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Business Times_Leading the way_ 9 November 2009 Service Sector Growth In Singapore

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  • 1. Leading the way - November 9, 2009 http://www.businesstimes.com.sg/sub/premiumstory/0,4574,358356,00.html? Home | Site Map | My Stocks | Currency Converter | Place an Ad | Subscriptions | About Us | FAQ | Tue, November 10, 2009, Singapore Search UserID Views From The Top More Story Photos Published November 9, 2009 Password THIS WEEK'S TOPIC Register | Activate Forgot Password? Leading the way Click here to turn on 'Remember me' Do you agree that services will play a key role in driving Click on the thumbnail economic growth in 2010? What are the implications for above for a full size view businesses and the overall Singapore economy? ST Index (Real-time) 2,707.60 14.22 Andrea Ross Email this article Managing Director Tue, Nov 10, 2009, Robert Walters Singapore Print article 18 58 Feedback KLCI 1,274.08 +6.33 WHETHER it is HSI 22,268.16 +60.61 services or not, NIKKEI 9,870.73 +61.74 Singapore's economic growth will be dependent on the Dow 10,226.94 +203.52 external environment. Larger unresolved Nasdaq 2,154.06 +41.62 structural issues faced by our major trade S&P 1,093.08 +23.78 partners, price competition and the Monday Closing strength of the Singapore dollar all point to challenging times ahead for the traditional Singapore: Shares higher at manufacturing, engineering and logistics close US: Dow hits 2009 high industries. However, we do see a surge in job Breaking News opportunities recently within the services Print Edition Headlines industry, particularly in the financial services and insurance, information technology and healthcare/pharmaceutical Hock Lock Siew sectors. We would expect this to continue Editorial & Opinion into 2010 due to the high recruitment activity in these sectors in the fourth quarter. Stocks Stock Picks Other service-related sectors where we anticipate growth include IPO Watch education and tourism (led by the Integrated Resorts and the staging of global sporting events), with a focus on tailoring these offerings to the FX/Money Markets emerging wealth economies. Funds/Unit Trusts Derivatives Within financial services, there continues to be a deployment of roles into Singapore as many firms view the location as a cost effective hub to base Commodities their Asian operations. However, it will not be the only industry to drive Calendar economic growth in 2010. We foresee that the pharmaceutical, biotech, Tools telecoms and FMCG companies will continue to hire aggressively next year as these industries tend to be relatively more recession proof. Biz IT The semiconductor and automobile sectors continue to remain flat and will Property take some time to fully recover. The implications for companies in these Executive Money sectors will include: staff morale issues, employees continuing to feel stretched and organisations struggling to retain top talent as their people Executive Lifestyle will look to move to more buoyant markets. BT Living Another key consideration is the correlation of local employment growth to APEC Singapore 2009 economic growth. As we move into the more value-add streams and away Enterprise 50 from the traditional manpower-reliant areas, net job loss can possibly More offset job creation in the shorter term and structural unemployment may occur. Mon Tue Wed Thu Fri Sat Sun Julien Arnaud CEO Edgilis AS manufacturing demand continues to waver and shift to developing markets, the professional service sector will play an increasingly significant role in driving economic growth both in Singapore and overseas. To shine a brighter spotlight on the service sector and track industry performance, Singapore regulators should consider adapting a tactic from 1 of 11 11/10/2009 10:33 PM
  • 2. Leading the way - November 9, 2009 http://www.businesstimes.com.sg/sub/premiumstory/0,4574,358356,00.html? the UK which successfully increased the level of investments in the sector. In early 2009, the first Professional Services Index was launched on the London Stock Exchange, which traces the performance of UK-listed professional firms. The index is up 23 per cent since March. A similar index here would sharply identify the service sector as an economic priority, giving a boost to Singapore-based companies. Vinod Kumar President & Chief Operating Officer Tata Communications SERVICES will continue to gain their share of the pie in Singapore. What I expect is that we will see a steady shift towards higher value added services that are more knowledge based. While sectors like tourism will grow and contribute to the economy, the uniqueness of Singapore will be derived from the robust presence of professional services, medical services and innovation centres for next generation industries like biotech and digital media. Tata Communications realises this and hence we operate several critical functions of our global business from Singapore. However, Singapore needs to ensure that its economic framework is constantly evolving since there are other cities in Asia and the Middle East trying to replicate its model. Ray Ferguson Regional CEO, Singapore and South-east Asia Standard Chartered Bank THE composition of Singapore's Gross Domestic Product (GDP) is set