical and oil
products.
Leading industry players that have
set up supply chain towers and regional
distribution centres in Singapore in­
clude Avaya, BASF, Diageo, Du Pont,
Embraer, Hewlett Packard, LVMH, Nu­
monyx, Roche Diagnostics and Scher­
ing-Plough.
The pres­
ence of
these mw­
tination­
als adds
policies, transparent procedures, developed
to the business environment for logistics
providers. "There are many business
transactions due to the presence of the
financial hub in Singapore. Most of our
customers have their regional headquar­
ters, as well as their supply-chain deci­
sion makers, based here. This attracts
logistics providers like Maersk Logistics,
who want to be close to their customers,
to Singapore," said Mr Hotine.
"Maersk Logistics has been provid­
ing logistics services in Singapore for
more than 30 years; and we have found
that this unique combination of proac­
tive trade policies, supportive govern­
ment policies, transparent procedures,
developed infrastructure, and ease and
efficiency of handling the entire impor­
tation and exportation process, makes
the country a vibrant trading and logis­
tics hub," he added.
Noted Michael Gildea, Agility Asia­
Pacific senior vice-president: "Logistics
is designated a strategic industry by the
Singapore government, and while it con­
tinues to invest and develop the industry
it will continue to attract international
companies. While it faces many chal­
lenges, Singapore remains alert and con­
tinues to develop strategies in response
to these challenges."
In April, Agility was one of the lat­
est logistics players to open a regional
distribution centre and establish its Asia­
Pacific headquarters in Singapore. "The
Singapore government has been proac­
tive in developing the city into a leading
logistics hub in the Asia-Pacific," said Mr
Gildea.
"From Agility's point of view the
logistics infrastructure is very advanced
in Singapore. There is an excellent tal­
ent pool, supported by first-rate training
and world-class university courses. The
general infrastructure is good and it is an
attnlctive place to base people and tal­
ent." Agility has a significant number of
regional management functions in Sin­
gapore such as logistics, IT, chemicals,
UWe have found that this unique combination of
proactive trade policies, supportive government
r
infrastructure, and ease and efficiency of handling the
entire importation and exportation process, makes
the country a vibrant trading and logistics hub."
- Maersk Logistics' Mr Hotine
'TO STO Y]
CONTAINER VOLUMES
lMonlhly TEUs rOOOj YTD TEUs ('OOO)
S'POIll Shanghai S'POte Sl\angltal
2007
2008
I ­
­
-
-
27,935
29,918
26,150
27,984
Jan '09 1,974 1,901 1,974 1,901
Feb '09 1,851 1,528 3,825 3,429
Mar '09 2,193 2,180 6,018 5,609
Apr '09 2,085 1,950 8.103 7,559
operations, and will continue to use Sin­
gapore as a base, Mr Gildea said.
The Port of Singapore, meanwhile, is
linked to 600 other ports in 123 coun­
tries via over 200 shipping lines. It
maintained its position as the world's
top transshipment port last year, moving
almost 30 million TEUs.
But the competition is getting tough­
er, especially in Asia where eight of the
top 10 container ports last year were
located. Singapore port's closest com­
petitor, Shanghai, was two million TEUs
behind in terms of container throughput
last year and was growing at the same
pace. And as traditional powerhouse
Hong Kong slipped into third position,
other southern Chinese ports such as
Guangzhou and Shenzhen are all loom­
ing, driven by booming export-driven
production in the region. Guangzhou,
for example, saw 19 per cent growth last
year, which leapfrogged it to seventh
place from 12th previously.
This will have both positive and neg­
ative effects on Singapore.
The most dramatic development
that industry watchers see in the next
few years is a sharp rise in intra-Asian
trade. This should benefit Singapore, due
to its strong feeder network. However,
cost competition will naturally arise as
ports fight for a bigger share of the pie.
In the past year, especially, as most ports
JULY 2009 _ PULSES _ 13

