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ExxonMobil investments in SingaporeThe roaring, dynamic, global “Lion City” in Asia Experts: Zsofia Olah Natalia Turkina Kinga Ladomery Dmitriy Pustovalov 24/04/2012
• Singapore in general • Singapore – world class economic example • Doing Business in Singapore vs. the USA • History of ExxonMobil • ExxonMobil today • ExxonMobil invests in Singapore • Why did ExxonMobil choose Singapore? • Conclusion Agenda24/04/2012 Slide 2
• population: 5,1 million (2011) • GDP (2011):• density: 7,315/km2 (3rd) • Total $314.911 billion• area: 710 km2 (189th) • Per capita $59,711 consists of 63 islands • 10th largest foreign reserves• 1965 became independent • Gini (2009) 47.8 (29th)• unitary parliamentary republic • HDI (2011) 0.846 (very • PresidentTony Tan Keng Yam high) (26th) • Prime Minister Lee Hsien • unemployment below 2% Loong • 10,784.6 Foreign Investments ($m) The Republic of Singapore is the most competitive Asian country and the fastest-growing economy in the world.
• …the best city according investment potential.• …in the top 2 most competitive countries in the world• …the only Asian country to have AAA credit ratings from all three major credit rating agencies – Standard & Poors, Moodys, and Fitch.• …the 14th largest exporter and the 15th largest importer in the world.• …the worlds fourth-leading financial centre Singapore is…
• …the worlds second-biggest casino gambling market • …the worlds third-largest oil refining centre • …the worlds fourth largest foreign-exchange trading centre • …the least bureaucratic place for doing business in Asia. • .. the 7th in the world and 1st in Asia for having the least corruption in its economy • …among the top 3 in foreign trade and investmentSingapore is…
FOREIGN DIRECT INVESTMENT IN SINGAPORE BY COUNTRY/ REGION, 2006-2010p (Stock as at Year-End) Million DollarsCountry/Region 2006 2010Total 370,494.7 621,884.5Asia 82,485.0 150,241.2Europe 174,058.3 233,114.4United States 38,325.0 67,189.5Canada 2,736.4 3,837.2Australia 3,318.7 7,619.6South and Central 60,876.4 137,735.5America, and CaribbeanOther countries 6,990.2 19,871.8ASEAN 12,116.9 21,007.5European Union 131,405.6 182,118.6 Source: Singapore Department of Statistics, 30 December 2011
History • 31 August 1963 – Independence from the United Kingdom (after being a British colony for 140 years) • 16 September 1963 – Merger with Malaysia • 5 August 1965 - Singapore declared its independence -> Republic of Singapore. • “Singaporean” culture and social identity -> by late 1989 physically small Singapore became an economic giant.WHAT IS THE SECRET OF SUCH SUCCESS?
Singapore – world-class economic example: Key to success English is one of the official languages Various reforms Lee Kuan YewSingapore – one of the 1st Prime Minister of four “Asian Tigers” Singapore Won Battle against Elections: 1959-1988 Corruption
Singapore – world-class economic example: Key to success • British-style system at • Policies ensured that • The National TECHNOLOGICAL INDUSTRIAL POLICIES DEVELOPMENTEDUCATION REFORM schools; English + direct foreign investment Computer Board Chinese, Indian, Malaysian was viable, allowing (since 1981) - to help dialects; spending ~ 6% of Singapore to become a GDP; free primary serious contender on the establish Singapore as education + funds for high international market. an international center education. for computer services (Now it is Infocomm Development Authority) • First copyright law (1986) – to avoid trade sanctions by the western markets and to attract foreign companies to the country.
Singapore – world-class economic example: Key to success • By 1988, the • Late 1980‟s - • Free trade and freeMANUFACTURING LEGACY THE PETROLIUM FACTOR Singapore Singapore was markets, in manufacturing the world‟s third combination with sector was largest oil- a dominant producing more trading centre government role economic and as the centre in macroeconomic returns than both for refining management and the financial and petroleum. government control of major business sectors production due to emphasis enterprises. on large international companies.
Singapore – world-class economic example: country’s industrial prioritiesThe major industries in Singapore:• Electronics• Oil and gas• Financial services• Shipping• Chemicals.Maintaining country’s competitiveness by:• diversifying into value-added activities in the manufacturing and services sectors;• identifying and investing in new growth sectors, such as clean technology and biotechnology.
Doing business in Singapore vs. the USA in 2010 CATEGORY SINGAPORE USA SOURCE World Bank, Ease of DoingEase of Doing Business 1 4 Business Report Forbes Tax Misery and ReformCountry with Lowest Tax Misery (2009) 11 18 IndexWorld‟s Most Competitive Economy World Economic Forum, 3 4 Global Competitiveness ReportWorld‟s Best Country for Business Forbes Best Countries for 5 9 Business List World Economic Forum,Country Most Open to Trade 1 19 Global Enabling Trade ReportWorld‟s Most Competitive Economy IMD, World Competitiveness 1 3 YearbookWorld‟s Most Innovative Economy INSEAD and the Confederation 7 11 of Indian Industry‟s Global Innovation Index Heritage Foundation‟s Index ofWorld‟s Freest Economy 2 8 Economic FreedomWorld‟s Most Economically Globalized KOF Index of Globalization 1 57Country BERI‟s Labour ForceWorld‟s Best Labour Force 1 2 Evaluation Measure Transparency International‟sCountry with Least Corruption Perception 1 22 Corruption Perceptions Index
History of ExxonMobil 1870 1879• Rockefeller and his associates • Standard Oil Co. form the Standard Oil Company combined facilities purchases a three-quarters constituting the largest refining interest in Vacuum Oil capacity of any single firm in Company. the world.