to shift more towards services and away from manufacturing - we think that manufacturing may shrink to 20 per cent of GDP by 2013 from around 25 per cent in 2008. We envisage the Singapore economy will transform into a structure similar to developed countries like the United States (US) which has more than 80 per cent of its economy comprising of services. Nonetheless, unlike the US, Singapore's service sector would still be reliant on external demand due to the absence of a significant domestic consumption base. As a financial services institution, Standard Chartered has continued to make good progress in 2009, building on the record income and profits in the first half of the year. We continue to benefit from the growth opportunities across our broad and diverse franchise and our continued, deliberate focus on capital and liquidity strength remains a source of competitive advantage. Annie Koh Dean, Executive and Professional Education Singapore Management University THE prognosis from the MAS and other government agencies represents a realistic picture of Singapore's value drivers, going forward. Pending the report coming from the ESC(Economic Strategies Committee) - the writing has been on the wall before the crisis and is even clearer after the excesses have been corrected. Currently, based on the ADB March 2009 figures, over 75 per cent of our GDP is derived from the services sector and this will likely move up to over 80 per cent in another year or two. For Hong Kong, the services sector accounts for 92 per cent of their GDP! This is not unusual for 'global' cities like New York City or London given the land constraints for traditional production and the need to move up the value chain for higher value added manufacturing. So while Singapore will attract more pharma and bio tech, design and media firms - there will be business-to-business services set up to ensure that such high-end manufacturing is viable in our ecosystem. We will need professional services support - legal, accounting, finance and shipping services - which is targeted to meet the needs of these high value-add industries. So the service sector needs to understand the specialised industries they support. I also see the need for Singapore to strengthen the quality of our human capital and professional managers to run global companies (hence the set-up of the Human Capital Leadership institute). We also need a good understanding that service excellence means lining up the back end and middle office support to ensure that higher consumer expectations are met. We will have more sophisticated consumers coming into the country to visit, work, learn and play - so the greater dependence on the services sector will mean a much higher level of talent and human capital . . . those are also the barriers which will take longer to build and greater difficulty to emulate. 2 of 11 11/10/2009 10:33 PM
  • 3. Leading the way - November 9, 2009 http://www.businesstimes.com.sg/sub/premiumstory/0,4574,358356,00.html? There will always be cheaper production workers - but it is more difficult to get knowledgeable and educated service workers. All private, public and academic resources will have to be aligned to make sure the service sector creates value and adds value, as that will be our lifeline, going forward. Singapore has no choice but to make this work. Liu Chunlin CEO K&C Protective Technologies Pte Ltd AS the developed economies overhaul their manufacturing industries ravaged by the financial crisis, it will take some time before MNCs readily put in more investments in countries like Singapore. Even if they do, the BRIC (Brazil, Russia, India and China) countries will pose a challenge in terms of manpower cost competitiveness. And with carbon trading becoming a fixed agenda, Singapore will find it increasingly hard to push in that direction. We are hence squeezed between the rock of MNCs not investing in new manufacturing yet and the hard place of the BRIC's cost-competitiveness. What then holds opportunities for us is in the soft areas, with what we can do with our human capital. These areas I see as innovation, aggregation and integration. Innovation will help us create new services and new technological and other products to meet new demand. We are also well-positioned with our educated population at home in both Asian and western culture. Our investments in the bio-medical sector should hopefully bring a harvest. In terms of aggregation and integration, I see potential in our ability to pull and put things together, whether in project management, IT, gaming software, multi-media productions, financial services, tourism, MICE industry and even culinary experiences (for the last two I think of the impending opening of the IRs and the opportunities they bring). John Koh Managing Director WMRC Private Ltd THE migration to the services industry is inevitable as Singapore progresses towards higher income levels. This is the same phenomenon happening in other developed countries where the GDP contribution of the services industry increases at a much faster rate compared to traditional industries such as manufacturing and trade. In the case of Singapore, what is unique is that we have managed to retain our traditional strength in manufacturing while building a strong reputation and critical mass for the services