 , ..l.olo4ll
". .:J.oIIf
.... \" '·"fl.
have seen an average of 20 per cent fall
in container traffic, the temptation to cut
prices is high as the pie gets smaller. "So
far everyone has been taking the heat
and none of the terminals has started
a price war, but if the hard times drag
on another year, nobody is sure what
will happen," said a prominent industry
player.
"More Asian conntries are develop­
ing into transportation hu bs, joining
the likes of Singapore, Hong Kong and
China in developing proactive trade pol­
icies and developed infrastructure. Over
the years, we also see a shift in sourc­
ing and manufacturing destinations to
Asia which increases regional cargo
demand. The pro-business environment
and abundance of opportunities attract
more shippers and logistics operators to
the region," said Mr Hahne.
In a cost-conscious environment,
Singapore may be at a disadvantage
compared to other ports. "Emerging
transportation hubs in Asia are emulat­
ing Singapore's success. The same ad­
vantages Singapore now enjoys may
no longer be c.ompetitive in the near
I 14 _ PULSES _ JULY 2009
future. This means thal Singapore has to
consistently review its strategies to re­
main competitive and stay ahead of the
game," said Mr Hotine.
Singapore should look into ways to
cut operating costs here, he added. "Al­
though some countries may not be able
to match Singapore's stable and pro­
business environment, lower operation
costs in other parts of Asia may attract
global companies to set up base there."
But Mr Gildea pointed out: "Cost
is of course an important factor, but in
our business it is not the only issue to
consider. From Agility's point of view
we are always looking to add value
and to provide our customers with im­
proved services at a competitive price.
Singapore makes great efforts to listen to
the business community and continues
to provide a good platform for logistics
companies to develop their businesses."
Shifts in trade patterns and geopo­
litical conditions may also threaten Sin­
gapore's position. Ii trade between India
and the Middle East expands rapidly, for
example, Sri Lanka's Colombo port ­
long ignored because of the threat posed
, -­
~ "'A~
( , ..,.."
~ ) II'W~
by the now-defeated Tamil Tigers - could
become a more natural transshipment
hub than Singapore.
Similarly increased volumes be­
tween China and the US could see more
mainline services going directly on the
Transpacific trade, reducing transship­
ment traffic through Singapore. While
these exports have fallen in the first half
of the year due to the global economic
slowdown, it is a matter of time before
the export boom resumes.
The danger with rising intra-Asia
trade also is that volumes may rise so
much that the container lines may choose
to serve ports with mainline services go­
ing directly from point to point in Asia,
instead of through feeders as they do
now. This would reduce the role of hub
ports such as Singapore somewhat.
For now, Singapore appears well able
to hold its own.
"From a container shipping perspec­
tive, Singapore is one of the world's bus­
iest container ports and has the natural
advantage of being located at the centre
of major international sea trades," Mr
Hotine noted. "Regionally, Singapore is
lTOP DRY]

strategically located as a logistics hu b in
Asia and expands options for business­
es with intra-Asian shipments. Being a
tTansshipment hub also means that the
country is very well-connected for glob­
al trade."
Added Mr Gildea: "Singapore is stra­
tegically located as a transshipment hub
for South-east Asia and also South Asia.
It continues to invest in its infrastructure
and is business friendly with a good fi­
nancial hub, optimal IT connectivity and
infrastructure and multilingual work­
force, political stability. This is attractive
to foreign companies who want to invest
and develop their businesses in the re­
gion (while) air and ocean connectivity
is a major factor."
However, there is a need to keep im­
proving and leveraging on its strengths
to stay ahead of the competition. This
is especially important since Singapore
does not have a large domestic market,
unlike Shanghai which for the past few
years has been nipping at its heels for
the position of top container port.
According to latest figures as at May,
Shanghai is still about 500,000TEUs be­
hind Singapore in year-to-date volumes
and it looks unlikely that it will over­
take the republic this year with China's
exports plunging. However, Shanghai's
weakness in its dependence on its hin­
terland for business may tum to strength
when the Chinese economy and the
global export market that it feeds come
roaring back to lile.
Mr Gildea said Singapore should
"keep listening to the business commu­
rrity and provide them with the environ­
ment to continue to grow, (as) this will
ultimately support Singapore's contin­
ued role as the leading logistics hub in
South-east Asia".
Maersk Logis­
tics' Mr Ho­
tine, mean­
while, said
that in or­
der for Singapore to keep its first mover
advantage, it must maintain its strengths
in providing an attractive business envi­
ronment for companies to locate their
regional offices here. "Maersk Logistics
is regionaHy headquartered here because
we enjoy the stability, safety and secu­
rity, and friendly government here," he
added. Singapore must also make sure it
continues to leverage global talent effec­
tively and ensure that it has a sufficient
pool of people with the required skills
and capacity to continue supporting
businesses here, Mr Hotine said.
In addition, Singapore must build
on its strengths of security and stability.
"Most of Maersk Logistics' customers
are based here because Singapore offers
business opportunities, security and a
politically stable environment," said Mr
Hotine. "Singapore needs to maintain its
pro-business policies which provide cer­
tainty. They are critical in attracting com­
panies to set up their bases here and in
turn drive demand. Stable costs, attrac­
tive taxation benefits, and a conducive
environment in which to do business
would help Singapore maintain its lead
in attracting customers to set up shop
here."
In developing itself, Singapore needs
to move up the value chain while also
helping its regional neighbours to im­
prove themselves. This will help them
boost volumes which in turn could feed
into Singapore, benefiting the region as a
whole.
PSA in particular has taken the lead
with investments in ports in Thailand
and Vietnam, as well as India, China and
Pakistan further west.
Recapping the past year, PSA group
CEO Eddie Teh said: "The group added
a number of terminals to its global net­
work and we now operate the second
largest container tenninal in Buenos
Aires in Argentina. PSA also added Kol­
kata and Kandla in India to our family
of tennmals, and we started operations
inTianjin and Dongguan in China."
]n the air logistics space, Changi In­
ternational Airport ranks among Asia's
top five in air cargo volumes, wilh more
than 4,000 flights connecting to 60 coun­
tries. It was noted as having the world's
best air transport infrastructure in the
2006-2007 Global Competitiveness Re­
port.
Singapore has the capabilities to offer
niche solutions to meet specific handling
needs of key industries. These would be,
for example, cold chain management,
customised procurement and postpone­
ment solutions.
In terms of air logistics iufrastruc­
ture, there is the Airport Logistics Park
of Singapore (ALPS) which is a free
trade zone located just next to Changi
Airport, catering for high-value goods
that require rapid turnaround in regional
distribu tion.
The Changi International LogisPark
is a 57-hectare logistics park located
near the airport to facili tate logistics and
freight forwarding activities. Meanwhile,
the Air Cargo Express hub is currently
being developed to increase Singapore's
capabilities in handling express cargo.
But there is no lack of competition on
the air front eitber. Bangkok has made
no secret of its ambitions to be a leading
air logistics player. Likewise, Hong Kong
and other southern China airports serve
that role for the China market. Fedex re­
cently moved its hub from Subic in the
Philippines to Guangzhou in southern
China, while DHL has long had its Asian
air hub in Hong Kong.
Here, as in the ports business, the po­
tentia! of the giant Indochina and China
markets must be balanced against the
security, stability and better business en­
vironment that Singapore offers.
There will be some winners and los­
ers amid the re-alignment as the global
economy re-orientates itself after the
global economic crisis. It will be inter­
esting to see where the chips fall. P