History of ExxonMobil 1882 1911• Standard Oil Trust forms to • Standard Oil breaks up into include the Standard Oil 34 unrelated Company of New Jersey companies, including Jersey and the Standard Oil Standard, Socony and Company of New York. Vacuum Oil. -the first time Jersey Standards sales of kerosene
History of ExxonMobil 1919 1926• Jersey Standard acquires • “Esso” was introduced- a 50 percent interest in Embodying the phonetic Humble Oil & Refining rendition of the initials „S‟ Company of Texas. and „O‟ in Standard Oil
History of ExxonMobil 1958 1966• first trans-Atlantic Boeing • changes its name to 707 flight from New York Mobil Oil Corporation to London with Mobil oil
History of ExxonMobil 1972 1986• Jersey Standard officially • Exxon Research and changes its name to Engineering invents a Exxon Corporation. powerful new imaging technique called 3-D microtomography
History of ExxonMobil 1999 2010• On November 30, Exxon • ExxonMobil finalizes its and Mobil join to form agreement with XTO Exxon Mobil Energy Inc., Corporation.
ExxonMobil today• Headquarter: Irving, Texas, USA• Operates around 50 countries around the worldOperating divisions:- Upstream (oil exploration, extraction, shipping, and wholesale operations) based in Houston, Texas- Downstream (marketing, refining, and retail operations) based in Fairfax, Virginia- Chemical division based in Houston, Texas
Financial Data US$ billion in year of 2011Revenue 486.429Operating income 73.257Net income 41.060Total assets 349.000Total Equity 154.396# of employees 82.100
ExxonMobil in SingaporeMilestones• 1893- the set-up of the Vacuum Oil Company, which sold mainly kerosene and lubricants under the Mobil Oil brand name.• 1916- Standard Oil, set up an office• 1931 - Vacuum Oil merges with the Standard Oil Company of New York (Socony) to form Standard-Vacuum Oil Company, or Stanvac
ExxonMobil in Singapore• 1963 - Mobil decides to go into refining business. Esso starts a chemical operations department which later became Exxon Chemical Singapore Pte. Ltd.• 1966 - Mobil opens Singapores first refinery• 1971 - Mobil in Singapore becomes Mobil Oil Singapore Pte. Ltd.• 2007 - All service stations converted to Esso brand
Activities• Singapore refinery• Singapore Chemical Plants• Fuels Marketing• Lubricants and Specialties
Incentives of FDI in Singapore For non-pioneer For pioneer firms:1967: Liberalize firms: tax 7 enjoy tax tax system exemption of up exemption for up to 90 % - 5 years to 10 years Tackle industrial Reduce labor relations costs
Why did ExxonMobil choose Singapore?Jurong Island –Energy&Chemical hubIndustry cluster with 95 globalcompanies includingExxonMobil$ 4 bn invested in a refinery andcracker plant
Why did ExxonMobil choose Singapore?the biggest Asia‟s leading oil trading hub andpricing centerthe leading bulk liquids logistic hub in Asia andranks amongst the top three in the worldaccess to recourses has displaced low labor costs asthe key driver of competitive advantagepolitical and macroeconomic stabilityavailability of skilled laboris a major aviation and shipping hub – that providesgood access and connectivity to destination markets.
Why did ExxonMobil choose Singapore?• - free trade agreements with United States, EU, Japan, NZ, India, Korea, Peru, Jordan, Brunei , Chile• - Singapore is ranked No.2 worldwide as the city with the best investment potential for 16 consecutive years• - the world leader in foreign trade and investment with the most open economy for international trade and investment• - government allows the movement of both capital and profit freely within and outside the country.• - tax incentives and tax holidays• - strong Singapore dollar is not hurting export of ExxonMobil
Conclusions: Lessons for the others What should other countries learn from Singapore?• Political stability• High level of education• Open-market policies• Modernized infrastructures• Attracting foreign investor policies• Sustainable long-term economic objectivesThat’s why the most successful investment in Asia byExxonMobil were in Singapore
• http://www.edb.gov.sg/edb/sg/en_uk/index/why_singapore/Guide_to_Investing_in_Singapore.html• http://www.singstat.gov.sg/• Department of statistics, Singapore http://www.singstat.gov.sg/• Doing Business in Singapore vs USA http://www.guidemesingapore.com/research- reports/usa/doing-business-singapore-usa• Singapore: A Future Economic Powerhouse? by Exequiel Octavio Bertaina, Staff Writer http://www.arbitragemagazine.com/features/singapore-future-economic-powerhouse/• Exxonmobil.com• Exxonmobil.com.sg• Department of Statistics Signapore http://www.singstat.gov.sg/educorner/faqsinvestment.html#qn6• Economywatch http://www.economywatch.com/foreign-direct- investment/countries/singapore.html• Outward FDI by Singapore: a different animal? By Gaute Ellingsen, Winfried Likumahuwa and Peter Nunnenkamp• Official Efforts To Attract FDI: Case Of Singapore‟s EDB, By Augustine H H Tan, National University of SingaporeReferences