industry, in particular the financial services. There are definitely deep implications on businesses and our society as our economy becomes increasingly dependent on services to drive growth. Services typically employ people who are well educated and able to work fast and work smart. The growth of services will bring with it ancillary services needed to augment the value chain. New business opportunities will arise to support and complement the services industry, which Singapore would have the potential to develop into a services hub providing key value to businesses across this region. Wee Piew CEO HG Metal Manufacturing Ltd WITH the opening of the two IRs and the Universal Studios theme park next year, the service industry is definitely going to play a key role in Singapore's economic growth in 2010 and beyond. Besides tourism, we should also see strong growth in other service industries like the medical and education sectors as the regional economies recover. This trend is inevitable as the Singapore economy matures and it can no longer depend on the manufacturing industry to fuel its growth. It also makes strategic sense for Singapore to focus on growing the service sector as it will help provide another leg for the economy. This is important as the manufacturing industry has not fully recovered while its sub-sectors like the pharmaceutical industry is volatile in nature while the tech sector is extremely dependent on the US economy. As Singapore moves towards a more service dependent economy, businesses will have to constantly monitor service standards in order to ensure that service standards can be constantly maintained at a high level and at the same time, look at ways to improve them. As a result, a larger part of their annual budgets may need to be allocated to educate and help improve service standards. François Lançon President 3 of 11 11/10/2009 10:33 PM
  • 4. Leading the way - November 9, 2009 http://www.businesstimes.com.sg/sub/premiumstory/0,4574,358356,00.html? Nortel Asia-Pacific IN the technology industry, we have started to see growth in Singapore and elsewhere in the region, with forward-looking companies making technology investment decisions that will help them provide better service as the rebound kicks in. Government spending has remained strong through the downturn, but the service sector is now showing some growth - with renewed financial services spending on technologies that aid efficiency, reduce cost and link communications to business processes, providing greater efficiencies and in turn helping companies develop more robust and easy-to-manage customer offerings. Healthcare and education remain strong, and even in the hospitality arena, we are starting to see a pick-up in demand, fuelled by the desire to differentiate service and improve staff effectiveness. This trend looks set to continue with the opening of new resorts, and the continued improvement of regional economic prospects. Clement Goh Managing Director Equinix Singapore WITHIN the IT market, IT services will definitely be the driver for growth as increasingly, we are seeing margins coming from IT services rather than hardware or software. The Singapore government has been moving in the right direction, encouraging development in services-centric sectors like new media and digital services. Singapore is in a good position to offer IT services, as we have the talent pool with the right knowledge and skill sets, guided by proven methodologies and processes. What is important now is to ensure that there is more emphasis on soft skills like customer service and consulting when it comes to training. This is already happening at our local tertiary institutions, so I believe we are well-equipped to meet the demands of a services-driven economy. Teng Yeow Heng Michael Managing Director Corporate Turnaround Centre Pte Ltd I AGREE that services will play a key role in the economy in 2010 and even beyond. I have personally spent more than 20 years in the manufacturing industry and have seen Singapore losing its competitive advantage in this sector across the board in recent years with the rapid rise of China. Unfortunately, we still have a penchant to promote manufacturing rather than services. Unlike the promotion of the manufacturing industry where we need to attract foreign technology and multi-national companies, for the services sector we need to focus on developing our own people as a brand. We will not have a strong servicing industry especially in financial, medical, education, consultancy, training, entertainment, professional services and so on, if we continue to develop foreign talent who ultimately go back home to their countries of origin. Thus, we need to first recognise our own local talent and brands and award them service jobs, contracts and government tenders so that they have an opportunity to excel and flourish. If we ourselves do not value our own brands, it is going to be difficult to convince outsiders of our capabilities and therefore develop a thriving service industry, going forward. Tim Hird Managing Director Robert Half Singapore SINGAPORE'S finance sector is expected to play an important role in driving economic growth as the city-state seeks to reinforce its position as a regional financial hub in the wake of the recent crisis. Demand for high-quality financial services and finance professionals, particularly for business critical roles such as risk and control, is expected to rise sharply. As business confidence returns, it is important that organisations not only drive growth in their businesses, but also answer to the call for greater accountability and transparency by strengthening their corporate governance practices. This will augur well for the long-term sustainability of the island's economic recovery and future growth. Stephen Lockley Managing Director Sodexo Singapore GIVEN the resource constraints in Singapore, it is imperative that Singapore continually moves towards being an established service- oriented economy. Therefore, it is natural that the service industry has 4 of 11 11/10/2009 10:33 PM