"The group added a number of terminals to its global

network and we now operate the second largest

container terminal in Buenos Aires in Argentina. PSA

also added Kolkata and Kandla in India to our family

of terminals, and we started operations in Tianjin

and Dongguan in China."

- PSA's Mr Teh


UNFAZED BY FINANCIAL CRISIS
The republic could even emerge stronger as a major financial
and wealth management centre in Asia
WITH FINANCIAL SERVICES in retreat
worldwide, many foreign banks here
nursing deep wounds at home, and
growing international pressure on j uris­
dictions with strict banking secrecy laws,
Singapore's future as a financial centre
has been thrown into the spotlight.
Some wonder whether the financial
crisis could set back yean; of progress in
its development as an important centre
for all types of financial services in the
region.
But senior banken; and the heads
of various asset management firms and
insurers Pulses spoke to suggest that
Singapore's position as a major financial
and wealth management centre in Asia
will survive the crisis well, and may even
be strengthened further in some areas
relative to its regional competiton;.
Lito Camacho, Asia-Pacific vice­
chairman and Singapore CEO at Credit
Suisse, says that the country's business­
friendly environment makes it very at­
-i
tractive to financial institutions that plan
to invest in Asia for the long tenn, not
just when times are good. "Singapore is
ranked very highly a.s a place to do busi­
ness, in almost any competitive ranking.
It has wonderful inirastructure - wheth­
er it's telecommunications, the legal sys­
tem, or the regulatory environment," he
says.
Just as importantly, "it has a very pre­
dictable environment", he adds. "That's
very important for any business - you
need to know what rules will apply to
your business as you make long-tenn in­
vestment decisions. Singapore rates very
well as far as that's concerned."
In fact, "Singapore possesses the po­
tential to overtake other financial centres
in the region", says Susan Soh, manag­
ing director at Schroden; Singapore, the
Asia-Pacific headquarten; of global asset
management firm Schroders.
"While the opportunities in the Sin­
gapore market are unlikely to match
[TOP STO Y 1
TEXT _ CONRAD TAN
those of many of the larger economies
within the region, the advantages of us­
ing this country as our management and
operational hub for expansion into Asia
cannot be underestimated," she adds.
Over the yean;, the government has
been aggressively promoting Singapore
as a centre for both asset and wealth
management.
Paul Leo, head of investment and
advisory services for private banking at
United Overseas Bank, points to vari­
ous official policies that have acceler­
ated Singapore's development in these
areas. "The move to tighten banking se­
crecy laws in 2000, the abolishment of
estate tax from February 2008 and the
new trust laws have helped to strengthen
the growth of private banking here," he
says.
After more than three decades of
development, the financial services sec­
tor now contributes 13 per cent of Sin­
gapore's annual gross domestic product,
JULY 2009 _ PULSES _ 17
compared with just 5 per cent in the
1970s. There are now over 600 financial
institutions in Singapore, including many
of the world's biggest and best-known
names, says the Monetary Authority of
Singapore (MAS).
But it was only relatively recently
- after a period of stagnation from the
1997-98 Asian financial crisis through
to the Sars pandemic in 2003 - that
Singapore really came into its own as a
regional financial powerhouse, says Ray
Ferguson, regional chief executive for
South-east Asia at Standard Chartered
Bank. "The government has played a
pivotal role in raising its status, through
free trade agreements (FTAs) and its ef­
forts to promote Singapore as a financial
hub."
Since 2001, Singapore has signed
15 FTAs with
23 trading
partners in
various regions from the Americas to
the Middle East, which give it a diversi­
fied trade network to build on, he points
out. "These initiatives are pro-business
and are intended to liberaHse invest­
ment. They have enabled Singapore to
gain a comparative advantage against its
peers."
Meanwhile, the decades-old com­
petition between Singapore and Hong
Kong to attract businesses and talent has
continued unabated throughout the cri­
sis. Even before the crisis broke, some
commentators wondered whether both
would eventually be eclipsed by China's
meteoric growth and the rise of Shang­
hai as a new rival in Asia.
"The main difference between Sin­
gapore and Hong Kong is that the hin­
terlands of the two markets are funda­
mentally different," says Kit Wei Zheng,
a Citigroup economist based here.
"Historically, Singapore has served as a
banking hub for the Asean region, while
Hong Kong has been a fund-raising cen­
tre, most notably via the equity market.
Whereas Hong Kong can rely on a re­
silient China as an anchor of growth, a
large part of the fortunes of Singapore's
financial centre is still tied to that of the
immediate neighbourhood."
Monica Wong, the Hong Kong-based
chief executive of HSBC's private bank­
ing business in Asia, says that Singapore
and Hong Kong each serve a range of dif­
ferent needs fOr wealth managers operat­
ing in the region. "Singapore's proximity
to the rest of South-east Asia makes it a
key hub for us to serve clients in these
countries. Hong Kong remains an ex­
tremely important gateway to China."
But "the high degree of confidenti­
ality that Singapore proVides, the trust
and faith in the transparency of Singa­
pore's jurisdiction, a highly educated
workforce, sound economic fundamen­