  • 5. Leading the way - November 9, 2009 http://www.businesstimes.com.sg/sub/premiumstory/0,4574,358356,00.html? been earmarked to lead economic growth indicators as we move into the new year. At Sodexo, our value-added outsourcing service provides companies with an attractive option to streamline their non-core business operations and costs. This allows us to fare well even in the downturn, and we are well-placed to continue contributing to Singapore's economic growth into 2010 and beyond. Growth in the service sector will provide a much needed uplift to the overall economy, which will have a spill-over effect in improving the sentiment and demand in other industries like manufacturing. So while the immediate outlook remains less than optimistic in certain economic quarters, we believe that sustained traction in the areas that recover faster during the upswing lends itself to improving economic fundamentals. This will be a key factor in ensuring a holistic and steady growth for the Singapore economy. Andrew Tay President Zebra Technologies of Asia-Pacific IN a small country with limited resources but big ambitions like ours, the progression towards a more services oriented economy is natural. However, the fight to stay relevant is just as competitive. For example, in the global healthcare sector, the struggle for healthcare dollars is increasingly fierce with more and more players entering the field. The development of new hospitals and training of healthcare professionals is a 'hygiene factor' for this industry; our real differentiator will be in the use of technology to enhance a patient's medical experience. RFID and barcode labelling, for example, can be used by healthcare professionals to provide better patient care and identification. I also think it's important to note that manufacturing continues to be one of the cornerstones of the Singaporean economy, and that continued investment is necessary to keep this industry competitive in an increasingly 'flat' world. Recent signs of economic recovery have manufacturers grappling with inventory management as government programmes stimulate consumer demand yet general economic weakness is seen. When speaking to customers in this sector, we advise the consideration of technologies that help manage and track assets and which increase visibility into the supply chain to monitor production, factory management, and supplier networks to help keep customers competitive. All the things which made Singapore great - efficiency, transparency and a great well trained workforce are assets that will continue to serve us well in an increasingly services oriented global economy. Teresa Lim Managing Director IBM Singapore GLOBALISATION is changing the world of work and how we operate in a globally integrated enterprise of the 21st Century. Many decades ago, global economic growth was heavily dependent on the manufacturing sector and modestly dependent on services. But the world is becoming a giant service system, comprising six billion people, millions of businesses, and millions of technology products connected into service networks. In Singapore, the services industry accounts for more than half of our gross domestic product and this figure continues to grow. The Monetary Authority of Singapore also expects services to fuel growth in 2010. In order to position ourselves for the further growth, it is imperative that our workforce is enabled with the appropriate skills and able to reinvent itself to remain viable and stay ahead of competition. In our view, to win and lead in this new global marketplace, the 21st Century worker will need to bring to the table a strong mix of business, technical, and people skills. At IBM, as we look at this landscape, we envision the ideal individual to be a 'T-shaped' persona - someone who has a deep proficiency in one area, engineering for instance, but are also conversant and comfortable interacting in a profitable way with other departments, such as marketing, industrial design, and finance, for example. To this end, we are working with universities around the world to help create this emerging discipline that we call services science. Working with academia, we aim to equip students with an integrated mix of business, technology and people skills. We term this new academic field Service Science, Management and Engineering (SSME) where it is about bringing science to the art of services and vice versa - bringing creativity into the sciences. 5 of 11 11/10/2009 10:33 PM