liThe high degree of confidentiality that Singapore

provides, the trust and faith in the transparency of

Singapore's jurisdiction, a highly educated workforce,

sound economic fundamentals and rigorous

supervision of the financial sector are all factors that

have served Singapore well and will continue to work

to Singapore's advantage."

- HSBC's Ms Wong


tals and rigorous supervision of the fi­
nancial sector are all factors that have
served Singapore well and will continue
to work to Singapore's advantage", she
adds.
To Kua Ka Hin, chief executive for
Singapore and South-east Asia at Mu­
nich Re, "it makes little sense for Sin­
gapore or Hong Kong to worry about
Shanghai possibly becoming tbe main
financial centre in the region". "Shang­
hai's bid to develop into a financial
centre will lead to more competition
on some specific types of services. But
the huge differences between the social
and economic fundamentals of tbe cities
will leave plenty of room for all three
to prosper. More importantly, Singapore
enjoys many unique advantages, includ­
ing its international connectivity, politi­
cal stability and rule of law."
Stanchart's Mr Ferguson says that
"with large economies such as China,
India and Indonesia growing strongly,
Asia's financial market will continue to
grow and Singapore, with its multi-racial
society, occupies an advantageous posi­
tion straddling these developing econo­
mies and will be able to capture business
opportunities on all sides".
"The government is also promoting
Singapore in a more targeted fashion as
a hub for a range of 'high-trust' services,
such as high-end arbitration work in le­
gal services, wealth management and
Islamic finance in financial services, as
well as logistics, maritime and aviation
activities" - all of which will strengthen
the country's position as a financial cen­
tre, he adds.
Many of its past efforts have borne
fruit. Today, Singapore is the fifth-largest
foreign exchange trading centre world­
wide, the second-largest trading centre
in Asia for over-the-counter derivatives
and a leading centre
for trading in com·
modity derivatives,
the MAS says. It
"Knowledge of foreign cultures and languages is crucial
geographical span also requires Singaporean managers
to have a good sense of command and control. These are
important skills needed to ensure Singapore's position as a
is also the world's third-largest oil refin­
ing centre, top bunker port and the Asia·
Pacific centre for the pricing and trading
of oil and rubber. In addition, it has a
rich mix of direct insurers, professional
reinsurers and captive insurers.
Over the last few years, new areas
of growth bave emerged, inclUding com­
modities trading, structured finance and
Islamic finance - reflecting an increasing
sophistication among investors and com­
panies in Asia, and demand for a wider
range of financial .services, the MAS
says.
Christine Ong, head of wealth man­
agement at UBS in Singapore, says that
the growing sophistication among Asian
investors also means that more money is
being managed from within Singapore.
"Many Asians no longer feel1he need to
place the majority of their funds in the
traditional offshore locations, given that
Singapore has matured as an interna­
tional financial centre and continues to
improve and expand the level and scope
of its wealth management services."
Nicholas Tan, head of global wealth
management at OCBC Bank, says that
"in the broad context of international
finance such as foreign exchange, Singa­
pore's relative ranking against Tokyo and
Hong Kong is largely unchanged" as a
result of the crisis.
But in wealth management, the regu­
latory responses to the outcry by inves­
tors who suffered losses on structured
products linked to Lehman Brothers
when the bank collapsed may give Sin·
gapore a slight edge over Hong Kong.
"The changes enacted by the Hong Kong
Monetary Authority are far more strin­
gent compared to those that are being
considered by the MAS," Mr Tan says.
"From a compliance standpoint, doing
business in Singapore will be easier than
in Hong Kong."
The biggest challenge ahead for Sin­
gapore's future development as a finan­
cial centre will be in making sure it has
as this determines how successful the transfer of
financial technology will be. Managing across a wide
regional financial centre."
- OCBC's Mr Tan
l TOP 'JRY 1
enough people with the right skills to
work not just in SinEapore, but the rest
of the region too, he says. "This means
that other skills that are required to op­
erate in a foreign country become criti­
cal."
Financial institutions based here that
do business elsewhere in the region of­
ten send Singaporeans to oversee their
operations in other Asian countries, be
says. "Knowledge of foreign cultures
and languages is crucial as this deter­
mines how successful the transfer of
financial teclmology will be. Managing
across a wide geographical span also
requires these Singaporean managers to
have a good sense of command and con­
trol. These are important skills needed to
ensure Singapore's position as a regional
financial centre."
Dan Sonlag, global wealth manage­
ment head at Merrill Lynch - now part
of Bank of America - makes a similar
point when he says that the financial cri­
sis has actually sharpened the bank's fo­
cus on established financial centres such
as Singapor e.
"I think it's because we serve the
region, not just Singapore, out of Singa­
pore," he says. "Given the wealth cre­
ation that we expect in the region in the
next five to 10 years, it's more sensible
for me to add people to a place that I'm
already in and good at; it's harder to
open in a new area and build. It's much
easier for me to add here and serve the
broad area."
Daniel Truchi, global CEO of SG Pri­
vate Banking, says that the longer-term
trends that have made Singapore what
it is today are still intact. "I'm based in
Europe, and whenever clients in Europe
ask me where they should diversify their
wealth, the answer's very obvious."
While any financial crisis will affect
asset values, "that doesn'l hann the un­
derlying trend" of Singapore's growth,
he says. "The crisis - I don't think that
changes anything." P
JULY 2009 _ PULSES _ 19
 TO STORY]