  • 6. Leading the way - November 9, 2009 http://www.businesstimes.com.sg/sub/premiumstory/0,4574,358356,00.html? In Singapore, IBM has collaborated with the National University of Singapore, Nanyang Technological University, Singapore Management University and Institute of Systems Science, together with industry partners, to include SSME into their curricula. There is a lot more to be done in developing our services talents to give us the competitive edge and place Singapore on the frontier of the explosive global services economy. It is my hope that the government and businesses continue to recognise the importance of and place an emphasis on investing and upgrading the skill sets of our workforce, starting with our students in the education institutes, right up to the professionals in the workplace. Charles Reed CEO DOCOMO interTouch THE numbers speak for themselves - Singapore alongside other regions like the Americas and Europe, continue to recognise this great potential as the services sector consistently expands across the board, and enterprises start reversing their downsizing measures. Services still make up the bulk of the world's economic activity and continues to be a key component of a country's economic structure. And why is Singapore so successful in the services sector? Singapore is a wonderful place to work; rule of law and political stability are just some of the reasons. The main criteria for success is Singapore's resource pool - its people. Hard working, diligent and service orientated. Singapore leads the world with some of its services and is starting to export these. The services sector will remain an important part of Singapore's business growth because at the heart of services is the people of Singapore. Dhirendra Shantilal Senior Vice-President, Asia-Pacific Kelly Services ALTHOUGH the services sector has been more resilient and weathered the current global economic crisis better compared to other sectors such as manufacturing, the goods and services sectors will remain vitally complementary in Singapore. While services will play a key role in driving the future growth in industries such as banking and finance, and information and communication, organisations providing services should also identify what will differentiate their offerings and look at diversifying their business portfolio. The continued and robust expansion of the services sector will add another dimension of stability to Singapore's GDP growth. In addition, producing services tends to entail relatively more human capital. As a result, there will be a greater demand for a more educated, skilled and multi-faceted workforce, which may prompt a higher investment in education and human capital development that will ultimately benefit businesses. From this perspective, organisations in the services sector should look at preparing for the renewed and increased demand with continued training and education, in order to equip their talent with the right skill sets and competencies for the upturn ahead. Benedict Soh Executive Chairman Kingsmen Creatives Ltd WITH no natural resources, Singapore is dependent on the talent and integrity of its people, as well as the country's reputation. Its focus on value-added services for financial, infocomm, engineering, architecture and design, is beginning to pay dividends. Many service providers in these sectors are already world-class; therefore it is not surprising that services will power the growth of Singapore in the future. Using knowledge and professional services to expand our market penetration across the globe can only be positive for Singapore's future, as in the Internet age, quality in production alone brings little differentiation. 'Soft power' offerings such as appropriate branding, quality product delivery and after-sales will boost Singapore's manufacturing capabilities. Jansen B Ek Vice-President and General Manager - A-Pac 6 of 11 11/10/2009 10:33 PM
  • 7. Leading the way - November 9, 2009 http://www.businesstimes.com.sg/sub/premiumstory/0,4574,358356,00.html? Intermec THE recession has spurred the Singapore economy's natural evolution towards one that is more knowledge-based and focused on services. With one of the best educated workforces in South-east Asia, and through government initiatives such as the Spur (Skills Programme for Upgrading and Resilience); we have slowly but surely nurtured a talent pool that we can capitalise in 2010. Not only can we expect to see growth in areas such as business services; but across the board, companies are increasingly seeing service provision as a key differentiator and growth driver. One implication is that IT companies will rely even more heavily on quality services to compete and add value for customers. Joshua Yim CEO ACHIEVE Group AS a human capital solutions provider, we have already experienced an increasing demand for workers in the services sector over the past two quarters. Defined by lifestyle, healthcare, hospitality, finance and professional services, the services sector is always a key economic propeller in mature economies such as Tokyo, London and New York. Correspondingly, it will be the eventual direction Singapore would head towards next year and beyond. In contrast, demand in the manufacturing area tends to be weaker except for high innovation areas such as R&D. This is inevitable as Singapore has become too expensive in terms of labour cost. Dennis