SINGAPORE:

MONACO OF THE EAST?

What are the challenges that the city state faces in drawing the ultra-rich like
Wall Street icon Jim Rogers to settle here?
TEXT _ ARTHUR SIM

AS MUCH AS Jim Rogers loves living in

Singapore vrith his family, he does have a
couple of gripes. For starters, he cannot
get credit from Singapore banks. His inter­
national cheques also take five weeks to
clear here.
These "anachronisms", as Mr Rogers
calls them, are clearly more than a little
exasperating and underscore the question
of how far Singapore v.r:ill go to attract the
wealthy.
Mr Rogers, a legendary Wall Street
icon, investor and co-founder (with
George Soras) of the successful Quantum
Fund, set off from NewYork in search of a
new home inAsia about five years ago.
Any city would have been glad to have
him. Not only as it would have been an
implicit endorsement of the city's global
status, but also because Mr Rogers, 66,
represents the strata of society known
as the ultra-high net worth individu­
als (ultra-HNWIs) who bring with them
not insignificant multiplier effects to the
economy. They are the ones who keep the
playgrounds of the rich and famous like
Monaco, the Bahamas, Gstaad, bathed
in a sunshine of gold and diamonds from
Cartier and TIffany's.
Forsaking Hong Kong, Shanghai and
Beijing (and many other cities besides),
Mr Rogers decided to settle in Singapore
because it has evetything. It is clean, has
good schools, great healthcare facilities
and, of course, a favourable tax regime.
So it was a bit of a rude awakening
when he was told he could not get the
credit limit on his Singapore credit card
increased. What kind of global city does
not give a bona fide ultra-HNVv'I carte
blanche, especially to a man like Mr Rog­
ers, for whom moving large sums of mon­
ey on a daily basis is second nature?
To hear one of the most astute inves­
tors in the world talk abou t credit card
problems is a little surreal. "I have a 10­
eal credit card, but it's severely restricted
on the amount you can charge on it - you
can get a credit card vrith a higher limit
but I have to put up the money upfront.
If I have to put up 'X' dollars where I can
charge 'X' dollars, that's not a credit card,"
he quips.
"They say you can earn a billion dol­
lars outside Singapore but it doesn't count
for your Singapore credit card. That's ab­
surd if you want to attract foreigners. So
what I do is to have foreign credit cards
where I don't have these restrictions," he
adds.
But the pros must outweigb the cons
because Mr Rogers is still living here in his
rented villa near the Botanic Gardens. In­
deed, throughout this interview, he reiter­
ates that he and his family are very happy
here. But while this has much to do with
being able to have his children schooled in
Mandarin, a prerequisite for him, it may
not be so important to most ultra-HNVv'Is.
So v.r:ill Singapore do what it has to do to
become a Monaco of the East?
One challenge Singapore will certainly
have to face is how it will address the mat­
ter of being on the Organisation for Eco­
nomic Cooperation and Development's
(OECD) "grey list" of tax havens. The 38
jurisdictions on this list have committed to
exchange iufonnation according to OEeD
standards but have not fully implemented
them.
For Mr Rogers, whether Singapore
chooses to fully implement the OECD
standards or not does not really matter. "I
pay and declare all my income worldwide
so it has no effect on me," be says. VVhile
he believes that some people may be im­
pacted, "every country in the world has
started complying so I don't think there is
a comparative advantage or disadvantage
anYIJlOre".
More broadly, however, he says:
"Some country, if they have any brains,
is going to recognise that there is a desire
and demand for bank secrecy and is going
to meet that demand; so I suspect some
country in the next few years is going to
say, we don't care, and that country or ju­
risdiction will undoubtedly attract huge
amounts of money because it will have a
strong comparative advantage."
Akbar Shah, managing director, region
head (Singapore, Malaysia and Brunei),
and head of mega wealth, Asia-Pacific,
at Citj Private Bank, also doubts that
there will be any serious faVout from the
OECD's demands.
"The impact on Singapore is likely to

20 _ PULSES _ JULY 2009

 r-op TORY J

be minimal. Singapore's status is no differ­

ent from that of other major financial cen­
tres such as Hong Kong, Switzerland and
Luxembourg, which the OECD has simi­
larly recognised as jurisdictions that helVe
committed to implementing the OECD
standard for infonnation exchange, but
have yet to do so," he says.
"The Singapore government has taken
a pragmatic and well-considered approach
on this matter. While it has stated that it
is keen to cooperate with the OECD on
taxation matters to ensure that it is re­
moved from the so-called 'grey list', it will
continue to take into account the fact that
the country's strict banking secrecy laws
are in place to saieguard the confidential­
ity of banking clients - this is one of the
key principles of a good wealth manage­
ment hub."
And the need for private banking is
growing. Citi Private Bank's top .five mar­
kets in the Asia Paci.fic region are Singa­
pore, Hong Kong, Indonesia, the Philip­
pines and Taiwan, and these markets have
all experienced substantial double-digit
percentage growth in terms of client num­
bers and assets under management in the
last 10 years.
Fong Wai Mun, associate professor,
department of finance, at the National
University of Singapore, notes that Singa­
pore has gained momentum as a place for
offshore fund management houses too.
"The tax regime encourages that on three
fronts. First, assets invested by Singapore­
based funds are exempt from Singapore
tax in respect of 'specified income from
designated investments', which practical­
ly includes returns from most asset types
- the exception being real estate situated
in Singapore.
"Second, Singapore has an extensive
network of tax treaties with nearly 60
countries, while many traditional tax ha­
vens have none.1hird, income earned by
'qualified' fund managers based in Singa­
pore is subject to a concessionary tax rate
of 10 per cent. As Singapore's corporate "In my view, Switzerland is over the top. Don't get me
tax rate may fall even furtlJer in the fu­
ture, there is scope for a further decline
wrong, Switzerland is not going to roll off the face of
in this concessionary tax rate." the earth tomorrow ... but now other places, especially
Olivier Denis, head of private bank, Singapore, are taking their market share away and that
OCBC Bank, adds: "Many clients in Sin­ will continue." - Mr Jim Rogers (above, with his family)
gapore and the region prefer a Singapore
trust because Singapore is an internation­ fits including global insurance provid­ available. The market has definitely be­
ally recognised financial centre "'lith a ro­ ers and trust companies setting up shop come more mature and developed com­
bust customer acceptance framework and here. "Typically, these wealth planning pared to a few years ago," he says.
strong privacy rules." outfits are anned v..ith a broader range of It seems that Singapore can ben­
As a result, Mr Denis says, this has products and services that cater to HN­ efit even as things stand today. "Given
led to an influx of wealth planning out­ Wls which were previously not as readily the heightened uncertainty in financial

JULY 2009 _ PULSES _ 21

~ TO TO Y j

markets, individuals and investors who

have concerns over the safety of their
funds may be looking to move them to
countries with greater financial stability
and stronger regulatory supervision. We
believe Singapore would benefit as a re­
sult, especially its local banks," adds Mr
Denis.
Indeed, there appears to be a growing
cli<;aHection with traditional ultra-HNWI
destinations.
"In my view, Switzerland is over
the top," says Mr Rogers. "Don't get me
wrong, Switzerland is not going to roll off
the face of the earth tomorrow but it is
now very expensive, not very competent,
a bit corroded, and a bit arrogant because
they think they are the only place (for
ultra-HNWls) - and they were the only
place for several decades - but now other
places, especially Singapore, are talting
their market share away and that will
continue."
There are other ways to make Singa­
pore more attractive to foreigners, and the
government has picked up on this. Under­
standing that foreigners like to invest in
real estate, for instance, the government
has made policy concessions.
Sen tosa Cove was originally conceived
along the lines of waterfront resorts in the
French Riviera, Caribbean and the Medi­
terranean. When it was launched, there
were many trade shows in the Middle
East, London, Dubai and Asia including
cities such as Guangzhou, Hong Kong,
Bangkok and Kuala Lumpur to market
the development.
An important aspect of its appeal is
that Sentosa Cove is the only district in
Singapore where foreigners are allowed
to buy landed property. Jason Yeo, general
manager of Sentosa Cove Resort Manage­
ment, says; "The strategic purpose of Sen­
tosa Cove was to attract and anchor an
international mix of influential, respected
and high net worth individuals to set up
home in Singapore for themselves and
their families." way, he says there are no "concrete plans" certainly have been a lure for them.
The success of Sentosa Cove is re­ as yet. Donald Han, managing director of
flected in its mix of homeowners. It has If owning the best a counby has to of­ Cushman and Wakefield, recalls: "The
a live-in population of about 1,700 and fer is so important to foreigners, should diHerence between previous property
60 per cent of the homes are owned by another Sentosa Cove be made available upturns, say, in 1996 and more recently
foreigners. to them? Why not give foreigners equal in 2007 and 2008, is that in the previous
But as successful as Sentosa Cove is, access to landed properties anywhere in peak, there were only a handful of luxury
Mr Yeo says there are no plans to develop Singapore? high-end projects in Singapore. Back in
any other residential communities on the Property tends to be a big part of most the late 1990s, there were The Claymore,
island. ultra-HNWIs' investment portfolios, mak­ Four Seasons Park and Ardmore Park. The
And while there has been talk of de­ ing up about 30 per cent, and the attrac­ property market then was a smaller and
veloping the Southern Islands in the same tive products here in recent years would less exciting place for intemational inves­