Choo Managing Director, Asia-Pacific Premiere Global Services IN a services-driven economy, the most important assets a company has are its people and the technology that supports them. As emphasis shifts from manufacturing to services, business leaders need to develop strategies and infrastructure that are cost effective and sustainable in the long term. Technologies like Web conferencing and digital notifications reduce operating expenses, improve cash flow and increase productivity, giving employees time not just to execute day-to-day operations but also to innovate. The Singapore government has anticipated the changes ahead and has begun executing plans to support those changes with the Infocomm Development Authority of Singapore (IDA) leading the way through its Intelligent Nation 2015 plan. Intelligent Nation 2015 (iN2015) is a 10-year plan that incorporates ideas and views from individuals in the private and public sector, guiding Singapore in its development as a global city, recognised as a synthesis of technology, infrastructure and talent. It is a living plan intended to give every individual seamless access to intelligent technology - and with it - the freedom and ability to connect, innovate, personalise and create. Choe Peng Sum CEO Frasers Hospitality Pte Ltd IF our own growth story at Frasers Hospitality Pte Ltd over the past years is any indication, the services sector looks set to play an increasingly dominant role both in the context of the Singapore economy, and driving the development of Singapore companies internationally. The challenge of course, for Singapore, will be managing our human capital. The rapid growth of the services sector across Asia and the resulting drain on expertise from Singapore, underscores more than ever the need for the development of strategic human capital practices here at home base. Lim Soon Hock Managing Director PLAN-B ICAG Pte Ltd SO long as global unemployment persists, which invariably causes global consumer demand to remain weak, the manufacturing sector will languish in the doldrums. In this scenario, we can expect services, without all the concomitant carrying costs of inventory, capital expenditure, etc, to play a key role in driving economic growth in 2010. It is a fait accompli. The current financial crisis highlights the vulnerability of Singapore's 7 of 11 11/10/2009 10:33 PM
  • 8. Leading the way - November 9, 2009 http://www.businesstimes.com.sg/sub/premiumstory/0,4574,358356,00.html? over-dependence on manufacturing. Countries in the region, for some years now, offer manufacturing capabilities and capacities, at lower costs with the same quality, if not better. China has evolved to become the manufacturing centre of the world. It is increasingly more difficult for Singapore to compete in this space I expect the services sector to evolve to become the mainstream GNP contributor in the future. It is a natural evolution for Singapore, when you consider that our only assets are human capital and financial capital. Our strategy must be to exploit both these assets to the fullest, to drive our future economic growth. According to the Bloomberg Global Poll, Singapore is now the world's second financial centre, after New York. There is no reason why we cannot be the first, much like what we have achieved for our port and airport and in the process, make services play a key role to fuel our economic growth. Apart from financial services, we can exploit our human capital in R&D, our high IT literacy, education know-how and our government's expertise in infrastructure development. While we rightsize our manufacturing sector, Singapore can move upstream and concentrate on R&D, leveraging off the infrastructure which our government has put in place. Singapore can serve as an R&D centre for both MNCs and local companies, to support their global network of manufacturing plants, especially in China and other countries in the region. In the field of IT, businesses can also learn from the experience of India; again there is no reason why we cannot tap on our high IT literacy rate, to excel to become a software centre. In my opinion, we have missed out on this opportunity, more than a decade ago, when India started out. Arising out of the financial crisis and increasing competition of countries as attractive manufacturing bases, the economics of doing business will compel many companies, both MNCs and local companies across multifarious industries, to diversify and concentrate on services, taking advantage of the comparative advantages of Singapore in management talents, R&D expertise, etc, and the lower costs of manufacturing in countries in the region. Businesses have no choice but to adapt if we are to continue to be successful and to stay ahead of the game. R Dhinakaran Managing Director Jay Gee Enterprises Pte Ltd SINGAPORE with its limited natural resources and high cost factors of production has been gradually moving towards the services sector from a manufacturing-sector-dominated economy. With the demand in the Western world yet to pick up strongly, growth in manufacturing-led exports in the immediate future is constrained. The services sector is more diversified with greater avenues for growth. With Asian economies already recovering well, economic activities in the region including visitor traffic is steadily