22 _ PULSES _ JULY 2009

I
I
I ""ooked at it thoroughly and the only cities with the same tax structure (as Singapore)
were Hong Kong and maybe Dubai, and England '" It was a choice between Hong Kong
I and Singapore. I wanted to start playing polo and Singapore has a polo club."
I
tors and high net worth investors who
were attracted to global cities like London,
Paris and New York."
TIlls changed when developers rea­
lised there was a huge appetite for luxury
offerings and developments like St Regis
Residences, Ritz Carlton Residences, The
Marque at Paterson, Orchard Residences
and Hamilton at Scotts started rising ev­
erywhere. Mr Han believes there could
now be over two dozen ultra high-end
luxury residential developments here. "In
fact, the term 'ultra luxury developments'
was coined to distinguish the 'super luxu­
ry' from the mere 'luxury' offerings," he
adds.
In 2007, he estimates, six out of 10
luxury apartments were sold to foreign­
ers. At the height of the recent property
boom, a unit at Orchard Residences also
had the distinction of transacting at the
highest price ever - $5,500 per sq ft.
But as exciting as the ultra-luxury
property market is, what really got peo­
ple around the world talking was the go­
ahead to build two casinos and integrated
resorts. "Suddenly, people began asking
why tbe casino operators were prepared
to pump in $5 billion each here."
Together with the casinos, other at­
tention-grabbing news like winning the
opportunity to host the Youth Olympic
Games and Fonnula One, helped to keep
the "buzz" going until the credit crunch
de-railed this trajectory.
Now with so much wealth destruction
around the world and sobriety replacing
the high living that characterises the life­
styles of the ultra-HNWI, much that has
been done to remake Singapore in the last
few years may have become undone.
Jonathan Galaviz, a partner at Global­
ysis, a leisure sector strategy consultancy,
believes Singapore may have to ramp up
its efforts again.
"Singapore is going to have to re­
invent itself such that public policy­
making on issues related to tourism is
approached in a liberal and creative
manner. Singapore to this day is seen
by many potential tourists as a boring,
squeaky clean city with not much to do
other than have business meetings and
- Mr Satinder Garcha peftl
visit the Night Safari zoo," he says.
But Mr Galaviz also cautions against
trying to model Singapore on cliches. "Mo­
naco does attract a good number of global
celebrities and wealthy individuals, but it
surely does not have the best example of
a dynamic towism sector. In fact, the tour­
ism profile of super-luxury and famous
individuals associated with Monaco is just
as much an exercise in good public rela­
tions on the part of Monaco authorities,"
he adds.
It is certainly true that Mr Rogers was
not attracted by Singapore's glitz and
glamour. "The integrated resorts had no
effect on my decision to move here," he
says.
This is also true for the debonair
Satinder Garcha, who moved here long
before the casinos were even conceived.
In many ways, the 37-year-old Garcha ­
who made his fortune when he sold his
US-based tech company at the height of
the tech boom and then dedicated his life
to playing polo - is the face of ultra-HN­
WIs today.
Mr Garcha (originally an Indian na­
tional with a US green card) decided to
move to Singapore in 2001.At the time, it
was quite common to think of Singapore
as heing boring and sterile but that didn't
stop him from moving here after consider­
ing other countries.
"Not very many cities fit my criteria,
to be honest. I looked at it thoroughly and
the only cities with the same tax structure
were Hong Kong and maybe Dubai, and
England. England didn't interest me be­
cause I had already lived in the US. It was
a choice between Hong Kong and Singa­
pore," reveals Mr Garcha.
And the cllncher?
"] wanted to start playing polo and
Singapore has a polo club. There aren't any
in Hong Kong. Secondly, coming from the
US which is a big vast place, Singapore is
still open and green while Hong Kong is
too vertical."
For Mr Garcha, playing polo was a way
of going back to his roots too. "My father
captained the India team for many years. ]
always had the passion for it but never had
the chance. Only when I got to Singapore
TOP STORV',
did] get the chance to do it again."
Mr Garcha also wanted his children to
be closer to their Asian roots and came to
Singapore to start his family. "When we
moved here we had no children. The plan
was to have children. And if you have a
family, you want to live in a place which
is conducive to bringing up your family,"
he says.
The familiar attributes - good schools,
healthcare, security, con.nectivity and
good govermllent - also apply, as does Mr
Garcha's position on the tax regime here.
"Underlining all of this is that Singapore
has a very favourable tax environment."
But Mr Garcha insists that it is the
"whole package" that foreigners !il{e.
"As we speak, there are at least three
people I know in my circle of friends who
are making the same move to S~apore
from the US and Europe. And the reason
is the same. FmanciaUy it makes a lot of
sense if you are not a US citizen. The life­
style is great. There is safety, security, edu­
cation, connectivity."
As part of the conditions of getting
permanent residence, two of these friends
have opted to invest in property wbile the
third will invest in a bu siness.
And Mr Garcha believes that even
more people will want to move here in
the future.
"The way I look at it, as the world
cracks down on people who may not be
paying their fair share of tax in the coun­
try they live in, maybe it will be more of
an incentive for higb net worth individu­
als to change their country of residence
to where they are not in any violation.
And today they have the flexibility to
be based anywhere they choose and still
run their businesses in a tax-efficient en­
vironment."
And Singapore is "doing everything
right", says Mr Garcha, who also believes
the current turmoil in the global economy
could benefit Singapore in the future.