increasing, leading to increased opportunities for the service industry in the travel, retail and leisure segments. Singapore's strength to continue attracting investments in the financial sector will remain its advantage as services dominate the recovery path in Singapore. Eric Hoh Vice-President, Asia South Region Symantec OVER the past decade, the government has made a concerted effort to reduce our dependence on exports and manufacturing, and this has sheltered us from the worst of the economic downturn. As the Singapore economy gears itself for post-recession growth, it is important for us to continue to diversify our growth areas, and identify new industries and markets for future expansion. I agree that modern services such as financial intermediation, business services and information and communications can be key economic differentiators for Singapore, enhancing our competitiveness and strengthening our economy in the long term. The information, communications and technology sectors, in particular, have great potential as businesses look to make efficient use of ICT to maximise their resources, automate key business processes and increase their competitiveness, thereby benefiting from an optimised environment. We at Symantec are poised to help organisations use technology to better secure and manage their information and infrastructure, improve productivity and reduce costs, ultimately emerging stronger from the downturn. Deb Dutta Vice-President Brocade - Asia Pacific 8 of 11 11/10/2009 10:33 PM
  • 9. Leading the way - November 9, 2009 http://www.businesstimes.com.sg/sub/premiumstory/0,4574,358356,00.html? SINGAPORE'S services sector has been resilient in the current downturn compared to the export of goods and trade-related services. Over the years, several ministries have catalytic measures for Singapore to become a regional hub for healthcare, logistics, business outsourcing, digital media development and education. However, I doubt the intrinsic capabilities of broad-base services to assume a key role in driving economic growth next year. Besides, the maturity of the services delivery capability is also dependent on the propensity of Singapore's global partners to engage Singapore. We have no control over this demand. I do feel the need to bolster its quality of service in addition to maintaining the current volume from the manufacturing sector. The quality has definitely dipped in recent times. Besides sectoral risk mitigation, capital formation, job creation and workforce retraining, the sector-specific service knowledge-base once quickly built, can become a national intellectual property. The IRs might be a good starting point. David Leong Managing Director PeopleWorldwide Consulting Pte Ltd FOR any sustainable growth in Singapore, a service-oriented infrastructure empowering the service economy must evolve in a flexible and dependable way. This will include financial intermediation, business services and information & communications and lifestyle services. There is demonstrable growth and continued strength in the services industries.The service industry was the major contributor to growth in the last three quarters of the year. Singapore needs to preemptively alter its economic DNA by not relying exclusively on the manufacturing sector. While exports of manufactured goods in chemical, pharmaceutical, biotechnology, electronics and oil refinery products remain key export indicators, other sources of growth must be nurtured. Such diversification will help reduce the vulnerability of growth to large swings during crises and minimise the economy's dependence on a few correlated sectors. However, in the near term, it is unlikely that services will take over the mantle from manufacturing as Singapore's growth engine as it moves into its post-recession gears. Singapore, despite our size, attracted global attention when it successfully hosted the world's first-ever Formula One night race. Singapore playing host to the Asia-Pacific Economic Cooperation (APEC) meeting and hosting of the Youth Olympics simply means that Singapore will want to be a hub for such exciting activities and these events will surely reap significant economic spin-offs for various trades for the country, in the form of increased tourist influx and swelling patronage for side entertainment and other associated events. Come 2010, our two integrated resorts (IR) namely, Marina Bay Sands and Resorts World in Sentosa, will be launched. The IRs will position Singapore as a must stop-over destination in Asia offering a wide range of entertainment experiences for the leisure and business visitors, thus enhancing tourism receipts. The resorts will promote Singapore's status as a convention hub in Asia and thereby positively impact the supporting industries, such as hospitality, healthcare, entertainment, F&B, transport & communications etc, apart from attracting huge investments and opening up employment opportunities directly and indirectly. Singapore is very advantageously located in the Asian region which, is home to the burgeoning middle class demanding quality lifestyle products and services including wealth management services enticing the growing high net worth individuals in Asia. With such prospects over the horizon, it will be a new dawn for Singapore. Dora Hoan Group CEO Best World International Ltd SINGAPORE'S Integrated Resorts projects, expected to be in full swing by 2010 are intended to be distinctive world-class developments that will no doubt boost the growth of the service sector. This will be propped up by amenities and infrastructure support services through hotels, convention facilities, themed attractions, luxury retail, fine dining and casino gaming. However, Singapore should be able to realise the expected influx of tourists and business visitors to really profit from this development, otherwise, the apprehension is that there may not be a broad enough consumer base to support the huge investment. Indeed, it's a gloomy outlook for manufacturing, as the economic climate improves gradually but may take some time to fully bounce back. 9 of 11 11/10/2009 10:33 PM
  • 10. Leading the way - November 9, 2009 http://www.businesstimes.com.sg/sub/premiumstory/0,4574,358356,00.html? Those in the manufacturing sector will be compelled to either seek opportunities overseas or prepare themselves for a new set of skills for a change of career path. The outlook for Singapore with the expected boost from the service sector of the economy is positive on the whole. However, we must take a closer look at the complications being felt particularly by smaller enterprises owing to rising business costs - higher costs of supplies, continuing surge in office rents, among others, are really affecting operating costs and making smaller companies barely able to compete on a level playing field in many aspects and unable to offer better compensation for their employees. To make matters worse, rising household costs on the other hand means falling consumer demand and should also be factored into the list of concerns. Unless all these are addressed as a whole, the service sector alone may not be able to sustain the post-recession economic growth and recovery at the pace and manner we have envisioned. Gavin Selkirk Corporate Senior Vice-President & General Manager CA Asia-Pacific & Japan ALL signs are that the services sector will be the spearhead of Singapore's thrust back into growth, following two buoyant quarters. Armed with the wisdom of hindsight, enterprises in the services sector will now be seeking to cut waste, reduce cost, boost productivity and mitigate risk like never before. The good news is that today's IT sophistication is enabling businesses to achieve unprecedented efficiency, especially in terms of trends such as software-as-a-service (SaaS). CA On Demand solutions, for example, offer full functionality with faster implementation, so that organisations can duck hefty upfront investment and avoid the time-lag associated with on-premises deployment. I'm pleased to say that news of CA's prowess in technologies such as SaaS, virtualisation and cloud computing, are hitting the headlines at a time when CIOs are starting to feel the confidence to peer further into the future - and not just on IT issues promising immediate payback. David Ang, Executive Director of SHRI There is a gradual change in the world economy from agrarian to industrial to the present knowledge economy and services sectors are important elements in this contemporary knowledge economy. It is an environmental consequence of the economic progress. The services sector has played an important role in cushioning the negative external impacts on Singapore during the economic downturn. From a sectoral perspective, Services will definitely feature very strongly next year, especially with the opening of the two Integrated Resorts and thereby strengthening Singapore further as a tourism hub in SE Asia. This will further create economic growth in other sectors as well, thereby pushing the overall economic growth for Singapore. Businesses in the services sector will prosper provided the regional and global economic recovery is sustained and broad-based. At the same time, Singapore will continue to re-position and strengthen itself in the manufacturing sector, eg in the higher value and knowledge-based mfg, including R&D, and creation of new products and establishment of new manufacturing facilities. The Manufacturing industry and Services industry are regarded as twin engines of Singapore economic growth, with the former contributes 25% of Singapore's annual GDP. There has to be an integrated approach to balance the two. Singapore needs to relook at the prospect of integrating them and making the development sustainable. With the Services sector gains economic momentum, human capital becomes an important determinant of the services sector output. The economic growth also contributes to higher demand for services and hence it has implications for the services sector output. Because of increased competition from countries like China and India, it is imperative that Singapore further develops and increases its human capital competencies and skills set. Increased availability of human capital through increased spending on advanced education and training will open up more opportunities for Singapore to continue to attract foreign investment, which is vital for its manufacturing sector. Ads by Google Online Marketing Strategy Shape Your Digital Marketing Strategy With Google Singapore. Services.Google.Com/Economy 10 of 11 11/10/2009 10:33 PM
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