Noting that many national deficits are
rising, these countries will simply have to
raise income taxes, and many will be un­
happy. "A lot of those people are simply
going to move. They can go to Hong Kong,
Singapore, Geneva, wherever," he adds. P
JULY 2009 _ PULSES _ 23
 t OP STORY J
-rHE ROAD AHEAD
Some ideas for Singapore's next thrust in economic development
WHILE THE FOUNDATIONS Singapore has
built - its clean government, sound social
security, efficient business environment
and first-rate infrastructure - will likely en­
sure it has a role to play in the irreversible
globalisation of the world economy, there
is also a realisation that it needs to review
its strategy going forward.
That is why Prime Minister Lee Hsien
Loong announced in May that the govern­
ment has set up an Economic Strategies
Committee (ESC) to come up with new
and creative ways to grow the economy
for the long tenn. Mr Lee said that Singa­
pore's approach to economic development
and growth "remains valid". It would re­
main open to international trade and
competition, stay plugged into the global
marketplace, build new capabilities and
encourage self-reliance.
"But we need to review our specific
strategies to develop the diHerent sectors
of our economy," he said. There are five
broad strategies the ESC will study: ex­
ploring new growth areas; anchoring global
companies here and nurturing homegrown
enterprises; attracting talent; creating high­
value jobs for locals; and maximising re­
sources such as land and energy.
Pulses polled some people on what
ideas they have for Singapore's next eco­
nomic thrust. Gerry Ball, founder and
honorary chainnan of Hong Kong Entre­
preneurs Club, said Singapore has a vital
role to play in Asia's continued economic
development, and is very well-placed cur­
rently with its strong governance and low
tax environment.
In the coming years, entrepreneurship
is going to get bigger and bigger.To capture
a significant piece of this growth and to
stay ahead in the next 10-20 years, Singa­
pore needs a dual strategy: one, to funda­
mentally rethink its education system, and
two, to design a system to attract overseas
techno-entrepreneurs, he said.
Instead of producing just maths and
j'Alongside educational transformation, Singapore could attract
overseas techno-entrepreneurs and substantially develop its venture
capital business so that Singapore becomes the Silicon Valley of Asia."
[ .
24 _ PULSES _ JULY 2009
science majors, Singapore needs to start
producing more creative thinkers who
can solve problems easily, create products
and services and start businesses, he said.
"Alongside this educaticmaJ transforma­
tion, Singapore could attract overseas
techno-entrepreneillS and substantially
develop its venture capital business so that
Singapore becomes the Silicon Valley of
Asia (a place that is waiting to be filled),"
said Mr Ball.
And to put in place the capital to fund
these new ventures, the government could
use a model similar to how it built the
mutual fund industry here in the 1990s,
namely, providing seed capital to overseas
venture capital managers to start busi­
nesses here by entrusting a portion of the
Central Provident Fund money for them
to manage.
"By producing more homegrown en­
trepreneurs and creating a more signifi­
cant venture capital industry, Singapore
could stay ahead of its neighbours for
many yea.rs to come, and could playa part
in shaping this important industry, rather
than playing second fiddle to it," said Mr
Ball, who at the "ripe old age" of 38 has
founded or co-founded and sold three
businesses in the last 15 years. He is still
the majority shareholder of his fourth
business - an online translation business
which managed to grow in spite of the dif·
ficult conditions las t year.
However, dramatically changing the
education system will not be easy, will
take time, and there may not be the politi­
cal will to make the transfonuation, noted
Mr Ball. If this is the case, Singapore needs
to have a Plan B, ie, to attract techno-en­
trepreneurs from other countries to set up
and raise capital here.
"If Singapore can provide venture cap­
ital funding, low tax and low wage techni­
cal staff, then many of an entrepreneur's
start-up problems are resolved. In today's
wired world it often makes considerable
]
- Mr Ball
TEXT _ TEH HOOI LING
strategic sense for Western-based entre­
preneurs to have their entire operations
in Asia and their sales forces as mobile
satellite teams working from home in the
markets in which they sell. The same well­
oiled machine that attracts multinationals
to Singapore's shores could be used to at­
tract techno-entrepreneurs."
Meanwhile, Jason Wee - retired top­
ranked Asian analyst with CLSA - in his
recent article in Pulses, on Singapore's
journey into uncharted waters, put forth a
few suggestions.
He believes that one of Singapore's
least heralded miracles is the racial and
religious harmony that has existed for the
last two decades amid the turmoil expe­
rienced by other countries in this sphere.
"Singapore is thus eminently qualified
to foster an inter-religious and spiritual
organisation that acts as a bridge to the
country-level organisations in India, the
Vatican, the US, etc. A successful imple­
mentation of this strategy will see Sin­
gapore become the world's pre-eminent
centre for religious and spiritual pursuits,
and a venue for continuing dialogue and
discussions in areas of religion and spiri­
tuality," said MrWee.
"This role might actually supersede
its current role as a trade and financial
intennediary. Best of all, this is one role
that other countries like China will never
be able to usurp for the foreseeable fu­
ture," he added.
No doubt the ESC will be inviting
feedback and suggestions from the pub­
lic. And the pros of each suggestion will
be weighed against their cons before the
committee finalises its review by next year.
Given the fast-changing world, it would
seem that such a strate­
gic rethink is neces­
sary if a country,
or for that matter
a company, aims
to stay relevant. p